State-Corporate Crime

Your starter for 10…..

Why would war-torn Iraq give $190,000 to Toys R Us?

• Iraq had paid nearly $20 billion in reparations from Saddam’s 1990 invasion of Kuwait…

• Even after Saddam was overthrown, the payments from Iraq have continued.

• Money is paid out through the United Nations Compensation Commission (UNCC)

• Payments have gone to Kuwaitis who have lost loved ones, limbs, and property to Saddam's forces ….. And also to others….. Like….

…the BIG CORPORATIONS

• Halliburton ($18m),

• Bechtel ($7m),

• Mobil ($2.3m),

• Shell ($1.6m),

• Nestlé ($2.6m),

• Pepsi ($3.8m), • Philip Morris

($1.3m),• Sheraton ($11m),• Kentucky Fried

Chicken ($321,000) • Toys R Us

($189,449).

• So we know something about corporate crime…..• We know rather more about state crime (though this

class)• Although a certain amount of work has been done

on both corporate and state crime, until 1990 there was no work conducted which highlighted that corporations and government agencies can act together to produce serious criminality.

• Key authors of note and architects of the definitions and theoretical development of state-corporate crime as a concept are Kramer and Michalowski

Definition of State-Corporate Crime

• Understanding the crimes and social harms of the political and economic elite;

• “State-corporate crime is defined as an illegal or socially injurious social action that is the collective product of the interaction between a business corporation and a state agency engaged in a joint endeavor. These crimes involve the active participation of two or more organizations, at least one of which is private and one of which is public. They are the harmful result of an interorganizational relationship between business and government” (Kramer, 1990: 1)

• Two main types: State initiated corporate crime & State facilitated corporate crime

• “The concept is primarily concerned with two aspects of the state-corporate relation:

• First, that the intersection of corporate and state interests encourages the production of large-scale social harms.

• Second, that this intersection of interests decreases the likelihood that those harms will be criminalized and punished by the state”.

• See (Whyte, 2003: 582)

State initiated corporate crime

• Corporations, employed by the government, engage in deviant behaviour with the approval of, or through the direction of, the government.

State facilitated corporate crime

• When the government regulatory institutions fail to restrain deviant business activities because of a degree of collusion between the business and the government, or because of some shared goals which would be undermined if the government were to adhere too stringently to the regulations.

Decreasing likelihood of criminalization &(non) violations of law

• Most state corporate crimes do not actually violate criminal law

• Rather they violate regulatory law

• The importance of this is that from a legal standpoint violations of regulatory law are not necessarily seen as ‘crimes’.

Theoretical Approaches to the Study of State-Corporate Crime

• Differential association theory (Sutherland)- looks at the individual level of action

• Organisational theory (the anomie perspective)- looks at specific institutional factors

• Political economic theory (Capitalism)-looks at the broad pre-existing social

characteristics

What are the catalysts for action?

1. Motivation or performance pressure

2. Opportunity structure

3. Operationality of control

• See the developed framework of analysis

TABLE 1: An Integrated Theoretical Model of State-Corporate Crime

Catalyst for Action

Motivation Opportunity Structure

Operationality of Control

Level of Analysis

Interaction (face to face)

Socialization

Social meaning

Individual goals

Competitive individualism

Material success emphasis

Definitions of situation

Perceptions of availability & attractiveness of illegal means

Personal morality

Rationalizations & techniques of neutralisation

Separation from consequences

Obey authority

Group think

Diffusion of resp.

