BASIC CONCEPT In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals that may be identified with a corporation or other business entity (see vicarious liability and corporate liability). Note that some forms of corporate corruption may not actually be criminal if they are not specifically illegal under a given system of laws. For example, some jurisdictions allow insider trading.

Corporate crime overlaps with:

white-collar crime, because the majority of individuals who may act as or represent the interests of the corporation are employees or professionals of a higher social class;

organized crime, because criminals can set up corporations either for the purposes of crime or as vehicles for laundering the proceeds of crime. Organized crime has become a branch of big business and is simply the illegal sector of capital. It has been estimated that, by the middle of the 1990s, the "gross criminal product" of organized crime made it the twentieth richest organization in the world—richer than 150 sovereign states (Castles 1998: 169). The world’s gross criminal product has been estimated at 20 percent of world trade. (de Brie 2000); and

State-corporate crime because, in many contexts, the opportunity to commit crime emerges from the relationship between the corporation and the state.

Historical background

The term white-collar crime only dates back to 1939. Professor Edwin Hardin Sutherland was the first to coin the term, and hypothesize white-collar criminals attributed different characteristics and motives than typical street criminals. Mr. Sutherland originally presented his theory in an address to the American Sociological Society in attempt to study two fields, crime and high society, which had no previous empirical correlation. He defined his idea as "crime committed by a person of respectability and high social status in the course of his occupation" (Sutherland, 1939). Many denote the invention of Sutherland's idiom to the explosion of U.S business in the years following the Great Depression. Sutherland noted that in his time, "less than two percent of the persons committed to prisons in a year belong to the upper-class." His goal was to prove a relation between money, social status, and likelihood of going to jail for a white-collar crime, compared to more visible, typical crimes. Although the percentage is a bit higher today, numbers still show a large majority of those in jail are poor, "blue-collar" criminals, despite efforts to crack down on corporate crime.

Other fiscal laws were passed in the years prior to Sutherland's studies including antitrust laws in the 1920's, and social welfare laws in the 1930's. After the Depression, people went to great lengths to rebuild their financial security, and it is

theorized this led many hard workers, who felt they were underpaid, to take advantage of their positions.

Much of Sutherland's work was to separate and define the differences in blue collar street crimes, such as arson, burglary, theft, assault, rape and vandalism, which are often blamed on psychological, associational, and structural factors. Instead, white-collar criminals are opportunists, who over time learn they can take advantage of their circumstances to accumulate financial gain. They are educated, intelligent, affluent, confident individuals, who were qualified enough to get a job which allows them the unmonitored access to often large sums of money. Many also use their intelligence to con their victims into believing and trusting in their credentials. Many do not start out as criminals, and in many cases never see themselves as such

Definitional issues

Modern criminology generally rejects a limitation of the term by reference, rather classifies the type of crime and the topic:

By the type of offense, e.g. property crime, economic crime, and other corporate crimes like environmental and health and safety law violations. Some crime is only possible because of the identity of the offender, e.g. transnational money laundering requires the participation of senior officers employed in banks. But the Federal Bureau of Investigation has adopted the narrow approach, defining white-collar crime as "those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence" (1989, 3). This approach is relatively pervasive in the United States, the record-keeping does not adequately collect data on the socioeconomic status of offenders which, in turn, makes research and policy evaluation problematic. While the true extent and cost of white-collar crime are unknown, it is estimated to cost the United States more than $300 billion annually, according to the FBI.

By the type of offender, e.g. by social class or high socioeconomic status, the occupation of positions of trust or profession, or academic qualification, researching the motivations for criminal behavior, e.g. greed or fear of loss of face if economic difficulties become obvious. Shover and Wright (2000) point to the essential neutrality of a crime as enacted in a statute. It almost inevitably describes conduct in the abstract, not by reference to the character of the persons performing it. Thus, the only way that one crime differs from another is in the backgrounds and characteristics of its perpetrators. Most if not all white-collar offenders are distinguished by lives of privilege, much of it with origins in class inequality.

By organizational culture rather than the offender or offense which overlaps with organized crime. Appelbaum and Chambliss (1997, 117) offer a twofold definition:

o Occupational crime which occurs when crimes are committed to promote personal interests, say, by altering records and overcharging, or by the cheating of clients by professionals.

o Organizational or corporate crime which occurs when corporate executives commit criminal acts to benefit their company by overcharging or price fixing, false advertising, etc.

