The Convenience of White-Collar Crime in Business 3030379892, 9783030379896

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Petter Gottschalk

The Convenience of White-Collar Crime in Business

The Convenience of White-Collar Crime in Business

Petter Gottschalk

The Convenience of White-Collar Crime in Business

Petter Gottschalk Department of Leadership & Org Behavior BI Norwegian Business School Oslo, Norway

ISBN 978-3-030-37989-6    ISBN 978-3-030-37990-2 (eBook) https://doi.org/10.1007/978-3-030-37990-2 © Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Introduction

This book documents the theory of convenience for white-collar crime to explain what motivates and enables offenders. The theory of convenience suggests that the extent to which elite members commit and conceal economic crime is dependent on their extent of orientation toward convenience in problematic and attractive situations. Convenience is a term used to describe the potential savings in time and effort, as well as the potential avoidance of suffering and pain. Convenience orientation varies among individuals, as some are more concerned than others are about time-­ saving, effort reduction, and pain avoidance. Convenience exists in three dimensions. First, there is convenience in achieving a desired financial outcome. Personal and organizational needs can be satisfied by illegal activities. The desire for money as a means to climb and maintain a high social status based on business success can motivate crime, especially when potential offenders consider money as a key enabler of success in the minds of offenders. This is convenience in the economical dimension. Second, there is convenience in the organizational dimension. Lack of controls combined with access to systems and people enables offenders to commit and conceal crime in convenient ways. The privileged position prevents detection and prevents others from reporting in case of suspicion. Third, there is convenience in the individual willingness for deviant behavior. The offender can apply neutralization techniques to avoid a guilty mind when committing crime, can suffer from a lack of self-control, and can slide down a slippery slope without really noticing that he or she has ended up on the wrong side of the law. After a thorough introduction to the three dimensions of convenience theory, those three dimensions find their links in the convenience triangle. Motive, opportunity, and willingness can reinforce each other, as there are six causal relationships in the triangle. For example, opportunity expansion can occur over time because of a strong financial motive and a great extent of personal willingness. This book presents empirical studies of white-collar crime. The presentation starts with some interesting autobiographies written by convicted offenders and continues with a sample of 408 convicted white-collar offenders for statistical v

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description and analysis followed by survey results from business school students attending a course in leadership and financial crime. The purpose of the empirical Chaps. 7 and 8 is to illustrate various ways in which convenience in white-collar crime occurs. This book is important for two main reasons. First, experts acknowledge globally that law enforcement detect and bring very few white-collar offenders justice. There might be only 1 out of 10, or maybe only 1 out of 100, facing conviction and incarceration for white-collar crime. Second, experts acknowledge globally that the harm caused by white-collar crime is formidable. There are both direct victims, such as employers and banks, and indirect victims, such as tax authorities and society. White-collar crime changes the rules of competition in a market economy by corruption and fraud. This book is thus important because it contributes to an increased understanding of the white-collar crime phenomenon. Law enforcement agencies cannot fight successfully a phenomenon that they do not understand. Increased understanding through the theory of convenience can contribute to increased detection, prosecution, and conviction of offenders in the future. This book is a further development of my research on convenience and white-­ collar crime as elaborated, in particular, in my book Convenience Triangle in White-­ Collar Crime: Case Studies of Fraud Examinations (Gottschalk 2019). It especially further expands the theoretical framework presented in previous volumes. As such, writing this book was an interesting opportunity to assess, refine, and synthesize previous materials and present new ideas and findings. The book includes, as an important contribution to knowledge in the area, the analysis of findings of interesting empirical research, including autobiographies of convicted offenders, a sample of 408 convicted white-collar offenders, surveys from business school student, as well as the analysis of 130 fraud examination reports. This should be a welcome contribution as empirical information and evidence of white-collar crime are typically lacking. The theory of convenience is a stimulating approach that has not received much attention in the literature yet. As for white-collar criminality, it remains an understudied field that has a great research and editorial future ahead. The combination of these two dimensions is fruitful and offers a wide range of research possibilities (Vasiu and Podgor 2019). White-collar crime has for too long been a subject only in criminology, criminal justice, and law. However, white-collar crime occurs in business contexts in corporations where privileged individuals abuse their positions for personal and corporate illegal gain. This is the first book that moves the focus of white-collar crime into the business context. For example, businesses are used to objectives and goals, but they are unaware of the dangers when ambitious goals at the individual level lead individuals to commit crime to survive and succeed in the organization. Business students for too long have only learned about ethics, auditing, and compliance, rather than real crime and why it occurs, as explained in this new book. To address the business audience, this book presents the theory of convenience in a completely new way by focusing on themes that are familiar to corporations.

Introduction

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Themes find themselves along the main theoretical dimensions of economical motive, organizational opportunity, and personal willingness. To document attitudes among future business leaders, the book covers responses from business students on core topics in white-collar criminology. This is the first volume that applies the theory of convenience to business administration by investigating motives, opportunities, and deviant behaviors. The book provides a perspective on business education that questions the traditional roles of topics like auditing and compliance in education and practice. The ambition with the new book is to introduce white-collar crime as a fundamental course in business schools, where it might function as the basis for courses on preventive actions, such as business ethics and management accounting, and also to bridge the gap between schools of criminal justice and business schools. My previous books on convenience theory have been traditional criminology book. For me as business school professor, this text is my first book that moves the topic of crime convenience from criminal justice into business administration. There should thus be no confusion over the content regarding business students. What makes this book distinctively different from the previous books are some of the features: • The economical motive in Chap. 2 describes themes rather than references that make it simpler to understand the main perspectives. • Similarly, themes describe organizational opportunity and personal willingness in Chaps. 3 and 4. This is a new and innovative way of breaking down the theory of convenience. • The historical evolution in Chap. 7 is completely new, which business historians from all over the world triggered when they recently asked me to present a keynote on the evolution of white-collar crime at the University of Uppsala. • Chapters on business student responses are completely new as well in Chaps. 8 and 9. • Similarly, the whistleblower concerned with white-collar crime is a new case study in Chap. 10. • In addition, Chap. 11, the final chapter, is completely new, where statistical analysis of investigation reports provides interesting insights into white-collar crime topics. • The remaining Chaps. 1, 5, and 6 have similarities with the previous book but needs to be included so that this new volume can be a stand-alone. The extent of the literature review and the surveys led by my students accounted for in this book can make it very attractive to young students. The subchapter “Whistleblowing by Business School Students” aims to catch the attention of students who might find the idea exciting. Moreover, because white-collar criminality is an exciting topic for the public, as I have experienced by giving numerous talks on the subject, this book might catch the attention of readers beyond academia. Reviewers of the manuscript for this book have pointed out that the qualitative and quantitative fieldwork is a great asset and have made a number of valuable suggestions. Many of the suggestions found their way into this volume, but some ideas

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belong in a future volume or in books by other authors. For example, anchoring white-collar crime in social-, national-, and judicial-specific environments in itself would require almost a completely new volume. In addition, topics like national coercion, international cooperation against white-collar criminals, the evolution of jurisdictions, judicial tools, and institutional responses to white-collar criminality belong in a different book.

References Gottschalk, P. (2019). Convenience triangle in white-collar crime – Case studies of fraud examinations. Cheltenham: Edward Elgar Publishing. Vasiu, V. I., & Podgor, E. S. (2019). Organizational opportunity and deviant behavior: Convenience in white-collar crime. Criminal law and criminal justice books, Rutgers, the State University of New Jersey, July, www.clcjbooks.rutgers.edu

Contents

  1 Convenience Orientation ������������������������������������������������������������������������    1 Different Concepts of Convenience ����������������������������������������������������������    1 Elements in Convenience Orientation��������������������������������������������������������    3 Determinants of Convenience Orientation������������������������������������������������    5 Development of Convenience Theory��������������������������������������������������������    6 Theory of White-Collar Convenience��������������������������������������������������������   11 References��������������������������������������������������������������������������������������������������   14   2 Economical Motive����������������������������������������������������������������������������������   17 Attractive Individual Economic Possibilities��������������������������������������������   18 Painful Individual Economic Threats��������������������������������������������������������   21 Attractive Corporate Economic Possibilities ��������������������������������������������   24 Painful Corporate Economic Threats��������������������������������������������������������   27 Rational Self-Interest Motivation��������������������������������������������������������������   29 References��������������������������������������������������������������������������������������������������   32   3 Organizational Opportunity ������������������������������������������������������������������   35 High Social Status in Privileged Positions������������������������������������������������   36 Legitimate Access to Crime Resources������������������������������������������������������   39 Disorganized Institutional Deterioration����������������������������������������������������   42 Lack of Oversight and Guardianship ��������������������������������������������������������   47 Criminal Market Structures������������������������������������������������������������������������   51 Interactions Between Crime Enablers��������������������������������������������������������   52 References��������������������������������������������������������������������������������������������������   53   4 Personal Willingness��������������������������������������������������������������������������������   59 The Innocent Justification Offender Mind ������������������������������������������������   60 The Deviant Personality Offender Mind����������������������������������������������������   64 The Rational Choice Offender Mind ��������������������������������������������������������   65 The Slippery Absent Offender Mind����������������������������������������������������������   69 References��������������������������������������������������������������������������������������������������   72

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  5 Convenience Triangle������������������������������������������������������������������������������   75 Summary of Perspectives in Convenience Theory������������������������������������   77 Interactions Between Convenience Factors ����������������������������������������������   77 Causal Convenience Triangle Relationships����������������������������������������������   79 Theoretical White-Collar Criminogenity ��������������������������������������������������   80 Theoretical Convenience Triangle Interactions ����������������������������������������   82 Sample Convenience Hypotheses Method������������������������������������������������   86 References��������������������������������������������������������������������������������������������������   90   6 White-Collar Crime ��������������������������������������������������������������������������������   93 Offender-Based White-Collar Perspective������������������������������������������������   94 Theoretical Foundation by Sutherland������������������������������������������������������   96 White-Collar Elite Shadow Economy��������������������������������������������������������   98 Seriousness of White-Collar Elite Crime��������������������������������������������������  104 Typical Profile of a White-Collar Offender������������������������������������������������  105 White-Collar Offenders’ Autobiographies������������������������������������������������  108 Offender or Victim in White-Collar Crime������������������������������������������������  111 Autobiography by a Chairman of the Board����������������������������������������������  115 Financial Motive������������������������������������������������������������������������������������  115 Organizational Opportunity ������������������������������������������������������������������  116 Deviant Behavior ����������������������������������������������������������������������������������  117 Discussion����������������������������������������������������������������������������������������������  120 References��������������������������������������������������������������������������������������������������  122   7 Historical Evolution ��������������������������������������������������������������������������������  129 Convenience Orientation����������������������������������������������������������������������������  130 White-Collar Convenience������������������������������������������������������������������������  131 Financial Motive����������������������������������������������������������������������������������������  133 Organizational Opportunity ����������������������������������������������������������������������  134 Personal Willingness����������������������������������������������������������������������������������  136 Historical Perspectives������������������������������������������������������������������������������  137 Evaluation Criteria ������������������������������������������������������������������������������������  138 Economical Dimension������������������������������������������������������������������������   139 Organizational Dimension ������������������������������������������������������������������   140 Behavioral Dimension�������������������������������������������������������������������������   143 References��������������������������������������������������������������������������������������������������  145   8 White-Collar Convenience����������������������������������������������������������������������  151 Six Convenience Triangle Case Studies����������������������������������������������������  152 Case 1: Motive on Opportunity��������������������������������������������������������������  152 Case 2: Opportunity on Motive��������������������������������������������������������������  153 Case 3: Motive on Willingness��������������������������������������������������������������  154 Case 4: Willingness on Motive��������������������������������������������������������������  155 Case 5: Opportunity on Willingness������������������������������������������������������  156 Case 6: Willingness on Opportunity������������������������������������������������������  157 Testing Convenience Hypotheses Findings ����������������������������������������������  159

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Determinants of White-Collar Crime Intention ����������������������������������������  162 Trust and Concern about White-Collar Offenses��������������������������������������  167 White-Collar Coping with Imprisonment��������������������������������������������������  176 Stage Model for Female White-Collar Offenders��������������������������������������  184 Stage 1: From Population Fraction to Needs Fraction��������������������������  185 Stage 2: From Needs Fraction to Crime Fraction����������������������������������  186 Stage 3: From Crime Fraction to Detection Fraction����������������������������  187 Stage 4: From Detection Fraction to Sentence Fraction������������������������  187 Stage 5: From Sentence Fraction to Prison Fraction ����������������������������  188 Research Method ����������������������������������������������������������������������������������  188 Research Results������������������������������������������������������������������������������������  189 References��������������������������������������������������������������������������������������������������  194   9 White-Collar Research����������������������������������������������������������������������������  199 Research Claims for Financial Motive������������������������������������������������������  200 Individual Economic Benefits����������������������������������������������������������������  200 Individual Economic Threats ����������������������������������������������������������������  201 Organizational Economic Benefits��������������������������������������������������������  202 Organizational Economic Threats����������������������������������������������������������  202 Rational Self-Interest ����������������������������������������������������������������������������  203 Research Claims for Organizational Opportunity��������������������������������������  204 High Social Status����������������������������������������������������������������������������������  204 Access to Resources������������������������������������������������������������������������������  205 Institutional Deterioration����������������������������������������������������������������������  206 Inefficient Overview and Control����������������������������������������������������������  207 Research Claims for Personal Willingness������������������������������������������������  208 No Guilty Mind��������������������������������������������������������������������������������������  208 Deviant Personality��������������������������������������������������������������������������������  210 Rational Choice��������������������������������������������������������������������������������������  211 Slippery Slope����������������������������������������������������������������������������������������  212 Support from Business School Students����������������������������������������������������  213 Empirical Study of Whistleblowing Intentions������������������������������������������  215 Whistleblowing by Business School Students ������������������������������������������  219 Research Method ����������������������������������������������������������������������������������  220 Research Results������������������������������������������������������������������������������������  221 Discussion����������������������������������������������������������������������������������������������  223 Conclusion ��������������������������������������������������������������������������������������������  225 Suspecting the Boss of White-Collar Crime����������������������������������������������  225 Theoretical Review��������������������������������������������������������������������������������  226 Research Method ����������������������������������������������������������������������������������  227 Research Results������������������������������������������������������������������������������������  229 Conclusion ��������������������������������������������������������������������������������������������  230 References��������������������������������������������������������������������������������������������������  231

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10 Whistleblower Case ��������������������������������������������������������������������������������  239 Crime Signal Detection Theory ����������������������������������������������������������������  240 Crime Signal Research Model ������������������������������������������������������������������  242 Signal Detection by Observer����������������������������������������������������������������  243 Signal Registration by Observer������������������������������������������������������������  243 Signal Interpretation by Whistleblower ������������������������������������������������  243 Signal Reception by Responsible����������������������������������������������������������  244 Signal Knowledge by Responsible��������������������������������������������������������  244 Reliability and Importance��������������������������������������������������������������������  244 Whistleblower Skog Case Study����������������������������������������������������������������  244 Case Study Research Method��������������������������������������������������������������������  245 Case Study Research Results ��������������������������������������������������������������������  246 Stage 1: Signal Detection by Observer��������������������������������������������������  246 Stage 2: Signal Registration by Observer����������������������������������������������  246 Stage 3: Signal Interpretation by Whistleblower ����������������������������������  246 Stage 4: Signal Reception by Responsible��������������������������������������������  247 Stage 5: Signal Knowledge by Responsible������������������������������������������  247 Case Study Research Discussion ��������������������������������������������������������������  248 References��������������������������������������������������������������������������������������������������  249 11 Fraud Examination Reports ������������������������������������������������������������������  251 Split Convenience Dimensions������������������������������������������������������������������  252 Research Method of Reports����������������������������������������������������������������������  253 Research Findings from Reports����������������������������������������������������������������  254 Discussion of Findings������������������������������������������������������������������������������  256 130 Fraud Examination Reports����������������������������������������������������������������  257 References��������������������������������������������������������������������������������������������������  264 Conclusion��������������������������������������������������������������������������������������������������������  267 References ��������������������������������������������������������������������������������������������������������  271 Index������������������������������������������������������������������������������������������������������������������  289

About the Author

Petter Gottschalk  is professor in the Department of Leadership and Organizational Behavior at BI Norwegian Business School in Oslo, Norway. After completing his education at Technische Universität Berlin, Dartmouth College, MIT, and Henley Management College, he took on executive positions in technology enterprises for 20  years before joining academics. He has published extensively on knowledge management, intelligence strategy, police investigations, white-collar crime, and fraud examinations.

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Chapter 1

Convenience Orientation

Convenience is the state of being able to proceed with something with little effort or difficulty, avoiding pain and strain (Mai and Olsen 2016). The extent to which individuals in privileged positions choose to break the law in difficult situations or tempting situations is dependent on their convenience orientation. Convenience comes at a potential cost to the offender in terms of the likelihood of detection and future punishment. In other worlds, reducing time and effort now entails a greater potential for future cost. Paying for convenience is a way of phrasing this proposition (Farquhar and Rowley 2009). Orientation is a function of the mind involving awareness of the situation. This book conceptualizes convenience orientation as the value that individuals and organizations in a given situation place on actions with inherent characteristics of saving time and effort. Convenience orientation is a value-like construct that influences behavior and decision-making. Mai and Olsen (2016) measured convenience orientation in terms of a desire to spend as little time as possible on the task, in terms of an attitude that the less effort needed the better, as well as in terms of a consideration that it is a waste of time to spend a long time on the task.

Different Concepts of Convenience Convenience is a phenomenon that we observe in many aspects of human life. For example, convenience stores and convenience shopping is associated with easy access to goods and services. A theory of convenience finds application in a number of areas where people prefer alternatives that are associated with savings in time and effort, and with avoidance of pain and problems. For example, a convenience theory of cheating suggests that cheating is a preferred alternative in certain situations. In this book, I focus on theory of convenience as convenience relates to white-­ collar misconduct and crime. Convenience theory attempts to integrate various theoretical explanations for the occurrence of white-collar misconduct and crime. © Springer Nature Switzerland AG 2020 P. Gottschalk, The Convenience of White-Collar Crime in Business, https://doi.org/10.1007/978-3-030-37990-2_1

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Convenience theory suggests that organizational opportunity to commit and conceal financial crime is at the core of deviant behavior to avoid threats and exploit possibilities (Vasiu and Podgor 2019). This book is concerned with offenders rather than offenses. To offend is to cause displeasure, anger, resentment, or wounded feelings. It is to be displeasing or disagreeable. It can also be to violate a moral, a guideline, a rule or a law. The purpose of convenience theory is to integrate a number of theoretical approaches to explain and understand white-collar crime that Sutherland (1939) first defined. Convenience theory applies the concept of convenience in terms of savings in time and effort (Farquhar and Rowley 2009), as well as avoidance of pain and obstacles (Higgins 1997). Convenience is a relative concept concerned with the efficiency in time and effort as well as reduction in pain and solution to problems (Engdahl 2015). A convenient individual is not necessarily neither bad nor lazy. On the contrary, the person can be seen as smart and rational (Sundström and Radon 2015). This book presents studies in search of empirical evidence of convenience theory by content analysis of reports of investigations by fraud examiners, content analysis of autobiographies by convicted offenders, and surveys among business school students. Fraud examiners from large accounting, auditing, consulting, and law firms are typically hired by private and public organizations when there is suspicion of misconduct and crime (Schneider 2006). The client organization receives a report of investigation where fraud examiners describe their procedures and findings (Brooks and Button 2011). From a resource matching perspective, convenience directly relates to the amount of time and effort (resources) that a task requires for its accomplishment. However, convenience is a more comprehensive construct than simply examining ease of use perceptions that also addresses the amount of effort in an interaction. Ease of use is the degree to which an alternative action is free of effort. Convenience addresses the time and effort exerted before, during, and after an action or avoidance of action (Collier and Kimes 2012). Convenience can be both an absolute construct and a relative construct. As an absolute construct, it is attractive to commit financial crime as such. As a relative construct, it is more convenient to commit crime than to carry out alternative actions to solve a problem or gain benefits from an opportunity. Convenience is an advantage in favor of a specific action to the detriment of alternative actions. Blickle et al. (2006) found that if the rationally expected utility of an action by a white-collar offender clearly outweighs the expected disadvantages resulting from the action, thereby leaving some net material advantage, then the offender would commit the offense in question. As a relative construct, convenience theory is line with the crime-as-choice perspective. This perspective by Shover et  al. (2012) suggests that it is a conscious choice among alternatives that leads to law violation. Convenience motivates the choice of action. Convenience is a matter of perception in advance of possible criminal actions. Convenience is a significant variable whose understanding involves complexity in multiple meanings (Sundström and Radon 2015).

Elements in Convenience Orientation

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For example, the flexibility to choose the exact moment for making a deal or another kind of action is often as a matter of convenience. Convenience can also mean selecting a proper occasion, which, in turn, is about timing. There may be more reluctance to do something at a certain point in time than willingness to save or spend time. Thus, when something is convenient, it could mean saving time as well as spending time and doing it at the right moment (Sundström and Radon 2015). The notion of convenience may seem rather obvious and not especially illuminating to some researchers. When convenience orientation is defined simply as the degree to which an executive or another member of the elite is inclined to save time, effort and pain to reach a goal, then it may sound more like an aspect of prudence rather than deviant criminal behavior. However, as pointed out in this book, some privileged individuals will employ illegal or objectionable means in striving to reach goals. This type of behavior is not necessarily different from the behavior of others in positions of power and authority (e.g., politicians, officers of universities, church officials, heads of major philanthropies, etc.), but the degrees of freedom enjoyed by people in the upper echelon of society make their positions nevertheless very special in terms of convenience. Convenience is a term found in studies of consumer behavior. Convenience theory adds something important to our understanding because it: A. Disaggregates the components of a consumer’s decisions about services and similarly disaggregates the dimensions of a white-collar offender’s decisions about deviant behavior before, under, and after an illegal act. B. Explains why illegitimate actions find preference at the detriment of legitimate actions. C. Provides a way to think about why organizations might do nothing despite being an arena for crime.

Elements in Convenience Orientation The basic elements in convenience orientation are the elite member attitudes towards the saving of time, effort and discomfort in the planning, action and achievement of goals. Generally, convenience orientation is the degree to which an individual is inclined to save time and effort to reach goals. Convenience orientation refers to a person’s general preference for convenient maneuvers. A convenience-oriented person is one who seeks to accomplish a task in the shortest time with the least expenditure of human energy (Berry et al. 2002). Convenience is a concept that was theoretically mainly associated with efficiency in savings of time. Today, convenience is associated with a number of other characteristics, such as reduced effort and reduced pain. Convenience is associated with terms such as fast, easy, and safe. Convenience says something about attractiveness and accessibility. A convenient individual is not necessarily neither bad nor lazy. On the contrary, the person can be seen as smart and rational (Sundström and Radon 2015).

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Convenience is the perceived savings in time and effort required to find and to facilitate the use of a solution to a problem or to exploit favorable circumstances. Convenience directly relates to the amount of time and effort that is required to accomplish a task. Convenience addresses the time and effort exerted before, during, and after an activity. Convenience represents a time and effort component related to the complete illegal transaction process or processes (Collier and Kimes 2012). Elite members with a strong convenience orientation favor actions and behaviors with inherent characteristics of saving time and effort. They have a desire to spend as little time as possible on challenging issues and situations that may occur. They have an attitude that the less effort needed the better, and they think that it will be a waste of time to spend a long time on a problem. They prefer to avoid the problem rather than handle it. They want to avoid discomfort and pain. They want to survive and prosper in the upper echelon of society in the best possible way. Convenience motivates the choice of action and behavior. An important element is avoiding more problematic, stressful and challenging situations. In the marketing literature, distinctions occur between decision convenience, access convenience, benefit convenience, transaction convenience, and post benefit convenience (Seiders et al. 2007). An example of access convenience is convenience yield which is defined as a benefit that accrues to inventory holders from the increased utility associated with availability at periods of scarce supplies (Kocagil 2004: 143): It is a generally accepted and helpful theoretical notion, particularly for exploring inverted market situations in which spot prices exceed futures prices in magnitude.

In convenience theory for white-collar crime, the theory makes distinctions between economical convenience, organizational convenience, and behavioral convenience. In addition, this research includes time convenience and timing convenience, as well as place convenience, where a potential offender finds the spatial circumstances convenient for crime (Sundström and Radon 2015). Saving of time is one of the elements in convenience orientation. Individuals have different perspectives on their own past, present and future time dispositions (Gamache and McNamara 2019: 923): This view suggests a distinction between objective perspectives of time (clock time) and subject perspective of time (psychological time). Recent research finds that psychological perspectives of time have important implications for how people behave and the decisions that they make.

Gamache and McNamara (2019: 923) find that those executives who mainly focus on their present time disposition have “the proclivity to act impulsively, move quickly with current opportunities, and consider current issues when making decisions”. A future time focus tends to increase the mental time span and reduce the perception of urgency.

Determinants of Convenience Orientation

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Determinants of Convenience Orientation Convenience orientation towards illegal actions increases as negative attitudes towards legal actions increase. The extent of convenience obviously varies with the mindset. Individual characteristics matter in regards to white-collar crime convenience. Personality traits may facilitate business success at one point in time and white-collar offending at another point in time. Benson (2013) finds that narcissistic self-confidence when coupled with drive, ambitiousness, and insensitivity to others may enable some people successfully to undertake risky business endeavors that more prudent and introspective individuals would never attempt. An ambitious and convenient mindset may also permit if not drive these individuals in the single-­ minded pursuit of their goals to engage in financial crime. The actual convenience is not important in convenience theory. Rather, the perceived, expected and assumed convenience influences choice of action. Berry et al. (2002) make this distinction explicit by conceptualizing convenience as individuals’ time and effort perceptions related to an action. White-collar criminals probably vary in their perceived convenience of their actions. Low expected convenience could be one of the reasons why not more members of the elite commit white-collar offenses. Convenience in white-collar crime relates to savings in time and effort by privileged and trusted individuals to reach a goal. Convenience is here an attribute of an illegal action. Convenience comes at a potential cost to the offender in terms of the likelihood of detection and future punishment. In other words, reducing time and effort now entails a greater potential for future cost. ‘Paying for convenience’ is a way of phrasing this proposition (Farquhar and Rowley 2009). People differ in their temporal orientation, including perceived time scarcity, the degree to which they value time, and their sensitivity to time-related issues. Facing strain, greed or other situations, an illegal activity can represent a convenient solution to a problem that the individual or the organization otherwise find difficult or even impossible to solve. The desire for convenience varies among people. Convenience orientation is a term that refers to a person’s general preference for convenient solutions to problems. A convenience-oriented individual is one who seeks to accomplish a task in the shortest time with the least expenditure of human energy (Farquhar and Rowley 2009). Convenience associates with some comfortable practicality. It is simple and not necessarily bad or illegal. For example, ship-owners can register their boats under flags of convenience, which is to sail under false flags to reap economic benefits that might otherwise not be achievable. Convenience can be tricking out without traces of obvious crime, lying in the gray zone and exploiting the system for organizational or personal gain and pleasure. Convenience can be to cause enrichment in an easy and comfortable manner without losing face or reputation (as long as nobody reveals the offender). In academic research, some researchers use convenience samples for their empirical studies, which consist of readily available respondents. The selection is not random and not representative of the population. It is unacceptable

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to generalize research results based on such convenience samples. Another example is the convenience store in terms of a grocery shop or a gas station, where consumer goods are easily available and accessible, but prices are higher and the selection is more limited (Sari et al. 2017). Because of the overwhelming workload combined with a need to prioritize own time, convenience is often at the core of thinking among chief executives in organizations (Bigley and Wiersma 2002). Convenience in the decision making process is not only concerned with one alternative being more convenient than another alternative. Convenience is also concerned with the extent to which an individual collects information about more alternatives and collects more information about each alternative. Market research indicates that consumers tend to make buying decisions based on little information about few alternatives (Sundstöm and Radon 2015). A similar process finds support for white-collar crime where the individual avoids the effort of collecting more information about more alternatives that might have led to a non-criminal rather than a criminal solution to a challenge, opportunity, or problem. Convenience is of value because time and effort are associated with value. Time is a limited and scarce resource, from a day of ten or twelve working hours to a person life of eighty or ninety years. Saving time means reallocating time across activities to achieve greater efficiency. Similarly, an effort surplus finds reallocation to create value elsewhere. The more effort people exert on a task, the more outcomes are likely in return (Berry et al. 2002). Many white-collar criminals have a mindset that will make them stop at nothing to enrich themselves and their organizations. The extent of convenience obviously varies with the mindset. Individual characteristics matter in regards to white-collar crime convenience. Personality traits may facilitate business success at one point in time and white-­ collar offending at another point in time. Benson (2013) finds that narcissistic self-­ confidence when coupled with drive, ambitiousness, and insensitivity to others may enable some people successfully to undertake risky business endeavors that more prudent and introspective individuals would never attempt. An ambitious and convenient mindset may also permit if not drive these individuals in the single-minded pursuit of their goals to engage in financial crime.

Development of Convenience Theory Theory is a necessary part of research in organization sciences (Ashkanasy 2016), and convenience theory emphasizes the organizational opportunity to commit and conceal white-collar crime. Theory is a systematic, interrelated set of concepts that explain a body of data. In convenience theory, three main concepts explain the occurrence of white-collar crime: financial motive, organizational opportunity, and personal willingness. These concepts are all interrelated as organizational opportunity interacts with financial motive and personal willingness. Interactions between

Development of Convenience Theory

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motive, opportunity, and willingness determine the extent of convenience perceived by a potential white-collar crime offender. Theory is a way of imposing conceptual order on the empirical complexity of the phenomenal world. Convenience theory offers a conceptual order on financial crime by members in the elite in society who certainly do not need to commit crime for their own survival. Theory offers a statement of relations between concepts within a set of boundary assumptions and constraints. Convenience theory makes assumptions about human behavior, such individuals’ motives and desires as well as individuals’ behaviors in organizational contexts. A theory reflects the magnitude of a discipline’s knowledge base. Convenience theory reflects and builds on a knowledge base from criminology, psychology, management, strategy and many other disciplines. Theory does more than abstracting and organizing knowledge. It also signals the values upon which we build knowledge (Suddaby 2014). In white-collar crime research, a number of values are at stake. For example, not all are equal to the law. Some are simply too powerful to jail (Pontell et al. 2014). Ever since Sutherland (1939) coined the term white-collar crime, researchers in the field have emphasized the value of preventing and detecting elite crime. Therefore, an important value signaled by convenience theory is that white-collar crime is just as bad as – and maybe even much worse than – traditional street crime including rape, murder and theft, since offenders’ motive is found in their choice of convenience with no regard to harm and victims. This signal from white-collar crime research is controversial still today. Many seem to consider white-collar criminals as individuals who were unlucky, who made a mistake that was not intentional, who made a short cut in a stressed job situation, and who are not really crooks. According to Leap (2007), white-collar crime imposes a degree of physical and emotional trauma on its victims that far exceeds the trauma inflicted by street criminals. Developing theory is neither easy nor ever completed. Weick (1989) defines theory development as disciplined imagination, where theory is an ordered set of assertions about a generic behavior or structure assumed to hold throughout a significantly broad range of specific instances. Offenders can find the generic behavior in white-­ collar crime in the abuse of power, influence and trust, and the generic structure is visible in the organizational context among convicted offenders. As suggested by Barney (2018), a theoretical contribution like this book on the theory of convenience is part of an ongoing conversation in the literature. The conversation is concerned with white-collar crime as a phenomenon and its occurrences in different situations. One unresolved theoretical issue related to white-collar crime is its convenience relative to legal means of reaching desired states for privileged individuals and organizations. This unresolved issue is important, as both prevention and detection of white-collar crime rests on a relevant understanding of its motives, opportunities, and behaviors. As suggested by Haveman et al. (2019: 241), “it is theory that gives meaning to empirical results”. Insights into white-collar crime occurrences are dependent on theory that guides us to what questions to ask and tells us why they are important.

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Theory provides a discipline of reasoning about occurrences that otherwise would end up as special cases of practice in the minds of observers. There are a number of interactions between dimensions in the theory of crime convenience. For example, opportunity enhances temptation (Steffensmeier and Allan 1996: 478): An illegitimate enterprise, being able tends to make one more willing, just as being willing increases the prospects for being able.

Thus, the organizational dimension of opportunity influences the desire for financial gain in the economical dimension. Opportunity also influences the behavioral willingness, while the behavioral willingness in turn influences abilities in terms of organizational opportunities. The theory of convenience finds its base in reasoning by analogy where the core analogy is that the organization is an arena for individual motives, opportunities, and behaviors with varying convenience options. Many of the supporting perspectives find their basis in analogies as well. For example, the principal-agent perspective derives from the analogy that the organization is a nexus of contracts. Ketokivi et al. (2017) argue that theoretical reasoning by analogy provides a link between two domains of meaning: the source and the target domains. The source domain in convenience theory is convenience orientation experienced among people, while the target domain is the organization where white-collar crime can occur. The convenience perspective suggests that motivation (personal and organizational ambitions), opportunity (offence and concealment in an organizational context), as well as behavior (lack of control and neutralization of guilt) make financial crime a convenient option to avoid threats and to exploit opportunities. Convenience theory makes statements about relationships between motive, opportunity, and behavior. The primary goal of the theory is to answer the questions of how, when, and why white-collar crime. The question of how is answered in the organizational context where there is an opportunity to commit white-collar crime. The question of when is answered in the behavioral context where the offender finds it relevant to apply deviant behavior. The question of why is answered in the economical dimension where the motive is profit to avoid threats and to exploit possibilities. The key components of convenience theory are similar to Felson and Boba’s (2017) problem triangle analysis in routine activity theory. Routine activity theory suggests three conditions for crime to occur: a motivated offender, an opportunity in terms of a suitable target, and the absence of a capable or moral guardian. The existence or absence of a likely guardian represents an inhibitor or facilitator for crime. The premise of routine activity theory is that crime is to a minor extent affected by social causes such as poverty, inequality and unemployment. Motivated offenders are individuals who are not only capable of committing criminal activity, but are willing to do so. Suitable targets can be something that offenders recognize as particularly attractive.

Development of Convenience Theory

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When introducing routine activity theory, Cohen and Felson (1979) concentrated upon the circumstances in which offenders carry out predatory criminal acts. Most criminal acts require convergence in space and time of (1) likely offenders, (2) suitable targets, and (3) the absence of capable guardians against crime. The lack of any of these elements is sufficient to prevent the successful completion of a crime. Though guardianship is implicit in everyday life, it usually is invisible by the absence of violations and is therefore easy to overlook. Guardians are not only protective tools, weapons and skills, but also mental models in the minds of potential offenders that stimulate self-control to avoid criminal acts. When compared to convenience theory, routine activity theory’s three conditions do not cover all three dimensions. The likely offenders occur in the behavioral dimension, while both suitable targets and absence of capable guardians occur in the organizational dimension. While routine activity theory defines conditions for crime to occur, convenience theory defines situations where crime occurs. White-­ collar crime only occurs when there is a financial motive in the economical dimension. Another traditional theory is worthwhile to compare to convenience theory. Fraud theory with the fraud triangle suggests three conditions for fraud (Cressey 1972): (1) incentives and pressures, (2) opportunities, and (3) attitudes and rationalization. Incentives and pressures belong in the economical dimension; opportunities belong in the organizational dimension, while attitudes and rationalization belong in the behavioral dimension. As such, the fraud triangle covers all dimensions of convenience theory. However, at the core of convenience theory is convenience in all three dimensions as well as opportunity found in the organizational setting based on professional role and trust by others. Furthermore, convenience theory emphasizes the relative importance of convenience, where offenders have alternative legitimate actions available to respond to incentives and pressures, but they choose illegitimate actions since these actions subjectively emerge as more convenient. We return to this theme when we compare Cressey’s (1972) fraud triangle with the convenience triangle. Some have suggested that there is nothing as practical as a good theory. Ployhart and Bartunek (2019: 495) suggest the opposite, that there is nothing as theoretical as good practice: In other words, we should start with the phenomena unveiled in practice situations.

The public has for too long explained the phenomenon of white-collar crime by greed. However, as we dive into cases of the white-collar phenomenon, we find a number of elements in practice that rather point at convenience in situations of alternative avenues. A phenomenon-driven theory such as convenience theory calls for more phenomenon-driven research, where the practice is a basis for theorizing. As Krogh et al. (2012: 278) explained: Phenomena can be defined as regularities that are unexpected, that challenge existing knowledge (including the extant theory) and that are relevant to scientific discourse. Thus, the aim of phenomenon-based research is to capture, describe and document, as well as conceptualize, a phenomenon so that appropriate theorizing and the development of research designs can proceed.

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More than two decades ago, there was an important debate about what theory is and is not, where the main contributors were DiMaggio (1995), Sutton and Staw (1995), Weick (1995), and Weick et al. (2005). Sutton and Staw (1995: 378) define theory in the following way: Theory is about the connections among phenomena, a story about why acts, events, structure, and thoughts occur. Theory emphasizes the nature of causal relationships, identifying what comes first as well as the timing of such events. Strong theory, in our view, probes underlying processes so as to understand the systematic reasons for a particular occurrence or nonoccurrence. It often burrows deeply into microprocesses, laterally into neighboring concepts, or in an upward direction, tying itself to broader social phenomena. It usually is laced with a set of convincing and logically interconnected arguments. It can have implications that we have not seen with our naked (or theoretically unassisted) eye. It may have implications that run counter to our common sense.

Corley and Gioia (2011: 12) provide a short definition of theory: Theory is a statement of concepts and their interrelationships that shows how and/or why a phenomenon occurs.

Various disciplines such as criminology, sociology, psychology, strategy, marketing, and management have developed a number of theories with the aim of explaining how and why individuals involve themselves in crime, and how they get involved in crime. Some of the theories are individualistic and look at risk factors in personality traits and family conditions (Listwan et al. 2010). Other theories emphasize ideology and culture, which represent the environment in terms of economy, society and structures. Sociological theories of white-collar crime, for example, postulate that managers who commit economic offenses live in a social setting, i.e. culture, in which a very high value associates with material success and individual wealth. Both economic theories and sociological theories are of the opinion that strong striving for wealth and enjoyment in some way contributes to economic crime committed by managers (Blickle et al. 2006). It is difficult to overstate the importance of theory to preventive understanding of white-collar crime. Theory allows analysts to understand and predict outcomes on a basis of probability (Colquitt and Zapata-Phelan 2007). Theory also allows analysts to describe and explain a process or sequence of events. Theory prevents analysts from avoiding confusion by the complexity of the real world by providing a linguistic tool for organizing a coherent understanding of the real world. Theory acts as an educational tool, which researchers use to develop insights into criminal phenomena such as financial crime in general and white-collar crime in particular. A theory is an undocumented explanation of a phenomenon or relationship. The opposite of theory is not practice. The opposite of theory is empirical findings. Both theory and empirical study are concerned with practice. While theory presents thoughts about practice, empirical study presents facts about practice. In this book, we apply the following definition of theory as summarized by Løkke and Sørensen (2014): A series of logical arguments that specifies a set of relationships among concepts. Specifically, we first introduce the main concept of

Theory of White-Collar Convenience

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convenience and describe convenience orientation. Next, we introduce three concepts as dimensions in convenience theory: desire for profit caused by threats and possibilities, organizational opportunity to commit and conceal, and personal willingness for deviant behavior. Finally, a set of relationships can link motive, opportunity and willingness. Convenience theory suggests that there are mutual influences among all three concepts. For example, greater opportunity can cause greater willingness, and greater willingness can lead to greater opportunity. The purpose of convenience theory is to explain why white-collar crime occurs, which again explains how white-collar crime takes place.

Theory of White-Collar Convenience The theory of convenience suggests that white-collar misconduct and crime occurs when there is a financial motive benefitting the individual or the organization, an organizational opportunity to commit and conceal crime, and a personal willingness for deviant behavior. Convenience theory assumes that crime is committed in an organizational context to make the label of white-collar crime relevant. This is in line with Sutherland’s (1939, 1983) original work, where he emphasized profession and position as key characteristics of offenders. The magnitude of white-collar crime as discussed earlier is thus the result of three factors according to convenience theory: • The gain that offenders can obtain serves to avoid a threat or to safeguard a possibility. For example, a more ambitious goal orientation leads to a stronger desire for profit. This is the economical dimension of convenience theory. Convenience implies that the illegal financial gain is a convenient option for the decision-­ maker to cover needs. The offender considers the current gain convenient when compared to future costs, and would like to avoid additional time, effort, sweat and pain to solve a problem. • The effort required to commit and conceal financial crime, the risk that someone detects and reports the offense, as well as encouragement from others to break the law. For example, a chief executive may act alone without anyone noticing or controlling. This is the organizational dimension of convenience theory. Convenience implies that the offender has convenient access to premises and convenient ability to hide illegal transactions among legal transactions. Crime is convenient as it often is an attempt to circumvent difficult (legal) means of accomplishment, such as hard work, fair competition, and navigation of bureaucracy and red tape. • Excuses that can justify the offense by lack of self-control and application of neutralization techniques. For example, the offender may argue that everyone else does it, and that there is something wrong with the law. This is the behavioral dimension of convenience theory. Convenience implies that the offender finds convenient justification and explanation.