TABLE 1: An Integrated Theoretical Model of State-Corporate Crime

Catalyst for Action

Motivation Opportunity Structure

Operationality of Control

Level of AnalysisOrganisational (structure and process

Corporate culture

Operative goals

Subunit goals

Managerial pressure

Instrumental rationality

Internal constraints

Defective SOPs

Creation of illegal means

Role specialization

Task segregation

Normalization of deviance

Culture of compliance

Subcultures of resistance

Codes of conduct

Reward structure

Safety & quality control procedures

Communication processes

TABLE 1: An Integrated Theoretical Model of State-Corporate Crime

Catalyst for Action

Motivation Opportunity Structure

Operationality of Control

Level of Analysis

Institutional environment (history, political economy, culture)

Culture of competition

Economic pressure

Organizational goals

Performance emphasis

Availability of legal means

Obstacles & constraints

Blocked goals/strain

Availability of illegal means

Access to resources

International reactions

Political pressure

Legal sanctions

Media scrutiny

Public opinion

Social movements

• See pg 274 of the Ronald C. Kramer, Raymond J. Michalowski & David Kauzlarich article in your weekly reading folder for full theoretical framework…

• SOURCE: From Crimes of the American Nuclear State: At Home and Abroad, by David Kauzlarich and Ronald C. Kramer. Copyright 1998 by David Kauzlarich and Ronald C. Kramer.

Commonly cited case studies on state-corporate crime

• Challenger disaster (NASA & Morton Thiokol)• Imperial Food Products chicken processing

plant, North Carolina • Valujet Flight 592• But what of more recent examples? See your

reading on the UK and the Congo.• What about Iraq (again)???• The US and UK banking scandals and

government bailouts of the banks in crisis???

Case Study: War and State-Corporate Crime

• Governments rely on private sector industry to produce the weapons of war.

• Chrysler, Ford, Chevrolet all retooled during WWII to produce tanks and guns.

• Executives from military making corporations come into government fuses the interests of the state and previous corporate allegiances.

• Eg US Vice President Dick Cheney and Halliburton• Halliburton well known for ‘corporate crimes’ –

overcharging, bribery etc but we are interested in the applicability of the label of ‘state corporate crimes to the company.

Halliburton-Cheney connections• Early 1990s – Cheney: Reagan’s secretary of defence.• Cheney awards subsidiary of Halliburton contract to

survey how private corporations could provide logistical support for US military forces around the world.

• Halliburton employs Cheney in 1993 and Halliburton enjoys an increase in government contracts from 93-99.

• In 2000, Cheney resigns from Halliburton to become Bush’s running mate in the 2000 presidential elections after divesting himself of 100,000 Halliburton shares worth $5.1 million. Then sells another 600,000 ($36million) shares once he’s declared his running mate BUT keeps 430,000 stock options.

• Halliburton decreases the amount spent on government lobbying but amount of contracts increases.

After invasion of Iraq…• A no-bid contract awarded by the Army Corp of

Engineers to put out oil fires ($15.6 billion)• Other contracts awarded included cooking meals,

delivering mail, building bases, delivering supplies in competitive processes.

• All are ‘cost-plus’ contracts: Halliburton will be paid for whatever it charges for its services plus an additional ‘fee’ for profit

• Motto was aid to be ‘Don’t worry about it – it’s cost plus’• Can this be called ‘state initiated war profiteering’?• Arguably, yes because of the relationship between the

company and the vice-president

After invasion of Iraq….• Over billing and lack of accountability by government amounts to

state facilitated corporate crimes

• Best explained not by me but by Panorama:‘Iraq’s Lost Billions’ which investigates claims that as much as $23bn (£11.75bn) may have been lost, stolen or not properly accounted for in Iraq.

http://news.bbc.co.uk/player/nol/newsid_7480000/newsid_7484100/7484114.stm?bw=bb&mp=wm&news=1&bbcws=1#

• Now more than 70 whistleblower cases threaten to reveal the scandals behind billions of dollars worth of waste, theft and corruption during the Iraq war by companies with links to the White House.

Consider again…• Firstly, the idea that the intersection of corporate and

state interests encourages the production of large-scale social harms. Does this apply in the context of ‘Iraq’s Lost Millions’?

• Second, the idea that this intersection of interests decreases the likelihood that those harms will be criminalized and punished by the state. Does this idea hold applicability in the context of ‘Iraq’s Lost Millions’?

• Is Iraq’s Lost Millions an example of state initiated corporate crime or state facilitated corporate crime? Why?