Relationship to other types of crime

Blue-collar crime

The types of crime committed are a function of what is available to the potential offender. Thus, those employed in relatively unskilled environments and living in inner-city areas have fewer "situations" to exploit (see Clarke: 1997) than those who work in "situations" where large financial transactions occur and live in areas where there is relative prosperity. Blue-collar crime tends to be more obvious and thus attracts more active police attention (e.g. for crimes such as vandalism or shoplifting, where physical property is involved). In contrast, white-collar employees can incorporate legitimate and criminal behavior, thus making themselves less obvious when committing the crime. Therefore, blue-collar crime will more often use physical force, whereas in the corporate world, the identification of a victim is less obvious and the issue of reporting is complicated by a culture of commercial confidentiality to protect shareholder value. It is estimated that a great deal of white-collar crime is undetected or, if detected, it is not reported.

State-corporate crime

In criminology, the concept of state-corporate crime, budget-bonus crime or incorporated governance due to the P3- or Public-private partnership doctrine, refers to crimes that result from the relationship between the policies of the state and the policies and practices of commercial corporations. The term was coined by Kramer and Michalowski (1990), and redefined by Aulette and Michalowski (1993). These definitions were intended to include all "socially injurious acts" and not merely those that are defined by the local criminal jurisdiction as crime. This is not universally accepted as a valid definition so a less contentious version has been adopted here. As an academic classification, it is distinguished from:

corporate crime, which studies deviance within the context of a corporation and by a corporation;

political crime, which is crime directed at the state; and state crime or "state-organised crime", which studies crimes committed by

government organisations (Chambliss: 1989).

One of the assertions made by those involved in this work is that a focus on the actual relationship between the state and corporations dependent on the state for their profitability can expose a more complete range of criminal activity than might be provided by independent analyses of corporate or state-organised crimes.

Discussion

To be able to operate as a commercial business entity, the modern corporation requires a legal framework of regulation and oversight within which to exploit the relevant markets profitably. The infrastructure of law and commerce are provided by the government of each state in which the corporation desires to trade, and there is an inevitable linkage between the political and commercial interests. All states rely on businesses to provide an economic base consistent with each government's political policies. Without policies that are supportive of economic activity, businesses will not be profitable and so will not be able to provide the economic support that the state desires. In some cases, this symbiosis may lead to the commission of crimes. The research studies situations where, for various reasons, the oversight of corporate and/or state organisations by independent bodies has been manipulated or excluded, and either existing criminal activity is redefined as lawful, or criminal activity results but is not prosecuted.

Harper and Israel (1999) comment:

...societies create crime because they construct the rules whose transgression constitutes crime. The state is a major player in this process.

i.e. the way in which crime is defined is dynamic and reflects each society's immediate needs and changing attitudes towards the local varieties of conduct. The process depends on the values underpinning the society, the mechanisms for resolving political conflict, the control over the discourse, and the exercise of power. Snider (1999) notes that capitalist states are often reluctant to pass laws to regulate large corporations, because this might threaten profitability, and that these states often use considerable sums to attract regional or national inward investment from large corporations. They offer new investors:

preferential tax concessions not available to the ordinary citizen or local business if foreign investment is sought;

loans, guarantees and other financial support on preferential terms; directly trageted grants and other subsidies; and a purpose-built infrastructure to subsidise the set-up costs.

Once the state is committed to this offer, it can be difficult to enforce local laws against pollution, health and safety or monopolies. Green and Ward (2004) examine how the debt repayment schemes in developing countries place such a financial burden on states that they often collude with corporations offering prospects of capital growth. Such collusion frequently entails the softening of environmental and other regulations. The debt service obligation can also exacerbate political instability in countries where the legitimacy of state power is questioned. Such political volatility leads states to adopt clientelistic or patrimonialist patterns of governance, fostering organized crime, corruption, and authoritarianism. In some third world countries, this political atmosphere has encouraged repression and the use of torture. Exceptionally, genocide has occurred. But Sharkansky (1995) is careful to maintain a strict definition of "crime" for these purposes. Many individuals and organisations may disapprove of what governments do or fail to do, but such acts and omissions are not necessarily criminal.

Function of law

History shows that laws have always served as instruments of regulation. Lea (2001) argues that whereas crime used to be the exceptional event, disrupting the otherwise normal socio-economic processes, as crime becomes more frequent it lost its status as an exceptional event and became "a standard, background feature of our lives—a taken for granted element of late modernity." (Garland 1996: 446)

Enforcement policy

Corporate crime has become politically sensitive in some countries. In the United Kingdom, for example, following a number of fatal disasters on the rail network and at sea, the term is commonly used in reference to corporate manslaughter and to involve a more general discussion about the technological hazards posed by business enterprises (see Wells: 2001). Similar incidents of corporate crime, such as the 1985 Union Carbide accident in Bhopal, India (Pearce & Tombs: 1993) and the behaviour of the pharmaceutical industry (Braithwaite: 1984).

The Law Reform Commission of New South Wales offers an explanation of such criminal activities:

"Corporate crime poses a significant threat to the welfare of the community. Given the pervasive presence of corporations in a wide range of activities in our society, and the impact of their actions on a much wider group of people than are affected by individual action, the potential for both economic and physical harm caused by a corporation is great."

