The Routledge International Handbook of the Crimes of the Powerful 9780415741262, 9781315815350

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The Routledge International Handbook of the Crimes of the Powerful

Across the world, most people are well aware of ordinary criminal harms to person and property. Often committed by the powerless and poor, these individualized crimes are catalogued in the statistics collected annually by the FBI and by similar agencies in other developed nations. In contrast, the more harmful and systemic forms of injury to person and property committed by powerful and wealthy individuals, groups, and national states are neither calculated by governmental agencies nor annually reported by the mass media. As a result, most citizens of the world are unaware of the routinized “crimes of the powerful,” even though they are more likely to experience harms and injuries from these types of organized offenses than they are from the atomized offenses of the powerless. Research on the crimes of the powerful brings together several areas of criminological focus, involving organizational and institutional networks of powerful people that commit crimes against workers, marketplaces, taxpayers, and political systems, as well as acts of torture, terrorism, and genocide. This international handbook offers a comprehensive, authoritative, and structural synthesis of these interrelated topics of criminological concern. It also explains why the crimes of the powerful are so difficult to control. Edited by internationally acclaimed criminologist Gregg Barak, this book reflects the state of the art of scholarly research, covering all the key areas including corporate, global, environmental, and state crimes. The handbook is a perfect resource for students and researchers engaged with explaining and controlling the crimes of the powerful, domestically and internationally. Gregg Barak is Professor of Criminology and Criminal Justice at Eastern Michigan University and the former Visiting Distinguished Professor in the College of Justice & Safety at Eastern Kentucky University. In 2003 he became the 27th Fellow of the Academy of Criminal Justice Sciences and in 2007 he received the Lifetime Achievement Award from the Critical Division of the American Society of Criminology. Barak is the author and/or editor of 20 books, including the award-winning titles Gimme Shelter: A Social History of Homelessness in Contemporary America (1991) and Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding (2012). His most recent book is the 4th edition of Class, Race, Gender, and Crime: The Social Realities of Justice in America (2015) with Paul Leighton and Allison Cotton.

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With a truly global focus – between the contributors and the focus of almost 40 chapters, this book spans five continents – Gregg Barak’s edited text brims with authority and insight. As the crimes of the powerful are forensically and variously dissected, injustice and anger bubble consistently close to the surface. If this masterful, cutting-edge call for radical change does not help to shift the gaze of criminology upwards as well as down onto the usual suspects, we may as well all give up . . . Steve Tombs, Professor of Criminology, The Open University, UK This text explores, with remarkable coverage, dexterity and precision, that most universal and enduring of contradictions in capitalist social orders: How being ripped off, mutilated and killed by a wealthy class of well-dressed people in shiny offices is generally ignored, pardoned and indeed often encouraged by democratic systems of law and justice. David Whyte, Professor of Socio-legal Studies, University of Liverpool, UK This is an excellent collection that defines the state of the art in scholarship on state and corporate crime. It is a must-read for graduate students and scholars who have an interest in crimes of the powerful and is sure to make an important contribution to research in this area. Peter Iadicola, Professor and Chairperson, Department of Sociology, Indiana University – Purdue University, USA

The Routledge International Handbook of the Crimes of the Powerful

Edited by Gregg Barak

First published 2015 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Simultaneously published in the USA and Canada by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2015 selection and editorial material, Gregg Barak; individual chapters, the contributors The right of Gregg Barak to be identified as author of the editorial material, and of the individual authors as authors of their contributions, has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Routledge international handbook of the crimes of the powerful / edited by Gregg Barak. — First Edition. 1. Organized crime. 2. Political corruption. 3. Corporations—Corrupt practices. 4. White collar crimes. 5. Power (Social sciences) 6. Elite (Social sciences) I. Barak, Gregg, editor. HV6441.R688 2015 364.1—dc23 2014045769 ISBN13: 978-0-415-74126-2 (hbk) ISBN13: 978-1-315-81535-0 (ebk) Typeset in Bembo by Apex CoVantage, LLC

Contents

List of illustrations List of contributors Preface Acknowledgements Introduction: on the invisibility and neutralization of the crimes of the powerful and their victims Gregg Barak

xii xiii xix xx

1

PART I

Culture, ideology and the crimes of the powerful

37

1 Crimes of the powerful and the definition of crime David O. Friedrichs

39

2 Operationalizing organizational violence Gary S. Green and Huisheng Shou

50

3 Justifying the crimes of the powerful Vincenzo Ruggiero

62

4 Corporate criminals constructing white-collar crime: or why there is no corporate crime on the USA Network’s White Collar series Carrie L. Buist and Paul Leighton

73

PART II

Crimes of globalization 5 Capital and catharsis in the Nigerian petroleum extraction industry: lessons on the crimes of globalization Ifeanyi Ezeonu

87

89

vii

Contents

6 State and corporate drivers of global dysnomie: horrendous crimes and the law Anamika Twyman-Ghoshal and Nikos Passas

105

7 Truth, justice and the Walmart Way: consequences of a retailing behemoth Lloyd Klein and Steve Lang

121

8 Human trafficking: examining global responses Marie Segrave and Sanja Milivojevic

132

9 Globalization, sovereignty and crime: a philosophical processing Kingsley Ejiogu

144

PART III

Corporate crimes

155

10 Corporate crimes and the problems of enforcement Ronald Burns

157

11 Corporate-financial crime scandals: a comparative analysis of the collapses of Insull and Enron Brandon A. Sullivan 12 Corporate social responsibility, corporate surveillance and neutralizing corporate resistance: on the commodification of risk-based policing Hans Krause Hansen and Julie Uldam 13 Walmart’s sustainability initiative: greening capitalism as a form of corporate irresponsibility Steve Lang and Lloyd Klein

172

186

197

PART IV

Environmental crimes

209

14 Climate change, ecocide and the crimes of the powerful Rob White

211

15 Privatization, pollution and power: a green criminological analysis of present and future global water crises Bill McClanahan, Avi Brisman and Nigel South

viii

223

Contents

16 Unfettered fracking: a critical examination of hydraulic fracturing in the United States Jacquelynn A. Doyon and Elizabeth A. Bradshaw

235

17 The international impact of electronic waste: a case study of Western Africa Jacquelynn A. Doyon

247

PART V

Financial crimes

263

18 Bad banks: recurrent criminogenic conditions in the US commercial banking industry Robert Tillman

265

19 Financial misrepresentation and fraudulent manipulation: SEC settlements with Wall Street firms in the wake of the economic meltdown David Shichor 20 A comprehensive framework for conceptualizing financial frauds and victimization Mary Dodge and Skylar Steele

278

289

PART VI

State crimes

303

21 Transnational institutional torturers: state crime, ideology and the role of France’s savoir-faire in Argentina’s Dirty War, 1976 to 1983 Melanie Collard

305

22 Para-state crime and plural legalities in Colombia Thomas MacManus and Tony Ward

320

23 Australian border policing and the production of state harm Michael Grewcock

331

24 Gendered forms of state crime: the case of state perpetrated violence against women Victoria E. Collins

348

ix

Contents

PART VII

State-corporate crimes

361

25 Blacking out the Gulf: state-corporate environmental crime and the response to the 2010 BP oil spill Elizabeth A. Bradshaw

363

26 Collaborate state and corporate crime: fraud, unions and elite power in Mexico Maya Barak

373

27 Mining as state-corporate crime: the case of AngloGold Ashanti in Colombia Damián Zaitch and Laura Gutiérrez Gómez

386

PART VIII

State-routinized crimes

399

28 Organized crime in a transitional economy: the resurgence of the criminal underworld in contemporary China Peng Wang

401

29 Institutionalized abuse of police power: how public policing condones and legitimizes police corruption in North America Marilyn Corsianos

412

30 The appearances and realities of corruption in Greece: the cases of MAYO and Siemens AG Effi Lambropoulou

427

PART IX

Failing to control the crimes of the powerful

441

31 Postconviction and powerful offenders: the white-collar offender as professional-ex Ben Hunter and Stephen Farrall

443

32 Business ethics as a means of controlling abusive corporate behavior Jay P. Kennedy 33 Ag-gag laws and farming crimes against animals Doris Lin

x

455 466

Contents

34 Genocide and controlling the crimes of the powerful Augustine Brannigan

479

35 Controlling state crime and alternative reactions Jeffrey Ian Ross

492

36 Hacking the state: hackers, technology, control, resistance, and the state Kevin F. Steinmetz and Jurg Gerber

503

37 (Liberal) democracy means surveillance: on security, control and the surveillance techno-fetish Dawn L. Rothe and Travis Linnemann

515

38 Limiting financial capital and regulatory control as non-penal alternatives to Wall Street looting and high-risk securities frauds Gregg Barak

525

Author Index Subject Index

537 543

xi

Illustrations

Figures 6.1 18.1 20.1 20.2 23.1 23.2 23.3 23.4 23.5 27.1

Analytical framework Bank failures and median loss, by year of failure, 1980 to 2011 Social construction framework The cyclic nature of the SCF groups Immigration detention population from 1990 to 31 July 2014 Average days in immigration detention centres in Australia from 2012 to 31 July 2014 Children in immigration detention in Australia from 2012 to 31 July 2014 Drawing by child in detention on Christmas Island Nauru protest, 29 September 2014 Number of granted mining titles (TMOs) in Colombia, 2000 to 2010

107 269 296 298 335 336 337 339 343 392

Tables 4.1 14.1 18.1 20.1

xii

Perpetrator, crime and victim in each episode of the first two seasons of White Collar Commodification of nature Characteristics of failed/sued banks and comparison group banks Financial fraud and sentencing

76 215 272 291

Contributors

Maya Barak is a doctoral candidate in the Department of Justice, Law, and Criminology at

American University with a dual concentration in the sociology of law and criminology, and overall emphasis on qualitative methods. Her research brings together the topics of law, deviance, immigration, and power utilizing interdisciplinary approaches that span the fields of Criminology and Criminal Justice, Law and Society, Sociology and Anthropology. Elizabeth A. Bradshaw is an Assistant Professor of Sociology at Central Michigan University and specializes in the area of state and corporate criminality. She received her PhD in Sociology from Western Michigan University in 2012. Her dissertation examined the causes of the Deepwater Horizon explosion and the ensuing response to the 2010 Gulf of Mexico oil spill as a form of state-corporate environmental crime. Augustine Brannigan received his doctoral training in Sociology at the University of Toronto, and graduated in 1978. He taught for two years at the University of Western Ontario before joining the faculty of sociology at the University of Calgary in 1979 where he taught criminology, criminal justice, social psychology and social theory until his retirement in 2012. He has appeared as an expert witness in criminal trials cases involving obscenity law and prostitution. Avi Brisman is an Assistant Professor in the School of Justice Studies at Eastern Kentucky Uni-

versity in Richmond, KY (USA). He has published articles in Contemporary Justice Review, Crime, Law and Social Change, Crime Media Culture, Journal of Contemporary Criminal Justice, Race and Justice, Theoretical Criminology, and Western Criminology Review, among other journals. Carrie L. Buist is an Assistant Professor of Criminology at the University of North Carolina, Wilmington. She received her PhD from Western Michigan University in Sociology with concentrations in Criminology and Gender and Feminism. Her primary areas of research are women police officers, LGBT issues, gender, feminist theory, and feminist criminology. Her most recent articles have been published in the Journal of Culture, Health & Sexuality (with Emily Lenning), and in the Journal of Crime and Justice (with Susan M. Carlson and Elizabeth A. Bradshaw). Ronald G. Burns is a Professor in the Department of Criminal Justice at Texas Christian University. His recent books include Policing: A Modular Approach; Critical Issues in Criminal Justice; Multiculturalism in the Criminal Justice System (with R.H. McNamara); and Environmental Law, Crime and Justice: An Introduction (with M.J. Lynch and P.B. Stretesky). His publications focus on policing issues, corporate deviance, and environmental crimes.

xiii

Contributors

Melanie Collard is a researcher at the International State Crime Initiative (ISCI) and also teaches Criminology at the London School of Economics and Birkbeck. She completed her Law Degree at the Université de Liège, Belgium. She also holds an LLM in Public International Law from Queen Mary University of London and an MA in Criminology and Criminal Justice as well as a PhD in Law & Criminology from King’s College London. Victoria Ellen Collins is an Assistant Professor in the School of Justice Studies at Eastern

Kentucky University. She recently completed her dissertation where she examined the processes involved in creating, implementing, and enforcing policy on maritime piracy. Some of her recent publications have appeared in journals such as International Criminal Law Review, Critical Criminology, Contemporary Justice Review, and The Australian and New Zealand Journal of Criminology. Marilyn Corsianos is Professor of Criminology and Sociology at Eastern Michigan University. She is the author of The Complexities of Police Corruption: Gender, Identity and Misconduct (Rowman & Littlefield, 2012), the CHOICE Outstanding Academic Title Policing and Gendered Justice (University of Toronto Press, 2009), co-author (with Walter S. DeKeseredy) of Pornography and Violence Against Women (Elsevier, 2015), and co-editor of Interrogating Social Justice (Canadian Scholars’ Press, 2000). Mary Dodge is a full Professor at the University of Colorado, Denver in the School of Public

Affairs. She earned her PhD in 1997 in Criminology, Law and Society from the School of Social Ecology at the University of California, Irvine. Her articles have appeared in the American Journal of Criminal Justice, Women & Criminal Justice, Contemporary Issues in Criminology, International Journal of the Sociology of Law, and The Prison Journal, among others. Her book, Women and White-collar Crime, was published in 2009. Jacquelynn A. Doyon is an Assistant Professor in the School of Criminal Justice at Grand Valley State University. Her most current research projects include such topics as the illegal trafficking of electronic waste, international policies and procedures on global warming, and the controversial practice of hydraulic fracturing (“fracking”). Kingsley Ejiogu is an Assistant Professor of Criminal Justice at the University of Maryland

Eastern Shore. He received his PhD in 2012 from Texas Southern University. His teaching and research interests are in comparative criminal justice policy and governance of criminological space, geospatial intelligence systems, and terrorism. Ifeanyi Ezeonu is an Associate Professor of Sociology and Criminology at Brock University,

Ontario, Canada. He is a graduate of the Universities of Cambridge, Leeds, and Toronto. His current research interests include critical gang studies, critical security studies, international political economy, and contemporary African Diaspora. Stephen Farrall is Professor of Criminology at Sheffield University, UK. His research has focused

on the fear of crime (especially how best to measure it), why people stop offending, middle-class crimes, and crime histories. David O. Friedrichs is Distinguished Professor of Sociology and Criminal Justice at the University of Scranton (Pennsylvania, USA). He is author of Trusted Criminals: White Collar Crime xiv

Contributors

in Contemporary Society 4e (Cengage 2010) and Law in Our Lives: An Introduction 3 edn (Oxford University Press 2012) and editor of State Crime (Ashgate 1998). Jurg Gerber is a Professor in the Department of Criminal Justice and Criminology at Sam

Houston State University, Texas. Laura Gutiérrez Gómez is a criminology PhD student at the University of Cambridge (UK). After studying an LLB in European Law and an MA in Criminology (cum laude) in the Netherlands, she wrote an MA dissertation (Utrecht University) on state-corporate harm in the case of AngloGold Ashanti in Colombia. Gary S. Green retired in 2014 as Professor of Government at Christopher Newport University. He has written on a wide variety of topics in criminology, especially in the area of wrongdoing associated with non-criminal purpose occupations. He lives in the Midwest enjoying his family and the outdoors. Michael Grewcock teaches criminal law and criminology in the Faculty of Law at UNSW,

Australia, Sydney. He is the author of Border Crimes: Australia’s War on Illicit Migrants (2009) and a number of articles and book chapters on contemporary border policing. He is a member of the Editorial Board of the State Crime journal. Hans Krause Hansen is Professor of Governance and Culture Studies at Copenhagen Business School. Originally trained in political science and Latin American studies, his current research revolves around the role of private actors in global governance, anti-corruption practices in international business, the surveillance infrastructures and practices of transparency regimes. He has published extensively in international peer-reviewed journals.He is a member of the PRME Working Group on Anti-Corruption and serves as reviewer for several international journals. Ben Hunter is Senior Lecturer in Criminology at the University of Greenwich, UK. His research interests focus on desistance from crime, white-collar crime and the contributions of existential philosophy to understandings of offenders’ lives. Jay P. Kennedy is currently a doctoral candidate in the School of Criminal Justice at the Uni-

versity of Cincinnati, where he is a Graduate School Dean’s Distinguished Fellowship recipient, and a Yates Scholar. His research focuses on issues of deviance within for-profit organizations, including the study of employee theft, multi-level antecedents of corporate crime, and ethical business decision making. Lloyd Klein is an Adjunct Associate Professor at Hostos Community College, CUNY. His research interests generally focus on criminal justice policy issues. Prior publications include work on community corrections, the impact of sex offender legislation, white-collar crime, and political surveillance. He is also the author of a book on consumer credit and the impact of legislation regulating the credit card industry. Effi Lambropoulou is a Professor of Criminology in the Department of Sociology at Panteion

University of Social and Political Science, Athens, Greece. Her main research, publication and teachings involve police-policing, corruption, illegal markets, and the ecology of crime. She is also a visiting fellow at the University of Cambridge. xv

Contributors

Steven Lang received his PhD in Sociology from the CUNY Graduate Center and is an Associ-

ate Professor at LaGuardia Community College. He has done research and written on the political ecology of global urban waterfronts. Currently, he is doing research on urban regeneration strategies in global cities. Paul Leighton is a Professor in the Department of Sociology, Anthropology and Criminology at Eastern Michigan University. He received his PhD from the American University in Sociology/ Justice. He is a past President of the Board of SafeHouse, the local shelter and advocacy center for victims of domestic violence and sexual assault. He is co-author of The Rich Get Riches and the Poor Get Prison: A Reader. Doris Lin is an animal rights attorney, Director of Legal Affairs for the Animal Protection League of New Jersey, and a former chair of the New Jersey State Bar Association’s Animal Law Committee. She holds a BS in Applied Biological Sciences from the Massachusetts Institute of Technology and a JD from the University of Southern California Law Center. Travis Linnemann is Assistant Professor of the School of Criminal Justice at Eastern Kentucky University. His research concerns the cultural politics of drug control and the reciprocities between the “war on drugs” and “war on terror.” His work has appeared in the academic journals Critical Criminology, Theoretical Criminology, Crime Media Culture, and British Journal of Criminology among others. Thomas MacManus is a Postdoctoral Research Fellow at the International State Crime Initiative (ISCI, statecrime.org) and is based at King’s College London’s Dickson Poon School of Law. He was admitted to the New York State Bar in 2004 and the Role of Solicitors of Ireland in 2008. His current research focuses on civil society, especially in Burma and Colombia. He is Joint Editor of Amicus Journal and is on the Editorial Board of the journal State Crime. Bill McClanahan is a graduate student in the School of Justice Studies at Eastern Kentucky University. His research interests include green criminology, cultural criminology, and peacemaking criminology. Sanja Milivojevic is a Lecturer in Criminology at University of New South Wales, School of

Social Sciences. Her research interests are trafficking in people and transnational crime, borders and mobility, security technologies, surveillance and crime, sexting, gender and victimisation and international criminal justice and human rights. Her latest book ‘Sex Trafficking: International Context and Response (co-written with Marie Segrave and Sharon Pickering) has been published by Willan. Nikos Passas is Professor of Criminology and Criminal Justice at Northeastern University, and co-Director of the Institute for Security and Public Policy. He is also Law Professor at Case Western Reserve University, Programme Consortium Member and Faculty at the International Anti-Corruption Academy, Vienna, Anti-Corruption Course Director at the Ethics and Compliance Officer Association (ECOA), and INSPIRE Fellow at Tufts University. Jeffrey Ian Ross is a Professor in the School of Criminal Justice, College of Public Affairs, and a Research Fellow of the Center for International and Comparative Law at the University of Baltimore. His work has appeared in many academic journals and books, as well as popular media.

xvi

Contributors

He is the author, co-author, editor, or co-editor of several books, including most recently The Encyclopedia of Street Crime in America (Sage, 2013). Dawn L. Rothe is an Associate Professor of Criminology at Old Dominion University. She is the author or co-author of seven books, over 70 peer-reviewed articles and book chapters dealing with crimes of globalization, state-corporate crime, state crime, and the international criminal justice system. Her articles appear in such journals as International Criminal Law Review, Contemporary Justice and Criminology. Vincenzo Ruggiero is Professor and Chair of Sociology and Director of the Crime and Con-

flict Research Centre at Middlesex University. His most recent book is The Crimes of the Economy (2013). Some of his work is translated into several languages, including Spanish, French, German, Italian, Lithuanian, Turkish, Portuguese, Greek and Chinese. Marie Segrave is a Senior Lecturer in Criminology at Monash University. She has undertaken

significant research in the area of human trafficking and migrant labour exploitation in Australia and South East Asia. She is the co-author of Sex trafficking: International Context and Response (with Milivojevic and Pickering) and the editor of Human Trafficking, part of the five-volume Ashgate series on Transnational Crime. David Shichor received his PhD in Sociology from the University of Southern California and is Professor Emeritus of Criminal Justice, California State University San Bernardino. He has edited and co-edited ten books and authored and co-authored over 100 articles and book chapters in the areas of white-collar crime, penology, victimology, privatization, and criminal justice. Huisheng Shou is an Assistant Professor of Government Department, Christopher Newport

University. His research focuses on comparative and international political economy, globalization, and public policies, and his area of concentration is on China, East Asia, and developing countries. His current research projects focus on China’s welfare reform, corporate regulation and compliance, and environmental governance. His work has appeared in the Journal of Chinese Political Science and edited volumes. He was the recipient of the Best Paper Award at the 2010 annual conference of the Association of Chinese Political Science for his study on China’s welfare reform. Nigel South is a Professor in the Department of Sociology, a member of the Centre for Criminology and the Human Rights Centre at the University of Essex, and an Adjunct Professor, School of Justice, Queensland University of Technology. He has published on green criminology; drug use, health and crime; social inequalities; and theoretical and comparative criminology, and serves on the editorial boards of Critical Criminology and Deviant Behavior. Skylar Steele is a Master of Criminal Justice student at the University of Colorado Denver in the School of Public Affairs, currently working on his thesis on police ethics compared to gender and geographic influences. His research and writing interests include gender and crime, white-collar crime, policing, jurisdictional crime, and the history of criminal justice. Kevin F. Steinmetz is an Assistant Professor in the Department of Sociology, Anthropology, and Social Work at Kansas State University.

xvii

Contributors

Brandon A. Sullivan is a Doctoral Candidate in the School of Criminal Justice at Michigan State

University and research associate with the National White Collar Crime Research Consortium, the Center for Anti-Counterfeiting and Product Protection (A-CAPP), the Extremist Crime Research Consortium, and the National Consortium for the Study of Terrorism and Responses to Terrorism (START). Robert H. Tillman is Professor of Sociology at St. John’s University in New York City. He received his PhD in sociology from the University of California, Davis. He is the author and co-author of several books on white-collar crime, including Profit Without Honor: White-collar Crime and the Looting of America (Prentice-Hall, 2013, 6th edn). Anamika Twyman-Ghoshal is an Assistant Professor of Sociology and Criminology at Stonehill

College in Easton, MA. Her main research interests include governance, globalization and how these affect transnational crime, white-collar crime, corruption, terrorism and maritime piracy. Julie Uldam is Assistant Professor at Copenhagen Business School, conducting her postdoctoral research in collaboration with Free University of Brussels (VUB) and London School of Economics (LSE). Her work has been published in peer reviewed journals, including International Journal of Communication, Policy and Internet, Sociology Compass and International Journal of Electronic Governance. Peng Wang is Assistant Professor of Criminology at the University of Hong Kong. His research

interests include organized crime, mafias, police corruption, and the crime–terror nexus. He is currently working on a book focusing on the Chinese mafia. Tony Ward is both a lawyer and criminologist with a special interest in state crime. He is a Reader in Law at the University of Hull and has been teaching at the University of Hull Law School since 2004. He is Co-Director of the International State Crime Initiative (ISCI, statecrime.org), one of the editors of the journal State Crime, a member of the Editorial Board of the British Journal of Criminology, and is a member of the Steering Committee of the Crime Studies Network. Rob White is Professor of Criminology in the School of Social Sciences at the University of Tasmania, Australia. He has published extensively in the areas of youth studies and criminology. Among his recent books are Environmental Harm: An Eco-Justice Perspective (Policy Press, 2013) and Climate Change from a Criminological Perspective (Springer, 2012). Damián Zaitch is Senior Lecturer at the Willem Pompe Institute for Criminal Law and Crimi-

nology, Utrecht University. He has researched and published on social control and terrorism, police cooperation in Europe, critical criminology, and for the past 15 years on organized crime, drug trafficking and drug policies in the Netherlands and Latin America. He was involved as senior researcher in the LAR project, financed by the Dutch Scientific Council (NWO) on land use change, socio-environmental harm, and human rights violations in Brazil and Colombia.

xviii

Preface

Beginning at the turn of the fourteenth century with the dawn of capitalism and the early formations of primitive capital and up through the contemporary epoch of advanced capitalism with its formations of global financial capital, the world’s expanding inequality and the appropriation, privatization, and circulation of accumulated capital has continuously serviced an economy based on the legal rights of private property and material wealth, on the one hand, and on alienation and dispossession of social labor from commodity production and exchange for the individual and the masses, on the other hand. As for the crimes of the powerful, dependent as they are on both extra-legal activities and legally sanctioned market trading to accomplish exponential capital growth, these illegal pursuits are typically committed by corporate and state entities and the arrangements and agreements between them. As a consequence, the crimes of the powerful remain primarily beyond incrimination. The Routledge International Handbook of the Crimes of the Powerful brings together an investigation into the following: • • • • • • •

Crimes of globalization Corporate crimes Environmental crimes Financial crimes State crimes State-corporate crimes State-routinized crimes.

While there are a number of books, anthologies, and/or handbooks devoted to these substantive areas, this volume represents a major project aimed at tackling and reframing the separate and yet interrelated worlds of these crimes of the political economy, social control, and analytical inquiry into the crimes of the powerful. In providing a diverse collection of original essays on the full range of the crimes of the powerful, this handbook not only accounts for and examines the similarities and differences in the perpetration and victimization of, and reaction to, these harmful and injurious actions or omissions, but it also establishes a basis for evaluating various means of addressing the adverse or unfavorable environmental and social conditions brought about by the crimes of the powerful.

xix

Acknowledgements

I would like to thank the other 49 contributors for participating in this international project on the crimes of the powerful that has yielded befittingly a very powerful handbook. I would also like to thank Eastern Michigan University for release time from teaching in the fall of 2014 so that I could devote my undivided attention to the editing and writing duties required by this endeavor. In the context of this release time, there was one particular 75-minute discussion that I had with three colleagues from the Department of Sociology, Anthropology, and Criminology at EMU on the meaning of or what exactly constitutes the “crimes of the powerful.” So I would like to thank Kevin Karpiak, Anders Linde-Laursen, and Robert Orrange for that conversation in the fall of 2013, which stayed with me throughout this project and helped me to shape the delineation of the crimes of the powerful as part of my introduction and overview for this international handbook. Finally, I would like to thank Heidi Lee, Editorial Assistant in Criminology at Routledge Books, for her shepherding of this project from start to end. Gregg Barak

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Introduction On the invisibility and neutralization of the crimes of the powerful and their victims Gregg Barak

In the developed political economies of the world, most people are well aware of ordinary criminal harms to person and property. Often committed by the powerless and/or poor, these individualized crimes are not only catalogued in the statistics collected annually by the FBI in the United States and by similar agencies in other developed political economies, but the data as well as visual images of these crimes are also dispersed to the public through the news media. In addition, there are television dramas and full-length motion pictures engrossed with “street” crimes. By contrast, the more harmful and serious forms of injury to person and property committed by powerful and/or wealthy groups or organizations and by governments or states are neither counted officially by any managerial agencies nor regularly reported on by the news media. And while the public has access to a handful of motion pictures and fewer made for television dramatic series focusing on “suite” crimes, the offenses are restricted to organized crime and the offenders to professional criminals. As a result, though most citizens of the world and their properties are more likely to experience victimization from the organizational and institutional offenses of the powerful than from the erratic and atomized offenses of the powerless, most people are still concerned about the latter and are in the dark about the former. On the other hand, most critical criminologists are aware of the routinization of the crimes of the powerful and they are mindful that people are increasingly at greater risk for harm or injury from these criminals. And yet, our lack of knowledge of the crimes of the powerful compared to our knowledge of the crimes of the powerless persists. In part, as many chapters in this handbook document, the crimes and victims of the powerful remain relatively invisible thanks to the concerted efforts of lawyers, governments, and corporations to censor or suppress these disreputable pursuits from going viral when they succeed. This absence of knowledge also continues, in part, because the discipline of criminology spends only 5 percent of its time researching, teaching, and writing about “white-collar” crime while devoting 95 percent of its time to “blue-collar” crime (McGurrin et al. 2013). Even this 5 percent may be inflated because much of what passes for researching and teaching about “white-collar” crime (i.e., embezzlement, identity theft, insurance fraud) not only has little in common with the crimes of the powerful, but also are actually crimes against the powerful. In these cases, chronically asymmetrical relations of popular knowledge and scholarly inquiry are deeply embedded in the cultural, economic, and political institutions that both influence and transcend academic studies of criminology. 1

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Historically, the crimes of the powerful have managed to avoid or escape criminalization and stigmatization. Time and again, these powerful criminal activities have been conventionalized or neutralized by way of alliances, negotiations, and justifications that undermine the moralizations of these offenses (Carson 1979; Prins 2014; Ruggiero 2013). Concurrently, the legal reactions to as well as the ideological rationalizations of elite offenses by capitalist state actors and other defenders of the status quo contribute to this demoralization of the crimes of the powerful and to the denial of victimhood and liability for those harmed or injured. This tendency of state-criminal enforcement to concede to the needs of the organizationally powerful and to capital accumulation is nothing new. Two illustrations, some 150 years apart, are the habitual crimes of large manufacturers in nineteenth-century England and the epidemic of securities frauds by major financial institutions in the United States and elsewhere early in the twenty-first century. In each set of circumstances, there were criminal laws in place to impose negative sanctions upon these habitual or reoccurring offenses. In the case of the daily victimization of manufacturing workers, there were laws to avert their wretched working conditions. Nevertheless, impoverished factory workers, adults and children alike, in locations such as Manchester, Leeds, and Birmingham were subject to flogging, starvation, and 18-hour workdays. In response, the biggest manufacturers regularly received immunity for their routine violations of laws prohibiting mistreatment of their employees (Harvey 2014). At the turn of this century, the recent wave of institutionalized crimes by the financial services industry in the US and elsewhere, which precipitated the Wall Street implosion of 2008, were committed with assistance from the federal deregulation of certain securities transactions that were previously criminalized. However, there were other laws in place to protect consumers or investors and to criminally punish the world’s largest financial firms for failing to engage in due diligences or for trafficking in toxic securities masquerading as triple AAA certified investments. As most informed people are now aware, these and other systemic criminal violations throughout the financial services industry created a housing bubble and crash and a subsequent global recession, which resulted in the loss of trillions of dollars in capital and the victimization of hundreds of millions of people worldwide. And yet, not one of those financial entities or the principal agents responsible for these high-stakes securities frauds was ever subject to criminal liability or penalty (Barak 2012). In each of these business-as-usual crime scenarios, the lack of criminal prosecution of the routinized illegal behaviors have been justified or rationalized away because of the necessity of capitalizing accumulation, enhancing the interests of the capitalist state, and elevating the national well-being of all citizens. These social relations of criminal non-enforcement are reflective of a legal order where the capitalist state not only possesses the monopoly over the legitimate use of force and violence, but also the sovereignty over the currency and the law. In addition, the capitalist state possesses the power to tax and to redistribute incomes and assets as well as the regulatory authority over other institutions, such as education, health care, and criminal justice. Most importantly, the capitalist state has ultimate power or eminent domain over private and public property, as these are most often deferential to the needs of capital accumulation and reproduction. Meanwhile, the interests of the capitalist state are not one and the same as the interests of capital, and yet capitalist state apparatuses play key supportive roles in the management of capital vis-à-vis the collaboration of their departments of treasury and their central banks constituting what David Harvey labels as the “state – finance” nexus. Stated somewhat differently, the capitalist state is not an instrument of capital that automatically or mechanistically absolves the crimes of the powerful. Rather, the capitalist state apparatus represents a complex network of bureaucracies and vested interests that are loosely affiliated and whose discretionary power is executed in a bunch of legally contradictory ways that are increasingly subordinate to but not dictated by capital. 2

Introduction

Let us take an example involving the relationship between illegal tax evasion, wealth inequality, and the policies of austerity that invisibly hurt average people globally in the name of national indebtedness. As Gabriel Zucman, a London School of Economics assistant professor and protégé of Thomas Piketty as well as the 2013 author of the bestselling The Missing Wealth of Nations argues, the idea of the richest nations’ indebtedness is an illusion caused by tax havens that he estimates hide US$7.6 trillion, or 8 percent, of the world’s personal financial wealth. Based on his calculations, “If all of this illegally hidden money were properly recorded and taxed, global tax revenues would grow by more than $200 billion a year” (Leslie 2014). And these numbers do not include the larger corporate tax avoidance schemes where Zucman calculates that 20 percent of all corporate profits in the United States are shifted offshore, depriving the government of one-third of corporate tax revenues, effectively dropping the corporate tax rate to only 15 percent. Zucman argues further that if these offshore assets were properly measured, “Europe would be a net creditor, and American indebtedness would fall from 18 percent of gross domestic product to 9 percent” (Leslie 2014). Keep in mind that since the less wealthy continue to pay their taxes, the prevailing tax-evasive practices deepen wealth inequality as well as weaken consumer buying power. These tax-avoiding schemes also skew economic statistics, hamper the private and public sectors from managing the economy or making social policy, erode respect for the law, discourage job creation, foster corruption, and accumulate private capital by rewarding indiviudals and corporations for sheltering money overseas rather than reinvesting it domestically in infrastructure and economic development. Hence, victims of the financial crimes of the powerful (i.e., “mortgage foreclosures,” “control frauds,” “bankruptcies”) often remain hidden, unrecognized, and out of sight not only due to a lack of criminal enforcement, but also because various tax accounting schemes that during much of the twentieth century were offenses in the US are now commonly practiced by multinational corporations. These formerly prohibited tax-avoiding or -dodging schemes were decriminalized during the Clinton and Bush II administrations. Under Mr. Obama, these and other unspecified Wall Street practices have been rhetorically railed against by the President but left essentially untouched by the law. For example, there are damages or loss of revenues incurred today from other state-facilitated forms of legalized corporate tax abuse, such as the practices of “synthetic cash repatriation” and “corporate inversions” that allow untaxed foreign profits to be used to pay the costs of domestic operations or to be reinvested in both stocks and US treasury bonds (McKinnon and Paletta 2014).