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Defense lawyers argue that convicted white-collar criminals have a hard time in prison. They have to leave all their privileges and opportunities behind to join a community dominated by street crime inmates. The argument finds support in the special sensitivity hypothesis, which suggests a relatively tougher everyday life for white-collar crime inmates compared to street crime inmates. However, empirical studies of white-collar inmates do not support the special sensitivity hypothesis. Rather, empirical studies support the special resilience hypothesis, which suggests that white-collar offenders are able to adapt to prison life more successfully than other inmates are (Logan 2015; Logan et al. 2019). This research argues that the theory of convenience can provide support for the special resilience hypothesis. White-collar offenders tend to find new friends more conveniently, and they are able to sleep all night, while most other inmates may have trouble sleeping and making friends in prison (Dhami 2007; Stadler et al. 2013). The theory of convenience provides a basis for the special resilience hypothesis, because white-collar offenders tend to have a strong convenience orientation to avoid pain and waste of energy (Logan et al. 2019). Convenience theory suggests that white-collar criminals have a strong convenience orientation. The theory of convenience attempts to integrate various theoretical explanations for the occurrence of white-collar crime from sociology, psychology, management, organizational behavior, criminology, and other related fields to shed light on different perspectives of convenience. Convenience theory indicates that economic crime can be a convenient solution for senior executives, independent professionals such as attorneys, and other privileged individuals in private business, public administration, and political positions. Economic crime can be a convenient solution when people in the elite face economic threats and economic possibilities. Economic threats can occur both privately and in organizations where elite members occupy top positions. Offenders hide economic crime among legitimate activities and thus shelter the offense from insight by others in the organization and from the outside world. Convenience theory emphasizes the organizational opportunity to commit and conceal financial crime by white-collar offenders without detection. Supporting perspectives such as institutional perspective, agency perspective, routine activity perspective, social disorganization perspective, resource perspective, too big to fail perspective, and attribution perspective all shed light on organizational opportunities by privileged members of the elite when they are into wrongdoing, as discussed in following chapters. The extent of convenience in repeating an illegal act after detection and incarceration – that is recidivism – depends on the negative consequences experienced from the previous offense, as well as by the opportunity structure after release from prison. Kroeger and Weber (2015) found that recidivism declined with mentorship from rehabilitated ex-offenders. In the economical dimension of convenience theory, the motive for illegal gain might be stronger after imprisonment, especially after asset recovery by public authorities. Left with little or nothing, the released inmate might feel an acute need to recover and return to a level of material lifestyle that the person enjoyed before detection of his or her white-collar crime.

Theory of White-Collar Convenience

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This book emphasizes variation in convenience orientation as an explanation for variation in white-collar crime occurrence. This book thus makes a case for a specific way of explaining deviant behavior among elite members. A question worth addressing is what other explanatory hypotheses should be considered. There is a need to place the convenience perspective in a broader setting of proposed or rival explanations. The question is what other approaches exist to explaining the relevant behavior, and whether the convenience approach applies in other contexts as well. Future theory development might focus on a discussion of what counts as a satisfactory explanation. To address this question, it is relevant to return to Sutherland (1939, 1983) who coined the term white-collar crime. He emphasized attitudes in society where some consider white-collar crime less serious than traditional street crime. While convenience theory emphasizes factors at the individual and organizational level, Sutherland (1939, 1983) emphasized hypotheses at the community level. In its earlier versions (Gottschalk 2017, 2019), convenience theory was lacking explicit representations of community level factors such as criminal market structures including competition-avoiding cartels (Goncharov and Peter 2019; Leonard and Weber 1970) and corruption networks (Nielsen 2003). In a corruption network, “corruption is not an isolated phenomenon between seller and buyer, but a socially embedded exchange” (Berghoff 2018: 428). In its current version, convenience theory applies three levels of analysis. Firstly, the individual is the unit of analysis, as individual responsibility cause offenders to face conviction and incarceration for white-collar crime. In the economical dimension, both occupational crime and corporate crime find their triggers in individuals’ motives. In the organizational dimension, the trust and power associated with privileged individuals enable committing and concealing crime. In the personal dimension, the willingness for deviant behavior is at individual level. Next, the organization is the unit of analysis, as the financial situation of the organization can be a strong motive for economic crime. The organization provides opportunities to commit and conceal financial crime because of failing controls, institutional deterioration and corporate culture. The personal willingness for deviant behavior is stronger where corruption, fraud and other forms of financial crime are more common and accepted. Finally, the community is the unit of analysis mainly in an opportunity perspective. Community level factors such as corruption networks enable individuals and organizations to commit and conceal white-collar crime. At the community level, the focus is not on the isolated individual act of providing a bribe or receiving a bribe, but rather “the systematic, pervasive sub-system of bribery that can and has existed across historical periods, geographic areas, and political-economic systems” (Nielsen 2003: 125). Following in the tradition of Sutherland (1939, 1983), this books focuses on high-status individuals who are involved in organizationally and occupationally based offenses. These individuals have made convenient choices, and their criminal choices depend on individual and psychological characteristics as well as situational characteristics and opportunity structures.

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As long as white-collar crime is a convenient option to explore and exploit opportunities, to avoid threats and uncertainty, to climb in a pyramid of personal and organizational needs, and to reach goals, financial crime by upper-class people will continue to occur. Chan and Gibbs (2020) describe the theory of convenience as an integrated theory of white-collar and corporate crime that conducts a cross-level up and down integration. They suggest that the theory is a deductive and parsimonious integration by unifying concepts from macro-economic, meso-organizational, and micro-­ behavioral perspectives. All these concepts are glued together by the overarching concept of convenience. In summary, this chapter has described why offenders may consider and prefer illegitimate activities, when alternative legitimate actions are less convenient to achieve desired goals and to avoid problems. Convenience in terms of savings of time and efforts as well as avoidance of suffering and pain influences decision-­ making among potential white-collar offenders. Chief executive officers and other members of the business elite are often extremely busy and may think they have to choose convenient solutions to problems that occur on the way to achieving business objectives.

References Ashkanasy, N.  M. (2016). Why we need theory in the organization sciences. Journal of Organizational Behavior, 37(8), 1126–1131. Barney, J. (2018). Editor’s comments: Positioning a theory paper for publication. Academy of Management Review, 43(3), 345–348. Benson, M. L. (2013). Editor’s introduction – White-collar crime: Bringing the offender back in. Journal of Contemporary Criminal Justice, 29(3), 324–330. Berghoff, H. (2018). “Organised irresponsibility?” the Siemens corruption scandal of the 1990s and 2000s. Business History, 60(3), 423–445. Berry, L.  L., Seiders, K., & Grewal, D. (2002). Understanding service convenience. Journal of Marketing, 66, 1–17. Bigley, G.  A., & Wiersma, M.  F. (2002). New CEOs and corporate strategic refocusing: How experience as heir apparent influences the use of power. Administrative Science Quarterly, 47, 707–727. Blickle, G., Schlegel, A., Fassbender, P., & Klein, U. (2006). Some personality correlates of business white-collar crime. Applied Psychology: An International Review, 55(2), 220–233. Brooks, G., & Button, M. (2011). The police and fraud investigation and the case for a nationalized solution in the United Kingdom. The Police Journal, 84, 305–319. Chan, F., & Gibbs, C. (2020). Integrated theories of white-collar and corporate crime. In M. L. Rorie (Ed.), The handbook of white-collar crime (pp. 191–208). Hoboken: Wiley. Cohen, L.  E., & Felson, M. (1979). Social change and crime rate trends: A routine activity approach. American Sociological Review, 44, 588–608. Collier, J. E., & Kimes, S. E. (2012). Only if it is convenient: Understanding how convenience influences self-service technology evaluation. Journal of Service Research, 16(1), 39–51. Colquitt, J.  A., & Zapata-Phelan, C.  P. (2007). Trends in theory building and theory testing: A five-decade study of the Academy of Management Journal. Academy of Management Journal, 50(6), 1281–1303.

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Chapter 2

Economical Motive

In white-collar crime research, a distinction emerges between individuals and organizations as beneficiaries of crime. Therefore, this book makes the same distinction between occupational crime and corporate crime. Self-interested individuals commit occupational crime in their profession against their employers (e.g., embezzlement or receipt of bribes) and other victims (Shepherd and Button 2019). Organizational officials commit corporate crime in the larger interests of an organization, such as bribing potential customers, avoiding taxes by evasion, and misrepresenting accounting to get unjustified government subsidies. In motivational research, we can make a distinction between possibilities and threats. Possibilities open up avenues for exploration and exploitation. A more luxurious life style and an improved business performance represent possibilities. Threats represent pain and obstacles that everyone would like to avoid. A less successful lifestyle and the threat of bankruptcy can imply pain and suffering. The motive for white-collar crime is simply financial gain (Berghoff and Spiekermann 2018). The motive for financial gain, however, can vary. Crime might be a response to both possibilities and threats, and it might be a response to both strengths and weaknesses. An offense can enable exploration and exploitation of a business or a personal possibility that seem otherwise unobtainable. An offense can enable avoidance of business threats or personal threats. An offense can make the business or the personal situation even stronger, and it can reduce and compensate for business or personal weaknesses. A number of perspectives from the research literature can explain white-collar crime motives. I organize the various theoretical explanations in this chapter according to whether or not they focus on individual versus corporate needs, and whether or not they focus on possibilities versus threats. Motivation represents the reasons for people’s actions, desires, and needs. Motivation involves personality and cultural factors that induce individuals to act in ways that neutralize the strong ethical controls of society. Specific cultural factors that lead to crime and criminal behavior include the desire to make a fast buck and the fear of losing what already exists as material wealth (Aguilera and Vadera 2008). © Springer Nature Switzerland AG 2020 P. Gottschalk, The Convenience of White-Collar Crime in Business, https://doi.org/10.1007/978-3-030-37990-2_2

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Motivation is different from, but at the same time linked to opportunity (Steffensmeier and Allan 1996: 478): Motivation is distinct from opportunity, but the two often intertwine, as when opportunity enhances temptation. As in legitimate enterprise, being able tends to make one more willing, just as being willing increases the prospects of being able.

I return to this link between motivation and opportunity when I discuss the convenience triangle where motive, opportunity, and willingness can reinforce each other.

Attractive Individual Economic Possibilities Greed is the most acknowledged motive for financial crime by white-collar offenders. Goldstraw-White (2012) defines greed as socially constructed needs and desires that can never be completely covered or contended. Greed can be a very strong quest to get more and more of something, and there is a strong preference to maximize wealth. To outsiders it may seem strange that rich people have such a strong desire to become even richer that they are willing to break the law. However, as the definition indicates, greedy individuals are never happy with what they have, as they desperately want more all the time. Prosperity is not a means, but a goal for greedy individuals. Greed can grow when the organization does not have an adequate reaction (Haynes et al. 2015). Greed is a typical motive for occupational crime where individuals enrich themselves. Greed implies that some people never become satisfied with what they earn or what they own. There is a lack of satisfaction with whatever one has. Greed can be a strong quest to get more and more of something, and there is a strong preference to maximize wealth, as wealth is also a symbol of success. Greed leads to a need for an increasingly larger home, several chalets and summerhouses, bigger boat, luxurious vacations, and ownership in various enterprises. Greed is a desire among all sorts of people. When there are simple possibilities for financial gain to enjoy prosperity, then economic crime can be a convenient action. Both Bucy et al. (2008) and Hamilton and Micklethwait (2006) emphasize greed as the most common cause of criminal acts by white-collar offenders. The hierarchy of needs is another well-known motive for financial crime by white-collar offenders. Needs start at the bottom with physiological needs, needs for security, social needs, and needs for respect and self-realization. When basic needs such as food and shelter are satisfied, then the person moves up the pyramid to satisfy needs for safety and control over own life situation. Higher up in the pyramid, the person strives for self-respect, status, and recognition (Maslow 1943). While street crime is often concerned with the lower levels, white-collar crime is often concerned with the upper levels in terms of status and success. Most individuals will want to move higher up in the pyramid when needs below are satisfied. As far as money or other valuable items can help climbing higher in the pyramid, potential offenders may find white-collar crime convenient if other options to achieve success

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are more stressful and require more resources. Whether the offender wants more at a certain level or wants to climb to higher levels in the pyramid, financial crime can be a means to the end. For some white-collar criminals, money is the goal of crime. For other white-collar criminals, money is a means to a goal of acceptance, influence and fame. For example, to achieve acceptance and recognition as a successful businessperson, the enterprise has to grow and make money. Financial success as a businessperson can lead to influence, privileges, and status. Admiration and respect in the elite is a desirable goal for many individuals. If it seems difficult and full of strain and pain to reach such a goal by legal means, illegal means represent an alternative. High-status individuals strive for fulfillment, self-esteem and esteem from others. As Agnew (2014: 2) formulates it: “crime is often the most expedient way to get what you want” and “fraud is often easier, simpler, faster, more exciting, and more certain than other means of securing one’s ends”. Glory and power are important to many in the elite in society. They care about status symbols that cost money. They care about treatment as very important persons (VIPs), having reserved parking spaces, and being preferred customers in noble restaurants. They care about flying first class on planes, and they care about staying in suites in hotels. At work, they care about having the corner office on the top floor with a large meeting table and comfortable chairs to show their positions. Visible status symbols in all varieties are often self-perpetuating in power. It is convenient to enjoy privileges and status symbols. Façade and personal reputation is important to take care of to keep their positions in the elite. When their positions in the elite are threatened, then some try to compensate by white-collar crime. Many law-abiding members of the elite use their economic prosperity to climb to the top of Maslow’s hierarchy of needs. Rich people want respect and reputation as well as status and admiration in the community. One way of achieving status is by giving away money through philanthropic behavior. A philanthropist is someone seemingly without self-interest willing to help disadvantaged and ignoring financial gain. Words like status, privileges, recognition, fame and admiration are all associated with both law-abiding as well as criminal white-collar people. White-collar offenders commit economic crime to climb, to remain in or to avoid falling from the pyramid. Hausman (2018: 383) mentions Samuel Insull as a classic philanthropist among white-collar offenders: The most visible figure in the holding company movement and its collapse, and indeed, in the entire history of the electric power industry in the United States, was Samuel Insull… He was instrumental in shaping an industry that brought electric power to millions of people and was a noted philanthropist as well.

In addition to greed and the hierarchy of needs, there are a number of other factors suggested in the research literature, which make white-collar crime relevant for attractive individual economic possibilities. An important factor in many societies is the American dream of prosperity and success (Schoepfer and Piquero 2006). According to the American dream perspective, the ultimate symbol of success and happiness in life is economic wealth. The ultimate goal for every citizen and the sign of success is to become financially rich. Everyone has the opportunity to climb one’s

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way to wealth, since America is the land of opportunity. Those who fail perceive themselves as failures and may chose illegal means to make the dream come true. The American dream places a dominant emphasis on the accumulation of visible assets, thereby increasing individual crime willingness by a concurrent emphasis on what means are acceptable for reaching desired ambitions (Pratt and Cullen 2005). The American dream emphasizes single mindedly only economic success, while at the same time society seems to be restricting individuals’ access to legitimate opportunities for upward socioeconomic mobility, which, in turn, can result in high levels of criminogenic anomie in society. A high white-collar crime rate finds an explanation in the commitment to the objective of material success as emphasized in the American dream. It is an extreme one-sided emphasis on success in exposed assets (Trahan et al. 2005). Other values, such as relationships, health and a meaningful job have relatively little or no importance in the American dream perspective. The American dream perspective can explain climbing in the pyramid by both law-abiding and criminal individuals. The American dream suggests that everyone in America has the possibility of becoming monetary successful. A cause for a high white-collar crime rate is a dedication and commitment to the goal of material success as experienced in the American dream. It is caused by an overemphasis on success in exposed assets (Schoepfer and Piquero 2006), and it is not matched by a concurrent emphasis on what means are legitimate for reaching desired goals (Pratt and Cullen 2005). When fewer people experience that they are unable to live the American dream by mean of law-abiding behavior, then more people will explore alternative avenues to live the American dream. In an empirical study in Germany, Cleff et al. (2013) identified four motivational factors for white-collar crime. (1) The offender seeks recognition and esteem shown by others. The offender is typically a narcissistic visionary who seeks constant ego stroking from those around. They employ their professional success and money to glorify further their inflated self-image. (2) The offender seeks security and secure livelihood for the family. (3) The offender seeks fulfilment of social norms. (4) The offender suffers from hedonism where the pursuit of pleasure and intrinsic goods are the primary or most important goals of human life. A hedonist strives to maximize pleasure and a luxurious lifestyle. Some high-status individuals have a need for acclaim as narcissists (Chatterjee and Pollock 2017; Zhu and Chen 2015). If illegal financial gain can help achieve desired acclaim, narcissists might feel entitled to crime (Nichol 2019). Narcissists exhibit an unusual trust in themselves, believing that they are uniquely special and entitled to more benefits than are legitimately available to them (Ouimet 2010). A particular version of narcissism is narcissistic identification with the organization, where the offender sees little or no difference between self and the business. Then company money is personal money that can be spent whatever way the narcissist prefers (Galvin et al. 2015). A pervasive pattern of grandiosity, need for admiration, and empathy deficits typifies narcissism. While grandiosity and admiration belong to the motivational dimension of convenience theory, empathy deficits belong to the willingness dimension of convenience theory where the offender possesses a sense of entitlement (Nichol 2019). The offender shows unreasonable expectations to receive and obtain preferential treatments (Zvi and Elaad 2018).

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Financial crime can be justified to restore the perception of equity and equality (Leigh et al. 2010). The equity perspective suggests that an executive or other privileged person compares his or her work efforts to another person or group of persons chosen as reference. A situation evaluated being without equity, will initiate behavior to reestablish equality and to remove the feeling of discomfort. The equity perspective proposes that individuals perceiving being unfair rewarded will feel distressed and therefore try to restore the perception of equity (Huseman et  al. 1987). Executives may choose from one or more different referents – or standards – in determining the equitableness of their pay (Martin and Peterson 1987). Organizational setting may influence an individual’s equity sensitivity level, as employees with advanced education might develop abstract moral principles differentiating themselves from rules, implementing their own autonomous principles, as well as constructing personal opinions of what is right and what is wrong (Roehling et al. 2010).

Painful Individual Economic Threats The strain perspective has become one of the leading theoretical explanations for crime (Langton and Piquero 2007). Strain associated with potential collapse and bankruptcy of an enterprise can trigger tax evasion, corruption, and fraud. The strain perspective argues that a range of factors influence whether individuals cope with strains through crime (Thaxton and Agnew 2018: 888): Criminal coping is said to be most likely among those with poor coping skills and resources, little social support, low social control, beliefs favorable to crime, criminal associates, and opportunities for crime.

The strain perspective emphasizes strains and stressors that increase the likelihood of crime, the negative emotions (including anger) resulting from those strains that create pressure for corrective action, and the factors that influence or condition the likelihood of criminal coping (Thaxton and Agnew 2018). The strain of survival within diverse opportunity structures, such as in an organizational context, may lead to adaptations of crime, delinquency, and other deviant behavior. The disjunction between goals and means create strain that an individual wants to overcome. Unrealistic expectations may come from a number of sources, including families, friends, media, life events and self (Hoffmann 2002). Agnew (2005) identified three categories of strain: failure to achieve positively valued goals, the removal of positively valued stimuli, and the presentation of negative stimuli. Strain theory posits that each type of strain ultimately lead to deviance for slightly different reasons. All three types tend to increase the likelihood that an individual will experience negative emotions in proportion to the magnitude, duration, and closeness of stress. Strains most likely to result in crime are those seen as unjust and high in magnitude, associated with low social control, being close in threat and consequence, and creating some incentive to engage in criminal behavior.

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Strains are events and conditions that individuals dislike. Strains lead to negative emotions and thereby create pressure for corrective action. Crime is one possible action, which seems attractive to some privileged members of the elite as a means to escape from or reduce strains (Froggio and Agnew 2007). The strain of pursuing goals within diverse possibility structures may lead to adaptations such as crime, delinquency, and other deviant behaviors (Hoffmann 2002). Delinquency results when individuals are unable to achieve their goals through legitimate channels (Agnew 2012). Sources of strain include failure to achieve inspiration, to achieve aspiration and to achieve fair and just outcome. Individuals, who suffer such failures that increase their reflected appraisal, will tend to commit financial crime because they want to reclaim their power of advantage. In an empirical study by Langton and Piquero (2007), they found that the strain perspective was useful for predicting a select group of white-collar offenses. Using data about convicted white-collar offenders, they examined the ability of the strain perspective to explain white-collar offenses. First, they found that strain was positively and significantly related to financial motivations for offending. Next, they found that individuals reporting higher levels of strain were more likely to engage in types of financial crime with higher complexity. Third, strain relates to negative emotions. Finally, strain among white-collar offenders had a negative relationship to business-type motivations for offending. Langton and Piquero (2007) suggest measurement of strain among white-collar offenders in terms of events such as: 1. Number of legal marriages, where two or more legal marriages can cause more strain. 2. Neighborhood, where lower class or lower middle class can cause more strain. 3. Academic performance, where failure to achieve positively valued goals is assumed to imply more strain. 4. Total assets, where less wealth can cause more strain. 5. Total liabilities, where more debts can cause more strain. 6. Employment history, where failure to achieve positively valued goals is assumed to imply more strain. Offense types can measure levels of white-collar crime that form a hierarchical pattern in terms of their organizational complexity and the harm they inflict (Langton and Piquero 2007): 1. Low-level white-collar crime such as embezzlement, tax offenses, and credit fraud. 2. Mid-level white-collar crime such as mail fraud, bribery, and false claims. 3. Complex large-scale corporate crime such as antitrust and securities violations. By means of logistic regression, Langton and Piquero (2007) attempted to predict crime level by strain factors. They proposed that more strain would lead to higher level of white-collar crime. Overall, however, they found no significant support for this explanation.

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Strain has many potential causes. The theory of crime forces suggests that the market is such that the only way to survive is to implement financial practices similar to the ones applied by competitors (Leonard and Weber 1970). If corruption is the name of the game, every business has to provide bribes to stay in business. Strain typically occurs in times of economic failure and inability to achieve class status. Strain triggers negative emotional states such as anger, fear, or depression, with anger being potentially the most criminogenic emotion. Of course, not all straining experiences or strained individuals resort to illegitimate coping strategies because there are often available legitimate – but less convenient – coping mechanisms that they could turn to. Different types of strain appear to influence different types of negative affect, which in turn influences whether a potential offender chooses a legitimate or illegitimate coping to adapt to strain. Angry responses to strain seem to increase the likelihood of illegitimate coping while no angry responses to strain appear to decrease the probability of illegitimate coping (Ngo and Paternoster 2016). Agnew (2014) introduced the motive of social concern and crime, where there is a desire to help others, and thus moving beyond the assumption of simple self-­ interest. However, as argued by Paternoster et al. (2018), helping others can be a self-interested, rational action. The self-interest or self-regarding preference and that rationality can imply interest in other’s materialism. While the economic model of rational self-interest focuses on incentives and detection risks and associated costs (Welsh et al. 2014), Agnew (2014) suggests that economic crime can also be committed when individuals think more of others than of themselves. An entrepreneur can commit financial crime to ensure that all employees have a job where they can return. A trusted employee can pay bribes to make sure that the company will have new orders to survive in the future. An executive may commit embezzlement to be able to help his adult children to recover after personal bankruptcy. Agnew (2014) believes that social concern consists of four elements, namely that (1) individuals care about the welfare of others, (2) they want close ties with others, (3) they are likely to follow moral guidelines such as innocent people should not suffer ham, and (4) they tend to seek confirmation through other people’s actions and norms. That a person puts others before oneself will initially lead to less crime. However, economic crime may be committed where the welfare of others and their success is the motive. TenEyck and Barnes (2019) tried to test the association between Agnew’s social concern and criminal behavior. Painful individual economic threats include the fear of falling from a high-status position in society. Many top executives and other members of the elite in society have a fear of falling from their positions (Piquero 2012). The fear of falling perspective suggests that the motivation for financial crime by white-collar offenders is the fear of losing what one has worked so hard to achieve. The offender has worked intensively over many years to create the business and to receive the recognition and prestige that goes with success. The fear of losing and falling from grace can stimulate illegal behavior to survive as member of the elite in society. Crime motivation increases in order to maintain privileged positions. The fear of falling perspective suggests that people in leading positions are afraid of the consequences of failure

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and therefore try to survive in their privileged positions by applying various means. They are afraid of falling off the financial cliff and losing their wealth and status that goes with it. Therefore, they work constantly hard to remain successful, preferably more successful than others do, while not having the time to relax and enjoy their wealth because of their fear of failure. This struggle for financial success and the maintenance of that success are important to them. The fear of falling leads to criminal outcomes in different times characterized by acute illiquidity or sales decline. The fear of falling contributes to the convenience of white-collar crime in the organizational setting. Kouchaki and Desai (2015: 362) found that the threat of falling might lead to unethical behavior: Perceived threat engenders self-protective defenses that cause people to focus narrowly on their own needs, which interfere with adherence to moral principles and encourage unethical acts.

Kouchaki and Desai (2015) suggest that people experiencing anxiety, nervousness and worry are likely to behave selfishly and engage in self-interested unethical acts is an effort to restore the threatened self. Individuals experiencing threats tend to focus inward and acquire resources as a means of compensating for threats. In threatening situations, the brain tends to shift into a state that facilitates mobilization of defense mechanisms. Threats imply the salience of risk of loss. Threats tend to bring about socially undesirable actions geared toward self-protection. To cope with threat, people rely on a variety of potential mechanisms to shield themselves from negative experiences and unpleasant feelings, and ultimately to protect their self-esteem. Not all members of the elite are as successful as they would like to be. Some feel that they lack resources and thus the ability to achieve their ambitious goals. They blame the system rather than themselves for their lack of success, and they compensate by white-collar crime (Wood and Alleyne 2010). The perspective of loss aversion states that the disutility of giving up an object is greater than the utility of acquiring one (Nichol 2019). Organizational death in the form of bankruptcy does not only cause a fall from grace that entrepreneurs and executives are desperate to avoid. Job loss as a consequence of bankruptcy also makes individuals lose their worth in others’ eyes, lose a means of organizing their time, lose the companionship of their co-executives, lose their status and titles, lose their dreams, lose an era in their lives, lose a place in their communities, and lose an office to visit every day. Loss of self-esteem is a typical consequence of organizational failure (Crosina and Pratt 2019).

Attractive Corporate Economic Possibilities In many organizations, ends justify means (Campbell and Göritz 2014). If ends in terms of ambitions and goals are difficult to realize and achieve in legal ways, illegal means represent an alternative in many organizations (Jonnergård et  al. 2010).

Attractive Corporate Economic Possibilities

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Among most executives, it is an obvious necessity to achieve goals and objectives, while it is an obvious catastrophe failing to achieve goals and objectives. Welsh and Ordonez (2014) found that high performance goals cause unethical behavior. Dodge (2009: 15) argues that it is tough rivalry making executives in the organization commit crime to attain goals: The competitive environment generates pressures on the organization to violate the law in order to attain goals.

Individual executives would like to be successful, and they would like their workplace to be successful. Being associated with a successful business is important to the identity of many executives. They explore and exploit attractive corporate economic possibilities in both legal and illegal ways, so that their organization can emerge just as successful, or as even more successful, than other organizations. Profit orientation becomes stronger in goal-oriented organizations whose aim tends to be an ambitious financial bottom line. When an organization develops and maintains a strong systematic socialization program, employees not only identify with the organization but also its goals. When personal promotion or dismissal, as well as bonuses and benefits link directly and individually to the achievement of goals, then employees identify even stronger with organizational goals. When the socialization process couples tightly to strong accountability systems, employees perceive individually oriented regulation to achieve organizational goals. The pursuit of goals does not at all imply the absence of crime. The bottom-line focus within an organizational context might increase the frequency of financial crime on behalf of the organization for profit or enhancement. A strong emphasis on goal attainment might indeed lead organizational members to engage in illegal acts (Kang and Thosuwanchot 2017). Incentive systems such as bonus arrangements can lead to white-collar crime such as corruption to meet sales targets or other targets on which bonus payments depend. Alternatively, the offender can pretend having met targets by manipulating accounting (Nichol 2019: 329): Bonus contracts have come under a great deal of criticism in the past few years for creating incentives that encourage managers to manipulate accounting information in order to maximize their pay. Such manipulation can range from subtle earnings manipulation to outright fraud.

When executives perceive high performance goals as invariable, personal desperation for goal achievement can result (Kuvaas et al. 2016: 401): Perceiving goals as invariable refers to the extent to which employees believe that the goals in a performance management system represent absolute standards that they must meet without exception, even if they think other factors are more important.

Corporations enter into exchange relationships with other corporations that may be suppliers, customers, banks, and consultants. Exchanges can be thought of as discrete events nested within continuous relationships that are developing and changing over the course of time. Central to exchange theory is the transfer of resources between two entities, with a resource being something that another entity values. Reciprocity such as kickbacks are natural according to expectations in an exchange relationship (Huang and Knight 2017).

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An organization is always looking for attractive corporate economic possibilities. Profit-driven crime is a result of a desire for more gain (Naylor 2003). We thus develop an understanding of profit-driven crime in mainly economic rather than in sociological terms. The profit-driven crime prospective suggests a typology that shifts the focus from actors to actions. Rather than focusing on profit-driven crime as a logical sequence of actions, it deconstructs the crime into its inherent characteristics, which differ radically according to whether an offense is predatory, market-­ based or commercial in nature. Among the principle characteristics is whether transfers of property occur by force, free-market exchange or fraud, whether those transfers involve redistribution of wealth, distribution of income, or redistribution of income; and whether the crime occurs in a non-business, underground network or legitimate business setting. The profit-driven crime perspective answers the how-­ question, rather than who-question or why-question concerned with white-­ collar crime. In his perspective of profit-driven crime by Naylor (2003), predatory offences involve redistribution of existing legally owned wealth from one party to another. Marked-based offences involve evasion of regulations, taxes, and prohibitions. Commercial offences involve illegal methods to distribute goods and services. Predatory crime involves the illegal redistribution of existing wealth, market-based crime involves the illegal earning of new income, and commercial crime involves the illegal redistribution of legally earned income. Wealth refers to a stock of assets that accumulates or deteriorates over time, and wealth measurement takes place at a specific point in time. On the other hand, income refers to a flow of value per unit of time. Predatory crime is crime purely of redistribution of existing wealth. Examples include bank fraud and embezzlement. Marked-based crime is crime of distribution of new income. Examples include tax evasion and environmental pollution. Exploitation of attractive corporate economic possibilities can cause environmental pollution. An example is the oil exploitation in the Gulf of Mexico that caused serious environmental pollution. British Petroleum (BP) operating the Deepwater Horizon platform faced criminal charges amounting to US$4 billion because of environmental crime. A federal court in New Orleans sentenced BP to pay the record sum (Müller 2018). Commercial crime is crime of illegal methods. Examples include corruption and cartel pricing with competitors. One cartel pricing approach is to agree among cartel members on who is next in line. That business provides a very expensive offer to the customer. The other cartel members provide offers as well, but they price their offers even higher than the business that is next in line (Goncharov and Peter 2019). Bribery descriptions include “grease in the wheels of commerce” that causes offenders to allocate their resources to the most profitable activities (Cuervo-Cazurra 2016: 40): Corruption is usually seen as sand when it is the government official who demands the bribe, but it is usually seen as grease when it is the manager who offers to pay a bribe to get something that helps the company.

Painful Corporate Economic Threats

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Convenience theory emphasizes that a white-collar offense is a crime-by-choice, where legal means less conveniently might enable satisfaction of needs. Convenience theory stresses that there are always alternatives to crime. The theory thus contradicts one part of Berghoff and Spiekermann’s (2018: 291) definition of white-collar crime, where white-collar crime is an illegal act “to secure financial returns that cannot be collected by legal means”. While sometimes almost impossible, there will always be avenues available for legal paths to reach goals in more stressful and painful ways.

Painful Corporate Economic Threats Markets with crime forces can represent painful corporate economic threats. In many markets, there are cartels that regulate the supply side. A cartel is an implicit agreement between firms in the same industry to fix prices, to divide customers and markets among themselves, to fix industry outputs, to allocate territories, or to divide profits (Goncharov and Peter 2019: 152): Cartel members seek to act collectively, as if they were a single monopolist, thereby maximizing the collective profit. By doing so, cartels violate competition policy and severely reduce consumer welfare through price-fixing activities that increase the price of goods far beyond the competitive level. Recent evidence shows that the average price overcharges by cartels prosecuted by U.S. and EU cartel authorities were 48.4 and 32.2 percent, respectively.

Supply to some customers occurs only from some vendors, while supply to other customers occurs only from other vendors in the cartel. There is only symbolic competition between vendors as far as they all seem to offer their products to all potential customers. Cartel members agree not only on market division but also on prices to various customers. When a public procurement officer asks for offers from all potential vendors, they may all provide an offer. However, they have agreed who is next by determining the relative price offer among themselves. The vendor next in line provides an expensive offer to the public procurement officer, while the remaining vendors provide offers that are even more expensive to the public procurement officer. Being a member of a cartel is illegal in most countries, yet they exist all over the world. Trying to operate outside a cartel in an industry can be painful and ­impossible to survive. To stay in the industry, businesses have to adapt to the usual way of business in markets with crime forces (Leonard and Weber 1970). In some markets, there is no other choice but to break the law. If a cartel completely dominates a market, then a new entrant may perceive no other choice but to join the cartel and cooperate with others on price fixing and other illegal activities. The market is such that the only way to survive is to implement financial practices similar to the ones applied by competitors. If corruption is the name of the game, every corporation in the industry has to provide bribes to stay in business.

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Leonard and Weber (1970: 408) argued that researchers pay too little attention to market forces as a reason for criminal behavior: Insufficient attention has been focused by sociologists on the extent to which market structures - that is, the economic power available to certain corporations in concentrated industries - may generate criminal conduct.

Threats in the workplace may stem from specific market conditions and market forces. Some business enterprises can be so dominant in an industry that others may only survive through economic crime. The threat of losing everything they have built up working very hard over a long period may cause owners who once were entrepreneurs to intervene and commit VAT fraud and tax evasion in order to prevent their own empire from collapse. The alternative for the former entrepreneurs can be bankruptcy crime by removing all assets before bankruptcy so that creditors receive little or nothing. The purpose is to protect the economic interests of the business (Blicke et al. 2006) and possibly start up again without debts. Threats can come from a monopoly, where potential competitors have the choice either to commit crime or to join the monopoly (Chang et al. 2005). When competitors have formed a cartel, an emerging business may either have the choice to join the illegal collusion or going bankrupt. Economic balance, preferably excess, is a requirement in the end to survive in all kinds of markets (Brightman 2009). Financial motives of white-collar criminals can find explanations in typologies of offenders. Geest et al. (2017: 547) make a distinction between crisis responders, opportunity takers, opportunity seekers and stereotypical criminals: Crisis responders are low-frequency offenders who commit white-collar offences typically in response to a crisis occurring in their personal or professional life (for example, financial pressures or pressures from colleagues). Few have multiple convictions for other offences and typically, these offenders lead ordinary and law-abiding – though at times troubled – lives. They often own or manage small businesses that provide them the means to commit white-collar crime. The second group of offenders is called opportunity takers. To them, committing an offence is equally unusual. Yet, unlike crisis responders, their key motivation to engage in white-collar crime is to take advantage of a specific opportunity. They typically commit only one or two white-collar offences, and only when the chance arises. Crisis responders and opportunity takers constitute the bulk of white-collar offenders. Both are distinct from a third group of offenders, which is labelled opportunity seekers. This group of offenders actively seeks out opportunities to commit an offence. Despite characteristics of conventionality, they typically follow a more chronic – though intermittent – criminal career that spans multiple convictions. The fourth and final group of offenders is a small group of stereotypical criminals. Their white-collar offences are part of a mixed and high-­ frequent criminal career. Their profile is very similar to that commonly found in the general offender population: their personal lives reflect disadvantage, they often have experienced academic failure, and they show unstable employment careers.

While crisis responders react to painful corporate economic threats, opportunity takers and opportunity seekers react to attractive economic possibilities. Threats can create moral panic. Moral panic can characterize reactions that do not accurately reflect the actual danger of a threat. During a moral panic, sensitization processes generate an escalation in the individual disturbance (Kang and Thosuwanchot 2017).

Rational Self-Interest Motivation

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Chattopadhyay et al. (2001) studied organizational actions in response to threats. They found that threats are associated with urgency, difficulty, and high stakes. Threats involve a negative situation in which loss is likely and over which one has relatively little control. A possibility implies a positive situation in which gain is likely and over which one has a fair amount of control, while at the same time been characterized by urgency, difficulty, and high stakes (Chattopadhyay et al. 2001). In conformity with the managerial perspective in business literature which highlights the role of managers as agents in deciding enterprise strategies and operations (Lopez-Rodriguez 2009), as well as leading the activities required to implement corporate priorities, managers can develop and implement both legal and illegal strategies. Managers’ perceptions and interpretations determine their commitment to certain goals over other goals (sub-goals). The goal of business enterprises is to make a profit, where enterprises often have the choice between legal and illegal means. Strong and ambitious goal-orientation in competitive markets can lead to a strategic choice of white-collar crime. We understand profit-driven crime by both legal and criminal business enterprises mainly in economic rather than sociological or criminological terms. The amounts involved can be staggering (Menon and Siew 2012).

Rational Self-Interest Motivation Both individual and corporate responses to possibilities and threats can result from rational self-interest. The economic perspective is concerned with the influence of rational self-interest in explaining the development of white-collar crime (Pillay and Kluvers 2014). The economic model of rational self-interest is all about weighing up the pros and cons of alternative courses of actions. The model considers incentives and probability of detection (Welsh et al. 2014). This applies to both private and professional life. Human behavior finds motivation in the self-centered quest for satisfaction and avoidance of suffering (Hirschi and Gottfredson 1987). The economic model implies that white-collar individuals pursue their goals, make trade-offs between likely consequences and select actions from several available options. When crime is attractive as a means to fulfill desires and satisfy needs, a rational actor chooses that option. The white-collar individual assesses the b­ enefits and costs, where crime is the preferred option if the benefits of crime exceed the costs of crime, and crime is more attractive than non-crime activities. The damage suffered by the individual in case of detection multiplied by the perceived probability of detection is an element of the costs of crime. Since the perceived probability of detection usually is very low, the costs associated with crime are also very low. Because the economic model implies that crime can be a rational choice, the crime rate will be lower where potential offenders subjectively perceive the risk of detection to be greater, and where the punishment is stricter (Pratt and Cullen 2005). Rational choice theorists have taken a position that assumes that the standard eco-

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nomic theory of individual preferences will determine whether crime is committed. The greater benefits of crime and the less costs of crime, the more attractive it is to commit criminal acts. According to Berghoff and Spiekermann (2018: 293), potential white-collar offenders “act on cost-benefit calculations involving the expected utility, the likelihood of being caught, and punishment costs”. However, Kamerdze et  al. (2014) argue that impulses, emotions and feelings play a role in individuals’ preferences and utility functions, and therefore are relevant to the theory of rational choice, because impulses, emotions and feelings affect cognitive processes of decision-makers. For example, the feeling of discomfort may prevent a white-collar person from committing crime, even if he has a great need for financial gain to achieve personal goals and/or objectives for the business. The economic model of rational self-interest does not imply that every individual in the same situation will conclude and act in the same way. There will be different choices in the same situation because rationality is a subjective matter. For example, the objective detection risk will be the same in the same situation for everyone, while the subjective detection risk will vary with individual variation in risk perceptions, risk willingness and risk aversion (Berghoff and Spiekermann 2018: 293): Risk-averse people seldom, if ever, violate criminal laws. On the other hand, those who are risk-tolerant or even risk-seeking, i.e. who display fundamental characteristics of entrepreneurial personalities, are much more likely to become criminals.

A person with high-risk willingness and low risk aversion will tend to perceive the detection risk as very low, while a person with low risk willingness and high-risk aversion will tend to perceive the detection risk as not so low. Research suggests that there is a gender gap in terms of subjective detection likelihood. For example, women tend to have a stronger belief in speed control when driving on the highway. Therefore, men tend to drive faster than women do on the highway because men believe speed control is less likely. The explanation for why women more often adhere to speed limits is thus not necessarily that they prefer to be more law-abiding than men are. The economic model of rational self-interest has many factors that influence the decision whether or not to violate the law. An interesting factor is the extent of economic benefits after disclosure, sentencing and prison. If a potential criminal expects that asset recovery agencies are able to track down illegal financial gain, recover it and confiscate it, there is little to look forward to after incarceration and release from prison. On the other hand, a potential criminal can calculate that a fiveyear prison stay will make an annual salary of two hundred thousand dollars if one million dollars are waiting when released from prison. Especially for white-collar criminals with greed as their main motive, concealment of financial gain is critical in the case of crime disclosure. Therefore, many white-collar criminals invest large efforts to hide and conceal illegal financial gain both to avoid detection and to avoid confiscation. Tax havens and faithful family and friends are means to succeed in such efforts. On the other hand, law enforcement is committed to confiscating most profits from economic crime in terms of asset recovery. If law enforcement largely succeeds in terms of recovery of illegal profits, then the economic model suggests

Rational Self-Interest Motivation

31

that the tendency to commit crime will decline among white-collar people. An interesting example is Norway, where recent legislation has changed the burden of proof. Earlier, law enforcement had to prove that assets where acquired in illegal ways. Now, convicted individuals and firms have to prove that assets stem from legal activities. If they are unsuccessful in providing such proofs, then public authorities will confiscate assets. If the individual assesses economic crime as an attractive action in the form of gain now (profit for realization of current ambitions) compared to possible future cost (punishment, isolation, loneliness), and the individual prefers to avoid the use of more time and effort to solve problems preventing realization of ambitions, then convenience theory says that crime will occur. White-collar crime is not emotional or spontaneous abuse of power and influence. Rather, white-collar offenders calculate benefits, costs and risks in advance of action. The choice of an illegal action is a consequence of a selection of a convenience solution to a challenge or a problem. The perspective of rational self-interest suggests that people who commit crime do so after considering risks of detection and punishment (risk assessment) to be less important to them than rewards (financial gain) of completing criminal acts successfully. Persons who do not commit crime decide that completing the act successfully is too risky and not worth the benefits (Lyman and Potter 2007). In other words, if the rationally expected utility of an action clearly outweighs the expected disadvantages resulting from the action, thereby leaving some net material advantage, then every person will commit the offense in question (Blickle et al. 2006). Rational choice perspective suggests that humans are selfish, focused on achieving their own individual happiness directly or indirectly by the enjoyment of helping others. Happiness is to many people the highest moral purpose of rational existence. Altruism, in contrast, is thus irrational and determinative of undesirable outcomes. Here, sacrifice is the antithesis of rationality, where the individual surrenders the right to the wrong, good to evil. Self-interest finds its defense in the rational choice perspective by contrasting it with irrational sacrifice (Barry and Stephens 1998). Rational choice perspective adopts a utilitarian belief that the economical individual is a reasoning actor who weights means and ends, costs and benefits to make a decision whether or not to commit white-collar crime. For example, increase in detection rate will cause decrease in crime rate (Hefendehl 2010). Rational choice by individuals documents itself by individuals’ actions and by their reactions to others’ action. White-collar criminals can be both an act of actions as well as an act of reaction. The anticipated utility determines the choice individuals make by the subjectively expected utility, viewed as an indication of individuals’ beliefs and preferences that alternative behavioral strategies are expected to produce. The perspective of rational self-interest adopts a utilitarian belief that the economical individual is a reasoning actor who weights means and ends, costs and benefits to make a decision whether or not to commit white-collar crime. Utility theory suggests that a criminal will attempt to maximize the utility from criminal behavior. An expected utility maximizing criminal commits an illegal act and, if he or she is neither caught nor punished, increases personal or organizational wealth.