Similarly, Russell Mokhiber and Robert Weissman (1999) assert:

"At one level, corporations develop new technologies and economies of scale. These may serve the economic interests of mass consumers by introducing new products and more efficient methods of mass production. On another level, given the absence of political control today, corporations serve to destroy the foundations of the civic community and the lives of people who reside in them."

Criminalization

Behavior can be regulated by the civil law (including administrative law) or the criminal law. In deciding to criminalize particular behavior, the legislature is making the political judgment that this behavior is sufficiently culpable to deserve the stigma of being labelled as a crime. In law, corporations can commit the same offences as natural persons. Simpson (2002) avers that this process should be straightforward because a state should simply engage in victimology to identify which behavior causes the most loss and damage to its citizens, and then represent the majority view that justice requires the intervention of the criminal law. But

states depend on the business sector to deliver a stable economy, so the politics of regulating the individuals and corporations that supply that stability become more complex. For the views of Marxist criminology, see Snider (1993) and Snider & Pearce (1995), for Left realism, see Pearce & Tombs (1992) and Schulte-Bockholt (2001), and for Right Realism, see Reed & Yeager (1996). More specifically, the historical tradition of sovereign state control of prisons is ending through the process of privatisation. Corporate profitability in these areas therefore depends on building more prison facilities, managing their operations, and selling inmate labor. In turn, this requires a steady stream of prisoners able to work. (Kicenski: 2002)

The majority of crimes are committed because the offender has the 'right opportunity', i.e., where the offender simply sees the chance and thinks that he or she will be able to commit the crime and not be detectedFor the most part, greed, rather than conceit, is the motive, and the rationalisation for choosing to break the law usually arises out of a form of contempt for the victim, namely that he, she or it will be powerless to prevent it, and has it coming for some reason. For these purposes, the corporation is the vehicle for the crime. This may be a short-term crime, i.e., the corporation is set up as a shell to open credit trading accounts with manufacturers and wholesalers, trades for a short period of time and then disappears with the revenue and without paying for the inventory. Alternatively and most commonly, the primary purpose of the corporation is as a legitimate business, but criminal activity is secretly intermixed with legal activity to escape detection. To achieve a suitable level of secrecy, senior managers will usually be involved. The explanations and exculpations may therefore centre around rogue individuals who acted outside the organizational structures, or there may be a serious examination of the occupational and organisational structures (often hinged on the socio-economic system, gender, racism and/or age) that facilitated the criminal conduct of a corporation

Bribery and corruption are problems in the developed world, and the corruption of public officials is thought to be a large cause of crime in poor countries that have large IMF debts and IMF sovereign obligations.

Penalties

In part, this will be a function of the public perception of the degrees of societal culpability involved. Weissman and Mokhiber (1999) catalog the silence and indifference of the major media in the face of the widespread corporate corruption. Only in part is this justifiable. The news media find it difficult to respond to corporate crime both because reporting may compromise the trial by tainting the jury's perceptions, or because of the danger of defamation proceedings. Further, major corporate crime is often complicated and more difficult to explain to the lay public, as against street or property crimes, which may provide graphic visual evidence of harm to victims injured, or of property that has been damaged or vandalized in spectacular fashion. But, more significantly, the news media are owned by large corporations which may also own prisons. Thus, the political decisions on the resources to allocate to investigate and prosecute will tend to match the electorate's understanding of the dangers posed by 'crime'. In sentencing, the fact that the convicted individuals may have had an impeccable

character as presidents, CEOs, chairmen, directors and managers is likely to be a mitigating factor.

Examples of criminal behavior in most jurisdictions include: insider trading, antitrust violations, fraud (usually involving the consumers), damage to the environment, exploitation of labour in violation of labor and health and safety laws, and the failure to maintain a fiduciary responsibility towards stockholders.

Enforcement and legal or quasi-legal corrupt activities

One example, may be in the area of takeovers and top executive compensation:

It is fairly easy for a top executive to reduce the price of his/her company's stock—due to information asymmetry. The executive can accelerate accounting of expected expenses, delay accounting of expected revenue, engage in off balance sheet transactions to make the company's profitability appear temporarily poorer, or simply promote and report severely conservative (e.g. pessimistic) estimates of future earnings. Such seemingly adverse earnings news will be likely to (at least temporarily) reduce share price. (This is again due to information asymmetries since it is more common for top executives to do everything they can to window dress their company's earnings forecasts). There are typically very few legal risks to being 'too conservative' in one's accounting and earnings estimates.

