The Routledge Handbook of White-Collar and Corporate Crime in Europe

Judith van Erp, Wim Huisman, Gudrun Vande Walle

• Publisher: Routledge
• Year: 2015
• eBook ISBN: 9781317936701
• Edition: 1
• Topic: Social Sciences
• Subtopic: Criminology
• Index: Social Sciences

The study of white-collar crime remains a central concern for criminologists around the world and research concentrates on its nature, prevalence, causes and responses. However, most books on white-collar crime tend to focus on Anglo-American examples, which is surprising given the amount of rich data and research taking place in mainland Europe. This new handbook seeks to reset the balance and, for the first time, presents an overview of state-of-the-art research on white-collar crime in Europe.Adding to the existing Anglo-American body of knowledge, the Handbook will discuss specific European topics and typical European features of white-collar crime. The Routledge Handbook of White-Collar and Corporate Crime in Europe consists of more than thirty chapters on topics ranging from the Icelandic Banking Crisis, to the origins of the study of white collar crime, to contemporary topics, such as white-collar crime in countries post-transition from communist regimes; the illegal e-waste trade and white-collar crime in professional football. Furthermore, the book contains extensive case study analyses of landmark European cases of white-collar crime.

The editors have gathered together the leading voices in the field and a final section offers commentaries on white-collar crime in Europe from eminent criminologists David Friedrichs and Hazel Croall. This Handbook will thus serve as a work of reference for all scholars and students engaged in the study of corporate and white-collar crime and will also set out directions for new research in the future.

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Criminology and white-collar crime in Europe

Wim Huisman, Judith van Erp, Gudrun Vande Walle and Joep Beckers

Introduction

Although most hand- and textbooks on white-collar crime and corporate crime begin with the statement that the topic is neglected in criminology, white-collar crime research is a well-established discipline in criminology. That is: in Anglo-American criminology. American, British and Australian white-collar crime research prevails in the criminological journals and major publishers. This might lead to the impression that the topic is understudied in other parts of the world, such as continental Europe. This is far from true. The European Working Group on Organizational Crime of the European Society of Criminology has brought together more than 60 scholars from across Europe, all studying white-collar crime. Most publish, however, in their own language. This means that there is a substantial body of knowledge on the nature, prevalence, causes and responses to white-collar crime in many European countries, but it is hardly accessible to the international academic community. Because of this, many European criminologists use American textbooks in academic courses of white-collar crime. As a result, German, Italian or Hungarian students know all about the Saving and Loans debacle in the US, the accounting fraud at ENRON, the Ponzi scheme of Bernhard Madoff and the operations of US regulatory agencies such as the Securities and Exchange Commission. But they will hardly know about the corruption at Siemens, the accounting fraud at Parmalat and the securities fraud at Postabank, nor will they know about the operations of the regulatory agencies in their home countries, let alone in other European countries.

In some European countries (e.g. the Netherlands, Belgium, the Scandinavian countries and of course the United Kingdom) the study of white-collar crime is well established. In other countries (such as Hungary and Croatia) criminological as well as governmental interest in white-collar crime is fairly new. Some countries have statistics that show that white-collar crime is widespread. Most countries have witnessed serious cases of white-collar crime, which have raised a lot of media coverage and political concern. Only when the offenders were top politicians or (executives of) multinational corporations are these cases known to a wider, international audience. In many European countries, tackling white-collar or financial-economic crime is a priority of law enforcement agencies, as it is at the level of the European Union and the Council of Europe.

This Handbook of White-Collar and Corporate Crime in Europe aims to provide an overview of academic knowledge of white-collar and corporate crime in Europe and aims to contribute to a broader and more balanced account of white-collar crime. ¹ As such, the book also aims to add to the existing body of work on white-collar and corporate crime.

Being the first handbook on the topic, this book takes a traditional and, for criminologists, familiar approach. Common aspects of the criminological study of crime are used to explore this fairly new topic of study: white-collar and corporate crime in Europe. The first part of this handbook focuses on the issues of defining white-collar and corporate crime and measuring the prevalence of white-collar crime. The authors in these chapters look at the way white-collar crime is conceptionalized and defined in the various European countries. As the term ‘white-collar crime’ was coined by the American criminologist Sutherland in his presidential address to the American Sociological Association in 1939, most Europeans take his work as the starting point of criminological interest in white-collar crime. However, both the work of Sutherland and the study of white-collar crime have earlier roots in European criminology and sociology. Also, the many differences in legal and administrative systems between European countries generate various problems in terms of measurement and comparison. An inventory of the various definitions, registration systems, and measurement problems in various countries, is a necessary first step for comparative research in the future.