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In summary, this chapter has documented that greed is not the only motive for financial crime by white-collar offenders. Sometimes, the motive is removal of strain and pain, and the fear of falling from position. Other motives include the perspective of business ends justifying means in goal orientation, the desire to help others as social concern, an unusual way of business in markets with crime forces such as cartels, and the desire to restore a perception of equity and equality. Crime can be convenient to satisfy greed, remove strain and pain, avoid falling, and achieve other desired outcomes.

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Müller, S. M. (2018). Corporate behavior and ecological disaster: Dow chemical and the Great Lakes mercury crisis, 1970-1972. Business History, 60(3), 399–422. Naylor, R.  T. (2003). Towards a general theory of profit-driven crimes. British Journal of Criminology, 43, 81–101. Ngo, F. T., & Paternoster, R. (2016). Toward an understanding of the emotional and behavioral reactions to stalking: A partial test of general strain theory. Crime & Delinquency, 62(6), 703–727. Nichol, J. E. (2019). The effects of contract framing on misconduct and entitlement. The Accounting Review, 94(3), 329–344. Ouimet, G. (2010). Dynamics of narcissistic leadership in organizations. Journal of Managerial Psychology, 25(7), 713–726. Paternoster, R., Jaynes, C. M., & Wilson, T. (2018). Rational choice theory and interest in the “fortune of others”. Journal of Research in Crime and Delinquency, 54(6), 847–868. Pillay, S., & Kluvers, R. (2014). An institutional theory perspective on corruption: The case of a developing democracy. Financial Accountability & Management, 30(1), 95–119. Piquero, N. L. (2012). The only thing we have to fear is fear itself: Investigating the relationship between fear of falling and white-collar crime. Crime and Delinquency, 58(3), 362–379. Pratt, T.  C., & Cullen, F.  T. (2005). Assessing macro-level predictors and theories of crime: A meta-analysis. Crime and Justice, 32, 373–450. Roehling, M. V., Roehling, P. V., & Boswell, W. R. (2010). The potential role of organizational setting in creating “entitled” employees: An investigation of the antecedents of equity sensitivity. Employee Responsibilities and Rights Journal, 22, 133–145. Schoepfer, A., & Piquero, N. L. (2006). Exploring white-collar crime and the American dream: A partial test of institutional anomie theory. Journal of Criminal Justice, 34(3), 227–235. Shepherd, D., & Button, M. (2019). Organizational inhibitions to addressing occupational fraud: A theory of differential rationalization. Deviant Behavior, 40(8), 971–991. Steffensmeier, D., & Allan, E. (1996). Gender and crime: Toward a gendered theory of female offending. Annual Review of Sociology, 22, 459–487. TenEyck, M., & Barnes, J. C. (2019). A preliminary test of the association between Agnew’s social concern and criminal behavior: Results from a nationally representative sample of adults. Deviant Behavior, 40(2), 187–204. Thaxton, S., & Agnew, R. (2018). When criminal coping is likely: An examination of conditioning effects in general strain theory. Journal of Quantitative Criminology, 34, 887–920. Trahan, A., Marquart, J., & Mullings, J. (2005). Fraud and the American dream: Toward an understanding of fraud victimization. Deviant Behavior, 26(6), 601–620. Welsh, D.  T., & Ordonez, L.  D. (2014). The dark side of consecutive high performance goals: Linking goal setting, depletion, and unethical behavior. Organizational Behavior and Human Decision Processes, 123, 79–89. Welsh, D. T., Ordonez, L. D., Snyder, D. G., & Christian, M. S. (2014). The slippery slope: How small ethical transgressions pave the way for larger future transgressions. Journal of Applied Psychology, 100(1), 114–127. Wood, J., & Alleyne, E. (2010). Street gang theory and research: Where are we now and where do we go from here? Aggression and Violent Behavior, 15, 100–111. Zhu, D. H., & Chen, G. (2015). CEO narcissism and the impact of prior board experience on corporate strategy. Administrative Science Quarterly, 60(1), 31–65. Zvi, L., & Elaad, E. (2018). Correlates of narcissism, self-reported lies, and self-assessed abilities to tell and detect lies, tell truths, and believe others. Journal of Investigative Psychology and Offender Profiling, 15, 271–286.

Chapter 3

Organizational Opportunity

The organizational opportunity is concerned with illegal profit that seem more conveniently achieved in an organizational setting where the offender can enjoy power and influence based on position and trust. Opportunity suggests the ability to commit wrongdoing with the expectation that nobody will detect or report it, and the offender will not be punished (Schnatterly et  al. 2018). The organizational dimension sets white-collar criminals apart from other financial criminals. Whitecollar crime can be distinguished from ordinary crime (“street crime”) based on the status of the offenders, their access to legitimate occupations, the common presence of an organizational form, and the extent of the costs and harmfulness of such crime. Sutherland (1983) specifically focused on emphasizing the respectability of white-­ collar offenders, stating that persons of the upper socio-economic class commit all kinds of financial crime. The ability of white-collar offenders to commit and conceal crime links to their privileged position, the social structure, and their orientation to legitimate and respectable careers (Friedrichs et al. 2018). The opportunity perspective suggests that many white-collar offences manifest the following opportunity properties: (1) the offender has legitimate access to the location in which the crime is committed; (2) the offender is spatially separate from the victim; and (3) the offender’s actions have a superficial appearance of legitimacy (Benson and Simpson 2015). Opportunity is a distinct characteristic of fraud and corruption by white-collar offenders and varies depending on the kinds of criminals involved. An opportunity is attractive as a means of responding to desires, wishes and ambitions. The organizational dimension provides the white-collar criminal an opportunity to commit financial crime and conceal it in legal organizational activities as seemingly legitimate. Aguilera and Vadera (2008: 434) describe a criminal opportunity as “the presence of a favorable combination of circumstances that renders a possible course of action relevant”. Opportunity arises when individuals or groups can engage in illegal and unethical behavior and expect, with reasonable confidence, to avoid detection and punishment. It is convenient for the offender to conceal crime and give it an appearance of outward acceptability.

© Springer Nature Switzerland AG 2020 P. Gottschalk, The Convenience of White-Collar Crime in Business, https://doi.org/10.1007/978-3-030-37990-2_3

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High Social Status in Privileged Positions Some members of the elite are simply too powerful to blame. Pontell et al. (2014) found that the financial crisis obviously had its cause in mismanagement in the financial sector, but all in the financial sector avoided serious blame. Status-related factors such as influential positions, upper-class family ties, and community roles often preclude perceptions of blameworthiness (Slyke and Bales 2012). White-­ collar offenders “are now regarded as the untouchables, too well-heeled and powerful to lock up” (Hausman 2018: 381). Evidence of the perspective of too powerful to blame is the observation of the absence of prosecution after the disclosure of crime because authorities consider the organization too big to fail, and authorities consider executives too powerful to jail. In their classical article on the absence of failure prosecution after the 2008 financial meltdown, Pontell et al. (2014: 1) suggest that some were too big to fail and too powerful to jail: These companies had balance sheets that were saturated with securities containing toxic subprime mortgages. They collapsed, were bought by competitors, or were bailed out by the federal government with huge infusions of taxpayer money. For most onlookers, including criminologists and the public in general, the corporate actions represented intricate and arcane business practices that were difficult to understand fully and to portray as sound bites – and therefore tended to become trivialized in regard to their failure components.

One of the companies mentioned in their article is Lehman Brothers that went bankrupt. A private internal report of 2208 pages written by fraud examiner Valukas (2010: 16) concluded with innocence for the powerful executives who drove the bank into bankruptcy: “The business decisions that brought Lehman to its crisis of confidence may have been in error but were largely within the business judgment rule.” Some years later, Crosina and Pratt (2019) studied organizational mourning among former Lehman Brothers bankers. Pontell et al. (2014: 10) argue that the financial meltdown points to the need to unpack the concept of status when examining white-collar and corporate offenses: The high standing of those involved in the current scandal has acted as a significant shield to accusations of criminal wrongdoing in at least three ways. First, the legal resources that offenders can bring to bear on any case made against them are significant. This would give pause to any prosecutor, regardless of the evidence that exists. Second, their place in the organizations assures that the many below them will be held more directly responsible for the more readily detected offenses. The downward focus on white-collar and corporate crimes is partly a function of the visibility of the offense and the ease with which it can be officially pursued. Third, the political power of large financial institutions allows for effective lobbying that both distances them from the criminal law and prevents the government from restricting them from receiving taxpayer money when they get into trouble.

Pontell et al. (2014) mention criminal wrongdoing, where wrongdoing generally is a behavior that a social-control agent judges to transgress a line separating right from wrong, where such a line can separate legal, ethical, and socially responsible behavior from its antithesis (Schnatterly et al. 2018).

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High social status in privileged positions is sometimes associated with entrepreneurship, where an entrepreneurial individual can create opportunities for deviant behavior (Ramoglou and Tsang 2016). The entrepreneurship perspective emphasizes that entrepreneurs discover and create innovative and entrepreneurial opportunities. However, Ramoglou and Tsang (2016: 738) argue that opportunities are not the result of innovation, discovery or creation: “They are objectively existing propensities to be creatively actualized”. Criminal entrepreneurs thus actualize illegal opportunities in the shadow economy (McElwee and Smith 2015). Criminal entrepreneurship represents the dark side of entrepreneurialism. To understand entrepreneurial behavior by white-collar criminals, important behavioral areas include “modus essendi”, “modus operandi”, and “modus vivendi”. Modus essendi is a philosophical term relating to modes of being. Modus operandi is method of operating, which is an accepted criminological concept for classifying generic human actions from their visible and consequential manifestations. Modus vivendi represents the shared symbiotic relationship between different entrepreneurial directions (Smith 2009). Entrepreneurs are often important economic agents, driving forward employment, opportunities, and economic development. Entrepreneurship is associated with innovation, adaptation, change and dynamism, hard work, willpower, and overcoming challenges and struggles. According to Welter et al. (2017), entrepreneurship is a broadly available social technology for creating organizations that may pursue a myriad of goals. Tonoyan et  al. (2010) found that viewing illegal business activities as a widespread business practice provides the rationale for entrepreneurs to justify their won corrupt activities. While it might seem reasonable that individual corporate officers could be found guilty of violating laws without exhibiting any unlawful intent, negligence or knowledge, as long as they hold a position of responsibility, this is not the case in most legislations. Even if it is obvious that they could prevent the violation or failed to prevent it, they will never become a target for prosecution and possible incarceration. There is little or no support for the responsible corporate officer doctrine (Müller 2018). Rather, the worst that can happen as consequence of corporate crime is that the business organization has to pay a fine that in some countries can be a substantial amount. Individuals with high social status in privileged positions sometimes use language that people simply do not understand. Executives and others in the elite may use language that followers not necessarily understand – however nevertheless they trust executive messages (Ferraro et al. 2005). Cryptology is concerned with techniques for secure communication in the presence of third parties called adversaries. Cryptology is about constructing and analyzing protocols that prevent third parties or the public from understanding messages. In an organizational context, executive communication applies a management language that few others understand. According to Ferraro et al. (2005), language affects what people see or not see; how they see it; and the social categories and descriptors that they use to interpret their reality. Language shapes what people notice and ignore, and what they believe is and is not important. Reality is socially constructed, and language plays as

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i­mportant role in such constructions. Srivastava and Goldberg (2017) argue that language is a window into culture. Subcultures develop in the organization, where the language is different from other parts of the organization. The language through which people in the elite communicate with colleagues on the job illustrates how people fit into an organization’s culture or subculture. Language use can predict an individual’s influence and adaption on the job and can reveal distinct linguistic patterns for executives involved in misconduct and crime. Making sense of executive language, attorney language and other professionals’ languages is difficult for outsiders (Weick 1995). People tend to trust what they do not understand based on the authority positions occupied by senders of messages. Sense making links to crime signal detection by the challenge of perceiving and understanding a crime signal, as discussed below. The sense-making perspective consists of both the interpretation of information and generating results from interpretations. People give meaning to experiences by the sense-making process. Since most people have little or no experience with fraud and corruption, they will not understand crime signals related to financial crime. People without experience are not able to make sense of weak crime signals from white-collar offenders. They are unable to frame or categorize through words what the signal is about (Holt and Cornelissen 2014). Thus even if a signal of fraud or corruption is present, colleagues and subordinates are unable to make sense of it, since they lack experience. Only experience can help to give meaning. Without experience in the organization, a white-collar offender can feel quite safe, as nobody will be able to make sense of crime signals. Deviant individuals with high social status in privileged positions might not only use language that simply does not make sense to people. White-collar offenders can also use humor to distract attention from their crime. Offender humor distraction as suggested by Yam et  al. (2018) implies that potential white-collar offenders can influence the organizational opportunity structure by aggressive humor. Aggressive humor is a negatively directed style of humor that an individual caries out at the expense and detriment of one’s relationships with others. It can be teasing with a humorous undertone, or it can be victimization of the receiver. It can be the opposite of self-irony, where the offender makes jokes about others and make them look ridiculous. The more aggressive an offender’s style, the more a sense of humor will signal acceptability of norm violations for the offender. Aggressive humor is a form of hostile behavior. Aggressive leader humor expands the organizational opportunity for white-collar crime, and it influences the willingness of victims of such humor (Yam et  al. 2018: 349): The more aggressive a leader’s style, the more a sense of humor will signal acceptability of norm violations, which will be positively associated with deviance.

Aggressive humor refers to a specific style of humor aimed at teasing or ridiculing. It may include sarcasm humorously to convey disapproving information to followers. Aggressive humor may signal to followers that the accepted social norm of being respectful towards others is not important. It signals that violating norms of human decency is acceptable.

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The leader humor perspective suggests that leader sense of humor is positively associated with followers’ perceived acceptability of norm violations. When leaders display humor and, as a result, violate norms, followers will likely perceive that it is socially acceptable to violate norms in the organization for two reasons (Yam et al. 2018: 352): First, leaders’ formal position makes them strong sources of normative expectations. Leaders, as role models, are more likely to be observed by followers who are scanning the environment for information on how to behave in the work context. In other words, leaders who make light of norm violations in order to produce humor are likely to imply to followers that mild norm violations in the organizations are generally acceptable. Second, when a leader acts in a humorous manner, others will likely react with laughter and amusement, an implicit signal of approval. Followers will be likely to interpret this social information as signaling the acceptability of norm violations. When a norm violation is enacted  – and interpreted by others – in a playful, humorous way, it also signals to followers that violations need not be taken seriously or scrutinized.

High social status in privileged positions creates power inequality compared to those without any status in their positions. The perspective of power inequality suggests that, for example, family members in family firms wield significant influence in their firms (Patel and Cooper 2014). Family members often have legitimate access to firm resources that nonfamily executives in the firm cannot question. Individuals with high social status in privileged positions can cooperate to create a business climate of “organized irresponsibility” (Berghoff 2018: 425): The term implies that management had conspired to prevent efficient controls and therefore facilitated and promoted corruption.

Leaders reinforce a culture of financial crime by ignoring criminal actions and otherwise facilitate unethical behavior (Ashforth and Anand 2003).

Legitimate Access to Crime Resources A white-collar offender has typically legitimate access to resources to commit and conceal crime (Adler and Kwon 2002; Williams et  al. 2019). A resource is an enabler applied and used to satisfy human and organizational needs. A resource has utility and limited availability. A white-collar offender has usually access to resources that are valuable (application provides appreciated outcome), unique (very few have access), not imitable (resources cannot be copied), not transferrable (resource cannot be released from context), combinable (results in better outcome), exploitable (possible to apply in criminal activities), and not substitutable (cannot be replaced). According to Petrocelli et  al. (2003), access to resources equates access to power. Others are losers in the competition for resources (Wheelock et al. 2011). In the conflict perspective suggested by Petrocelli et al. (2003), the upper class in society exercises its power and controls the resources.

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Opportunity is dependent on social capital available to the criminal. The structure and quality of social ties in hierarchical and transactional relationships shape opportunity structures. Social capital is the sum of actual or potential resources accruing to the criminal by virtue of his or her position in a hierarchy and in a network (Adler and Kwon 2002). Social capital accumulated by the individual in terms of actual and potential resources, which are accessible because of profession and position, creates a larger space for individual behavior and actions that others can hardly observe. Many initiatives by trusted persons in the elite are unknown and unfamiliar to others in the organization. Therefore, white-collar criminals do not expect consequences for themselves (Adler and Kwon 2002). Berghoff and Spiekermann (2018: 291) argue that all economic transactions depend on a certain degree of trust, without which transaction costs would simply be too high for economic activity: White-collar criminals abuse the good faith of various stakeholders, from customers to the general public, from shareholders to the authorities. Therefore, white-collar crime often coincides with the breach of trust.

Offenders take advantage of their positions of power with almost unlimited authority in the opportunity structure (Kempa et al. 2009), because they have legitimate and often privileged access to physical and virtual locations in which crime is committed, are totally in charge of resource allocations and transactions, and are successful in concealment based on key resources used to hide their crime. Offenders have an economic motivation and opportunity (Huisman and Erp 2013); linked to an organizational platform and availability, and in a setting of people who do not know, do not care or do not reveal the individual(s) with behavioral traits who commit crime. Opportunity includes people who are loyal to the criminal either as a follower or as a silent partner, for example, when the follower perceives ambitious goals as invariable (Kuvaas and Buch 2018). The resource-based perspective postulates that differences in individuals’ opportunities find explanation in the extent of resource access and the ability to combine and exploit those resources. Executives and other members of the elite are potential offenders that are able to commit financial crime to the extent that they have convenient access to resources suitable for illegal actions. Access to resources in the organizational dimension makes it more relevant and attractive to explore possibilities and avoid threats using financial crime. The willingness to exploit a resource for fraud and corruption increases when a potential offender has a perception of relative convenience. Criminal acts disappear from easy detection in a multitude of legal transactions in different contexts and different locations performed by different people. The organizational affiliation makes crime look like ordinary business. Offenders conceal economic crime among apparently legal activity. Offenders leverage resources that make it convenient to conceal crime among regular business transactions. In particular, businesses that practice secrecy rather than transparency enable convenient concealment of financial crime. Chasing profits leaves people more creative in finding ways to make more legal as well as illegal profits for themselves and the organization, and people become more creative in concealing crime in various ways (Füss and Hecker 2008). Offenders carry out crime in such a way that the risk of detection is minimal and even microscopic (Pratt and Cullen 2005).

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As suggested by Berghoff and Spiekermann (2018: 290), sophisticated concealment is an important factor in white-collar crime: The privileged position of white-collar criminals is the result of several factors. Their offences are especially difficult to prosecute because the perpetrators use sophisticated means to conceal them. They can also often afford the best lawyers and have the political clout to influence the legislative process to their advantage and, if need be, to bribe prosecutors and judges. Additionally, the class bias of the courts works to their benefit. The law is often seen as not binding, at least not for and by economic elites.

White-collar offenders have legitimate access to premises (Benson and Simpson 2015; Williams et al. 2019), and they have specialized access in routine activities (Cohen and Felson 1979). The routine activity perspective suggests three conditions for crime to occur: a motivated offender, an opportunity in terms of a suitable target, and the absence of a capable or moral guardian. The existence or absence of a likely guardian represents an inhibitor or facilitator for crime. The premise of the routine activity perspective is that crime is to a minor extent affected by social causes such as poverty, inequality, and unemployment. Motivated offenders are individuals who are not only capable of committing criminal activity, but are willing to do so. Suitable targets are financial sources that offenders consider particularly attractive. Lack of guardians is not only lack of protective rules and regulations, audits and controls, but also lack of mental models in the minds of potential offenders that reduce self-control against attraction from criminal acts. Reyns (2013) expanded the routine activity perspective into online routines where insider business cybercrime occurs without direct contact. Lange (2008) defines organizational corruption as the pursuit of individual interests by one or more organizational actors through the intentional misdirection of organizational resources or perversion of organizational routines. Pinto et al. (2008) makes a distinction between corrupt organizations and organizations of corrupt individuals. A corrupt organization is usually a top-down phenomenon in which a group of organizational members – typically, the dominant coalition, organizational elites, or top management team  – undertakes corrupt actions. An organization of corrupt individuals is an emergent, bottom-up phenomenon in which informal processes facilitate personally corrupt behaviors that cross a critical threshold such that the organization deserves the characteristic of being corrupt. In the rare case of detection of possible crime, the potential offender has access not only to better defense as a strategic resource, but also often access to an alternative avenue of private investigation. When suspicion of misconduct and crime emerges, then the organization may hire a fraud examiner to conduct a private investigation into the matter. The enterprise takes control of suspicions by implementing an internal investigation (Gottschalk and Tcherni-Buzzeo 2016). An external law firm or auditing firm is engaged to reconstruct past events and sequence of events. Typically, the resulting investigation report points to misconduct, while at the same time concluding that there have been no criminal offenses. The police will monitor the internal investigation and await its conclusion. When the conclusion states that there may be misconduct, but no crime, then the police and prosecution tend to settle down with it.

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Legitimate access to crime resources is illustrated later in this book by the case of a chairman of the board who published his autobiography. The chairman used a tax haven where he had an account when he ran business through another company there. A tax haven is a country or place with very low or no rates of taxation for foreign investors, where foreigners enjoy complete secrecy about their investments. Money laundering of proceeds from criminal activity is an attractive opportunity in tax havens. On the legitimate side, the use of tax havens enables transfer-pricing strategies to lower overall tax burdens for multinational corporations. Subsidiaries located in tax havens serve multinationals to avoid taxes by shifting income from high-tax countries to low-tax countries. Firms also use tax havens in strategies that involve inter-company debt or leasing arrangements to shift income across jurisdictions. Tax authorities in various countries attempt to challenge this kind of tax evasion (Dyreng et al. 2019; Guenther et al. 2019).

Disorganized Institutional Deterioration Institutional deterioration can occur conveniently as result of external legitimacy where deviance is the norm (Rodriguez et al. 2005). Executive deviance enacted at institutional deterioration is dependent on a number of factors. For example, in the case of government corruption for multinational enterprises in host countries, both pervasiveness and arbitrariness are important factors. Pervasiveness is the average firm’s likelihood of encountering bribery, while arbitrariness is the inherent degree of ambiguity associated with corrupt transactions in a given nation or state (Rodriguez et al. 2005). Pinto et al. (2008: 686) define the beneficiary of corruption as the actor deriving direct and primary benefit from the action: “For example, even if individuals can benefit financially from corruption on behalf of the organization (e.g., through bonuses or high prices for their stocks), the organization is still the primary and direct financial beneficiary”. It becomes more convenient to commit financial crime by white-collar criminals in organizations characterized by moral deterioration and collapse. The institutional perspective of moral deterioration suggests that opportunities improve for white-­ collar criminals. For example, Bradshaw (2015) found criminogenic industry structures in the offshore oil industry. The institutional perspective contributes an understanding of organizational behavior that experiences influence from individuals, groups, other organizations, as well as the larger society of which they are a part. The perspective emphasizes how organizational structure and organizational culture derive from norms, attitudes and rules, which are common to most organizations in society. While organizational structure is characterized by design of positions in terms of job specialization, behavioral formalization, unit grouping and unit size (Donk and Molloy 2008), organizational culture is characterized by accepted practices, rules, and principles of conduct that are applied to a variety of situations, as well as generalized rationales and beliefs (Barton 2004).

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Berghoff and Spiekermann (2018: 291) found that white-collar crime is often systemic and part of a culture, either of a corporate culture inside the firm or of a culture in the firm’s environment: In the first case, the corporation’s control mechanisms are typically weak, intentionally or unintentionally, which is an obstacle to the prevention and the investigation of economic crimes. Individual responsibility is therefore hard to ascertain. Defendants routinely deny responsibility and point to their superiors who made them commit crimes, or to their inferiors who engaged in shady practices without their knowledge or authorization.

The institutional perspective applied to white-collar crime means that white-­ collar offenders find opportunity for and acceptance of illegal behaviors because of moral collapse generally in their organizations. The institutional perspective argues that business enterprises are much more than simple tools and instruments to achieve financial goals and ambitions. The perspective says that organizations are adaptable systems that recognize and learn from the environment by mirroring values in society. This reasoning is relevant to explain why business organizations tend to be similar in the same industry and the same nation and region (Kostova et al. 2008). Moral collapse happens when organizations are unable to see that bright line between right and wrong. Seven signs of ethical collapse can become visible: (i) pressure to maintain those numbers; (ii) fear and silence antidotes to openness; (iii) young ones and a bigger-than-life CEO; (iv) weak board; (v) conflicts; (vi) innovation like no other; and (vii) goodness in some areas atones for evil in others. Shadnam and Lawrence (2011: 379) apply the institutional perspective to explain moral decline and potential crime in organizations: Our theory of moral collapse has two main elements. First, we argue that morality in organizations is embedded in nested systems of individuals, organizations and moral communities in which ideology and regulation flow “down” from moral communities through organizations to individuals, and moral ideas and influence flow “upward” from individuals through organizations to moral communities. Second, we argue that moral collapse is associated with breakdowns in these flows, and explore conditions under which such breakdowns are likely to occur.

Shadman and Lawrence (2011: 393) formulated several research hypotheses, which imply that the likelihood of moral decline will vary depending on several circumstances: • Moral collapse is more likely to happen in organizations that operate in moral communities in which flows of corporate ideology and culture disappear. Either it can happen through a lack of commitment to formal communication mechanisms by community leaders, or it can happen through the disruption of informal communication networks by high rates of membership turnover. • Moral collapse is more likely to happen in organizations in which structures and practices diminish the organization’s capacity to absorb and incorporate morally charged institutions from the organization’s moral community, because the organization monopolizes the attention of its members and/or because the o­ rganization delegitimizes the morally charged institutions rooted in the moral community.

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• Moral collapse is more likely to happen in organizations in which accusing individuals of misconduct creates significant social and economic costs for the organization or the moral community within which it operates. • Moral collapse is more likely to occur in organizations to the degree that employment conditions undermine disclosure and/or work arrangements diminish the effectiveness of surveillance. The institutional perspective is mainly a sociological and public policy perspective on organizational studies. The perspective sheds light on normative structures and activities. The institutional perspective in public policy emphasizes the formal and legal aspects of government structures. Signs from organizations represent observations as indications of values in organizational members. When activities occur repetitively in the same way and within the same structure, then those activities become part of the institution itself, as the sum of activities based on shared perceptions of reality are an institution (Hatch 1997). The institutional perspective considers the processes by which structures, including schemes; rules; norms; and routines become established as authoritative guidelines for social behavior. Triggers of institutional adaption include political, cultural and social influences. Behavioral patterns supported by norms, values and expectations lead to cultural influence. A desire to equal others implies social influence. Normative institutional pressure is concerned with conformity, where deviance is disliked, disapproved or even dismissed (Hatch 1997). The institutional perspective is in line with the dysfunctional network perspective, in that organizations tend to mirror the basic elements of their environments. The largest business corporations can more easily absorb the negative impact of legal sanctions that certain governmental or regulatory agencies might impose on them. The largest business enterprises might have better lawyers and other resources, so that they are able to contend with legal pursuits in more effective and efficient ways. Microsoft versus the United States and Microsoft versus the European Union are typical examples. Therefore, laws and regulations tend to have less deterrent effect in the case of large business organizations (Dion 2008). Institutional deterioration often occurs at the same time as social disorganization, which further improves the opportunity structure for white-collar crime. The disorganization perspective argues that structural conditions lead to higher levels of social disorganization – especially of weak social controls – in organizations and between organizations, which in turn results in higher rates of crime (Pratt and Cullen 2005). Of course, rates of financial crime vary across time and space in private or public sector. Social disorganization increase offenders’ opportunities to commit financial crime without any likelihood of detection. Offenders have unrestricted and legitimate access to the location in which the crime is committed without any kinds of controls (Williams et al. 2019). Offenders’ actions have a superficial appearance of legitimacy also internally, since both legal and illegal actions in the organization occur in a manner characterized by disorganization (Benson and Simpson 2015).

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The social disorganization perspective argues that crime is a function of people dynamics in the organization and between organizations, and not necessarily a function of each individual within such organizations. Business enterprises experiencing rapid changes in their social and economic structures that are in a zone of transition will experience higher crime rates. Management mobility is another structural factor or antecedent that can produce organizations that develop into socially disorganized entities. Conventional mechanisms of social control are weak and unable to regulate the behavior within organizations (Pratt and Cullen 2005). Especially in knowledge organizations where the hierarchical structure tends to be weak, social controls among colleagues are of importance to prevent financial crime. An unstable and disorganized unit will suffer from lack of knowledge exchange and collaboration to prevent and detect white-collar crime (Swart and Kinnie 2003). Structural antecedents include not only management instability and rapid organizational changes, but also external factors such as family disruptions and no intelligence about life outside work. Social disorganization may well occur at the very top of organizations, where chief executives have created large business space for themselves without access from others. The board of directors is incapable of controlling chief executive activities (Ghannam et al. 2019). Rivalry among members of the top management group can create silos of allies and enemies in the organization that hardly communicate honestly with each other. There are no ties allowing others to act collectively to fight problems (Pratt and Cullen 2005). Corporate disorganization weakens the ability of social bonds to circumscribe delinquent behavior. In enterprises characterized by instability and heterogeneity, there is reduced likelihood of effective socialization and supervision. The impact of social bonds varies by type of organization and disorganized units negatively affect the ability of social bonds to reduce delinquent behavior (Hoffmann 2002; Onna and Denkers 2019). Concerted ignorance can occur in deteriorated organizations, where the normalization of deviant thinking and behavior in organizations develops. Employees slowly adapt to organizations’ deviant norms and values that become dominant due to the higher authority of deviating individuals (Katz 1979). The essence of a deteriorated institution is that its norms, behaviors, and ways of thinking are rooted in its deviant culture. For example, Campbell and Göritz (2014) identified corrupt organizations as enterprises that systematically receive bribes or provide bribes that lead to advantages in competitions. Executives who facilitate corruption either on the bribed or bribing side harm other companies for the advantage of their own organizations. In corrupt organizations, executives perceive corrupt behavior as appropriate. Disorganized institutional deterioration can cause potential whistleblowers become reluctant to blow the whistle on observed wrongdoings. Potential whistleblowers can fear organizational death and job loss. They may feel strongly for their organization, and they may be dependent on the income from their jobs. As argued by Crosina and Pratt (2019), organizations can foster deep bonds among their members, whether in the form of person-organization fit, organizational commitment,

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organizational identification, or some other type of attachment. A potential scandal from exposure of white-collar crime suspicion can threaten members’ bonds to the organization. Organizational failure and closure can lead to organizational mourning, which Crosina and Pratt (2019: 67) define as “the thoughts, feelings, and actions that individual members undergo when processing and responding to the loss of their organization”. The threat of organizational collapse is a stressor that can prevent attention to possible crime, which can create a scandal. Job loss because of a corporate scandal is detrimental to individuals’ needs, desires and goals. Job loss in conjunction to organizational death results in a large number of people entering the stage of organizational mourning that they all would like to avoid. An element of disorganized institutional deterioration is the opportunity of fraudulent misreporting in accounting (Qiu and Slezak 2019). Lack of transparency makes concealment in accounting convenient (Goncharov and Peter 2019). Elite members can withhold bad news by accounting misrepresentation (Bao et al. 2019). Balakrishnan et al. (2019) found that reduced corporate transparency is associated with increased corporate tax aggressiveness. Disorganized institutional deterioration in combination with lack of corporate social responsibility cause both internal and external collapse. Executives in the organization do not care about the community, the environment or product safety (Davidson et al. 2019). Lack of government and governance is another enabler of disorganized institutional deterioration. The last decades have seen a shift of regulatory authority of business conduct from governments to the private sector. Self-regulation and self-­ policing has become the norm rather than the exception when it comes to white-­ collar crime suspicions (Kourula et al. 2019). Kourula et al. (2019: 1103) define government as those public actors, which have exclusive authority over legitimate force in a specific territory: In our contemporary world, governments defined in this way are generally coextensive with nation-states. By virtue of this unique mode of authority, the “sine qua non” of state power, governments have the capacity, within their jurisdictions, to impose legally binding constraints and sanctions over non-governmental actors, whether in politics, society, or markets.

When there is suspicion of corporate white-collar crime, the government branch typically involved is the national criminal justice system. The police have the task of investigating suspicions by reconstructing past events and sequences of events. If the police find sufficient evidence of law violation, then the case moves to the prosecution. The defendant faces the prosecutor in court, where a jury or a judge decides whether the suspected criminal is guilty of law violation. Kourula et  al. (2019: 1104) define governance as those private actors, which direct behaviors in business conduct by rulemaking, enforcement and sanctioning: By “governance” we refer not to corporate governance, but to the wider concept of societal governance, that of the collective means to give “direction to society” which we take to include direction to society’s politics and markets.

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47

When there is suspicion of corporate white-collar crime, the governance branch typically involved should be the compliance function, potentially cooperating with internal and external auditors as well as various controllers. Internal or external fraud examiners have the task of investigating suspicions by reconstructing past events and sequences of events. If fraud examiners find sufficient evidence of law violation, then the case stops, moves internally or moves externally to the national criminal justice system. If secrecy to protect corporate reputation is the main concern, then the case typically stops and remains internal (Gottschalk and Tcherni-­ Buzzeo 2016). However, organizations with inefficient or non-existing compliance functions or governance branch generally, contribute to disorganized institutional deterioration.

Lack of Oversight and Guardianship The perspective of principal and agent suggests that when a principal delegates tasks to an agent, the principal is often unable to control what the agent is doing. Agency problems occur when principal and agent have different risk willingness and different preferences, and knowledge asymmetry regarding tasks exists (Eisenhardt 1985). The principal-agent perspective (or simply agency perspective) can illuminate fraud and corruption in an organizational context. The principal may be a board of a company that leaves the corporate management to the chief executive officer (CEO). The CEO is then the agent in the relationship. The CEO in turn may entrust tasks to other executives, where the CEO becomes the principal, while people in positions such as chief financial officer (CFO), chief operating officer (COO), and chief technology officer (CTO) are agents. Agents perform tasks on behalf of principals. A CEO may cheat and defraud owners (Khanna et al. 2015; Zahra et  al. 2005; Williams 2008), and a purchasing manager can fool the CEO when selecting vendors (Chrisman et al. 2007) by taking bribes that can cause the company to pay more for inferior quality, for instance. The agency perspective assumes narrow self-interest among both principals and agents. The interests of principal and agent tend to diverge, and the principal has imperfect information about the agent’s contribution (Bosse and Phillips 2016). According to principal-­ agent analysis, exchanges can encourage illegal private gain for both principal and agent (Pillay and Kluvers 2014). According to the agency perspective, managers are opportunistic agents motivated by individual utility maximization. Taking an economic model of man that treats human beings as rational actors seeking to maximize individual utility – when given the opportunity – then executives and other members of the elite will maximize their own utilities at the expense of shareholders and others. As evidenced by many internal investigation reports by fraud examiners after white-collar crime scandals, internal auditors, external auditors, compliance committees and other internal and external control units do not function properly (e.g., Bruun Hjejle 2018; Deloitte 2015, 2017; Shearman Sterling 2017). Oversight and

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control functions tend to be formal units without any insights into the substance of business activities. They tend to review procedures rather than transactions within procedures. Therefore, ineffective control functions are often an important part of the opportunity structure for white-collar crime. For example at Toshiba Corporation, lack of controls was an important element of the opportunity structure (Deloitte 2015). Fraud examiners emphasized lack of internal controls by accounting and auditing functions, as well as lack of finance control in each corporate division. At Wells Fargo, corporate control functions were constrained by the decentralized organizational structure (Shearman Sterling 2017). Fraud examiners excused corporate control functions since they suffered from harm by the decentralized organizational structure and a culture of substantial independence for business units. At Fuji Xerox, CEO Whittaker had gained control over reporting lines to manipulate accounting (Deloitte 2017). At Danske Bank where money laundering occurred in their Estonian branch, corporate control functions did not work because the branch operated computer systems different from computer systems at the headquarter (Bruun Hjejle 2018). Telenor executives ignored corruption rumors at VimpelCom since the chief compliance officer and chief legal officer did not know how to handle whistleblowing (Deloitte 2016). Lack of oversight and guardianship becomes even worse when auditors slide over on the wrong side of the law. Mohliver (2019: 310) found that some auditors prioritize their clients’ interests over their legal obligation by recommending client malfeasance, for example in terms of illegal stock option backdating: The findings suggest that professional experts’ involvement in the diffusion of liminal practices is highly responsive to the institutional environment.

Auditors are supposed to serve as gatekeepers to protect shareholders and report directly to shareholder representatives on the board of directors, but auditors become surprisingly often hired by corporate management to whom they are loyal (Hurley et al. 2019). Reporting fraud to public authorities will also harm auditors (Mohliver 2019: 316): As organizations, audit firms are often severely penalized for client malfeasance. Yet the individual auditors working for these firms are susceptible to “motivated blindness” stemming from conflicts of interest that bias their moral judgment toward choices that help their clients.

Mohliver (2019) found that auditor bias towards accepting deviant financial reports increased when there is ambiguity about the appropriateness of a course of action. Financial misreporting that is viewed favorably by the client organization, can be recommended by external auditors on the grounds that such reporting is already adopted among companies served by the same auditing firm. Lack of whistleblowing is an important part of the opportunity structure for white-collar crime. When people notice wrongdoings in the organization, they are reluctant to report it because of perceived retaliation threats. As argued by Keil et al. (2010), costs tend to exceed benefits for individual whistleblowers. In addition, as argued by Bussmann et al. (2018), employees in societies characterized by collectivist values are reluctant to blow the whistle on others.

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Whistleblowing is the disclosure by an individual in an organization or in society of deviant practices to someone who can do something about it (Bjørkelo et  al. 2011). Whistleblowing is an action by employees who believe that their business or colleague(s) are involved in activities of misconduct or crime, cause unnecessary harm, violate human rights or contribute to otherwise immoral offenses (Mpho 2017). Whistleblowing is the disclosure by an organizational member of deviant practices to someone who can do something about it. Whistleblowers stand out as a group of reporters who have made observations and who are willing to disclose what they have observed. However, managers may try to withhold bad news (Bao et al. 2019). A potential whistleblower might be afraid of retaliation. Retaliation makes informants reluctant to blow the whistle. Reprisal and retaliation against a whistleblower represent an outcome between an organization and its employee, in which members of the organization attempt to control the employee by threatening to take, or actually taking, an action that is detrimental to the well-being of the employee (Mesmer-­ Magnus and Viswesvaran 2005; Rehg et al. 2009). The lack of whistleblowing is an organizational inhibitor in relation to addressing white-collar crime and thus an enabler of wrongdoing. Shepherd and Button (2019) suggest that a range of avoidant rationalizations constructed by observers justify not noticing, reporting or tackling white-collar crime. These rationalizations and justifications for disregard of observed wrongdoing can be similar to those rationalizations applied by offenders when committing crime, such as denial of victim and denial of damage (Kaptein and Helvoort 2019). Guardianship, oversight and control become more difficult in times of wrongdoings by misleading attributions. The attribution perspective implies that white-collar offenders are able to attribute causes of crime to everyone else but themselves in the organization. Attribution theory is about identifying causality predicated on internal and external circumstances (Eberly et  al. 2011). External attributions place the cause of a negative event on external factors, absolving the account giver and the privileged individual from personal responsibility. Innocent subordinates receive blame for crime committed by elite members (Lee and Robinson 2000). According to Sonnier (2015: 10), affective reactions influence blame attribution directly and indirectly by altering structural linkage assessments: For example, a negative affective reaction can influence the assessment of causation by reducing the evidential standards required to attribute blame or by increasing the standards of care by which an act is judged.

When the Siemens corruption scandal emerged in the public, top management attempted to blame lower level managers (Berghoff 2018: 423): At first the company defended itself with set phrases like ‘mishaps of individuals’ and isolated offenses committed by a ‘gang’ of criminals, or ‘This is not Siemens’.