A reduced share price makes a company an easier takeover target. When the company gets bought out (or taken private)—at a dramatically lower price—the takeover artist gains a windfall from the former top executive's actions to surreptitiously reduce share price. This can represent 10s of billions of dollars (questionably) transferred from previous shareholders to the takeover artist. The former top executive is then rewarded with a golden handshake for presiding over the firesale that can sometimes be in the 100s of millions of dollars for one or two years of work. (This is nevertheless an excellent bargain for the takeover artist, who will tend to benefit from developing a reputation of being very generous to parting top executives).

Similar issues occur when a publicly held asset or non-profit organization undergoes privatization. Top executives often reap tremendous monetary benefits when a government owned or non-profit entity is sold to private hands. Just as in the example above, they can facilitate this process by making the entity appear to be in financial crisis—this reduces the sale price (to the profit of the purchaser), and makes non-profits and governments more likely to sell. Ironically, it can also contribute to a public perception that private entities are more efficiently run, reinforcing the political will to sell off public assets. Again, due to asymmetric information, policy makers and the general public see a government owned firm that was a financial 'disaster'—miraculously turned around by the private sector (and typically resold) within a few years.

Enron.

Enron Corporation (former NYSE ticker symbol ENE) was an American energy company based in the Enron Complex in Downtown Houston, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000[1] staff and was one of the world's leading electricity, natural gas, communications and pulp and paper companies, with claimed revenues of nearly $101 billion in 2000.[2] Fortune named Enron "America's Most Innovative Company" for six consecutive years. At the end of 2001, it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud, known as the "Enron scandal". Enron has since become a popular symbol of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations throughout the United States and was a factor in the creation of the Sarbanes–Oxley Act of 2002. The scandal also affected the wider business world by causing the dissolution of the Arthur Andersen accounting firm

Enron filed for bankruptcy protection in the Southern District of New York in late 2001 and selected Weil, Gotshal & Manges as its bankruptcy counsel. It emerged from bankruptcy in November 2004, pursuant to a court-approved plan of reorganization, after one of the biggest and most complex bankruptcy cases in U.S. history. A new board of directors changed the name of Enron to Enron Creditors Recovery Corp., and focused on reorganizing and liquidating certain operations and assets of the pre-bankruptcy Enron. On September 7, 2006, Enron sold Prisma Energy International Inc., its last remaining business, to Ashmore Energy International Ltd. (now AEI)

Enron traces its roots to the Northern Natural Gas Company, which was formed in 1932, in Omaha, Nebraska. It was reorganized in 1979 as the leading subsidiary of a holding company, InterNorth. In 1985, it bought the smaller and less diversified Houston Natural Gas.

The separate company initially named itself "HNG/InterNorth Inc.", even though InterNorth was the nominal survivor. It built a large and lavish headquarters complex of pink marble in Omaha (dubbed locally as the "Pink Palace"), that was later sold to Physicians Mutual. However, the departure of ex-InterNorth and first CEO of Enron Corp Samuel Segnar six months after the merger allowed former HNG CEO Kenneth Lay to become the next CEO of the newly merged company. Lay soon moved Enron's headquarters to Houston after swearing to keep it in Omaha and began to thoroughly re-brand the business. Lay and his secretary, Nancy McNeil, originally selected the name "Enteron" (possibly spelled in camelcase as "EnterOn"), but, when it was pointed out that the term approximated a Greek word referring to the intestines, it was quickly shortened to "Enron". The final name was decided upon only after business cards, stationery, and other items had been printed reading Enteron. Enron's "crooked E" logo was designed in the mid-1990s by the late American graphic designer Paul Rand.

Enron was originally involved in transmitting and distributing electricity and natural gas throughout the United States. The company developed, built, and operated power plants and pipelines while dealing with rules of law and other infrastructures worldwide. Enron owned a large network of natural gas pipelines, which stretched ocean to ocean and border to border including Northern Natural Gas, Florida Gas Transmission, Transwestern Pipeline company and a partnership in Northern Border Pipeline from Canada. In 1998, Enron moved into the water sector, creating the Azurix Corporation, which it part-floated on the New York Stock Exchange in June 1999. Azurix failed to break into the water utility market, and one of its major concessions, in Buenos Aires, was a large-scale money-loser. After the move to Houston, many analysts criticized the Enron management as swimming in debt. The Enron management pursued aggressive retribution against its critics, setting the pattern for dealing with accountants, lawyers, and the financial media.

Enron grew wealthy due largely to marketing, promoting power, and its high stock price. Enron was named "America's Most Innovative Company" by "Fortune magazine" for six consecutive years, from 1996 to 2001. It was on the Fortune's "100 Best Companies to Work for in America" list in 2000, and had offices that were stunning in their opulence. Enron was hailed by many, including labor and the workforce, as an overall great company, praised for its large long-term pensions, benefits for its workers and extremely effective management until its exposure in corporate fraud. The first analyst to publicly disclose Enron's financial flaws was Daniel Scotto, who in August 2001 issued a report entitled "All Stressed up and no place to go", which encouraged investors to sell Enron stocks and bonds at any and all costs.

