White Collar Crime and Risk

Financial Crime, Corruption and the Financial Crisis

Nic Ryder

• Publisher: Palgrave Macmillan
• Year: 2017
• Print ISBN:
  9781137473837
• eBook ISBN:
  9781137473844
• Topic: Social Sciences
• Subtopic: Financial Services
• Index: Social Sciences

Draws on an impressive range of contributions from expert researchers 

Appeals to policy makers and practitioners as well as academics

Addresses some very topical issues, such as market manipulation, which have not yet been fully explored

© The Author(s) 2018

Nic Ryder (ed.)White Collar Crime and RiskPalgrave Studies in Risk, Crime and Societyhttps://doi.org/10.1057/978-1-137-47384-4_1

Begin Abstract

1. Introduction

Nic Ryder¹  

(1)

Bristol Law School, University of the West of England, Bristol, UK

 

 

Nic Ryder

End Abstract

The objective of this edited collection is to critically appraise the association and relationship between white collar crime and risk. The term “white collar crime” was famously used by Professor Edwin Sutherland,¹ who in his seminal 1939 presidential lecture to the American Sociological Society offered the following definition of white collar crime “a crime committed by a person of respectability and high social status in the course of his occupation”.² The term white collar crime is often used in common parlance and thus is one of which we assume we know its meaning, despite the fact that there is no internationally accepted definition of it. In England and Wales, financial crime can be said to include “any offence involving fraud or dishonesty; misconduct in, or misuse of information relating to, a financial market; or handling the proceeds of crime”.³ The Financial Services Authority, now the Financial Conduct Authority, offered a similar definition, stating that it is “any offence involving money laundering, fraud or dishonesty, or market abuse”.⁴ The Federal Bureau of Investigation defines financial crime as including the criminal activities of corporate fraud, commodities and securities fraud, mortgage fraud, healthcare fraud, financial institution fraud, insurance fraud, mass marketing fraud and money laundering.⁵ More recently, the term has been referred to as “financial crime”, “economic crime” and even “illicit finance”. The most obvious examples of white collar crime include fraud, money laundering, insider dealing, insider trading, terrorist financing, market abuse and more recently market manipulation. Other examples of white collar crime include, for example, “embezzlement, fraud and insider trading, on one hand, and market manipulation, profit exaggeration, and product misrepresentation”.⁶ These types of white collar crimes have gained significant notoriety in the last 30 years via a plethora of high profile incidents including, for example, Enron, WorldCom, Bernard Madoff, Alan Stanford, Ivan Boesky, Michael Milken, Jérôme Kerviel, Martha Stewart, Azil Nadir, Nick Leeson, John Rigas, Bernard Madoff and the Libor scandal. Furthermore, in response to the threat and risk posed by white collar crime, which costs the UK economy in excess of £70bn per year, the government has implemented an unprecedented number of white collar crime legislative amendments. Examples include the Fraud Act 2006, the publication of the Fraud Review, the creation of the National Crime Agency and the introduction of the Bribery Act 2010. Furthermore, the threat and risk posed by white collar crime to the global economy has been has been graphically illustrated during the most recent financial crisis due to large-scale instances of market manipulation, fraud and abuse of the financial system.

Therefore, this edited collection is divided into five unique parts, each of which focuses on a different type of white collar crime, and its relationship with risk. For example, the first part of the edited collection relates bribery and corruption and contains two chapters by Professor Indira Carr (University of Surrey) and Professor Umut Turksen (University of Coventry). The second part of the edited collection contains two chapters on the association between financial crime and risk and contains chapters from Professor Michelle Gallant (University of Manitoba) and Professor Ester-Herlin Karnell (University of Amsterdam). The third considers the recent criminalisation of market abuse and market manipulation and contains two chapters from Andrew H. Baker (Liverpool John Moores Univeristy) and Dr Rick Ball (University of the West of England, Bristol). The penultimate part of the collection considers the emerging area of the risk associated with cyber white collar crime and contains two innovative chapters from Alan S. Reid (Sheffield Hallem Univeristy) and Dr Clare Chambers-Jones (University of the West of England). The final part contains chapters dealing with the 2007 financial crisis and white collar crime and contains contributions from Dr Sarah Wilson (University of York), Gary Wilson (Nottinghamn Trent Univeristy), Professor Roman Tomasic (University of South Australia) and Professor Nic Ryder (University of the West of England).

Footnotes

1

Green, S. ‘The concept of white collar crime in law and legal theory’ (2004) Buffalo Criminal Law Review, 8, 1–34, at 3.