A unifying framework for studying the crimes of the powerful As part of the institutional crises and the changing social and political landscapes of the 1960s and 1970s, the study of the “crimes of the powerful” or what had previously been known as those illegalities committed by “white-collar” criminals shifted to illegalities committed by private business organizations or corporations and state institutions. As Alan Block and William Chambliss (1981: 2) wrote in Organizing Crime about the changing discipline at the time: “criminology underwent a ‘paradigm revolution’” with the “emergence of ‘the new criminology’” (Taylor et al. 1973) and “the study of the ‘crimes of the powerful’” (Pearce 1976), which included those “crimes of nation states, through the illegal and immoral acts of large corporations, to misuses of police and political office by local, state, and national power holders.” As part of a newly radical or critical paradigm, investigators were free to examine the crimes of power and privilege (Krisberg 1975) as well as the institutional abuses of racism, sexism, imperialism, neocolonialism, and capitalism (Schwendinger and Schwendinger 1970). This paradigmatic shift allowed for entertaining 3

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the idea that these institutional arrangements were criminogenic. Similarly, Block and Chambliss (1981: 10) were writing about why: criminal law and criminal behavior are best understood not in terms of customs, norms, or value-conflict and interest-group activity, but as directly linked to efforts by the state to create laws as a resolution to dilemmas created by conflicts that develop out of the basic contradictions in the political economy. Some 25 years later Crimes of the Powerful: A Reader appeared with a compilation of 45 extracts from previously published material referring to crimes committed by state institutions and private business organizations and corporations with such substantive section headings as “State, violence, crime: States of exception”; “Partners in crime: The protection racket state”; “Capitalism and the crimes of the powerful: The slow sacrifice of humanity”; and “Law and the corporation: Structures of irresponsibility.” As its editor David Whyte (2008) underscored, the study of the crimes of the powerful is “not merely about crime; it is really about power” and the institutionally powerful who have become “the central agents of power in contemporary societies” (p. 3). In everyday terms, the crimes of the not so powerful and the very powerful are inclusive of a panoply of criminal and civil offenses that range from the more mundane thievery, swindling, corruption, usury, predation, violence, and coercion, to the more arcane practices of monopolization, manipulation, market cornering, price-fixing, and Ponzi schemes, to the more exceptional war crimes or crimes against humanity, to the more common crimes against the environment. More abstractly, the contemporary crimes of the very very powerful are where the personal and the collective intersect and upon which all species may just depend for their common survival. Finally, the seven overlapping and semi-autonomous faces of the crimes of the powerful identified below often coincide with each other, or with one or more of the other faces. In the case of environmental crimes, for example, that are harmful to the air we breathe, the water we drink, and the food we eat, these may overlap with other crimes of the powerful such as global, corporate, financial, state, state-corporate, and state-routinized. Similarly, the crimes of globalization that are responsible for much of the world’s environmental pollution and ecosystem destruction are also associated with those transnational corporations that have often abandoned traditional employment models as they rid themselves of union contracts, healthy workplaces, direct liability, and employment taxes. In their place, these multinationals substitute governmentsubsidized business models that pay excessively low wages, engage in wage theft and retaliation, and use contingent workers. In this handbook, the unifying framework for examining the crimes of the powerful is found in the dialectical expansion or contraction of harms informed, on the one hand, by the reciprocal relations of accumulating licit and illicit capital and, on the other hand, by the reciprocal relations of capitalist reproduction interloping with the systems of bourgeois legality and the apparatus of the capitalist state (see also Balbus 1974). In light of these political and economic arrangements as well as the emerging and traditional areas of criminological inquiry, this international examination of the crimes of the powerful is classified into seven clustered or overlapping sets of activities: (1) crimes of globalization, (2) corporate crimes, (3) environmental crimes, (4) financial crimes, (5) state crimes, (6) state-corporate crimes, and (7) state-routinized crimes. All of these powerful and offending categories of criminality share in common varying gradations of leverage on, opposition to, and protection from the capitalist state apparatus of crime control. To recapitulate, the crimes of the powerful are typically committed by well-established private and/or public organizations in violation of the rights of workers, women, children, taxpayers, consumers, marketplaces, political and eco-systems, and/or against the interests of equity and 4

Introduction

religiosity, ethnicity and race, and gender and sexuality. These crimes of the powerful also refer to less commonly practiced forms of injury such as those involving torture or various kinds of genocide. These human rights violations are typically known as the internationally sanctioned crimes of war and/or crimes against humanity and the peace. In a nutshell, the crimes of the powerful concern a wide range of activities that are performed illegally as well as a narrower range of illegal avoidances or omissions that frustrate or do not sustain morally bound obligations, and a plethora of harmful activities that are legally beyond incrimination or civil action. Presently, this and other up-and-coming investigations into the crimes of the powerful are propelled both by the converging material needs of geopolitical securitization and global capital, on the one hand, and by the academic studies in international, transnational, and global criminology, on the other hand (Larsen and Smandych 2008; Sheptycki and Wardak 2005; Smeulers and Haveman 2008). Accordingly, this international handbook brings together several distinctive and yet overlapping areas of criminological study that focus on those harms and injuries whose commonalities may include organizational and institutional networks of powerful people – locally, nationally, and transnationally – and whose fields of criminal endeavor and victimization are diversified and wide-ranging. Indeed, studies of the crimes of the powerful straddle a variety of disciplines and areas of academic interest. A truly multi-disciplinary field of investigation, the study of the crimes of the powerful involves the cross-fertilization of areas of knowledge and inquiry from readings in criminology, human rights, criminal justice, law, security studies, development studies, and peace and conflict studies. Hence, this collaborative project aims to articulate a way of thinking about these crimes of the powerful that extends our existing theoretical and methodological frameworks for developing a localized and globalized understanding of the complex relations of law, power, and justice both interpersonally and institutionally. Finally, this transnational examination provides a rationale for mounting a nontraditional global movement in resistance to the crimes of the powerful and for social justice not unlike the emerging global movement in resistance to ecocide and for climate justice.

Part I Culture, ideology and the crimes of the powerful This inquiry into the crimes of the powerful begins by focusing attention on the socially constructed realities of crime through the lenses of cultural, ideological, and lawful co-production. As Augustine Brannigan writes in Beyond the Banality of Evil (2013), “crime is the use of force and fraud in the pursuit of self-interest. Sometimes this is illegal, sometimes immoral, and sometimes imprudent” (p. 23). Importantly, much of criminality and particularly those crimes of the powerful are often treated as though they were “non-criminal” matters. Armed with this kind of understanding of “crime and crime control,” Part I establishes what constitutes the crimes of the powerful and conveys the economic, philosophical, political, and social interpretations that revolve around defining, excusing, and ignoring the materially harmful activities of the powerful. One take away from this conceptual overview is that in addition to the state apparatus, the people at large mostly through ignorance, also adjudicates or legitimates the acceptable costs of capitalist criminality, in the courts of public opinion. Together, the crimes of the capitalist economy, for example, become bearable because their overheads allow for and facilitate the progress, development, and survival of an economic and political system whose very legitimation and structure depends on the very same asymmetrical relations of privilege, domination, inequality, consumption, and profit (see also Ruggiero 2013). These self-interested crimes of the powerful, however, are not primarily about individualistic gains, avarice, or greed. For example, the crimes of corporate domination or state repression are mainly about trying to secure organizational and institutional goals of advancement, survival, and/or expansion (Quinney 1977; Coleman 2002). 5

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In the opening chapter of Part I, “Crimes of the powerful and the definition of crime,” David Friedrichs locates the origins of the historical bias of the field of criminology within the pioneering work of Italian criminologist Cesare Lombroso and the publication of his English translated version of Criminal Anthropology in 1897, which treated the crimes of the powerless as central to his focus. Friedrichs tries to imagine how criminology might have developed differently – perhaps with the crimes of the powerful as its central focal concern – had the 1898 publication of Political Crime by French jurist Louis Proal, with his emphasis on those crimes committed by the politically powerful, including tyranny, war, and corruption, not fallen into criminological obscurity, or had it acquired a large following of its own similar to or in place of Lombroso’s. Next, he provides a depiction of the evolution of the definition of crime in general and of whitecollar crime and the crimes of the powerful in particular. Friedrichs also addresses the limitations of mainstream conceptions of crime, examines the meanings of the crimes of the powerful, and who or what constitutes “the powerful,” distinguishing between the very powerful and the petit (or petty) powerful. Accordingly, crimes of the powerful may range from the monstrous (e.g., genocide) to the mundane (e.g., harassing peddlers). Friedrichs finishes his overview by discussing emerging conceptions of the crimes of the powerful, such as the crimes of globalization, arguing that increasingly, the application of the term “crime” to the activities of the powerful is a core attribute of an evolving criminological enterprise. In Chapter 2, “Operationalizing organizational violence,” Gary S. Green and Huisheng Shou provide a heuristic interrogation of the meaning of organizational violence. They argue that because those who study the wrongdoing of organizations have yet to agree on the concept’s constituent structure, there is a tendency to both under- and over-ascribe violent behavior to organizational agents. Accordingly, they strive both to concretize the abstract conditions of organizational violence to give the concept meaning and to deconstruct the concept in order to determine which behaviors and individuals within an organizational entity should be held accountable, liable, and/or culpable for the crimes of organizational violence. Grounded in the context of organizational decisions and previous definitions of violence, Green and Shou discuss the pros and cons for the inclusion of specific elements in operationalizing organizational violence. After raising and responding to a series of nine questions, Green and Shou proffer their own working definition of organizational violence, as an invitation to others to come forth with precise meanings of organizational violence. In Chapter 3, “Justifying the crimes of the powerful,” Vincenzo Ruggiero concentrates his theoretical investigation on the ways in which the crimes of the powerful are justified through philosophical and political arguments. He begins his analysis by departing from Sykes and Matza’s 1957 “techniques of neutralization” because these justifications or ex-post rationalizations are “precisely situated and mobilised within contexts in which notions of morality and legality are negotiated.” Ruggiero’s adopted idea of justification implies “recourse to general principles and philosophies that are presented as non-negotiable, in that they are thought of as belonging to a collective patrimony of values.” By specifically using such conceptual variables as equality, inclinations, needs, toleration, liberty, and authority, Ruggiero reveals how non-negotiable justification represents “a strategy that may or may not incorporate deceit, but mainly aims to present conducts as being beyond good and evil, to allow them to escape any sort of judgment.” Finally, Ruggiero contends that these illegalities in the name of experimentation, innovation, and the pursuit of private gains and in the wake of their devastation have always had the capacity to restructure legal, political, and ethical relationships on behalf of capital accumulation. In Chapter 4, “Corporate criminals constructing white-collar crime – or why there is no corporate crime on USA Network’s White Collar series,” Carrie L. Buist and Paul Leighton employ a content analysis of the first two seasons of the televised series White Collar. They found 6

Introduction

no programs on corporate or state crime or on respectable citizens engaging in criminal fraud of any kind. Instead, the programming revolved around high-end professional criminals, organized criminals, and elevated incidences of interpersonal crimes like murder rather than coverage of activities that more indirectly cause extensive suffering and victimization. Buist and Leighton conclude that the absence of corporate and state crime in the televised series White Collar parallels the real world where a public consciousness of the crimes of the powerful is disappearing at the very same time as corporate and state abuses of power are becoming more corrupt, harmful, and unabashed. Whether based on actual or fictional narratives, there are two award-winning and critically acclaimed fictional dramas that are also devoid of respectable citizens engaging in organizational fraud: AMC’s popular series Breaking Bad (2008–2013) that entered the Guinness World Records in 2014 as the highest rated show of all time, and Netflix’s streaming internet season House of Cards with two seasons under its belt and a third in production. These highly rated mass-mediated programs are worth talking about because they too allegedly reproduce the behavior and crimes of powerful people. Like White Collar, both Breaking Bad and House of Cards are also wanting of any crime stories delving into the world of corporate, financial, state, or global crime. Instead, their interpersonally misleading representations of powerful criminals focus attention on the personalities and pathos of a few characters that, in dealing with life’s adversities, resort to predatory crimes of drug dealing, extortion, and murder. These stirring images of the individualistic crimes of the powerfully mundane or psychopathic, not unlike the reified images of white-collar crime in White Collar, are not reflecting on the victimization of consumers or workers by powerful business organizations or of the violations of personal privacy by governmental agents or of voting rights by political gerrymandering. On the contrary, these criminal portrayals of the powerful are about evil people doing unequivocally bad things. No gray areas of wrongdoing, only shades of black and white. In the case of Breaking Bad, the story’s protagonist, a struggling high school chemistry teacher who has been diagnosed with lung cancer, turns to a life of crime to make a lot of illegal money for his family to tide them over when he is gone. He takes his expertise and uses it to cook some of the purest methamphetamine to be smoked in parts of Mexico, the USA, and Europe. Our outlaw starring character also distributes his product by way of criminal organized networks and drugdealing cartels. He also kills a few individuals up close and personal and has potential witnesses against him “rubbed out” by a network of criminal thugs behind prison walls. In the case of House of Cards, when the story’s villainous democratic House majority whip learns that he is being passed over for a Secretary of State appointment, he schemes with his equally conniving political wife to exact revenge on his congressional adversaries. On his way to positioning himself to replace a dying Vice President of the United States, he personally kills not only a fellow US representative, but also a female investigative journalist with whom he has been colluding and having sex. By the final episode of the second season, the recently appointed Vice President Frank Underwood has set his boss up to have engaged in unethical and conflict of interest financial dealings while in the oval office. Rather than face messy impeachment hearings the President resigns – and as the closing credits for the second season roll across the screen, audiences witness Underwood being sworn in as the next President of the United States.

Part II Crimes of globalization Whether one is discussing the logics of exclusivity and the social bulimia of late modernity (Young 1999) or the logics of expulsion and the elementary brutalities of advanced political economies (Sassen 2014), each of these analyses of a post-Keynesian multinational world order 7

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captures the new realities of advanced global capitalism. These social realities include neoliberal policies of austerity and privatization, the diminution of the welfare state, the immiseration and exclusion of not only the indigenous or migrant classes but also the former working and middle classes of developed societies, as well as the diminishing role of mass consumption for profits in a number of economic sectors, especially those intertwined with an increasingly driven financial globalism marked by the systemic extraction and destruction of the social, the economic, and the biosphere (Klein 2007; Harvey 2014). These crimes of scale and technology push people out or away as they contract the spaces of traditional economies and expand those of the newer corporate and transnational sectors. Crimes of globalization refer to “those demonstrably harmful policies and practices of institutions and entities that . . . by their very nature occur within a global context” (Rothe and Friedrichs 2015: 26). These crimes of globalization are powered, in part, by the policies of neoliberalism and the actions of international financial institutions such as the World Bank and the International Monetary Fund and, in part, by the competitive needs of global markets and capital accumulation. As these four sets of powerful interests interact in the commercial affairs of nations and multinational corporations, they often negatively affect the well-being of human and animal populations as well as ecosystems and natural environments. In Part II, the “global crimes” represented include violations of domestic, international, and humanitarian law and are not limited to these myriad abuses and harms: the contamination of natural resources, health complications, high rates of poverty, extreme inequalities, global dysnomie, predatory activities, toxic waste dumping, violations of sovereignty, assassinations and disappearances, forced evictions, thefts of homelands, recolonization, human trafficking, and the violations of civil rights, worker rights, women rights, and children rights. The five chapters incorporated here, individually and collectively, shed much light on the etiology of the crimes of globalization and the unsuccessful attempts to control the widespread harm and injury from these crimes. In Chapter 5, “Capital and catharsis in the Nigerian petroleum extraction industry: lessons on the crimes of globalization,” Ifeanyi Ezeonu examines the political economy of oil extraction in the Niger Delta and the harmful activities of transnational corporations, consistent with a growing body of literature that conceptualizes market-driven harms as criminogenic. Ezeonu argues that without a strong regulatory framework in Nigeria the Niger Delta region has become a perfect landscape for neoliberalism and economic activities that have been sustained at highly negative costs to the indigenous population, to healthiness, and to the natural environment. While manifesting high rates of poverty and extreme economic inequality, he also underscores how these abuses by a significant number of Western transnational corporations involved in crude oil and marketing have been aided by the various regimes of the Nigerian government. Ezeonu concludes that while Friedrichs and Friedrichs’ 2002 conception of the crimes of globalization aptly captures the Niger Delta region as a site of neoliberalism and enormous wealth and plunder, “the collaborate roles of domestic capitalists, many of whom control apparatuses of state power,” also encourages the re-contextualizing of these crimes as domestically preventable market-generated harms. In Chapter 6, “State and corporate drivers of global dysnomie: horrendous crimes and the law,” Anamika Twyman-Ghoshal and Nikos Passas examine the extent to which neoliberal policies contribute to criminogenic processes. They do so by applying the analytical framework of global anomie theory (GAT) to two different case studies, the first involving maritime piracy off the coast of Somalia, and the second involving the forced eviction of an entire people from the island of Diego Garcia to establish a US military base and the accompanying theft of this nation from the Chagossians. Among their conclusions, Twyman-Ghoshal and Passas maintain that their case studies expose not only the double standards and inexcusable abuses of power, 8

Introduction

but also explain how global policies of neoliberalism are conducive to mass victimization. And finally, that global anomie theory is useful for both understanding transnational misconduct and explaining how the processes of globalization and neoliberalism can lead to anomie, dysnomie, and horrendous crimes. In Chapter 7, the first of two harmonizing offerings that analyze Walmart, the retailing giant (see also Lang and Klein, Chapter 13), Lloyd Klein and Steve Lang, in “Truth, justice and the Walmart way: consequences of a retailing behemoth,” scrutinize the workings of Walmart and other multinational global retailing businesses, spotlighting an international business model that bypasses environmental standards, creates dangerous manufacturing conditions, and subverts workers’ rights as a strategy for importing cheaply manufactured goods primarily to the United States. After exploring the consequences of Walmart’s business model for workers and communities in several countries, including China, Mexico, and Bangladesh, they “focus their attention on the ways in which workers and communities struggle to resist Walmart’s exploitative corporate practices.” Comparatively, they also examine other countries like Germany that have successfully resisted the global expansion of Walmart and its exploitation of workers and environments alike. In Chapter 8, “Human trafficking: examining global responses,” Marie Segrave and Sanja Milivojevic provide a critical overview of the insights and contributions of both competing and complementary analyses of human trafficking. Theoretically, they take issue with the inability of these analyses to adequately capture the various forms of “gendered exploitation that occur in connection” with “the migration – labor nexus” that impacts upon those persons “least able to negotiate lawful migration and labor options in countries of transit or destination.” Pragmatically, Segrave and Milivojevic underscore that despite the extensive interdisciplinary analyses of human trafficking, there is limited empirical data to support many of the claims made and conclusions reached. The purpose of their critique is ultimately to stress the importance of attending to how we frame what is and what is not considered human trafficking in order that we take stock of both the counter-trafficking strategies available and the limitations of conceptualizing human trafficking as a crime. The final selection in Part II, “Globalization, sovereignty and crime: a philosophical processing” by Kingsley Ejiogu, nicely rounds out the readings on the crimes of globalization. From the vantage points of virtual communities and the commodification of cyberspace, Ejiogu explores the philosophical creation of innovative models of transnational crime. Underpinned by theories of egalitarian global governance, reform interchangeability, and social change with the perceived gains of global interdependence, Ejiogu observes the emergence of the metaphysical pathways to globalized crime and the criminal, evaluates the dilemma of crime as a progressive attachment to the value system of human development, and questions the use of heuristic international philosophical synergies for globalized crime governance. More specifically, Ejiogu grounds his examination of the evolving values of globalization in relation to the transnational crimes of terrorism and human rights abuses at the meeting point of sovereign boundaries. He argues that the transnational development or global pathways of these crimes follow the new borderless world of the internet. Finally, Ejiogu calls for the development of new disciplinary paradigms both at the integrity and intersection of sovereign borders.

Part III Corporate crimes What exactly is a corporation? The modern version of a corporation is a nineteenth-century invention of capitalism that created a separate entity, a “legal person,” which is not the same as an individual/s or shareholder/s who own/s the company. This corporate legal person, like a real person, can enter into contracts, borrow money, and sue for damages. However, a corporation, 9

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unlike a real person, has limited rather than full liability. That is, a corporation may be sued without exposing its owners or shareholders to personal liability because by definition they are not the corporation; nor are any of the directors, executives, or employees. Thus, the corporation is a legal invention or “fiction” that allows individuals to personally profit from their kosher activities without having to be fully liable for their un-kosher activities, especially when people are harmed as a result of those activities. Hence, the U.S. Supreme Court did not declare in Hobby Lobby in 2014 that a corporation has religious rights because it was confused about whether or not a corporation could pray, but rather because the Court decided five to four not only to allow business owners to retain the powerful protection of limited liability, but also to expand this benefit or right by exempting corporations from one of their basic financial obligations of the Affordable Care Act. Naturally, there could be no corporate crimes without corporations or the right to incorporate. Corporate crimes are those illegal acts committed by either a business entity (e.g., a corporation) or by individuals on behalf of a business entity. Functionally, corporate crimes may also overlap with state-corporate crimes (see Part VII) in particular and with state omissions or nonregulatory behaviors (see Parts II–VII) in general because the opportunity to pull these crimes off with minimal liability, criminal or otherwise, depends on the selective practices used by the apparatus of the capitalist state. For example, on September 14, 2014 The New York Times published an extensive investigation into the record of the National Highway Traffic Safety Administration that goes well beyond its publicly acknowledged failure to detect an ignition switch defect in several models of GM cars now linked to at least 21 deaths. The investigation also included the handling of major safety defects since 2004 and found that NHTSA had “been slow to identify problems, tentative to act and reluctant to employ its full legal power against companies” (Stout 2014; Stout et al. 2014). After analyzing agency correspondence, regulatory documents, and public databases as well as interviewing congressional and executive branch investigators, former agency employees, and auto safety experts, The New York Times learned that in many of the major vehicle safety issues during this ten-year period – including “unintended acceleration in Toyotas, fires in Jeep fuel tanks and air bag ruptures in Hondas, as well as the GM ignition defect – the agency did not take a leading role until well after the problems had reached a crisis level, safety advocates had sounded alarms and motorists were injured or died” (Stout et al. 2014). Two thousand and fourteen was a particularly disturbing year in automobile safety, which included the deadly ignition “scandal” at GM, the billion-dollar Toyota criminal settlement, and the ever-expanding number of air bag recalls. In fact, in 2014 automakers “recalled more than 48 million vehicles in the United States, surpassing the previous record of about 30 million in 2004” (Stout et al. 2014). The GM ignition recall “compensation program” managed by Kenneth Feinberg is alleged to have paid out US$70 million to the families of 15 killed auto victims (Stout 2014). In Chapter 10, “Corporate crimes and the problems of enforcement,” Ronald Burns provides a general overview of the history and contemporary state of corporate crime as well as of the affairs, quandaries, and inefficacies of enforcing the laws against corporate crime. He also provides a theoretical overview of corporate crime and of the research and methodological issues pertaining to the enforcement of corporate crime. Burns argues that though corporations may not necessarily intend to harm or injure, “pressures to perform” result in corporate violations that do, in fact, harm and injure. At the same time, these corporate crimes have traditionally gone unnoticed by the general public and they have been under-enforced by the state, resulting in punishments as merely the costs of doing business as usual. 10

Introduction

In Chapter 11, “Corporate-financial crime scandals: a comparative analysis of the collapses of Insull and Enron,” Brandon Sullivan analyzes the historical demises of two of the largest energy companies in the United States: Insull in the early 1930s and Enron in the early 2000s. Sullivan argues that both Insull’s and Enron’s crimes exemplify what William Black has termed “control fraud,” where corporate leaders use their businesses to defraud others while at the same time manipulating external and internal controls to carry out the crimes and to prevent their detection. These types of corporate control frauds were facilitated by criminogenic environments that lacked effective regulation and enforcement, and by political campaign contributions and highprice lobbying for enhanced deregulation. Finally, despite the persistence of major corporatefinancial scandals like these, including those of Tyco, Adelphia, and Global Crossings to name a few, no serious attempt has ever been made to link the root causes of corporate abuse to the lax policies of regulation. In Chapter 12, “Corporate social responsibility, corporate surveillance and neutralizing corporate resistance: on the commodification of risk-based policing,” Hans Krause Hansen and Julie Uldam are concerned about the lack of attention paid to the role played by corporate surveillance and intelligence practices in tending to the interests of big business, and in neutralizing those critics and activists who are keen to reveal corporate fraud or environmentally damaging practices. They are also concerned about how these practices are used in their social responsibility and public relations campaigning. In the context of critically reviewing the literature on corporate surveillance and intelligence practices, and linking these to theoretical debates on corporate social responsibility, corporate self-regulation, and private policing, Hansen and Uldam empirically analyze the different surveillance and intelligence tactics deployed by oil companies BP and Shell to silence their radical critics. They conclude the chapter by arguing for the further need to theorize corporate power and surveillance in relation to debates on privatized self-regulation and policing. In the final contribution to Part III, “Walmart’s sustainability initiative: greening capitalism as a form of corporate irresponsibility,” Steve Lang and Lloyd Klein examine how the retail giant conducts a kind of international diplomacy and a legislation of American social and industrial policy. More specifically, they reveal how Walmart’s mission to make consumption smarter and more sustainable is having a far-reaching and troubling influence on environmental policies and practices around the globe. They also expose the Walmart sustainability paradox that “embraces sustainability outside of its organizational supply chain but not inside its stores with respect to its workforce and their communities.” Finally, Lang and Klein demonstrate how Walmart’s “greening of capitalism” reinforces neoliberalism and corporate irresponsibility as it appropriates environmental problems and turns them into marketable and profitable business ventures.