As was later discovered, many of Enron's recorded assets and profits were inflated or even wholly fraudulent and nonexistent. Debts and losses were put into entities formed "offshore" that were not included in the firm's financial statements, and other sophisticated and arcane financial transactions between Enron and related companies were used to take unprofitable entities off the company's books.

Its most valuable asset and the largest source of honest income, the 1930s-era Northern Natural Gas, was eventually purchased back by a group of Omaha investors, who moved its headquarters back to Omaha, and is now a unit of Warren Buffett's MidAmerican Energy Holdings Corp. NNG was put up as collateral for a $2.5 billion capital infusion by Dynegy Corporation when Dynegy was planning to buy Enron. When Dynegy looked closely at Enron's books, they backed out of the deal and fired their CEO, Chuck Watson. The new chairman and head CEO, the late Daniel Dienstbier, had been president of NNG and an Enron executive at one time and an acquaintance of Warren Buffett. NNG continues to be profitable today.

Accounting scandal of 2001

After a series of revelations involving irregular accounting procedures bordering on fraud perpetrated throughout the 1990s involving Enron and its accounting firm Arthur Andersen, Enron stood on the verge of undergoing the largest bankruptcy in history by mid-November 2001 (the largest Chapter 11 bankruptcy until that of Worldcom in 2002, now surpassed by the collapse of Lehman Brothers). A white

knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable.

As the scandal unraveled, Enron shares dropped from over US$90.00 to just pennies. Enron had been considered a blue chip stock, so this was an unprecedented and disastrous event in the financial world. Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled). The result was that many of Enron's debts and the losses that it suffered were not reported in its financial statements.

Enron filed for bankruptcy on December 2, 2001. In addition, the scandal caused the dissolution of Arthur Andersen, which at the time was one of the world's top accounting firms. The firm was found guilty of obstruction of justice in 2002 for destroying documents related to the Enron audit and was forced to stop auditing public companies. Although the conviction was thrown out in 2005 by the Supreme Court, the damage to the Andersen name has prevented it from returning as a viable business.

Enron also withdrew a naming rights deal with the Houston Astros Major League Baseball club to have its name associated with their new stadium, which was formerly known as Enron Field

Accounting practices

Enron had created offshore entities, units which may be used for planning and avoidance of taxes, raising the profitability of a business. This provided ownership and management with full freedom of currency movement and the anonymity that allowed the company to hide losses. These entities made Enron look more profitable than it actually was, and created a dangerous spiral, in which each quarter, corporate officers would have to perform more and more contorted financial deception to create the illusion of billions in profits while the company was actually losing money This practice drove up their stock price to new levels, at which point the executives began to work on insider information and trade millions of dollars worth of Enron stock. The executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company; however, the investors knew nothing of this. Chief Financial Officer Andrew Fastow led the team which created the off-books companies, and manipulated the deals to provide himself, his family, and his friends with hundreds of millions of dollars in guaranteed revenue, at the expense of the corporation for which he worked and its stockholders.

In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually every energy company in the United States. Enron president and chief operating officer Jeffrey Skilling began advocating a novel idea: the company didn't really need any "assets." By pushing the company's aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, trading over $27 billion per quarter. The firm's figures, however, had to be accepted at face value. Under Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal were tabulated as if

real today. Thus, Enron could record gains from what over time might turn out to be losses, as the company's fiscal health became secondary to manipulating its stock price on Wall Street during the Tech boom. But when a company's success is measured by agreeable financial statements emerging from a black box, a term Skilling himself admitted, actual balance sheets prove inconvenient. Indeed, Enron's unscrupulous actions were often gambles to keep the deception going and so push up the stock price, which was posted daily in the company elevator. An advancing number meant a continued infusion of investor capital on which debt-ridden Enron in large part subsisted. Its fall would collapse the house of cards. Under pressure to maintain the illusion, Skilling verbally attacked Wall Street Analyst Richard Grubman, who questioned Enron's unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied "Well, thank you very much, we appreciate that . . . asshole." Though the comment was met with dismay and astonishment by press and public, it became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling's lack of tact. When asked during his trial, Skilling wholeheartedly admitted that industrial dominance and abuse was a global problem: "Oh yes, yes sure, it is."

Peak and decline of stock price

In August 2000, Enron's stock price hit its highest value of $90 At this point Enron executives, who possessed the inside information on the hidden losses, began to sell their stock. At the same time, the general public and Enron's investors were told to buy the stock. Executives told the investors that the stock would continue to climb until it reached possibly the $130 to $140 range, while secretly unloading their shares.