Status-related factors such as influential positions, upper-class family ties, and community roles often preclude perceptions of blameworthiness (Slyke and Bales 2012). According to the attribution perspective, parties involved in a personal

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conflict or crime suspicion will naturally wonder ‘Why is this happening?’ in the hope that if they understand the negative event, they might be able to predict its cause. The cause can be either individual behavior (personal attribution) or organizational behavior (system attribution). The attribution perspective suggests that, all else being equal, the odds are in favor of making a personal attribution (Keaveney 2008). If a white-collar offender fails to attribute crime to another individual, then there is the alternative of blaming the system. Control functions in charge of crime signal detection have to make decisions when there is a new signal. The perspective of crime signal detection suggests that there is often too much interference and noise for white-collar crime to reach the attention of observers. There are four possibilities in the decision matrix of the observer of potential misconduct and crime (Karim and Siegel 1998: 368): • • • •

The observer notices a noise when it is a signal (called a miss) The observer notices a signal when it is a signal (called a hit) The observer notices a noise when it is a noise (called a correct identification) The observer notices a signal when it is a noise (called a false alarm)

The observer needs to make a decision concerning the event and classify it as either a signal or a noise. In an organizational context, where less powerful individuals may suspect powerful individuals, the less powerful will conveniently prefer to think of the event as a noise signal rather than as a crime signal. The perspective of crime signal detection holds that the observation of a stimulus depends on both the intensity of the stimulus and the physical and psychological state of the observer. An observer’s ability or likelihood to detect some stimulus depends on the intensity of the stimulus as well as the extent of alertness of the observer. Perceptual sensitivity depends upon the perceptual ability of the observer to detect a signal or target or to discriminate signal from non-signal events (Szalma and Hancock 2013). Furthermore, detecting persons may have varying ability to discern between information-­bearing recognition (called pattern) and random patterns that distracts from information (called noise), as illustrated by the four possibilities in the decision matrix above. The ethical climate can be another element of the opportunity structure for white-­ collar crime. The ethical climate perspective defines five distinct climate types within organizations (Victor and Cullen 1988): instrumental, caring, independence, rules, and law and code. A work climate is the sum of perceptions that provide meaningful insights into the working environment, which people can agree characterize an organization’s values, practices and procedures. The instrumental climate is the climate in which Murphy and Free (2015) believe fraud is most likely to occur. Instrumental means that executives and others in the organization tend to prioritize decisions that either provide personal benefits or serve the organization’s interests with little regard for ethical considerations. There is association between instrumental climate and workplace deviance extending to fraud. Workplace ­deviance is voluntary behavior that violates significant organizational norms and in so doing threatens the well-being of an organization, its members, or both. However, fraud and corruption can be a consequence of following, rather than violating, an organizational norm. For example, a case against Siemens in Germany alleges that

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Siemens executives abroad routinely bribed foreign officials as part of an overall pattern of corporate conduct in marketing. The climate encourages corruption and fraudulent behavior as normal and acceptable (Murphy and Dacin 2011). Lack of oversight and guardianship was obvious in the Siemens corruption scandal, as phrased by the judge in German court (Berghoff 2018: 430): He compared the Siemens compliance department with ‘fire fighters, who were equipped with a toothbrush mug to extinguish major fires’.

Lack of control is both a formal and social phenomenon. Greve et  al. (2010) discuss social control agents that have the legitimate authority to define specific conduct as right and wrong. When social control agents are missing or not functioning then executives have no way of reacting on deviance and misconduct by other executives. An example of managerial misconduct occurs when management intentionally misleads investors or when shareholders become injured as result of management’s disclosure decisions (Jennings 2019).

Criminal Market Structures As mentioned earlier in this book, Sutherland (1939, 1983) emphasized attitudes in society where people consider white-collar crime as less serious than traditional street crime. While convenience theory so far emphasizes factors at the individual and organizational level, Sutherland (1939, 1983) emphasized hypotheses at the community level. In its earlier version (Gottschalk 2017), convenience theory was lacking explicit representations of community level factors such as criminal market structures including competition-avoiding cartels (Goncharov and Peter 2019; Leonard and Weber 1970) and corruption networks (Nielsen 2003). In its current version, convenience theory applies three levels of analysis. In addition to the individual and the organization as units of analysis, the community is the unit of analysis mainly in an opportunity perspective. Community level factors such as corruption networks enable individuals and organizations to commit and conceal white-collar crime. At the community level, the focus is not on the isolated individual act of providing a bribe or receiving a bribe, but rather “the systematic, pervasive sub-system of bribery that can and has existed across historical periods, geographic areas, and political-economic systems” (Nielsen 2003: 125). While cartels can represent painful corporate economic threats as discussed earlier in economical dimension of convenience theory, a cartel can represent an opportunity for those enterprises that have joined the cartel. In many markets, there are cartels that regulate the supply side. Cartel members agree not only on market ­division but also on prices to various customers (Goncharov and Peter 2019; Leonard and Weber 1970). The social exchange perspective aids explanations of how power structures in cartels and corruption networks develop and institutionalize through relationship building and social exchanges among participating enterprises. The perspective suggests

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that organizational activities are contingent on the actions of other organizations. The successful cartels and networks are dependent on generation of obligations and fulfillment of rewards. Relational efforts in an industry or in a community lead to repeated patterns of interactions that may develop into durable institutions of interdependencies in cartels and networks (Cartier-Bresson 1997; Cropanzano and Mitchell 2005; Emerson 1976; Lawler and Hipp 2010). Cartels and corruption networks are important to many global business enterprises. When the corruption case at Siemens became public, Murphy and Dacin (2011) found that the business climate encouraged corruption and fraudulent behavior as normal and acceptable. To cope with the scandal, Siemens replaced its management board (Berghoff 2018: 423): Siemens is one of the world’s leading electrical engineering corporations. In 2006, a massive corruption scandal erupted, concluded in 2008 with a record fine. For Siemens the largest risk was being barred from government contracts. As a consequence, it replaced virtually its entire managing board, an unprecedented procedure in the history of the company.

However, the criminal market structures did not change. Siemens “thrived in the cozy world of national monopolies and cartels, which guaranteed high margins and no worries about rivals” (Berghoff 2018: 425). While the new management at Siemens attempted trust repair among stakeholders by introducing updates rules and guidelines, Eberl et al. (2015: 1205) found that the new rules were paradoxical in nature and thus difficult to implement in practice: Our findings suggest that tightening organizational rules is an appropriate signal of trustworthiness for external stakeholders to demonstrate that the organization seriously intends to prevent integrity violations in the future. However, such rule adjustments were the source of dissatisfaction among employees since the new rules were difficult to implement in practice. We argue that these different impacts of organizational rules result from their inherent paradoxical nature.

Interactions Between Crime Enablers This chapter has presented a number of organizational enablers of white-collar crime. Some of these factors can interact with each other. For example, principal-­ agent misfit can interact with institutional pressure as suggested by Aguilera et al. (2018). While the principal-agent misfit is an internal contributor to the organizational opportunity structure, institutional pressure is an external contributor. External institutional forces can influence organizational agency to create an improved opportunity structure for convenient white-collar crime. The factors that can explain organizational opportunity as presented above can find their foundation in the situational action perspective, as the factors represent an inviting environment for an individual to commit crime. The situational action perspective is a concerned with crime causation (Wikstrom et al. 2018: 12):

References

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It analyses crime as acts of rule-breaking and stresses the importance of the person-­environment interaction and the need to properly understand and explicate the action mechanism that links people and their immediate environments to their actions, such as acts of crime.

The situational action perspective insists that people are the source of their actions, but that the causes of their actions are situational. This is in line with the theory of convenience, since people’s particular perception of action alternatives determines the choice between legal or illegal actions. The process of choice and execution of action are a result of a person-environment interaction, where the individual chooses the most attractive avenue. The situation is not so much the immediate environment but more the particular perception of action alternatives. The factors listed above represent a setting’s particular criminogenic inducement that makes white-collar crime more convenient. There is a strong interaction between crime signal detection and whistleblowing intentions among potential whistleblowers. A low uncertainty that there is a crime signal will relate positively to whistleblowing intentions. If the signal is weak and confused by noise, whistleblowing intentions are likely to deteriorate as the potential whistleblower considers risk for him or her (Brown et al. 2016). It is convenient for an offender to know that even though others in the organization may develop suspicions, they will not notify others about what they have observed. They are not sure if something wrong has occurred, they are not sure who to notify, and they are not sure if any whistleblowing may have consequences for themselves in the form of reprisals. That is why many people are reluctant to report suspicion of misconduct and crime, even when they feel quite certain that something wrong has happened. Many who have cast light on critical conditions have experienced unwillingness, and they have been isolated and considered less attractive in the labor market afterwards (Rehg et al. 2009). According to Shawver and Clements (2019), potential whistleblowers often decide not to report ethical wrongdoing because of the likelihood of retaliation. In summary, this chapter has described how elements of individual position, organizational culture and market conditions all contribute to convenient opportunity structures for financial crime by white-collar offenders. White-collar criminals can be distinguished from other financial criminals in their ability to abuse their positions of trust. Even when others observe and notice misconduct, very few subordinates or colleagues might be willing to blow the whistle on white-collar offenders in fear of retaliation and reprisals.

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Chapter 4

Personal Willingness

Personal willingness for deviant behavior means willingness for individual actions that violate social norms, including formally enacted rules and informal nonconformity (Aguilera et al. 2018). Deviance is a term to describe behavior that contravenes accepted norms, values, and ethical standards (Smith and Raymen 2018). The offender may explain the act of wrongdoing as morally justifiable (Schnatterly et al. 2018). Most research on white-collar crime exists along the behavioral dimension. Researchers have presented numerous suggestions to explain famous people who have committed financial crime. In this chapter, some of the most prominent perspectives are differential association, lack of self-control, slippery slope, and neutralization techniques. Systems, routines, and organizations do not commit crime. Individuals and groups of individuals commit crime. White-collar criminals practice a deviant behavior to carry out their offenses. Members of the privileged socioeconomic class commit white-collar crime by abusing their power and influence. Offenders are typically charismatic, they have a need-to-control, and they have a tendency to bully subordinates. They fear losing their status and position, exhibit narcissistic tendencies, lack integrity and social conscience, have no guilt feelings, and do not perceive themselves as criminals. Convenience theory argues that white-collar crime is most common among people in their forties, an age when one is most ambitious and opportunities often are the greatest. Ambitions can be significant both on behalf of oneself and on behalf of the organization. At this age, many have taken on positions that enable and make it relatively convenient to carry out financial crime. The maximum extent of criminogenity occurs usually in a period where ambitions and opportunities are at a peak.

© Springer Nature Switzerland AG 2020 P. Gottschalk, The Convenience of White-Collar Crime in Business, https://doi.org/10.1007/978-3-030-37990-2_4

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The Innocent Justification Offender Mind The personal willingness is concerned with the impression that surprisingly few white-collar criminals think they have done anything wrong. Most of them feel innocent and victims of injustice when indicted, prosecuted, convicted, and imprisoned. By application of neutralization techniques (Sykes and Matza 1957), they deny responsibility, injury, and victim. They condemn the condemners. They claim appeal to higher loyalties and normality of action. They claim entitlement, and they argue the case of legal mistake. They find their own mistakes acceptable. They argue a dilemma arose, whereby they made a reasonable tradeoff before committing the act (Jordanoska 2018; Kaptein and Helvoort 2019; Siponen and Vance 2010). Such claims enable offenders to find crime convenient, since they do not consider it crime, and they do not feel guilty of wrongdoing. These are the most frequently cited neutralization techniques in the research literature for white-collar offenders: 1. Disclaim responsibility for crime: Not responsible for what happened. The offender here claims that one or more of the conditions of responsible agency did not occur. The person committing a deviant act defines himself or herself as lacking responsibility for his or her actions. In this technique, the person rationalizes that the action in question is beyond his or her control. The offender views himself as a billiard ball, helplessly propelled through different situations. He denies responsibility for the event or sequence of events. 2. Refuse damage from crime: There is no visible harm from the action. The offender seeks to minimize or deny the harm done. Denial of injury involves justifying an action by minimizing the harm it causes. The misbehavior is not very serious because no party suffers directly or visibly because of it. 3. Refuse victim from crime: There is nobody suffering from the action. The offender may acknowledge the injury, but deny any existence of victims or claims that the victim(s) are unworthy of concern. Any blame for illegal actions are unjustified because the violated party deserves whatever injury they receive. 4. Condemn those who criticize: Outsiders do not understand relevant behavior. The offender tries to accuse his or her critics of questionable motives for criticizing him or her. According to this technique of condemning the condemners, one neutralizes own actions by blaming those who were the target of the misconduct. The offender deflects moral condemnation onto those ridiculing the misbehavior by pointing out that they engage in similar disapproved behavior. In addition, the offender condemns procedures of the criminal justice system, especially police investigation with interrogation, as well as media coverage of the case. 5. Justify crime by higher loyalties: It was according to expectations. The offender denies the act was motivated by self-interest, claiming that it was instead done out of obedience to some moral obligation. The offender appeals to higher loyalties. Those who feel they are in a dilemma employ this technique to indicate that the dilemma must be resolved at the cost of violating a law or policy. In the context of an organization, an employee may appeal to organizational values or

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hierarchies. For example, an executive could argue that he or she has to violate a policy in order to get things done and achieve strategic objectives for the enterprise. 6. Claim blunder quota: It was a necessary shortcut to get things done. The offender argues that what he or she did is acceptable given the situation and given his or her position. The person feels that after having done so much good for so many for so long time, others should excuse him or her for more wrongdoings than other people deserve forgiveness. Others should understand that the alleged crime was an acceptable mistake. This is in line with the metaphor of the ledger, which uses the idea of compensating bad acts by good acts. That is, the individual believes that he or she has previously performed a number of good acts and has accrued a surplus of good will, and, because of this, can afford to commit some bad actions. Executives in corporate environments neutralize their actions through the metaphor of the ledger by rationalizing that their overall past good behavior justifies occasional rule breaking. 7. Claim legal mistake: This should never pop up as illegal in the first place. The offender argues that the law is wrong, and what the person did should indeed not pop up as illegal. One may therefore break the law since the law is unreasonable, unfair and unjustified. The offender may argue that lawmakers sometimes criminalize behaviors and sometimes decriminalize more or less randomly over time. For example, money involved in bribing people were treated as legal expenses in accounting some decades ago, while corruption today is considered a misconduct and therefore criminalized. 8. Claim normality of action: Everyone else does and would do the same. The offender argues that it is so common to commit the offense, so that it one can hardly define it as an offense at all. The offense is no deviant behavior, since most people do it or would do it in the same situation. The offender might even suggest that what may constitute deviant behavior is when people in the same situation obey the law. 9. Claim entitlement to action: It is sometimes a required behavior in this position. The offender claims to be in his right to do what he did, perhaps because of a very stressful situation or because of some misdeed perpetrated by the victim. This is defense of necessity, which is a kind of justification that if the rule breaking seems necessary in the mind of the offender, one should feel no guilt when carrying out the action. 10. Claim solution to dilemma: The benefits of action outweigh costs. The offender argues a dilemma arose whereby he or she made a reasonable tradeoff before committing the act. Tradeoff between many interests therefore resulted in the offense. A dilemma represents a state of mind in which it is not obvious for an offender what is right and what is wrong to do. For example, the criminal carries out the offense to prevent what seems to be a more serious offense from happening. 11. Justify necessity of crime: It was necessary to carry out the offense. The offender claims that the offense belongs into a larger picture in a comprehensive context, where the crime is an illegal element among many legal elements to ensure an

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important result. The offense was a required and necessary means to achieve an important goal. For example, a bribe represents nothing in dollar value compared to the potential income from a large contract abroad. Alternatively, a temporary misrepresentation of accounts could help save the company and thousands of jobs. Claim role in society: It is a natural maneuver among elite members. The offender argues that being a minister in the government or a chief executive officer in a global company is so time-consuming that little time is available for issues that seem trivial. Shortcuts are part of the game. Some shortcuts may be illegal, but they are nevertheless necessary for the elite member to ensure progress. If someone is to blame, then subordinates are supposed to provide advice and control what the elite member is doing. Perceive being victim of incident: Others have ruined my life. The incident leads to police investigation, prosecution, and possible jail sentence. Media is printing pictures of the offender on the front page, and gains from crime disappear as public authorities conduct asset recovery without considering the harm caused to the offender. Previous colleagues and friends have left, and so has the family. The offender perceives being a loser and made victim of those who reacted to his crime after disclosure. Gather support: Nobody thinks it is wrong. Most colleagues, friends and others in the upper echelon of society think what the offender did, is quite acceptable. The supporters communicate to the public, the media and others that it is ridiculous that the offender becomes subject to police investigation and eventually subject to prosecution and conviction. The supporters argue that it is completely misleading to portrait the white-collar offender as a criminal. The supporters may suggest that the offender was unlucky and made an unintentional mistake. They may argue that in the eyes of the public, the offense can emerge as misconduct, but certainly not crime. The offender potentially made a shortcut for very good reasons, which is tolerable and not objectionable. Given such massive support from those who condemn the criminal justice system, the offender gathers support that cause a fundamental reduction in his or her potentially guilty mind. The guilty mind may further deteriorate as the offender hires top defense attorneys who tell the offender that it is the state or someone else who, without any acceptable or plausible reason, is out there to catch him or her for an act that certainly was no crime. Claim rule complexity: It is impossible to understand what is right and what is wrong. Some laws, rules and regulations are so complex that compliance is random. The regulatory legal environment is supposed to define the boundaries of appropriate organizational conduct. However, legal complexity is often so extreme that even specialist compliance officers struggle to understand what to recommend to business executives in the organization.

Lehman et  al. (2019: 6) define rule complexity in terms of components and connections:

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First, a rule is more complex to the extent that it comprises more components that together describe the actions and outcomes necessary for compliance. A rule with a high number of components contains more detail and requires more actions to constitute compliance. Second, a rule is more complex to the extent that it has more connections to or functional dependencies upon other rules in the same system. A rule with a high number of connections refers to actions or outcomes that may be affected by activities pertaining to another rule or set of rules.

Neutralizations are not merely after-the-fact rationalizations where offenders can live with and accept what they have done. Neutralizations imply a deterministic or causal relationship available before the offense takes place. The use of neutralization techniques function as a means of making it possible to commit violations while at the same time reducing a guilt feeling (Cohen 2001). When potential offenders apply neutralization techniques in advance of criminal actions, their willingness increases for criminal behavior. A simple example is speeding on the highway, where the offender can drive to fast because of neutralizations such as everyone else does it, there is something wrong with the speed limit, or nobody will get hurt anyway. Neutralizations ahead of a criminal act protect the offender from harm to his or her self-image. Deviant actions by followers can be the consequence of obedience (Baird and Zelin 2009), where obedience is a voluntary or not so voluntary behavior among followers to obey their leaders to do what leaders wants. Executive followers’ belief in their leaders’ behavior as morally right make followers experience shame and guilt when they fail to support their leaders’ actions (Fehr et al. 2015). Executives may use language that followers not necessarily understand – however nevertheless they trust executive messages (Ferraro et al. 2005). Obedience is not so voluntary in cases of abusive supervision, where subordinates perceive that supervisors engage in a sustained display of hostile verbal and non-verbal behaviors (Mawritz et al. 2017). Innocent justification can also occur, as the offender feels entitled to financial crime after negative life events (Engdahl 2015). The perspective of negative life events suggests that events such as divorce, accident, lack of promotion, and cash problems can cause potential offenders to consider white-collar crime a convenient solution. Lack of justification can occur when an offender ignores information related to misconduct and crime. There is simply no need for justification. The upper echelon perspective suggests accordingly that white-collar offenders selectively attend to information when evaluating own decisions. White-collar offenders may receive feedback from a range of actors while selectively ignoring some of the feedback by not paying attention to it (Gamache and McNamara 2019: 920): However, corporate executives operate in an environment where they receive feedback from a range of actors, yet we have a limited understanding of whether and to what extent these “soft performance feedback cues” influence their decision making.

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Members of the upper echelon of society where we find white-collar offenders may thus combine neutralization techniques with disregard of negative information related to them personally. They try to choose what information they pay attention to and how they interpret that information.

The Deviant Personality Offender Mind Deviance is “the failure to obey group rules” (Becker 1963: 8). Deviance is “a form of behavior that violates organizational norms and that consequently negatively impacts the well-being of the organization and its members” (Michalak and Ashkanasy 2013: 20). Deviance is detrimental to organizational performance in several ways, including damaged reputation, exposure to lawsuits, and financial loss (Dilchert et al. 2007). Some white-collar offenders are narcissists. Narcissists exhibit an unusual trust in themselves, believing that they are uniquely special and entitled to more benefits than are legitimately available to them (Ouimet 2010). A particular version of narcissism is narcissistic identification with the organization, where the offender sees little or no difference between self and the business. Then company money is personal money that can be spent whatever way the narcissist prefers (Galvin et  al. 2015). A pervasive pattern of grandiosity, need for admiration, and empathy deficits typifies narcissism. While grandiosity and admiration belong to the motivational dimension of convenience theory, empathy deficits belong to the willingness dimension of convenience theory where the offender possesses a sense of entitlement. The offender shows unreasonable expectations to receive and obtain preferential treatments (Zvi and Elaad 2018). Some white-collar offenders take on a professional deviant identity (Obodaru 2017). The identity perspective suggests that individuals develop professional identities where they commit to a chosen identity. It is a process of generating possible selves, selecting one, and discarding the others. Professional identity is how an individual sees himself or herself in relation to work. The self-concept is a complex cognitive structure containing all of a person’s self-representations. According to the identity perspective, roles and identities are interdependent concepts. Identity enactment refers to acting out an identity, or claiming the identity by engaging in behaviors that conform to role expectations and that allow the identity to become manifest. Deviant behavior finds an anchor in a person’s professional identity, where the deviant leader must claim and assume a leader identity by their followers. Labeling can influence the deviant personality offender mind. The labeling perspective suggests that individuals adapt to the reputation created by others. The labeling perspective argues that the deviant reputation stigmatizes a person into a stereotype. Formal societal reaction to the individual can be a stepping-stone in the development of a criminal career. The deviant label is over time embedded in the individual. The labeled person is increasingly likely to become involved in social groups that consist of social deviants and unconventional others without feeling any doubt or regret since the behavior is in accordance with the label glued to the person by others (Bernburg et al. 2006).

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Work contexts that individuals do not find supportive of basic psychological needs are leading to disloyal executives and employees. Disappointed executives and employees feel entitled to deviant behaviors (Nichol 2019). This is in line with the self-determination perspective, which suggests that awareness and attention facilitate the choice of behaviors that coincide with the offender’s values, needs, and interests (Olafsen 2017; Olafsen et al. 2017). Extrinsic relative to intrinsic work value orientation is associated with less positive outcomes. Maladaptive motivational processes in the workplace relate to stress, somatic symptom burden, and emotional exhaustion. Central to the self-determination perspective is the specification of three basic psychological needs for autonomy, competence, and relatedness. Lack of autonomy refers to control by others without any personal choice. It is the experience of not standing behind one’s actions and having to act against one’s will due to internal or external factors. Lack of competence refers to the experience of behavior as ineffective and failing. It is the experience of feeling unable to achieve desired outcomes. Lack of relatedness refers to missing mutual connection with and care for important others. It is the experience of a lack of communion and close connection with others. When an organization introduces performance metrics without involvement of people then it can have a detrimental effect. According to self-­determination theory, need frustration promotes psychological decline and sick functioning. Need frustration contributes to energy depletion, dysfunction, and illness. The desire to get out of a state of need frustration subjectively perceived as a problem caused at work increases personal willingness for deviant behavior that may include financial crime. The personality of an individual can change with age. The age-graded perspective of informal social control assumes that social ties can dwindle in later stages of life, even in individuals who appear to have successfully adapted to adult social roles and had no contact with the justice system until adulthood (Sampson and Laub 1993). The personality perspective suggests weak social bonds in white-collar offenders. Although professionally successful and powerful, the perspective suggests that white-collar offenders are often associated with unstable residency, unsteady employment histories and superficial relationships. Social bonds are age-­ graded in nature. The risk of crime involvement in adult offenders is not dependent on deterrence or the mere presence of a social bond, but on the perceived lack of severity in obligations and restraints. The strength of social bonds can deteriorate over an individual’s life span due to developments such as disappointments that weaken former solid bonds. The propensity for crime increases when the bond to conventional society decreases.

The Rational Choice Offender Mind The economical dimension of convenience theory applied the rational self-interest motivation. The rational choice approach also applies to the willingness in the behavioral dimension of convenience theory. The rational choice assumption about offending is based on a normative foundation where advantages and disadvantages are subjectively compared (Müller 2018).

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When there is no perceived likelihood of detection, then there is no deterrence effect to prevent offences (Comey 2009). If there is a certain perceived likelihood, then willingness might depend on the perceived consequences. For potential white-­ collar offenders it can be frightening to think of time in jail or prison. Research has shown that some white-collar offenders suffer from special sensitivity in prison, while others have special resilience in prison (Logan et al. 2019), which means that they cope better with incarceration than other inmates. Deterrence comes from whether or not an offender has to go to prison, rather than the severity of sanction in terms of imprisonment length. Generally, the severity of punishment has shown to have no effect on recidivism (Mears and Cochran 2018). Rational choice is concerned with benefits of crime exceeding costs (Pratt and Cullen 2005), where the perceived likelihood of incarceration is a cost element. Another cost element is media exposure, where investigative journalists often are the first to disclose suspected white-collar crime and the offenders. Press reporters’ detection of misconduct and crime “represented an important ingredient of the nineteenth-­century newspaper” (Taylor 2018: 346), and this is certainly also the case so far in the twenty-first century media. The economic model of rational self-interest is all about weighing up the pros and cons of alternative courses of action. When the desire increases, then the benefits in the rational benefit-cost comparison increase that in turn influences willingness. The rational choice perspective simply states that when benefits exceed costs, we would all do it. The perspective is explicitly a result of the self-regarding preference assumption, where rationality is restricted to self-interested materialism (Paternoster et al. 2018). The rational choice perspective suggests that anyone might be an offender when the benefits of a crime exceed expected costs of crime (Pratt and Cullen 2005). Rational choice assumes that the standard economic model of individual preferences will determine whether crime is committed. The greater the benefits of crime and the smaller the costs of crime, the more attractive it is to commit criminal acts. The economic model of rational self-interest does not imply that every individual in the same situation will conclude and act in the same way. There will be different choices in the same situation because rationality is a subjective matter. For example, the objective detection risk will be the same for individuals in exactly the same situation, but the subjective detection risk will vary with individual variations in risk willingness and risk perception. Similarly, the threat of imprisonment works fewer deterrents on some than on others. The economic perspective is concerned with the influence of rational self-interest in explaining white-collar criminality (Pillay and Kluvers 2014). The economic model of rational self-interest is all about weighing up the pros and cons of alternative courses of actions. The model considers incentives and probability of detection (Welsh et al. 2014). This applies to both private and professional life. Human behavior finds motivation in the self-centered quest for satisfaction and avoidance of suffering (Hirschi and Gottfredson 1987). The deviant personality offender mind is not only a result of external labeling as discussed above. The offender mind is a result of internal differential association as suggested by Sutherland (1939, 1983). The differential association perspective

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suggests that potential offenders make a rational choice where they associate with those who agree with them, and distance themselves from those who disagree. This perspective suggests that whether individuals engage in white-collar crime or not depends on their socialization within certain peer groups. In an elite setting, interactions with deviant others promote criminal activity. The essence of differential association is that criminal behavior is learned, and the main part of learning comes from within important personal groups. Exposure to the attitudes of members of the organization that either favor or reject legal codes influences the attitudes of the individual. The individual will go on to commit crime, if the person exposes himself or herself more to attitudes that favor law violation than to attitudes that favor abiding the law (Wood and Alleyne 2010). Learning from others is an active process. Differential association can occur in the organizational setting, but does not as such increase the organizational opportunity to commit crime. Rather, differential association belongs to the behavioral dimension of convenience theory, as crime learning makes it more convenient to favor law violation. Differential association by individuals can occur outside the organizational setting, such as exposure to law-­ violation attitudes early in life, exposure to law-violation attitudes over a prolonged period in different situations, and exposure to law-violation attitudes from people they like and respect. Once the appropriate attitudes have developed, young people learn the skills of criminality in much the same way as they would learn any other skill, which is by example and training (Wood and Alleyne 2010). Individuals embedded within structural units by differential association become vulnerable to attitudes in favor of or opposed to delinquent and criminal behavior. Differential reinforcement of crime convenience develops over time as individuals become vulnerable to various associations and definitions conducive to delinquency (Hoffmann 2002). It is a considered a rational choice to commit financial crime whenever required, since members of the highest socio-economic class consider laws as less relevant to their activities. This is line with the social conflict perspective, which suggests that the powerful and wealthy in the upper class of society define what is right and what is wrong. If they themselves break their own laws, then there is a need to change the laws rather than punish the law violators (Petrocelli et al. 2003). The rich and mighty people can behave like “robber barons” because they make the laws and because they control law enforcement. The ruling class does not consider white-collar offences as regular crime, and certainly not similar to street crime. Nevertheless, crime by individuals in the elite tends to face prosecution if crime receives public attention and evidence of wrongdoing is present, as long as they are not too powerful and do not have too excellent defense attorneys. The social conflict perspective views financial crime as a function of the conflict that exists in society. The theory suggests that class conflict causes crime in any society, and that those in power create laws to protect their rights and interests. For example, embezzlement by employees is as a violation of law to protect the interests of the employer. However, it might be argued that an employer must and should protect own assets without assistance from law enforcement. Bank fraud is a crime to protect the powerful banking sector. However, in the perspective of social conflict one might argue that a bank should

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have systems making bank fraud impossible. If an employee has no opportunity to commit embezzlement, and if a fraudster has no opportunity to commit bank fraud, then these kinds of financial crime would not occur, and there would be no need to have laws against such offenses. Law enforcement protects powerful companies against counterfeit products, although they should be able to protect themselves by reducing opportunities for the production of counterfeit products. The social conflict perspective holds that laws and law enforcement support dominant groups in society to minimize threats to their interests posed by those whom they perceive as dangerous and greedy from the lower classes. Legal codes define crime, and crime becomes sanctioned by institutions of criminal justice to secure order in society. The ruling class secures order in the ruled class by means of laws and law enforcement. Law enforcement agencies restrict and stabilize conflicts and clashes between interest groups (Schwendinger and Schwendinger 2014). According to the social conflict perspective, the justice system is biased and designed to protect the wealthy and powerful. The wealthy and powerful can take substantial assets out of their own companies at their own discretion whenever they like, although employed workers in the companies were the ones who created the values. The superrich can exploit their own wealth that they created as owners of corporations as long as they do not hurt other shareholders. Employees have no right to object. It is no crime to take out values from own enterprises and build private mansions for the money. This is no crime by the owners. Even when the owners just inherited the wealth created by earlier generations, they can dispose freely of it for private consumption. Similarly, top executives who are on each other’s corporate boards grant each other salaries that are ten or twenty times higher than regular employee salaries. In this perspective, elite members feel entitled to acts defined as financial crime whenever they themselves consider such acts necessary. Rational choice is a matter of subjectively perceived benefits compared to subjectively perceived costs. If you are on the highway and you find benefits exceed costs, then you might violate the speed limit. The same thinking applies to serious financial crime by white-collar offenders. There is little or no deterrence effect from the threat of incarceration when either the subjectively perceived detection likelihood is microscopically small, or the collateral effects of a sentence to prison seem microscopically small. These costs in terms of effects may range from accentuated present and future audience criticism, internal and external stigmatization, loss of status by falling from high social prestige, removal of employment prospects, as well as family deterioration (Dhami 2007; Goldstraw-White 2012). Rational choice among convicted white-collar offenders is a matter of recidivism, i.e. what subjectively perceived benefits and costs are after incarceration. Repeating white-collar crime might be a rational choice since the collateral effects of being sentenced a second time can be much lower than the first time. On the other hand, the opportunity can be drastically reduced the second time. The prison experience can either support the special resilience hypothesis or the special sensitivity hypothesis (Logan et  al. 2019), which strongly influences perceived costs of recidivism.

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The Slippery Absent Offender Mind Lack of self-control is a frequent explanation for executive deviance and crime in general (Gottfredson and Hirschi 1990). While many might be tempted, only those lacking self-control will actually do it. Self-regulation monitors self-control, where self-regulation represents a process of using self-regulatory resources to control undesirable impulses and override subsequent behavioral responses. As argued by Mawritz et  al. (2017), individuals possess varying and limited self-regulatory resources that inhibit responses that may arise from physiological processes, habit, learning, or the strain of the situation. When resources that regulate self-control are depleted, individuals struggle to constrain their urges and engage in behavior almost unwittingly, using quick, thoughtless responses. They move down the slippery slope from the right side of the law to the wrong side of the law (Arjoon 2008). Self-­ control processes deplete self-regulatory resources and impair one’s ability to control subsequent inappropriate responses. Kroneberg and Schulz (2018: 59) link lack of self-control (Gottfredson and Hirschi 1990) to the situational action perspective, when they find that “personal moral rules play a crucial role in the process of perception of action alternatives, whereas self-control matters only in the subsequent process of choice should actors start to deliberate on whether or not to break the law”. While the perception of action alternatives belongs to the organizational opportunity dimension of white-­collar offending, the subsequent lack of self-control belongs to the personal willingness dimension of white-collar offending. When the situational action perspective by Wikstrom et al. (2018) distinguishes between three stages, (1) perception of action alternatives (legal alternatives, illegal alternatives), (2) process of choice (habit, rational deliberation), and (3) action, then Kroneberg and Schultz (2018) conceptualize lack of self-control as well as lack of deterrence on the axis from (2) to (3). Personal willingness can be a dynamic phenomenon that develops over time. Cleff et al. (2013: 149) defines six phases for such a development: In the first phase, the delinquents initially try to achieve their professional and private goals through legally acceptable means. In the second phase, they realise that they have not accomplished what they set out to do while remaining within the law: the anticipated success and strived-for satisfaction of perceived needs fail to materialise, paving the way for negative emotions such as the fear of failure or loss, or even anxiety about their livelihood. On a search for solutions for these problems, the individual begins to sound out areas at the margins of legality during the third phase – and to consider even illegal means for achieving his ends. If he now meets with success, his criminal behaviour has been positively confirmed and reinforced: the fourth phase. This feeds the desire for further success, overriding the fear of possible repercussions and ultimately culminating in the fifth phase: the “point of no return”. In this situation, the offender’s “personal sense of right and wrong” is adapted to fit his own criminal behaviour, enabling him to continue to rationalise his actions to himself. Those affected increasingly lose touch with reality, becoming entangled more and more deeply in illegal actions that preclude any turning back to the state of affairs before the crime. With the discovery of the deed, the sixth phase then begins – the shock of reality.

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Similarly, Benartzi et al. (2017) suggest behavioral reinforcement of deviance over time. Their nudge perspective emphasizes reinforcement and indirect suggestions to try to influence motives, incentives and decision-making of groups and individuals. A nudge is an influence that alters people’s behavior in a voluntary manner. Nudges can influence individuals to perceive misconduct and crime as normal and thus acceptable. Nudges can simplify processes to make illegal benefits more readily available. An example is state subsidy fraud, where enterprises are encouraged to report numbers that result in more subsidies than are justified. Nudges are impulses that can make the offender feel at ease when committing crime. The control perspective finds use in two different ways. First, the perspective of self-control proposes that individuals commit crime because of low self-control, as described above. This perspective contends that individuals who lack self-control are more likely to engage in problematic behavior – such as criminal behavior – over their life course because its time-stable nature (Gottfredsson and Hirschi 1990). Second, the desire to control and the general wish to be in control of everything and everybody might be a characteristic of some white-collar criminals, meaning that low self-control can be combined with control of others. Desire for control is the general wish to be in control over everyday events related to the organization (Piquero et al. 2010). Self-control is the ability to consider consequences of actions that provide immediate rewards. The underlying assumption is that their rewards of offending are apparent to all. Individuals readily perceive the benefits of offending, but individuals with high self-control also perceive, and weight more heavily, the costs associated with immediate gratification. Conversely, those with low self-control place more weight on the here-and-now and fail to consider or appreciate the long-term costs associated with satisfying one’s immediate impulses. Aspects of low self-­ control include impulsivity, risk seeking, as well as a preference for physical (as opposed to mental) activities, opting for simple tasks (compared with challenging ones), temper, and insensitivity to others (Jones et al. 2015). The control perspective diverts attention away from why offenders offend, to why conformists do not offend. However, the control perspective posits that communities with a deteriorating social structure are a breeding ground for delinquency. The central contention of the control perspective is that people are inherently disposed to offend because offending offers short-term gains, and the central aim of those with criminal dispositions is to satisfy desires in the quickest and simplest way possible. Social bonds prevent offending, which operates on individuals’ conscience (Wood and Allayne 2010). Desire-for-control is the degree to which individuals want to be in control over whatever goes on in the organization. Those high in desire-for-control tend to manipulate events to avoid unpleasant situations and to ensure desired outcomes. They tend to attribute organizational success solely to their own hard work, while they blame failures on others. These individuals also tend to engage in more risk-­ taking behaviors and work harder at a challenging task (Craig and Piquero 2016). Therefore, many executives with a high degree of desire-for-control often have a low degree of self-control.

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While an expectation is that a high degree of self-control be required to climb the corporate ladder, executives who have reached the top may quickly loosen up their self-control and instead develop a desire for control. Craig and Piquero (2016) found that both low self-control and high desire-for-control are consistent predictors of intentions to offend. The slippery slope perspective suggests that a person can slide over time from legal to illegal activities without really noticing. The small infractions can lead to the larger ones. An organization that overlooks the small infractions of its employees creates a culture of acceptance that may lead to its own demise (Welsh et al. 2014). The slippery slope perspective applies to a number of situations, such as seventeenth century England, where “unregulated overseas trade was a slippery slope to fraud” (Pettigrew 2018: 313). Arjoon (2008: 78) explains slippery slope in the following way: As commonsense experience tells us, it is the small infractions that can lead to the larger ones. An organization that overlooks the small infractions of its employees creates a culture of acceptance that may lead to its own demise. This phenomenon is captured by the metaphor of the slippery slope. Many unethical acts occur without the conscience awareness of the person who engaged in the misconduct. Specifically, unethical behavior is most likely to follow the path of a slippery slope, defined as a gradual decline in which no one event makes one aware that he or she is acting unethically. The majority of unethical behaviors are unintentional and ordinary, thus affecting everyone and providing support for unethical behavior when people unconsciously lower the bar over time through small changes in their ethical behavior.

A look at Siemens’ corporate culture reveals according to Berghoff (2018: 429) an astounding willingness to engage in bribery: It was like an unwritten law to go through thick and thin for Siemens. Some employees were proud to have been entrusted with the responsible and at the same time risky task of taking care of organizing bribery. To them it was a token of trustworthiness and importance. Many indeed believed that facilitating bribery was in the best interest of the firm.

As a tribal community and the “Siemens family”, the global company had its own peculiar sets of practices in order to preserve and strengthen their cohesion. The rational self-interest found replacement in self-sacrifice to take risks on behalf of the collective. Some privileged individuals even put their behavior on autopilot to serve the organization as they expected to spend the rest of their professional lives at Siemens (Berghoff 2018). Welsh et al. (2014) argue that interpretation of many recent scandals as resulting from a slippery slope makes sense, in which a series of small infractions gradually increase over time. Committing small indiscretions over time may gradually lead people to complete larger unethical acts that they otherwise would have judged to be impermissible. The slippery slope perspective is in contrast to individual perspectives such as the standard economic model of rational choice as described in the economic dimension. Psychological and organizational processes shape moral behavior, where individuals are motivated to view themselves in a positive manner that corresponds with their moral values. Individuals tend to rationalize minor unethical acts so that they

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may derive some benefit without feeling the burden of negatively to update their self-concept. For example, a minor transgression such as taking a pen home from the office may seem permissible, whereas taking money out of the company cash drawer more clearly may become stealing in the minds of observers (Welsh et al. 2014). Craig (2019) suggests a link between lack of self-control and morality based on the situational action perspective. The perspective argues that an individual’s morality is the central individual-level variable in predicting offending. It also hypothesizes that low self-control will only predict offending among those with low morals. Murphy and Dacin (2011) break down the slippery slope to fraud into three distinct paths ending in different conclusions: (1) I am unlikely to commit fraud again, (2) I will likely continue committing fraud, and (3) I commit (or continue committing) fraud while upholding my moral values.

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Chapter 5

Convenience Triangle

White-collar crime is financial crime committed in an organizational setting where offenders have legitimate access to resources to commit and conceal crime (Sutherland 1983). The theory of convenience is suited to define and describe the white-collar crime phenomenon. The theory suggests that white-collar misconduct and crime occurs when there is a financial motive benefitting the individual or the organization, an organizational opportunity to commit and conceal crime, and a personal willingness for deviant behavior. The convenience triangle for white-collar crime has similarities with the fraud triangle (Cressey 1972), which suggests three conditions for fraud: (1) incentives and pressures, (2) opportunities, and (3) attitudes and rationalization. However, there are three distinct differences. First, convenience is a relative concept, indicating that offenders have the option of alternative actions to reach their goals that do not represent illegitimate behavior. While the fraud triangle suggests that opportunities will stimulate crime, the convenience triangle suggests that relative opportunities will stimulate crime. There is no reason to commit crime, even if there are many opportunities, as long as alternative decisions may lead to the same result. It is the extent of convenience, and not the extent of opportunity, that determines whether an offense is attractive. A very conveniently oriented decision-maker may resort to illegal activities when legal activities are slightly more stressful. A less conveniently oriented decision-maker may try intensely to solve problems and explore opportunities without violating the law. Second, it is in the organizational setting where offenders have access to resources so that opportunity arises to commit and conceal crime. While the fraud triangle emphasizes opportunity in general, the convenience triangle concentrates on the privileged position that offenders can abuse to commit and conceal crime. There is trust and lack of control, obedience and fear, which create convenient opportunities. The convenient opportunity derives from legitimate access to resources in a trusted position without guardians, where resources are enablers to carry out activities that are not available to others. Opportunity convenience emerges because of an ­organizational structure and an organizational culture where members of the elite may feel above the law. © Springer Nature Switzerland AG 2020 P. Gottschalk, The Convenience of White-Collar Crime in Business, https://doi.org/10.1007/978-3-030-37990-2_5

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Third, a white-collar offender can influence the organizational opportunity over time, as exemplified in a case in this book. Therefore, opportunity in convenience theory is a dynamic rather than a static condition. By collecting decision rights, by controlling information flows, and by authoritarian leadership styles a potential offender develops an opportunity space that grows over time. Whether intentional or not, the opportunity space changes over time as a reaction to the potential offender’s behavior. To understand white-collar crime from the perspective of convenience requires addressing the fact that people differ in their temporal orientation, including perceived scarcity, the degree to which they value time, and their sensitivity to time related issues. Facing strain, greed or other situations, an illegal activity can represent a convenient solution to a problem that the individual or the organization otherwise find difficult or even impossible to solve. Therefore, the desire for convenience varies among people, as there are individual level differences. Some people, who are already strained and face a problem, will essentially choose to solve that problem by engaging in crime. Convenience theory is about solving problems. The theory of convenience thus suggests that the likelihood of white-collar offences is dependent on financial motives, organizational opportunities, and personal willingness to commit and conceal financial crime in an occupational setting. The convenience triangle suggests that motives, opportunities, and willingness can reinforce each other to commit and conceal crime. While developing research hypotheses in the following sections both for the extent of crime tendency and for interactions in the triangle, this research has failed in identifying empirical sources to test suggested hypotheses. Instead, in the next chapter, I derive and interpret data from 408 convicted white-collar offenders into intentions to commit financial crime. Given this transformation of data from court documents and media reports, I find support for all three hypotheses regarding motive, opportunity, and willingness as predictors of white-collar crime intentions. The purpose of this chapter is to illustrate the potential relationships between motives, opportunities, and willingness to commit financial crime by white-collar offenders. I apply the theory of convenience to study six cases that link three constructs concerned with white-collar crime. For example, a strong motive for illegal profit or a strong willingness to commit financial crime can lead to opportunity expansion in an organizational context. The theory of convenience suggests that financial crime is a convenient option for white-collar offenders when there is an economical motive, an organizational opportunity, and a personal willingness. The theory of convenience suggests that financial crime is a convenient option for white-collar offenders when there is an economical motive, an organizational opportunity, and a personal willingness. Convenience action is taking the handiest or easiest way to achieve a goal. Convenience orientation is the value that individuals place on actions with inherent characteristics of saving time and effort, as well as avoiding pain, suffering, and uncertainty (Mai and Olsen 2016). The theory of convenience has three dimensions: (1) a desire for financial gain based on threats and possibilities, (2) an organizational opportunity to commit and conceal financial crime, and (3) a personal willingness for deviant behavior.