Part IV Environmental crimes Much of the time, environmental crimes fit into multiple areas of harm and victimization, as in the case of greenhouse gas emissions or the crimes of hydraulic fracking carried out by the multinational oil and natural gas industries. Depending on the associated context and whether these “fracking crimes” are committed beneath the farms of Midland, Texas, near the rivers and streams that empty into the Great Lakes of the northern United States, or at the southern edge of the Sahara Desert in Timbuktu, Mali, they may be identified primarily as environmental, corporate, state-corporate, and/or globalization crimes. However we label these environmental crimes, a growing number of criminologists, including the former President of the American Society of Criminology Robert Agnew (2012), argue that the “crimes of climate change” are globally positioning the human species for serious risks of extinction. Hyperbolic or not, the potential harm and victimization from environmental crimes to the Earth’s ecosystems may ultimately 11

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dwarf the combined harm and victimization from all the other crimes of the powerful. What we know for sure, as the four contributions in this part testify, is that the harmful costs from all of the environmental crimes represent a convergence of powerful interests “not to know” about the real dangers and potential threats to our collective security. In Chapter 14, “Climate change, ecocide and crimes of the powerful,” Rob White discusses the systemic and organizational crimes of the powerful in relation to climate change. In doing so, he provides an integrated analysis of: ecocide and its social relations to and interactions with transnational corporations; global crimes and state-corporate crimes; the commodification and consumption of nature; and the struggle against neoliberalism, self-interest, and the fortress mentality of late capitalism. White concludes by arguing that exposing injustice and advocating for eco-justice for humans, non-humans, and eco-systems is not enough. In an age of globalization, White also calls for strategic interventions, identifies an alternative vision to Fortress Earth, and outlines the types of ideals and values to pursue in the course of reassessing our systems of production and consumption. In Chapter 15, “Privatization, pollution and power: a green criminological analysis of present and future global water crises,” Bill McClanahan, Avi Brisman and Nigel South take on the popularly conceptualized viewpoints that water pollution and access to clear water are problems with different socioeconomics and geopolitics. They attempt to recast the issues of water and harm by exploring the ways in which the global spread of the privatizing and commoditizing logics of neoliberalism has led to restricted and unequal access to clean water, to a regulatory atmosphere favorable to corporate polluters, and to a reconceptualization of water as a saleable commodity rather than an element of the commons. Utilizing a critical theoretical framework informed by green criminology, McClanahan, Brisman, and South seek to contextualize access-restricting water privatization, corporate polluting of oceans, rivers, streams, and estuaries, municipal water regulation schemes that criminalize or hinder water reuse, and corporate schemes to profit from the bottling and selling of water as events and movements detrimental to ecological health and sustainability, yet beneficial to powerful corporate, economic, and political actors and institutions. In Chapter 16, “Unfettered fracking: a critical examination of hydraulic fracturing in the United States,” Jacquelynn Doyon and Elizabeth Bradshaw attempt to get a handle on both the regulatory practices of the industry and on the environmental and human health effects of fracking. This is not easy because the United States has no federal framework in place for regulating the hydraulic fracking industry and has yet to perform a comprehensive examination of fracking on water contamination, seismic activity, and workplace safety. Similarly, calls for transparency of the chemicals used in fracking fluids are shielded by “trade secrets” where some 84 percent of the registered wells in the US claim exemptions from full disclosure. As for federal regulations, the Energy Policy Act of 2005 exempts oil and gas companies from several environmental protection laws, including the Clean Water Act and the Safe Drinking Water Act. As a result, states have much latitude in implementing environmental protections, and a hotchpotch of policies now currently exists within and between states. While local grassroots efforts to regulate or ban fracking have met with some successes, the interests of big oil and gas companies have stymied other attempts. Doyon and Bradshaw’s not surprising take is that without uniform legislation based on independent scientific research the “economic logic” and the harmful effects of industrial fracking will continue unfettered. The final chapter in Part IV, “The international impact of electronic waste: a case study of Western Africa,” also by Jacquelynn Doyon, examines the profitable markets that are not in production or consumption, but are in the business of electronic waste disposal. After decades of shipping hazardous and toxic waste from the industrialized nations of the West to nations in the Asian Pacific such as China and India, more recently that waste (and now heavily electronic waste) has been re-routed to the western coast of Africa in response to increasing regulations and restrictions in Asia. The lack of international regulation of global waste today coupled with lax 12

Introduction

enforcement of what domestic laws do exist permits the transboundary shipment of often illegal “e-waste” to the ports of Lagos, Nigeria and Accra, Ghana, which places a heavy burden of the physical and environmental harms associated with the improper disposal of electronic waste on already marginalized populations. Her analysis underscores the fact that advanced political economies have a vested interest in exporting e-waste and that developing political economies have a vested interest in importing e-waste. Finally, Doyon discusses the implications of the ongoing relations of life cycle electronics in terms of exploiting disadvantaged nations and of the prospects for future environmental and human harms. In the not too distant future, succumbing to or overcoming the environmental harms and crimes of the powerful – from ecocide to global shortages of water to fracking to electronic waste disposal to moving beyond fossil fuels to the unsustainable expansion of consumption – may very well come to a showdown between a climatic crisis of uneven civilized landscapes versus barbarized landscapes, on the one hand, and a reconstructed public capitalism versus an unencumbered private capitalism, on the other hand. Between then and now, as Naomi Klein argues in her latest book, This Changes Everything: Capitalism vs. the Climate, the task is “to articulate not just an alternative set of policy proposals, but an alternative worldview to rival the one at the heart of the ecological crisis – embedded in interdependence rather than hyperindividualism, reciprocity rather than dominance, and cooperation rather than hierarchy” (Klein 2014: 20). In very concrete terms this means resisting neoliberalism and privatization. It means struggling to disperse power into the hands of the many rather than consolidating it into the hands of a few. It means struggling to expand rather than contract the public commons. Finally, it means transforming the climate movement into a “people’s movement” as was the case on Sunday, September 21, 2014 when hundreds of thousands of diverse people filled the streets of New York City calling for climate justice, including many thousands of union members, representatives from indigenous peoples’ organizations, business types behind an Investors for Climate Solutions banner, and students, anti-poverty, family and faith groups. As organizers of the People’s Climate March pointed out, there were 2646 demonstrations held that day in 156 countries, representing “the largest mass protest to date against government and corporate inaction on the overheating of our planet” (The Nation Editorial 2014: 3). This type of people power had more than a symbolic effect. The very next day institutional investors representing US$50 billion in assets, including the offspring of the biggest name in petroleum history, John D. Rockefeller, announced that they were divesting all of their money from fossil fuels.

Part V Financial crimes At least since the post-mortem of the 1929 Wall Street stock market crash tensions have persisted between those people favoring and those people disfavoring regulation or deregulation. After the Wall Street implosion and the subsequent bailouts in 2009, issues and questions about “reregulation” have added further to the strains over financial market intervention. In the words of Thomas Hoenig (quoted in Barak 2012: 133), President of the Federal Reserve Bank of Kansas City: “It is ironic that in the name of preserving free market capitalism in this country, we have undermined it so deeply.” His point being that for the past 75 years, whether during heightened periods of regulation or deregulation, the economic reality of financial markets has always relied upon and consisted of “banking on the state,” as the Bank of England’s Andrew Haldane has termed the relationship. For example, during the recent financial meltdown, public safety nets and assistance were stretched far beyond anything that we had done in past crises. Deposit insurance coverage was substantially expanded and public authorities 13

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went well beyond this with guarantees of bank debt instruments, asset guarantees at selected institutions, and many other forms of market support. Discount window lending sharply departed from previous practices in terms of nonbanks and special lending programs. Substantial public capital injections were further provided through TARP to the largest financial organizations in the United States and to several hundred other banks on a scale not seen since the Reconstruction Finance Corporation in the 1930s. These steps were similar to those that many other major countries took. (Quoted in Barak 2012: 133–134) Hoenig argues that over an extended period of time “we have experienced a ratcheting process in which public authorities are pressured to widen and deepen their state safety nets after every financial crisis brought on by excessive bank risk taking. This expansion in safety nets then sets the stage for the next crisis by providing even greater incentives for risk taking and further expanding moral hazard” (Quoted in Barak 2012: 134). As a consequence, Hoenig further contends: We have become trapped in a repeating game in which participants continue to seek ever higher and more risky returns while “banking” on the State to fund any losses in a crisis. Large organizations, moreover, are the key players in this process as States become more immersed in the perception during a crisis that they protect any bank regarded as systemically important. We must stop this game if we are to create a more stable financial system and not condemn us to an escalating series of crises with rapidly rising costs. (Quoted in Barak 2012: 134) One of the questions I asked about re-regulation in my examination of The Wall Street Financial Reform and Consumer Protection Act of 2010 (Dodd-Frank) in Theft of a Nation (2012) was whether or not these financial reforms would alter the economic relations of banking on the state. Another question I posed had to do with what impact or relief would Public Law 111-21 or the Fraud Enforcement and Recovery Act of 2009, signed by President Obama on May 20, for the purposes of improving the enforcement of fraud, securities and commodities fraud, financial institution fraud, and other frauds related to Federal assistance and relief programs, have on the weakest victims of the epidemic in mortgage and securities frauds that occurred throughout the financial services industry during the run-up to the near economic abyss. Concerning FERA, this public law has had at best a negligible impact upon the recovery for the vast majority of Americans victimized directly or indirectly by high-stakes securities fraud. As for Dodd-Frank altering the practices of Wall Street banking on the state, these relations look secure well into the immediate future. In other words, we still have a private banking oligarchy dependent on the US Federal Reserve System (or central bank) and a capitalist state and political economy dependent for its well-being on financial capital. These contradictory relationships are hardly conducive for re-regulation or for regulatory control. Moreover, the biggest global banks of Wall Street have more concentrated wealth now than before the implosion in 2008/2009 and by way of revolving doors, financial lobbying, and campaign contributions the powerfulness of the Wall Street – Regulatory interlock seems impenetrable. As most white-collar criminologists in the US know, The Fed (or US Federal Reserve) and in particular the Federal Reserve Bank of New York, are responsible for supervising and monitoring what the big banks on Wall Street do. The Fed in short is supposed to make sure that these banking institutions do not break the rules or take risks that could bring down the financial system. Not exactly “the cop on the beat,” these Fed examiners are embedded in offices of their 14

Introduction

own within those financial institutions they are assigned to oversee. In early 2009 shortly after the financial meltdown, a team of Fed managers under the charge of David Beim, a former Wall Street banker and current Colombia University finance professor, was asked by the NY Fed president at the time, David Dudley, to investigate and submit a confidential report on the behavior of the Fed running up to the Wall Street meltdown. The report subsequently released to the public by a governmental commission found Fed deference to the banks, an unwillingness to take action, extreme passivity, and regulatory capture. One of the recommendations for how the New York Fed could be more effective was to hire a new kind of employee: “outspoken, unafraid, somebody who would not get captured” (Chicago Public Media and Ira Glass 2014: 2). In the wake of the crisis, Congress had concurrently given the Fed new responsibilities and resources that could potentially help implement this Beim recommendation. Hence, the NY Fed went on a hiring spree of new bank examiners and financial experts. One of those hired was a former Fed employee and “whistleblowing” attorney Carmen Segarra, who had secretly recorded conversations of Fed meetings during her employment. Her many revelations in conversation with Jake Bernstein, a futures analyst, international trader, and investigative journalist, and with Mike Silva, the Fed’s top official inside of Goldman Sachs, on the 60-minute program This American Life, produced in collaboration with ProPublica that aired on September 26, 2014, substantiates the findings of the Beim Report. I encourage readers to go online and listen to the show for themselves, but to get a sense of the program allow me to share from Ira Glass’ remarks at the beginning of the program and to paraphrase from Bernstein’s remarks before the commercial break half-way through: It’s This American Life, I’m Ira Glass. Today on our show we’re hearing never-before-heard recordings made secretly by a bank examiner named Carmen Segarra at the New York Fed. They give an unprecedented look inside this very secretive, very powerful, very important financial regulator. (Chicago Public Media and Ira Glass, 2014: 1)1 As for Jake Bernstein, he explains that the New York Fed declined to be interviewed for the show, how the Fed officials came to This American Life’s office to listen to the tapes of Carmen Segarra, and how the program sent the Fed 13 pages of questions and received back a two-page statement. Bernstein also pointed out that unlike the Beim Report, the Fed failed to acknowledge the central problem or to identify any recommendations addressing the Fed culture, the fear of speaking up, the deference to the banks, or the regulatory capture. A sampling of the crimes committed by the world’s mega-financial firms, banks, and institutions includes violating securities laws by imposing illegal extra fees and costs on customers, laundering money from illegal enterprises, and improperly pushing toxic financial deals on unsuspecting and budget-stressed cities from Stockton, California to Detroit, Michigan. These same financial players were also fraudulently active in the Libor interest rate manipulation. In that particular financial scam, the Federal Deposit Insurance Corporation filed a lawsuit in the U.S. Federal District Court in Manhattan on March 14, 2014, sueing 16 banking giants, including Bank of America, Citigroup, and JP Morgan in the United States for fraud and conspiring to keep the global interest rate (or the interbank offered rate that banks charge each other) low to enrich themselves. Among the other banks sued were Britain’s Barclays and Royal Bank of Scotland, Switzerland’s biggest bank UBS, and Rabobank of the Netherlands (The Associated Press 2014). For a sustained period of more than five years (2009–2014), the mass media and the public were more exposed to the workings of the “state – finance” nexus or to the ongoing alliance 15

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between the state apparatus and capital (Harvey 2014) and the world of securities frauds than they ever were before or, for that matter, to any of the other crimes of the powerful. Because of the TARP bailouts and other FED perks like interest-free loans that followed the financial implosion of 2008/2009, the collective loss of some US$14 trillion in wealth, and the subsequent worldwide recessions and worse that ensued, there have been literally hundreds of books and many more articles, journalistic and scholarly, written about the securities industry, the regulation/ deregulation/re-regulation of banking practices, and, to a much lesser extent, the risk and recurrent criminogenic conditions that surround these types of securities trades. In addition, several film documentaries were made such as Inside Job (2010) or The Untouchables (2013), which provide substantial exposés into these financial crimes of Wall Street. Finally, there was the 650-page US Senate investigative report, Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, published in the spring of 2011. The fundamental lessons or combined messages from these mediums are not all that complicated. Two of the more critical insights demonstrated over and over in the numerous analyses from myriad diverse perspectives and fields of inquiry, inclusive of whistleblowers, investigative journalists, and regulators, are as follows. First, the capitalist-financial system has always been a rigged structure of profit accumulation, unfairly tilted in favor of one set of economic interests over or against or in conflict with other sets of economic interests, whether or not the law and political economy were subject to periods of increasing or decreasing regulation (Prins 2014). However, concerning inequality, per capita incomes, or financial crime, this need not be the case. As Nobel Laureate in economics Joseph Stiglitz (2014: 7), a former chairman of the Council of Economic Advisers and chief economist for the World Bank, has explained on numerous occasions: • • •

The dynamics of imperial capitalism of the nineteenth century needn’t apply in the democracies of the twenty-first century. Our current brand of capitalism is a counterfeit capitalism. Inexorable laws of economics aren’t tearing us apart. Our policies are.

Second, the looting, the shorting, and the control frauding by the wealthiest bankers/banking institutions and their financial organizations (e.g., trading companies, holding companies, insurance companies, securities firms, private equity firms) on and off Wall Street, buttressed by insider political and legal colluding, have always been beyond incrimination and generally subject to some form of bailout and/or state subsidy when their untrustworthy actions have resulted in downturns in the economy and in the simultaneous harming of millions of people. In contrast, less powerful financial fraudsters (e.g., think thrifts and savings and loans in the late 1980s), as well as the very powerful corporate (e.g., Enron, WorldCom), state (e.g., Abu Ghraib, Gitmo), and corporate-state (e.g., Blackwater, DynCorp, Halliburton) offenders and their organizations have at least from time to time been held culpable and subject to criminal sanctions (Barak 2012; Black 2005; Prins 2014; Ruggiero 2013; Warren 2014; Will et al. 2013). Unlike the Wall Street offenders and their crimes of capital control, the corporate, environmental, and corporate-state offenders are not immune to penal sanctions from advanced, if not developing, political economies and their respective capitalist states. As far back as thirteenth- and fourteenth-century capitalism, a handful of the biggest bankers and/or traders were always in a position to negotiate, if not dictate, the terms of financial exchanges. In today’s age of globalizing capital, the six biggest banking institutions in the United States post the financial crash of 2008, with their agents situated strategically in the executive, legislative, judicial, and regulatory corridors of Washington, DC, have only further consolidated 16

Introduction

their wealth, privilege, and capacity to resist criminal sanctions. Moreover, the exposure in the fall of 2014 of the SEC “cover-up” for the systemic thefts by the private equity industry of its investors suggests that not much has changed on the criminal enforcement front since the cover-up policies of “too big to fail banks” began in 2009. In the case of the missing private equity scandal, apparently there were millions of dollars of income across the equity industry, adding up to a couple of billion dollars, for non-existent monitoring services charged to investors (Smith 2014). For some perspective on the kind of money these individuals can make – when the 1971 founder Bill Gross of Pimco, otherwise known as the Pacific Investment Management Company of Newport Beach, CA, resigned on September 26, 2014 and announced that he was off to run a tiny bond fund, Janus Capital Group Inc., a four months old “start-up,” he was earning US$200,000,000 a year (Grind 2014). As the saying goes, “that’s not exactly chopped liver”; then again, there are hedge fund managers like Ray Dalio of Bridgewater Associates, Westport, CT, and James Simons of Renaissance Technologies, East Setauket, NY, who earned US$3 billion and US$2.1 billion respectively in 2011 (The 40 Highest-Earning Hedge Fund managers, www. forbes.com/pictures/mdg45ghlg/ray-dalio-2/). Speaking of hedge funds, otherwise known as illiquid partnerships, these were traditionally limited to a small number of wealthy investors employing sophisticated investment strategies, such as taking leveraged, long, short, and derivative positions in both domestic and international markets. Currently, hedge funds as well as private equity funds are vehicles used to pool investment capital with little oversight or regulation as part of the shadow banking industry. In addition to wealthy clients’ money, these funds today include the management of ordinary people’s money by way of their pension fund investments, often to the detriment of these investors (Appelbaum and Batt 2014). For a bit more perspective on hedge fund wealth, Gross announced his resignation from Pimco in the early morning hours on a Friday. By the end of the trading day, roughly US$10 billion of withdrawals from Pimco had occurred. Some experts speculate that Pimco could lose at least US$100 billion or more in total asset withdrawals before things cool out. Pimco CEO Douglas Hodge said in a statement that the firm “manages nearly $2 trillion in assets, and we are confident that the vast majority of our clients will continue to stand with us” (Quoted in Grind et al. 2014: A1). Hedge funds may also involve debt-restructuring instruments such as those concerning a 2014 UN Human Rights Council resolution in Geneva that condemned investors, led by US hedge funds NML and Aurelius Capital management, who had successfully sued Argentina in US courts, demanding payments worth more than US$1.3 billion. The resolution was approved by 33 votes to five, with nine countries abstaining. The United States, Britain, Germany, Japan, and the Czech Republic voted against it. “The resolution ‘condemns the activities of vulture funds’ and says it regrets the effect the debt payment to such funds could have ‘on the capacity of governments to fulfill their human rights obligations’” (BBC News 2014). Two out of three contributions in Part V concentrate on the enforcement behaviors of the state in addressing financial institutions for their securities violations. The first involves local community banks and the second involves the banks of Wall Street, allowing for some comparisons of the differential responses to these financial frauds, such as the former but not the latter violators being subject to criminal prosecution. The third contribution provides a broad conceptual examination of the relations between financial fraud and its victimization. In Chapter 18, “Bad banks: recurrent criminogenic conditions in the US commercial banking industry,” Robert Tillman examines the causes behind the wave of bank failures in the period 2008 to 2011 that left 355 banks – most of them small community banks – shuttered, with losses exceeding US$57 billion. He also describes the criminogenic environment that surrounded the banking industry in the 1980s that was recreated in the 2000s when lawmakers and regulators 17

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ignored the lessons of the recent past and implemented policies that loosened restrictions on commercial banks and other lending institutions. Tillman argues that corrupt bankers took advantage of this relaxed regulatory environment and regional economic booms to engage in a variety of reckless and fraudulent practices, leading their banks to insolvency. Theoretically, he argues for combining economic theories of financial instability and looting with the sociological/ criminological concept of criminogenic markets. Finally, Tillman presents quantitative data on the conditions at failed banks where allegations of misconduct were leveled at bank insiders to support his argument. In Chapter 19, “Finnacial misrepresentation and fraudulent manipulation: SEC settlements with Wall Street firms in the wake of the economic meltdown,” David Shichor examines the settlements between the SEC and Wall Street for its disclosure and misrepresention of violations in the context of the deregulation of the securities market that began in earnest in the 1980s with the Reagan administration. First, he connects the recent economic meltdown to the now familiar narrative of fraudulent mortgage originations, securitization of risky mortgages, and esoteric financial products. He then critiques and discusses the preferred SEC settlements with financial firms in which they would “neither admit nor deny” their wrongdoing. Bemoaning the lack of criminal sanctions and recognizing that it is much easier to settle with corporations than to criminally punish executives, Shichor still favors imposing some kind of personal liability upon those individuals reponsible for these fraudulent offenses as a potential deterrent and because justice deserves as much. In Chapter 20, “A comprehensive framework for conceptualizing financial frauds and victimization,” Mary Dodge and Skylar Steele offer an in-depth perspective on a variety of factors associated with the different types of financial frauds, the fiscal and emotional impacts of these frauds, and the difficulties of establishing standing as a victim. In the process, Dodge and Steele present an overview of the development and standing of victims of financial fraud as well as a synthesis of empirical research and case studies to advance an inclusive framework for estabishing increased understanding of the dynamics of victmization. They argue that there is still much research to conduct on financial victimization and that the use of a social constructionist framework represents a starting point for the necesssary studies related to regulation, prosecution, and sentencing. Dodge and Steele further contend that by ferretting out the nuances of financial fraud and victimization, this will facilitate a fuller appreciation of the need for victim recognition, prevention, and restitution as well as for taking the necessary policy steps toward fullfiling these needs, both locally and globally.

Part VI State crimes State crimes, originally coined as “state-organized crimes” by William Chambliss (1990: 184) in his 1989 American Society of Criminology presidential address, referred to those “acts defined by law as criminal and committed by state officials in pursuit of their jobs as representatives of the state.” Chambliss identified an array of state-organized crimes, including but not limited to supporting terrorists, spying on citizens, diverting funds illegally, selling arms to blacklisted countries, engaging in criminal conspiracies, carrying out assassinations, and smuggling contraband. A classic state crime from this historical period was the Iran-Contra Affair where senior officials of the Reagan administration during his second term, in violation of an arms embargo, secretly facilitated the sale of arms to Iran as a means of trying to secure the release of US hostages held in Iran, on the one hand, and as a means of funding the Nicaraguan Contras in violation of the U.S. Borland Amendment prohibiting the government from funding the Contras in their efforts to overturn the democratically elected Sandinista Nicaraguan government, on the other hand. 18

Introduction

As a member of Chambliss’ Program Committee, I was responsible for arranging the topical sessions on “Crimes By and Against the State.” More than 25 papers on crimes by the state were presented. Ten of those ended up in the first book devoted solely to state crime, the edited anthology Crimes By the Capitalist State: An Introduction to State Criminality, published in 1991 as a volume in the SUNY Series in Radical Social and Political Theory. The chapters in this reader were organized around three themes: the classical forms of state crime, the dialectical nature of state crimes, and the crimes of state omission. An extract from the prologue states, the study of state criminality is a political enterprise consisting of, among other things, the study of power, ideology, law, and public and foreign policy. As such, the study of state criminality is part and parcel of the emotionally charged landscape of a changing political economy. (Barak 1991: 5) Over the past quarter of a century, the conceptualizing of crimes of state has continued to evolve in both theory and practice. For example, in 2004 Penny Green and Tony Ward produced a book-length treatment of state crime, utilizing case studies and drawing upon the disciplines of law, criminology, human rights, international relations, political science, and social deviance to craft their analysis in State Crime: Governments, Violence and Corruption. Five year later, in what has become a seminal contribution to the area, State Criminality: The Crime of All Crimes (2009: 6), Rothe provided an integrated theory and practical typology for understanding state crime. Therein, she defines state crime as: “Any action that violates international public law, and/or a state’s own domestic law when these actions are committed by individual actors acting on behalf of, or in the name of the state, even when such acts are motivated by their personal economical, political and ideological interests.” Consistent with these conceptualizations of state criminality, there are also those activities that may not involve state actors directly, but rather are committed by non-state proxies aided by some kinds of external resources, facilitation, planning, and/ or logistics. Accordingly, the crimes of and by the state examined in Part VI include torture, organized violence, forced immobility, and gendered violence. These crimes are more inclusive than actions arranged or committed by the state or by its agents or proxies. They also refer to those state crimes of omission and to state crimes of collusion with the crimes of globalization, of corporations, of the environment, and of finance capital already described in great detail. In addition, the capitalist state and its agents are integral to the commission of state-corporate crimes and state-routinized crimes that will be examined in the next two parts of the handbook. Functionally then, the capitalist state has a stake of one kind or another in virtually all of the crimes of the powerful as well as its own. Not unlike powerful corporations and financial institutions that are supposed to self-regulate, the capitalist state is also presumed to oversee itself. However, as a dynamic and adaptable institution the state capitalist apparatus has always been situated within the contradictions of forbidding versus forgiving the powerful for the numerous laws that they routinely violate. As a consequence, when it comes to the crimes of the powerful, inquiring minds are often left clueless because much of the time these offenses are not materially processed through the formal legal systems and as a result these behaviors remain state secrets that are not available for public enquiry. In Chapter 21, “Transnational institutional torturers: State crime, ideology and the role of France’s savior-faire in Argentina’s Dirty War, 1976 to 1983,” Melanie Collard provides a case study in the exportation of torture techniques as a way of probing the transnational institutionalization of torture. Collard analyzes the deadly cooperation between France and Argentina that 19

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transformed Argentine war professionals into official state torturers. Using a transnational state crime framework as well as an international structural context, Collard asks why and how France became Argentina’s trainers in torture. Specifically, she examines the “transnational institutional” perpetrator and the linkages connecting France with institutionalized torture in both the Algerian War in the 1950s and in Argentina between 1976 and 1983 vis-à-vis the French military training of Argentine officers in the late 1950s and early 1960s. Her conclusions are that the French military had established the theoretical, methodological, and semantic basis for torture that informed the repressive actions of the Argentine army. Therefore, she argues that to use the label of “transnational institutional torturers” is appropriate. In Chapter 22, “Para-state crime and plural legalities in Colombia,” Thomas MacManus and Tony Ward offer a fascinating case study in what they label “para-state” crime. They argue that although the Republic of Colombia is a state, it does not have a complete monopoly over the legitimate use of organized force within its territorial borders. In parts of Colombia, for example, guerrilla groups FARC and ELN rule what amount or have amounted to “de facto” states. Complicating matters further is that Colombia has informally delegated some of its legitimate use of violence to paramilitary organizations outside of its legal framework, known as the “paraestado.” MacManus and Ward use the example of Colombia to illustrate the complex and fluid relations of the state and civil society, and how these may be expressed in organized violence. They conclude that in Colombia there is an unclear dividing line between civil society and “uncivil society” that relies on coercion rather than moral or political argument to pursue demands. In Chapter 23, “Australian border policing and the production of state harm,” Michael Grewcock examines the systemic abuses inflicted upon irregular migrants by contemporary Western border controls. Using Australia’s “border protection” policies targeting unauthorized refugees as a case study, Grewcock analyzes a continuum of internal and external policing practices including visa restrictions, anti-smuggling operations, mandatory detention, and forced removal to Australian funded detention centers in Nauru and Papua New Guinea, that are designed arguably to disrupt unauthorized movement and ultimately prevent access to Australia’s refugee determination process. He provides extensive evidence, including testimony on the normalization of abuse and the offshore processing and criminalization of people smuggling. Grewcock contends that not only are practices such as indefinite detention inherently and profoundly abusive, but furthermore, by immobilizing refugees in precarious transit zones, subjecting them to indefinite warehousing regimes, denying them access to formal travel and refusing settlement, Australia’s border policing measures expose refugees to much higher levels of risk and push them into more dangerous forms of confinement and travel. Grewcock concludes that rather than protecting refugees from smugglers, Australia’s border policing regime generates multiple harms that may be identified as state crime. In the final chapter of Part VI, “Gendered forms of state crime: The case of state perpetrated violence against women,” Victoria Collins seeks to extend the discussion of women and gender to include state perpetrated violence. After reviewing the established literature on state perpetrated violence against women, Collins specifically addresses the systematic state victimization of women both in times of conflict/war and peace. Using examples from the violent targeting of women and girls during the 1992 to1994 conflict that occurred in the former Yugoslavia to the violent targeting of girls and women by both Sunni and Shiite militia during the US occupation of Iraq to the sexual assaults of women soldiers by US military men in peacetime, Collins reveals the ways in which the state directly and indirectly perpetrates gendered violence. She concludes that her case studies demonstrate that the larger historical, social, and political constructions of gender interactions are a product of institutional relations that are reinforced by the state. 20

Introduction

Part VII State-corporate crimes The idea of state-corporate crime traces its roots to an ASC paper presented by Ronald Kramer and Ray Michalowski (1990: 3) in which they defined state-corporate crimes as “illegal or socially injurious actions that occur when one or more institutions of political governance pursue a goal in direct cooperation with one or more institutions of economic production and distribution,” as well as a book chapter by Judy Aulette and Michalowski (1993) about the Imperial Foods chicken-processing plant fire in Hamlet, North Carolina on September 3, 1991 when 25 workers were killed and 55 injured because the fire doors were locked preventing these employees from exiting the burning fire. State-corporate crime typically involves political and economic elites or their agents acting together in violation of local, national, and international laws. Their “wrongdoing at the intersection of business and government” has been well documented by numerous case studies, such as the space shuttle Challenger explosion, the Ford Explorer rollovers, and the ValuJet flight 592 crash, which have revealed numerous cover-ups, frauds, collusions, and more (Michalowski and Kramer 2006). Traditionally, the idea of state-corporate crimes has signified those illegalities that are products of both state activities and/or policies and corporate activities and/or practices, usually in some form of collaboration for mutual gains or respective interests. More recently, there has been the recognition that these state-corporate or public – private partnerships or symbiotic crimes may also include other organized groups that are not representatives of either business or government. As the chapters in Part VII disclose, these hybrid state-corporate crimes can be more complex, involving other significant participants or interests such as unions, political parties, and paramilitary units. These newer formulations are also increasingly taking both the local and global conditions of capital production into their accounts. Currently, the applications and conceptualizations of state-corporate crime are expanding to include vested interests from civil society as well as exemplified by the state-corporate-organized crime found in Colombia. In Chapter 25, “Blacking out the Gulf: state-corporate environmental crime and the response to the BP oil spill,” Elizabeth Bradshaw provides a case study in an attempted state-corporate “cover-up” to suppress the criminality and environmental impact caused by the explosion of the Deepwater Horizon rig owned by Transocean and leased by British Petroleum. Bradshaw carefully reveals how both state and corporate actors worked in coordination to conceal the extent of the damages through a variety of means. Employees and clean-up workers were censored, toxic chemical dispersants were used, a media blackout was implemented in the Gulf, and a deliberate manipulation of official images and information about the spill were circulated. Bradshaw argues that the coordinated efforts by BP and the federal government were able to keep the devastating effects of the oil spill from public view, thereby limiting, if not preventing, the social control effects of their crimes. Full disclosure: as of fall 2014, BP had paid out US$28.3 billion in clean-up costs and fines, in compensation claims from injured businesses, and in relation to pleading guilty to criminal manslaughter charges for the 11 men who died in the explosion. Then, on September 4, 2014, Louisiana district judge Carl Barbier concluded that “profit-driven decisions” and “willful misconduct” led to the rig explosion, and so he found BP liable for “gross negligence” under the Clean Water Act, which imposes penalties of US$4300 per barrel of oil spilled compared to only US$1100 per barrel for simple “negligence.” This could add up to an additional US$18 billion with some of the fines to be picked up by rig owner Transocean and US contractor Halliburton (Banerjee and Khouri 2014). Of course the “gang of three” are appealing the Barbier civil ruling. In Chapter 26, “Collaborative state and corporate crime: fraud, unions and elite power in Mexico,” Maya Barak examines the case of the National Mine, Metal and Steel Workers Union 21

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of Mexico and the numerous civil, criminal, and extra-legal harms committed in tandem by one of the world’s largest mining companies and the Mexico government beginning in 2006. Employing a social-historical analysis and framing her discussion around the roles played by neoliberal ideology and anti-labor socio-political culture, Barak takes us through a medley of state-corporate harms including murder, kidnapping, the death of 65 miners, the police brutality of striking workers, threats and intimidation, harassment, bribery, forged documents, fraudulent charges, and conspiracy. Finally, calling into question traditional interpretations of statecorporate/corporate-state crime, Barak maintains that these crimes of the powerful may be more appropriately viewed as collaborate state and corporate criminality. In Chapter 27, “Mining as state-corporate crime: the case of AngloGold Ashanti in Colombia,” Damián Zaitch and Laura Gutiérrez-Gómez as part of a larger research project on the nature, causes, and harmful effects of state-corporate-organized crime in Latin America since the 1990s, focus on the South African gold-mining multinational AngloGold Ashanti (AGA) in Colombia. Their objective is to describe and explain the interconnections between multinational and governmental bodies, actors, and policies, as they engage in, or promote, various forms of criminal, unethical, or harmful behavior. Zaitch and Gutiérrez-Gómez also document the extent to which mining corporations like AGA strongly resist when they are accused by courts and civil society organizations of engaging in a slew of crimes, including fraud, corruption, theft, tax avoidance, contamination of land and water resources, systematic infringement of all kinds of rules, serious safety crimes, forced displacement and destruction of local communities, unlawful dispossession of land, and collaborating with paramilitary forces. Finally, they re-examine Michalowski and Kramer’s (2006) model of state-corporate crime in light of their empirical findings and conclude that in “order to explain and understand the logic of corporate gold mining in Colombia, a less prescriptive approach” is called for that takes harmful interactions and frictions into account at the global, national, and local levels.