The second and third parts of this handbook address historical and contemporary manifestations of corporate and white-collar crime. By doing so, the various chapters in this handbook will also touch upon typical European features of white-collar crime. Among these are: fraud with funds of the European Union, EU policies regarding economic crime, and white-collar crime in countries of transition from communist to capitalist economies, as well as European case studies. This raises the question of what is ‘European’ about white-collar crime in European countries. And therefore, is there a (need for a) ‘European’ criminology of white-collar crime?

The fourth part of the handbook discusses a variety of developments in the regulation, governance and enforcement of white-collar and corporate crime in Europe. Regulatory and law enforcement responses might be as plural as the number of countries in Europe, as this involves many nation states. A large proportion of these states however are members of the European Union. The European Union sets standards for legislation and law enforcement in the member states and has law enforcement agencies on its own. This multi-level framework of regulation and enforcement invokes many questions about combatting white-collar crime in Europe.

The handbook ends with the view of two well-experienced Anglo-American criminologists on this first overview of white-collar crime scholarship in Europe. This introductory chapter will offer a first exploration of the topics covered in this handbook.

White-collar crime in Europe

Historical accounts of ‘white-collar crime’

The rich history of Europe holds many accounts of white-collar crime. One must be aware, however, of presenting anachronisms in discussing historical accounts of crime – for a start using a term that refers to the early-twentieth-century dress of the corporate (male) elite to define situations that occurred in times when this specific context did not yet exist. Yet a historical account might offer interesting insights and analogies, as is shown for example by Hanawalt’s use of the concept of ‘fur-collar crime’ to label medieval nobles (robber barons) who used their castles to extort money from peasants (Hanawalt 1975).

Also, as the historical accounts below illustrate, regulation of trade and of occupations did exist in most eras and places of European history. As with modern-day law making, these regulations were responses to unfair or harmful trading practices. And as with modern-day law breaking, once put in place, these laws could be broken. The accounts can therefore fulfil Sutherland’s definition of ‘crime’, which he defined as violations of ‘the regular penal code or special trade regulations’ and ‘the laws designed to regulate […] occupational activities’ (Geis 2007).

Economic crimes in ancient times

As Friedrichs observes in his award-winning textbook on white-collar crime (Friedrichs 2010: 3), records from ancient times include cases of fraud and sanctions against fraud carried out in the context of various types of commercial transactions. According to Geis, ‘the records show that there has been a long-standing ancient tradition, passed on to the Judeo-Christian world, that associated commerce with fraud and avarice and that held such endeavors were a potential source of moral corruption and decay’ (Geis 2007: 51). In publications on white-collar crime, not seldom examples of fraudulent behavior in business transaction from as long ago as ancient Greece are given to illustrate that white-collar crime is as old as mankind, or at least as old as trade (Clarke 1990: 13; Croall 2001; Johnstone 1999: 107).

For early civilizations access to food, essential for human survival, was not certain and therefore a concern for rulers responsible for safeguarding production and regulating trade. Evidence has been found of counterfeit Roman seals on amphorae containing fraudulent olive oil and wine (Spink and Moyer 2011). Contemporary legal systems of most European countries are still based on the laws that evolved in the Roman Empire and that were codified in AD 529 by emperor Justinian in the Codex Justinianus. Being basically a system of civil law, it did contain trade regulations and provisions for unfair trading practices.

Economic crime in the Middle Ages

After the fall of the Western Roman empire, Roman law continued to be used and further evaluated throughout the Middle Ages in the larger part of Europe. The modern-day concept of fraud developed from Roman law.

With the growth of urban economies in late medieval Europe, the power balance gradually shifted away from the aristocracy to the cities. In these cities, crucial trades for the local economy organized themselves into associations, the so-called ‘guilds’. While the practices of guilds to limit competition closely resemble to what nowadays would be anti-trust offences, Ponsaers in this handbook portrays guilds as predecessors of contemporary regulatory authorities, regulating and monitoring production and trade. The guilds became more and more autonomous in controlling industrial regulation. This regulation was aimed at standardizing the quality of production and the goods produced.