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These three dimensions have links in the convenience triangle that results in six relationships between constructs. In this chapter, I explore these six relationships in terms of case studies. I illustrate each relationship by the case of a privileged professional who committed and concealed financial crime in the course of his or her occupation in an organizational context. This research is important, as it illustrates the centrality of organizational opportunity in white-collar crime as emphasized by researchers such as Benson and Simpson (2015).

Summary of Perspectives in Convenience Theory Table 5.1 lists all theoretical perspectives that form the basis for convenience theory as discussed in the previous chapter.

Interactions Between Convenience Factors This research reviewed a number of factors under motive, opportunity, and willingness respectively. Depending on the interpretation of each factor, some factors may fit to other dimensions or several dimensions at the same time. For example, aggressive leader humor expands the organizational opportunity for white-collar crime, but it also influences the willingness of victims of such humor (Yam et al. 2018: 349): The more aggressive a leader’s style, the more a sense of humor will signal acceptability of norm violations, which will be positively associated with deviance.

Aggressive humor refers to a specific style of humor aimed at teasing or ridiculing. It may include sarcasm humorously to convey disapproving information to followers. Aggressive humor may signal to followers that the accepted social norm of being respectful towards others is not important. It signals that violating norms of human decency is acceptable. That collectivist value orientations can cause personal willingness for deviant behavior to commit white-collar crime may come as a surprise. We might all implicitly think that such values are positive. However, Bussmann et al. (2018: 256) argue that studies have shown a significant relationship between the collectivist value orientations in a country and its degree of corruption: Such values encourage patronage along with the formation and stabilization of exclusive and corrupt networks. Societies characterized by collectivist values tend to favor the in-­group organization. In contrast to individualistic cultures, ‘ego’ refers not to the individual but to the reference group. Such susceptible networks justify corruption by ideas about the need to look after one’s own collective. Collectivist value orientations are assigned particularly to hierarchic-elitist nations. In the social context, employees in collectivist cultures tend to make unethical decisions when these seem to be advantageous for their own c­ ompany or for their extended family. As a result, they view such business practices in their company uncritically. At the same time, studies indicate that these employees are far less willing to engage in whistleblowing than are employees with a more individualistic societal background.

Table 5.1  Theoretical perspectives as basis for the theory of convenience Economical white-collar crime motive 1. Climbing the hierarchy of needs for status and success (Maslow 1943) 2. Business ends justify means in goal orientation (Jonnergård et al. 2010) 3. Desire to help others as social concern (Agnew 2014) 4. Greed where nothing is ever enough (Goldstraw-White 2012) 5. Removal of strain and pain (Langton and Piquero 2007) 6. Fear of falling from position (Piquero 2012) 7. The American dream of prosperity and success (Schoepfer and Piquero 2006) 8. Usual way of business in markets with crime forces (Goncharov and Peter 2019) 9. Need for acclaim as a narcissist (Chatterjee and Pollock 2017) 10. Mutual benefits in an exchange relationship (Huang and Knight 2017) 11. Restore the perception of equity and equality (Leigh et al. 2010) 12. Profit is a goal in itself (Naylor 2003) Organizational white-collar crime opportunity 1. Lack of control in principal-agent relationships (Bosse and Phillips 2016) 2. Institutional deterioration based on external legitimacy (Rodriguez et al. 2005) 3. Opportunity creation by entrepreneurship (Ramoglou and Tsang 2016) 4. Legitimate access to premises (Benson and Simpson 2015) 5. Specialized access in routine activity (Cohen and Felson 1979) 6. Inability to control because of social disorganization (Hoffmann 2002) 7. Executive language that people do not understand (Ferraro et al. 2005) 8. Legitimate access to resources (Adler and Kwon 2002) 9. Too big to fail, too powerful to jail (Pontell et al. 2014) 10. Blame game by misleading attribution (Eberly et al. 2011) 11. Interference and noise in crime signals (Karim and Siegel 1998) 12. Sense-making of actions difficult for outsiders (Weick 1995) 13. Costs exceed benefits for whistleblowers (Keil et al. 2010) 14. Ethical climate conflict (Victor and Cullen 1988) 15. Offender humor distraction (Yam et al. 2018) 16. Power inequality (Patel and Cooper 2014) 17. Rule complexity preventing compliance (Lehman et al. 2019) 18. Misrepresentation in accounting (Qiu and Slezak 2019) Personal white-collar crime willingness 1. The act of wrongdoing is morally justifiable (Schnatterly et al. 2018) 2. Personality trait of narcissism expecting preferential treatment (Zvi and Elaad 2018) 3. Behavioral reinforcement of deviance over time (Benartzi et al. 2017) 4. Professional deviant identity (Obodaru 2017) 5. Undesirable impulses in self-regulation (Mawritz et al. 2017) 6. Reputation adaption to individual labels (Bernburg et al. 2006) 7. Learning from others by differential association (Sutherland 1983) 8. Perception of benefits exceeding costs as rational choice (Pratt and Cullen 2005) 9. Lack of self-control (Gottfredson and Hirschi 1990) 10. No risk of detection perceived and thus no deterrence effect (Comey 2009) 11. Action according to authority as obedience (Baird and Zelin 2009) 12. Negative life events have occurred (Engdahl 2015) 13. Sliding on the slippery slope (Welsh et al. 2014) 14. Application of neutralization techniques (Sykes and Matza 1957) 15. Acceptable for the elite from social conflict (Petrocelli et al. 2003) 16. Work-related stress self-determined (Olafsen et al. 2017) 17. Narcissistic identification with the organization (Galvin et al. 2015) 18. Social ties dwindle with age (Sampson and Laub 1993) 19. Collectivist value orientations (Bussmann et al. 2018) 20. Sensation seeking to experience adventure (Craig and Piquero 2017) 21. Deviant identity labeling (Mingus and Burchfield 2012) (continued)

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Table 5.1 (continued) General perspectives on convenience 1. A convenient individual is not necessarily neither bad nor lazy. On the contrary, the person can be seen as smart and rational (Sundström and Radon 2015) 2. Savings in time and effort is a desire for all individuals (Farquhar and Rowley 2009) 3. Relief and ease characterizes comfort (Carrington and Catasus 2007)

Employees in societies characterized by collectivist values are thus not only reluctant to blow the whistle when costs exceed benefits for whistleblowers (Keil et al. 2010). I return to the role and destiny of whistleblowers several times throughout this book. Deviant identity labeling implies that the label of deviant, and the stigma that comes with such a label, may cause the person to act in accordance with that label (Mingus and Burchfied 2012). Labeling can thus lead to adoption of a deviant status caused by self-labeling. Self-labeling is a person’s social identity which may classify one, in own eyes and others yes, as normal or deviant, and as a success or a failure (Hayes 2010). A person accepts a deviant identity (Crank 2018). Giurge et al. (2019: 1) suggests an interesting link between organizational opportunity in terms of high social status in privileged positions to personal willingness for deviant behavior and found that more leader power reduces moral reasoning: We find that having power over more followers decreased leaders’ principled moral reasoning, whereas having higher power to enforce one’s will enabled leaders to engage in self-­ interested behavior.

Giurge et al. (2019) found that powerful individuals with high social status in privileged positions tend to become more self-serving, where the economical dimension of convenience theory can experience stronger motives. Implicitly their research suggests that more power and influence can cause both a stronger financial motive as well as a stronger personal willingness for deviant behavior. In summary, this chapter has described different mindsets for deviant behavior, such as the innocent justification offender mind, the deviant personality offender mind, the rational choice offender mind, and the slippery absent offender mind. Many white-collar offenders find it convenient to disclaim responsibility for crime, refuse damage from crime, refuse victim from crime, condemn those who criticize, and justify crime by higher loyalties. The slippery slope perspective suggests that offenders only gradually move from the right side of the law to the wrong side of the law where it is the small infractions that lead to the larger ones.

Causal Convenience Triangle Relationships Similar to the fraud triangle, the convenience triangle emphasizes pressures and incentives, opportunities and prospects, and attitudes and rationalizations. The theory of convenience expands the fraud triangle in two directions. First, the term

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convenience is important to emphasize the decision-making process among alternatives, where an illegal pathway in terms of fraud is only one out of several options for a potential offender. Second, the term opportunity occurs in an organizational context where a potential offender has legitimate access and can abuse position and trust to commit fraud (Williams et al. 2019). The theory of convenience is a crime-as-choice theory where offenders have the option to choose legitimate rather than illegitimate paths to solve problems and gain from possibilities. Figure  5.1 illustrates the convenience triangle for white-collar crime. There are three constructs and six relationships in the triangle. Each relationship represents a causal effect from one construct on the other construct. The research method applied in this chapter is the case study approach. For each of the six hypothesized relationships in Fig. 5.1, an actual case of a convicted white-­ collar offender will illustrate that link. Each case study retrieved information from court documents, fraud examination reports, and media coverage. These case studies do not confirm the research hypotheses as such. Rather, they illustrate the potential causality that might be present between dimensions in the theory of convenience.

Theoretical White-Collar Criminogenity Criminogenity is the tendency to commit crime. The tendency can be high or low, depending on a number of factors. According to the theory of convenience, the tendency to commit white-collar crime is dependent on financial motive, organizational opportunity, and personal willingness. When a financial motive becomes stronger, when an organizational opportunity to commit and conceal financial crime becomes more attractive, and when the personal willingness for deviant behavior increases, then the tendency for white-collar crime will increase. Figure 5.2 illustrate motive, opportunity, and willingness as criminogenic factors in the theory of convenience. Incentives and pressures for financial gain represent the motive to exploit possibilities and avoid threats. Compensation structure and firm performance can represent internal forces. Compensation structure can drive executives to misbehavior because of the incentive and pressure it applies. When it is an incentive, the pressure constitutes greed. Organizational characteristics can increase pressure such that executives believe they must engage in wrongdoing. Pressure to engage in wrongdoing can originate from forces outside of the organization, such as competition and active investors (Schnatterly et al. 2018). Individuals’ ability to commit wrongdoing depends on their opportunities, which can be a reflection of individual power, organizational resources, and organizational structure and controls. The more power an individual has, the more opportunity there is to misbehave by overruling or ignoring others. External forces that provide opportunity to commit or facilitate wrongdoing include industry cultures and norms (Schnatterly et al. 2018).

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Theoretical White-Collar Criminogenity

Case 1 Motive on Opportunity

Economical Dimension of Convenience Theory Motive of Individual and/or Organizational Benefit based on Incentives and Pressures Case 2 Opportunity on Motive

Case 3 Motive on Willingness

Case 4 Willingness on Motive Organizational Dimension of Convenience Theory Professional Opportunity for Crime and Concealment without Organizational Guardian

Behavioral Dimension of Convenience Theory Deviance Willingness based on Attitudes and Rationalization without Moral Guardian

Case 5 Opportunity on Willingness Case 6 Willingness on Opportunity

Fig. 5.1  Hypothetical links between constructs in the triangle of convenience

The personal willingness can come from deviant cultures. A focus on risk taking increases the scope of potential results, while at the same time allowing for more freedom with regard to means (including wrongful means) to reach desired goals (Schnatterly et al. 2018). Based on the research model in Fig. 5.2, three research hypotheses emerge: Hypothesis 1. The stronger motive for illegal financial gain, the more likely white-collar crime will occur. Hypothesis 2. The greater organizational opportunity for access to resources to commit and conceal financial crime, the more likely white-collar crime will occur. Hypothesis 3. The higher personal willingness for deviant behavior, the more likely white-collar crime will occur.

The theory of convenience suggests that motive, opportunity and willingness are the underlying factors for criminal behavior among white-collar offenders. Considered together as illustrated in Fig. 5.2, these factors comprise a criminogenity specter that influence the likelihood of law violations. I do not expect that the model in the figure can provide forecast information on which criminals one can catch before they commit crime, but I do expect that the model can provide insights into actions that might reduce the likelihood of white-collar crime occurrences. In particular, actions that can reduce organizational opportunity are quite evident to derive from convenience theory. An interesting question is whether all three dimensions (motive, opportunity, and willingness) are equally important for white-collar crime to occur. Without an opportunity, no crime can occur. Without a motive and willingness, crime can nevertheless occur. The relative importance of the dimensions can vary with situation, both for the individual and the organization.

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5  Convenience Triangle MOTIVE Convenient Financial Gain to Avoid Threats and Exploit Possibilities OPPORTUNITY Convenient Legitimate Access to Resources to Commit and Conceal Financial Crime

CRIMINOGENITY Likelihood of White-Collar Crime Occurrence in the Organization

WILLINGNESS Convenient Deviant Behavior to Commit and Conceal Financial Crime

Fig. 5.2  Dimensions influencing criminogenity in convenience theory

Schnatterly et al. (2018) make a distinction between internal forces and external forces. Internal motivational factors might be compensation, aspirations, and board expectations. External motivational factors might be competition, relative performance, and investor expectations. Internal opportunity factors might be individual power, organizational complexity, and formal organizational controls and audits. External opportunity factors might be industry culture and norms, industry complexity, and macroeconomic factors. Internal willingness factors might be firm culture, control misalignment and social structures. External willingness factors might be industry culture and norms, and globalization. We may look at the decision-making process by a white-collar offender as illustrated in Fig.  5.3. The potential offender makes two decisions. First, the crime opportunity is more convenient than the no crime opportunity in the organizational setting. Second, crime selection is more convenient than a no crime selection based on a personal willingness for deviant behavior.

Theoretical Convenience Triangle Interactions The theory of convenience suggests causal interactions between dimensions. Figure 5.4 illustrates the convenience triangle for white-collar crime where dimensions link to each other as criminogenic factors. Figure 5.5 illustrates that there are three constructs and six relationships in the triangle. Each relationship represents a causal effect from one construct on the other construct. Based on the research model in Fig. 5.5, six research hypotheses emerge. The first hypothesis is concerned with opportunity expansion resulting from a stronger desire for illegal profit to cover personal or organizational needs. Potential offenders have access to resources for opportunity expansion.

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Theoretical Convenience Triangle Interactions TRIGGER

ALTERNATIVES

DECISION

FINANCIAL MOTIVE

CRIME OPPORTUNITY

CRIME SELECTION

NO CRIME OPPORTUNITY

NO CRIME IMPLEMENTATION

ACTION CRIME IMPLEMENTATION

Fig. 5.3  The decision-making process in white-collar crime

MOTIVE

Fig. 5.4 Convenience triangle in white-collar crime

OPPORTUNITY

Hypothesis 1 Motive on Opportunity

WILLINGNESS

Economical Dimension of Convenience Theory Motive of Individual and/or Organizational Benefit based on Incentives and Pressures Hypothesis 2 Opportunity on Motive

Hypothesis 3 Motive on Willingness

Hypothesis 4 Willingness on Motive Organizational Dimension of Convenience Theory Professional Opportunity for Crime and Concealment without Organizational Guardian

Behavioral Dimension of Convenience Theory Deviance Willingness based on Attitudes and Rationalization without Moral Guardian

Hypothesis 5 Opportunity on Willingness Hypothesis 6 Willingness on Opportunity

Fig. 5.5  Hypothetical links between constructs in the triangle of convenience

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Over time, an offender can expand opportunities for white-collar crime. Earlier research has emphasized that opportunity is dependent on the social capital available to the criminal, as well as the structure and quality of social ties in hierarchical and transactional relationships that shape opportunity structures (e.g., Adler and Kwon 2002; Pontell et al. 2014). In a dynamic perspective, a potential offender can improve the organizational convenience of white-collar crime. Hypothesis 1. A stronger motive for illegal financial gain will cause a greater organizational opportunity for access to resources to commit and conceal financial crime.

A historic case supporting this hypothesis is Bernard Ebbers at WorldCom. Ebbers was the chief executive officer at WorldCom. He had built and developed the company into a major telecom enterprise. At the same time, he had accumulated personal wealth by acquiring more and more properties privately. He had to finance some of his purchases by bank loans, and he provided security for those loans by depositing shares in WorldCom. When the share price fell, the value of the security fell. Therefore, he had to make sure that something happened in the organizational dimension to stabilize the share price. Ebbers’ personal greed in the economical dimension caused him to instruct deviance in the organizational dimension. The second hypothesis is concerned with greed expansion resulting from emerging ample organizational opportunity for financial crime. A greater organizational opportunity can occur from institutional deterioration over time (Pillay and Kluvers 2014) that often accelerates because of social disorganization (Hoffmann 2002). The organizational guardian disappears (Benson and Simpson 2015). The temptation from perceived new opportunities increases. Greed can grow when the organization does not have an adequate reaction. Goldstraw-White (2012) defines greed as socially constructed needs and desires that can never be completely covered or contended. Greed can be a very strong quest to get more and more of something, and there is a strong preference to maximize wealth. Hypothesis 2. A greater organizational opportunity for access to resources to commit and conceal financial crime will cause a stronger motive for illegal financial gain.

The third hypothesis is concerned with willingness expansion resulting from a stronger desire for profits to cover personal or organizational needs. For example, procurement officers in a public office can be an attractive target for vendors who are willing to bribe officials. When officials have a stronger desire for a bribe, then then their willingness to accept a bribe will increase, and corruption is more likely to occur. Generally, a stronger motive leads to higher willingness based on rational choice. The economic model of rational self-interest is all about weighing up the pros and cons of alternative courses of action. When the desire increases, then the benefits in the rational benefit-cost comparison increase that in turn influences willingness. Rational choice theory simply states that when benefits exceed costs, we would all do it (Pratt and Cullen 2005). The theory is explicitly a result of the self-­ regarding preference assumption, where rationality is restricted to self-interested materialism (Paternoster et al. 2018).

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Hypothesis 3. A stronger motive for illegal financial gain will cause a higher personal willingness for deviant behavior.

Hypothesis 4 is concerned with motive expansion resulting from higher willingness for deviant behavior. For example, narcissistic organizational identification by some CEOs is one of several perspectives on potential criminal behavior (Galvin et al. 2015). If a CEO says and believes in the statement – “I am the company” – then the organization can be up for trouble. Narcissism here means seeing oneself as central to the organization’s identity. It is a self-centered form of organizational identification. The CEO may lose his or her independent sense of self and engage in questionable behaviors. Narcissistic organizational identification implies domination of individual identity over organizational identity. CEOs with narcissistic organizational identification feel a strong affinity for their organizations’ identities, but as an expression of themselves. Removing the separation between the individual and the organization can cause the CEO to think of company money as personal money (Zhu and Chen 2015). Galvin et al. (2015: 163) found that: It is not uncommon to learn of individuals in positions of power and responsibility, especially CEOs, who exploit and undermine their organizations for personal gain. A circumstance not well explained in the literature, however, is that some of those individuals may highly identify with their organizations, meaning that they see little difference between their identity and the organization’s identity – between their interests and the organization’s interest. This presents a paradox, because organizational identification typically is not noted for its adverse consequences on the organization.

A typical example is family-owned businesses where family members’ greed can increase resulting from higher willingness derived from the ownership (Patel and Cooper 2014). Hypothesis 4. A higher personal willingness for deviant behavior will cause a stronger motive for illegal financial gain.

Hypothesis 5 is concerned with willingness expansion resulting from emerging ample organizational opportunity for financial crime. As the institution deteriorates, social disorganization occurs, or other events happen that represent a greater organizational opportunity for access to resources to commit and conceal financial crime, it becomes much more convenient for a potential offender to apply neutralization techniques (Sykes and Matza 1957). For example, the blame game in such organizational settings can imply that an offender easily might disclaim responsibility for crime (Lee and Robinson 2000). Furthermore, an offender can claim normality of action, as several others have entered into deviant behavior in the organization. Hypothesis 5. A greater organizational opportunity for access to resources to commit and conceal financial crime will cause a higher personal willingness for deviant behavior.

The final hypothesis 6 is concerned with opportunity expansion resulting from a stronger willingness for deviant behavior. For example, when a potential offender’s self-control deteriorates over time, then the offender’s willingness for deviant

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5  Convenience Triangle MOTIVE Convenient Financial Gain to Avoid Threats and Exploit Possibilities

OPPORTUNITY Convenient Legitimate Access to Resources to Commit and Conceal Financial Crime

CONVENIENCE Combination of motive, opportunity and willingness interactions

CRIMINOGENITY Likelihood of WhiteCollar Crime Occurrence in the Organization

WILLINGNESS Convenient Deviant Behavior to Commit and Conceal Financial Crime

Fig. 5.6  Structural equation model for convenience determining criminogenity

behavior increases. Higher willingness for deviant behavior can create opportunity expansion over time. Potential offenders have often access to resources for opportunity expansion. In a dynamic perspective, an offender can improve the organizational convenience for financial crime (Schnatterly et  al. 2018). For example, by taking on a personal project of selling some business activities for the organization, the offender can make sure that he or she is alone in handling the case. When making sure that nobody else is involved, some of the income can be diverged to private accounts. Hypothesis 6. A higher personal willingness for deviant behavior will cause a greater organizational opportunity for access to resources to commit and conceal financial crime.

The models in Figs.  5.4 and 5.5 integrate into a structural equation model as illustrated in Fig. 5.6.

Sample Convenience Hypotheses Method The collection of the Norwegian sample of white-collar offenders applied the original definition and characteristics of white-collar crime. Sutherland (1939, 1983) defined white-collar crime as crime committed by a person of respectability and high social status in the course of his occupation. This definition is a well-known and influential example of what researchers call the offender-based approach to defining white-collar crime. The definition emphasizes that white-collar crime is financial crime by privileged individuals in society who abuse their legitimate

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access to resources to violate laws (Benson and Simpson 2015; Schoepfer and Piquero 2006). White-collar crime is financial crime committed by privileged individuals in a professional context where offenders have legitimate access to resources based on power and trust (Sutherland 1983). In line with the theory of convenience, crime can be a convenient option when alternative actions are associated with more time and effort, and more strain and pain. Privileged offenders know that they can conveniently obtain illegal profit in an organizational setting where the offenders can enjoy power and influence based on position and trust. The organizational dimension sets white-collar criminals apart from other financial criminals. White-collar crime can be distinguished from ordinary crime (“street crime”) based on the status of the offenders, their access to legitimate occupations, the common presence of an organizational form, and the extent of the costs and harmfulness of such crime. Sutherland (1983) specifically focused on emphasizing the respectability of white-collar offenders, stating that persons of the upper socio-economic class commit all kinds of financial crime. The ability of white-collar offenders to commit crime relates directly to their privileged position in the social structure, and their orientation to legitimate and respectable careers (Friedrichs et al. 2018). In addition to the criteria above, the sample is limited to white-collar offenders who appeared in the media before, during, or after their trials. This limitation can be found relevant and in accordance with the original definition by Sutherland (1983), while at the same time noting that offenders are only exposed in the press to the extent that they are sensational and possibly revealed and discovered by the press itself. As pointed out by Piquero (2018), national statistics do not provide relevant figures for our offender group. My sample thus has the following characteristics as applied by newspapers when presenting news: famous individuals, famous companies, surprising stories, important events, substantial consequences, matters of principles, and significant public interest. The two main financial newspapers in Norway are Dagens Næringsliv and Finansavisen, both of which are conservative-leaning business newspapers. In addition, the business-friendly national daily newspaper Aftenposten regularly reports news of white-collar criminals. Left-wing newspapers such as Klassekampen very seldom cover specific white-collar criminal cases, although generally report on white-collar crime. Sampling from newspaper articles is in line with the Siemens corruption study (Eberl et al. 2015). A review of Dagens Næringsliv, Finansavisen, Aftenposten, and Klassekampen took place on a daily basis for 6 years from 2009 to 2015. We studied every edition of these four newspapers on a daily basis to identify stories reporting on white-­collar crime cases and the people involved in them. We defined a person as a white-­collar criminal if the following three conditions were satisfied. First, he or she committed an offense in a deliberate and purposeful manner as part of professional activity linked to regular business activities and using non-physical means. Second, the offense involved large sums of money or large losses for others. Third, the media covered the offender’s case and described the offender as being successful and

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having a high social status and a position of some power and access to organizational resources. The media often report this sort of crime, but there are instances where the omission by the media would make the offence nevertheless counting as white collar offense. This third criterion is thus not really part of the definition, but rather a way of defining the search for a relevant empirical sample that is possible to obtain. In short, my approach to defining white-collar crime is consistent with Sutherland’s (1983) offender-based definition. This research identified a person as a white-collar criminal if the person satisfied the general criteria mentioned above, and if the person received a verdict in court to imprisonment. The total number of white-collar criminals was 408 reported during those years from 2009 to 2015. This research carried out verification of facts in newspaper accounts by obtaining court documents. After registering newspaper accounts as an important indication of white-collar offenders, this research compared the contents of newspaper articles and corrected my notes by court sentences, which typically range from five to fifty pages in Norwegian district courts, courts of appeal, and the Supreme Court. This research was not able to collect data to test the original hypotheses above, where there are three hypotheses to predict criminogenity, and six hypotheses linking concepts in the convenience triangle. The presentation of the hypotheses served as an introduction and as an option for future research, if any researchers in the future can come up with a way of testing them empirically. The challenge is of course to find a sample of individuals who have not committed crime, but at the same time have a varying extent of tendency potentially to commit white-­ collar crime. For the current research, it was only possible to retrieve data regarding offender characteristics and offense characteristics: 1. Gender (male/female) 2. Age when committing crime 3. Age when final conviction in court 4. Prison sentence (number of years) 5. Court level (district court/court of appeals/supreme court) 6. Crime amount (money value of financial crime) 7. Number of persons involved in each criminal case 8. Crime category (fraud/theft/manipulation/corruption) 9. White-collar level (low/medium/high level member of elite in society) 10. Personal income according to IRS 11. Personal tax paid according to IRS 12. Personal wealth according to IRS 13. Organizational revenue where offender worked 14. Organizational members where offender worked 15. Sector (private/public) 16. Victim (employer/bank/tax authority/customer/shareholder/other) 17. Detection (media/victim/bankruptcy lawyer/tax authority/bank/police/auditor/ internal control/stock exchange/other) 18. Crime beneficiary (corporate/occupational crime) 19. Criminal role (leader/follower)

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2 0. Criminal situation (criminal apple/barrel) 21. Criminal group (entrepreneur/corporate criminal/criminal follower/female criminal) 22. Defense lawyer fame (number of hits in business newspaper) 23. Defense lawyer age 24. Defense lawyer income. The next chapter returns to statistical analysis of the sample of 408 convicted white-collar offenders in Norway from 2009 to 2015. In summary, this chapter has described both similarities and differences between the new convenience triangle and the traditional fraud triangle. Similar to the fraud triangle, the convenience triangle emphasizes pressures and incentives, opportunities and prospects, and attitudes and rationalizations. The theory of convenience expands the fraud triangle in two directions. First, the term convenience is important to emphasize the decision-making process among alternatives, where an illegal pathway in terms of fraud is only one out of several options for a potential offender. Second, the term opportunity occurs in an organizational context where a potential offender has legitimate access and can abuse position and trust to commit fraud. In addition, the theory of convenience is a crime-as-choice theory where offenders have the option to choose legitimate rather than illegitimate paths to solve problems and gain from possibilities. Figure 5.7 illustrates elements in the theory of convenience in the form of a causal loop diagram. All three dimensions influence each other mutually. These interactions can create dynamics over time, where, for example, a stronger economical motivation can cause greater organizational opportunity, while a greater organizational opportunity can cause a stronger economical motivation. The figure also illustrates the external factors that were described earlier in this chapter. Individual Possibilities Corporate Possibilities Individual Threats

Privileged Status Commit Crime Organizational Opportunity

Financial Motive

Legitimate Access Functional Decay

Conceal Crime

Corporate Threats

Oversight Chaos External Collapse

Personal Willingness

Crime Choice

Deviant Identity Rational Decision Deviant Learning

Crime Innocence

Justification Neutralization

Fig. 5.7  Causal loop diagram for elements in the theory of convenience

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Chapter 6

White-Collar Crime

Sutherland (1939) who coined the term white-collar crime defined it as crime committed by a person of respectability and high social status in the course of his occupation. This definition is a well-known and influential description of what researchers call the offender-based approach to defining white-collar crime. The definition emphasizes that white-collar crime is financial crime by privileged individuals in society who abuse their legitimate access to resources to violate laws (Benson and Simpson 2015; Schoepfer and Piquero 2006; Williams et al. 2019). White-collar crime is financial crime committed by privileged individuals in a professional context where offenders have legitimate access to resources based on powerful positions and personal trust (Sutherland 1983). In the empirical study of white-collar crime later in this book, the study defines a person as a white-collar criminal if the following three conditions are satisfied. First, he or she committed an offense in a deliberate and purposeful manner as part of professional activity linked to regular business processes and using non-physical means. Second, the offense involved large sums of money or large losses for others. Third, the media covered the offender’s case, described the offender as being successful and having a high social status, and a position of some power and access to organizational resources. In short, the approach in this book to defining white-collar crime is consistent with Sutherland’s (1939, 1983) offender-based definition. This research identified a person as a white-collar criminal if the person satisfied the general criteria mentioned above, and if the person received a verdict in court to imprisonment. Why do organizational leaders and other privileged individuals engage in wrongdoing? Wrongdoing is behavior that a social-control agent judges to transgress a line separating right from wrong. The line separates responsible behavior from irresponsible behavior along axes such as legal, ethical, psychological, economic and social dimensions. Wrongdoing by people at the upper echelon of society can come in many forms, and its consequences are often dramatic, resulting in a number of negative outcomes (Schnatterly et al. 2018).

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This book simply defines crime as violation of the law. This legal definition of crime is problematic since it does not provide “a stable reference point for distinguishing criminal acts from noncriminal acts because laws change from one society to another and across time” (DiCristina 2017: 298). For example, providing a bribe in a corrupt situation was in many jurisdictions considered an expense that was deductible from revenues in corporate accounting some decades ago. Criminal laws can vary to great degrees over time, and they can vary dramatically across societies. Generally, a crime is a harmful action to somebody that deserves punishment, but this research sticks to the definition of crime as breaches of rules of conduct stated in law (Wikstrom et al. 2018).

Offender-Based White-Collar Perspective As already introduced in this book, the offender-based definition has its origin in the work of Sutherland (1939), who defined white-collar crime based on the social and occupational status of the offender as a crime committed by a person of respectability and high social status in the course of the offender’s occupation. The other, offense-based tradition stems from a critique against using offender characteristics as part of the definition. For instance, Shapiro (1990: 347) argues that this “confuse[s] acts with actors, norms with breakers, the modus operandi with the operator”. The offense-based tradition is instead concerned with the criminal act in itself, drawing upon legal definitions, motives and means (Piquero and Schoepfer 2010). Offense-­ based approaches to white-collar crime emphasize the actions and nature of the illegal act as the defining agent. For example, white-collar crime is typically a non-­ violent offense (Berghoff and Spiekermann 2018). Because status is not included in the definition of offense-based approaches, and status is free to vary independently from the definition in most legislations; an offense-based approach allows measures of status to become external explanatory variables. An argument for the offense-based perspective is that everyone now can commit fraud on the Internet, an act that was impossible when Sutherland (1939) coined the term white-collar crime eight decades ago (Geest et al. 2017: 544): In sharp contrast to the 1940s however, when most financial crimes were out of reach for ordinary people, in modern-day society the opportunity structure for white-collar crime has dramatically changed. The growth of the credit economy, the increase of the service sector, increased urbanization, and the advent of the internet – to name but a few factors – have increasingly democratized the phenomenon of financial crimes and fraud. With the advancement of technology, crimes labeled as ‘white-collar’ do not require employment or specific skills, and have increasingly come within range of the poor and disadvantaged who disproportionately came in contact with the criminal justice system then and now.

Nevertheless, this book applies the offender-based rather than the offense-based definition of white-collar crime, which is consistent with Sutherland’s (1939: 2) approach when he introduced the term:

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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 misapplication of funds, short weights and measures and misgrading of commodities, tax frauds, misapplication of funds in receiverships and bankruptcies. These are what Al Capone called “the legitimate rackets”. These and many others are found in abundance in the business world.

The book applies this definition by emphasizing that the white-collar offender has legitimate access to resources to commit and conceal crime in the course of occupational and professional activity. White-collar crime is committed during the course of legitimate occupational activity, by persons of high and respectable social status for personal or organizational gain. Individualistic white-collar crime benefits that individual, while corporate white-collar crime benefits the organization more directly than individuals that committed the offense (Craig and Piquero 2017). Occupational crime is a frequent label for the former, while corporate crime is a frequent label for the latter. White-collar crime is illegal acts that violate responsibility or public trust for personal or organizational gain. It is one or a series of acts committed by non-­ physical means and by concealment to obtain money or property, or to obtain business or personal advantage (Leasure and Zhang 2017). The offender has legitimate access, where legitimacy is a generalized perception or assumption that the actions of an individual are desirable, proper, and appropriate within some socially constructed system of norms, roles, and values (Fitzgibbon and Lea 2018). Legitimacy is an assessment of the appropriateness of an individual’s actions (Bundy and Pfarrer 2015). The offender has high social status, power and enjoys respectability. Given the offender-based perspective, the text in this book disagrees with Galvin et al. (2018) who includes all kinds of non-violent crime with financial motive. For us, identity theft or credit card abuse in a private context is no white-collar crime. Bank fraud or CEO fraud using the Internet in a private context is no white-collar crime. A distinct term like white-collar crime can lose meaning by including more and more offenders and offenses. While it is certainly true that many wear white-­ collar, everyone knows what the term means in criminology. It is financial crime by members of the elite in society. Those who attempt to stay above the law and feel they are too powerful to fail and too powerful to jail, those are the typical white-­ collar offenders (Pontell et al. 2014). This book makes a distinction between occupational crime and corporate crime. Self-interested individuals commit occupational crime in their profession against their employers (e.g., embezzlement or receipt of bribes) and other victims (Shepherd and Button 2019). Organizational officials commit corporate crime in the larger interests of an organization, such as bribing potential customers, avoiding taxes by evasion, and misrepresenting accounting to get unjustified government subsidies. As argued by Alalehto (2018), an organization does not think or act by itself because it lacks ethical, philosophical, sociological and psychological ­properties. Therefore, offenders of both occupational crime and corporate crime are individuals.

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By corporate crime, individuals such as board members and chief executives serve the benefit of the organization. Of course, individuals may benefit personally as a side effect of the corporate financial crime, since the interests of the organization may coincide with the interests of individual members. While a corporation cannot feel, does not have a mind, and does not think, the corporation nevertheless acts and is the actor when executives and others attempt to improve organizational performance in illegal ways (Bundy and Pfarrer 2015; Scott and Lyman 1968). The organizational connection of white-collar offenses is particularly evident when crime is committed on behalf of the business. The organizational anchoring of crime is obvious in corporate offenses as crime takes place within the business and to the benefit of the business (Bradshaw 2015). While offenders often hide occupational crime individually to enrich himself or herself by abusing corporate resources (Hansen 2009; Shepherd and Button 2019), corporate crime is often hidden by a group of individuals to improve business conditions.

Theoretical Foundation by Sutherland The offender-based white-collar perspective originates from Edwin Sutherland. Sutherland is one of the most cited criminologists in the history of the criminology research field. Sutherland’s work has inspired and motivated a large number of scholars in the field associated with his work. His ideas influence, challenge and incentivize researchers. Sutherland based his research on white-collar crime on his own differential association theory. This learning theory of deviance focuses on how individuals learn to become criminals. Differential association theory assumes that individuals learn criminal behavior in interaction with other persons. Berghoff and Spiekermann (2018: 290) are among those emphasizing the importance of Sutherland’s work: The assessment of the offences committed in the corporate world began to change in light of the theories of sociologist and criminologist Edwin Hardin Sutherland, who not only established the criminological term ‘white-collar crime’ in 1939, but also made clear that crimes were not exclusively committed by lower-class offenders. Sutherland, who had among other things previously worked on juvenile delinquents in ghettos of recent immigrants, pointed to certain parallels such as the influence of cultural milieus. This concept violated existing prejudices that high-ranking persons would not or only in highly exceptionally circumstances commit crimes and that economic crimes were due to ‘merely technical violations’, which ‘involve no moral culpability’. Sutherland, who is considered one of the most influential criminologists of the twentieth century, vehemently contradicted widespread views that criminality was caused by poverty or biological and psychological factors.

Sutherland’s (1939, 1983) concept of white-collar crime has been so influential for various reasons. First, there is Sutherland’s engagement with criminology’s neglect of the kinds of crime of the powerful and influential members of the elite in society. Next, there is the extent of damages caused by white-collar crime. Sutherland emphasized the disproportionate extent of harm caused by the crime of the wealthy

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in comparison to the much researched and popular focus on crime by the poor, and the equally disproportionate level of social control responses. Third, there is the focus on organizational offenders, where crime occurs in course of their occupations. A white-collar criminal is a person who, through the course of his or her occupation, utilizes own respectability and high social status to perpetrate an offense. Fourth, the construction of the corporation as an offender indicates that organizations might be accountable for misconduct and crime. Finally, there is the ability to theorize deviant behaviors of elite members. Sutherland’s groundbreaking challenge of mainstream criminology as neglecting the crime of the upper class and the dominating focus on crime of the poor has inspired many researchers. This was a major insight that began a dramatic shift and broadening in the subject matter of criminology that continues today. The long lasting influence of Sutherland upon criminological, sociological and more recently also on management thinking is observable across the globe, but in particular in the United States and Europe. Sutherland exposed crime by individuals who people thought of as almost superior, and people who apparently did not need to offend as a means of survival. Businesspersons and professionals frequently commit serious wrongdoing and harm with little fear of facing criminal justice scrutiny. It can be true that poverty and powerlessness is a cause of one kind of crime while excessive power can be a cause of another kind of crime. Sutherland exemplified the corporation as an offender in the case of war crime where corporations profit heavily by abusing the state of national emergency during times of war. Corporate form and characteristics as a profit-maximizing entity are shaping war profiteering. War profiteering is organizational crime by powerful organizations that may commit environmental crime, state-corporate crime, and human rights violations. Corporations break the law, and they get away with it, according to Sutherland (Müller 2018). While Sutherland’s concept of white-collar crime has enlightened sociologists, criminologists and management researchers, the concept may have confused attorneys, judges and lawmakers. In most jurisdictions, there is no offense labelled white-collar crime. There are offenses such as corruption, embezzlement, tax evasion, fraud, and insider trading, but no white-collar crime offense. Sutherland’s contribution to the challenge of concepts such as law and crime, researchers consider one of the strengths of his work as he showed that laws and legal distinctions that the elite produces politically and socially in very specific ways. For lawmakers, there is nothing intrinsic to the character of white-collar offenses, which makes them somehow different from other types of offenses. One reason for this confusion is that white-collar crime in Sutherland’s research is both a crime committed by a specific type of person, and it is a specific type of crime. Later research has indicated, as applied in this book, that white-collar crime is no specific type of crime, it is only a crime committed by a specific type of person. However, white-collar crime may indeed sometime in the future emerge as a kind of crime suitable for law enforcement as Sutherland envisaged it in his ­offender-­based approach to crime, focusing on characteristics of the individual offender to determine the categorization of the type of crime.

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While white-collar criminal as a term was introduced by Sutherland in 1939, other terms such as robber baron had been introduced several decades earlier. Robber barons are the powerful and wealthy in the upper class of society who defines what is right and what is wrong, and who change the laws when they themselves are in danger of breaking the laws (Petrocelli et  al. 2003). The rich and mighty people can behave like robber barons because they make the laws and because they control law enforcement. Spiekermann (2018: 363) presents the case of the Spreckels family as an example of robber barons: Claus Spreckels (1828-1908) was surely one of the notorious ‘robber barons’ of the time… When in 1876 the Kingdom of Hawaii and the United States arranged a first reciprocity treaty, which included a bounty for cane sugar imports to the United States, Spreckels took his chance and erected, after corrupting the king and the government, large-scale sugar plantations. Within a few years, Claus Spreckels established a vertically integrated sugar empire, which not only included plantation and refining but also financing, transport and wholesale trade. Although harshly criticized for exploiting coolie work and corrupting the Sandwich Islands, his political influence in California and Washington, DC generated continuous political support for his business interests.

Sutherland’s broader engagement with criminological and sociological theory in general, such as his theory of differential association and social learning, has been and is influential. One aspect of the theory of differential association – social disorganization – has had a significant influence of later researchers. Sutherland’s work is the foundation in all teaching, research and policing of white-collar crime today.