Part VIII State-routinized crimes Reflexive of critical criminology and a definition of crime equating the cause of harm with something that does not necessarily have to be an act or illegal or criminal but could be all three, I am now introducing a variation of state-organized crime denoted here as “state-routinized crimes” (SRCs). A concept like SRC is especially useful for examining the theory and practice of the crimes of the powerful, especially as these revolve around different forms of institutionalized corruption. While some of these practices may be illegal even criminal, many will be routinized through public policies, civil and administrative laws, and normative political behaviors. Examples would include: the surveillance practices by the NSA, the passage of ag-gag laws, or the Halliburton “loophole” exempting fracking and other modes of oil production from the Federal Clean Air and Water Acts passed by Congress in 2006. At the time, Halliburton’s former CEO, Dick Chaney, was occupying the office of the US Vice Presidency. Legal or not, these state-routinized activities may cause or be responsible for all types of real harm and injury. These activities may also provide profits and gains for those participating individuals or networks. Most importantly, these state-routinized activities bring together politicians, lobbyists, and campaign fundraisers as well as stakeholders from all areas of business, law, and the military. Their interactions, as part of the state – financial nexus and the fiscal military – enforcement complex (e.g., the monetization of war-making and policing) serve as cultural and material transmission belts enabling various crimes of the powerful. State-routinized crimes share some commonality with expanded conceptions of organized crime. Traditionally, organized crime is commonly viewed as some kind of monolithic 22

Introduction

organization of criminals and is usually represented by some type of criminal enterprise or syndicate operating locally, nationally, or transnationally. More specifically, organized crime usually refers to “illegal activities connected with the management and coordination of racketeering (organized extortion) and the vices – particularly illegal drugs, illegal gambling, usury, and prostitution” (Block and Chambliss 1981:12). This narrowly construed definition excludes organized corruption, organized professional theft, organized burglary rings, organized identity theft, or any kind of unrelenting criminality organized by any other groups. In contrast to this selectively restrictive construction of organized crime, state-routinized activities include those expressions of “corruption,” “extortion,” and “professional theft” that are institutionalized or legally sanctioned through legislation and court decision, such as the 2010 Citizens United v. Federal Election Commission, 558 U.S. State-routinized crime borrows from Michael Johnston’s comparative analysis of corruption in both advanced and developing political economies. SRC specifically incorporates Johnston’s idea that corruption can be brought forth legally into a political system of governing, and extends this idea to include extortion as well as professional theft in order to better understand how the crimes of the powerful are neutralized and why their invisibility remains secure. Johnston (2005) characterizes and distinguishes between “influence market” corruption and five other styles of corruption practiced around the world, such as “elite,” “cartel,” “oligarch,” “clan,” or “official mogul.” He argues that the influence market-type corruption, in effect, is corruption that has been legalized. Influence market corruption (IMC) occurs in advanced political economies because the roles of competitive politics and lobbying are more complex than they are in those countries where the other styles of corruption are displayed. Compared to the styles of corruption found in developing political economies that work their means and ways around the formal systems of governing, IMC works primarily within the prevailing political-legal-economic order. Briefly, IMC “revolves around access to, and advantages within, established institutions, rather than deals and connections circumventing them” (Johnston 2005: 42). As Johnston explains, “strong institutions reduce opportunities and some of the incentives, to pursue extra-system strategies, while increasing the risks. Moreover, the very power of those institutions to deliver major benefits and costs raises the value of influence within them” (ibid.). Just as corruption can become legal, I am suggesting that extortion and professional theft can be legalized in the same way, even under the guises of the first amendment of the U.S. Constitution, as in the case of Citizens United. Let us now loop back around to Block and Chambliss’ description of the crimes of the powerful quoted earlier in this introduction, which in 1981 was inclusive of those “crimes of nation states, through the illegal and immoral acts of large corporations, to misuses of police and political office by local, state, and national power holders.” State-routinized crimes refer to those regularized activities that may or may not be illegal and whose influence enables or facilitates the harmful or injurious effects of the crimes of the powerful, especially those involving agencies of the state apparatus like the police. If one then takes Alan Wolfe’s argument in The Seamy Side of Democracy (1973), which maintained that repression was an essential aspect of class societies that is neither irrational nor spontaneous but rather a calculated method of the state apparatus to shape the parameters within which decisions are made, and combine it with the argument that crimes are primarily driven by the structural contradictions of capitalism from Quinney’s Class, State, and Crime, then one is able to interpret the repressive crimes of capitalist state control as state-routinized behavior (See also Balbus 1974). Repressive measures of state-controlled law enforcement circulate by way of fiscal – military states and state – finance nexuses that generate money and resources for all kinds of purposes, including in the United States for militarizing and SWATifizing police forces throughout urban, 23

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suburban, and rural America, or for waging wars on oppressed barrio and ghetto communities, or for coordinating the suppression across the nation of Occupy Wall Street encampments in the fall of 2011. In the case of militarizing the police, federal incentives lie within the US Department of Defense that operates the 1033 Program through the Defense Logistics Agency and the Law Enforcement Support Office (LESO), whose motto is “from warfighter to crimefighter.” According to LESO, since 1990 the program has transferred US$4.3 billion-worth of property from the military to the police. More than 17,000 federal, state, and local law enforcement agencies have been recipients of military equipment transferred through the program, which has increased from US$1 million in 1990 to nearly US$450 million in 2013 (ACLU 2014). State-routinized crimes can also be less than routinized or convoluted. They may also involve criminals from organized enterprises, as examples from this handbook reveal and as the story suggests behind the fall 2014 news headline, “Violence Erupts in Hong Kong as Protesters Are Assaulted.” After one week of nonviolent student protests demanding democratic elections for Hong Kong’s chief executive and several days of “erratic and unsuccessful attempts by the Beijing-backed government to end the protests,” unidentified men assaulted protesters and tore down their encampments in two of Hong Kong’s most crowded shopping districts (Buckley et al. 2014). Up until the point of those attacks, the Hong Kong authorities had: “resorted to one contradictory tactic after another in trying to end the demonstrations: sending in riot police officers with tear gas one day, pulling them back the next, refusing in principle to talk to the protesters, then calling for talks with university students at the forefront of the pro-democracy campaign, disclosing a plan to wait out the protests, and then appearing ill-prepared and tardy as the protesters were attacked. (Ibid.). On Friday evening one day after the Communist Party had warned that there would be “chaos in Hong Kong if the protests did not end,” two organized gangs of attackers entered the dispute. They “shoved and punched protesters, sometimes kicking them after they fell.” Others grabbed the scaffolding of canopies and pulled them down. “Residents said that the police were outnumbered and slow to react, and hours passed before reinforcements arrived to protect the protesters from a hostile crowd” of pro-Hong Kongers who sided with those who wanted access to work as usual (Buckley et al. 2014). The skirmishing first broke out in the Mong Kok neighborhood of Hong Kong, one of the most densely populated places in the world and home to “organized gangs or triads that extort payments from the many small businesses there” (ibid.). Some protesters believed that the attackers were connected to the triads. In fact, on the morning after the attacks, a police spokesman said, “19 men, including eight with links to organized crime syndicates, or triads, had been arrested in connection with the violence” (ibid.). Meanwhile, the government denied abetting the violence, but said: [T]he turmoil was a good reason for the entire protest movement to end its sit-ins across the city. Benny Tai, an associate professor of law at the University of Hong Kong and a founder of Occupy Central With Love and Peace, was quoted as saying: “I hope everybody can persist in the spirit of peaceful resistance.” However, that “may be unlikely if a commentary published” the morning after the Friday night clashes “on the front page of the Chinese Communist Party’s newspaper, People’s Daily, is as prescient as the one on Thursday that warned of chaos. The news commentary said the mayhem “could lead to deaths and injuries and other grave consequences.” (Buckley et al. 2014) 24

Introduction

As Peng Wang (2014), the author of Chapter 28 has observed, individuals and entrepreneurs frequently employ gangsters’ services to protect property rights, facilitate transactions, enforce debt repayment, and deal with government extortion. In Chapter 28, “Organized crime in a transitional economy: the resurgence of the criminal underworld in contemporary China,” Wang first identifies the causes for the re-emergence of the criminal underworld in the People’s Republic of China. These include the widening gap between the rich and poor, the emergence of a huge marginalized population, the failure of legal institutions to provide sufficient and efficient protection, the prohibition of certain goods and services, and widespread corruption in the public sector. Wang then examines and critiques the Chinese government’s series of national “strike-hard” campaigns as failing to be effective both against organized crime and police corruption. Not being able to defeat or effectively prevent organized crime, he makes two recommendations to the Chinese government. Short term, Wang calls for abandoning the “smashing black” police striking back campaigns because they drain police power and resources away from other types of crime that may be more harmful to society. Long term, he calls for market regulation through legislation and for the decriminalization of some illegal markets, such as gambling and prostitution. In Chapter 29, “Institutionalized abuse of police power: how public policing condones and legitimizes police corruption in North America,” Marilyn Corsianos scrutinizes how law enforcement as an institution creates crime opportunities for its officers, how it often operates to justify police abuse of powers, and how particular types of police abuse are either not recognized as such and/or are overwhelming ignored by internal investigators. First, Corsianos evaluates the lack of accountability mechanisms in relation to the tenants of the police culture. Next, she examines police organizational goals and public perceptions of police deviance in relation to how the state constructs and responds to incidents of police corruption. Corsianos also calls for a broader conception of police corruption to include forms of corruption that are not ordinarily recognized as such, including patterns of discriminatory law enforcement. Finally, she concludes that the North American police identities and policing systems facilitate organizational acquiescence to certain forms of police misconduct while fostering opportunities to engage in other forms. In Chapter 30, “The appearances and realities of corruption in Greece: the cases of MAYO and Siemens AG,” Effi Lambropoulou reviews the functions of corruption as she attempts to demystify Greece’s image as a nation of corrupt people. In light of two high-profile celebrated corruption cases concerning both the public and private sectors, she reconsiders the passage of anti-corruption legislation over the past two decades. The first study discloses what Lambropoulou refers to as an example of low accountability of political elites, involving party politics and questionable campaign financing based on a case filed in 2002 and because of a lack of evidence closed in 2008. The second study involves Siemens AG as an example of a classic “pay to play” crime of globalization. Lambropoulou concludes her analysis by acknowledging the cases of grand and petty corruption that are maintained over time in certain geopolitical landscapes in the South of Europe. However, she rejects the presentation of Greece as exemplifying Europe’s corrupt state par excellence, because this characterization operates as a tool of scandalization and denunciation used for the legitimation of important political and economic decisions.

Part IX Failing to control the crimes of the powerful If there were only three thematic refrains in this international handbook, probably the most unifying of those themes would be the extent to which the enforcement apparatus of capitalist states has failed miserably to control the crimes of the powerful. Another unifying theme would be the 25

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extent to which corporations, financial institutions, and state apparatuses will invest in strategies to deceive the consuming public, to distort and mystify harmful practices, to deny and dilute the effects of widespread victimization, and to co-opt or resist those interests, policies, or laws that contest the dominant relations of their power and abusive behavior. A third unifying theme, at least implicitly if not explicitly, would be the extent to which the existing power arrangements of the state–non-criminal nexus of capital unsustainable expansion needs to be fundamentally transformed through massive social, political, and economic activism. Certainly, one of the most prominent examples of the state – non-criminal working nexus failing to control the crimes of the powerful in general and state criminality in particular was when President Obama, the US Congress, and the Department of Justice in a shared “state of denial” did not pursue criminal charges against officials of George W. Bush’s administration for torturing and other criminal misconduct that were integral parts of their “secret” war on terror. Not only did Mr. Obama declare that the United States should “look forward, as opposed to looking backward,” but his administration was also unwilling to entertain an independent investigation into the torture. Even after a Senate intelligence committee finally released long-awaited summary of a 6200-page “torture review”, there was no accountability from those who arranged, encouraged, and conducted torture following the terrorist attacks of September 11, 2001. And, while the world is well aware that Khalid Shaikh Mohammed, the alleged mastermind behind the Twin Towers destruction and killing of close to 3000 persons, was water-boarded 183 times by the CIA in March 2003, the same cannot be stated about the hundreds of other enemy combatants who were tortured on behalf of the US at numerous black sites around the globe. Under the rule of law, the state apparatus should have focused its attention on and punished those who had abetted or committed these tortures. Accordingly, the European Court of Human Rights ordered Poland and Macedonia to pay damages to detainees for their complicity in the CIA’s secret torture program. The USA, however, like other superpowers, continues to buck the prevailing trends in international law and justice. Although Mr. Obama in August of 2014 finally did publicly acknowledge that “we tortured some folks,” he continued “to resist the consequences of that admission. His administration has even pressed federal judges to close the door on civil suits by former detainees, citing state secrets” (Hafetz 2014). This looks, sounds and smells strikingly familiar to the same modus operandi of denial used by the Obama administration to clear the banksters of Wall Street for their criminal and fraudulent wrongdoings (Barak 2012). These contradictory absences of the “rule of law” and the normalization or conventionalization of these crimes of the powerful across a liberal democratic society like the USA are also indicative of the degree to which its economic leaders and political institutions are held accountable to and/or dependent on rules and regulations that are fairly applied. Historically, Francis Fukuyama (2014) has shown that political order and decay fluctuates in response to the changing modes and relations of production. For example, throughout the laissez-faire nineteenth century, the US had a weak, decentralized, corrupt, and preindustrial patrimonial state. During this period, graft and other forms of bribery contributed not only to the buying of justice by those who could afford it but also to national immorality. At the time, rackets, pull, and protection were common antidotes for stubborn legal nuances. Prevailing values of wealth and success predominated as guiding principles of right and wrong (Barak 1980). Well into the twentieth century, the “ability to ‘make good’ and ‘get away with it’ offsets the questionable means employed in the business as well as the professional world. Disrespect for law and order is the accompanying product of this scheme of success” (Cantor 1932: 145). 26

Introduction

From the turn of the twentieth century up through the 1960s in the USA, changes brought about by a social revolution (first expressed by President Teddy Roosevelt and his Progressives and later by his distant cousin President Franklin Roosevelt and his New Dealers) and driven by the forces of industrialization recognized the plights and the struggles of the poor and the marginal classes. As a response to those masses of individuals who were not benefitting from and were posing a threat to the expanding political economy, some sectors of the ruling strata set about to provide a Square Deal for everyday people and to “clean up” working environments as well as the political corruption within and outside the legal systems. A strong unionization movement of working Americans and a “radical” way of thinking eventually gained the political support of some industrialists and other social leaders. A much stronger and centralized capitalist state emerged in the 1930s, subject to Keynesianism and a slew of new federal regulations, realizing a legal zenith of sorts with the “due process” revolution of the Earl Warren Supreme Court in the 1960s. By the 1980s and up until the present, one could argue that a decaying process or a reversal of legitimation has been occurring, in response both to the ideologies of neoconservatism and neoliberalism and to the forces of global competitive capitalism. By the 1990s, as the “me generation” graduates from elite colleges and universities flocked to Wall Street to make their financial fortunes as investment brokers, arbitrage dealers, and derivative traders, unenlightened self-interest, unregulated financial markets, and unfettered victimization had become the order of the day. As Fukuyama (2014) argues, political and social, if not economic development in the US has been going in reverse, spurred by deregulation, privatization, growing inequality, concentrating wealth and power, a decaying infrastructure, and a contracting welfare state. Similarly, recent U.S. Supreme Court decisions have facilitated this reversal, exemplified by Citizens United and Hobby Lobby, both further expanding the power and rights of “insider” corporate entities over those of “outsider” individuals. In the process, the political institutions have become less democratic, less fair, less efficient, and more dependent on corporate classes for their policy-setting agendas. Failing to control the crimes of the powerful is only one manifestation of the decaying state of affairs in the United States and elsewhere. Failing to control the violations of the powerful applies both to criminal offenders and to their offenses. With respect to criminal desistence and/or not controlling the habitual offenders on the street or in the suite, there has been some research, more examining the extent of the former than the latter, to which “personal” and “social” capital among these offenders relates to their reoffending or not. Generally, personal and social capital has been conceptualized in terms of “social bonds” at the individual-micro level (Sampson and Laub 1993; Nagin and Paternoster 1994) and in terms of “collective efficacy” at the group-macro level (Sampson et al. 1997; Rose and Clear 1998). Regarding white-collar offenders there are some three studies of note: one analysis is descriptive (Weisburd and Waring 2001) and two are trajectory (Piquero and Weisburd 2009; van Onna et al. 2014). It appears from these studies that employment as a form of social if not economic capital is a key factor in desistence from future crime. Unfortunately for our purposes, the available records on white-collar criminals are limited to the Yale datasets that include both working-class and middle-class convicted offenders rather than the upper-class offenders from the corridors of corporate or state power. Such data are missing for a variety of reasons, not the least of which is that there are so few convicted powerful offenders on which to collect information. In the case of any ex-Wall Street offenders from Goldman Sachs, AIG, or Morgan Stanley, and so on there are zero convict records to study – because none of these “criminal” violators was ever charged, let alone prosecuted or convicted for any of their criminal wrongdoings. There are, however, some anecdotal stories about one very super-rich professional ex-offender Michael Milken. Developer of the high-yield bond and other innovations in access 27

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to capital, Milken pled guilty in 1989 to reporting and securities violations, was sentenced to ten years in prison, fined US$600 million, and barred from the securities industry for life. As part of his plea deal, Milken’s indictments for racketeering and inside trading were dropped. Subsequently, his sentence was reduced to two years for cooperating with prosecutors against his former financial colleagues and for his good behavior. Upon his release from prison, he was invited by the Anderson Graduate School of Management at UCLA to participate as a guest lecturer in a finance course and to help the school develop a teaching video at his expense for use by universities across the USA. Today, Milken is worth some US$2.5 billion. He is also a survivor of prostate cancer and a founder of medical philanthropies funding research into all types of life-threatening diseases. So, one might say that in addition to his vast economic worth, he has a great deal of “social” capital through his philanthropic endeavors, such as the Milken Family Foundation and the Milken Institute. Milken is also married to his second wife and has three grown children, so one could check off the “personal” capital box, too, as contributing to his desistence from crime. In the opening chapter of this final section, “Postconviction and powerful offenders: the white-collar offender as professional-ex,” Ben Hunter and Stephen Farrall explore the postconviction accounts of white-collar offenders with reference to their professional-ex statuses. In doing so Hunter and Farrall reveal how by adopting a professional-ex status an individual draws upon a previous, deviant identity in order to give legitimacy to a new identity. They specifically focus in detail on the accounts of a couple of relatively powerful professional ex-offenders. The first is Barry Minkow, convicted of accounting fraud at age 20 for single-handedly operating a US$100 million Ponzi scheme that collapsed in 1987. Upon release from prison he became a pastor, a fraud investigator, and ethics spokesperson who ultimately returned to prison in 2011 and again in 2014. Today, he stills owes more than US$600 million in restitution for his role in deliberately helping to drive down the stock price of home builder Lennar Corporation, a Fortune 500 company based out of Miami, Florida. The other professional-ex reviewed by Hunter and Farrall is Charles Colson of Watergate infamy. A former adviser to President Nixon, who after release from prison became a famous Evangelical Leader and founder of the very successful Prison Fellowship Ministries, Colson remained crime-free up until his death in 2012 at the age of 80. With respect to not controlling powerful crimes, abuses, and misbehaviors there are the internal/informal levers of power (i.e., boards of directors, investors, legal counsel, accountants) and the external/formal levers of power (i.e., law, litigation, arbitration, punishment) circulating through business organizations in particular. There are also the ideological or cultural inhibitors espoused by those criminologists, policy wonks, entrepreneurs, economists, lawyers, and others that often advocate on behalf of “social responsibility” or “financial accountability” as informal strategies for reducing the crimes of the powerful. In the case of corporate and financial abuse and crime, boards of directors are called upon to “do the right thing,” to act ethically and responsibly in their roles of oversight and accountability. These palliatives are often heard and repeated as bromides for reining in the misbehavior of the powerful, such as when Mary Jo White, the chairwoman of the Securities and Exchange Commission, delivered a speech at Stanford University’s Rock Center for Corporate Governance in the early summer of 2014. White emphasized the importance of the duty of corporate directors to protect shareholders from abusive practices at companies that they oversee: “ethics and honesty can become core corporate values when directors and senior executives embrace them” (Quoted in Morgenson 2014: 1). Unfortunately, published research reveals that under current governing relations where the majority of corporate boards have personal ties with their chief executives, this is much easier said than done, even when their overlapping relations (or conflicts 28

Introduction

of interests) are disclosed or transparent. In fact, nearly half (46 percent) of those with personal ties as contrasted with only 6 percent of those with no personal ties, in order to assist CEOs in getting their annual bonuses, for example, would agree to actions that would not only hurt investors and taxpayers, but would also increase the risks for the well-being of these companies’ futures. These contradictory relations are vital to the workings of corporate boardrooms (Morgenson 2014). Critics of social responsibility and financial accountability recognize the importance of these findings. Unfortunately, most advocates, expert and lay alike, typically ignore these everyday, compromising relationships. In Chapter 32, “Business ethics as a means of controlling abusive corporate behavior,” Jay Kennedy examines the often contradictory relations between private profits and social responsibility. He first describes and discusses the field of “business ethics,” with an emphasis on behavioral ethics and the ability of ethical business principals to control the proliferation of abusive corporate behavior within a business environment. In the process, Kennedy highlights both the history and philosophy underpinning business ethics and the ability of its behavioral approach to influence business decision making through both formal and informal means. He concludes that while business ethics are not necessarily a panacea, they do provide government regulators, non-governmental agencies, corporations, business schools, and businesspeople with a means “to materially affect abusive behavior within the marketplace,” especially when that behavior is viewed as ethically ambiguous. The next reading illustrates a “reversal in crime control.” That is a contradictory situation where agribusiness in this instance has been able to lobby successfully for the passage of laws to criminalize the behavior of those who would expose the farming industry’s cruelty to animals. In Chapter 33, “Ag-gag laws and farming crimes against animals,” Doris Lin, an animal rights attorney, examines the efforts of agribusinesses to shut down the investigations into factory farming cruelty to animals through the passage of “ag-gag laws” that criminalize the making or distribution of undercover photos or videos that document these felonious behaviors. As paradoxical as these laws may be, Lin reveals that in the US animal cruelty laws at all levels of government operate to protect factory farms and animal agriculture more than they protect animals. For example, most state animal cruelty laws exempt animals raised for food as well as most of the practices common to big agricultural facilities. But instead of the government addressing the cruel conditions of factory farming or the inadequacy of existing laws to protect these animals, in a number of states ag-gag bills are being introduced as one more means of suppressing the exposure of animal cruelty, as well as a means to criminalize those individuals who would dare to bring these abuses to public attention. Following her discussions on factory farming crimes, the relationships between agribusiness and government regulation, and the development of ag-gag laws, Lin also explains why “humane farming” is not a viable alternative to factory farming. She concludes that whether or not one believes animals are sentient and have rights, ag-gag laws are objectionable because they not only allow an industry to operate in secrecy, but they also punish individuals who expose wrongdoing. In Chapter 34, “Genocide and controlling the crimes of the powerful,” Augustine Brannigan explains why genocide and related war crimes among the gravest offenses recognized in international criminal law have been so rarely successfully prosecuted. After introducing the Kantian vision of a “cosmopolitan justice” he then outlines the evolution of the legal framework under which genocide has been defined and applied. His narrative moves chronologically from sovereign immunity to criminal accountability, to the rule of law at Nuremberg, to the Genocide Convention of 1948, and finally to the Rome Statue and the establishment of The International Criminal Court in 2002. Using applicable examples as he proceeds through this history, Brannigan identifies the numerous contemporary obstacles still in the way of the attempts to control the crimes of the 29

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powerful through the law of genocide, such as the costs of funding these tribunals or the biases of focusing on developing nations in Africa that have little power to introduce their own security measures or to resist the neo-colonial incursions by the ICC to fill these legal vacuums. Although Brannigan acknowledges that there has been a “remarkable diminution of the impunity with which sovereigns can evade criminal accountability in international law,” the problem of not yet achieving cosmopolitan justice through the creation of the ICC stems primarily from the fact that “the major superpowers have absented themselves from its jurisdiction by failing to support the convention on which it is based.” He ends his chapter with the hope that as Nuremberg provided a check on sovereign immunity globalization may produce a reconceptualization of sovereign power as “a balance of political autonomy combined with a responsibility to the community of nations and to the governed.” Brannigan acknowledges that if this were to materialize, it would have to be led by the “middle powers” nations like Germany, Canada, Brazil, Japan and so on because this is not likely to be a priority of the superpowers. Moreover, in terms of “balanced” global power this would also have to be in opposition to empire. As Kramer (2012: 442) argues, “One necessary, although clearly not sufficient, step in the effort to curb state crime . . . is to challenge, resist, and change the American empire,” which continues not only “to engage in the most state violence in the world,” but also through its “attempted imperial domination of the globe creates or supports conditions that lead to state crimes on the part of other nations.” With respect to external or international violators, among the relatively powerful world nations, probably Israel, Russia, and the United States are the biggest offenders. In the case of the US, for example, post 9/11 it has tortured (e.g., Bagram Air Force Base, Afghanistan; Abu Ghraib, Iraq; Guantanamo Bay Naval Base, Cuba) and assassinated “enemy combatants” by drone (e.g., Yemen, Pakistan, Somalia). The US also illegally invaded and waged war against Iraq in 2003 and occupied the country until the end of 2011. Not unlike Stanley Cohen (2001) in States of Denial of the atrocities and suffering throughout the world, Kramer argues that challenging the crimes of empire calls for breaking through the denial and normalization of these crimes of the powerful, contesting their corporate and state connections, and enhancing the power and control of international political and legal institutions. In Chapter 35, “Controlling state crime and alternative reactions,” Jeffrey Ian Ross contextualizes the notions of controlling state crimes. He first outlines the traditional types of “internal” (e.g., police, national security/intelligence agencies, the military, and educational institutions) and “external” (e.g., domestic and international laws, transitional justice, and criminal tribunals) control mechanisms. He then examines the alternative reactions (e.g., victim/activist/opposition group resistance, state/organizational resistance, and state/organizational public relations) to the traditional state controls and the state’s responses to those. After reviewing these traditional and non-traditional attempts at controlling state crime, Ross concludes somewhat sardonically that short of abolishing the state, state crimes and the non-control of these crimes will continue to provide ample content for understanding why these processes of control fail to do so. In Chapter 36, “Hacking the state: hackers, technology, control, resistance, and the state,” Kevin Steinmetz and Jurg Gerber examine hackers as important players in the global struggle for technological control and resistance. This offering seeks to incorporate alternative perspectives into the state crime literature. Specifically examining the roles, the philosophies, and the practices of hackers, Steinmetz and Gerber contend that while hackers such as Anonymous, a loosely associated network of activists and hacktivists, are often demonized in a process of social construction and moral panics and sometimes pose threats to state and corporate interests, they actually have much to teach criminologists and state actors about cyberspace and crimes by the state. Going forward, they conclude that nations, aided by hacker communities, would be well served in reevaluating their policies and laws surrounding technology, information, and surveillance. 30

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Interesting “bedfellows” one might say about national cyberspace security forces teaming up with hacker communities to prevent crime. However, that is precisely the case in Washington Post journalist David Ignatius’ 2014 novel The Director, where the CIA hires a hacker to head up its “counter-hacking” division to bring the agency into the twenty-first digital century as it races to prevent the international financial system from what could be total bankruptcy. Spoiler alert: Turns out that the hacker with all the preppy credentials that one could need, including an advanced degree in computer engineering from Stanford University, is a double agent in league with a cyber group of “liberal do-gooders” who want to steal the money back from New York, London, and Hong Kong and redistribute it into the people’s bank accounts. Turning from fiction to headlines, on October 3, 2014, “Hackers’ Attack Cracked 10 Financial Firms in Major Assault,” including JP Morgan Chase, the world’s largest bank accessing information on 83 million households and businesses, in what has been called “one of the most serious computer intrusions into an American corporation.” According to the New York Times article, the hackers are thought to be operating from Russia and appear to have loose connections with officials of the Russian government. The breadth of the cyber attacks and “the lack of clarity about whether it was an effort to steal from accounts or to demonstrate that the hackers could penetrate even the best-protected American financial institutions” has left “Washington intelligence officials and policy makers far more concerned than they have let on publicly” (Goldstein et al. 2014). Speculation about the breaches that occurred in August 2014 include that they were meant to send a message to Wall Street and the US that its digital networks of the world’s most powerful banking institutions were vulnerable. “It could be in retaliation for the sanctions” placed on Russia for its military intervention into the Ukraine by the US and its allies, stated one senior official who had been briefed on the intelligence. “But it could be mixed motives – to steal if they can, or to sell whatever information they could glean” (Goldstein et al. 2014). Whether or not the banks are up to the job of digitally protecting themselves, the attacks have already stoked questions about the inconsistent regulations governing when companies must inform regulators and their customers about a breach. In the wider world of domestic and international state security surveillance, for example, there is the National Security Agency that is virtually an unencumbered free agent without any real type of oversight or regulation. On several occasions during its history the NSA has come under criticism for spying. Most recently, this was the case when in 2013 Edward Snowden revealed the extent of the NSA’s secret surveillance, including that the agency intercepts the communications of over a billion individuals worldwide, tracks the movement of hundreds of millions of people, and collects and stores the phone records of all US citizens. Post 9/11 both the Bush and Obama administrations waged a war against whistleblowers and investigative journalists that has had a chilling affect on both (Solomon and Wheeler 2014). In Chapter 37, “(Liberal) democracy means surveillance: on security, control and the surveillance techno-fetish,” Dawn Rothe and Travis Linnemann suggest that it is not only surveillance programs such as PRISM that must be “a target for radical critique, but also the public’s disavowal of its complicity in more banal and normalized forms of surveillance,” including a slowing down and unplugging from our mediated lives. As for the recent revelations over state surveillance, they argue that these are simply the latest iterations in processes that have always been part and parcel of state power, social control, and capitalist order building. They reject the position that what is called for is merely a balancing of individual rights and security, arguing that the portrayal of surveillance in this vein legitimates the state system by implying that some degree of surveillance is acceptable. Rothe and Linnemann contend that the intermittent outrage over government intrusion more aptly reflects an enduring capitalist techno-fetish, which they aver is a deeply 31

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engrained part of our consumer culture. The focus upon “new” surveillance projects operates as fetish objects. Once fetishized, surveillance technologies, not unlike drone strikes, become objects of outrage, allowing the underlying state violence of state power to carry on, in essence, unchallenged. Finally, to fetishize “new” surveillance they argue is to overlook and become complicit in quotidian forms of state violence, coercion, and terror. In the closing chapter to this handbook, “Limiting financial capital and regulatory control as non-penal alternatives to Wall Street looting and high-risk securities frauds,” Gregg Barak explains why criminal law has had no effect on controlling high-risk securities frauds. The contribution departs from those financial reforms calling for organizational ethics, for stricter law enforcement, and for the passage of new laws not only because all of these have consistently failed in the past, but also because high-risk security trading and many of the illegalities originate from private stock exchanges and “dark pools” representing today more than one-third of equity trading in the United States and Europe. These high-speed trading pools involving mutual funds, pension funds, and other institutional investors are where the frauds are more likely to happen because these trades are conducted outside the public exchanges and beyond their control or oversight. Chapter 38 begins by describing the forces of free-market capitalism and the failures of securities law to prevent Wall Street fraud and looting. It discusses the inefficacies as well as the non-controls of state-legal interventions into these securities, past and present. The chapter concludes by summing up its argument and identifying 20 related policy proposals and/or political ambitions that are anti-neoliberalism to the core and reflective of an alternative paradigm viewed as absolutely necessary for changing the prevailing power relations of free-market capitalism and for curbing the crimes of the powerful. This new paradigm is part of the movement away from an ownership economy and toward a collaborative economy based on developing a mixed economy as well as the financial restructuring of the political economy.

