Sociology

Corporate Crime Explained



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Corporate crime is the name given to the acts of negligence of a company resulting in death, injury or criminal damage, where no individual can be identified as solely liable and the company, as a person, assumes responsibility and accountability. It is done under the cover of legitimate business activity in an effort to increase the company's competitive advantage.

In most large corporations responsibility is spread widely and there is no single person that controls and directs the entire operation. There are usually shareholders, a board of directors, executives and managers that all contribute to the working decisions of the company and no single person controls any aspect in its entirety. This is when the corporation itself becomes the face of the organisation and takes the burden of liability for all actions that are carried out.

The complex set up of departments and budgets and the constant difficulty of identifying a decision maker that is competent in everything that the company operates in makes managerial hierarchies susceptible when making a decision beneficial to the company that can be directly detrimental to the local environment, or even dangerous to the staff and general public.

How can decisions be made when exploring new technologies, handling dangerous chemicals, general health and safety of workers, pollution and the effect on the environment if you have no previous data to work with? This is where costly mistakes are made as dangerous errors of judgement, usually all down to budgets, balancing the books and market pressure to cut corners.

When these corporate actions are identified as known risks and foreseeable then the resulting action is known as corporate crime. An example is the 1989 case of the Herald of Free Enterprise, a ferry that sank when it put to sea with its bow doors open. It was found that this had become an acceptable practice, speeding departure and reducing manpower. The person who was responsible for shutting the door was guilty of failing to comply with the health and safety standards, but the company was also guilty of allowing this to become an acceptable practice and allowing the ferry to sail with insufficient key staff. The error caused more than 100 deaths and no individual was made to serve a sentence in prison.

Another example was the Ladbroke Grove train crash of 1999 when 31 people died and 400 were left injured. Railtrack the maintenance company for Britain's railways failed to act on warnings regarding a misleading signal that had already been misinterpreted seven times in the previous five years. It was estimated that remedial action would have cost less than 100,000 and it was the disruption of service to the public and the ensuing loss of profit that affected the decision of the management concerned.

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