White-Collar Elite Shadow Economy The dominant view globally is that very few white-collar offenders face prosecution. “The bigger the crime, the less likely the perpetrator will serve time” (Hausman 2018: 381). “Corruption only rarely comes to light” (Berghoff 2018: 423). We may assume that only one out of 10, or maybe only one out of 100, faces conviction and incarceration for white-collar crime, as discussed in the following. The undetected white-collar crime is the elite shadow economy, which is part of the overall shadow economy. The elite shadow economy can be extremely harmful to individuals, organizations, as well as society. There are both direct victims such as employers and banks, and indirect victims such as tax authorities and society. White-collar crime changes the rules of competition in a market economy by corruption and fraud. The harmful effects of white-collar crime are evident in the few cases detected. Those few detected often cause corporate scandals such as Danske Bank in Denmark (Bruun Hjejle 2018), Siemens in Germany (Eberl et  al. 2015; Berghoff 2018), Toshiba Corporation in Japan (Deloitte 2015). Similar scandals occurred at Fuji Xerox in New Zealand (Deloitte 2017), NNPC in Nigeria (PwC 2015), Telenor’s VimpelCom in Norway (Deloitte 2016), Nordea bank in Sweden (Mannheimer Swartling 2016), and Wells Fargo in the United States (Shearman Sterling 2017).

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The national white-collar crime center in the United States estimated in a report by Huff et al. (2010) the magnitude of white-collar crime in the U.S. at between 300 and 600 billion dollars. Given that the U.S. has a population of 321 million compared to a small nation of 5 million people in Norway, the equivalent range for Norway would be from 5 to 10 billion dollars, if one assumes that white-collar crime has the same prevalence in both nations. However, Gottschalk and Gunnesdal (2018) have estimated the amount in Norway to only 1–2 billion dollars. Either the magnitude of white-collar crime is substantially less in Norway compared to the United States, or estimates are diverging because of different estimation techniques. Of course, the range, nature, and impact of white-collar criminal activity are at least as plausible a possible source of variation, where there may be little relevance in using the U.S. statistics to estimate Norway’s white-collar crime rate. Estimating the magnitude of white-collar crime is an exercise where there is no way of controlling whether an estimate is right, wrong or close. The shadow economy is undetected by public authorities, and researchers can thus come up with all kinds of estimates without ever facing confrontation with facts. According to Berghoff and Spiekermann (2018: 290), Sutherland stated that, “the total damages of white-collar crimes were several times higher than those of all other crimes combined”. Therefore, one has to be extremely careful with numbers that often simply represent a guestimate, which is a combination of guessing and calculating. The shadow economy comprises those economic activities and the income derived from them that circumvent or otherwise avoid government regulation, taxation and observation (Schneider and Williams 2013). The shadow economy is synonymous with the informal economy or the underground economy that is not visible and parallel to the formal economic system (Edelbacher et al. 2016). The shadow economy is illegal economic or non-complying economic activity within legal businesses existing alongside a country’s official and legitimate economy. Main categories of white-collar crime in the shadow economy are fraud, theft, manipulation, and corruption. When bank fraud is committed, bank costs increase, thereby reducing value creation in the bank. At the same time, the fraudster spends the illegal money. When theft is committed, organizational income decreases, thereby reducing value creation in the organization. At the same time, the thief consumes or uses the stolen goods, services and money. When manipulation is committed, such as inappropriate accounting, then tax evasion can result, which reduces government income. At the same time, the manipulator consumes or uses the illegally withheld funds. When corruption is committed, then the values on the bribing side decline, while values on the bribed side increase. At the same time, the most competitive bidder loses in the market place to the bribing competitor. Just like one cannot observe the magnitude of white-collar crime specifically, the shadow economy generally is not observable, thus its magnitude estimation must result from some indicators (Breusch 2005). Schneider and Williams (2013) argue that there is no appropriate methodology to assess the scope of the shadow economy. Rather, three competing methods of assessment of the size of the shadow economy are as follows:

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• Direct procedures at a micro level that aim at determining the size of the shadow economy at one particular point in time. An example is survey method. • Indirect procedures that make use of macroeconomic indicators in order to proxy the development of the shadow economy over time. • Statistical models that use statistical tools to estimate the shadow economy as an unobserved variable. An emerging approach to replace the traditional methods mentioned above is expert elicitation. Expert elicitation refers to a systematic approach to synthesize subjective judgments of experts on a topic where there is uncertainty due to lack of data (Heyman and Sailors 2016; Valkenhoef and Tervonen 2016). The purpose of eliciting and analyzing expert judgment is to use all available information to make expert judgment inference, which is different from statistical inference. Statistical inference means that conclusions about the population can be established when the sample derives randomly for the population. Expert judgment inference means that experts’ estimates represent the state of knowledge. It represents previously unknown and undocumented information. The limited ability to infer does not mean that expert judgments are not valid data. Expert judgments are indeed valid data in that its careful collection, analysis and interpretation are transparent (Meyer and Booker 2001).When a number of experts participate in interviews, their accumulated guestimates tend to converge towards numbers that remain stable when more experts participate in interviews. Therefore, approximately ten experts from various backgrounds are often sufficient (Heyman and Sailors 2016; Slottje et al. 2008; Valkenhoef and Tervonen 2016). Gottschalk and Gunnesdal (2018) applied expert elicitation to estimate the magnitude of white-collar crime in Norway. Experts participated in interviews to estimate the magnitude in seven different approaches as listed in Table 6.1. For example, the fourth approach applied fraction of crime categories. Interviewees responded to a distinction between fraud, theft, manipulation, and corruption. Experts believed that thieves have the highest likelihood of detection and conviction, while bribery most seldom leads to conviction. One reason might be that both parties of the crime – both briber and bribed – are best served by never disclosing their criminal Table 6.1 Estimation of white-collar crime magnitude based on seven approaches

All approaches combined Approach 1 Fraction of white-collar criminals 2 Fraction with probability distribution 3 Fraction of offender groups 4 Fraction of crime categories 5 Fraction of victim groups 6 Gender fractions 7 Total magnitude suggestion Average magnitude of white-collar crime in Norway

Expert elicitation 13.4 billion 12.3 billion 12.9 billion 11.8 billion 10.6 billion 12.2 billion 10.1 billion 11.9 billion

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act. The fourth approach resulted in an estimate of white-collar crime magnitude of 11.8 billion Norwegian kroner. The current exchange rate between Norwegian kroner and United States dollars is 1 to 8, so the average magnitude of 11.9 billion NOK is the equivalent of US$ 1.5 billion. Most business schools have courses on business ethics, but few business schools have courses on white-collar crime. Most white-collar crime courses are in the schools of criminal justice. I am in a business school in Norway where there is an elective class on white-collar crime focusing on offenders based on the theory of convenience (Gottschalk 2017). I conducted a survey among the students by handing out a questionnaire in class, thereby providing a hundred percent response rate among 27 students. These responses are particularly interesting, since the students actively had elected this class on financial crime rather than more traditional business school classes. Similar to expert elicitation applied by Gottschalk and Gunnesdal (2018), I asked about the magnitude of white-collar crime by means of several approaches: 1. The fraction of all white-collar criminals in the country who face prosecution and conviction. 2. The fractions of offenders for fraud, theft, manipulation, and corruption that face prosecution and conviction. 3. The fractions of male and female offenders that face prosecution and conviction. 4. The magnitude of annual white-collar crime in billions of Norwegian kroner (exchange rate US$ 1 is NOK 8). The survey instrument had two open-ended questions as well. The first was concerned with why not more white-collar offenders face prosecution and conviction. The second was concerned with measures to bring more offenders to justice. Table 6.2 lists descriptive statistics for the questions. The assumed fraction brought to justice among white-collar offenders varied among students from half a percent to sixty-five percent with an average of fourteen percent. Assuming that the crime amount is the same for detected and undetected criminals, the result implies that 1 out of 7 white-collar offenders face prosecution and conviction. This is half of the ration of 1 out of 15 resulting from expert elicitation by Gottschalk and Gunnesdal (2018). Table 6.2  Student elicitations of white-collar crime fractions and amount Student Elicitation Percent Fraud Theft Manipulation Corruption Women Men Amount

Minimum .5% 2% 1% 1% 1% .5% 1% 1 billion

Maximum 65% 50% 60% 60% 80% 80% 95% 500 billion

Mean 14% 18% 18% 19% 19% 23% 59% 65 billion

Deviation 15% 13% 15% 15% 17% 22% 29% 131 billion

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While the expert elicitation by Gottschalk and Gunnesdal (2018) included seven approaches as listed in Table 6.2, I limited my student elicitation to four approaches as listed in Table 6.3. I knew from the detected offenders that the fraction of crime categories was 43 percent fraud, 4 percent theft, 35 percent manipulation, and 18 percent corruption of all detected white-collar offenses. Furthermore, I knew from detection statistics that the average amount for fraud is 16 million, for theft is 1 million, for manipulation is 12 million, and for corruption is 2 million NOK. Finally, I knew that the criminal justice system detects 66 offenders each year. By multiplying all these fractions, the result is 4.0 billion NOK as listed in Table 6.3. Similarly, for gender fractions I knew from detection statistics that 8 percent are female and 92 percent are male. I also knew from detection statistics that women had a crime amount of 5 million, while men had a crime amount of 12 million. Given student elicitation of 23% versus 59% for females and males, it ends up with an estimate of .7 billion NOK. Table 6.3 illustrates that depending on the approach, the business school students end up with much more varying estimates compared to the limited variation based on experts in Table 6.1. Students may have limited experience with numbers in the range of billions of Norwegian kroner. Here are some of the student answers to the question why so few white-collar criminals face prosecution and conviction: • Clever at hiding their tracks, thus difficult to detect and to identify hard evidence. • Very few people have the job of actively detecting financial crime. • Consensus culture. Others who question nothing quickly replace those who are presenting critical questions. • Law enforcement agencies place too much trust in private fraud examination, where internal investigators often claim there is misconduct but no crime. • Law enforcement agencies do not have sufficient insights and competence in white-collar crime investigations. • Society has too limited focus on crime committed by the elite. • There are only costs and no benefits from blowing the whistle when suspecting misconduct and crime. Table 6.3  Student elicitations of white-collar crime based on four approaches

All approaches combined Approach 1 Fraction of white-collar criminals 4 Fraction of crime categories 6 Gender fractions 7 Total magnitude suggestion Average magnitude of white-collar crime in Norway

Expert elicitation 8.1 billion 4.0 billion 0.7 billion 65.0 billion 19.5 billion

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• Many organizations have a one-sided focus on trust where controls and audits represent actions of distrust. • Preventing and detecting financial crime is no priority in public and private organizations. • Fear of the mighty and powerful make people reluctant to go against them. • When large sums are in circulation, then some deviations can be difficult to detect. Here are some of the student answers to the question what are the most important actions to catch and bring white-collar offenders to justice: • Active controls and search for criminals based on skeptical inquiry. • More openness and transparency. • Improved systems for whistleblowing, and change in culture so it is more acceptable and even admirable to be a whistleblower. Organizations should protect and promote whistleblowers. • Avoid single procure, more controllers and auditors, avoid that one person can manage everything or be responsible alone. • Automated processes and registers that make embezzlement, manipulation and other forms of financial crime more difficult. • Improve the competence of special police forces to investigate white-collar crime. Traditionally, all police forces are educated to fight street crime. • More national attention paid to white-collar crime relative to street crime. • Improve the competence of internal auditors to be able to conduct successful internal fraud examinations. • Improve international cooperation in monitoring money flows and exchange of national bank and tax information. The above study utilized the methodology of expert elicitation and focused on an important area of criminological study. Whilst any attempt to excavate the dark figure of white collar crime is commended in the research community, it might be more legitimate to frame this study in terms of assessing the attitudes and perceptions of business school students rather than an attempt to quantify the unknown extent of criminality. Given the inexperienced nature of business students, the definition of respondents as experts remains inescapably problematic. Students were probably just guessing. Future research might focus on different kinds of student groups to guess the magnitude of different kinds of financial crime. The reason should not be to use the students as experts and try to assess the magnitude, but instead the reason might be to discuss different groups’ perceptions of crime and try to explain the differences.

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Seriousness of White-Collar Elite Crime When Sutherland (1939) introduced the term white-collar crime, he wanted to draw attention to the fact that anyone, regardless of social class, can commit criminal acts (Piquero 2018). He emphasized privileged individuals in positions that they could abuse to commit and conceal crime, and he emphasized corporations involved in corruption and fraud. He emphasized elite offenses that the public and the criminal justice system should take more serious. Eighty years later, Piquero (2018) argues that white-collar crime is a growing problem in terms of both the numbers of people affected as well as the amount of harm caused to victims. Nevertheless, people do not necessarily consider white-­ collar crime very serious. Michel (2016) found that white-collar offenders are still significantly more likely to avoid criminal indictment, prosecution, conviction, and incarceration compared with street offenders. White-collar crime is hard to detect, and detection is obviously a precondition for any indictment and prosecution. It is usually obvious when a street crime has occurred, while financial crime by the elite usually is less apparent (Cullen et al. 2006: 346): The difference in visibility is tied directly to the nature of the crimes involved in each offense category. Missing property, a mugging, or an assault are forced upon a victim’s attention. By contrast, the very structure of most corporate acts insulates workers or citizens from knowledge of their victimization. Typically, corporate offenders are not present physically at the scene of the crime, and the effects of their victimization are diffused over time.

Logan et  al. (2019) argue that public support for the indictment, prosecution, conviction and imprisonment of white-collar offenders is on the rise. However, some studies show an association between political ideology and punitive philosophies, where conservatives favor greater control and punishment of traditional street crime as compared to liberals. Features of each political perspective suggest that the association is a reversal when it comes to white-collar crime. Reducing and punishing white-collar offenders may seem more important to liberals than to conservatives (Unnever et  al. 2009). This reversion of attitudes is in line with the switch hypothesis (Zimring and Hawkins 1978). Logan et al. (2019: 225) further argue that the number of people incarcerated for white-collar offenses in the United States has been steadily rising for the past two decades: There are now more white-collar offenders in jail or prison than ever before, and public support for the prosecution and imprisonment of white-collar offenders is on the rise. The United States Sentencing Commission reports an increase in the rate of white-collar offenders sentenced to federal prison. For example, between 1997 and 2009, the incarceration rate for fraud rose from 64.8 to 74.9 and has remained stable through 2015.

White-collar offenders are individuals who had high occupational status. The sentencing outcome can reflect the seriousness of their crime. Some research finds that high occupational status decreases punishment, showing that auto thieves receive a harsher punishment compared to physicians involved in medical fraud

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(Tillman and Pontel 1992). Other research finds that occupational status increases punishment, with higher occupational status health care professionals given more severe sentences than lower level health care professionals do (Payne et al. 2011). Still other research finds no effect at all from occupational status on length of prison sentence for white-collar offenders (Holtfreter et al. 2010). Perceptions of crime seriousness in the population still distinguish between offenses resulting in physical harm and the ones not resulting in such harm. Public opinion thus considers white-collar offenses not resulting in physical damages as not very serious. In a study by Isenring (2008), white-collar offenses are severely condemned, even when there is no physical harm involved in the crime. The study seems to show a greater sensitivity with respect to white-collar offenses, especially towards white-collar crime perpetrated by corporations, such as a corporation bribing a public official. On the other hand, the study showed a difference between street crime and white-collar crime with regard to punishment. Respondents preferred a more severe sentence passed on street criminals rather than on white-collar offenders. Goossen et  al. (2016) studied relationships between basic human values and white-collar crime. They tested seven value constructs in relation to three types of white-collar crime: tax evasion, insurance fraud, and bribery. They found that the relationships between values and white-collar offenses are particularly evident for values of universalism, power, and stimulation. Universalism is a value concerned with understanding, appreciation, tolerance, and protection of the welfare of all people and of nature. Power is a value concerned with social status and prestige, control or dominance over people and resources. Stimulation is a value concerned with excitement, novelty, and challenge in life. While universalism and stimulation were positively associated with the condemnation of white-collar crime, power had a negative association as a value construct. The seriousness of white-collar elite crime was emphasized by Hausman (2018: 392) who found that offenders present “a long-term danger to the U.S. business climate”. Honest businesspersons – who must have access to capital to succeed – suffer because financial investors, public authorities and the general public lose faith in business enterprises.

Typical Profile of a White-Collar Offender Ever since Sutherland (1939) coined the term white-collar crime, there has been extensive research and debate what do include and what to exclude from this offense category (e.g., Benson and Simpson 2015; Logan et al. 2019; Pontell et al. 2014; Schoepfer and Piquero 2006; Stadler et al. 2013). In accordance with Sutherland’s original work, convenience theory emphasizes the position and trust enjoyed by the offender in an occupational setting. Therefore, the organizational dimension is the core of convenience theory where the offender has access to resources to commit and conceal financial crime.

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The typical profile of a white-collar criminal includes the following attributes (e.g., Benson and Simpson 2015; Logan et al. 2019; Pontell et al. 2014; Schoepfer and Piquero 2006; Stadler et al. 2013): • The person has high social status and considerable influence, enjoying respect and trust, and belongs to the elite in society. • The elite have generally more knowledge, money and prestige and occupy higher positions than other individuals in the population occupy. • Privileges and authority by the elite are often not visible or transparent, but known to everybody. • Elite members are active in business, public administration, politics, congregations and many other sectors in society. • The elite are a minority that behaves as an authority towards others in the majority. • The person is often wealthy and does not really need crime income to live a good life. • The person is typically well educated and connects to important networks of partners and friends. • The person exploits his or her position to commit financial crime. • The person does not look at himself or herself as a criminal, but rather as a community builder who applies personal rules for own behavior. • The person may be in a position that makes the police reluctant to initiate a crime investigation. • The person has access to resources that enable involvement of top defense attorneys, and can behave in court in a manner that creates sympathy among the public, partly because the defendant belongs to the upper class similar to the judge, the prosecutor and the attorney. However, one of the theoretical challenges facing scholars in this growing field of research is to develop an accepted definition of white-collar crime. While the main characteristics are the foundation, such as economic crime committed by a person of respectability and high social status in the course of an occupation, other aspects lack precision (Kang and Thosuwanchot 2017). White-collar crime is a unique area of criminology due to its atypical association with societal influence compared to other types of criminal offenses. White-collar crime conceptualization occurs in its relationship to status, opportunity, and access. This is the offender-based perspective. In contrast, offense-based approaches to white-collar crime emphasize the actions and nature of the illegal act as the defining agent. In their comparison of the two approaches, Benson and Simpson (2015) discuss how offender-based definitions emphasize societal characteristics such as high social status, power, and respectability of the actor. Because status is not included in the definition of offense-based approaches and status is free to vary independently from the definition in most legislation, an offense-based approach allows measures of status to become external explanatory variables.

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Benson and Simpson (2015) approach white-collar crime utilizing the opportunity perspective. They stress the idea that individuals with more opportunities to offend, with access to resources to offend, and that hold organizational positions of power are more likely to commit white-collar crime. Opportunities for crime depend on the nature of economic and productive activities of various business and government sectors within society. Benson and Simpson (2015) do not limit their opportunity perspective to activities in organizations. However, they emphasize that opportunities are normally greater in an organizational context. Convenience theory, however, assumes that crime is committed in an organizational context to make the term white-collar crime relevant. This is in line with Sutherland’s (1939, 1983) original work, where he emphasized profession and position as key characteristics of offenders. The white-collar offender is a person of respectability and high social status who commits financial crime in the course of his or her occupation (Leasure and Zhang 2017). In the offender-based perspective, white-collar criminals tend to possess many characteristics that are consistent to expectations of high status in society. There is both attained status and ascribed status among white-collar offenders. Attained status refers to status that individuals accrue over time and with some degree of effort, such as education and income. Ascribed status refers to status that does not require any specific action or merit, but rather requires physically observable characteristics, such as race, age, and gender. The main offender characteristics remain privilege and upper class. Early perception studies suggest that the public think that white-collar crime is not as serious as other forms of crime. Most people think that street criminals should receive harsher punishments. One explanation for this view is self-interest (Dearden 2017: 311): Closely tied to rational choice, self-interest suggests that people have views that selfishly affect themselves. Significant scholarly research has been devoted to self-interest-based views. In laboratory conditions, people often favor redistribution taxes when they would benefit from such a tax. This self-interest extends into non-experimental settings as well. For example, smokers often view increasing smoking taxes less favorably than non-­smokers do.

In this line of thinking, people may be more concerned about burglary and physical violence that may hurt them. They may be less concerned about white-collar crime that does not affect them directly. Maybe those who are financially concerned with their own economic well-being will be more concerned with white-collar crime (Dearden 2017). White-collar perpetrators have social power associated with different occupational activities across the society. Power and authority at the hands of individuals enable white-collar crime. The power essentially comes from the positions individuals legitimately occupy.

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White-Collar Offenders’ Autobiographies It is often argued that the guilty mind seems more absent among white-collar criminals than street criminals. This chapter presents self-portraits of six whitecollar criminals in their autobiographies from Germany, Norway, and the United States. This research applies the theory of convenience to find a variety of financial motives, organizational opportunities, and reasons for personal willingness to commit and conceal financial crime benefitting the organizations or themselves. This research uses a scale from offender to victim, where some convicts present themselves as offenders, while most portrait themselves as victims of crime for which they were convicted to incarceration. Autobiographies are a unique source of information for research to study reasons for deviant behaviors. Unfortunately, some very few white-collar criminals write books about themselves while in prison or afterwards. A white-collar criminal is a member of the privileged elite in society who abuses the occupational position to commit and conceal financial crime (Sutherland 1983). The crime represents an abuse of trust and access to resources in professional activities, it benefits mainly the individual (occupational crime) or the organization (corporate crime), and the person is later sentenced to prison (Logan et al. 2019; Onna et al. 2014). While in prison or afterwards, some very few convicted white-collar criminals write their autobiographies. This chapter is based on an available sample of six autobiographies from Germany (Middelhoff 2017), the United States (Belfort 2008; Kerik 2015), and Norway (Bogen 2008; Eriksen 2010; Fosse 2004). These books are interesting in the perspective of whether the convicted white-collar criminals consider themselves mainly as offenders or victims in the scandals that emerged and culminated in incarceration (Blickle et al. 2006; Dhami 2007; Slyke and Bales 2012). This chapter applies the theory of convenience to the study of white-collar autobiographies. Convenience theory suggests that there is an economical motive (Schoepfer and Piquero 2006), an organizational opportunity (Benson and Simpson 2015), and a personal willingness (Craig and Piquero 2016; Langton and Piquero 2007; Sykes and Matza 1957), that might make illegitimate activities more convenient than legitimate activities. Convenience orientation is the value that individuals place on actions with inherent characteristics of saving time and effort as well as avoiding pain, suffering, and uncertainty (Farquhar and Rowley 2009; Mai and Olsen 2016). This chapter addresses the following research question: Do convicted white-­ collar criminals mainly portrait themselves as offenders or victims in their autobiographies? The research is important, as it adds to the study of the guilty mind (e.g, Benson 1985; Galvin et al. 2018), where the guilty mind seems more absent among white-collar criminals than street criminals. This chapter presents a continuum from offender to victim where I allocate all six white-collar criminals on the scale based on content analysis (Krippendorff 1980; McClelland et  al. 2010; Patrucco et  al. 2017) of their autobiographies.

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Convenience is the state of being able to proceed with something with little effort or difficulty, avoiding pain and strain (Mai and Olsen 2016). The extent to which individuals in privileged positions choose to break the law in difficult situations or tempting situations is dependent on their convenience orientation. Convenience comes at a potential cost to the offender in terms of the likelihood of detection and future punishment. In other worlds, reducing time and effort now entails a greater potential for future cost. Paying for convenience is a way of phrasing this proposition (Farquhar and Rowley 2009). The theory of convenience suggests that white-collar misconduct and crime occurs when there is a financial motive benefitting the individual or the organization, an organizational opportunity to commit and conceal crime, and a personal willingness for deviant behavior. Financial motive is concerned with the desire for profit that offenders more conveniently achieve in illegal ways. The desire finds its causes in both possibilities and threats. Possibilities can emerge in the perspectives of profit-driven crime (Naylor 2003) and goal orientation (Dodge 2009), as well the American dream (Schoepfer and Piquero 2006). Threats arise in perspectives of strain (Froggio and Agnew 2007) and fear of falling (Piquero 2012). Organizational opportunity is concerned with illegal profit that one can obtain more conveniently in an organizational setting where the offender can enjoy power and influence based on position and trust. The organizational dimension sets white-­ collar criminals apart from other financial criminals. White-collar crime can be distinguished from ordinary crime (“street crime”) based on the status of the offenders, their access to legitimate occupations, the common presence of an organizational form, and the extent of the costs and harmfulness of such crime. Sutherland (1983) specifically focused on emphasizing the respectability of white-collar offenders, stating that persons of the upper socio-economic class commit all kinds of financial crime. The ability of white-collar offenders to commit crime is dependent on their privileged position, the social structure, and their orientation to legitimate and respectable careers (Friedrichs et al. 2018). Personal willingness is concerned with the impression that surprisingly few white-collar criminals think they have done anything wrong. Most of them feel innocent and victims of injustice when put on trial, convicted and imprisoned. By application of neutralization techniques (Sykes and Matza 1957), they deny responsibility, injury, and victim. They condemn the condemners. They claim appeal to higher loyalties and normality of action. They claim entitlement, and they argue the case of legal mistake. They find their own mistakes acceptable. They argue a dilemma arose, whereby they made a reasonable tradeoff before committing the act (Siponen and Vance 2010). Such claims enable offenders to find crime convenient, since they do not consider it crime. The research method applied in the following empirical studies of autobiographic books is content analysis. Content analysis is any methodology or procedure that works to identify characteristics within texts attempting to make valid inferences (Duriau et al. 2007; Krippendorff 1980; McKenny et al. 2013; Patrucco et al. 2017). Content analysis assumes that language reflects both how people understand their

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surroundings and their cognitive processes. Therefore, content analysis makes it possible to identify and determine relevant text in a context (McClelland et  al. 2010). Gibbs (2007) recommends a variety of approaches including (1) open coding, (2) analysis of words, phrases, or sentences, (3) systematic comparison, and (4) far-out comparisons. Open coding can make it possible to organize and analyze constructs behind a text, and analysis of word assists with examining words and phrases that may have a secondary meaning significant to findings. Systematic comparison enhances the analysis by asking what-if questions to the content of a text, and far-out comparisons examine other elements of the phenomena to shed further light on the autobiographical books. Qualitative content analysis as applied here “captures cognitions, emotions, and other types of meaning as reflected in the rhetoric presented in words or narrative texts” (Short et al. 2018: 3). Members of the elite involved in financial misconduct and crime sometimes write their own version of the stories in terms of autobiographies. In this chapter, a sample of six books is ready for examination. In the United States, Belfort (2008) was convicted of fraud and related crime in connection with stock-market manipulation as the founder and chief executive at Stratton Oakmont. In Norway, Bogen (2008) faced conviction for bank fraud as the founder and chief executive at Sponsor Service. In Norway, Eriksen (2010) faced conviction for accounting fraud as the chief auditor for an organized criminal who committed suicide. In Norway, Fosse (2004) was convicted of subsidy fraud as the chief accountant at ferry company OVDS. In the United States, Kerik (2015) faced conviction for tax fraud and false statements as the police commissioner in New York City. In Germany, Middelhoff (2017) faced conviction for fraud as the chief executive at Arcandor. These autobiographies are interesting generally in terms of convenience perspectives, and specifically in terms of their extent of presentations as crime offenders or scandal victims. Autobiographies of elite members who were faced prosecution are not included here. An example is Erin Callan, who was the chief financial officer at Lehman Brothers. The bank collapsed, and she was one of the main responsible executives for the bank scandal. Fraud examiner Valukas (2010: 930) in his internal investigation report discussed the role of CFO Callan: In her interview with the examiner, Callan recalled very little about Lehman’s Repo 105 program. Callan said she had little to no independent recollection of Lehman’s use of Repo 105 transaction, but that her memory had been refreshed to a limited extent by documents the examiner provided her in advance of her interview.

In 2016, 6 years after Valukas (2010) interviewed her for the investigation report, Erin Callan published her own autobiography entitled “Full circle: A memoir of leaning in too far and the journey back”. An interesting issue is whether her book adds new insight into possible misconduct and crime related to the collapse of the bank. She had been working for the bank since 1995. She recalls in her book (Montella 2016: 142):

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One thing I do remember is the sense that I had a shocking lack of control over the state of Lehman Brothers and its financial health. Maybe that seems like it would be obvious, but it felt very strange and alarming to me. I was used to running businesses where the decisions I was making every day had real consequences. The market environment itself was always a wild card in terms of how quickly the profitability of those decisions could be realized, but I had the ability to create a respected, highly competent business under any circumstances (…) I came to understand how the mere existence of a concentrated portfolio of mortgage assets on our balance sheet was a big problem, regardless of any quality or hedging arguments that might be made. By late January of 2008, when I was fully committed to the view that some assets should be sold regardless of our opinion of their future profitability, then my complement lack of control and influence came home to roost. It was one thing to live with legacy decisions that had defined the position of the firm, but it was another to not be able to convince Dick and Joe that we had to move quickly to reduce our positions, even if that meant selling at a loss. Since they had been part of those initial decisions, they were vested, not willing to abandon ship with the same urgency.

Richard “Dick” Fuld was CEO at Lehman Brothers, while Joseph “Jo” Gregory was president and COO when the bank collapsed. Callan takes no responsibility of bank misconduct as she blames Fuld and Gregory. She presents herself as a victim, since she had to leave the bank a few days before it filed for bankruptcy.

Offender or Victim in White-Collar Crime Belfort (2008: 270) suggests in his autobiography entitled “The Wolf of Wall Street” that “money makes people do strange things”. Jordan Belfort admits all kinds of wrongdoings, and explains his illegal actions with self-irony. He denies no guilt, and he justifies or excuses no actions. It is a fascinating and frightening book that later became a major motion picture. In Table  6.4, his convenient economical motive, organizational opportunity, as well as personal willingness are explained by referencing to the literature. In Fig. 6.1, Belfort is at the far left on the scale from offender to victim. He admits being the offender through all the deviant behaviors described in his book. For example, Belfort (2008: 151) admits having involved family members in money laundering from the United States to a Swiss bank in Europe: Plausible deniability was obviously an international obsession among white-collar criminals (…) “But to answer your question, I’m planning to use a family member with a different last name than mine. She’s from my wife’s side, and she’s not even a U.S. citizen, she’s British. I’m flying to London tomorrow morning, and I can have her back here the day after tomorrow – passport in hand – ready to open an account at your bank.”

Bogen (2008) was a successful founder and CEO of Sponsor Service that connected business enterprises to top athletes to present their brands. When business enterprises were reluctant to sponsor top athletes for a while, Terje Bogen told banks that he would eventually obtain new contracts, and asked the banks to finance his activities in the meantime. However, he did not obtain new contracts, and the

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Table 6.4  Convenience theory applied to self-portraits of white-collar criminals White-Collar Criminal Belfort (2008)

Convenient Economical Motive Greed where nothing is ever enough (Goldstraw-­ White 2012)

Convenient Personal Willingness Sensation seeking to experience adventure (Craig and Piquero 2017) Sliding on the slippery Bogen Fear of falling from Opportunity creation by (2008) position (Piquero 2012) entrepreneurship (Ramoglou slope (Welsh et al. 2014) and Tsang 2016) Learning from others Eriksen Desire to help others as Institutional deterioration based on external legitimacy by differential (2010) social concern (Agnew association (Sutherland (Rodriguez et al. 2005) 2014) 1983) Fosse (2004) Usual way of business in Specialized access in routine Action according to activity (Cohen and Felson authority as obedience markets with crime (Baird and Zelin 2009) 1979) forces (Leonard and Weber 1970) Too big to fail, too powerful Lack of self-control Kerik (2015) Removal of strain and to jail (Pontell et al. 2014) (Gottfredson and pain (Langton and Hirschi 1990) Piquero 2007) Professional deviant Middelhoff The American dream of Sense-making of actions difficult for outsiders (Weick identity (Obodaru (2017) prosperity and success 2017) (Schoepfer and Piquero 1995) 2006)

Offender

Convenient Organizational Opportunity Inability to control because of social disorganization (Hoffmann 2002)

Belfort-Middelhoff-Bogen-Eriksen-Kerik-Fosse

Victim

Fig. 6.1  White-collar criminals on the self-portrait offender-victim continuum

court ultimately convicted him to 4 years in prison for bank fraud. Bogen’s motive was to rescue the business out of a fear of falling from his elite position as listed in Table 6.4. He tried to blame others for the misconduct and crime. Therefore, he is in the middle in Fig. 6.1. Eriksen (2010) was the accountant for a famous criminal who committed suicide. Investigators found fake invoices and backdated contracts when they searched Eriksen’s computer, and he was sent to prison for 3 years. He felt he was innocent, and thus the subtitle of his book “A miscarriage of justice”. Therefore, Terje Eriksen is on the right hand side in Fig. 6.1 where self-defined victims belong.

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A third and final example from Norway is Gunn Fosse who was a financial executive in a shipping firm that was responsible for subsidy fraud. Boats were visiting a number of harbors along the coast. The firm got more subsidies from the government if there was less passengers and freight, so Fosse reported lower numbers. The court convicted her to 3 years in prison. In her book, Fosse (2004) denies responsibility and blames the chief executive officer for the crime. The subtitle of her book – “the captains first in the lifeboats” – indicates that she feels that executives above herself ran away from their responsibility for subsidy fraud. However, after her conviction, the criminal justice system finally prosecuted the CEO and sentenced him to 4 years in prison. Her book is a continuous denial of any responsibility for the subsidy fraud. Therefore, she is on the far right side in Fig. 6.1. Bernard Kerik was the New York City police commissioner. He pleaded guilty of tax fraud and false statements, and the court sentenced him to 4 years in federal prison in 2010. He published his book “From Jailer to Jailed” in 2015. Kerik (2015: 146) seems to apply a number of neutralization techniques to remove responsibility for wrongdoings away from himself, while at the same time presenting himself as a success: I had lived a version of the American dream: a high school dropout who with ambition, hard work, and a lot of good luck rose to the cusp of one of the highest positions in the land.

The book entitled “Der Sturtz” (“The Fall”) by Middelhoff (2017) is interesting and relevant here as a source, also because he was portrayed and interviewed in the Financial Times after the book was released (Storbeck 2018). Middelhoff is now a German retired corporate manager. He was on the board of directors of Bertelsmann from 1990 to 2002, being the CEO from 1998. From 2004 to 2009, Middelhoff was chairperson of the supervisory board of Arcandor (previously KarstadQuelle AG) and CEO of the company (Weidermann 2017). In 2014, Middelhoff received his conviction on charges of fraud related to his activities while head of Arcandor, and the court passed a sentence of 3 years in prison. Weidermann (2017) suggests that Middelhoff (2017) in his book completely rewrite his own story to portrait himself as a continuing success, despite “A115” as the subtitle of the book, which is the prison cell in the city of Essen where he first suffered incarceration. While Middelhoff’s self-portrait seems distorted, he nevertheless admits to misconduct. Therefore, he is next to Belfort in Fig. 6.1. However, he was of the opinion that there was something wrong with the law, and that his misconduct should not result in imprisonment. Middelhoff (2017: 22) was convinced of his innocence based on application of neutralization techniques: Ich fühle mich unschuldig und zu Unrecht verurteilt. (I feel innocent and wrongly convicted).

This chapter addresses the following research question: Do convicted white-­ collar criminals mainly portrait themselves as offenders or victims in their autobiographies? Apart from Jordan Belfort who portraits himself perhaps even worse than he actually was, all the other five autobiographies present some forms of justifications and excuses. Five out of six autobiographies represent self-defense. They

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admit a crisis, which is “an unexpected, publicly known, and harmful event that has high levels of initial uncertainty, interferes with the normal operations of an organization, and generates widespread, intuitive, and negative perceptions” externally (Bundy and Pfarrer 2015: 350). However, they attempt to protect their own image by neutralizations and denials in text known as accounts (Scott and Lyman 1968). An account is a statement made to explain unanticipated behavior. There are two general forms of accounts: (1) justifications and (2) excuses. In a justification, the actor admits responsibility for the act in question but denies its pejorative and negative content. In an excuse, the actor admits the act in question is wrong, but denies having full responsibility for it. Bogen (2008), Eriksen (2010), Fosse (2004), and Kerik (2015) are mostly into justifications, while Belfort (2008) and Middelhoff (2017) are mainly into excuses. Offenders can use accounts to narrow the gap between expectation and behavior and to present their acts in a favorable light. Related to the justification and the excuse is the apology. In an apology, the offender admits violating a rule, accepts the validity of the rule, and expresses embarrassment and anger at self (Benson 1985). In a very peculiar way, Belfort (2008) seems the closest to making apologies for his misconduct, and his apologies direct themselves towards former employees and business partners. He does not play the blame game as most other convicts do. The blame game is concerned with a group of people when something goes wrong. They all try to place the blame on each other, they are looking for a scapegoat, and one of them may typically end up with the blame (Lee and Robinson 2000). The only blame Belfort (2008: 388) assigns is to drugs: I had become a drug addict. I had become depressed. And I had done things while I was high that were unconscionable. Without the drugs I would have never let Stratton get so out of control. How much had my drug addiction fueled my life on the dark side? As a sober man, would I have ever slept with all those prostitutes? Would I have ever smuggled all that money to Switzerland? Would I have ever allowed Stratton’s sales practices to spiral so far out of control? Admittedly, it was easy to blame everything on drugs, but, of course, I was still responsible for my own actions.

The motive for most autobiographies seems to be reducing social approval loss and restoring social approval. Bundy and Pfarrer (2015: 347) define social approval as “perception of general affinity” toward an individual, legitimacy as “assessment of an organization’s appropriateness”, and reputation as “assessment of an organization’s ability to deliver value”. An autobiography can represent an individual’s response strategy after a crisis. Bundy and Pfarrer (2015) describe response strategies on a continuum from defensive to accommodative. A defensive response strategy attempts to avoid social approval loss by eliminating an individual’s suggested association with a crisis. Examples range from outright denial of responsibility, via attacking accusers and shifting blame onto other persons, to perceive being a victim of an incident. In contrast, an accommodative response strategy attempts to manage social approval loss by acknowledging own causal role in a crisis and thereby hopefully reducing external negative perceptions. Examples range from outright acceptance of responsibility to communicated regrets and apologies. While Belfort (2008) and Middelhoff (2017) seem somewhat accommodative, the others apply defensive response strategies.

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In conclusion, this chapter has so far presented convenient self-portraits of white-­ collar criminals in their autobiographies. This research applied the theory of convenience to find a variety of financial motives, organizational opportunities, and reasons for personal willingness to commit and conceal financial crime benefitting the organizations (Bogen and Fosse) or themselves (Belfort, Eriksen, Kerik, and Middelhoff). Future research may explore the differences between occupational and corporate crime as presented in autobiographies. This research applied a scale from offender to victim, and found a rank consisting of Belfort-Middelhoff-Bogen-Eriksen-Kerik-Fosse, where Fosse consistently portraits herself as a victim of a subsidy fraud scheme that she implemented in the shipping company. Belfort, on the other hand, portraits himself as the mastermind behind all financial, sexual as well as drug-related misconduct.

Autobiography by a Chairman of the Board Some members of the upper echelon in society violate laws whenever they feel necessary. They have access to resources to commit and conceal financial crime while they deny the guilty mind. Autobiographies by convicted white-collar offenders are an interesting source of information to understand motives, opportunities, and willingness for deviant behaviors. This research applies the theory of convenience to study the autobiography of a convicted chairperson of the board in Norway. While claiming corporate crime for the benefit of the business, he actually carried out occupational crime to benefit himself. As an entrepreneur, he felt entitled to do whatever he considered necessary. He suffered from narcissistic identification, where there is little difference between personal money and company money. Based on his autobiography (Olav 2014, 2015), the court document (Oslo tingrett 2015), as well as media reports (e.g., Bjørklund 2018), this research was able to identify Olav’s motive for white-collar crime, his opportunity for white-collar crime in an organizational setting, as well as his willingness for deviant behavior.

Financial Motive Officially, his motive was corporate crime to save the business. Corporate crime is white-collar offenses that benefit the organization, while occupational crime is white-collar offenses that benefit the individual (Craig and Piquero 2016, 2017). Actually, Olav’s motive was occupational crime where he exploited the economic situation to acquire funds from the company before a potential bankruptcy. He had seen that the company was heading for possible bankruptcy and tried to secure money as a replacement and compensation for all the struggle and stress he felt exposed to in difficult times. The difficult economic situation that Thule Drilling

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experienced, led to stress for Olav. The fact that the company was in a pressured situation in relation to having the rig Thule Power completed, contributed to Olav as chairperson of the board becoming more inclined to find convenient solutions to the difficult situation. In case Thule Drilling would go bankrupt and thus his hard work for many years would become worthless, he was motivated to help himself to money that could help him keep his position as a wealthy man. Olav’s claim is that his sole motive was to rescue Thule Drilling from collapse by transferring money in different channels and make funds available to people who could enable completion of Thule Power. Maybe he followed a dual strategy, where he could keep the funds in his own firms if a rescue operation would seem hopeless. Eventually, he saw the opportunity to enrich himself, although he denies it completely in his books (Olav 2014, 2015). However, the judge believes he intended to enrich himself already at the time of money transfer to his own firms (Oslo tingrett 2015). Olav argues in his books that he was motivated to rescue Thule Drilling also because he wanted to rescue his own position as chairperson of the board. While he claims to have made his dispositions to save Thule’s business, it seems that personal goal achievement, status, respect, admiration, success and esteem high up in Maslow’s (1943) pyramid were the driving forces behind his actions. During the Thule crisis that emerged as a scandal, Olav bought himself a new leisure boat for US$ 100.000 and lithography by the painter Edvard Munch for US$ 50.000.