Crises, contradictions and control: a postscript for the twenty-first century? More than six years after the financial collapse, a global recession, if not economic crisis, still persists throughout the world. The well-being of the relatively powerless and masses of people has continued to deteriorate. Meanwhile, the super-rich and the very powerful are getting much richer and more powerful than ever before. In 2012 the top 100 billionaires from China, Russia, India, Mexico, Indonesia, North America, and Europe added US$240 billion to their coffers, enough money, Oxfam calculates, to end world poverty overnight. Unfortunately, the current policies in place to address these contradictions are more likely to exacerbate rather than ameliorate them. Unless the power relations behind the policies that speak to the problems of capital accumulation, reproduction, and consumption fundamentally change, the prospects of controlling the crimes of the powerful as opposed to suffering from them will remain close to zero. Policy wise, to fix the contemporary crises, the world finds itself caught between neoliberal, supply-side and monetarist remedies as in Europe and the United States that emphasize austerity and privatization, on the one hand, or a centralized demand-side and debt-financed expansion that ignores the Keynesian emphasis on the redistribution of money to ordinary people, as in China, on the other hand. Paradoxically, the economic and political outcomes are the same – widening and escalating inequalities – because in either case the world is increasingly turning to central banks, led by the Federal Reserve of the United States, to manage the recurring financial global crises. These “solutions” to resolving the problem of capital accumulation depend, in other words, on the contradictory “dictatorship of the world’s central bankers” whose primary 32

Introduction

concern is about protecting and bailing out the banks, the plutocrats that run them, and the various systems of market capitalism with little, if any, regard for the well-being of the general masses of people. In sum, unless the prevailing political and economic arrangements locally and globally as well as the contradictions of the bourgeois legal relations of the capitalist state are structurally addressed, it is very hard to imagine how any other kind of tinkering will alter the negative trends of unsustainable capital development or make any kind of dent in the volume let alone in the driving forces underpinning the crimes and victimization of the powerful. Accordingly, what is needed as an alternative to the current economic malaises is a worldwide people’s movement on behalf of a global system of international Keynesianism, an Eco-welfarism, and a Marshall-like strategic plan of sustainable growth. Consistent with this utopian vision is a realpolitik recognition that resisting the crimes of the powerful has little in common with trying to make the existing regulatory or penal arrangements of social control work better through reformist-type modifications of business as usual. Rather, fundamental changes of the political economy through social, cultural, and global activism are called for. Without eliminating the basic conditions that nurture these crimes of the powerful, new and improved social controls will not change the enduring reproduction of these crimes.

Note 1 Quotes taken from WBEZ Chicago’s This American Life, episode 536: The Secret Recordings of Carmen Segarra. Reproduced with the kind permission of This American Life.

References ACLU. 2014. War Comes Home: The Excessive Militarization of American Policing. June. New York: ACLU Foundation. Agnew, R. 2012. “Dire Forecast: A Theoretical Model of the Impact of Climate Change on Crime.” Theoretical Criminology (February) 16: 21–42. Appelbaum, E. and Batt, R. 2014. Private Equity at Work: When Wall Street Manages Main Street. New York: Russell Sage. Aulette, J. and Michalowski, R. 1993. Fire in Hamlet: A Case Study of State-Corporate Crime, in Political Crime in Contemporary America, edited by K. Tunnel. New York: Garland, pp.171–206. Balbus, I. 1974. The Dialectics of Legal Repression: Black Rebels Before the American Criminal Courts. New York: Russell Sage Foundation. Banerjee, N. and Khouri, A. 2014. “BP, Found Grossly Negligent, May Face $18 Billion in Gulf Spill Fines.” Los Angeles Times, September 4. Available at: www.latimes.com/nation/nationnow/la-na-nn-bpreckless-gulf-oil-spill-20140904-story.html. Barak, G. 1980. In Defense of Whom? A Critique of Criminal Justice Reform. Cincinnati, OH: Anderson Publishing. Barak, G. 2012. Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding. Lanham, MD: Rowman & Littlefield. Barak, G. (ed.). 1991. Crimes by the Capitalist State: An Introduction to State Criminality. Albany, NY: State University of New York Press. BBC News. 2014. “Hedge Funds Condemned over Argentina.” September 26. Black, W. 2005. The Best Way to Rob a Bank is to Own One: How Corporate Executives and Politicians Looted the S & L Industry. Austin, TX: University of Texas Press. Block, A. and Chambliss, W. 1981. Organizing Crime. New York: Elsevier. Brannigan, Augustine. 2013. Beyond the Banality of Evil: Criminology and Genocide. Oxford: Oxford University Press. Buckley, C., Ramzy, A. and Wong, E. 2014. “Violence Erupts in Hong Kong as Protesters Are Assaulted.” The New York Times, October 3. Available at: www.nytimes.com/2014/10/04/world/asia/hong-kongprotests.html?emc=edit_th_20141004&nl=todaysheadlines&nlid=34985918&_r=0. 33

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Rose D.R. and Clear, T.R. 1998. “Incarceration, Social Capital, and Crime: Implications for Social Disorganization Theory.” Criminology, 36, 441–480. Rothe, D. 2009. State Criminality: The Crime of All Crimes. Lanham, MD: Lexington Books. Rothe, D. and Friedrichs, D. 2015. Crimes of Globalization. London: Routledge. Ruggiero, V. 2013. The Crimes of the Economy: A Criminological Analysis of Economic Thought. London: Routledge. Sampson, R.J. and Laub, J.H. 1993. Crime in the Making: Pathways and Turning Points Through Life. Cambridge, MA: Harvard University Press. Sampson, R.J., Raudenbush, S.W. and Earls, F. 1997. “Neighborhoods and Violent Crime: A Multilevel Study of Collective Efficacy.” Science, 277, 918–924. Sassen, S. 2014. Expulsions: Brutality and Complexity in the Global Economy. Cambridge, MA: The Belknap Press of Harvard University Press. Schwendinger, H. and Schwendinger, J. 1970. “Defenders of Order or Guardians of Human Rights.” Issues in Criminology, 5: 123–157. Sheptycki, J. and Wardak, A. (eds). 2005. Transnational and Comparative Criminology. New York: Glasshouse Press. Smeulers, A. and Haveman, R. (eds). 2008. Supranational Criminology: Towards a Criminology of International Crimes. Antwerp: Intersentia. Smith, Y. 2014. “The SEC Coverup for Private Equity: Worse Than for TBTF Banks?” Available at: www. nakedcapitalism.com/2014/09/sec-coverup-private-equity-worse-tbtf-banks.html. Solomon, N. and Wheeler, M. 2014. “The Government’s War on Whistleblowers.” The Nation. October 27: 12–18. Stiglitz, J. 2014. “Inequality is not Inevitable.” The New York Times, June 29, Sunday Review: 1 and 7. Stout, H. 2014. “After a G.M. Recall, a Fiery Crash and a Payout.” The New York Times, September 25. Available at: www.nytimes.com/2014/09/26/business/after-a-gm-recall-a-fiery-crash-and-payout. html?emc=edit_th_20140926&nl=todaysheadlines&nlid=34985918&_r=0. Stout, H., Ivory, D. and Ruiz, R. 2014. “Regulator Slow to Respond to Deadly Vehicle Defects.” The New York Times, September 14. Available at: www.nytimes.com/2014/09/15/business/regulator-slow-torespond-to-deadly-vehicle-defects.html?_r=0. Taylor, I., Walton, P. and Young, J. 1973. The New Criminology: For a Social Theory of Deviance. London: Routledge & Kegan Paul. The Associated Press. 2014. “F.D.I.C. Sues 16 Big Banks Over Rigging of a Key Rate.” Available at: www. nytimes.com/2014/03/15/business/fdic-sues-16-big-banks-over-rate-rigging.html?_r=0. The Nation Editorial. 2014. “The Heat Rises on Climate.” The Nation, October 13: 3. van Onna, J.H.R., van der Geest, V.R., Huisman, W. and Denkers, A.J.M. 2014. “Criminal Trajectories of White-collar Offenders.” Journal of Research in Crime and Delinquency, 51(6): 759–784. Wang, P. 2014. “Extra-legal Protection in China: How Guanxi Distorts China’s Legal System and Facilitates the Rise of Unlawful Protectors.” The British Journal of Criminology, 54 (5): 809–830. Warren, E. 2014. A Fighting Chance. New York: Metropolitan Books. Weisburd, D., and Waring, E. (2001). White-collar Crime and Criminal Careers. Cambridge: Cambridge University Press. Whyte, D. (ed.). 2009. The Crimes of the Powerful: A Reader. Buckingham, Berks: Open University Press. Will, S., Handelman, S. and Brotherton, D. (eds). 2013. How They Got Away With It: White Collar Criminals and the Financial Meltdown. New York: Columbia University Press. Wolfe, A. 1973. The Seamy Side of Democracy: Repression in America. New York: McKay Company. Young, J. 1999. The Exclusive Society. London: Macmillan.

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Part I

Culture, ideology and the crimes of the powerful

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1 Crimes of the powerful and the definition of crime David O. Friedrichs

Introduction In 1897 an English-language book by Cesare Lombroso, Criminal Anthropology, was published. Lombroso’s approach to understanding crime was tremendously influential in the development of criminology in relation to its focus upon conventional, individual offenders and the application of a positivistic approach to the study of crime and criminality. Lombroso, an Italian physician, is quite uniformly identified as a pioneer criminologist, and typically, significant space is devoted to his career and his ideas in any history of criminology. For Lombroso – and for most criminologists who have followed in his wake – crime is principally an activity engaged in by the powerless, but in the year following the publication of Criminal Anthropology, in 1898, a French judge, Louis Proal, published a book entitled Political Crime. The book was published by D. Appleton and Company as part of a “Criminology Series” edited by W. Douglas Morrison, including his own book, Our Juvenile Offenders, The Female Offender by Cesare Lombroso and William Ferrero, and Criminal Sociology by Enrico Ferri. Proal addressed the crimes that are carried out in the political domain, with the most consequential of these perpetrated or directed by powerful political leaders. Among other topics, the book addressed tyranny, war and corruption. Proal and his book are almost wholly unknown to contemporary criminologists, and Proal’s work is not addressed in standard histories of the development of the field of criminology and criminological theories. Yet let us suppose it had been the other way around: that it was Proal and not Lombroso who became an iconic figure in the history of criminology. If it had played out this way the whole character and focus of criminology might be quite different, with the majority of criminologists focused upon the crimes of the powerful. The crimes of the powerless would in this scenario be a somewhat more limited focus of criminological research and exposition. There is significant resistance among many criminologists to engaging with the definitional issues relating to crime or to specific types of crime. This author has encountered over the years any number of comments on “tedious” and “interminable” definitional discussions. Many criminologists clearly prefer to “get on with the work” of addressing specific theoretical and empirical questions that arise in relation to crime and its control, as opposed to devoting time and intellectual energy to dialogues relating to definitional and conceptual issues. Such impatience is understandable on a certain level, and the downside of becoming “imprisoned” by definitional 39

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conundrums to the point where one is hindered from addressing concrete and consequential “real-world” issues needs to be acknowledged. But the premise here is that avoidance of core definitional issues has costly consequences in relation to theoretical and empirical progress. All too often, we end up with criminologists talking past each other or generating a bottomless well of confusion and misunderstanding because the core concept of “crime” is not clearly defined. Addressing the definitional issues has to be a fundamental starting point for any coherent discussion of crimes of the powerful. The historical focus principally on the crimes of the powerless, not the powerful, is significantly a function of how crime has been defined and imagined. There is a long and enduring history of invoking the term “crime” without any attempt to define it. For many people the meaning of the term “crime” is clearly taken to be obvious. The term crime is most widely equated with conventional criminal offenses, or violations of the criminal law that are exemplified in the United States by the FBI’s index crimes: murder, rape, assault, robbery, burglary, auto theft, larceny and arson. This is the type of crime traditionally of most concern to the American public, along with drug-related offenses and recent concerns about terrorism, and these offenses account for most of the “mass imprisonment” of the recent era (Abramsky, 2007). The largest proportion of criminological scholarship addressing crime through the present era encompasses one or more of these types of crime. But there is also a long tradition critical of the limitations of a conventional conception of crime (Hall, 2012; Henry and Lanier, 2001; Tifft and Sullivan, 1980). Accordingly, the claim is made that much of the focus of mainstream criminologists is seriously skewed. If criminology as an enterprise has focused very disproportionally on the crimes of the powerless as opposed to the crimes of the powerful, why is this so? It is rooted in part in the historical circumstance of embracing a certain conception of crime, which over time becomes reinforced and reified. The media and the broader public discourse on crime, as well as the political classes, are disproportionally focused upon conventional forms of crime. Graduate students in criminology came to adopt the conception of crime of their professors and mentors, and a cohort effect continues to reinforce this conception of crime and criminals (Savelsberg and Flood, 2004). Career advancement is best realized by focusing on the types of crime that is the primary focus of the public as well as of those who shape the curriculum of criminal justice and criminology programs. The vast majority of students who enroll in such programs are focused upon conventional criminals and their control. Powerless offenders, often institutionalized, are more readily available as research subjects than powerful offenders. Furthermore, powerful entities are well positioned to derail or retaliate against research projects directed at their activities. Powerless entities have no such influence or clout. Altogether, a confluence of factors militate against a focus upon crimes of the powerful, and those who choose to do so must often contend with various forms of direct and indirect pressure to shift their attention elsewhere.

Defining crime and the criminological mainstream As Robert Agnew (2011: 13) notes, little space and time are devoted to considering the definition of crime in mainstream texts and in discussions of crime and criminological phenomena. Much mainstream criminology clearly adopts a taken-for-granted approach to what the term crime (and criminal) refers to, with a strong if not exclusive emphasis upon conventional types of crime. A volume entitled The Future of Criminology, edited by Rolf Loeber and Brandon C. Welsh (2012), exemplifies this pattern. Nowhere in this volume do we find any discussion of the meaning of crime or criminal: it is taken for granted that readers understand what these terms refer to (i.e., conventional law-breaking and “street” criminals). There is no acknowledgment of any kind that crime and criminals may exist outside the conventional framing of such activity. Nor 40

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is there any acknowledgment that “the future of criminology” extends beyond the criminological mainstream, and accordingly there is at a minimum an implicit if not explicit dismissal of the notion that any criminological concerns outside the mainstream criminological framework are part of a legitimate criminological enterprise. The exclusion of a vast range of willfully harmful endeavors – by states, corporations, and other hugely powerful entities – is immensely limiting for a criminology that aspires to remain relevant in the twenty-first century. This type of institutionalized parochialism – which is quite pervasive within criminology – may be attributed at least partially to the dismissal of definitional and conceptual issues. Michael Gottfredson and Travis Hirschi’s (1990) “general theory of crime” is – within the American context – the single most widely cited and widely tested criminological theory of the present era (see, e.g., Cohn and Farrington, 2012; Goode, 2008; Madfis, 2012). This general theory holds that crime (all crime) is best explained as a function of low self-control and poor parenting. Indeed, Gottfredson and Hirschi claim that this explanation applies not just to those types of behavior that are commonly characterized as “crime,” but to the whole range of patterns of deviant conduct (e.g., all forms of substance abuse) as well as proneness to accidents and so forth. The popularity of this theory may well be the attractiveness of adopting a form of explanation with a limited number (as opposed to a multiplicity) of variables, and the availability of standard instruments for testing the theory which allow for the generation of findings in a quantifiable form, with the application of impressive multiple regression equations and so forth. Gottfredson (2011: 36) has recently argued against the adoption of either a legalistic definition of crime or a disciplinary definition of crime, in favor of a behavioral definition of crime as “part of a much larger set of behaviours that provide (or appear to provide) momentary benefit for the actor but which are costly in a longer term.” It should be obvious that such a definition of crime inherently aligns crime with the behavioral patterns of members of society who are powerless, not powerful, and skews the study of crime almost exclusively to street crime. On the one hand, Gottfredson and Hirschi (1990: 191; Gottfredson 2011: 39) have referred to white-collar crime – and organizational crime specifically – as “rare.” On the other hand, they have also claimed that the profiles for white-collar and conventional offenders are virtually parallel. Both claims have been challenged, as have the huge limitations of the general theory in relation to understanding white-collar crime (Friedrichs and Schwartz, 2008). Crimes of the powerful are anything but rare, and powerful criminals have dramatically different profiles from conventional offenders. Donald Palmer (2012), a professor of sociology and organizational behavior, argues that organizational wrong-doing is in fact “normal.”

The criminological critique of the mainstream conception of crime At least some criminologists who would be classified as falling within the parameters of the criminological mainstream acknowledge the limitations of the traditional, mainstream criminological way of defining and studying crime. Robert Agnew (2011), in Toward a Unified Criminology, specifically engages with the work of a range of critical criminologists and puts forth an integrated definition of crime that seeks to find some common ground between mainstream and critical criminological approaches to defining crime. The advantages of this integrated definition of crime, which promotes a broadening of the scope of criminological concerns, are fully addressed by him. John Hagan (2010), in his Who are the Criminals?, offers a potent critique of the conventional, mainstream framing of the problem of crime, with its highlighting of street crime or conventional crime and its relative inattention to suite crime or high-level white-collar crime. Hagan has produced several recent books on genocide and international criminal justice in relation to crimes of states. Both Agnew and Hagan have been recipients of major forms of 41

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recognition by the criminological establishment and are highly respected contemporary criminologists. Accordingly, their critiques of the mainstream way of defining of and conceiving of the problem of crime are at least potentially influential. Joachim Savelsberg (2010) is another prominent criminologist aligned with the mainstream who has argued for criminological attention to human rights violations. It remains to be seen whether a critical mass of mainstream criminologists will heed the call for an expanded scope of criminological concerns. There is a long-standing tradition of critique of conventional conceptions of crime that have been advanced by self-described radical or critical criminologists (see, e.g., DeKeseredy and Dragiewicz, 2012; Tifft and Sullivan, 1980; Watts et al., 2008). Richard Quinney (1970) introduced in The Social Reality of Crime an influential conception of crime as a construct put forth by the powerful to reflect their interests. The “humanistic” definition of crime put forth by Schwendinger and Schwendinger (1970) is quite familiar and has been widely cited. The approach to conceiving of crime as “crimes of capital” by Raymond Michalowski (1985), in Order, Law and Crime, was another noteworthy contribution. Stuart Henry and Mark Lanier (2001), in an in-depth consideration of the definition of crime, have advanced a “prism of crime” definition (see also Agnew, 2011). For some criminologists, the term crime itself is inevitably so limiting and so constrained by its historical meaning that it should be abandoned in favor of “social harm” as the focus of our concern, with criminology itself being replaced by “zemiology,” or the study of harm (see Friedrichs and Schwartz, 2007; Hillyard et al., 2004). A call on the part of Victoria Greenfield and Letizia Paoli (2013) for creating “a framework to assess the harms of crimes” represents one recent initiative to increase the focus on the harm dimension inherent to definitions of crime. Altogether, the radical and critical critiques of the definition of crime promote attention to the crimes of the powerful, and take a form which recognizes that the crimes of the powerful tend to be exponentially more consequential than the crimes of the powerless.

Who are the powerful? If the definition of crime itself is contentious, the notion of “the powerful” also requires some attention. It is widely recognized that “power” is a key force (some suggest the key force) in the world inhabited by human beings, and many tomes have been devoted to addressing the concept of power (e.g. Hearn, 2012). We need not engage with this large literature here, but one should acknowledge that the powerful is a somewhat elastic term. It can be stretched to encompass the unambiguously powerful but can encompass as well parties and entities that have only some degree or measure of power. We have powerful entities (e.g., major corporations) and powerful individuals. In some cases, power is structurally embedded within the political economy; in other cases, power is situational and circumstantial. Political dictators in totalitarian states – with Hitler and Stalin being the paradigmatic historical cases – are the most unambiguously powerful individuals, and in both cases these individuals were responsible for inspiring and setting into motion crimes on a monumental scale. In the public sector, high-level political and governmental officials have formidable power; but what of government bureaucrats and low-level government officials, such as police and corrections officers? They certainly have some power, and they may exercise considerable power in carrying out specific or implied orders of their superiors, or they may be abusing the power they have to further their own personal agendas or as expressions of personal biases. Police abuse of power – some of which is mundane and some especially serious (e.g. misuse of deadly force)—has long been recognized and studied (e.g., Eitle et al., 2014). In the private sector, CEOs of major corporations and financial institutions also have formidable power, but lower level executives as well as managers and foremen have situational power. 42

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As C. Wright Mills (1956) famously highlighted in his classic book, a “power elite” of the top government, military and corporate people has disproportionate power within society, and has various interconnections with each other to advance common interests and to make trade-offs between themselves in relation to differential power exercised in different realms. The empirical validity of Mills’ claims has been challenged from the outset (Domhoff and Ballard, 1968; Hearn, 2012: 70). But at a minimum the exercise of power is hugely asymmetric in contemporary society, and at least some significant interlocks and intersections of interests occur within the highest reaches of society. In relation to crimes of the powerful specifically, the identification of any such interlocks and intersections is one key challenge. Altogether, we need to recognize that the powerful may be conceived of in traditional terms, as individuals; in modern terms, as organizations; and in postmodern terms, as networks.

The definition of white-collar crime and crimes of the powerful Within American criminology in particular, Edwin H. Sutherland is surely the highest profile figure associated with a challenge to the conventional definition of crime. For some commentators, Sutherland is the most significant criminologist of the twentieth century. His introduction of the concept of “white-collar crime” is among his more important contributions. We need not here revisit in any detail Sutherland’s (1945) celebrated exchange with law professor Paul Tappan (1947), who complained that Sutherland’s application of the term “white-collar crime” to a range of activities not specifically declared crimes by legislative criminal law was unwarranted. But the essence of Sutherland’s response to Tappan has remained hugely influential among subsequent students of white-collar crime: the inclusion of violations of civil and administrative law as well as of criminal law could justifiably be encompassed by the term “white collar-crime” because the white-collar “class” has too much influence over lawmaking generally and criminal lawmaking specifically. Accordingly, limiting the definition of white-collar crime to actions specifically proscribed by the criminal law excludes a vast amount of obviously immensely harmful activity carried out by the white-collar class. In effect, limiting oneself to the activities specifically proscribed by the criminal law in relation to white-collar crime plays directly into the hands of corporations and other powerful social actors who have succeeded in preventing the “crime” label from being applied to a wide range of demonstrably harmful activities in which they engage. For all of the credit Sutherland deserves in relation to introducing the concept of white-collar crime to the field of criminology – and, more broadly, to the public discourse on crime – he can also be faulted for having contributed to the long, ongoing historical confusion on the appropriate meaning of the term “white-collar crime.” Sutherland simply did not devote enough thought and consideration to the definitional issue at the outset of his work on white-collar crime, and accordingly invoked the term in quite different ways with quite different meanings. Due to space limitations, I will not here undertake a review of the historical development of the concept of white-collar crime since Sutherland, other than to make a few pertinent observations (but see Friedrichs, 2014). First, this history has been characterized by much confusion (Geis, 2007). Second, while the term “white-collar crime” has been applied to hugely powerful organizations and individuals, it has also been applied to utterly powerless individuals (e.g., cashiers and stock room employees who steal from their employer). And third, some of the most widely known studies of white collar crime (e.g., the Yale studies) have incorporated powerless white-collar crime offenders, in part because doing so contributes to operationalizing key variables. My own solution to the definitional conundrum has been to use the term “white-collar crime” as a broad, heuristic, umbrella term encompassing a wide range of 43

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core, cognate, hybrid and marginal specific types of such crime (Friedrichs, 2010). Corporate crime and occupational crime are the two principal core types. But in relation to crimes of the powerful, specifically: corporate offenders (or at least large corporations as offenders) are intrinsically powerful, while occupational offenders range from the relatively powerful (e.g., wealthy physicians and lawyers) to the wholly powerless (e.g., low-level employee pilferers), and everything in between. The concept of state-corporate crime – extensively addressed elsewhere in this handbook – captures the hugely consequential cooperative activity of powerful entities. Within the financial sector, one has especially powerful entities and actors whose illegal and unethical activities are also hugely consequential, and have been relatively neglected by criminologists (Barak, 2012; Friedrichs, 2013; Hagan, 2010). If the term “white-collar crime” is often used to refer to crimes of the powerful, it is clear then that it is not in fact synonymous with this term. Frank Pearce (1976), in a book entitled Crimes of the Powerful, has been credited with coining this term, at least within criminological discourse (Whyte, 2009: 1). Pearce did not specifically define “crimes of the powerful” but rather demonstrated the relevance of a Marxist approach for understanding the significance of crime perpetrated by the powerful. As was suggested earlier, many others – including Marx and Engels, Louis Proal, E.A. Ross, and Willem Bonger – had drawn attention to such crime, but the term itself has only been quite widely invoked in recent years. David Whyte’s (2009) Crimes of the Powerful: A Reader is one reflection of the current institutionalization of the term, as is this handbook. In the sections that follow I will limit myself to commenting on only some dimensions of crimes of the powerful.