Overseas trading companies

Trading companies set up by the Dutch and the British are claimed to be the first modern corporations: funded by private capital, in tradable shares, aimed at profit. The two most prominent examples are the British East India Company (1600) and the Dutch Vereenigde Oost-Indische Compagnie (VOC, 1602). Both companies started as speculative companies importing spices from South-East Asia and gradually obtained tremendous wealth and power. In the Netherlands, the VOC is synonymous with both the ‘Dutch Golden Age’, as well as with widespread fraud and corruption. In popular belief, the company’s abbreviation also stands for Vergaan Onder Corruptie meaning ‘Perished By Corruption’. Illicit trade on the side on the part of the company’s agents, breaching the company’s monopoly, contributed to its downfall (Nierstrasz 2007). The British company suffered a similar fate (Robins 2002).

The introduction of tradable securities soon also brought the drawbacks that still plague today’s financial markets: speculation, bubbles, crashes and securities fraud (Garper 2000), such as the notorious South Sea Company bubble in which outrageous and often fraudulent claims were made to raise capital and to boost stock prices. When the bubble burst, thousands were financially ruined (Carruthers 2005).

The crimes of colonial states

Besides these economic crimes, the VOC and the British trading companies were also engaged in actions that would today be labelled as state crime, because these companies also exercised state authorities, such as waging war. Many of their actions would nowadays constitute breaches of international criminal law, such as crimes against humanity and war crimes. For example, in 1621 the VOC eradicated most of the indigenous population of the Banda Islands to install a more profitable system of plantation.

Dutch and British states took over the assets of the trading companies after their bankruptcy respectively in 1795 and 1858. In contemporary (anachronistic?) terminology this would mean a shift from corporate crime to state crime. In recent times, the colonization itself and many of the practices executed in the name of colonization have been deemed as wrong and even criminal. An extreme example of economic exploitation for private gain that has been the topic of criminological study is the Congo Free State (Ward 2005). From 1885 to 1908 this country mainly served for the enrichment of the Belgian King Leopold II and the exploitation of the Congo’s natural resources (then mainly ivory and rubber) was mainly left in the hands of commercial enterprises. In furthering this goal, massacres, hostage taking, rape, death by starvation and extremes of physical cruelty were common occurrences. Particularly for employees of the companies, terror and atrocities became standard business practices (Ward 2005).

The excrescences of industrial revolution

The industrial revolution that dramatically transformed civil society and the economy in many European countries in the nineteenth century came with the rise of labour-related crimes, such as child labour, slavery-like working conditions and unsafe working conditions resulting in injury and death. Excrescences of labour exploitation brought the first social regulations for businesses (Tombs and Whyte 2007). Besides the exploitation of labour and the crimes related to this exploitation, the industrial revolution also had an impact on the structure of the economy and the opportunities for fraud. Industrialization required considerable investment and as corporate business proliferated, businesses became larger, and this placed ever greater distance between investors providing capital and those managing business decision making (Wilson 2006). Monitoring directors became increasingly difficult, while reduced opportunity for detecting derelictions of duties allowed incompetence to flourish and, in some cases, actually provided an incentive to partake in fraud (Robb 1992).

In Victorian England the excitement of the intense stock market activity because of the railway boom promoted empty and asset-less ‘bubble’ companies alongside legitimate rail schemes (Wilson 2006: 1076). A panic over the widespread fraudulent schemes made the railway bubble burst and led to a crash in the market. The crash and the outrage at the financial dishonesty that created it generated a number of landmark criminal trials against company directors.

As in the case of the trading companies already discussed, the case of fraud in the financial markets in Victorian England shows a pattern that would reappear in modern European and American history: inflated, ‘bull’ markets tempt established, bona fide actors to take excessive risks while they also attract mala fide actors drawn to the lure, both resulting in fraud schemes that contribute to implosion of these inflated markets. A further pattern is that the public outrage about the excessive behavior in the build-up to the burst of economic bubbles, and the economic crisis as a result of that, have led to cycles of criminalization of harmful and fraudulent business conduct. The financial crisis of 1720 in England led to the introduction of white-collar crime as an offence, although at this time it was referred to as a ‘scandal’ (Johnstone 1999). The Victorian cases constituted the discovery of ‘financial crime’ and led to the redefinition of certain kinds of business activity as being criminal activity in England (Wilson 2006). In France, business crime as a specific criminal offence was established in 1935 in response to the economic crisis of 1929 and a...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• List of figures
• List of tables
• Notes on contributors
• Acknowledgements
• 1 Criminology and white-collar crime in Europe
• Part I Defining and measuring white-collar and corporate crime in Europe
• Part II Historical perspectives on white-collar and corporate crime in Europe
• Part III Contemporary white-collar and corporate crime in Europe
• Part IV Responses to white-collar crime in Europe
• Part V Anglo-American reflections on white-collar crime in Europe
• Index