Organizational Opportunity Olav’s opportunity for white-collar crime in an organizational setting is evident in a series of financial transactions. Accountants at Thule Drilling did what they were told, when Olav asked them urgently to transfer sums of money without documentation. He was the chairperson, and they could not object to his dispositions. He made people first transfer significant sums from the company’s account to another account, which after several transactions ended up in one of his accounts in Switzerland, on Malta, or in Monaco. As chairperson of the board, he had the authority to decide on the execution of money transfer. Money transferred seemed to be legal acts and thus had superficial appearance of legitimacy (Benson and Simpson 2015). Legitimacy is an assessment of the appropriateness of an individual’s actions (Bundy and Pfarrer 2015). Both board members and management had blind faith in Olav’s ability to get Thule Drilling out of trouble. Olav lied to Thule’s administration that transactions had to happen immediately, as a problem had arisen in Dubai that money could solve. At that time, Olav tried to influence rig work in Saudi Arabia through contacts in Dubai. Through his position and power at Thule Drilling, Hans Eirik Olav had access to strategic resources to perform and cover criminal acts. A white-collar offender has typically legitimate access to resources to commit and conceal crime (Adler and Kwon 2002). A resource enables satisfaction of human and organizational needs. A resource has utility and limited availability. A white-collar offender has usually access to resources that are valuable (application provides appreciated

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outcome), unique (very few have access), not imitable (resources cannot be copied), not transferrable (resource cannot be released from context), combinable (results in better outcome), exploitable (possible to apply in criminal activities), and not substitutable (cannot be replaced). According to Petrocelli et al. (2003), access to resources equates access to power. Olav thus had many opportunities to find creative and convenient solutions to conceal his illegalities. Access to resources combined with poor routines in the company meant that he could carry out transactions without any likelihood of negative consequences. If Thule Drilling had avoided bankruptcy, nobody would probably ever detect Olav’s illegal transactions (Gottschalk 2017). When bankruptcy proceedings revealed his embezzlement of corporate funds, he had access to resources in terms of Norway’s most skilled defense lawyer. In addition to a publicly appointed defense lawyer, the defendant can pay for additional defense. Even with self-paid additional defense, his two books (Olav 2014, 2015), and active defense in the media, the verdict in Oslo district court (Oslo tingrett 2015) became enforceable, and Olav ended up in prison. He was not as successful as other white-collar defendants where skilled attorneys help defendants to get the case acquitted based on the attorneys relative knowledge superiority compared to the prosecutor and the judge (Gottschalk 2014). Hans Eirik Olav had created a situation where nobody kept an overview of all financial transactions by impulsively ordering people in the administration to change accounting. External auditors withdrew from their assignments due to the company’s lack of proper accounting and delayed submission of annual accounts. This may also indicate that there has been a lack of ethics and rules in the organization, which created the opportunity to commit financial crime. In the absence of an audit, which had the potential ability to detect financial crime, a required control regime was absent, which in turn made it easier to carry out illegal actions by the chairperson of the board.

Deviant Behavior Olav’s willingness for deviant behavior seems partly based on his ability to apply neutralization techniques (Sykes and Matza 1957). He applied defense of necessity as one of his neutralizations. Defense of necessity implies justification that if rule breaking seems necessary, one should feel no guilt when carrying out the action. It is sometimes a required behavior in this position, so the offender can claim entitlement to action. The offender claims to be in his right to do what he did, often because of a very stressful situation. Olav tried to convince people that his actions resulted from his dedication to save Thule from going bankrupt and help the company complete the rig that would secure them good income in the future. He did what he did for Thule’s best interest. At the same time, he argues that he was entitled to carry out the money transfers to receive funds for the work he had done for the company already. Besides, it was natural that he had an account in a tax haven when he ran business through another company there.

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Another neutralization technique applied by Olav was claiming legal mistake. What actions he completed should not receive the label illegal. The offender argues that the law is wrong, and what the person did should receive a negative characteristic from nobody. One may therefore break the law since the law is unreasonable. The offender may argue that lawmakers sometimes criminalize behaviors and sometimes decriminalize the same behaviors more or less randomly over time. For example, money involved in bribing people were treated as legal expenses in accounting some decades ago, while corruption today is considered a misconduct and therefore criminalized. Similar to the speed limit that car drivers on the street often consider wrong, white-collar offenders consider economic laws reflecting lack of business and industry insights. In his explanation in court, Olav said the money had a business purpose, and that the transfers were indeed necessary to rescue the company. In the period before illegal money transfers, the company was close to bankruptcy, and the situation was difficult. His explanation gives the impression of transfers being legitimate, so the money transfers was as an attempt to save the company, which he himself might have believed. Olav describes himself as a victim after the public prosecutor charged him with financial crime. This is a third neutralization technique where the offender perceives being a victim of an incident. Others have ruined the offender’s life. The incident leads to police investigation, prosecution, and possible prison sentence. Media is printing pictures of the offender on the front page, and public authorities retrieve gains from crime away from the offender. Previous colleagues and friends have left, and so has the family. The offender thus perceives being a loser and made victim of those who reacted to his crime after disclosure. On YouTube, Olav posted a video of himself entitled “justice murder”. Olav claims injustice, and that the prosecuting authority treated him unfairly. This is his fourth neutralization technique where he condemns his condemners. The offender tries to accuse his or her critics of questionable motives for criticizing him. According to this technique of condemning the condemners, one neutralizes own guilt feeling by deflecting moral condemnation onto those ridiculing the misbehavior by pointing out that they engage in similar disapproved behavior. In addition, the offender condemns procedures of the criminal justice system, especially police investigation with interrogation, as well as media coverage of his case. Olav claims that the court convicted him even when he is innocent, and that the prosecuting authority treated him unfairly. Olav condemns investigators and prosecutors as well as the Norwegian state and the judicial system in general. He claims that they did not allow him sufficient insight into the evidence against him. He claims that the prosecution deliberately has failed to use important evidence that would prove that he is completely innocent of financial crime. Police investigators deliberately and systematically have avoided investigating tracks that could clean his name. His attempts to get the police to investigate circumstances that speak to his advantage, law enforcement personnel consistently rejected to look into.

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Olav seems to have suffered from narcissistic identification with Thule Drilling. The offender sees little or no difference between self and the business. Then company money is personal money that can be spent whatever way the narcissist prefers (Galvin et al. 2015). A pervasive pattern of grandiosity, need for admiration, and empathy deficits typifies narcissism. While grandiosity and admiration belong to the motivational dimension of convenience theory, empathy deficits belong to the willingness dimension of convenience theory where the offender possesses a sense of entitlement. The offender shows unreasonable expectations to receive and obtain preferential treatments (Zvi and Elaad 2018). Olav was an entrepreneur who played a key role in establishing Thule Drilling, and he continued to be a key person in the business. His self-confidence and way of approaching opportunities indicate that he has narcissistic features. Writing an autobiography might result from a tendency of narcissism for a convicted white-collar offender. Olav seems to have moved down the slippery slope. The slippery slope perspective suggests that a person can slide over time from legal to illegal activities without really noticing. The small infractions can lead to the larger ones. An organization that overlooks the small infractions of its employees creates a culture of acceptance that may lead to its own demise (Welsh et al. 2014). Arjoon (2008: 78) explains slippery slope in the following way: As commonsense experience tells us, it is the small infractions that can lead to the larger ones. An organization that overlooks the small infractions of its employees creates a culture of acceptance that may lead to its own demise. This phenomenon is captured by the metaphor of the slippery slope. Many unethical acts occur without the conscience awareness of the person who engaged in the misconduct. Specifically, unethical behavior is most likely to follow the path of a slippery slope, defined as a gradual decline in which no one event makes one aware that he or she is acting unethically. The majority of unethical behaviors are unintentional and ordinary, thus affecting everyone and providing support for unethical behavior when people unconsciously lower the bar over time through small changes in their ethical behavior.

Welsh et al. (2014) argue that many recent scandals seem to result from a slippery slope in which a series of small infractions gradually increase over time. Committing small indiscretions over time may gradually lead people to complete larger unethical acts that they otherwise would have judged to be impermissible. In the case of Olav, it started with convenient solutions to initiate measures to save Thule from financial problems and other difficulties, then gradually to enrich himself at Thule’s expense. Olav more and more slipped into financial crime. He slipped through corporate crime to occupational crime. It seems that Olav suffered from lack of self-control. He was attracted to convenient solutions to problems, where violations of law were less important. For example, he applied inappropriate accounting and failed payments of public fees in his own firm Juno Finance. Lack of self-control is a frequent explanation for executive deviance and crime in general (Gottfredson and Hirschi 1990). While many might be tempted, only those lacking self-control will actually do it. Self-regulation monitors self-control, where self-regulation represents a process of using self-regulatory resources to

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control undesirable impulses and override subsequent behavioral responses. As argued by Mawritz et al. (2017), individuals possess varying and limited self-regulatory resources that inhibit responses that may arise from physiological processes, habit, learning, or the strain of the situation. When resources that regulate selfcontrol are depleted, individuals struggle to constrain their urges and engage in behavior almost unwittingly, using quick, thoughtless responses. They move down the slippery slope from the right side of the law to the wrong side of the law (Arjoon 2008). Self-­control processes deplete self-regulatory resources and impair one’s ability to control subsequent inappropriate responses.

Discussion Already on the cover of his book entitled “The Grand Self-Deception”, Olav (2015) formulates a number of rhetoric and provocative questions: “What if we no longer accept the government’s actions that would be deemed morally reprehensible and/ or criminal if they were to be done by you and me? What if we showed determination and courage and pushed back against a system that has made us morally impotent? We have to take our freedom back because freedom is unilaterally positive in all interpersonal relationships. Freedom will create a better, more sustainable, and happier society. If we don’t do something fundamentally different before it’s too late, it will be a betrayal to future generations.” Olav labels his book a libertarian manifesto against the deep state. Olav as a suspect at this stage takes on a role of not defending only himself, but also defending society. Benson (2013) finds that narcissistic self-confidence when coupled with drive, ambitiousness, and insensitivity to others may enable some people successfully to undertake risky business endeavors that more prudent and introspective individuals would never attempt. An ambitious and convenient mindset may also permit if not drive these individuals in the single-minded pursuit of their goals to engage in financial crime. Olav (2015: 21) portraits himself as a victim of police arrest: Early in the morning of 15 June 2011, both my family and I were brutally dragged out of our beds in our home by Økokrim (Norway’s Criminal Police). With my wife and loved ones as incredulous spectators, I was pushed and dragged out of my house by two big men towards a waiting police car, which subsequently drove me down to the police headquarters in Oslo for questioning. Afterwards, I was jailed and thrown into a stripped down isolation cell where I was held for two days longer than what is permitted in the torture clause of the European Convention of Human Rights. Later on, the prosecution authority and the judge lied in court about these events ever having taken place.

Very different from other autobiographies, such as Belfort (2008), Bogen (2008), Kerik (2015) and Middelhoff (2017), Olav (2015) does not really tell his own story. Rather, he focuses on institutional collapse in society of which he has become a victim. It is all about denying the guilty mind in various ways (Benson 1985).

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We conducted a supplementary study regarding the organizational opportunity for Hans Eirik Olav as chairperson at Thule Drilling. The study was concerned with the organizational culture at Thule Drilling as interpreted by business school students who had read the court documents (Oslo tingrett 2015). The business school students were attending an elective class on white-collar crime and fraud investigations in the spring term 2019. Business school students are relevant for this research, as they will occupy positions in the future where they can commit fraud, prevent fraud, investigate fraud or become victims of fraud. Our student responses are particularly interesting, since the students actively had elected a class on financial crime and fraud examination rather than more traditional business school classes on ethics. Students responded to organizational culture scales from one to nine where they marked their opinions. For example on the scale from fear to courage, students found that the organizational culture at Thule seemed characterized more by courage and less by fear. A stippled line in Fig. 6.2 indicates the middle value on the scale. Olav’s organizational opportunity finds support by values such as action rather than planning, and short-term rather than long-term focus.

FEAR

COURAGE

RISK AVERSION

RISK WILLINGNESS

INCOMPETENCE

COMPETENCE

PARALYSIS

SKILL

FUMBLING

MASTERY

COMPETITION IOQUACITY SHORTTERM FOCUS

COOPERATION SILENCE LONG-TERM FOCUS

TASK ORIENTATION

RELATIONSHIPS

DIRECT TALK

INDIRECT TALK

ACTION PRACTICAL SAFETY

PLANNING PHILOSOPHICAL CHALLENGE

AUTHORITY

FREEDOM

TRANSPARENCY

SECRECY

Fig. 6.2  Organizational values at Thule suggested by business school students

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In summary, autobiographies by convicted white-collar offenders are interesting for research, as they document denial of the guilty mind. In the research perspective of convenience theory, this research finds ample evidence of financial motive, organizational opportunity and personal willingness to commit and conceal financial crime. While the stories of various white-collar offenders are different, their explanations are similar. They claim to have been loyal to the company in their motives, they claim they did only the right thing even if it was to break the law, and they feel entitled to whatever they did. They have no recognition in abusing their positions for personal gain.

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Chapter 7

Historical Evolution

The theory of convenience suggests that a white-collar offender has a financial motive, an organizational opportunity and a personal willingness that make committing and concealing economic crime convenient (Gottschalk 2017, 2019). A white-collar offender is a privileged individual with high and respectable social status who has access to resources to commit and conceal economic crime in the course of occupational and professional activity (Sutherland 1939, 1983). A white-­collar offender has also been labeled a robber baron, who is a wealthy and powerful individual in the upper class of society influencing laws and law enforcement (Spiekermann 2018). The purpose of this chapter is to address the following research question: What criteria might be applied to study the evolution of white-collar crime? Criteria are derived from convenience theory, where the dimensions of motive, opportunity and willingness influence the extent of convenience. This research is an important contribution to business historians as they continue their studies of the evolution of white-collar crime in business history (Berghoff 2018; Berghoff and Spiekermann 2018; Bernsee 2018; Eberl et  al. 2015; Hausman 2018; Müller 2018; Pettigrew 2018; Spiekermann 2018; Taylor 2018). This research is also important because the dominant view globally is that very few white-collar offenders face prosecution. “The bigger the crime, the less likely the perpetrator will serve time” (Hausman 2018: 381). “Corruption only rarely comes to light” (Berghoff 2018: 423). According to Berghoff and Spiekermann (2018: 290), Sutherland stated that, “the total damages of white-collar crimes were several times higher than those of all other crimes combined”. The seriousness of white-collar elite crime was emphasized by Hausman (2018: 392) who found that offenders present “a long-term danger to the U.S. business climate”. Honest businesspersons – who must have access to capital to succeed – suffer because financial investors, public authorities and the general public lose faith in business enterprises. This article begins by presenting the concepts of convenience orientation and white-collar convenience. Next the three dimensions of convenience theory are described, i.e. financial motive, organizational opportunity and personal willingness. Then, some historical perspectives on white-collar crime are reviewed. © Springer Nature Switzerland AG 2020 P. Gottschalk, The Convenience of White-Collar Crime in Business, https://doi.org/10.1007/978-3-030-37990-2_7

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Convenience Orientation Convenience is the state of being able to proceed with something with little effort or difficulty, avoiding pain and strain (Mai and Olsen 2016). The extent to which individuals in privileged positions choose to break the law in difficult situations or tempting situations is dependent on their convenience orientation. Convenience comes at a potential cost to the offender in terms of the likelihood of detection and future punishment. In other worlds, reducing time and effort now entails a greater potential for future cost. Paying for convenience is a way of phrasing this proposition (Farquhar and Rowley 2009). Orientation is a function of the mind involving awareness of the situation. This article conceptualizes convenience orientation as the value that individuals and organizations in a given situation place on actions with inherent characteristics of saving time and effort. Convenience orientation is a value-like construct that influences behavior and decision-making. Mai and Olsen (2016) measured convenience orientation in terms of a desire to spend as little time as possible on the task, in terms of an attitude that the less effort needed the better, as well as in terms of a consideration that it is a waste of time to spend a long time on the task (Sari et al. 2017). Convenience is a relative concept concerned with the efficiency in time and effort as well as reduction in pain and solution to problems (Engdahl 2015; Higgins 1997). A convenient individual is not necessarily neither bad nor lazy. On the contrary, the person can be seen as smart and rational (Blickle et  al. 2006; Sundström and Radon 2015). As a relative construct, convenience theory is line with the crime-­as-­choice perspective. This perspective by Shover et  al. (2012) suggests that it is a conscious choice among alternatives that leads to law violation. Convenience motivates the choice of action. Convenience is a matter of perception in advance of possible criminal actions. Convenience is a significant variable whose understanding involves complexity in multiple meanings (Sundström and Radon 2015). Elite members with a strong convenience orientation favor actions and behaviors with inherent characteristics of saving time and effort (Collier and Kimes 2012). They have a desire to spend as little time as possible on challenging issues and situations that may occur. They have an attitude that the less effort needed the better, and they think that it will be a waste of time to spend a long time on a problem. They prefer to avoid the problem rather than handle it. They want to avoid discomfort and pain. They want to survive and prosper in the upper echelon of society in the best possible way. Convenience thus motivates the choice of action and behavior (Seiders et al. 2007). An important element is avoiding more problematic, stressful and challenging situations. Because of the overwhelming workload combined with a need to prioritize own time, convenience is often at the core of thinking among chief executives in organizations (Bigley and Wiersma 2002).

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White-Collar Convenience Convenience orientation towards illegal actions increases as negative attitudes towards legal actions increase. The extent of convenience obviously varies with the mindset. Individual characteristics matter in regards to white-collar crime convenience. Personality traits may facilitate business success at one point in time and white-collar offending at another point in time. Benson (2013) found that narcissistic self-confidence when coupled with drive, ambitiousness, and insensitivity to others may enable some people successfully to undertake risky business endeavors that more prudent and introspective individuals would never attempt. An ambitious and convenient mindset may also permit if not drive these individuals in the single-­ minded pursuit of their goals to engage in financial crime. The actual convenience is not important in convenience theory. Rather, the perceived, expected and assumed convenience influences choice of action. Berry et al. (2002) make this distinction explicit by conceptualizing convenience as individuals’ time and effort perceptions related to an action. White-collar criminals probably vary in their perceived convenience of their actions. Low expected convenience could be one of the reasons why not more members of the elite commit white-collar offenses. The objective detection risk will be the same in the same situation for everyone, while the subjective detection risk will vary with individual variation in risk perceptions, risk willingness and risk aversion (Berghoff and Spiekermann 2018: 293): Risk-averse people seldom, if ever, violate criminal laws. On the other hand, those who are risk-tolerant or even risk-seeking, i.e. who display fundamental characteristics of entrepreneurial personalities, are much more likely to become criminals.

Convenience in white-collar crime relates to savings in time and effort by privileged and trusted individuals to reach a goal. Convenience is here an attribute of an illegal action. Convenience comes at a potential cost to the offender in terms of the likelihood of detection and future punishment. In other words, reducing time and effort now entails a greater potential for future cost. ‘Paying for convenience’ is a way of phrasing this proposition (Farquhar and Rowley 2009). Convenience in the decision making process is not only concerned with one alternative being more convenient than another alternative. Convenience is also concerned with the extent to which an individual collects information about more alternatives and collects more information about each alternative. Market research indicates that consumers tend to make buying decisions based on little information about few alternatives (Sundstöm and Radon 2015). A similar process finds support for white-collar crime where the individual avoids the effort of collecting more information about more alternatives that might have led to a non-criminal rather than a criminal solution to a challenge, opportunity, or problem. Convenience is of value because time and effort are associated with value. Time is a limited and scarce resource, from a day of ten or twelve working hours to a person life of eighty or ninety years. Saving time means reallocating time across activities to achieve greater efficiency. Similarly, an effort surplus finds reallocation to create value elsewhere. The more effort people exert on a task, the more outcomes are likely in return (Berry et al. 2002).

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Many white-collar criminals have a mindset that will make them stop at nothing to enrich themselves and their organizations. The extent of convenience obviously varies with the mindset. Individual characteristics matter in regards to white-collar crime convenience. The greater benefits of crime and the less costs of crime, the more attractive it is to commit criminal acts. According to Berghoff and Spiekermann (2018: 293), potential white-collar offenders “act on cost-benefit calculations involving the expected utility, the likelihood of being caught, and punishment costs”. While white-collar criminal as a term was introduced by Sutherland in 1939, other terms such as robber baron had been introduced several decades earlier. Robber barons are the powerful and wealthy in the upper class of society who defines what is right and what is wrong, and who change the laws when they themselves are in danger of breaking the laws (Petrocelli et  al. 2003). The rich and mighty people can behave like robber barons because they make the laws and because they control law enforcement. Spiekermann (2018: 363) presents the case of the Spreckels family as an example of robber barons: Claus Spreckels (1828-1908) was surely one of the notorious ‘robber barons’ of the time… When in 1876 the Kingdom of Hawaii and the United States arranged a first reciprocity treaty, which included a bounty for cane sugar imports to the United States, Spreckels took his chance and erected, after corrupting the king and the government, large-scale sugar plantations. Within a few years, Claus Spreckels established a vertically integrated sugar empire, which not only included plantation and refining but also financing, transport and wholesale trade. Although harshly criticized for exploiting coolie work and corrupting the Sandwich Islands, his political influence in California and Washington, DC generated continuous political support for his business interests.

This article applies the offender-based definition of white-collar crime, which has its origin in the work of Sutherland (1939), who defined white-collar crime based on the social and occupational status of the offender as a crime committed by a person of respectability and high social status in the course of the offender’s occupation. The other, offense-based tradition stems from a critique against using offender characteristics as part of the definition. For instance, Shapiro (1990: 347) argues that this “confuse[s] acts with actors, norms with breakers, the modus operandi with the operator”. The offense-based tradition is instead concerned with the criminal act in itself, drawing upon legal definitions, motives and means (Piquero and Schoepfer 2010). Offense-based approaches to white-collar crime emphasize the actions and nature of the illegal act as the defining agent. For example, white-­ collar crime is typically a non-violent offense (Berghoff and Spiekermann 2018). Because status is not included in the definition of offense-based approaches, and status is free to vary independently from the definition in most legislations; an offense-based approach allows measures of status to become external explanatory variables. Berghoff and Spiekermann (2018: 290) are among those emphasizing the importance of Sutherland’s work: The assessment of the offences committed in the corporate world began to change in light of the theories of sociologist and criminologist Edwin Hardin Sutherland, who not only

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established the criminological term ‘white-collar crime’ in 1939, but also made clear that crimes were not exclusively committed by lower-class offenders. Sutherland, who had among other things previously worked on juvenile delinquents in ghettos of recent immigrants, pointed to certain parallels such as the influence of cultural milieus. This concept violated existing prejudices that high-ranking persons would not or only in highly exceptionally circumstances commit crimes and that economic crimes were due to ‘merely technical violations’, which ‘involve no moral culpability’. Sutherland, who is considered one of the most influential criminologists of the twentieth century, vehemently contradicted widespread views that criminality was caused by poverty or biological and psychological factors.

As Agnew (2014: 2) formulates it: “crime is often the most expedient way to get what you want” and “fraud is often easier, simpler, faster, more exciting, and more certain than other means of securing one’s ends”.

Financial Motive Convenience in the economical dimension of convenience theory is focused on avoidance of threats and exploitation of possibilities by illegal means. The motive for white-collar crime is simply financial gain (Berghoff and Spiekermann 2018). Many law-abiding members of the elite use their economic prosperity to climb to the top of Maslow’s (1943) hierarchy of needs. Rich people want respect and reputation as well as status and admiration in the community. One way of achieving status is by giving away money through philanthropic behavior. A philanthropist is someone seemingly without self-interest willing to help disadvantaged and ignoring financial gain. Words like status, privileges, recognition, fame and admiration are all associated with both law-abiding as well as criminal white-collar people. White-­ collar offenders commit economic crime to climb, to remain in or to avoid falling from the pyramid. Hausman (2018: 383) mentions Samuel Insull as a classic philanthropist among white-collar offenders: The most visible figure in the holding company movement and its collapse, and indeed, in the entire history of the electric power industry in the United States, was Samuel Insull… He was instrumental in shaping an industry that brought electric power to millions of people and was a noted philanthropist as well.

Exploitation of attractive corporate economic possibilities can cause environmental pollution. An example is the oil exploitation in the Gulf of Mexico that caused serious environmental pollution. British Petroleum (BP) operating the Deepwater Horizon platform faced criminal charges amounting to US$4 billion because of environmental crime. A federal court in New Orleans sentenced BP to pay the record sum (Müller 2018).

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Organizational Opportunity Convenience in the organizational dimension of convenience theory is focused on opportunities to commit and conceal financial crime in a professional setting. High social status in privileged positions creates power inequality compared to those without any status in their positions. The perspective of power inequality suggests that, for example, family members in family firms wield significant influence in their firms (Patel and Cooper 2014). Family members often have legitimate access to firm resources that nonfamily executives in the firm cannot question. Individuals with high social status in privileged positions can cooperate to create a business climate of “organized irresponsibility” (Berghoff 2018: 425): The term implies that management had conspired to prevent efficient controls and therefore facilitated and promoted corruption.

Berghoff and Spiekermann (2018: 291) argue that all economic transactions depend on a certain degree of trust, without which transaction costs would simply be too high for economic activity: White-collar criminals abuse the good faith of various stakeholders, from customers to the general public, from shareholders to the authorities. Therefore, white-collar crime often coincides with the breach of trust.

As suggested by Berghoff and Spiekermann (2018: 290), sophisticated concealment is an important factor in white-collar crime: The privileged position of white-collar criminals is the result of several factors. Their offences are especially difficult to prosecute because the perpetrators use sophisticated means to conceal them. They can also often afford the best lawyers and have the political clout to influence the legislative process to their advantage and, if need be, to bribe prosecutors and judges. Additionally, the class bias of the courts works to their benefit. The law is often seen as not binding, at least not for and by economic elites.

Berghoff and Spiekermann (2018: 291) found that white-collar crime is often systemic and part of a culture, either of a corporate culture inside the firm or of a culture in the firm’s environment: In the first case, the corporation’s control mechanisms are typically weak, intentionally or unintentionally, which is an obstacle to the prevention and the investigation of economic crimes. Individual responsibility is therefore hard to ascertain. Defendants routinely deny responsibility and point to their superiors who made them commit crimes, or to their inferiors who engaged in shady practices without their knowledge or authorization.

Guardianship, oversight and control become more difficult in times of wrongdoings by misleading attributions. The attribution perspective implies that white-collar offenders are able to attribute causes of crime to everyone else but themselves in the organization. Attribution theory is about identifying causality predicated on internal and external circumstances (Eberly et  al. 2011). External attributions place the cause of a negative event on external factors, absolving the account giver and the privileged individual from personal responsibility. Innocent subordinates receive

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blame for crime committed by elite members (Lee and Robinson 2000). According to Sonnier (2015: 10), affective reactions influence blame attribution directly and indirectly by altering structural linkage assessments: For example, a negative affective reaction can influence the assessment of causation by reducing the evidential standards required to attribute blame or by increasing the standards of care by which an act is judged.

When the Siemens corruption scandal emerged in the public, top management attempted to blame lower level managers (Berghoff 2018: 423): At first the company defended itself with set phrases like ‘mishaps of individuals’ and isolated offenses committed by a ‘gang’ of criminals, or ‘This is not Siemens’.

Lack of oversight and guardianship was obvious in the Siemens corruption scandal, as phrased by the judge in German court (Berghoff 2018: 430): He compared the Siemens compliance department with ‘fire fighters, who were equipped with a toothbrush mug to extinguish major fires’.

Cartels and corruption networks are important to many global business enterprises. When the corruption case at Siemens was detected, Murphy and Dacin (2011) found that the business climate encouraged corruption and fraudulent behavior as normal and acceptable. To cope with the scandal, Siemens replaced its management board (Berghoff 2018: 423): Siemens is one of the world’s leading electrical engineering corporations. In 2006, a massive corruption scandal erupted, concluded in 2008 with a record fine. For Siemens the largest risk was being barred from government contracts. As a consequence, it replaced virtually its entire managing board, an unprecedented procedure in the history of the company.

However, the criminal market structures did not change. Siemens “thrived in the cozy world of national monopolies and cartels, which guaranteed high margins and no worries about rivals” (Berghoff 2018: 425).While the new management at Siemens attempted trust repair among stakeholders by introducing updates rules and guidelines, Eberl et al. (2015: 1205) found that the new rules were paradoxical in nature and thus difficult to implement in practice: Our findings suggest that tightening organizational rules is an appropriate signal of trustworthiness for external stakeholders to demonstrate that the organization seriously intends to prevent integrity violations in the future. However, such rule adjustments were the source of dissatisfaction among employees since the new rules were difficult to implement in practice. We argue that these different impacts of organizational rules result from their inherent paradoxical nature.

Some members of the elite are simply too powerful to blame. Pontell et al. (2014) found that the financial crisis obviously had its cause in mismanagement in the financial sector, but all in the financial sector avoided serious blame. Status-related factors such as influential positions, upper-class family ties, and community roles often preclude perceptions of blameworthiness (Slyke and Bales 2012). White-­ collar offenders “are now regarded as the untouchables, too well-heeled and powerful to lock up” (Hausman 2018: 381).

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Personal Willingness Convenience in the behavioral dimension of convenience theory is focused on the personal willingness for deviant behavior. The slippery slope perspective suggests that a person can slide over time from legal to illegal activities without really noticing. The small infractions can lead to the larger ones. An organization that overlooks the small infractions of its employees creates a culture of acceptance that may lead to its own demise (Welsh et al. 2014). The slippery slope perspective applies to a number of situations, such as seventeenth century England, where “unregulated overseas trade was a slippery slope to fraud” (Pettigrew 2018: 313). Arjoon (2008: 78) explains slippery slope in the following way: As commonsense experience tells us, it is the small infractions that can lead to the larger ones. An organization that overlooks the small infractions of its employees creates a culture of acceptance that may lead to its own demise. This phenomenon is captured by the metaphor of the slippery slope. Many unethical acts occur without the conscience awareness of the person who engaged in the misconduct. Specifically, unethical behavior is most likely to follow the path of a slippery slope, defined as a gradual decline in which no one event makes one aware that he or she is acting unethically. The majority of unethical behaviors are unintentional and ordinary, thus affecting everyone and providing support for unethical behavior when people unconsciously lower the bar over time through small changes in their ethical behavior.

A look at Siemens’ corporate culture reveals according to Berghoff (2018: 429) an astounding willingness to engage in bribery: It was like an unwritten law to go through thick and thin for Siemens. Some employees were proud to have been entrusted with the responsible and at the same time risky task of taking care of organizing bribery. To them it was a token of trustworthiness and importance. Many indeed believed that facilitating bribery was in the best interest of the firm.

As a tribal community and the “Siemens family”, the global company has its own peculiar sets of practices in order to preserve and strengthen their cohesion. The rational self-interest is replaced by self-sacrifice to take risks on behalf of the collective. Some privileged individuals even put their behavior on autopilot to serve the organization as they expect to spend the rest of their professional lives at Siemens (Berghoff 2018). Rational choice is concerned with benefits of crime exceeding costs (Pratt and Cullen 2005), where the perceived likelihood of incarceration is a cost element. Another cost element is media exposure, where investigative journalists often are the first to disclose suspected white-collar crime and the offenders. Press reporters’ detection of misconduct and crime “represented an important ingredient of the nineteenth-­century newspaper” (Taylor 2018: 346), and this is certainly also the case so far in the twenty-first century media. The rational choice approach also applies to the willingness in the behavioral dimension of convenience theory. The rational choice assumption about offending is based on a normative foundation where advantages and disadvantages are subjectively compared (Müller 2018).

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Historical Perspectives In this book, crime is simply defined as violation of the law. This legal definition of crime is problematic since it does not provide “a stable reference point for distinguishing criminal acts from noncriminal acts because laws change from one society to another and across time” (DiCristina 2017: 298). For example, providing a bribe in a corrupt situation was in many jurisdictions considered an expense that was deductible from revenues in corporate accounting some decades ago. Criminal laws can vary to great degrees over time, and they can vary dramatically across societies. Generally, a crime is a harmful action to somebody that deserves punishment, but this research sticks to the definition of crime as breaches of rules of conduct stated in law (Wikstrom et al. 2018). The legal definition of crime applied in this article is in line with Berghoff and Spiekermann (2018: 292): Crime is a category created by legislatures and, with the increasing complexity of economic transactions, the number and the intricacies of laws and regulations swell. New offences are invented with high speed and in large numbers, and the rules of the game that determine the relative payoffs to different entrepreneurial activities do change dramatically from one time and place to another. The ever-growing jungle of accounting and taxation rules, along with the proliferation and differentiation of health and safety laws are drastic examples. Indeed, according to the Economist, there were about 300 000 regulatory statutes carrying criminal penalties in the USA in the early 1990s, a number that can only have grown since then. For financial crime especially, there are now so many laws, and they are so complex that enforcing them is becoming discretionary…As legal risks escalate the chances of becoming a white-collar criminal by accident or negligence have increased enormously… At the same time, potential white-collar offenders may have entrepreneurial skills to discover loopholes in the law and grey areas of unclear legal status … A growing army of business lawyers in large law firms help entrepreneurial executives and wealthy individuals to find ways of avoiding obvious law violations.

In a historical perspective, “most crimes were regarded as private matters, and it was therefore the responsibility of injured parties to prosecute” (Taylor 2018: 347). Therefore, the legal definition of crime applied in this article influences the scope of our study in the sense that what made white-collar crime convenient in the past will differ from what makes white-collar crime convenient presently. For example, Berghoff and Spiekermann (2018: 298) state in this context of changing times for criminal justice and control mechanisms that “whether this has led to a marked reduction in economic crime is unknown but unlikely”. In media reports and contemporary debates on white-collar crime, the impression seems often conveyed that law enforcement implicitly is dealing with a relatively new phenomenon. While times have changed and so have crime opportunities, this impression nevertheless could not be more erroneous and misleading. Policing white-collar crime has long traditions. Already in the seventeenth and eighteenth centuries, colonial companies were rocked by large corruption and embezzlement scandals according to Pettigrew (2018: 307), who suggests that “seventeenth century England offers a distinctive context in which to examine the history of white-­ collar crime”.

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As emphasized in the quote from Berghoff and Spiekermann (2018) above, there are factors that increase convenience and factors that reduce convenience for white-­ collar crime over time. One additional factor for convenience increase mentioned by them is that with every technological wonder, with every new-fangled financial instrument, or mode of organizing business ventures come bounteous prospects for fraudsters. One additional factor for convenience reduction was the assessment of financial crime committed by high-level officials in the corporate world that began to change in light of the theory of delinquent association by Sutherland (1939). According to Berghoff and Spiekermann (2018), Sutherland violated existing perceptions that high-ranking persons would not or only in extreme situations commit offenses. Sutherland stated that the total damage of white-collar crime was enormous as it undermined society and its economic systems of markets. Bernsee (2018: 321) suggests that processes of privatization are often accompanied by dubious or even criminal practices, especially in countries in transition: Although the actors involved mostly claim to improve the common good, a remarkable phenomenon is that in many cases, specific groups take extraordinary advantages from them or even enrich themselves in a criminal manner.

He studied privatization in Bavaria and Prussia in the early nineteenth century and found ample evidence of increase in convenience for corruption and other kinds of white-collar crime. Based on these selected history sources, it seems that a number of factors have increased the convenience of white-collar crime. Some of the factors are new technologies, globalization and other changes, business lawyers finding loopholes in the law and grey areas of unclear legal status, new corporate structures, and new management schools. Factors that reduce the convenience include new laws and regulations, ethics, environmental concerns, public condemnation, and the role of compliance (Biegelman and Bartow 2012; Graham 2015; Lehman et  al. 2019; Marchetti 2012).

Evaluation Criteria The research question addressed in this article is concerned with criteria that might be applied to study the evolution of white-collar crime. We study the evolution of white-collar crime in terms of convenience, where convenience varies in the motivational dimension, the organizational dimension and the behavioral dimension of convenience theory. Illegitimate profits might be a more or less convenient way of satisfying needs and desires. Organizational settings can be more or less convenient to commit and conceal financial crime. Deviant behavior can be more or less convenient for personal willingness.

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Within each of the three dimensions of convenience theory, Gottschalk (2019) emphasizes certain characteristics that might be relevant in this article for criteria to evaluate the evolution of convenience for white-collar offenders over time.

Economical Dimension A distinction is made between occupational crime and corporate crime, where the former mainly benefits a privileged individual, while the latter mainly benefits the organization (Craig and Piquero 2017). A further distinction is made between threats and possibilities as motives (Langton and Piquero 2007). 1. Attractive individual economic possibilities: Are people in privileged professional positions more or less greedy presently compared to the past? Greed is the most acknowledged motive for financial crime by white-collar offenders. Goldstraw-­White (2012) defines greed as socially constructed needs and desires that can never be completely covered or contended. Greed can be a very strong quest to get more and more of something, and there is a strong preference to maximize wealth. To outsiders it may seem strange that rich people have such a strong desire to become even richer that they are willing to break the law. However, as the definition indicates, greedy individuals are never happy with what they have, as they desperately want more all the time. Prosperity is not a means, but a goal for greedy individuals. Greed can grow when the organization does not have an adequate reaction. Both Bucy et al. (2008) and Hamilton and Micklethwait (2006) emphasize greed as the most common cause of criminal acts by white-collar offenders. 2. Painful individual economic threats: Are people in privileged professional positions more or less strained and stressed in difficult financial situations presently compared to the past? The strain perspective has become one of the leading theoretical explanations for crime (Langton and Piquero 2007). The strain perspective argues that a range of factors influence whether individuals cope with strains through crime (Thaxton and Agnew 2018: 888): “Criminal coping is said to be most likely among those with poor coping skills and resources, little social support, low social control, beliefs favorable to crime, criminal associates, and opportunities for crime.” The strain perspective emphasizes strains and stressors that increase the likelihood of crime, the negative emotions (including anger) resulting from those strains that create pressure for corrective action, and the factors that influence or condition the likelihood of criminal coping (Thaxton and Agnew 2018). Agnew (2005) identified three categories of strain: failure to achieve positively valued goals, the removal of positively valued stimuli, and the presentation of negative stimuli. Crime is one possible action, which seems attractive to some privileged members of the elite as a means to escape from or reduce strains (Froggio and Agnew 2007).

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3. Attractive corporate economic possibilities: Are business organizations more or less greedy presently compared to the past? An organization is always looking for attractive corporate economic possibilities. Profit-driven crime is a result of a desire for more gain (Naylor 2003). In many organizations, ends justify means (Campbell and Göritz 2014). If ends in terms of ambitions and goals are difficult to realize and achieve in legal ways, illegal means represent an alternative in many organizations (Jonnergård et al. 2010; Welsh and Ordonez 2014). Among most executives, it is an obvious necessity to achieve goals and objectives, while it is an obvious catastrophe failing to achieve goals and objectives. Dodge (2009: 15) argues that it is tough rivalry that makes executives in the organization commit crime to attain goals: “The competitive environment generates pressures on the organization to violate the law in order to attain goals”. 4. Painful corporate economic threats: Are business organizations more or less strained and stressed in difficult financial situations presently compared to the past? Threats in the workplace may stem from specific market conditions and market forces. Some business enterprises can be so dominant in an industry that others may only survive through economic crime (Chang et al. 2005; Geest et al. 2017; Leonard and Weber 1970). The threat of losing everything they have built up working very hard over a long period may cause owners who once were entrepreneurs to intervene and commit VAT fraud and tax evasion in order to prevent their own empire from collapse. The alternative for the former entrepreneurs can be bankruptcy crime by removing all assets before bankruptcy so that creditors receive little or nothing. The purpose is to protect the economic interests of the business (Blicke et al. 2006) and possibly start up again without debts. Threats can create moral panic. Moral panic can characterize reactions that do not accurately reflect the actual danger of a threat. During a moral panic, sensitization processes generate an escalation in the individual disturbance (Kang and Thosuwanchot 2017). 5. Rational self-interest motivation: Are people more or less into weighing up the pros and cons of alternative courses of actions for profit presently compared to the past? Both individual and corporate responses to possibilities and threats can result from rational self-interest. The economic perspective is concerned with the influence of rational self-interest in explaining the development of white-collar crime (Pillay and Kluvers 2014). The economic model of rational self-interest is all about weighing up the pros and cons of alternative courses of actions. The model considers incentives and probability of detection (Welsh et al. 2014). This applies to both private and professional life. Human behavior finds motivation in the self-centered quest for satisfaction and avoidance of suffering (Hirschi and Gottfredson 1987).