As executives sold their shares, the price began to drop. Investors were told to continue buying stock or hold steady if they already owned Enron because the stock price would rebound in the near future. Kenneth Lay's strategy for responding to Enron's continuing problems was in his demeanor. As he did many times, Lay would issue a statement or make an appearance to calm investors and assure them that Enron was headed in the right direction.

By August 15, 2001, Enron's stock price had fallen to $42. Many of the investors still trusted Lay and believed that Enron would rule the market. They continued to buy or hold their stock and lost more money every day. As October closed, the stock had fallen to $15. Many saw this as a great opportunity to buy Enron stock because of what Lay had been telling them in the media. Their trust and optimism proved to be greatly misplaced.

Lay has been accused of selling over $70 million worth of stock at this time, which he used to repay cash advances on lines of credit. He sold another $20 million worth of stock in the open market. Also, Lay's wife, Linda, has been accused of selling 500,000 shares of Enron stock totaling $1.2 million on November 28, 2001. The money earned from this sale did not go to the family but rather to charitable organizations, which had already received pledges of contributions from the

foundation. Records show that Mrs. Lay placed the sale order sometime between 10:00 and 10:20 AM. News of Enron's problems, including the millions of dollars in losses they had been hiding went public about 10:30 that morning, and the stock price soon fell to below one dollar. Former Enron executive Paula Rieker has been charged with criminal insider trading. Rieker obtained 18,380 Enron shares for $15.51 a share. She sold that stock for $49.77 a share in July 2001, a week before the public was told what she already knew about the $102 million loss.

Post-bankruptcy

Enron initially planned to retain its three domestic pipeline companies as well as most of its overseas assets. However, before emerging from bankruptcy, Enron spun off its domestic pipeline companies as CrossCountry Energy.

Enron sold its last business, Prisma Energy, in 2006, leaving it as an asset-less shell. In early 2007, it changed its name to Enron Creditors Recovery Corporation. Its goal is to pay off the old Enron's remaining creditors and wind up Enron's affairs.

Shortly after emerging from bankruptcy in November 2004, Enron's new board of directors sued 11 financial institutions for helping Lay, Fastow, Skilling and others hide Enron's true financial condition. The proceedings were dubbed the "megaclaims litigation." Among the defendants were Royal Bank of Scotland, Deutsche Bank and Citigroup. As of 2008, Enron has settled with all of the institutions, ending with Citigroup. Enron was able to obtain nearly $20 billion dollars to distribute to its creditors as a result of the megaclaims litigation. As of December 2009, some claim and process payments are still being distributed.

California's deregulation and subsequent energy crisis

In October 2000, Daniel Scotto, the top ranked utility analyst on Wall Street, suspended his ratings on all energy companies conducting business in California because of the possibility that the companies would not receive full and adequate compensation for the deferred energy accounts used as the cornerstone for the California Deregulation Plan enacted in the late 1990s. Five months later, Pacific Gas & Electric (PG&E) was forced into bankruptcy. Senator Phil Gramm, the second largest recipient of campaign contributions from Enron, succeeded in legislating California's energy commodity trading deregulation. Despite warnings from prominent consumer groups which stated that this law would give energy traders too much influence over energy commodity prices, the legislation was passed in December 2000.

As Public Citizen reported, "Because of Enron’s new, unregulated power auction, the company’s 'Wholesale Services' revenues quadrupled—from $12 billion in the first quarter of 2000 to $48.4 billion in the first quarter of 2001.

Before passage of the deregulation law, there had been only one Stage 3 rolling blackout declared. Following passage, California had a total of 38 blackouts defined as Stage 3 rolling blackouts, until federal regulators intervened in June 2001. These blackouts occurred mainly as a result of a poorly designed market system that was

manipulated by traders and marketers. Enron traders were revealed as intentionally encouraging the removal of power from the market during California's energy crisis by encouraging suppliers to shut down plants to perform unnecessary maintenance, as documented in recordings made at the time. These acts contributed to the need for rolling blackouts, which adversely affected many businesses dependent upon a reliable supply of electricity, and inconvenienced a large number of retail consumers. This scattered supply raised the price exponentially, and Enron traders were thus able to sell power at premium prices, sometimes up to a factor of 20x its normal peak value.

Within the field of criminology, white-collar crime has been defined by Edwin Sutherland as "a crime committed by a person of respectability and high social status in the course of his occupation" (1939). Sutherland was a proponent of Symbolic Interactionism, and believed that criminal behavior was learned from interpersonal interaction with others. White-collar crime, therefore, overlaps with corporate crime because the opportunity for fraud, bribery, insider trading, embezzlement, computer crime, copyright infringement, money laundering, identity theft, and forgery is more available to white-collar employees.