 

2

See Sutherland, E. (1940) ‘The White Collar Criminal’, American Sociological Review, 5(1), 1–12, at 1. Sutherland, E. White Collar Crime (Dryden: New York, 1949) 9. Sutherland famously described white collar crime as “White-collar criminality in business is expressed most frequently in the form of misrepresentation in financial statements of corporations, manipulation in the stock exchange, commercial bribery, bribery of public officials directly or indirectly in order to secure favorable contracts and legislation, misrepresentation in advertising and salesmanship, embezzlement and mis- application of funds, short weights and measures and misgrading of commodities, tax frauds, misapplication of funds in receiverships and bankruptcies”. See Sutherland, E. (1940) ‘The White Collar Criminal’, American Sociological Review, 5(1), 1–12, at 2–3.

 

3

Financial Services and Markets Act 2000, s 6(3).

 

4

Financial Services Authority, ‘Fighting Financial Crime’ <http://​www.​fsa.​gov.​uk/​about/​what/​financial_​crime> accessed 21 March 2012.

 

5

The Federal Bureau of Investigation, ‘Financial Crimes Report to the Public’ <http://​www.​fbi.​gov/​stats-services/​publications/​financial-crimes-report-2010-2011/​financial-crimes-report-2010-2011#Financial> accessed 21 March 2012.

 

6

Kempa, M. ‘Combating white- collar crime in Canada: serving victim needs and market integrity’ (2010) Journal of Financial Crime, 17(2), 251–264, at 253.

 

Part 1Bribery and Corruption

© The Author(s) 2018

Nic Ryder (ed.)White Collar Crime and RiskPalgrave Studies in Risk, Crime and Societyhttps://doi.org/10.1057/978-1-137-47384-4_2

Begin Abstract

2. Corruption, Development, Financial Institutions and Politically Exposed Persons

Indira Carr¹

(1)

University of Surrey, Guildford, UK

Indira Carr

End Abstract

2.1 Introduction

Freeing more than a billion “fellow men, women and children from abject and dehumanizing conditions of extreme poverty” and a commitment to “create an environment – at the national and global levels alike – which is conducive to development and to the elimination of poverty” are amongst the goals listed in the United Nations (UN) Millennium Declaration adopted on 18 September 2000.¹ The Declaration was translated into a roadmap, setting out measurable goals such as the Millennium Development Goals (MDG) to be achieved by 2015. The first goal was to eradicate extreme poverty and hunger by reducing “by half the proportion of people whose income is less than $ 1 a day”, achieving “full and productive employment and decent work for all, including women and young people”, and reducing “by half the proportion of people who suffer from hunger”.²

The key factors for reducing poverty are seen as infrastructure development, investment, economic growth and equitable distribution within developing and least developed countries.³ Indeed the Millennium Declaration itself links development with the elimination of poverty. However, the year 2015 which had been set as by the MDGs for the elimination of poverty has come and gone but poverty continues to be a problem. Surprisingly, many of the developed nations are also seeing a growth in poverty. For instance, in the UK (the sixth largest economy) one in five of the population live below the poverty line, that is they “experience life as a daily struggle”.⁴

The elimination of poverty continues to be a goal when in 2015 the UN adopted the Sustainable Development Goals (SDG). Clause 1.1 states as its target eradication of “extreme poverty for all people everywhere, currently measured as people living on less than $ 1.25 a day” by 2030. The US$1.25 per day figure stated in the SDG reflects the international poverty line that was set by the World Bank (WB) in 2005. The WB has been assessing poverty figures since 1979 and, in 1990, its World Development Report⁵ set the international poverty line⁶ at US$1 per day which was raised to US$1.25 in 2005. In late 2015, the figure was raised further to US$1.90 per day to preserve the purchasing power of the previous figure of US$1.25 in the poorest countries of the world.⁷

A serious concern facing development, investment, economic growth and equitable distribution is corruption at the highest levels, amongst the political and bureaucratic elite, and the accompanying risk of laundering the proceeds of corruption. In order to reduce these risks, it is important that there are adequate laws and regulatory mechanisms. The international community, consisting of international financial institutions (FIs) such as the World Bank, national development agencies such as UK’s Department for International Development (DFID),⁸ Swedish International Development Agency (SIDA)⁹ and US Agency for International Development (USAID),¹⁰ international organisations such as the UN¹¹ and the Organisation for Economic Co-operat...

Table of contents

• Cover
• Front Matter
• 1. Introduction
• Part 1. Bribery and Corruption
• Part 2. Financial Crime
• Part 3. Market Manipulation
• Part 4. Technology and White Collar Crime
• Part 5. The Financial Crisis and White Collar Crime
• Erratum to: White Collar Crime and Risk
• Back Matter