Organizational Dimension The organizational opportunity is concerned with illegal profit that seem more conveniently achieved in an organizational setting where the offender can enjoy power and influence based on position and trust. Opportunity suggests the ability to

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commit wrongdoing with the expectation that nobody will detect or report it, and the offender will not be punished (Schnatterly et  al. 2018). The organizational dimension sets white-collar criminals apart from other financial criminals. Whitecollar crime can be distinguished from ordinary crime (“street crime”) based on the status of the offenders, their access to legitimate occupations, the common presence of an organizational form, and the extent of the costs and harmfulness of such crime. The ability of white-collar offenders to commit and conceal crime links to their privileged position, the social structure, and their orientation to legitimate and respectable careers (Friedrichs et al. 2018). 1. High social status in privileged positions: Are members of the elite more or less possible to blame presently compared to the past? Some members of the elite are simply too powerful to blame. Pontell et al. (2014) found that the financial crisis obviously had its cause in mismanagement in the financial sector, but all in the financial sector avoided serious blame. Status-related factors such as influential positions, upper-class family ties, and community roles often preclude perceptions of blameworthiness (Slyke and Bales 2012). White-collar offenders “are now regarded as the untouchables, too well-heeled and powerful to lock up” (Hausman 2018: 381). 2. Legitimate access to crime resources: Do elite members in privileged professional positions have more or less convenient access to systems to commit and conceal financial crime presently compared to the past? A white-collar offender has typically legitimate access to resources to commit and conceal crime (Adler and Kwon 2002; Williams et al. 2019). A resource is an enabler applied and used to satisfy human and organizational needs. According to Petrocelli et al. (2003), access to resources equates access to power. Offenders take advantage of their positions of power with almost unlimited authority in the opportunity structure (Kempa et al. 2009), because they have legitimate and often privileged access to physical and virtual locations in which crime is committed, are totally in charge of resource allocations and transactions, and are successful in concealment based on key resources used to hide their crime. 3. Disorganized institutional deterioration: Are business organizations more or less transparent presently compared to the past? Institutional deterioration can occur conveniently as a result of external legitimacy where deviance is the norm (Rodriguez et  al. 2005). Offenders’ actions have a superficial appearance of legitimacy also internally, since both legal and illegal actions in the company occur in a manner characterized by disorganization (Benson and Simpson 2015). Conventional mechanisms of social control are weak and unable to regulate the behavior within organizations (Pratt and Cullen 2005). In enterprises characterized by instability and heterogeneity, there is reduced likelihood of effective socialization and supervision. The impact of social bonds varies by type of organization and disorganized units negatively affect the ability of social bonds to reduce delinquent behavior (Hoffmann 2002; Onna and Denkers 2019). 4. Lack of oversight and guardianship: Are control functions within business enterprises more or less effective presently compared to the past? As evidenced by

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many internal investigation reports by fraud examiners after white-collar crime scandals, internal auditors, external auditors, compliance committees and other internal and external control units do not function properly (Biegelman and Bartow 2012; Graham 2015; Lehman et  al. 2019; Marchetti 2012). Oversight and control functions tend to be formal units without any insights into the substance of business activities. They tend to review procedures rather than transactions within procedures. Therefore, ineffective control functions are often an important part of the opportunity structure for white-collar crime. For example at Toshiba Corporation, lack of controls was an important element of the opportunity structure (Deloitte 2015). Fraud examiners emphasized lack of internal controls by accounting and auditing functions, as well as lack of finance control in each corporate division. At Wells Fargo, corporate control functions were constrained by the decentralized organizational structure (Shearman Sterling 2017). Fraud examiners excused corporate control functions since they suffered from harm by the decentralized organizational structure and a culture of substantial independence for business units. At Fuji Xerox, CEO Whittaker had gained control over reporting lines to manipulate accounting (Deloitte 2017). At Danske Bank where money laundering occurred in their Estonian branch, corporate control functions did not work because the branch operated computer systems different from computer systems at the headquarters (Bruun Hjejle 2018). Telenor executives ignored corruption rumors at VimpelCom since the chief compliance officer and chief legal officer did not know how to handle whistleblowing (Deloitte 2016). 5 . Criminal market structures: Are cartels and corruption networks more or less conveniently available for business performance presently compared to the past? While cartels can represent painful corporate economic threats in the economical dimension of convenience theory, a cartel can also represent an opportunity for those enterprises that have joined the cartel. In many markets, there are cartels that regulate the supply side. Cartel members agree not only on market division but also on prices to various customers (Goncharov and Peter 2019; Leonard and Weber 1970). The social exchange perspective aids explanations of how power structures in cartels and corruption networks develop and institutionalize through relationship building and social exchanges among participating enterprises. The perspective suggests that organizational activities are contingent on the actions of other organizations. The successful cartels and networks are dependent on generation of obligations and fulfillment of rewards. Relational efforts in an industry or in a community lead to repeated patterns of interactions that may develop into durable institutions of interdependencies in cartels and networks (Cartier-Bresson 1997; Cropanzano and Mitchell 2005; Emerson 1976; Lawler and Hipp 2010).

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Behavioral Dimension Most research on white-collar crime exists along the behavioral dimension. Researchers have presented numerous suggestions to explain famous people who were willing to commit and conceal financial crime. Some of the most prominent perspectives are differential association (Sutherland 1939, 1983), lack of self-­ control (Gottfredson and Hirschi 1990), slippery slope (Arjoon 2008), and neutralization techniques (Sykes and Matza 1957). 1. The innocent justification offender mind: Do offenders find it more or less convenient to justify misconduct and crime presently compared to the past? The personal willingness is concerned with the impression that surprisingly few white-collar criminals think they have done anything wrong. Most of them feel innocent and victims of injustice when indicted, prosecuted, convicted, and imprisoned. By application of neutralization techniques (Sykes and Matza 1957), they deny responsibility, injury, and victim. They condemn the condemners. They claim appeal to higher loyalties and normality of action. They claim entitlement, and they argue the case of legal mistake. They find their own mistakes acceptable. They argue a dilemma arose, whereby they made a reasonable tradeoff before committing the act (Jordanoska 2018; Kaptein and Helvoort 2019; Siponen and Vance 2010). Such claims enable offenders to find crime convenient, since they do not consider it a crime, and they do not feel guilty of wrongdoing. 2. The deviant personality offender mind: Do members of the upper echelon of society view themselves as more or less privileged presently compared to the past? Some white-collar offenders are narcissists. Narcissists exhibit an unusual trust in themselves, believing that they are uniquely special and entitled to more benefits than are legitimately available to them (Ouimet 2010). A particular version of narcissism is narcissistic identification with the organization, where the offender sees little or no difference between self and the business. Then company money is personal money that can be spent whatever way the narcissist prefers (Galvin et al. 2015). A pervasive pattern of grandiosity, need for admiration, and empathy deficits typifies narcissism. While grandiosity and admiration belong to the motivational dimension of convenience theory, empathy deficits belong to the willingness dimension of convenience theory where the offender possesses a sense of entitlement. The offender shows unreasonable expectations to receive and obtain preferential treatments (Zvi and Elaad 2018). 3. The rational choice offender mind: Are people more or less into weighing up the pros and cons of alternative behaviors for profit presently compared to the past? The rational self-interest motivation was described earlier in the economical dimension of convenience theory. The rational choice approach also applies to the willingness in the behavioral dimension of convenience theory. The rational choice assumption about offending is based on a normative foundation where advantages and disadvantages are subjectively compared (Müller 2018). When there is no perceived likelihood of detection, then there is no deterrence effect to

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prevent offences (Comey 2009). If there is a certain perceived likelihood, then willingness might depend on the perceived consequences. For potential white-­ collar offenders it can be frightening to think of time in jail or prison. Research has shown that some white-collar offenders suffer from special sensitivity in prison, while others have special resilience in prison (Logan et al. 2019), which means that they cope better with incarceration than other inmates. Deterrence comes from whether or not an offender has to go to prison, rather than the severity of sanction in terms of imprisonment length. Generally, the severity of punishment has shown to have no effect on recidivism (Mears and Cochran 2018). Rational choice is concerned with benefits of crime exceeding costs (Pratt and Cullen 2005), where the perceived likelihood of incarceration is a cost element. Another cost element is media exposure, where investigative journalists often are the first to disclose suspected white-collar crime and the offenders. Press reporters’ detection of misconduct and crime “represented an important ingredient of the nineteenth-century newspaper” (Taylor 2018: 346), and this is certainly also the case so far in the twenty-first century media. 4. The slippery absent offender mind: Do members of the upper echelon of society suffer from more or less lack of self-control presently compared to the past? Lack of self-control is a frequent explanation for executive deviance and crime in general (Gottfredson and Hirschi 1990). While many might be tempted, only those lacking self-control will actually do it. Self-regulation monitors self-control, where self-regulation represents a process of using self-regulatory resources to control undesirable impulses and override subsequent behavioral responses. As argued by Mawritz et al. (2017), individuals possess varying and limited self-­ regulatory resources that inhibit responses that may arise from physiological processes, habit, learning, or the strain of the situation. The slippery slope perspective suggests that a person can slide over time from legal to illegal activities without really noticing. The small infractions can lead to the larger ones. An organization that overlooks the small infractions of its employees creates a culture of acceptance that may lead to its own demise (Welsh et al. 2014). The slippery slope perspective applies to a number of situations, such as seventeenth century England, where “unregulated overseas trade was a slippery slope to fraud” (Pettigrew 2018: 313). Arjoon (2008: 78) explains slippery slope in the following way: “As commonsense experience tells us, it is the small infractions that can lead to the larger ones.” In summary, the purpose of this chapter was to discuss how convenience in white-collar crime might be studied in business history, as the extent of convenience influences the magnitude of financial crime among privileged individuals in the course of their professions. Convenience is savings in time and efforts, as well as avoidance of strain and pain. The theory of convenience suggests that the extent of white-collar crime is dependent on economical motives, organizational opportunities, and personal willingness for deviant behavior. These three dimensions in convenience theory were broken down in this chapter into fourteen potential criteria to evaluate whether white-collar crime is more convenient presently compared to the past. Historians are encouraged to apply these criteria in their future studies to describe the evolution of white-collar crime.

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Chapter 8

White-Collar Convenience

The theory of convenience is concerned with issues at both the individual and the organizational level. Financial motive occurs at the individual level in the case of occupational crime, while it occurs at the organizational level in the case of corporate crime. Organizational opportunity always occurs at the organizational level, while personal willingness always occurs at the individual level. Therefore, the unit of analysis at empirical study is not only the individual or the organization, but also both units of analysis. An empirical study can focus either on one level of analysis or on a mix of two levels of analysis. If an empirical study focuses exclusively on the individual level, then the financial motive will be concerned with individual occupational motive and perceived corporate motive, where the perception will vary with individuals. Similarly, the perception of organizational opportunity will vary with individuals. If an empirical study focuses exclusively on the organizational level, then the financial motive will be concerned with corporate motive and perceived occupational motive, where the perception will not vary with individuals. Similarly, the perception of organizational opportunity will not vary with individuals. This chapter presents a variety of empirical studies focusing on convenience in white-collar crime. First, the convenience triangle suggests that motive, opportunity and willingness can reinforce each other. For example, a stronger personal willingness for deviant behavior can create greater organizational opportunity for misconduct and crime over time. This is illustrated by six case studies. Second, a sample of 408 convicted white-collar offenders is statistically tested for convenience hypotheses. Third, business school students were asked about their convenience orientation. Fourth, the same students in a financial crime class were asked about trust and concern for white-collar offenses. Fifth, the same students were asked about white-­ collar coping with imprisonment to test the special sensitivity hypothesis versus the special resilience hypothesis. Finally, the same students were asked about reasons why 50% of the population in society is women, while there are a very low percentage of women in the prison population.

© Springer Nature Switzerland AG 2020 P. Gottschalk, The Convenience of White-Collar Crime in Business, https://doi.org/10.1007/978-3-030-37990-2_8

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Six Convenience Triangle Case Studies Case 1: Motive on Opportunity Case 1 is concerned with opportunity expansion resulting from a stronger desire for illegal profit to cover personal or organizational needs. Offenders have access to resources for opportunity expansion. Over time, an offender can expand opportunities for white-collar crime. Earlier research has emphasized that opportunity is dependent on the social capital available to the criminal, as well as the structure and quality of social ties in hierarchical and transactional relationships that shape opportunity structures (e.g., Adler and Kwon 2002; Pontell et  al. 2014). In a dynamic perspective, an offender can improve the organizational convenience of white-collar crime. I illustrate the dynamic perspective by the case of a chief financial officer (CFO) in a Norwegian enterprise who received a prison sentence for embezzlement in the organization. The district court in Gjøvik is located north of the capital Oslo in Norway. On August 8, 2014, district court judge Håkon Schei Mentzoni announced a verdict of 4 years and 6 months in prison for the former CFO. The average prison sentence for white-collar criminals in Norway is 2 years and 4 months, so the judge passed a severe sentence to the former CFO. His conviction included to pay back the embezzled amount of 18 million Norwegian kroner (about US $ 2.2 million) to his former employer HRB (Gjøvik tingrett 2014). The former CFO was divorced and had a strong desire to impress his children with cars, houses, and travels. He had a new girlfriend with whom he enjoyed expensive wine and restaurant visits. His income was not sufficient to cover all his expenses. The former CFO had the task to develop and implement a new system for accounting generally and money transfer procedures for bank accounts specifically. This is where his first opportunity expansion occurred. He designed procedures with single approval requirements where approval rights rested with people in the accounting function. Before taking on the CFO position at HRB, he had worked in the parent company. This is where his second opportunity expansion occurred. He kept professional and social ties to executives in the parent company, so that the other executives at HRB never dared questioning his performance or behavior. He was a friendly person who everyone seemed to like, although he never talked about work. The chief executive officer (CEO) at HRB later told fraud examiners from global auditing firm PwC (2014) that he simply felt he had no other choice but to trust the man. The external auditor later told fraud examiners from PwC (2014) that the cooperation with the CFO went so smoothly since the CFO always provided large volumes of records for review. The auditor never felt a need to ask for more information. This is where the third opportunity expansion occurred. The CFO made sure that the auditor received an overload of information so that the auditor would not ask for more.

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Hestnes (2017) asked the question in his study of the CFO case: Why did the auditor fail in detecting embezzlement at HRB? Normally in a Norwegian context, the auditor is to report annually to the board in the business where the auditor has reviewed accounts. Since the cooperation between the auditor and the CFO went so smoothly, the CEO did not invite the auditor anymore to board meetings. This is where the fourth opportunity expansion occurred. The CFO became the actual person to report external audit results to the board. The CFO’s fifth and final opportunity expansion was to separate flows of money for current expenses from flows of money for investments. He embezzled mainly investment money. This separation enabled him to present results where the bottom line had no signs of his financial crime.

Case 2: Opportunity on Motive Case 2 is concerned with greed expansion resulting from an emerging ample organizational opportunity for financial crime. A priest in the Methodist church appointed chief executive officer (CEO) in the religious Betanien Foundation in Bergen in Norway. He lived a modest life style while successfully expanding foundation business. He did very well in negotiations with the Municipality of Bergen Hordaland County and the government, and he had a genuine interest in achieving the best possible deals for Betanien. On several occasions, people honored and admired him for having brought Betanien to successful expansion and profitability. Soon Betanien ran several hospitals, nursing homes, and kindergartens. The district court of Drammen is located west of the capital Oslo in Norway. On February 2, 2015, the former CEO was sentenced to prison for 3 years because of embezzlement in the Methodist foundation Betanien (Drammen tingrett 2015). He admitted to embezzlement of 16 million Norwegian kroner (about US $2 million) that he later agreed to pay back based on future income and heritage. Fleckenstein and Bowes (2000) phrased the question: Do members often betray trust in terms of white-collar crime in religious institutions? According to Owens and Shores (2010), most white-collar crime incidents are exploitations of trust, where trust may originate from a shared religious identity between the victim and the perpetrator. Shores (2010) phrased the questions: Are social religious networks an attractive arena for white-collar criminals? Is the morale of not acting illegally blinded from a chance perspective when an attractive opportunity arises? Alternatively, as suggested by Corcoran et al. (2012): Do shared religious beliefs lead to less acceptability of white-collar crime? Furthermore, Deshotels et  al. (2019) suggest that neutralization of deviant behavior is particularly convenient in religious organizations if the offender somehow can claim that God accepts or forgives. Techniques of neutralization then draw upon larger cultural norms, disseminated through organizations, and used in relationships to maintain stability in the religious institution. Pimentel and Melander (2019) support this view, as they found that members of a religious organization

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enjoy strong internal group cohesion promoted by their religious ideology and symbolic boundaries that hinge on external conflict with society and separate them from outside institutions. Fundacion Betanien opened in the autumn of 2001 in Alfaz del Pi in Spain. The institution in Spain is part of Betanien’s rehabilitation and nursing home. Betanien Foundation in Bergen owned and operated the home. The CEO initiated and successfully established Fundacion Betanien. He told accountants in Bergen whenever they had to transfer money from Norway to Spain. The CEO experienced complete trust from all involved. He had authority both as a business leader and as a religious leader. When he made a mistake, nobody noticed. He was managing large sums of money all by himself. The auditor in Norway believed that Spanish auditors would audit accounts in Spain, while accountants in Spain believed the audit took place in Norway. In Spain, the CEO developed a drinking problem. While always sober in Norway, he became a heavy drinker in Spain. He enjoyed drinking, and he could afford it at the expense of the foundation. Soon he expanded his local lifestyle in Spain to include parties with prostitutes that he paid with money from the foundation. His embezzlement of funds from the foundation enabled him to live a double life, where he was modest at home, while living like a playboy in Spain. He abused the money that he controlled on behalf of the foundation to enjoy a lifestyle in Spain that he could never do at home as a priest and as a family man. After much pressure and threats from two whistleblowers, the chairperson at the foundation hired BDO (2014) to conduct an internal investigation, where fraud examiners detected large sums of money embezzled by the CEO over a period of several years.

Case 3: Motive on Willingness Case 3 is concerned with willingness expansion caused by a stronger desire for illegal profit to cover personal or organizational needs. Procurement officers in public office can be an attractive target for vendors who are willing to bribe officials. When officials have a stronger desire for a bribe, then their willingness will increase and corruption is more likely to occur. The German bus manufacturer MAN bribed more than nine procurement officers at the bus operating company Unibuss in Oslo, Norway. There were a large number of offenders identified in the Unibuss case, where nine persons ended up in prison, and more persons were waiting for their trials in Oslo district court. The Unibuss scandal started in Germany where bus manufacturer MAN was systematically bribing public transportation companies to make them buy MAN busses. For example, MAN made procurement officials specify the need for busses of exactly 18 meters and 75 centimeters in length. The only bus manufacturer supplying exactly that length was MAN.  Corruption did not only occur towards procurement officers but also executives at Oslo city transportation company Unibuss (Haugan 2014).

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All of the bribed Norwegians were on public salaries, which is significantly lower than salaries in the private sector. Their strong desire for a better standard of living seems to be the case since their spending of bribes mainly ended up in home expansions and better private cars. They obviously felt they deserved more than they earned, which influenced their willingness to accept bribes. When Unibuss procurement officials and executives from Norway visited MAN sales executives in Germany, they received envelopes with Euros in cash during social events. However, some years later, a Unibuss employee was on vacation in Munich in Germany when he read a local newspaper. He read that MAN sales executives faced prosecution in Germany in a corruption scandal. In the newspaper in German, the article mentioned that several countries might be involved in the bribery scandal, including Norway. When the Unibuss employee returned home from his vacation, he went to his superior who he trusted, and told about the media story. Fraud examiners at local law firm Wiersholm (2012) found that some of the Norwegians at Unibuss had asked for bribes, while others had waited for MAN to offer them bribes. All payments used only cash from the firm MAN Nutzfahrzeuge AG, where payments registered as mediation commission. A technical executive received a sentence of 5  years and 9  months in prison, while a procurement executive received a sentence of 5  years in prison by Oslo district court (Oslo tingrett 2015). Other sentences were 2 or 3 years in prison.

Case 4: Willingness on Motive Case 4 is concerned with motive expansion caused by a stronger willingness for deviant behavior. Narcissistic organizational identification by some CEOs is one of several perspectives on potential criminal behavior (Galvin et al. 2015). If a CEO says and believes in the statement – “I am the company” – then the organization can be up for trouble. Narcissism here means seeing oneself as central to the organization’s identity. It is a self-centered form of organizational identification. The CEO may lose his or her independent sense of self and engage in questionable behaviors. Narcissistic organizational identification implies domination of individual identity over organizational identity. CEOs with narcissistic organizational identification feel a strong affinity for their organizations’ identities, but as an expression of themselves. They see their own identity as the main reference for understanding what the organization is doing and how it is structured. Removing the separation between the individual and the organization can cause the CEO to think of company money as personal money. While there is considerable variance in narcissistic tendencies across CEOs, many CEOs have narcissistic personality traits such as self-­focus, self-admiration, a sense of entitlement, and a sense of superiority (Zhu and Chen 2015). Galvin et al. (2015: 163) found that:

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It is not uncommon to learn of individuals in positions of power and responsibility, especially CEOs, who exploit and undermine their organizations for personal gain. A circumstance not well explained in the literature, however, is that some of those individuals may highly identify with their organizations, meaning that they see little difference between their identity and the organization’s identity – between their interests and the organization’s interest. This presents a paradox, because organizational identification typically is not noted for its adverse consequences on the organization.

The CEO in Norway received a sentence of 7 years in prison. He had spent company money on a variety of projects that had nothing to do with the business. As suggested by Zhu and Chen (2015), the convicted CEO favored bold actions that could cause external recognition. For example, he built a water fountain in front of a nursing home since one of the company’s business areas was water supply. The CEO bought from company money a hunting farm in South Africa. He argued in court that this was an investment according to his new business model for the company. Similarly, a number of other money flows he claimed in court as business investments resulting from his expanded business model. He told the court that they did not understand his business ideas. The convicted CEO was very much in line with a description presented by Zhu and Chen (2015: 35): Narcissistic CEOs tend to favor bold actions, such as large acquisitions, that attract attention. They are less responsive than other CEOs to objective indicators of their performance and more responsive to social praise. For instance, while narcissistic CEOs tend to aggressively adopt technological discontinuities, they are especially likely to do so when such behavior is expected to garner attention and admiration from external audiences.

The convicted CEO had received an honor from the King of Norway for his good deeds in his local community, including the water fountain in front of a nursing home. Fraud examiners from Distriktsrevisjonen (2007) found that several causal factors had worked together to enable the CEO to carry out his systematic pouring and emptying of resources from the company. Among the factors were his personal commitment, willingness and motivation to work in untraditional ways.

Case 5: Opportunity on Willingness Case 5 is concerned with willingness expansion caused by emerging ample organizational opportunity for financial crime. One brother was in charge of property management and maintenance within the municipality while two other brothers were in the maintenance business. When they discovered the mutual interest in doing business with each other, they ignored public procurement regulations. A court of appeals convicted all three brothers to prison for several years. The court found them guilty of corruption and organized crime (Borgarting 2011). Five and a half years in prison for corruption and organized crime became the verdict of the former property manager in the municipality. This ruling from a district court in 2009 received confirmation in the court of appeals in 2011 (Borgarting 2011). Together with his brothers, he caused a loss for the municipality of 20

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million Norwegian kroner (about 2.5 million US dollars). They cheated by lack of competition and systematically overbilling maintenance services. The convicts shared the profits via craft services, building materials, boats, motorcycles and cash (Gedde-Dahl 2011). Benson and Simpson (2015) argue that many white-collar offences manifest the following opportunity properties: (1) the offender has legitimate access to the location in which the crime is committed; (2) the offender is spatially separate from the victim, and (3) the offender’s actions have a superficial appearance of legitimacy. Situation-focused perspectives explain crime in terms of opportunity structures. Piquero and Benson (2004) proposed a middle-ground explanation of white-collar crime, which they call the punctuated situational theory of offending. This theory assumes that white-collar criminals start offending when they reach their forties. Opportunities that result from a certain occupational status may explain crime. Situational factors – such as a more influential job and a growing number of important contacts – provide access to legitimate means to obtain desirable goals. Willingness driven by opportunity implies that an opportunity is attractive as a means of responding to desires. The presence of a favorable combination of circumstances can stimulate willingness (Aguilera and Vadera 2008). Fraud examiners at G-Partner (2007) found that the property manager had convenient opportunity to order services from whomever he liked, since he was empowered to do it on his own, and no control mechanisms or audit procedures were in place.

Case 6: Willingness on Opportunity Final case 6 is concerned with opportunity expansion caused by a stronger willingness for deviant behavior. Two employees in the city of Drammen outside Oslo found building regulations too strict, and therefore started to approve construction applications that represented violations of the law. They disagreed with the law, and were thus willing to break it. To enable law violation, they cooperated in the receipt of new applications. Normally, there should be random assignment of new applications to one of several officers in the construction branch department in the municipality. The two employees expanded their organizational opportunity by manipulating the system so that one of them always got a case from the other one who applicants had been contacting personally. For each successful application, the two officers received a bribe of twenty or thirty thousand Norwegian kroner (approximately three thousand US dollars). In March 2018, both employees received prison sentences of 6 years and 3.5 years respectively in Drammen district court. The defendants were a woman age 59 years and a man age 46 years. The sentence was more severe than suggested by the prosecutor in court (Kommandantvold and Bjerkeseth 2018). In their fraud examination, Deloitte (2017: 4) draws the following conclusion: The investigation shows that the department has not had a framework or system that ensures adequate control in the construction application work. Deficiencies are revealed that relate to the control structure and culture in the department, including lack of formal delegation of

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authority to relevant personnel and lack of overview of responsibilities and authorizations. The department has no management system, and there are shortcomings associated with access to functions in the case processing system, which contributes to a lack of overview and control.

Deloitte’s (2017) review originated from the control committee’s mandate, which essentially deals with organizational conditions. Fraud examiners at Deloitte had to take into account that there was a police investigation going on in parallel. Investigators from Deloitte collected data through document analysis, interviews and review of 58 building cases, which all received favorable outcomes in the municipality building permit department. In this chapter, six case studies of convicted white-collar offenders in Norway have illustrated causal relationships between dimensions in convenience theory. There is a need for further empirical study to verify the convenience triangle in white-collar crime. For example, trajectories of offending can be identified, where the three dimensions play different roles over time. In addition to court documents, reports of investigations by fraud examiners help shed light on crime cases. The purpose of an internal investigation by fraud examiners is to reconstruct the past. The past may be an event or a series of events where for example someone did something to somebody. Previous events are typically negative, and they have caused some damage. The goal of an investigation is to uncover the facts in a particular situation. In doing so, the objective truth about the situation is the ultimate goal. A private investigation is mainly after the facts, with the goal of determining how a negative event occurred, or whether the suspected action occurred at all. The goal may also be to prevent a situation from ever occurring in the first place, or to prevent it from happening again. Unfortunately, too many internal investigation reports written by global auditing firms and local law firms never reach the public domain because of secrecy by the client organization. Reports are thus hard to discover and access for research (Gottschalk and TcherniBuzzeo 2016). The current study is limited to cases from Norway. Since Norway, being a relatively good governance nation, is likely to have a low white-­collar crime frequency, one cannot be sure about the general applicability of case studies based on Norwegian data. Norway is considered to have a more limited shadow economy than most other developed nations (Gottschalk and Gunnesdal 2018), and thus a relatively low white-­collar crime frequency can be assumed. An interesting avenue for future research is to explore international comparisons with famous American and German cases. A more complicated, yet attractive avenue is to provide an actual investigation into causality, for example based on autobiographies by convicted offenders (e.g., Kerik 2015; Middelhoff 2017). This chapter has applied convenience theory to study six Norwegian white/collar crime cases that link three constructs: motives, opportunities, and willingness. The chapter documents a desire to propose an integrated theory of white-collar crime where the organizational opportunity is at the core of attention. It is in the professional context that offenders carry out their illegal acts as long as there is a motive and willingness. Several of the cases have an international nature, although they all originate in Norway.

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Testing Convenience Hypotheses Findings

One important theoretical implication of convenience theory is the relativity and thus decision-making involved in white-collar crime. Crime will only occur when it is the most attractive option among alternatives in a decision-making process to reach goals. Another important theoretical implication is the combined presence of motive, opportunity and willingness that have a reinforcing effect on each other. An important policy implication is concerned with levels in the convenience model. Motive is at the individual or organizational level, opportunity is at the organizational or societal level, while willingness is at the individual level. Crime control measures are thus needed at all three levels. To reduce opportunity, organizational and societal measures are required so that access to resources decreases and probability of detection increases.

Testing Convenience Hypotheses Findings Out of twenty-four items registered in my database, this research selected eleven items that represent scales applicable to statistical analysis. Table  8.1 presents descriptive statistics for my sample of 408 convicted white-collar criminals in Norway. The average age when convicted was 49 years. The average prison sentence was 2.3  years. Most criminal cases found their final sentences in district courts. The amount of money involved in crime was 44 million Norwegian kroner, which is about 5 million US dollars. There were on average 3.8 persons convicted in each white-collar crime case. There were just as many from low level and high level among the convicts. The convicts income, tax, and wealth as reported by the Norwegian tax authorities were quite normal, but a few convicts were very wealthy. Convicts were associated with both small and large organizations. Table 8.1  Descriptive statistics for 408 convicted white-collar criminals in Norway Item Aged when convicted Prison sentence Court level Crime amount Convicted persons White-collar level Personal income Personal tax Personal wealth Revenue of organization Employees organization

Mean 49 years 2.3 years 1.5 44 million 3.8 persons 2.0 446.406 206.736 2.760.702 321 million

Minimum 25 years .04 years 1 1 million 1 person 1 0 0 0 0

Maximum 77 years 9 years 3 1.200 million 15 persons 3 14.000.000 7.000.000 159.000.000 9.000 million

Std. dev. 11 years 1.8 years .6 146 million 3.2 persons .7 1.070.426 522.570 12.808.590 990 million

210 persons

0

8.000 persons

861 persons

Age of offender Prison when convicted sentence in court Age when convicted 1 .1∗ Prison sentence 1 Criminal court level Amount crime Persons convicted Level white-collar Income person Tax paid by person Wealth person Revenue of organization Employees organization

Criminal court level .1∗∗ .1∗ 1

Amount of money in crime .2∗∗ .2∗∗ .2∗∗ 1

Persons in case convicted −.1 .1∗ −.0 .0 1

Table 8.2  Correlation coefficients for items regarding white-collar criminals Level white-­ collar elite −.3∗∗ −.1∗ −.2∗∗ −.1∗ .1∗∗ 1

Income reported by person .1∗∗ −.0 −.0 −.0 −.0 −.2∗∗ 1

Tax paid by person .1∗∗ −.0 −.0 −.0 −.0 −.2∗∗ .9∗∗ 1

Wealth reported by person .1 .1 .0 .0 −.0 −.2∗∗ .3∗∗ .5∗∗ 1

Revenue of the organization .2∗∗ .0 −.0 .0 −.0 −.2∗∗ .5∗∗ .5∗∗ .1∗∗ 1

1

Employees in the organization .2∗∗ −.2 −.1 .0 −.0 −.2∗∗ .5∗∗ .5∗∗ .1∗ .9∗∗

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Testing Convenience Hypotheses Findings

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Table 8.3  Regression analysis with prison sentence as the dependent variable (Constant) Age Court level Amount Persons Elite level Income Tax Wealth Revenue Employees

B 1.594 .006 .197 .002 .062 −.159 −3541E−7 4631E−7 5999E−9 .001 −.001

Std. Error .586 .009 .144 .001 .028 .131 .000 .000 .000 .000 .000

Beta .036 .068 .198 .108 −.064 −.209 .134 .042 .500 −.484

t 2.722 .696 1.373 3.984 2.226 −1.213 −.658 .366 .382 2.619 −2.551

Sig. .007 .487 .171 .000 .027 .226 .511 ,715 .703 .009 .011

Table 8.2 presents correlation coefficients for the set of items. Offender age when convicted is significantly correlated with crime amount, elite level (negative), personal income, personal tax paid, and the size of the organization measured in revenue and employees. The prison sentence is correlated with crime amount and number of persons convicted in the case. Ten out of eleven items now serve as potential predictors of the eleventh item, which is the prison sentence in terms of incarceration length. The regression model shows that the set of ten items are significant predictors of prison length with an adjusted R square of .09 and a statistical significance of .000 in the ANOVA calculation. Table 8.3 lists coefficients for all ten items. It is interesting to note that among ten items, three items are significant determinants of prison sentence. The most significant predictor is crime amount, where a larger amount of money involved in financial crime leads to a longer incarceration period. In addition, offenses in larger organizations measured in revenue and employees can cause a longer incarceration period. While the research hypotheses were concerned with varying intentions to commit white-collar crime, the empirical study was concerned with actual white-collar offenses. Bridging the two topics is not easy. I would like to derive from the empirical study some insights regarding financial motive, organizational opportunity, personal willingness, and tendency to commit crime. In terms of financial motive, it is relevant to note in Table 8.2 that crime amount and age have a positive and significant correlation coefficient, while crime amount and elite level have a negative and significant correlation coefficient. This research can thus suggest that the motive increases with age and with reduced level of influence. While certainly not obvious, this research can claim that amount, age and level represent willingness that influences criminogenity. In terms of organizational opportunity, an opposite effect of white-collar level is likely, in which individuals at higher levels have more opportunity to commit and conceal financial crime. The organizational opportunity may increase with the size of the organization in terms of revenue and employees. However, again this kind of

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substitution of items into a causal relationship is indeed questionable. Nevertheless, this research can claim that level, revenue, and employees represent organizational opportunity that influences criminogenity. In terms of personal willingness, this research can argue that either less wealthy members in the elite are more eager, or we can argue that rich members of the elite are greedier. We might also argue that when there are more persons participating in the crime, the individual willingness will increase. This research can thus claim that personal income, personal wealth as well as the number of convicted persons represent individual opportunity that influences criminogenity. Finally, there is a need to select item(s) that can represent the tendency to commit white-collar crime, which is criminogenity. One idea is to let prison sentence represent criminogenity, where the tendency might seem stronger the longer incarceration that the court passed on the offender. Again, this is speculative, but an approach as testing the research model. Table 8.3 provides us with some answers given all assumptions here: Hypothesis 1: Financial motive (amount, age, and level) is a significant predictor of the tendency to commit white-collar crime (criminogenity), where the crime amount is the significant item. Hypothesis 2: Organizational opportunity (level, revenue, and employees) is a significant predictor of the tendency to commit white-collar crime (criminogenity), where both organizational revenue and number of employees as indicators of organization size are significant items. Hypothesis 3: Personal willingness (income, wealth, and participants) is a significant predictor of the tendency to commit white-collar crime (criminogenity), where the number of persons involved in each criminal case is a significant item.

In conclusion, this research finds support for all three hypotheses. Convenience is a key concept to understand the white-collar crime phenomenon. Executives and other offenders in the elite in society may choose illegal means to reach their objectives in terms of fraud, corruption, embezzlement, and other forms of financial crime. This research has conceptualized their intentions or tendency to commit and conceal crime in terms of criminogenity in this article by two research models and associated hypotheses, but empirical data on offender tendencies are hard to collect. Therefore, this research used data from a sample of convicted white-collar criminals to establish statistical relationships where motive, opportunity, and willingness as significant predictors of crime. Future research might identify and explore data sources that more directly can test causal relations as well as interactions as suggested by the convenience triangle. If relevant data are obtainable, then a structural equation model might be developed to integrate both causality and interaction effects as suggested by the theory of convenience.

Determinants of White-Collar Crime Intention Incentives and pressures for financial gain represent the motive to exploit possibilities and avoid threats. Compensation structure and firm performance can represent internal forces. Compensation structure can drive executives to misbehavior because

Determinants of White-Collar Crime Intention

163

of the incentive and pressure it applies. When it is an incentive, the pressure constitutes greed (Goldstraw-White 2012). Organizational characteristics can increase pressure such that executives believe they must engage in wrongdoing (Agnew 2014). Pressure to engage in wrongdoing can originate from forces outside of the organization, such as competition and active investors. Individuals’ ability to commit wrongdoing depends on their opportunities, which can be a reflection of individual power, organizational resources, and organizational structure and controls. The more power an individual has, the more opportunity there is to misbehave by overruling or ignoring others. External forces that provide opportunity to commit or facilitate wrongdoing include industry cultures and norms (Schnatterly et al. 2018). Personal willingness for deviant behavior means willingness for individual actions that violate social norms, including formally enacted rules and informal nonconformity (Aguilera and Vadera 2008). Deviance is a term to describe behavior that contravenes accepted norms, values, and ethical standards (Smith and Raymen 2018). The offender may explain the act of wrongdoing as morally justifiable (Schnatterly et al. 2018). The personal willingness is concerned with the impression that surprisingly few white-collar criminals think they have done anything wrong. Most of them feel innocent and victims of injustice when indicted, prosecuted, convicted, and imprisoned. By application of neutralization techniques (Sykes and Matza 1957), they deny responsibility, injury, and victim. They condemn the condemners. They claim appeal to higher loyalties and normality of action. They claim entitlement, and they argue the case of legal mistake. They find their own mistakes acceptable. They argue a dilemma arose, whereby they made a reasonable tradeoff before committing the act (Siponen and Vance 2010). Such claims enable offenders to find crime convenient, since they do not consider it crime, and they do not feel guilty of wrongdoing. Convenience is the state of being able to proceed with something with little effort or difficulty, avoiding pain and strain (Mai and Olsen 2016). The extent to which individuals in privileged positions choose to break the law in difficult situations or tempting situations is dependent on their convenience orientation. Convenience comes at a potential cost to the offender in terms of the likelihood of detection and future punishment. In other worlds, reducing time and effort now entails a greater potential for future cost. Paying for convenience is a way of phrasing this proposition (Farquhar and Rowley 2009). Based on the research model in Fig.  8.1, four research hypotheses can be formulated: Hypothesis 1. The stronger motive for illegal financial gain, the more likely white-collar crime will occur. Hypothesis 2. The greater organizational opportunity for access to resources to commit and conceal financial crime, the more likely white-collar crime will occur. Hypothesis 3. The higher personal willingness for deviant behavior, the more likely white-collar crime will occur. Hypothesis 4. The more conveniently oriented, the more likely white-collar crime will occur.

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FINANCIAL MOTIVE Convenient Financial Gain to Avoid Threats and Exploit Possibilities

ORGANIZATIONAL OPPORTUNITY Convenient Legitimate Access to Commit and Conceal Crime

8  White-Collar Convenience

CONVENIENCE ORIENTATION Savings in time and effort, reduction in pain and suffering

CRIME INTENTION Likelihood of Individual WhiteCollar Offence

PERSONAL WILLINGNESS Convenient Deviant Behavior to Commit and Conceal Crime Fig. 8.1  Dimensions influencing crime intention in convenience theory

The theory of convenience suggests that motive, opportunity and willingness are the underlying factors for criminal behavior among white-­ collar offenders. Considered together as illustrated in Fig. 8.1, these factors comprise a criminogenity specter that influence the likelihood of law violations. It is not expected that the model in the figure can provide forecast information on which criminals one can catch before they commit crime, but we might expect that the model can provide insights into actions that might reduce the likelihood of white-collar crime occurrences. In particular, actions that can reduce organizational opportunity are quite evident to derive from convenience theory. An interesting question is whether all three dimensions (motive, opportunity, and willingness) are equally important for white-collar crime to occur. Without an opportunity, no crime can occur. Without a motive and willingness, crime can nevertheless occur. The relative importance of the dimensions can vary with situation, both for the individual and the organization. Schnatterly et al. (2018) make a distinction between internal forces and external forces. Internal motivational factors might be compensation, aspirations, and board expectations. External motivational factors might be competition, relative performance, and investor expectations. Internal opportunity factors might be individual power, organizational complexity, and formal organizational controls and audits. External opportunity factors might be industry culture and norms, industry complexity, and macroeconomic factors. Internal willingness factors might be firm culture, control misalignment and social structures. External willingness factors might be industry culture and norms, and globalization. This research developed a survey instrument with questions for all five constructs in Fig. 8.1. The dependent construct, crime intention, was defined in the instrument by the following vignette story: You are the regional executive for Norwegian Telecom Inc. that operates mobile telephone networks in Africa. Your main task is to acquire new telecommunication licenses in several corrupt countries. You have been working on obtaining new telecommunication licenses for many years, but without any success. What will you do now?

Determinants of White-Collar Crime Intention

165

This vignette story is similar to a real story that happened in 2012. The corruption case involved the daughter of President Islam Karimov of Uzbekistan, Gulnara Karimova, accepting bribes from several foreign telecom companies in exchange for contracts to do business within Uzbekistan. One of the companies was VimpelCom partially owned by the Norwegian telecom corporation Telenor. Telenor executives had to quit after damning report into VimpelCom stake (Deloitte 2016). After the vignette story, the questionnaire had two items: A. You tell the headquarters back home in Norway that it will take even more years before you eventually succeed. You continue to apply for telecom licenses in the usual way in several corrupt African countries. B. You seek contact with some consultants who have good relationships with those in power in several corrupt African countries. You give the consultants several million contracts to succeed for you. The scale in the questionnaire went from 1 (I would certainly not do that) to 6 (I would certainly do that). Response to A was subtracted from response to B as a calculation of crime intention. It was expected that for most responses this number would be negative, meaning that respondents would generally be more inclined to do A than B. Four independent variables in Fig. 8.2 were measured on a scale from disagree to agree:

Investigative journalists’ crime signal detection ability Offense victims’ crime signal detection ability Bankruptcy lawyers’ crime signal detection ability Internal auditors’ crime signal detection ability Tax clerks’ crime signal detection ability Bank clerks’ crime signal detection ability External auditors’ crime signal detection ability Police officers’ crime signal detection ability Stock exchange clerks’ crime signal detection ability Fig. 8.2  Research model for respondents’ perceptions of detection abilities

Concerns about white-collar crime

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166

Table 8.4  Multiple regression results for determinants of white-collar crime intention (Constant) Convenience Orientation Financial Motive Organizational Opportunity Personal Willingness

B −6.679 .404 .406 .500

Std. Err. 1.601 .167 .192 .150

Beta .231 .207 .309

t −4.171 2.425 2.118 3.334

Sig. .000 .017 .037 .001

−.379

.159

−.227

−2.388

.019

1 . Financial motive: Money can make it easier for me to reach my goals. 2. Organizational opportunity: It is simple for a procurement manager to accept bribes. 3. Personal willingness: I will never deviate from what is acceptable. 4. Convenience orientation: It is very important for me to solve a problem as quickly as possible. Students in a bachelor class in a business school in Norway were respondents in this survey research. Early on in the spring term 2018, the questionnaire was handed out on paper to all students that were present in class. All 97 students filled in the questionnaire. The total enrollment in the course was 110 students. The questionnaire was handed out ten minutes before class end, so that students handed in their responses when they left class for that day. Regression analysis was applied to the 97 responses. Crime intention is the dependent variable, while there are four dependent variables: financial motive, organizational opportunity, personal willingness, and convenience orientation. Convenience orientation can be considered a control variable that implicitly influences the other three independent variables. In the multiple regression analysis, the combined explanatory power of four independent variables explain more than half of the variance in crime intention as the regression coefficient R is .550, while the R square is .302, and the adjusted R square is .268. The multiple regression equation is significant at .000 with an F-value of 8.871. Table 8.4 shows that all four determinants of white-collar crime intention are significant. While organizational opportunity is significant already at p