CONCLUSION

The International Conference of Labour Statisticians (ILO) defines the unemployed as

persons above a specified age who, during the reference period, were without work, were

currently available for work, and were seeking work. The process

of industrialisation encouraged working-class incorporation into society with greater social

mobility being achieved during the twentieth century. But the routine of policing tends to

focus on the public places where the economically marginal live out more of their lives, so

regulation falls on those who are not integrated into the mainstream institutions of economic

and political life. A perennial source of conflict has therefore involved working-class youth

but, as long-term structural unemployment emerged, an underclass was created. Ralf

Dahrendorf argues that the majority class did not need the unemployed to maintain and

even increase its standard of living, and so the condition of the underclass became hopeless.

Box (1987) sums up the research into crime and unemployment at

The relationship between overall unemployment and crime is inconsistent. On

balance the weight of existing research supports there being a weak but none-the-

less significant causal relationship. However, properly targeted research on young

males, particularly those from disadvantaged ethnic groups, which considers both the

meaning and duration of unemployment, has yet to be done. The significance of

unemployment will vary depending on its duration, social assessments of blame,

previous experience of steady employment, perception of future prospecAts,

comparison with other groups, etc. Hence, there is likely to be a causal relationship

between relative deprivation and crime, particularly where unemployment is

perceived as unjust and hopeless by comparison with the lot of other groups.

Thornberry and Christenson (1984) analysed data from a longitudinal cohort study

ofdelinquency in Philadelphia and found (at p405):

Unemployment exerts a rather immediate effect on criminal involvement, while

criminal involvement exerts a more long-range effect on unemployment. What this

and other empiricalresearch demonstrates is that crime-rates, especially for property

offences, were higher during periods of unemployment than of employment. This

suggests that holding constant other variables, the same youths commit more crimes

while unemployed. This is not surprising since unemployment provides an incentive

to commit offences and erodes the social controls which would otherwise encourage

conformity. But crime also rose during the so-called period of affluence, prompting

the Right Realism of James Q. Wilson and his associates in the United States who

argued that the criminal justice system was failing, and the Left Realism attributed to

Jock Young, which argued for situational changes to reduce the availability of criminal

opportunities in the environment. More generally, the growth

ofanomie (see Durkheim and, more recently, the Strain Theory proposed by Merton),

predicted a strong correlation between unemployment and property crime. But

Cantor and Land (1985) found a negative association for unemployment and property

crime in the United States. They argued that unemployment decreases the

opportunity for property crime since it reflects a general slowdown in production and

consumption activities and it increases the ability to guard property due to a greater

concentration of time at home.

Conservatism alleges the failure of state agencies charged with the task

of socialisation to instil self-discipline and moral values resulting in permissiveness,

a lack of conformity, and liberalisation. The "evidence" that there are new affluent

criminals allows populist politicians to deny any link between inner-city deprivation

and crime. The Left avoids the issue of morality and crime which denies earlier

work in Marxist criminology linking crime and the culture of egoism stimulated by

economic advance under capitalism as a more amorally materialistic culture

emerges. As Durkheim asserted, moral education cannot be effective in an

economically unjust society. Thus, additional research is required, using a more

complex model of crime and control to include variables such as opportunities or

incentives relative to a country's standard of living, potential punishment, chance

of being caught, law enforcement efforts and expenditures on theft and property

crime relative to other crimes, size of the country's criminal population, education

levels, and other socio-economic factors. A further factor currently being

researched is the role of the media in the social construction of "hot spots" or

dangerous places within a city. Crime is a substantial element in media news

reporting. Media research is now determining whether the coverage of crime is

spatially representative of where crime occurs, or disproportionately presents

crime as occurring in certain areas of a city, thereby skewing public perceptions

and the political response

BIBLIOGRAPHY

Arcot, Sridhar, Bruno, Valentina and Antoine Faure-Grimaud, "Corporate Governance in

the U.K.: is the comply-or-explain working?" (December 2005). FMG CG Working Paper

001.

Becht, Marco, Patrick Bolton, Ailsa Röell, "Corporate Governance and Control" (October

2002; updated August 2004). ECGI - Finance Working Paper No. 02/2002.

Brickley, James A., William S. Klug and Jerold L. Zimmerman, Managerial Economics &

Organizational Architecture, ISBN

Feltus, Christophe; Petit, Michael; Vernadat, François. (2009). Refining the Notion of

Responsibility in Enterprise Engineering to Support Corporate Governance of IT ,

Proceedings of the 13th IFAC Symposium on Information Control Problems in

Manufacturing (INCOM'09), Moscow, Russia

Cadbury, Sir Adrian, "The Code of Best Practice", Report of the Committee on the

Financial Aspects of Corporate Governance, Gee and Co Ltd, 1992. Available online

from [10]

Cadbury, Sir Adrian, "Corporate Governance: Brussels", Instituut voor Bestuurders,

Brussels, 1996.