The most powerful actor of all? The state If Sutherland made a huge contribution to the evolution of criminology by directing criminological attention to hugely powerful entities – major corporations – he wholly disregarded an even more powerful entity: the state. The late William J. Chambliss’ (1989) 1988 American Society of Criminology presidential address, on state-organized crime, deserves a historical status parallel to Sutherland’s 1939 American Sociological Society presidential address, introducing the concept of white-collar crime. Just as one can identify progenitors for the crimes of respectable businesses – including Marx and Engels – one can also identify those who anticipated Chambliss in calling attention to the crimes of states. But in both cases, for various reasons, it was Sutherland in the case of white-collar crime and Chambliss in the case of state crime who inspired significant (and growing) numbers of criminologists to take up the study of crimes of states – including quite a few contributors to this volume. If the notion of crimes of corporations was controversial at the outset – beginning with Paul Tappan’s oft-cited critique – the notion of crimes of states (to say nothing of criminal states) has been even more controversial, with many commentators taking the view that harms carried out in the name of states is a matter of concern for students of international relations, but is not a criminological phenomenon. By now various overviews of state crime as a criminological phenomenon (e.g., Barak, 1991; Green and Ward, 2004; Rothe, 2009) have been published, as have anthologies (e.g., Chambliss et al., 2010; Rothe and Mullins, 2011). There is a newly established journal, State Crime, and criminological articles and papers relating to state crime are increasingly well represented in journals and at conferences. In sum, the criminology of crimes of states has now been fully legitimized as a focus of criminological inquiry. But it remains somewhat paradoxical that the most consequential crimes of all by arguably the most powerful “actor” of all – the state – have only in the recent era become a focus of substantial criminological attention. Quite a number of contributors to this handbook address crimes of states and their control. 44

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Mundane crimes of the powerful The criminological literature on crimes of the state disproportionally attends to the largest scale of such crimes, especially genocide, war-related crimes, state terror, torture, and fundamental denials of basic human rights (e.g., Green and Ward, 2004; Chambliss et al., 2010; Rothe, 2009). I have myself contributed to this literature, also with a focus on such crimes (Friedrichs, 1998, 2010, 2011). And perhaps this is as it should be, as these large-scale crimes of the powerful have broad, diffuse consequences. There are also crimes of the powerful in the private sector, with a focus predominantly on environmental destruction, the creation of unsafe working conditions, and the production of unsafe products. I will here restrict myself to mundane crimes of the powerful in the public sector, or mundane crimes of the state. Mundane crimes of the powerful are relatively neglected by criminologists. Don C. Gibbons (1983), in an article published more than 30 years ago, addressed the issue of “mundane crime.” Dictionary meanings of the term “mundane” include dull or routine, and Gibbons pointed out that a range of “commonplace, low visibility and often relatively innocuous instances of law-breaking” (1983: 214) made up a significant portion of the crime problem in modern societies. Gibbons’ list of mundane crimes includes: drug abuse violations; gambling; offenses against the family; driving under the influence; liquor laws; drunkenness; disorderly conduct; and vagrancy. The salient point here is that these commonplace, rather innocuous offenses on the one hand account for a huge proportion of all arrests in the United States, and on the other hand have low social visibility and many (but not all) of these mundane crimes attract little attention from criminologists. On a personal note, my interest in mundane crimes of the powerful was prompted by a bizarre, 18-hour ordeal trying to cross the border from Cambodia into Vietnam with a travel companion (Elizabeth Windle) in March 2014. We finally had to sign confessions for our visa-related errors. The mundane crimes of the powerful refer to the routine exercise of power by relatively lowlevel agents of the state – civil service or justice system bureaucrats and enforcement personnel – in ways that impose significant costs on vast numbers of people, especially in developing countries. That such mundane crime in developing countries is part of the legacy of colonialism – wherein colonial power imposed hugely oppressed bureaucratic regimes upon indigenous peoples – is one more dimension of the tragic consequences of colonialism (Haque, 1997; Sumner, 1982). These mundane abuses of power surface in relation to applications for necessary permits across a wide range of activities, from obtaining visas to peddling licenses to residential permits. The low-level agents who perpetrate these offenses may be characterized as the “petty powerful.” Their power is situational, circumstantial, and contingent. In a strict sense, of course, a significant percentage of such abuse occurs when the petty powerful enforce “letter of the law” requirements mindlessly and in a rote fashion, even when these requirements are clearly irrational, dysfunctional, and counterproductive. Such enforcement of laws and regulations may be characterized as a form of “structural” abuse of power; i.e., abuse in the sense of identifiable harmful consequences even when the agent is technically in compliance with what is called for by the law or regulation. The source of abuse in such cases may be traced back to those who create the laws and regulations in the first place. The petty powerful may pride themselves in such cases with carrying out their job strictly in accordance with formal requirements and expectations. But for at least some of the petty powerful the intrinsic satisfactions of exercising power over other people, in some cases people with significantly higher social status within the broader societal context, is a core motivating factor, and a form of sadistic pleasure may be derived from compelling groveling responses and visible suffering upon those over whom one has situational power. In some circumstances the petty powerful may abuse the formal power they have by requiring those over whom they have power to go through procedures outside of what is formally required, simply to demonstrate that 45

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they can exercise such power over other people. Of course the solicitation (or routine expectation) of bribes to provide some form of permit is a classic form of abuse of power by the petty powerful, and is pervasive (even institutionalized) across the developing world, in particular. The Arab Spring was apparently triggered by such a mundane crime of power. A Tunisian fruit vendor, Mohammed Bouazizi, had been routinely subjected to abuses by police empowered to supervise these vendors. As one account notes, “The cops took visible pleasure in subjecting the vendors to one indignity after another – fining them, confiscating their scales, even ordering them to carry their stolen fruit to the cops’ car” (Fisher, 2011). In December 2010, Bouazizi was once again contending with police officers who tried to block his path and take his fruit; his uncle complained to a police chief. A policewoman called in by the chief was outraged, and returned to the marketplace to confiscate Bouazizi’s fruit. A physical confrontation followed, and Bouazizi was slapped in the face, shamed in front of some 50 witnesses. He got no satisfaction from a city hall clerk when he complained. Bouazizi subsequently set himself on fire in protest of this treatment, and died three weeks later in a hospital burns unit. This episode is widely regarded as setting in motion the uprisings across the Arab world. Yes, the corrupt and oppressive practices of autocratic leaders were a prime focus of these uprisings in Egypt, Libya, and elsewhere. But surely there is good reason to believe that the pervasive experience of the mundane, routine acts of low-level government agents – police, inspectors, clerks, and all the rest – provided a hugely important source of inspiration for the uprisings.

Emerging conceptions of crimes of the powerful: crimes of globalization If criminology as a field has produced a very large body of literature on some types of crime, it has almost wholly neglected other types of crime. “Crimes of globalization” is one such neglected type of crime. I co-authored an article with my daughter Jessica, published in 2002, on “Crimes of Globalization and the World Bank: A Case Study.” This project evolved out of Jessica Friedrichs’ experience of living among river fishermen in Thailand, in 1999, whose traditional way of life was being destroyed by a World Bank-financed dam. Since I had long been interested in the crimes of the powerful I was struck by the fact that the policies and practices of an immensely powerful entity – the World Bank – were causing demonstrable, severe harm to powerless people in a developing country, and this type of “crime” had been wholly neglected by criminologists. Crimes of globalization, then, refer to the crimes of the international financial institutions, not just the World Bank but the International Monetary Fund as well. The harmful activities of these international financial institutions did not fit into any recognized criminological typology “box”: obviously, not those capturing the whole range of conventional types of crimes, but the international financial institutions are neither corporations nor state entities, in the conventional sense, so their harmful activities also do not fit into the categories of corporate crime and state crime. Can these harmful activities be justifiably characterized as “crime,” however? As Maureen Cain (2010) argues, in her parallel advancement of the term “global crime” for these activities of the World Bank and the International Monetary Fund, this is in fact crime when the harms involved could and should have been foreseen by the international financial institution policy makers. And there is much evidence to support that claim. Since the publication of the original article on crimes of globalization in 2002, a number of other criminologists have applied this concept to other cases involving the World Bank or the International Monetary Fund, and I have co-authored recent book chapters and a book on this topic (Friedrichs and Rothe, 2013; Rothe and Friedrichs, 2014; Rothe and Friedrichs, 2015). One core argument of this book: In a rapidly changing, globalizing world, some types of crimes (e.g., crimes of globalization) are likely to achieve greater significance and recognition, 46

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and other types of crimes (e.g., low-level conventional or street crimes) are likely to be less of a problem or challenge for a range of reasons.

Concluding observations A criminology of the crimes of the powerful should adopt as its starting point recognition of the traditional approach to defining crime almost exclusively as crime committed by the powerless. The criminological mainstream, with a self-identify as a scientific endeavor, is inherently biased in favor of definitions of crime that lend themselves easily to operationalization. This bias inevitably privileges attention to the crimes of the powerless rather than to the crimes of the powerful. A “prospective” criminology in a complex, globalized world looks ahead toward anticipating key emerging developments and changes in this world, and recognizes that the meaning of the core term “crime” itself inevitably evolves with these developments and changes (Aas, 2007). It is an illusion, surely, that the term “crime” may be defined in only one way, and that any such definition would be universally acknowledged and adopted. Any invocation of the term “crime” requires some specification of just which definition or meaning of the term is being adopted within the context of this invocation. Increasingly, the application of the term “crime” to activities of the powerful, not the powerless, is a core dimension of an evolving criminological enterprise.

Acknowledgments This chapter is dedicated to the memory of Gil Geis – who addressed the definitional issues relating to white-collar crime so fully and wisely – and to the memory of Bill Chambliss – who played a key role in initiating contemporary criminological attention to crimes of states and other powerful actors and entities. They were both warm, wonderful human beings, and great friends to many of us. An earlier, quite different version of this chapter was presented as an invited Presidential Panel paper at the Annual Meeting of the American Society of Criminology, Atlanta in November 2013, and was subsequently posted on the ASC website (under “Resources”).

References Aas, K.F. (2007) Globalization and Crime. Los Angeles, CA: Sage. Abramsky, S. (2007) American Furies: Crime, Punishment, and Vengeance in the Age of Mass Imprisonment. Boston, MA: Beacon Press. Agnew, R. (2011) Toward a Unified Criminology: Integrating Assumptions about Crime, People, and Society. New York: New York University Press. Barak, G. (ed.) (1991) Crimes by the Capitalist State: An Introduction to State Criminality. Albany, NY: State University of New York Press. Barak, G. (2012) Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding. Lanham, MD: Rowman & Littlefield. Cain, M. (2010) “Crimes of the global state,” In F. Brookman, M. Maquire, H. Pierpoint, H. T. Bennett (eds), Handbook on Crime. Cullompton, Devon: Willan. Chambliss, W.J. (1989) “State-organized crime.” Criminology, 27: 183–208. Chambliss, W.J., Michalowski, R. and Kramer, R.C. (eds) (2010) State Crime in the Global Age. Cullompton, Devon: Willan. Cohn, E.G. and Farrington, D.P. (2012) “Scholarly influence in Criminology and Criminal Justice Journals in 1990–2005.” Criminal Justice Review, 37: 360–383. DeKeseredy, W. and Dragiewicz, M. (eds) (2012) Routledge Handbook of Critical Criminology. London: Routledge. Domhoff, G.W. and Ballard, H.B. (eds) (1968) C. Wright Mills and the Power Elite. Boston, MA: Beacon Press. 47

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Eitle, D., D’Alessio, S.J. and Stolzenberg, L. (2014) “The effect of organizational and environmental factors on police misconduct.” Police Quarterly, 17: 103–126. Fisher, M. (2011) “In Tunisia, act of one fruit vendor unleashes wave of revolution through Arab world.” Washington Post, 1. Friedrichs, D.O. (ed.) (1998) State Crime, Vos I and II. Aldershot, Surrey: Ashgate. Friedrichs, D.O. (2010) Trusted Criminals: White Collar Crime in Contemporary Society, 4th edn. Los Angeles, CA: Wadsworth/Cengage Learning. Friedrichs, D.O. (2011) “The crime of the last century – and of this century?” In D.L. Rothe and C.W. Mullins (eds) State Crime – Current Perspectives. New Brunswick, NJ: Rutgers University Press. Friedrichs, D. O. (2013) “Wall Street: Crime never sleeps.” In S. Will, S. Handelman and D. Brotherton (eds) How They Got Away With It: White Collar Criminals and the Financial Meltdown. New York: Columbia University Press. Friedrichs, D.O. (2014) “Transcending the traditional definition of crime: Positive dimensions and potential drawbacks.” Invited Presidential Panel presentation at the Annual Meeting of the American Society of Criminology (Atlanta). Friedrichs, D.O. and Friedrichs, J. (2002) “The World Bank and crimes of globalization: A case study.” Social Justice, 29: 1–12. Friedrichs, D.O. and Rothe, D.L. (2013) “Crimes of globalization as a criminological project: The case of international financial institutions.” In F.J. Pakes (ed.) Globalisation and the Challenge of Criminology. London: Routledge. Friedrichs, D.O. and Schwartz, M.D. (2007) “Editors’ Introduction: On social harm and a twenty-first century criminology.” Crime, Law and Social Harm, 48: 1–7. Friedrichs, D.O. and Schwartz, M.D. (2008) “Low self-control and high organizational control: The paradoxes of white-collar crime.” In E. Goode (ed.) Out of Control: Assessing the General Theory of Crime. Stanford, CA: Stanford University Press. Geis, G. (2007) White-collar and Corporate Crime. Upper Saddle River, NJ: Pearson. Gibbons, D.C. (1983) “Mundane Crime.” Crime and Delinquency (April): 213–227. Goode, E. (ed.) (2008) Out of Control: Assessing the General Theory of Crime. Stanford, CA: Stanford University Press. Gottfredson, M.R. (2011) “Some advantages of a crime-free criminology.” In M. Bosworth and C. Hoyle (eds) What is Criminology? Oxford: Oxford University Press. Gottfredson, M.R. and Hirschi, T. (1990) A General Theory of Crime. Stanford, CA: Stanford University Press. Green, P. and Ward, T. (2004) State Crime. London: Pluto Press. Greenfield, V.A. and Paoli, L. (2013) “A framework to assess the harms of crimes.” British Journal of Criminology, 53: 864–885. Hagan, J. (2010) Who are the Criminals? The Politics of Crime Policy from the Age of Roosevelt to the Age of Reagan. Princeton, NJ: Princeton University Press. Hall, S. (2012) Theorizing Crime and Deviance: A New Perspective. London: Sage. Haque, M.S. (1997) “Incongruity between bureaucracy and society in developing nations: A critique.” Peace and Change, 22: 432–462. Hearn, J. (2012) Theorizing Power. London: Palgrave/Macmillan. Henry, S. and Lanier, M.M. (eds) (2001) What is Crime? Controversies over the Nature of Crime and What to Do about It. Lanham, MD: Rowman & Littlefield. Hillyard, P., Pantazis, C., Tombs, S. and Gordon, D. (eds) (2004) Beyond Criminology: Taking Harms Seriously. London: Pluto Press. Loeber, R. and Welsh, B.C. (eds) (2012) The Future of Criminology. Oxford: Oxford University Press. Lombroso, C. (1897) Criminal Anthropology. New York: Philosophical Library. Madfis, E. (2012) “Across crimes, criminals, and contexts: Traps along the troubled path towards a general theory of crime.” Critical Criminology, 20: 429–445. Michalowski, R. (1985) Order, Law, and Crime. New York: Random House. Mills, C.W. (1956) The Power Elite. New York: Oxford University Press. Palmer, D. (2012) Normal Organizational Wrong-doing. Oxford: Oxford University Press. Pearce, F. (1976) Crimes of the Powerful. London: Pluto Press. Proal, L. (1898) Political Crime. New York: D. Appleton & Co. Quinney, R. (1970) The Social Reality of Crime. Boston, MA: Little, Brown. Rothe, D.L. (2009) State Criminality. Lanham, MD: Lexington Books.

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Rothe, D.L. and Friedrichs, D.O. (2014) “Controlling crimes of globalization: A challenge for international criminal justice.” In W. de Lint, M. Marmoand N. Chazal (eds) Crime and Justice in International Society. London: Routledge. Rothe, D.L. and Friedrichs, D.O. (in press) Crimes of Globalization. London: Routledge, 2015. Savelsberg, J.J. (2010) Crime and Human Rights. Los Angeles, CA: Sage. Savelsberg, J.J. and Flood, S.M. (2004) “Criminological knowledge: Period and cohort effects in scholarship.” Criminology, 42: 1009–1041. Schwendinger, H. and Schwendinger, J. (1970) “Defenders of order or guardians of human rights?” Issues in Criminology, 5: 123–157. Sumner, C. (ed.) (1982) Crime, Justice, and Underdevelopment. London: Heinemann. Sutherland, E.H. (1945) “Is ‘white-collar crime’ crime?” American Sociological Review, 12: 132–139. Tappan, P. (1947) “Who is the criminal?” American Sociological Review, 12: 96–102. Tifft, L.L. and Sullivan, D.C. (1980) The Struggle to Be Human: Crime, Criminology and Anarchism. Sanday, UK: Cienfuegos Press. Watts, R., Bessant, J. and Hil, R. (2008) International Criminology: A Critical Introduction. London: Routledge. Whyte, D. (ed.) (2009) Crimes of the Powerful: A Reader. Buckingham, Berks: Open University Press.

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2 Operationalizing organizational violence Gary S. Green and Huisheng Shou

“Organizational violence” – organizational decisions that knowingly risk harm to human beings – has been traced back at least as far as ancient Greece (Geis, 1968: 11). The purpose of this chapter is to put forth for debate various dimensional elements for operationalizing that concept, primarily as a dependent variable in the explanation of crimes committed within organizational decision-making contexts. Without some sense of agreement about what constitutes organizational violence, its use could lose material legitimacy, thereby impeding meaningful investigation into its underlying causes. For instance, Kramer (1983: 167) calls for comprehending organizational violence in terms of the environments and structures that facilitate it, but we cannot isolate those environments and structures as predictors of the phenomenon if we cannot agree on what that phenomenon actually is. Put another way, if those who study organizational violence opt for idiosyncratic rather than constituent definitional constructs, then the field as a whole will never evolve an understanding of such behaviors because it will never quite know what it is trying to understand. Simply knowing organizational violence when you see it – as Justice Potter Stewart declared about obscenity in Jacobellis v. Ohio (1964: 197) – is hardly the way to undertake scientific inquiry. Subjectively, organizational violence may be construed narrowly as involving those purposeful organizational decisions that can inflict direct physical harm on human beings (as well as on other species and the environment). Or it may be perceived much more broadly as involving, for example, the case of the financial institution-based housing implosion of 2007 that resulted in four million US citizens losing their homes, becoming displaced or homeless, and subjected indirectly to the harm caused by the mental violence associated with their material and psychological losses. For the sake of clarity, both concretely and theoretically, it is important that some kind of definitional consensus is reached about the meaning of organizational violence. Otherwise, confusion and obfuscation will continue. Even worse, overusing the term often wrongly convicts people verbally who do not deserve the label. On the other hand, failure to use the label when appropriate will often mask what is arguably the wickedest practice of human immorality in the context of behaviors within organizations. Humanity demands that we take a moral stand against organizational violence, independent of scientific inquiry into its causes. However, to scientifically operationalize organizational violence requires an agreement about its definitional parameters. 50

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Some might argue that the idea of “violence” must been limited to direct and immediate harms intentionally inflicted upon or threatening particular individuals, such as through battery, robbery, forcible rape, and murder, and therefore the use of “violence” in the context of legitimate business serves only as a sensationalized rhetorical metaphor, and is otherwise fundamentally irrelevant to any indirect and delayed harms associated with organizational decisions. The head of a company is not likely to pollute the water supply of a city in order to seek revenge on an ex-husband, for instance. Whatever persuasiveness this argument may have against the idea of organizational violence, one cannot argue that intentional choices by business decision-makers to recklessly endanger the life and limb of other human beings share nothing in common with assaultive behaviors that have typically been characterized as violent. Immediacy of harm is not an essential criterion for violence because, as Salmi (2004: 56-57) has noted, violence may be a “result of a deliberate human intervention in the natural or social environment whose harmful effects are indirect or often delayed.” Therefore, for the purposes at hand, it is the willful reckless physical endangerment of others shared by organizational decision-makers and by individuals committing violent “street” crime that renders organizational violence to be violence per se. Organizational “violence” is not a metaphor.

Previous use of “violence” in the context of organizational decisions Referencing writing about organizational violence could go back at least as far as Upton Sinclair’s The Jungle (1906), a historical novel that depicted unsafe consumer product distribution, dangerous working conditions, and bio-hazardous pollution knowingly committed by large meat-packing plants. As for the specific use of the term, Ralph Nader’s (1971) piece, “Corporate Violence Against the Consumer,” may be the first written connection between intentional organizational decisions that harm human beings and the idea of “violence,” followed by several others who invoked the concept over the following decade and a half (e.g., Monahan et al., 1979; Monahan and Novaco, 1980; Swigert and Farrell, 1980; Tye, 1985). Ronald Kramer’s (1983) important piece, “A Prolegomenon to the Study of Corporate Violence,” appeared in Humanity and Society, in which he offered what many consider to be the first systematic working definition of the conduct: [C]orporate behavior which produces an unreasonable risk of physical harm to employees, the general public, and consumers, which is the result of deliberate decision-making by persons who occupy positions as corporation managers or executives, which is organizationally based, and which is intended to benefit the corporation itself. (Kramer, 1983: 166) In 1987, the appearance of two additional significant works – one a case study on Ford Motor Company’s 1978 Indiana negligent homicide indictment based on its Pinto automobile (Cullen et al., 1987) and the other an influential anthology entitled Corporate Violence (Hills, 1987) – clearly signaled that acts committed by organizational agents which threatened human harm are well within the purview of criminological inquiry into violent behavior. Hills proposed essentially the same definition of corporate violence as Kramer, but explicitly articulated non-criminal negligence for inclusion: [A]ctual harm and risk of harm inflicted on consumers, workers, and the general public as a result of decisions by corporate executives or managers, from corporate negligence, the quest for profits at any cost, and willful violations of health, safety, and environmental laws. (Hills, 1987: vii) 51

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The idea that organizational actors make decisions that may be termed “violent” was also evident in the criminal courts at that time: during the 1980s, some level of criminal homicide charge was levied against American companies or their executives in at least seven unrelated instances of employee deaths caused by unsafe working conditions (Maakestad, 1987). Since the late 1980s, using the concept of “violence” in relation to organizational behavior that is physically harmful to human beings has become routine. Additional books so titled include Corporate Crime and Violence (Mokhiber, 1988), Corporate Crime, Corporate Violence (Frank and Lynch, 1992), The Case for Corporate Responsibility: Corporate Violence and the Criminal Justice System (Bergman, 2000), and Corporate Crime Under Attack: The Fight to Criminalize Business Violence (Cullen et al., 2010). Doctoral dissertations on the subject include Courtney Davis’ (2000) Corporate Violence, Regulatory Agencies and the Management and Deflection of Censure. There have been many case studies which explicitly employ the usage of “violence” associated with non-criminal purpose organizations, ranging from environmental crimes (Raman, 2005; Rajan, 2001) to manufacturers of dangerous breast implants (Rynbrandt and Kramer, 1995), to criminally incompetent doctors (Liederbach et al., 2001), to restaurants that knowingly serve tainted foods (Walczak and Reuter, 2004). Organizational violence has been studied in the context of sexist victimization against women (Hinch and DeKeseredy, 1992; DeKeseredy and Goff, 1992), racist environmental victimization against African Americans (Stretesky and Lynch, 1998), a type of violence in general (Barak, 2003), and an industrializing nation as a whole (Green and Shou, 2013). There is even a sub-literature which addresses the social construction of awareness about organizational “violence” based on content analyses of the media (Wright et al., 1995; Burns and Orrick, 2002; Mcmullan and Mcclung, 2006). The phenomenon has been variously termed “suite violence” (See and Khashan, 2001; Punch, 2000), “toxic capitalism” (Pearce and Tombs, 1998), “industrial violence” (Schmidt, 2010), and, based on a large volume of work by Steve Tombs, corporate violence as “safety crime” (e.g., Tombs and Whyte, 2007; Tombs, 1995, 2007). Grounded on the aforementioned proliferation of work connecting humanly harmful organizational decisions to “violence” and the large amount of such scholarship that has yet to be produced, a focused analysis of the concept seems prudent.

Nine questions about the dimensions of organizational violence We see at least nine debatable dimensional elements of the concept of organizational violence that may be extracted from the aforementioned literature. Because each of the elements is to a greater or lesser degree dependent upon all others, we will try to present them in a fashion that facilitates the overall discussion, beginning with what we see as the more fundamental elements: 1 2 3 4 5 6 7 8 9 52

Exactly what should constitute an “organization” for the purpose of conceptualizing “organizational violence”? Does the violence necessitate criminal legal violation or should tortious or other noncriminal behavior also be included? Does the violence involve only actual harm or must it include risk of harm as well? Can the violence be non-physical? Does the organization or its agent(s) commit the violence, or both? How should intentionality to commit organizational violence be articulated? Are motives for the violence relevant to the concept? What is the nexus required between an organizational actor’s decision and its violent results? Should non-human animals be included as victims of organizational violence?

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We will now address these questions in terms of their implications for operationalizing organizational violence. Based on those discussions, we will then offer our own working definition for future consideration.

1 What constitutes an “organization”? An “organization” should be broadly defined as any legal person other than an individual that has a non-criminal purpose, and would include governmental and non-governmental entities. Criminal purpose organizations (those that operate primarily for criminal purpose or by criminal means) are excluded because the concept of organizational violence should be limited to legitimate economic and political spheres. The inclusion of criminal purpose entities such as street gangs, organized crime, single drug dealers, and so forth will serve only to confuse the generally shared setting of where organizational violence occurs and who commits it. Regarding non-government organizations, both Kramer and Hills have chosen to focus on “corporate” violence by “managers” and “executives.” We acknowledge that “corporate violence” is a catchy phrase with strong political overtones that implicitly vilifies the rich and powerful as greedy and uncaring. However, “corporate,” and specifically “corporate executives and managers,” may imply that these behaviors are committed only by people in much larger organizations (or at least by those in organizations that are legally designated as corporations), thereby leading us to ignore the countless physically harmful decisions made in the milieu of much smaller organizations, including those with no employees. More than three-quarters of all businesses in the United States (78%) have no employees, and among those that do have employees, three-fifths (60%) have fewer than five (Bureau of the Census, 2008). Typically, more than four in five organizations convicted for federal crimes have fewer than 50 employees. Even the smallest businesses have many of the same opportunities to commit violent business behaviors (and the same profit motivations) as do larger ones, albeit on a smaller scale. Moreover, smaller businesses are not held to the same ongoing self-policing internal compliance program standards as are larger ones, nor are they under the same higher level of governmental and public scrutiny. Note that both federal and state RICO (Racketeer Influenced and Corrupt Organizations) criminal statutes include single-person enterprises as organizations. Therefore, although “corporate violence” may in a very technical sense be seen to already include small businesses because even one with no employees has at least one owner who can be called a “manager” or “executive,” we nevertheless strongly advocate the term “organizational violence” over “corporate violence.” We also assert that an “organization” be conceived as comprising one or more human actors. This view of organizational violence will necessarily encompass a very large number of relatively powerless persons, but adopting it does not in any way detract from the importance of special power relations associated with violent “crimes of the powerful,” including governmental actors involved in state-based violence.

2 Should organizational violence be limited to criminal behavior? The question of whether organizational violence should include tortious or other non-criminal behavior in addition to criminal behavior is of monumental importance because its answer will have a massive effect on the number of acts which would be included under the concept. We will first analyze the issue for non-governments and then address governmental organizations. Our vigorous inclination is to eliminate non-criminal negligence (that is, torts) from the conceptualization, as well as any other non-criminal behaviors. We noted earlier that Hills explicitly added “corporate negligence” as an element of organizational violence in response to Kramer’s 53

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alleged omission of it. Hills’ (1987: 5) rationale is that the idea of organizational violence must transcend the traditional criminal law and include any act which “could be punished by the government, regardless of whether the corporate offense is punishable under civil, administrative, or criminal law” (emphasis added). Using governmental punishment as the foundation for criminal behavior, irrespective of the venue in which it is levied, has been an accepted practice by criminologists since Edwin Sutherland’s earliest work (e.g., 1940, 1945) on “white-collar crime.” Sutherland argued to particularly include regulatory administrative law violations as well as criminal convictions as “criminal” behavior because both include a governmental punishment and both were created by the legislature in response to the harms involved (even though administrative law requires a preponderance of the evidence and criminal code law requires much more stringent proof beyond a reasonable doubt). Some of the most horrific acts of violence perpetrated by organizational actors have been adjudicated in administrative lawcourts enforcing regulatory law. We strongly support Sutherland’s (and Hills’) criterion that all governmentally punished acts constitute crimes. And, assuming that prima facie evidence for the corpus delicti of an illegality is present, we can declare them to be criminal acts regardless of whether they are officially adjudicated. In short, as long as an organizational behavior that risks human harm could be punished under criminal or administrative law (including international law) that has a governmental penalty, it is organizational violence because it is both criminal and violent. We must be careful here because mere judgment calls (such as whether the act constitutes criminal negligence) are not illegal prima facie and therefore must be left to the courts to decide. We reject Hills’ call for including “corporate negligence” adjudicated under “civil” law. Foremost, we disagree that damages in civil court based on negligence represent a “governmental penalty.” Judicial findings against parties in administrative lawcourts result in fines paid to the government (and in some cases restitution to injured parties). Conversely, civil courts are merely places where one party can seek compensatory damages against another party because the latter is believed to have acted without due diligence to prevent a harm. The government merely enforces the rules of civil procedure in such lawsuits, sometimes decides (in non-jury trials) who are the winners, and in very rare cases approves of jury-imposed punitive financial penalties against the losers. But any governmentally approved compensatory or punitive damages are not paid to the government; rather, they are paid to the winner of the legal case. We therefore see no “governmental penalty” associated with findings of non-criminal negligence by civil courts. To include noncriminal organizational negligence would open up the concept to acts such as failure to remove snow from the sidewalk in front of a company’s building (i.e., risk of human harm based on an organizational decision). If that is “violent” behavior, then one’s neighbor who also fails to remove snow would analogically be committing non-organizational violence. This example demonstrates how the inclusion of non-criminal negligence opens up a Pandora’s Box of behaviors that are relatively so innocuous and trivial that they belie the egregious essence of organizational violence. Without some governmental penalty attached to an alleged act of violence, completely legal behaviors can be wrongly verbally convicted as constituting violence. A classic example would be the long-time designation as “violent” (e.g., Green, 1997) of Ford Motor Company’s actions in regard to its marketing of the Pinto in the late 1960s and early 1970s, even though it knew that the vehicle’s gas tank mounted behind the rear axle could immeasurably increase the probability of a fiery explosion as the result of a rear-end collision. Indeed, Ford’s now-famous Grush – Saunby memorandum that juxtaposes the costs of retooling (to relocate) the gas tank relative to the probable civil settlement payments in burn injury and death lawsuits has been seen as the epitome of organizational amoral profit rationality. However, as Lee and Ermann (1999) convincingly demonstrate, the Grush – Saunby memorandum occurred in 1973 (long after the Pinto had been designed and marketed), it was generated for the National Highway Safety Traffic Administration 54

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in the negotiation of a possible safety standard and not internal distribution among Ford decisionmakers, it was based on NHSTA-accepted procedures for cost – benefit analyses in such matters, crash-testing was not an established practice in the industry at the time the Pinto was designed and manufactured for several years, and the Pinto’s questionable design was quite legal because it did not violate any regulatory law. Thus, it is difficult to attach a label of “violent behavior” to those involved, especially when there is no evidence of purposeful action to break the law. In fact, Ford was concerned about the issue and took proactive measures to investigate it (Lee and Ermann, 1999). Ford was acquitted of the Indiana negligent homicide charge mentioned earlier. We offer one more example that will help illustrate the necessity of requiring some level of governmental penalty associated with organizational violence. Millions of entirely legal abortions could quite reasonably be deemed to constitute organizational violence according to, for instance, Kramer’s definition, because: (1) organizational decisions are responsible for performing the abortions for profit; (2) there is no question of physical harm; and (3) unborn children are part of the “general population” (killers of pregnant women have been successfully prosecuted for double-homicide (see, e.g., 18 USC 1841), and the US Supreme Court in Roe v. Wade (1973: 165) placed unborn children under a state’s interest to protect her or him at later stages of pregnancy). Requiring a criminal legal violation will ensure that unfitting interpretations such as this legal abortion example are disallowed, but it will rightly include illegal abortions. And it will rightly include more atypical acts of organizational violence such as doctors found to be criminally negligent and the assaultive practices used by labor union bosses for purposes of intimidation. Limiting non-governmental organizational violence only to acts punishable by the government should not in any significant way impede the labeling of egregious organizational activities, especially given the voluminous listings of administrative law violations. The stricture for governmental penalty will also help disqualify over-utilization by those who want to exploit social science as a political tool – both the Ford Motor Company and legal abortion examples could be improperly utilized for such purposes, for instance. Addressing criminally violent acts by governmental organizations is far more complex because governments control definitions of criminal behavior, including their own. US non-federal governments are subject to federal criminal penalties when they involve organizational violence because an “organization” according to the US Sentencing Commission (2013: §8A1.1.1) includes “governments and subdivisions thereof.” However, actions by persons in federal governments that create risk of human harm (such as environmental pollution or unsafe working conditions) often have no criminal context and therefore they would theoretically be eliminated from the idea of organizational violence according to our mandate for governmental penalty. This technicality creates a difficult challenge, along with all the other acts of violence committed by governmental actors where no domestic or international criminal violation occurs. We have no answer for the conundrum associated with these relatively few circumstances, other than to determine whether the action would be punishable if committed by those in non-federal organizations. Surely there are ways by which the often unconscionable violence committed by state actors that is technically non-punishable may be rationally argued to be organizational violence without having to eliminate the governmental penalty requirement.

