Describe White Collar Crime And Discuss Its Causes (Essay Sample)

The Causes of White Collar Crime
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The Causes of White Collar Crime
The criminologist Edwin Sutherland coined the term white collar crime and defined it to mean those crimes that are committed by people considered respectable and important in society (Croall 2001). These crimes are business related and performed by individuals in their professional capacities. White collar crime is mainly committed by people with considerable power and influence. Money is usually the biggest motivation, although some criminals have confessed to committing these offenses in pursuance of thrills, attention or as a way of demonstrating one’s skills. It is important to note that white collar crime encompasses various crimes in different fields such as the financial sector, environmental mismanagement, and even price fixing. Other forms of white collar crime include insider trading, identity theft and even hacking of information and communication systems.
In the recent past, white collar crime has assumed greater attention in the media. Modern examples of white collar crime include the scandals that plagued companies such as Enron, Exxon Mobil and recently, the Bernie Madoff scandal involving the operation of a Ponzi scheme by a securities trader. The case of Bernie Madoff's Ponzi scheme will be used to demonstrate and support the arguments made in this essay. The importance of studying the causes of white-collar crime reveals itself in the economic, financial, political and social cost to society. According to the FBI, whereas white collar crime contributes less than 5 percent to the total number of crime in the United States, its ramifications and cost are tremendous. For this reason, the study of white-collar crime becomes an important task to society. Personality, environmental factors, and opportunity are some of the commonest causes of white collar crime (Croall 2001). Other causes of white-collar crime include competition in business and a relaxed regulatory environment.
ARGUMENT
The non-violent nature of white collar crime is one of the reasons we approach the topic with notoriety. Violent crime has an immediate impact on society regarding visible injuries and harm to society. White collar crime, being non-violent, tends to be treated as less harmful to society. However, this is not particularly true, considering that it has the biggest cost implications to society. These crimes are more prevalent in acquisitive societies as well as those that are affluent. Thus, the level of white collar crime in America would typically be higher than the level in Somalia or Myanmar. However, this does not mean less affluent societies do not commit white collar crimes. Instances of white collar crime in modern society include the tax fraud, embezzlement of money and resources of transnational organizations by the top leadership, and the corruption of government/regulatory officials. The causes of white collar crime are varied, and various theories have been advanced to explain their origins and even describe the motivations behind perpetrators of such forms of crime.
One theory posits that culprits are highly motivated individuals who are influenced by macroeconomic, organizational as well as social factors (Gottschalk 2011). Corporate forces may include the fear of failure, especially in a highly competitive society/market, and they can provide the motivation for the commission or omission of the crimes. Sociologists like Paul Jesilow opine that white collar crime can be committed when the markets are socially overregulated (as cited in Simpson, et al. 2014). As a result, the white collar criminal will commit a crime, not for ill-intended motives but rather satisfy the need for more profit. In other words, according to Jesilow, white collar crime is a rebellion against the legal restrictions that society has enacted to protect the business or market environment. To the criminal, these limitations imposed by the government on business are unnecessarily burdensome, and this makes the government villainous. In the end, the crime becomes an avenue for the criminal to protest restrictions to the markets. These restrictions only become burdensome to the white collar offender when they occur in a socially overregulated market.
The fraud-minimalistic perspective on white collar crime provides an economic explanation for the causes of white-collar crime. The fraud-minimalistic approach considers crime as the outcome of risky business that went bad for the individual. As a result, any instances of white collar crime can be regarded as a matter of bad calculation or unanticipated financial outcomes, and, therefore, not necessarily the result of criminal intent. A liberal interpretation of this theory holds the government accountable for white collar crime since it is evidence of the government’s failure to regulate competition in the marketplace (Gottschalk 2011). Capitalists will continue taking risky business outcomes regardless of whether the decisions will result in profit or loss. According to supporters of this theory, the government should step in to regulate capitalism to protect against risky outcomes such as white collar crime. The subsequent failure of this regulatory role thus explains the incidence of white-collar crime. An infallibility attitude is also characteristic of white collar criminals. For example, the Bernard Madoff scam of billions of dollars from investors was conducted by the offender partly based on the belief that he was untouchable and that he was a genius who has operated without being suspected by the SCC for a long time. As a result, he was convinced of his infallibility only for his billion dollar Ponzi scheme to be revealed by an investigative team led by Harry Markopolos. Bernie Madoff is just one example of white collar criminals who think they are too smart for the law.
Other behavioral theories can be used to explain the incidences of white collar crime. These approaches include self-control, different association, exchange and the social bonding theories. When understood from these perspectives, white collar crime becomes a matter of opportunity, situational factors, and integrity. Thus, if a person can commit a crime, coupled with sufficient motivation such as a relaxed regulatory climate and the person lacks integrity, chances are, that person may commit crime at his/her place of business. In recent surveys conducted by PwC and KPMG, the increasing inability by most professionals to achieve financial targets draws them to commit white collar crime. Another reason provided by PwC for the prevalence of white collar crimes is the fear of losing employment and jobs. In an internal business climate within an organization, poor internal mechanisms for control of illegal activities as well as collusion between third parties and the business owners/employers are motivators too. Collusion is usually endemic and difficult to detect in an organization, and this may lead to the increase in cases of white collar crimes. Bernie Madoff perpetrated his Ponzi scheme because he was highly connected and would use his power and influence on Wall Street to defeat investigations into his alleged acts of securities fraud and insider trading (Dimmock & Gerken 2010). Bernard Madoff was arrested in 2008 after avoiding arrest for securities fraud and running a Ponzi scheme that defrauded his investors (Dimmock & Gerken 2010). He used false trading reports. Bernie Madoff was later sentenced to 150 years in prison and required to pay a penalty of $ 170 billion regarding restitution. Auditing failures are also avenues for the commission of white collar crime. The recent emissions scandal by Volkswagen about certain vehicles running on diesel became possible after the company failed to put in place adequate internal auditing structures to check emission targets.
In a study conducted in Malaysia to determine the causes of white-collar crime among business, the fear or apprehension that one’s business competitors pay bribes to get government contracts ranked as number one (Liew 2011). Secondly, the prevalence of weak internal controls in a business or industry also contributed to the incidence of crime within business organizations. Additionally, the occurrence of white-collar crimes was the desire to earn higher bonuses. Fourthly, senior executives commit white collar crime to achieve the financial targets of the company. Crime is also prevalent in cases when it is the corporate culture to commit white collar offenses. The 2008/2009 global financial crisis was an example when weak internal controls and a corporate culture of crime took control of an industry. The banking sector was practically guilty of perpetrating acts of white collar crime on its investors. When the opportunity to commit white collar crime is presented, one is likely to commit white collar crime. Behavioral factors are least in the reasons for the occurrence of white collar crime in Malaysia’s business environment (Liew 2011). Comprehending white collar crime can be difficult. The reasons for th...