Claessens, Stijn, Djankov, Simeon & Lang, Larry H.P. (2000) The Separation of Ownership

and Control in East Asian Corporations, Journal of Financial Economics, 58: 81-112

Clarke, Thomas (ed.) (2004) "Theories of Corporate Governance: The Philosophical

Foundations of Corporate Governance," London and New York: Routledge, ISBN 0-415-

32308-8

Clarke, Thomas (ed.) (2004) "Critical Perspectives on Business and Management: 5

Volume Series on Corporate Governance - Genesis, Anglo-American, European, Asian and

Contemporary Corporate Governance" London and New York: Routledge, ISBN 0-415-

32910-8

Clarke, Thomas (2007) "International Corporate Governance " London and New York:

Routledge, ISBN 0-415-32309-6

Clarke, Thomas & Chanlat, Jean-Francois (eds.) (2009) "European Corporate Governance

" London and New York: Routledge, ISBN 9780415405331

Clarke, Thomas & dela Rama, Marie (eds.) (2006) "Corporate Governance and

Globalization (3 Volume Series)" London and Thousand Oaks, CA: SAGE, ISBN 978-1-

4129-2899-1

Clarke, Thomas & dela Rama, Marie (eds.) (2008) "Fundamentals of Corporate

Governance (4 Volume Series)" London and Thousand Oaks, CA: SAGE, ISBN 978-1-4129-

3589-0

Colley, J., Doyle, J., Logan, G., Stettinius, W., What is Corporate Governance ? (McGraw-

Hill, December 2004) ISBN

Crawford, C. J. (2007). Compliance & conviction: the evolution of enlightened corporate

governance. Santa Clara, Calif: XCEO. ISBN 0-976-90190-9 9780976901914

Denis, D.K. and J.J. McConnell (2003), International Corporate Governance. Journal of

Financial and Quantitative Analysis, 38 (1): 1-36.

Easterbrook, Frank H. and Daniel R. Fischel, The Economic Structure of Corporate

Law, ISBN

Erturk, Ismail, Froud, Julie, Johal, Sukhdev and Williams, Karel (2004) Corporate

Governance and Disappointment Review of International Political Economy, 11 (4): 677-

713.

Garrett, Allison, "Themes and Variations: The Convergence of Corporate Governance

Practices in Major World Markets," 32 Denv. J. Int’l L. & Pol’y).

Holton, Glyn A (2006). Investor Suffrage Movement, Financial Analysits Journal, 62 (6),

15–20.

Hovey, M. and T. Naughton (2007), A Survey of Enterprise Reforms in China: The Way

Forward. Economic Systems, 31 (2): 138-156.

La Porta, R., F. Lopez-De-Silanes, and A. Shleifer (1999), Corporate Ownership around the

World. The Journal of Finance, 54 (2): 471-517.

Lekatis, George IT and Information Security after Sarbanes-Oxley [11]

Monks, Robert A.G. and Minow, Nell, Corporate Governance (Blackwell 2004) ISBN

Monks, Robert A.G. and Minow, Nell, Power and Accountability (HarperBusiness 1991),

full text available online

Moebert, Jochen and Tydecks, Patrick (2007). Power and Ownership Structures among

German Companies. A Network Analysis of Financial Linkages [12]

Murray, Alan Revolt in the Boardroom (HarperBusiness 2007) (ISBN 0-06-088247-

6) Remainder

New York Society of Securities Analysts, 2003, Corporate Governance Handbook,

OECD (1999, 2004) Principles of Corporate Governance Paris: OECD)

Özekmekçi, Abdullah, Mert (2004) "The Correlation between Corporate Governance and

Public Relations", Istanbul Bilgi University.

Sapovadia, Vrajlal K., "Critical Analysis of Accounting Standards Vis-À-Vis Corporate

Governance Practice in India" (January 2007). Available at

SSRN: http://ssrn.com/abstract=712461

Shleifer, A. and R.W. Vishny (1997), A Survey of Corporate Governance. Journal of

Finance, 52 (2): 737-783.

Skau, H.O (1992), A Study in Corporate Governance: Strategic and Tactic Regulation

(200 p)

World Business Council for Sustainable Development WBCSD (2004) Issue Management

Tool: Strategic challenges for business in the use of corporate responsibility codes,

standards, and frameworks

Low, Albert, 2008. "Conflict and Creativity at Work: Human Roots of Corporate Life,

Sussex Academic Press. ISBN 978-1-84519-272-3

Sun, William (2009), How to Govern Corporations So They Serve the Public Good: A

Theory of Corporate Governance Emergence, New York: Edwin Mellen, ISBN:

9780773438637.