3 Risk of harm vs. actual harm as violence One might argue that mere risk of injury associated with an organizational criminal act as defined earlier, even if it is a foreseeable risk, is not violent behavior because no harm resulted. That is, no harm, no foul. But there is probably very close to a unanimous consensus that organizational violence comprises risk of human physical harm in addition to actual inflictions of injury or 55

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death, rather than only the latter. We noted at the outset of this chapter that the knowing reckless endangerment of others is the foundational rationale for connecting organizational violence to violence per se, and therefore the concept must include risk of actual harm. To argue that risk of human harm without actual harm is irrelevant to organizational violence is akin to stating that an errant bomber who misses his or her random human targets because of a failed detonation did not commit an act of violence because no injury resulted. The foreseeability of risk would have to be necessary, of course, whether the offender knew, or at least should have known, that the result of their organizational action or inaction put others at risk. Determining foreseeability of risk will be discussed in the section on intentionality.

4 Physical vs. non-physical violence The term “crime of violence” most generally denotes physical harm. But it can also involve only a threat of physical harm – the violent crime of “assault,” for instance, need not involve touching or battery of the person, only that some level of fear existed in the victim. One exception to actual or threatened physical harm in a crime of “violence” is extortion, where a person is forced to choose between two unwanted alternatives, each of which can be non-violent. It is the mental harm, or mental violence, associated with extortion that causes it to often be listed in the same section of criminal codes as robbery (robbery also involves forcing a person to address two unwanted choices: one’s money or one’s injury). Thus, even in violent street crimes, not all violence involves physical harm or even the threat of physical harm. The conceptualization of violence has recently been expanded to include the infliction of mental anguish, especially in relation to domestic violence (against intimate partners, against one’s children, and against one’s parents) (see, e.g., Barak, 2003). To give but one example of domestic non-physical mental violence, threats of harming companion animals of a partner is a way to demonstrate power, teach submission, and perpetuate a context of terror in an overall battering-control schema (Adams, 1995). But compared to physical harm, determining mental harm caused by an organizational decision-maker will be far more subjective (and therefore more problematic). One illustration of this is Stein’s (2005: 448) assertion that downsizing in large organizations is a form of “corporate violence” because it is an “assault on the human spirit . . . .” If termination from employment raises the specter of being a victim of organizational violence, organizational violence is endlessly present wherever some sort of mental anguish is claimed as a result of organizational decisions. Especially given the relative powerlessness of individuals compared to large organizations, including the idea of “non-physical” mental violence in the study of organizational violence would be far too idiosyncratic to withstand scientific scrutiny. Virtually any perceived intimidation by an organizational actor against an individual could then be deemed “violent” behavior by anyone else (recall the example of “mental violence” against the displaced and homeless inflicted by the financial institution crisis that was mentioned at the outset of this chapter), and such amorphous applications would retard the study of organizational violence to a point of no return. Although mental violence may well be an integral part of complex domestic and other abuse situations, the study of which would be incomplete without its inclusion, the addition of nonphysical violence to the operationalization of organizational violence is most probably a mistake.

5 Is the violence committed by the organization or by its agents? Both Kramer and Hills proclaim that organizational agents are the culpable parties for any acts of violence. Using methodological reductionism (or, perhaps more accurately, methodological individualism) to study organizational violence – predicated on the idea that the best scientific 56

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strategy is to attempt to reduce explanations to the smallest possible entities – may seem excessively obvious. But there has been a tendency to anthropomorphize organizations into emergent actors (e.g., Braithwaite and Fisse, 1990; Geis, 1995; cf. Parisi, 1984; Cressey, 1989). Kramer and Hills essentially adopt the same methodological individualism position articulated by the US Sentencing Commission (2013: Introductory Commentary): “An organization can act only through its agents, and under . . . criminal law, generally are [only] vicariously liable for offenses committed by their agents.” “Agents” include directors, officers, employees, independent contractors, and anyone else authorized to act on behalf of the organization. As Herbert et al. (1998: 869) observed in support of the idea that only people can commit organizational behaviors, “It is one thing, for legal purposes, to hold an organization vicariously liable for its agents’ actions. It is quite another, for explanatory purposes, to assume that an organization acts independently of its agents” (emphasis in original). Organizational actors are always free to choose alternative business behaviors that do not result in the poisoning of the environment or that risk the maiming and killing of consumers and workers. Once firms are taken as the responsible parties for the decisions made within them, individuals’ preferences and choices become irrelevant. Put more accurately, such an approach allows individuals, as agents, to easily distance themselves from the decisions they make by blaming the business environments in which their firms are located or based. It is therefore probably imprudent to assume any autonomous act of violence that emerges at the organizational level. The role that organizations play in theorizing about organizational violence should suggest nothing more than their influence (through opportunity or lack of it, culture, or whatever the theory at hand suggests) on an individual actor’s choice of behavior (Herbert et al., 1998: 869).

6 Intentionality to commit organizational violence Imputing violent behavior to any individual must include some level of intent or mens rea. Accidental harms would be excluded to the extent they were completely unintentional. Cressey (1989) has argued persuasively that unintentional organizational behaviors which happen to violate the law cannot be explained criminologically. Further, as Perrow (1999) has told us, high-risk technologies (such as space exploration and nuclear power) will inevitably lead to “natural accidents,” regardless of our intent to avoid them. Therefore, equating unintentional legal violation that risks human harm to “violence” is not only unfair to the entity so labeled, it also contradicts the egregiousness of the purposeful inhumanity that is a core essence of organizational violence. In addition to being non-accidental, the risk of harm must be foreseeable in order to be intentional for our purposes. A person who knows of a foreseeable risk, or should have known about it, is a fair yardstick by which to impute intentionality. The US Sentencing Commission (2013: §8A1.2) has articulated exactly how to determine whether a risk to human harm was known or should have been known, and its language should be employed in the determination of foreseeable risk in applications of organizational violence: Did the person “participate in, condone, or be willfully ignorant of ” a non-accidental legal violation that risked human harm? Adopting further from the Commission, an organizational actor “condoned” a foreseeable risk if she or he knew about it and did not take reasonable steps to prevent or terminate it. And the organizational actor should have known about the risk if they were “willfully ignorant” of it by not investigating its possible occurrence despite knowledge of circumstances that would lead a reasonable person to investigate whether a risk would occur or had occurred. Each of these levels of culpability should be treated as equally blameworthy. Although case-specific applications of criteria such as “condoning” or being “willfully ignorant” of a risk to human harm may become subjective, as well as whether the risk creation was 57

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completely “accidental,” at least the foregoing language from the Commission represents tangible and sensibly articulated standards to relate to actual instances of organizational actor behavior. Including full blameworthiness for “condoning” and “willful ignorance” will enable persuasive denunciation of many organizational actors’ claims that they did not participate in a decision which resulted in organizational violence or that they did not know about one.

7 The role of motive in organizational violence Motive is not a cause because, as Sutherland (1973: 39) observes, “People steal [for various reasons] – and they engage in lawful employment [for the same] reasons” (see also Hirschi and Gottfredson, 2008: 221). Therefore, motive, specifically in the case of organizational violencefor-profit, should not be used as an independent variable in the explanation of organizational violence because there are always alternative choices of behavior to those that include an illegal risk of harm to human beings. That stated, we nevertheless propose, as did Kramer and Hills, that motive is an important aspect of operationalizing organizational violence – but only as it relates to agents’ decisions that are calculated to have a beneficial result to their employing organization. These attempts to benefit the organization through the use of violence invariably materialize in the form of economic gain – either by increasing income or decreasing cost (e.g., knowingly distributing dangerous foods or other consumer products to avoid loss, choosing to pollute the environment rather than purchase expensive correct disposal equipment, failure to ensure worker safety because of its costs). However, the commission of organizational violence by agents based on the motive to benefit an employing organization should represent nothing more than a definitional restriction. Such limitation would be specifically designed to exclude violent behaviors committed within an organizational context for personal gain only (as opposed to violent behaviors that benefit both the organization and the agent, which should be included). An example of violence within an organizational context that is committed strictly for personal gain would be driving a commercial truck while illegally intoxicated or flying a jetliner while illegally impaired by prescription drugs. As well, child molestations by clergy would not be considered acts of organizational violence because these are of no benefit to the religious organization. However, condoning those molestations or being willfully ignorant of them by others to avoid adverse publicity would be seen as organizational violence because hiding the scandal would be motivated by organizational benefit. To have true meaning, the conceptualization of organizational violence should include some attempt to benefit the organization.

8 Determining the nexus between an organizational agent’s behavior and its violent results One important aspect in employing the concept of organizational violence is whether the organizational behavior is the “proximate cause” of the risk of human harm in question. This is not the place to dissect the innumerable legalistic technicalities associated with proximate cause, but it nevertheless should be addressed here as an essential element of organizational violence. Kramer uses the idea of organizational decisions “producing” risk and Hills frames it in terms of risk “resulting” from organizational decisions. But how do we determine whether the organizational decision actually produced the risk or whether the risk was actually the result of the decision? We must ask one simple question: “Was the organizational decision to act or fail to act necessary for the risk of harm to occur?” The answer to this question will probably be affirmative 58

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and pro forma in most cases of alleged organizational violence, but asking it will nonetheless help prevent the over-application of the label upon those who do not deserve it. Thus, the claim that “firearm manufacturers commit organizational violence because they knew or should have known about the foreseeable risk that their products will be used in robberies and murders” would be falsified because the manufacturers had nothing to do with the decisions to employ their otherwise safe products to injure others. Verifying the organizational decision as the proximate cause of the risk of harm may seem elementary, but it should in all cases be compulsory.

9 Should non-human animals be included as victims of organizational violence? Any conceptualization of organizational violence that does not include the victimization of nonhuman animals can potentially be criticized for its speciesist bias (Beirne, 1999). Certainly, nonhuman animals are analogous to human victims of organizational violence, such as fish which die in polluted rivers, dogs and cats which die from poisonous pet food consumer products, and work animals which are harmed or killed based on cruel working conditions. Without implying a lack of regard for the feelings of non-human animals, it is probably better at this point to limit victimization from organizational violence to human beings. Students of organizational violence should be conscious of the significance of a non-speciesist conceptualization (such as Lin, Chapter 33, this volume), as long as any inclusion of non-human victims of organizational violence adheres to the concept’s accepted parameters (e.g., that the behavior is subject to a governmental penalty, that the violence was based on organizational benefit, that the organizational actor’s decision is the proximate cause of the violence).

Conclusion: a working definition of organizational violence We have tried to deconstruct the concept of organizational violence into its rudimentary dimensional elements and discuss what we believe to be the important questions about them. The following appear to be the most significant ways to capture the quintessence of what most criminologists have traditionally seen as organizational violence: (1) it should not be limited to any kind or any size of organization and the organization must not have a criminal purpose; (2) it must involve an act to which there is a governmental penalty attached; (3) it should involve foreseeable risk of harm rather than actual harm; (4) it should be limited to risk of physical harm; (5) the unit of behavioral analysis should be the actor and not the organization; (6) non-accidental intentionality must be established by actor participation in the creation of the risk, the actor condoning the risk, or the actor being willfully ignorant of the risk; (7) organizational violence must be committed for the benefit of the connected organization in some way; (8) the actor’s behavior must be verified as the proximate cause of the risk; and (9) organizational violence should not at this time include non-human animal victims. Thus, we offer the following working definition of “organizational violence”: Any non-accidental behaviors committed for organizational gain within a non-criminal purpose organization that participates in, condones, or demonstrates willful ignorance of a governmentally punishable act within that organization that risks physical harm to human beings. This statement will undoubtedly lead to some level of consternation about whether this or that real instance of organizational behavior should or should not fall within its bounds. No single definition of organizational violence will allow perfect classifications, nor will it please everyone. 59

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But the working definition we have put forth should, in the vast majority of applications, be relatively easy to relate to acts that embody at their core what most people in the field have believed to be the conceptual essence of “organizational violence.” Discussions must continue about the various dimensional elements we have presented, as well as any additional ones we may have missed, so that the field of criminology can find both congruity and consensus about the use of organizational violence as an academic concept.

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Maakestad, W. (1987). “Redefining Corporate Crime.” Multinational Monitor 8(5), www.multinational monitor.org/hyper/issues/1987/05/maakestad.html. Mcmullan, J.L., and Mcclung, M. (2006). “The Media, the Politics of Truth, and the Coverage of Corporate Violence: The Westray Disaster and the Public Inquiry.” Critical Criminology 14(1): 67–86. Mokhiber, R. (1988). Corporate Crime and Violence. San Francisco, CA: Sierra Club. Monahan, J., and Novaco, R.W. (1980). “Corporate Violence: A Psychological Analysis.” In Lipsitt, P.D. and Sales, B.D. (eds), New Directions in Psycholegal Research. New York: Van Nostrand Reinhold, 3–25. Monahan, J., Novaco, R., and Geis, G. (1979). “Corporate Violence: Research Strategies for Community Psychology.” In Sarbin, T. (ed.), Challenges to the Criminal Justice System. New York: Human Sciences. Nader, R. (1971). “Corporate Violence Against the Consumer.” In Osborne, W., The Hope of the Powerless. New York: Gordon and Breach, 10–11. Parisi, N. (1984). “Theories of Corporate Criminal Liability.” In Hochstedler, E. (ed.), Corporations as Criminals. Beverly Hills, CA: Sage, 41–68. Pearce, F., and Tombs, S. (1998). Toxic Capitalism: Corporate Crime and the Chemical Industry. Burlington, VT: Ashgate. Perrow, C. (1999). Natural Accidents: Living with High-risk Technologies. Princeton, NJ: Princeton University Press. Punch, M. (2000). “Suite Violence: Why Managers Murder and Corporations Kill.” Crime, Law and Social Change 33(3): 243–280. Rajan, S.R. (2001). “Toward a Metaphysic of Environmental Violence: The Case of the Bhopal Gas Disaster.” In Peluso, N.L. and Watts, M. (eds), Violent Environments. Ithaca. NY: Cornell University Press, 380–398. Raman, K.R. (2005). “Corporate Violence, Legal Nuances and Political Ecology: Cola War in Plachimada.” Economic and Political Weekly: 2481–2486. Roe v. Wade (1973). 410 U.S. 113. Rynbrandt, L.J., and Kramer, R.C. (1995). “Hybrid Nonwomen and Corporate Violence: The Silicone Breast Implant Case.” Violence Against Women 1(3): 206–227. Salmi, J. (2004). “Violence in Democratic Societies: Toward an Analytic Framework.” In Hillyard, P., Pantazis, C., Tombs, S., and Gordon, D.(eds), Beyond Criminology? Taking Harm Seriously. London: Pinto Press, 55–66. Schmidt, J.D. (2010). Industrial Violence and the Legal Origins of Child Labor. Cambridge: Cambridge University Press. See, L.A., and Khashan, N. (2001). “Violence in the Suites: The Corporate Paradigm.” Journal of Human Behavior in the Social Environment 4(2–3): 61–83. Sinclair, U. (1906). The Jungle. New York: Vanguard Press. Stein, H.F. (2005). “Corporate Violence.” In Connerly, C. and Edgerton, R.B. (eds), A Companion to Psychological Anthropology: Modernity and Psychocultural Change. New York: John Wiley, 436–451. Stretesky, P., and Lynch, M.J. (1998). “Corporate Environmental Violence and Racism.” Crime, Law and Social Change 30(2): 163–184. Sutherland, E.H. (1940). “White-collar Criminality.” American Sociological Review 5(1): 1–12. Sutherland, E.H. (1945). “Is ‘White-Collar Crime’ Crime?” American Sociological Review 10: 132–139. Sutherland, E.H. (1973). “Critique of the Theory.” In Schuessler, K. (ed.), Edwin H. Sutherland: On Analyzing Crime. Chicago, IL: University of Chicago Press, 13–29. Swigert, V. and Farrell, R. 1980. “Corporate Homicide: Definitional Processes in the Creation of Deviance.” Law and Society Review 15(1): 160–182. Tombs, S. (1995). “Law, Resistance and Reform: ‘Regulating’ Safety Crimes in the UK.” Social & Legal Studies 4(3): 343–365. Tombs, S. (2007). “‘Violence,’ Safety Crimes and Criminology.” British Journal of Criminology 47(4): 531–550. Tombs, S., and Whyte, D. (2007). Safety Crimes. Abingdon, Oxon: Taylor & Francis. Tye, J.B. (1985). “Cigarette Marketing: Ethical Conservatism or Corporate Violence?” New York State Journal of Medicine 85(7): 324–327. US Sentencing Commission (2013). “Organizational Guidelines Manual.” www.ussc.gov/training/ organizational-guidelines/2013-ussc-guidelines-manual. Walczak, D., and Reuter, M. (2004). “Putting Restaurant Customers At Risk: Unsafe Food Handling as Corporate Violence.” International Journal of Hospitality Management 23(1): 3–13. Wright, J.P., Cullen, F.T., and Blankenship, M.B. (1995). “The Social Construction of Corporate Violence: Media Coverage of the Imperial Food Products Fire.” Crime & Delinquency 41(1): 20–36.

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3 Justifying the crimes of the powerful Vincenzo Ruggiero

Introduction The crimes of the powerful have been addressed from a variety of perspectives and interpreted through an array of analytical tools, as testified by the contributions included in this volume. Building on the solid foundations laid down by Edwin Sutherland (1983), corporations are often described as recidivist offenders compelled to undergo learning processes leading to crime (Pearce, 1976). Outside the economic sphere, some scholars have focused on state agents, highlighting how the formation, distribution and exercise of power produce harmful institutional conducts (Geis and Meier, 1977; Tilly, 1985; Whyte, 2009), while others have remarked that the core capitalist states remain the greatest source of state-supported harm, violence and injury (Rothe and Ross, 2009). Anomie and conflict theory have also been used, suggesting that powerful individuals and groups distance themselves from imputations of criminal conduct while attributing them to the powerless (Passas, 2009; Ruggiero, 1996; Slapper and Tombs, 1999; Ross, 2000). Finally, micro-sociological aspects have been examined, leading to the observation that the very dynamics and values guiding the behaviour of organizations and their members often pave the way for their criminality (Burns, 1963; Dalton, 1959; Mouzelis, 1967; Keane, 1995; Shover, 2007). This chapter attempts to add to the available wide-ranging literature, focusing less on explanations of why, when and how the crimes of the powerful occur than on the ways in which such crimes can be justified through philosophical and political arguments. This theoretical investigation will be carried out while focusing on the following conceptual variables: equality, inclinations, needs, toleration, liberty and authority.

On justification An important precedent to this approach in criminological theory is, of course, the groundbreaking work conducted by Sykes and Matza (1957), whose ‘techniques of neutralization’ reveal how offenders are able to deny the harm produced or the very criminal nature of their acts. Such techniques, however, seem to be precisely situated and pragmatically mobilized within contexts in which notions of morality and legality are negotiated. Ex-post rationalizations, they reflect an 62

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agonistic endeavour involving one party condemning and the other defending itself. The notion of justification adopted here, instead, implies the recourse to general principles and philosophies that are presented as non-negotiable, in that they are thought of as belonging to a collective patrimony of values. Such principles and philosophies, in brief, are not deemed reflections of a specific subculture, but core, constitutive elements of our culture. Sociological analysis of justification proposes a specific reading of organizations and businesses, where resources and arrangements based on personal ties are said to play a crucial role in determining behaviour (Boltanski and Thévenot, 2006). The crimes of the powerful, following this line of analysis, may be seen as the result of proximity among actors, mutual trust, imitation, and the desire to perpetuate bonds, values and group interests. But such arguments do not appear to distance themselves from the criminological domain, where all of this can be expressed with the notions of subcultures and learning processes. Proper philosophical and political justification requires that partial concerns and factional gains be depicted as beneficial to the collectivity; hence it requires an agreed-upon definition of the common good and the identification of higher common principles. In this sense, justification is a form of compromise, and ‘a compromise, in order to be acceptable, must be based on the quest for a common good of a higher order than the ones the compromise attempts to reconcile’ (ibid.: 20). One strategy allowing for the configuration of a higher order consists of grounding such order on the alleged universal appreciation of individualism. By denying the reality of collective phenomena, for instance, the mere interest of individuals comes to be recognized. This strategy does not amount to deceit, but is inspired by a serious imperative to justify acts; it is not a pretext, but a genuine attempt to present actions as conducts which withstand the test of justification.

Equality of souls and inclinations If we regard the crimes of the powerful as extensions of individual interests, justifications are to be found in the very history of liberalism. By linking liberalism with the Christian revolution and its legacy in the modern age, a sacred aura is conferred upon free enterprise and its social effects. Christianity, we are told, freed a world suffocated by hierarchy, where rank was deemed natural and reason belonged to born elites (Siedentop, 2013). It built a world of equal individuals ‘sharing a common fate and endowed with equal moral status’ (Collins, 2014: 7). Individual conscience developed, as did communities, as a free association of moral agents defined by St Paul as the ‘body of Christ’. Enemies of liberalism and individualism, therefore, are enemies of Christianity. While powerful offenders may justify their acts by claiming the saintly origin of their predatory instinct, they may at the same time claim that their rectitude is testified by the intimate, individual relationship they establish with the divinity they worship. Before Max Weber associated religious belief and self-discipline with the entrepreneurial spirit, philosophers formulated theories of morality revolving around individual rectitude, theories that ignored collective forms of life while encouraging solipsism. Individualism, in Plato, is characterized by homo erectus, namely a person who abandons the cave in which she is held and the uncomfortable position she is forced to assume, and walks in straight paces towards virtue. His theoretical model is ‘vertical’ and excludes deviations or inclinations. According to this model, therefore, leaning towards vice is a logical impossibility for those who have acquired independence in the form of erect posture. During the eighteenth century, the century of Immanuel Kant, depictions of individualism as independence abound, with Kant himself abhorring children for their ‘leaning’ on others and their passive attitude towards the mechanics of instincts. In his moral writings the others never appear, the only protagonist being the ego and her reason functioning in solitude (Arendt, 2006). Inclinations, on the other hand, are dangerous for autonomous individuals, because they allude 63

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not only to deviant conducts, but also to offers of care and solidarity to those in need (Cavarero, 2013). Rather than leaning towards others with acts of generosity, the ‘erect’ individual is allowed to act politically; that is, to take initiatives, operate in new areas, be they economic or moral: in brief, to experiment with unique conducts. Acting is the faculty to initiate, the art of giving life to something new: the crimes of the powerful, from this perspective, are tantamount to novel discoveries, unprecedented forays into the static moral world made up of continuity and habits. Inclinations as care of the other entail solidarity and mutual responsibility, associated with reproduction and opposed to the total commodification of life. Against morbid individualism and infinite accumulation, groups may incline towards the defence of nature, ecological justice between generations, political participation and control of economic initiative. ‘Such claims, along with the counter-claims they inevitably incite, are the very stuff of social struggle in capitalist societies’ (Fraser, 2014: 68). The crimes of the powerful are indeed counter-claims, namely a forceful upsetting of rules, challenges to notions of legality, which aim at neutralizing the legitimacy of collective claims.

Needs and tolerance Justifications of the crimes of the powerful may follow another trajectory, one based around the notion of need. The individuals described above, having achieved independence and rectitude, may advocate the crucial importance of needs defined by the telos to which they refer. To say that they need something is merely shorthand for the complete statement that they need something in order to acquire something else. The Marxist tradition distinguishes at least three different categories of needs: individual natural needs, or the means of biotic survival; social needs, or the means to an existence that is fulfilled in some ethical sense; and economic needs, the means required for the individual to serve the logic of capital (Heller, 1976). The crimes of the powerful adopt the third telos; that is, a logic of appropriating resources before they are wasted. This echoes John Locke’s views around economic initiative, which is required to establish private ownership wherever fruits and game risk to rot and wherever rules allow such waste. Surprisingly, however, the crimes of the powerful also follow what may be termed a ‘Pareto logic’, in the sense that even wealth illegally appropriated may be regarded as loss if no one appropriates it. From this perspective, powerful individuals and groups who abstain from crime cause a ‘Pareto-inferior change’, which refers to any change leading to at least one player experiencing a fall in utility. The crimes of the powerful, therefore, aim at causing ‘Pareto-superior change’; that is, utility for all social players. Tolerance for the crimes of the powerful may be generated by this very notion of ‘utility’, which we encounter when powerful actors pursuing their interest find resort to coercion unnecessary. Successful criminals may present themselves as philanthropists, in the sense that their deeds and their outcomes may appear as benefiting others rather than the perpetrators. These philanthropic powerful offenders, in brief, manage to repel the criminal label from their activity and to persuade others that their goals correspond to those of the collectivity. Criminal entrepreneurs, for instance, can often claim that their crimes (for example, producing or exporting prohibited or harmful goods) contribute to keeping and creating jobs (Ruggiero, 2007). It is in these cases that we are faced with what is deemed an ethical paradox of toleration. The paradox lies in the fact that tolerating other people’s acts may be opposed to the imperatives of our ethical code. Believing that a certain kind of conduct is wrong can turn into the feeling that the conduct in question should be prevented. Such feeling, however, is avoided if toleration of that conduct is justified by adhering to higher principles that supersede our ethical code (Mendus, 1988). In the example given, the higher principles embedded in job 64

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creation may lead to condoning the crimes of the powerful and recognizing some moral value in them. Even crimes associated with tyrannical systems may find toleration, as in Xenophon’s dialogue between Hiero the tyrant and Simonides the poet that I will now discuss. Hiero has been a private man before becoming a tyrant, and is asked by Simonides to explain how the pains and joys of the two conditions differ. Hiero claims that power brings fewer pleasures and greater grief than the condition of an ordinary person of moderate means. Those who are politically or economically powerful have to strive to maintain their status and their wealth, they are constantly fearful that they may be deprived of what they possess and, as a consequence, become powerless. Praise and respect do not balance this fear, because these are only bestowed upon them for the sake of flattery. Wealth itself ceases to generate new pleasure over time, as growing amounts of it find the powerful insensitive to that to which they are already accustomed. ‘So, in the duration of pleasure too, one who is served many dishes fares worse than those who live in a moderate way’ (Strauss, 2013: 5). It would be interesting to enquire whether Alfred Marshall took inspiration from Xenophon for the formulation of his celebrated theory of marginal utility: ‘the marginal utility of a thing to anyone diminishes with every increase in the amount of it he already has’ (Marshall, 1961: 79). Applying this principle to the accumulation of power, money and resources, we are led to conclude that there are natural limits to social privileges and that the abuse of one’s position is unlikely, due to spontaneous self-restraining mechanisms. ‘The richer a man becomes the less is the marginal utility of money to him’ (ibid.: 81). Xenophon’s main focus, however, is fear rather than satiability: fear that the disadvantaged may challenge the unjust distribution of wealth or even plot tyrannicide, which will lead to the erection of statues honouring those who commit it. Fear is only tempered by the realization that inequality may constantly increase provided something is left for the needy, because ‘the one who lacks something takes his fill with delight whenever it comes to sight before him’ (Strauss, 2013: 6). Another core concern of the powerful, however, is the existence of other powerful individuals and groups who may possess more, and this turns into bitter competition. For, as the ordinary individual desires a house or a field, the powerful desire cities, extensive territory, harbours or citadels, ‘which are things much harder and more dangerous to win than the objects desired by private men’ (ibid.: 11). This is why, in Xenophon, crime is an option, as plundering temples and human beings is the only guarantee that power is maintained and augmented. If crime, on the other hand, tarnishes the honourability of the powerful, this does not change the situation substantially, the powerful normally being less honoured than feared. Power, therefore, may well rule without or against the laws. Hiero in fact considers that, in order to become powerful, some unpopular or even criminal measures have to be taken, but he also admits that the conservation of power itself, once achieved, requires incessant ‘innovation’ in a cumulative, virtually infinite process. From the Hegelian perspective, such process corresponds to history, which offers a concrete social and political reality while providing an understanding of how to change it. The powerful are impelled to ‘go beyond’, to deny reality and overcome its restraining force: negation is realized ‘by action, struggle and work so that a new political reality is created’ (Kojève, 2013: 174). This exercise of ‘negation’ includes violating rules and decriminalizing conducts.

