corporate crime - saint leo universitywhat’s $50 million to bp? the maximum possible penalty is...

Corporate CrimeWhat’s $50 Million to BP?

What Happened?

Antiquated installation• Not up to code• Grand-fathered in• Manager complains to

London office• Safety budget cut

Photo 1: NASA. (n.d.). Refinery. [Photograph].Retrieved November 10, 2010. (http://commons.wikimedia.org/wiki/File:Refinery.jpg)

What Happened?

Antiquated installation• Not up to code• Grand-fathered in• Manager complains to

London office• Safety budget cut

Photo 2: Sullivan, Jon. (October 16, 2004). Explosions.[Photograph]. Retrieved fromhttp://commons.wikimedia.org/wiki/File:Explosions.jpg.

Explosion• Unit overflowed• Series of explosions• 15 died• Hundreds injured

What Happened?

Antiquated installation• Not up to code• Grand-fathered in• Manager complains to

London office• Safety budget cut Photo 3: Ammodramus. [June 30, 2010]. Nuckolls

County Courthouse courtroom 3. Retrieved fromhttp://commons.wikimedia.org/wiki/File:Nuckolls_County_Courthouse_courtroom_3.JPG.

Explosion• Unit overflowed• Series of explosions• 15 died• Hundreds injured

Lawsuit• Crime Victims Act of

2004• Proposed settlement:

− $50 million fine− 3-year probation

• Victims outraged

What’s $50 Million to BP?

The maximum possible penalty is $3.4 billion.

What’s $50 Million to BP?

The maximum possible penalty is $3.4 billion.

The deal asks for 1.5% of this sum, or $50 million.

What’s $50 Million to BP?

The maximum possible penalty is $3.4 billion.

The deal asks for 1.5% of this sum, or $50 million.

During the first quarter of 2008 (when the settlement was proposed), BP’s quarterly profits were $7.6 billion(or $30.4 billion for the whole year).

What’s $50 Million to BP?

The maximum possible penalty is $3.4 billion.

The deal asks for 1.5% of this sum, or $50 million.

During the first quarter of 2008 (when the settlement was proposed), BP’s quarterly profits were $7.6 billion(or $30.4 billion for the whole year).

What would be the equivalent fine for an individual?

What would be the equivalentfine for an individual?

Let’s divide these figures by 1 million and bring the case down to an individual who has an income of $30,400/year.

What would be the equivalentfine for an individual?

BP Individual

Income $30.4 billion $30,400

Maximum fine $3.4 billion $3,400

Proposed fine

(1.5% of maximum)$50 million $51

Let’s divide these figures by 1 million and bring the case down to an individual who has an income of $30,400/year.

Questions to Consider

What would you do if you were fined $51?

Questions to Consider

What would you do if you were fined $51?Do you think the penalty is enough?

Will this cause BP to change its practices?How is this possible?

Questions to Consider

What would you do if you were fined $51?Do you think the penalty is enough?

Will this cause BP to change its practices?How is this possible?

What do you think would have happened if someone had gunned down 15 people in a killing spree, instead of 15 people dying at the refinery?

Street Crime

• Committed by an individual or a group for immediate personal gain

• Direct personal interaction

• Often violent and graphic

• Triggers emotional public response

• Heavily sanctioned in court

Corporate Crime

This is a crime committed by a business in the course of normal activities.

Corporate Crime

This is a crime committed by a business in the course of normal activities.

Who is responsible?

Corporate Crime

This is a crime committed by a business in the course of normal activities.

Who is responsible?It is difficult to assign blame to one person.

Corporate Crime

This is a crime committed by a business in the course of normal activities.

Who is responsible?It is difficult to assign blame to one person.

Who benefits?

Corporate Crime

This is a crime committed by a business in the course of normal activities.

Who is responsible?It is difficult to assign blame to one person.

Who benefits?A specific person cannot be identified.

BP as a Corporate Criminal

BP as a Corporate Criminal

The company failed to update its refinery to comply with new safety regulations. At best, BP was negligent.

BP as a Corporate Criminal

The company failed to update its refinery to comply with new safety regulations. At best, BP was negligent.

Diffuse benefit: BP executives and all shareholders gained as the company’s negligence lowered production costs, but they were not necessarily the same people as the ones who implemented any of the condemnable actions.

Diffuse Responsibility

Who has ultimate responsibility?

Diffuse Responsibility

Who has ultimate responsibility?• The technician who did not report the problem?

Diffuse Responsibility

Who has ultimate responsibility?• The technician who did not report the problem?• The supervisor or manager who did not follow the new standards?

Diffuse Responsibility

Who has ultimate responsibility?• The technician who did not report the problem?• The supervisor or manager who did not follow the new standards?• The CEO who did not send a memo requiring that all plants be

compliant?

Diffuse Responsibility

Who has ultimate responsibility?• The technician who did not report the problem?• The supervisor or manager who did not follow the new standards?• The CEO who did not send a memo requiring that all plants be

compliant?• The stockholders who did not demand that their corporation

comply with the law?

Diffuse Responsibility

Who has ultimate responsibility?• The technician who did not report the problem?• The supervisor or manager who did not follow the new standards?• The CEO who did not send a memo requiring that all plants be

compliant?• The stockholders who did not demand that their corporation

comply with the law?

So no one goes to jail, but why was the fine so low?

Why was the fine so low?

Conflict Theory

Corporate criminals are wealthy, connected, and powerful.

They have resources to:• Influence the laws to keep

penalties low• Get good legal

representation• Give a favorable image in

the media

Others face harsher punishment for lack of resources.

• Lower class• Racial minorities