The Growth of Corporate Crime as a Subject

I am wary of talking of corporate crime, because I am wary of limiting myself to criminal law and no more, given crime’s shaky meaning (see Crime and Punishment 1) and because I am interested in areas where there is maybe some thing that looks wrong and engages the law, but no crime is committed. But I doubt many scholars study corporate naughtiness.

Corporate crime has become a more widely considered subject. I’m not the only blogger on these sorts of subjects, and others, like http://lawprofessors.typepad.com/whitecollarcrime_blog/ and http://www.whitecollarfraud.com/ are far more concentrated and detailed than this one.

But why is it demanding more and more interest? Nicola Lacey recognised four reasons when considering why there were steps towards recognition of corporate homicide:

o   Technology – as technology advances, disasters can be more disastrous. So we care more.

o   Communications – and then we let everyone know about these events quickly.

o   Attitude – sociologists have noted we are increasingly interested in pinning responsibility to someone or some thing, including systems/stuctures as well as individuals.

o   Corporate significance – these days there are bigger corporations, playing bigger roles, featuring more highly in social conciousness.

Disagreeing with Nicola Lacey is not high on the to-do list of a criminal law student. She's featured on the rather splendid Philosophy Bites website, for a start. But here, it’s not so much that I disagree is that I’m pretty underwhelmed by these reasons. Of course companies have got bigger, in real, relative terms. They can and do wield more power over larger areas than before. And as they do, they can do worse things.

Technology, communications and attitudes are all relevant but are relevant across the board. Corporations can execute incredibly complicated frauds using means that are difficult to comprehend, never mind regulate. But equally, technology plays roles in other crimes – carjacking becomes less prevalent as car security gets better, but Facebook can help create riots. Communications are equally relevant to international cartels as to creating YouTube videos of vigilante train justice. And as to blame culture, thank God we blame people, not ‘fate, chance [or] the gods’.

I think, simply (it’s easier that way), that bigger corporations doing bigger bad things leads to more interest. And as we criminalise more practices, there’s more to study. It’s not surprising that there is more US scholarship on corporate crime given the fact they are at the forefront of criminal enforcement of, for  example, competition offences. They just got concerned first, and that’s very possibly linked to their brand of capitalism breeding bigger companies quicker.

Further, it is important to remember that numerous academic subjects have grown rapidly. More people are more educated, and when that happens, it’s little wonder they find and fill their own disciplines and niches.

[Lacey's arguments from an article by her extracted in Criminal Law: Cases, Texts and Materials (Herring, OUP)]

Why I won’t blog about executive pay (at the moment)

This is very easy. Paying executives big money is legal. Simple. As the law stands, if your company lets you have it, then that’s that. It’s capitalism, baby. The law does make PLCs disclose to us how much their top people get paid, so we can see their packages (ooh-er Matron)[1].

Just because it’s legal doesn’t mean big pay is ethical, and elsewhere I’ll discuss some contours of legality and ethics in the business world. For what it’s worth, some of the ‘Crime and Punishment 1: Crime’ post highlights that ‘legal’ does not always, in reality, equate to moral; and so all that’s immoral may not also be illegal. (See also this post on a very good business ethics blog)

Ethicists can argue the size of corporate pay. PR people can question the sense of taking big pay in the face of public antipathy, or the point of rejecting it under pressure. Politicians can question whether they want to be aligned with big pay. Business analysts can wonder whether binding shareholder votes will make a difference. Anyone doing studies of happiness can argue about why relative parity increases wellbeing in a society. Football fans can ask whether Tevez, Adebayor, and Yaya Toure deserve to be paid millions upopn millions each year, and how that fits with bankers.  Statisticians and journalists can tell us why we don't talk about bankers losing jobs. Everyone can ask whether they value themselves at the rate they earn, and whether they are worth twice as much as the guy below them, or half as much as the guy above. Philosophers and economists can always question the merits of capitalism.

But a legal blog has very little to say on the matter. Unless and until the law tries to make a difference.

[1] Just look up any page for investors on a PLC’s website.

---

Minimum Pricing of Alcohol in Scotland 2: The SWA

A couple of posts ago, I tried to explain why minimum pricing is probably illegal. This post is less technical, but more business related. It concerns the press release made by the Scotch Whisky Association as to its stance on minimum pricing.

They say it’s illegal too, so I should probably be agreeing with them. And to their legal basis, I do. But I can’t help but think that their press release is not a particularly good strategy for them. I’ll deal with it as ‘gobbets’ to explain why.

Minimum pricing ineffective and illegal screamed the headline. My issue with ineffective is that the SWA’s evidence is as shaky as the Scottish governments. That headline deserves more than the paltry Average alcohol prices are higher in Scotland than in England, yet consumption is greater in Scotland which raises doubts over the Government’s claim that higher prices will address alcohol misuse in Scotland hidden in the endnotes. The difference is pennies, and, as we are well aware, issues of culture and history and distribution of costs and healthcare all play a role.

My problem with illegal is maybe less strong. I explained why minimum pricing might be caught by free movement laws, and would therefore be illegal. But I dislike when people cry illegal as a Finish-Him move that ends discussion (so as to avoid discussing merits) and to try and label the transgressor as a dirty-no-gooder. Maybe the SWA weren’t doing that.

What I can’t understand  is why the SWA would publish the press release at all. Claims that Scotch Whisky as a ‘premium product’ has nothing to fear from minimum pricing are misplaced. Within Scotland less affluent consumers who buy own-label Scotch Whisky will be hit, while the knock-on impact of copycat trade barriers overseas could lead to enormous damage in the industry’s exports markets… A legal alternative would be to work with the UK Government on a UK basis to remove tax discrimination between different drinks and to introduce a ‘floor price’ for alcohol based on the revised duty rates and VAT.

First, we get a glimpse into why the SWA are concerned – Scotch could be affected. They are not in the slightest concerned with the strict observance of EU treaties for their own sake. Second, they are right that some Scottish customers would be affected, but it is true that branded Whiskies soar above (the assumed) minimum price requirements. I also am unconvinced that exported whiskies wouldn’t also survive minimum price requirements abroad. Further, given the ‘premium’ reputation afforded to Scotch, and the strict controls on what can be marketed as Scotch, whisky producers have some amount of safeguards. The tax issue hits towards the nub of the SWA’s concerns - Scotch Whisky is taxed 250% higher than cider, 37% higher than beer and 30% higher than wine. But this is partly why minimum pricing would affect them less! That said, I can understand that a more coherent structure towards alcohol pricing may be ‘fairer’. But then this leads to a rather funny final point – the SWA reckons higher pricing is ineffective, but wants to raise the floor price through tax. Why? Wouldn’t that be ineffective too? (It might also be illegal, under EU directives on alcohol duties, but I could be wrong).

I still don’t understand why the SWA has gone public. It is easy to pay lip service to the objective of a more healthy, positive and responsible attitude to alcohol and then slip into self-preservation. Given that other alcohol producers have backed the proposals, it’s not great PR to oppose them publicly. Maybe a more pragmatic approach would be to welcome the attempted change in culture, survive the implemented scheme (as I reckon whisky producers would) and tell on the Scottish government to the EU Commission, and wait. Or, get right on board with the proposals. If cheap booze kills (which it might), it takes a devil’s advocate to defend it.