UNDERSTANDING WHITE-COLLAR CRIME
Under the weight of liberalist critiques, the state's role in the economic sphere is severely restricted.
With the exception of a diminishing sector of public utilities, the modern state lacks its own means of
production. It is therefore dependent upon the private sector to generate the wealth necessary to
provide public services, including education, social security, health and defence (Habermas, 1976;
Offe, 1984, 1985). In order to maintain and expand these services, and thereby sustain its legitimacy,
institutions of the state are obliged to enact and enforce policies which serve the long-term smooth
accumulation of economic surpluses by private capital. Such policies include the use of legislation to
regulate transactions within the private sector, including the enactment of legislation that defines and
outlaws particular kinds of activity, such as fraud and moneylaundering which have been ascribed the
label of `white-collar crime'.
Attempts to regulate economic activity may be resisted as those who perceive their `private interests'
or `freedom' to be detrimentally affected by such regulations. They strive to apply pressures,
individually and collectively, upon the state to limit and dilute restrictions upon their activity . When
attacking regulations, the business sector routinely ridicules and challenges the laws on the grounds
that they stifle economic activity and infringe their right to privacy, etc. Subsequent de-regulation
may please large sections of the business sector but, in addition to risking loss of mass support for
liberalization, its longer term consequence may be the undermining of confidence when the paralysing
effect of uncertainty outweighs the costs of compliance. Without `hierarchy', the tendency of free
`markets' is to degenerate into chaos as the absence of trust is not made good by the rule of law.
In order to secure even minimal compliance and enforcement with some laws - for example against
corporate crime, fraud, institutionalised lawbreaking - vigilance is required inside private
organisations. The separation of public and private spheres in modern societies means that, to a
greater or lesser extent, the state depends upon the business sector to monitor and report compliance.
The form of this regulation of economic activity is a product of recurrent conflicts which involve a
process of negotiation and bargaining between representatives of the public and private sectors.
Exemplifying this process of negotiation, social policy on white-collar crime, including fraud and
insider dealing, is constantly in the making: a relaxation of legislation that inadvertently undermines
business confidence and/or mass support is followed by pressures for increased regulation.
The business world may contest and resent the direct encroachment of the state into what they might
consider to be private affairs. Yet, in addition to demands for `stability' and `predictability',
ideologies of justice, fairness and accountability and pressure group activity demand that the state
place restrictions upon the powerful and, to some extent, holds them to account. In the context of the
UK state, responsibility for working out and applying the detail of regulations is often delegated to
occupational groups, such as accountants. The members of such groups are recognised by the state
(e.g. through the receipt of a Royal Charter) on claims of possessing a level of expertise and a
standard of conduct sufficient to assume responsibility for the regulation of a particular field of
activity. In effect, a sponsoring Ministry (e.g. the Department of Trade and Industry, in the case of
accountancy bodies) keeps a watching brief on the activities of the accountancy bodies and, in
principle, ensures that effective mechanisms exist and are used to root out and punish misconduct. In
relation to fraud, the members of accountancy bodies claim an ability to identify suspicious
transactions. Suspicious transactions leading to money laundering, the Institute of Chartered
Accountants in England & Wales (ICAEW) advises, can be spotted by being aware that "companies
or trusts have been formed with no apparent commercial or other purpose; the use of financial legal or
other advisers to provide their names as directors or trustee; using the adviser as a financial
intermediary, where this does not seem appropriate, requests by clients for investment management
services (either foreign currency or securities) where the source of funds in unclear or not consistent
with the client's apparent standing; formation of subsidiaries or branches in such countries where
these do not appear necessary to the business; unusual transactions with companies registered
overseas ..." (ICAEW, 1994; also see Auditing Practices Board, 1995). By claiming expertise in such
fields, accountants secure niches and monopolies for themselves as they seek to act as agents of
surveillance for the state.
Despite numerous legislative and scholarly attempts to define it, `white-collar crime' remains a
contested concept (Sutherland, 1940, 1945; Geis et al, 1995). It is often invoked to cover inter alia
abuse of position, power, drug trafficking, insider trading, fraud, poverty wages, violation of laws,
theft, exploitation and concealment, resulting in financial, physical, psychological damage to some
individuals and a disruption to the economic, political and social institutions and values (Meier and
Short Jr, 1995; Tunnell, 1993). Any more precise definition of `white-collar crime' has proved elusive
as new revelations and challenges have stretched the limits imposed by the established theoretical
frameworks. As Box (1981 : 236-7) has observed,"theorists may be capable of drawing sharp
conceptual lines between mafia-like organized crime, corporation crime and political corruption,
but in real life these phenomena are so intertwined that it is not easy to see where the "bad guys"
end and the "good guys" begin".
Since the late 1970s, a focus within criminology upon individual wrongdoers has been increasingly
complimented by an appreciation of the social and organizational contexts of white-collar crime,
including the role of business organizations and professionals in criminal and antisocial actions. New
vocabularies and categories have been introduced. For example, in the aftermath of the 1973-74
Watergate inquiry, attention focused on the institutional entities responsible for lawbreaking and the
term `moneylaundering' came into common usage (Gold and Levi. 1994). As finance capitalism has
expanded, opportunities have increased for white-collar crimes such as moneylaundering (Calvita and
Pontell, 1990) which were vividly exposed by the failure of the Bank of Credit and Commerce
International (BCCI) . As the US Senate's report on the closure of BCCI commented, "BCCI's
criminality included fraud .... involving billions of dollars; money laundering in Europe, Africa, Asia
and the Americas; .... Among BCCI's principal mechanisms for committing crimes were its use of
shell corporations and bank confidentiality and secrecy havens; layering of corporate structures; its
use of front-men and nominees, guarantees and buy-back arrangements; back-to-back financial
documentation among BCCI controlled companies; kick-backs and bribes, the intimidation of
witnesses, and the retention of well-placed insiders to discourage government action" (Kerry and
Brown, 1992, page 1). Such activities thrive on secrecy and the services of knowledgeable elites
(Gold and Levi, 1994) and, as our case study shows, cannot easily be carried out without the (direct
or indirect) involvement of accountants.