Relative liberty? Tolerance towards the crimes of the powerful may also be granted when another key category of liberal thought is taken into account. Adam Smith strives to establish when the absolute liberty ideally enjoyed by all ends up injuring someone. He posits that violations may undermine our natural rights, for example, the right of liberi commercii, namely the right to exchange goods and services with those who are willing to deal with us. Those who hamper such a right violate what 65

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Smith terms iura perfecta, that is to say, ‘rights that we have a title to demand and, if refused, to compel another to perform’ (Smith, 1978a: 8). Iura imperfecta, conversely, pertains to expectations to duties which may be performed by others for our benefit, but to which we have no entitlement or can compel others to perform. ‘Thus, a man of bright parts or remarkable learning is deserving of praise, but we have no power to compel any one to give it him’ (ibid.: 9). Similarly, beggars may be the objects of our charity and may be assumed to have a right to demand it, but we are not compelled to share our wealth with them. In this initial classification, Smith argues that perfect rights relate to communicative justice, whereas imperfect rights refer to distributive justice. After expounding the very well-known theory according to which the pursuit of selfinterest, thanks to the laws governing markets, assures a beneficial outcome for society as a whole, he reiterates that the economic dynamic performs a crucial educational function, making antisocial behaviour counterproductive and transforming selfishness into its opposite: that is to say, regard and consideration for others. Private selfishness turns into public altruism. But antisocial behaviour returns in his Theory of Moral Sentiments, where Smith (1978b) examines what makes certain conducts praiseworthy and certain actions the spontaneous object of approbation and admiration. Utility, authority and wealth are his answers, with fortune playing a crucial role: in this way he separates a material status (being wealthy) from the way in which that status is acquired. Wealth is said to emanate power and elicit admiration in that the poor owe their subsistence to those who may be generous enough to share it. The hope that this may happen leads to the neglect of the ways in which ‘fortune’ is actually accumulated, leaving therefore the wealthy in the condition to negotiate the degree of virtuosity of their acts. Persons endowed with wealth, in other words, may constantly move the threshold beyond which their conduct is to be deemed immoral. Smith is well aware of this dynamic, for example, when he notes that wealth represents an important source of authority, but also an important object of dispute. In a situation where property may be acquired, he argues, there are advantages to be gained by committing acts of injustice, because ‘that situation tends to give full rein to avarice and ambition’, and hence the necessity to establish a ‘civil government’. But then he concedes that ‘civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all’ (ibid.: 12). One may conclude, in this respect, that even illicit or unorthodox economic practices, like conventional economic activity, will contribute to the dream that privileges will be extended and that power, the usual attendant of wealth, will be in some measure diffused among all the members of the community. In the chapter ‘Delinquency’ of his Lectures on Jurisprudence, the author further clarifies his views on the subject matter. The initial distinction is made between damage produced by ‘willful injury’ or the malice propense of the offender, and damage caused by ‘faulty negligence, or culpa’ (Smith, 1978a: 103). In a list of what we would now describe as crimes of the powerful, he mentions ‘those injuries which may be done to one’s personal estate’, a variety of frauds, including the acts of ‘cheating another out of his property’ and offences like perjury and forgery. He then describes in some detail ‘fraud with regard to insurance’, where ‘the insurers, on the masters giving in an account of the value of the ship and cargo, insure her for that sum’. A ‘master’, we are told, may make mendacious claims, and ‘having insured his ship above the value, might take an opportunity of wrecking her on some place where he might easily save himself and crew; and by this means enrich himself to the great loss of the insurers’ (ibid.: 132). We are also warned that the detection of such operations is very difficult, and that the large profits made in this way are the cause of the great temptation to commit this specific form of fraud. After briefly discussing some examples of ‘financial crime’, such as ‘forgery of bills, India bonds, banks bonds, bank notes and all other payables’, Smith moves his attention to ‘the crimes which the sovereign 66

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may be guilty of against the subjects’. Well, if ‘financial crimes’, again, are too difficult to detect, those committed by the sovereigns against their subjects do not produce ‘willful injury’, but are normally caused by pure ‘faulty negligence’. Does Smith, here, condone or encourage a variety of crimes of the powerful? As we have seen, the virtuous circle translating self-love into public good may also turn into a vicious circle. But when this occurs it is likely that the damage caused cannot be attributed to specifically identifiable entities. The crimes committed by the powerful are hard to detect and responsibilities are difficult to apportion, also because often such crimes are the result of negligence rather than injurious intentions. We are faced, therefore, with culpa rather than with malice propense. Such crimes, moreover, violate imperfect rather than perfect rights. Authority emanates from wealth, whatever the modality in which it has been accumulated, and is aimed at protecting those who possess property against those who possess none. Smith could not have anticipated the future success of his formulations and the ways in which his views, wittingly or otherwise, provide an ideal justification for the crimes of the powerful.

Absolute liberty Conquest brings the opening of new and inexhaustible markets even when carried out through illegal aggression. John Stuart Mill, the philosopher of classical liberalism, a theorist of political economy and a proponent of women’s rights, condones this typical crime of the powerful, which is condemned by Adam Smith. Mill spent a large part of his adult working life drafting ‘dispatches’ or official documents on British policy in India (Lal, 1998). Between 1836 and 1856 he was responsible for the vast correspondence pertaining to the East India Company’s relations with the Native Indian States. He also represented the Company in negotiations with government during the rebellion of 1857, and defended its interests against plans to transfer the responsibility for India directly to the Crown. How could the apologist of ‘liberty’ support such a predatory enterprise? The main idea handed down to us by John Stuart Mill is that individuals are free and sovereign, and that happiness is not the direct and conscious objective of conducts; rather, it is the unintended outcome of other objectives: ‘the happiness of others, the improvement of mankind, art, beauty, the contemplation of nature, any activity pursued for its own sake’ (Himmelfarb, 1982: 15). This philosophy of anti-self-consciousness echoes Adam Smith’s notion of individual interest as public good. Mill, however, shifts the emphasis from the outcomes of individual choice onto individual choice itself. The opening lines of On Liberty offer a concise summary of his whole enterprise. The book is said to assert one very simple principle, namely that no authority should govern by means of compulsion and control the dealings of individuals, whether the means be physical force in the form of legal penalties, or the moral coercion exerted by public opinion. Interference of government in any member of a community is only justified when it is intended to prevent harm to others. Conversely, there is no justification for the authority to intervene to ensure the ‘physical or moral good’ of those who, by making choices, may cause harm to themselves. The individual: cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinion of others, to do so would be wise, or even right. (Mill, 1982: 47) Liberty not truth is the mark of individuality, he asserts, meaning that dissenters from conventional truth express their individual independence more than proponents of that truth. The 67

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invective against tradition and dull conformity is expressed in a tone that is as combative as it is persuasive. We need protection, Mill says, not only from the tyranny of the magistracy, but also from that of the prevailing opinions and feelings, and our fight should be against ‘the tendency of society to impose, by other means than civil penalties, its own ideas and practices as rules of conduct on those who dissent from them’ (Mill, 1982: 63). This fight against customs is the only exercise that guarantees the liveliness of our mental and moral powers. Feelings and character must be active and energetic, not inert and torpid. Finally, An intelligent deviation from custom is better than a blind and simply mechanical adhesion to it. . . . Energy may be turned to bad uses; but more good may always be made of the energetic nature than of an indolent and impassive one. (Ibid.: 124) An ‘intelligent deviation’ is what in economic thought is known as innovation, and in the sociology of deviance is one of Merton’s ‘adaptations’, which allows individuals to pursue legitimate ends (money and success) while using illegitimate means. Intelligent deviation, therefore, immediately brings to mind crimes committed by powerful people. Mill, however, advocates the cultivation of individuality ‘within the limits imposed by the rights and interests of others’. Deviance, therefore, must not hurt others, their life, health or interests, and should be confined within the boundaries of victimless behaviour. ‘If anyone does an act hurtful to others, there is a prima facie case for punishing him by law or, where legal penalties are not safely applicable, by general disapprobation’ (ibid.: 70). Conducts causing harm to others, therefore, may escape formal punishment where statutory penalties are difficult to apply or are non-existent. Using our contemporary vocabulary, we may suggest that conducts for which penalties can be ‘safely applicable’ correspond to conventional criminal conducts, while those for which legal intervention is problematic are the preserve of powerful individuals and groups. Mill appears to suggest, therefore, that the crimes of the powerful are punishable through mere general disapprobation. A range of conducts examined in On Liberty fall in this grey area where liberty encounters crime, and Mill’s attempt to classify them mirrors our own contemporary endeavour to formulate a taxonomy of offences and the harm that these produce. Even in situations where liberty and crime, in a sense, almost coincide, he considers freedom as a priority by stating unequivocally that ‘leaving people to themselves is always better than controlling them’ (ibid.: 165). We are faced here with two familiar concepts regularly recurring in debates around white-collar and corporate crime. ‘General disapprobation’ and ‘punishment by opinion’ echo analyses of the crimes of the powerful as conduct whose definition should be elaborated, and whose criminal nature is perceived, within the occupational context in which it occurs. Punishment or persuasion becomes the question. Mill’s argument reminds us of this dilemma, although his belief that ‘leaving people to themselves is always better than controlling them’ would suggest that persuasion, accompanied by disapprobation, would be preferable. Intervention against malpractice, in many cases, ‘would produce other evils, greater than those which it would prevent’ (Mill, 1982: 70). We are therefore left with two main solutions: either the conduct affecting others is met with free, voluntary consent by those affected, or those affected somehow ‘disappear’. We are yet in another crucial part of Mill’s argument, where the author discusses the variable liberty within a highly controversial commercial activity, namely the marketing of poisons. Here, he notes that authority control should not infringe the liberty of producers or sellers, or that of buyers. Persons should simply be warned of the dangerousness of the good they buy. In a clarifying example, Mill describes a person attempting to cross a bridge 68

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that has been ascertained to be unsafe. There is no time to warn the person of the danger, but she may be seized and turned back without any real infringement of her liberty, ‘for liberty consists in doing what one desires’, and she does not desire to fall into the river (ibid.: 166). In other cases, the person may desire just that, and once warned of the danger should be left free to make her choice. The conclusion stemming from this example may be that those in charge of the building of the bridge should be granted the freedom to make it unsafe. Potential victims, on the other hand, should be granted the freedom to voluntarily become victims, thus ‘participating’ in the free entrepreneurial process. The crimes of the powerful, in this sense, are justified through the disappearance of the victims, on the one hand, and through their consent to being victimized, on the other.

Authority ‘Authority is the possibility for an agent to act upon others without others reacting despite being able to do so’ (Kojève, 2004: 26). This is an elegant formulation that echoes Mill’s notion of consent. We have seen that Mill’s concern is not to prevent perceptible damage to others, but rather to prevent harm being inflicted upon them without their consent (McKinnon, 2008). Authority examined from the perspective of consent may be seen as an entity that does not change itself in relation to the action it performs, as change would signal its failure. If I want to get someone out of my room and I have to use force to do so, I show lack of authority. Naturally recognized by its subjects, all human authority must have a cause, a reason or a justification of its existence. The main ‘pure’ forms of authority identified by Kojève are linked with different philosophical schools: Hegel (master and father), Aristotle (leader or chef) and Plato (judge or the pretence of impartiality, objectivity, disinterest). These pure forms are not the result of a social contract: their genesis is spontaneous. More precisely, there is a theological or theocratic theory, whereby the prime and absolute authority belongs to God and all others derive from Him. Elaborated by the scholastics, this theory is then appropriated by partisans of hereditary monarchies. Plato’s theory, on the other hand, is based on the assumption that authority derives from justice and equity, and when based on more or less brute force it is a sheer pseudo-authority. Aristotle’s theory indicates that real authorities occupy the position they do by showing wisdom, knowledge, and the capacity to predict and transcend the present. In Hegel, the whole notion is reduced to the relationship between the master and the slave, the victors and the vanquished, ‘the former having risked his life in order to gain recognition, the latter having preferred subjugation rather than death’ (Kojève, 2004: 50). The crimes of the powerful can find justification in all the theories listed; for example, they may be seen as the result of the divine right to freedom, individualism and hereditary wealth, as expressions of justice and equity supported by consent, or as the inevitable outcome of the master – slave relationship accepted by those who are subjugated. It is in Aristotle’s conceptualization, however, that we find a compelling aspect, namely that authority possesses the capacity to predict the future and transcend the present. Authority, in the form of crimes of the powerful, surpasses the natural time that prioritizes the present and the past: the time of the crimes of the powerful is the future. It is in the future that powerful offenders will enjoy the advantages acquired and transmit them to their progeny and peers, where the augmented inequality will become increasingly difficult to challenge, and where the foundational nature of their acts will be weighed. The crimes of the powerful, in brief, inhabit a grey area in which conducts await the outcome of the criminalization – decriminalization conflict, in the sense that they may be subject to regulation or may become accepted routine. Some of these crimes, in fact, possess a decriminalization impetus, while others implicitly invoke legal pragmatism, in that they challenge 69

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legal reasoning and request departure from precedents. These foundational crimes are inspired by an ‘experimental’ logic and driven by a consequentialist philosophy. Powerful actors so driven adopt illicit practices with the awareness that they are, indeed, illicit, but justify them through their founding force, namely their capacity to transform the previous jurisprudence and establish new laws and new types of legitimacy. The crimes of the powerful, in sum, restructure the legal and political spheres while playing a legislative role.

Negative and positive liberty Consent and authority return under different guises in the influential distinction between two purely descriptive concepts, respectively termed negative liberty and positive liberty (Berlin, 1969). The former is freedom from coercive interference by others in relation to certain areas of personal conduct. Within certain relevant domains, nobody is entitled to deny others, either directly creating obstacles or calling on institutions to do so, opportunities to choose the behaviour to adopt. Positive liberty, on the other hand, is freedom to be one’s own master. It involves a ‘wish to be the instrument of my own, not of other men’s acts of will’ (ibid.: 131). In brief, individuals have a right to exercise their own will in the private domain as well as in the public arena, where participation amounts to self-government, namely decision-making opportunities (McKinnon, 2008). We shall discuss the ambiguity of this formulation later. Applying negative liberty to powerful offenders, we are led to argue that such offenders may claim a degree of immunity in relation to their choices, particularly within certain protected domains of conduct. No coercive interference by others is allowed in such domains, where choices, Berlin omits to note, are rendered possible due to the political power of those making them. Here is where his distinction reveals its ambiguity, in that negative liberty needs a substantial degree of positive liberty, without which no immunities in relation to choice of conduct could be gained. In sum, negative and positive liberty can amalgamate in a perfectly homogeneous whole, making choices possible and interference by external forces difficult. Berlin’s distinction, therefore, seems to originate in ethical concerns pertaining to the individual and their ‘informal’ life, but unwittingly leads us to the ‘formal’ sphere in which individuals interact, namely the political arena. ‘Real power to determine the future of democratic societies rests in the hands of a remarkably small number of people’ (Miller, 2003: 40). This statement is a good starting point for a discussion of contemporary political issues, which here inevitably can only be cursory. Politics has become the exclusive preserve of a caste, an elite who claims its right to govern due to the incompetence of ordinary people, including those who designate them as representatives. Voters have to limit their role to the choice of their qualified leaders, being unqualified to decide on issues directly. The ‘democratic’ process itself generates this form of political deskilling among citizens, whereby people lose touch with those making choices that affect their lives. A political decision, in effect, requires judgement with respect to available options, factual information relating to the likely outcome of those options, and sensitivity with regard to their ethical fairness. It would be risky to ask the general public to make major policy decisions unless they have the skills and information to make good judgments, but they have no incentive to acquire these unless they are given significant decisions to make. (Ibid.: 47) The crimes of the powerful, in this case, find justification in the fact that the general public is incapable of identifying options, assessing their likely outcome, let alone establishing the ethical 70

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value of the acts it is called upon to judge. The minority monopolizing the realm of politics is therefore able to also monopolize the decision whether acts are to be deemed criminal or not.

Conclusion Justification puts the crimes of the powerful in a peculiar light, as I hope I have shown in this chapter. It is a strategy that may or may not incorporate deceit, but mainly aims to present conducts as being beyond good and evil, to allow them to escape any sort of judgement. Of course, it implies a high degree of hegemonic power, but even when hegemony is weak it makes claims, it establishes a right to forcefully upset rules and challenge notions of legality. Perfectly consistent with Hegelian interpretations of history, the crimes of the powerful occur in specific social and political contexts that offer opportunities for change. The powerful are compelled to ‘go beyond’ and ‘negate’ those contexts, and in doing so they find justification for their actions, whose illegality is perceived as a form of innovation, within a process of inevitable historical evolution. Justifications provided by Adam Smith pinpoint how the crimes committed by the powerful are hard to detect and responsibilities difficult to apportion. Such crimes, moreover, are the result of negligence rather than injurious intentions; they fall into the category of culpa, rather than into that of malice propense. Ultimately, they only violate imperfect, not perfect rights. In his turn, John Stuart Mill is not concerned with the harm caused by powerful actors, but only with establishing whether that harm is inflicted with or without the consent of those suffering it. The crimes of the powerful are ‘experimental’ and experiments may lead to the foundation of new ethics, new rules and new socio-political arrangements. In this sense, these types of crimes have been described as capable of restructuring the legal and political spheres and playing a legislative role. The distinction between negative and positive liberty, finally, has given an unexpected opportunity to clarify that both types of liberty coalesce in specific minorities who can find justification for their actions through a careful amalgam of the two. The imperative of justification does not rule out that individuals and groups attempt to exempt themselves from it and opt for the use of deception or violence. Hegemony is never perfect: however, the justification model allows us to identify the shifts into deception and violence, and ‘to discriminate between situations oriented toward justification and situations of domination and contingency’ (Boltanski and Thévemot, 2006: 346). On the other hand, distinguishing acceptable justification from unacceptable associations (in our case, the crimes of the powerful) becomes increasingly hard, as the skills required to make such a distinction are proportionate to the power held by actors in the extremely skewed, polarized, elitist political systems of today. In Greek the term idiotes was used to describe someone who lived an entirely private existence and who took no part in the public life of the city. Idiotes today are those who believe that the pursuit of private gains, whether enacted legally or illegally, turns into beneficial achievements for all. The evolution of the political sphere, sadly, seems to be set to produce increasing numbers of unskilled political actors, as exemplified in the statement: ‘You, the people, have the right to air your views; and we, the ruling class, reserve the right to disregard them’ (Badiou, 2005: xvi). Idiotes, in this case, will proliferate, and with them the justifications of the crimes of the powerful.

References Arendt. H. (2006). Alcune questioni di filosofia morale. Turin: Einaudi. Aubert, V. (1956). ‘White-collar Crime and Social Structure’. American Journal of Sociology, 58: 263–271. Badiou, A. (2005). Metapolitics. London: Verso. 71

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Berlin, I. (1969). ‘Four Essays on Liberty’, in Hardy, H. (ed.), Isaiah Berlin: Liberty. Oxford: Oxford University Press. Boltanski, L. and Thévenot, L. (2006). On Justification. Economies of Worth. Princeton, NJ: Princeton University Press. Burns, T. (1963). ‘Industry in a New Age’. New Society, 31 January: 17–20. Cavarero, L. (2013). Inclinazioni. Critica della rettitudine. Milan: Raffaello Cortina. Collins, J. (2014). ‘Equality of Souls’. Times Literary Supplement, 11 April: 7–8. Dalton, M. (1959). Men Who Manage. London: Wiley. Fraser, N. (2014). ‘Behind Marx’s Hidden Abode’. New Left Review, 86: 55–72. Geis, G. and Meier, R. (eds) (1977). White-collar Crime: Offences in Business, Politics and the Professions. New York: Free Press. Heller, A. (1976). The Theory of Need in Marx. London: Allison and Busby. Himmelfarb, G. (1982). ‘Introduction’, in Mill, J.S., On Liberty. Harmondsworth: Penguin. Keane, C. (1995). ‘Loosely Coupled Systems and Unlawful Behaviour: Organization Theory and Corporate Crime’, in Pearce, F. and Snider, L. (eds), Corporate Crime. Contemporary Debates. Toronto: Toronto University Press. Kojève, A. (1981). Esquisse d’une phénoménology du droit. Paris: Gallimard. Kojève, A. (2004). La notion de l’autorité. Paris: Gallimard. Kojève, A. (2013). ‘Tyranny and Wisdom’, in Strauss, L., On Tyranny. Chicago, IL: University of Chicago Press. Lal, V. (1998). ‘John Stuart Mill and India’. New Quest, 54: 54–64. Marshall, A. (1961). Principles of Economics, vol. 1. London: Macmillan. McKinnon, C. (ed.) (2008). Issues in Political Theory. Oxford: Oxford University Press. Mendus, S. (ed.) (1988). Justifying Toleration. Cambridge: Cambridge University Press. Mill, J.S. (1982). On Liberty. Harmondsworth: Penguin. Miller, D. (2003). Political Philosophy. A Very Short Introduction. Oxford: Oxford University Press. Mouzelis, N.P. (1967). Organization and Bureaucracy. An Analysis of Modern Theories. London: Routledge & Kegan Paul. Passas, N. (2009). ‘Anomie and Corporate Deviance’, in Whyte, D. (ed.), Crimes of the Powerful: A Reader. Maidenhead: Open University Press. Pearce, F. (1976). Crimes of the Powerful. Marxism, Crime and Deviance. London: Pluto. Ross, J.I. (ed.) (2000). Controlling State Crime. New Brunswick: Transaction. Rothe, D.L. and Ross, J.I. (eds) (2009). ‘State Crime’, special issue of Critical Criminology, 17. Ruggiero, V. (1996). Organized and Corporate Crime in Europe: Offers That Can’t Be Refused. Aldershot: Dartmouth. Ruggiero, V. (2007). ‘It’s the Economy, Stupid! Classifying Power Crimes’. International Journal of the Sociology of Law, 35: 163–177. Ruggiero, V. (2013). The Crimes of the Economy. London: Routledge. Shover, N. (2007). ‘Generative Worlds of White-collar Crime’, in Pontell, H.N. and Geis, G. (eds), International Handbook of White-collar and Corporate Crime. New York: Springer. Siedentop, L. (2013). Inventing the Individual. The Origin of Western Liberalism. London: Allen Lane. Slapper, G. and Tombs, S. (1999). Corporate Crime. Harlow: Pearson. Smith, A. (1976). An Inquiry into the Nature and Causes of the Wealth of Nations. Oxford: Clarendon Press. Smith, A. (1978a). Lectures on Jurisprudence. Oxford: Clarendon Press. Smith, D. (1978b). Theory of Moral Sentiments. Oxford: Clarendon Press. Strauss, L. (2013). On Tyranny. Chicago, IL: University of Chicago Press. Sutherland, E. (1983). White Collar Crime: The Uncut Version. New Haven, CT: Yale University Press. Sykes, G. and Matza, D. (1957). ‘Techniques of Neutralization: A Theory of Delinquency’. American Sociological Review, 22: 664–670. Tilly, C. (1985). ‘War Making and State Making as Organized Crime’, in Evans, P.B., Rueschemeer, D. and Skocpol, T. (eds), Bringing the State Back In. Cambridge: Cambridge University Press. Whyte, D. (ed.) (2009). Crimes of the Powerful: A Reader. Maidenhead: Open University Press.

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4 Corporate criminals constructing white-collar crime Or why there is no corporate crime on the USA Network’s White Collar series Carrie L. Buist and Paul Leighton

A standard critique of media portrayals of crime correctly states that there is an over-emphasis on street crime compared to white-collar crime, especially given the prevalence and enormous costs of the latter. This situation partly reflects the pattern of legislators and enforcement agencies focusing more on harms done by the poor (street crime) than harms done by the rich (white-collar crime), but the media further magnify the carnival mirror-like distortions of the criminal law and criminal justice system (Reiman and Leighton 2013). COPS, all the varieties of Law & Order, CSI, etc. hardly ever deal with a white-collar crime. Occasionally, rich people kill, but not through corporate acts that harm workers, consumers, the environment and/or communities. An apparent exception is the USA Network’s White Collar series, which finished its fifth season in 2014. In the show, convicted art forger and con man Neal Caffrey receives a conditional release from prison to assist FBI agent Peter Burke in solving cases for the White Collar Crime Division. As a single show on a modest-sized cable channel, White Collar does little to disrupt the standard critique, but it still deserves scrutiny because media representations of crime are ideologically charged; they shape public perception of the “crime problem” and appropriate policy responses. Indeed, the ideological slant from corporate media creating programs about the criminality of the wealthy and powerful will not be confined to fictionalized drama, so White Collar is an opportunity to understand how corporate media distort harmful elite deviance. Fox TV Studios (owned by the notoriously conservative Rupert Murdoch) produces White Collar that airs on USA Network (which has been owned by Fortune 500 firms during the show’s five seasons). While white-collar crime does not have a specific generally accepted definition, in the speech where he coined the term, Sutherland discussed white-collar crime as the behavior of men working in legitimate business fields who often used criminal means to gain money and influence in a variety of professional fields such as banking, oil, and real estate as well as in political arenas (Sutherland 1940: 2). So what type of mirror does the corporate medium turn on itself, its owners, advertisers, and financiers? And what type of understanding would a viewer have of white-collar crime from watching White Collar? 73

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The distortions of news because of corporate ownership are well established (Bagdikian 2004). For example, in 2010, GE made profits in the USA of $5.1 billion but paid no taxes (Kocieniewski 2011). The story ran on several networks, but not on the GE-owned NBC nightly news or the network’s flagship public affairs program Meet the Press. The NBC Nightly News did have time during its broadcast on the day the GE tax story broke for a segment about the Oxford English Dictionary adding such terms as “OMG” and “muffin top” (Farhi 2009). An article on the “missing story” noted that one media critic “cited a series of GE-related stories that NBC’s news division has underplayed over the years, from safety issues in GE-designed nuclear power plants to the dumping of hazardous chemicals into New York’s Hudson River by GE-owned plants” (ibid.). Similarly, the neglect of actual white-collar crimes by White Collar may be mapped against the misdeeds of the show’s corporate owner. The concern, then, is that the same dynamics that created the “missing (news) story” also create “missing (crime) stories” and specifically “missing (corporate crime) stories” – even from a series about white-collar crime. Corporate ownership of the media means that corporate criminals construct white-collar crime and elite deviance in a way that neglects the crimes and abuses of power by “legitimate” businesses. The misinformed public lacks information about corporate abuses of power and harms, which means it is easier for these harms to persist. In an earlier piece, Leighton (2010) pointed out that the crimes portrayed on White Collar are a narrow apolitical set of white-collar crimes that do not include abuses of power by corporations or government. For White Collar, white-collar crime means jewel and art theft, mostly done by high-end professional criminals and organized crime trafficking. Few reputable people commit occupationally related white-collar crime, the essence of white-collar crime according to common definitions. Even then, their crimes are not what Quinney describes as crimes of domination: “crimes of control” (acts by the police and the FBI in violation of civil liberties), “crimes of government” (political acts that violate US or international law), and “crimes of economic domination” (corporate acts involving price fixing, pollution, workplace safety, dangerous products, and financial harm to the public) (Barak et al. 2015: 61). This chapter further explores that hypothesis through a content analysis of the first two seasons of White Collar, when it was owned by GE. Their frequent and prolific corporate offending includes environmental pollution, bribery, price fixing, defense contract fraud, safety concerns about their nuclear power reactor, and fraud in the sale of mortgage-backed securities. The following section, Methodology, describes the sample, data collection, and analysis. The second section, Results, compares the perpetrators and crimes on White Collar with the acts described by Sutherland’s “White Collar Criminality” (1940). The third section, Discussion, reviews the crimes and abuses of power by GE. The conclusion sets this study in the context of other corporate media reporting of crime.

Methodology White Collar first aired in October 2009 when GE had a majority ownership of the USA network’s immediate corporate parent, NBC Universal. In January 2011, GE’s ownership in NBC Universal fell from about 80 percent to 49 percent when telecommunications giant Comcast picked up a 51 percent stake. Thus, we focus here on the first two seasons of White Collar, which were written and produced before the change in control. The first two seasons of White Collar comprise 30 episodes (14 episodes in season one and 16 in season two). To do the coding, we employed several data sources. First, we watched the show, which is available for on-demand viewing through services like Netflix as well as reruns on the USA network. Second, we used detailed (3,500-word) summaries of episodes available on tv.com and shorter summaries from usanetwork.com (which airs the show). 74

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As noted by Weber, “a central idea in content analysis is that many words of the text are classified into much fewer content categories” (1990/2004: 118). The same logic applies to classifying the hours of video (44 minutes per episode) into meaningful content categories. Following up on Leighton’s critique (2010), we initially coded each episode to identify the perpetrator, crime, and victim. The next step in the process is to develop the themes where the codes will find their new homes. We approached the process using “open coding,” which allowed us to identify as many possible themes as we could (Denzin and Lincoln 2003). As Charmaz (2004) contends, the coding process is a way in which a researcher can begin to define what it is he or she is encountering during the process. For example, the codes for smuggler, counterfeiter, and professional highend thief were less important than professional criminals who did not enjoy the respectability and trust that are the usual hallmarks of white-collar crime (Friedrichs 2010). A second category then captured “Respectable Individuals” who are not necessarily perfect people – they may have gambling debts to organized crime – but they earn a living from a conventional, professional, and legitimate job (lawyer, bank manager, etc.). Coding may vary widely and there is never one right way to code. The important consideration is that the “classification procedure be reliable in the sense of being consistent” (Weber 1990/2004: 118). Our original coding scheme of perpetrator, victim, and crime may be consistently applied to 26 of the 30 episodes. The other four involved a deviation from the usual episode where solving a crime or crimes was central to the plot. Instead, these episodes focused on advancing the subplot about a music box – an objet d’art that once belonged to Catherine the Great and contains a secret. Our efforts to apply categories of “Professional Criminal” and “Respectable Individual” produced several anomalies that did not reflect problems with the integrity of the categories as much as the show’s efforts to obfuscate the dynamics of white-collar occupational crime. Consistency also involves intercoder reliability (Neuendorf 2002). Each of the authors watched the episodes and read each summary twice. Each author made his or her own assessment of perpetrator, victim, and crime, then verified the accuracy of the coding conducted by his or her co-author. Differences were not substantive and often revealed emerging themes. Memo writing (Charmaz 2004) helped this analysis by clarifying the theme’s development.

Results The results of coding the first two seasons of White Collar are presented in Table 4.1. Column one includes the episode name and a shorthand way to reference it (i.e., S2E4 is season two, episode four). Column two highlights information about the most significant perpetrators, with PC indicating “Professional Criminal” and RI indicating “Respectable Individual.” Column three captures information about the crimes and victims. Column four, “Notes,” captures additional observations to support our coding and/or aspects of the plot that serve to deflect attention from the harms done by legitimate businesses. Our comments on crimes and harms not raised by the show are not meant to be exhaustive, but merely illustrate the types of missing issues. From our analysis of the data, three important themes emerge. First, White Collar is about the thieves who steal valuable objects and high-end organized crime. Second, when legitimate individuals commit white-collar crime, they act alone or never with another person at the same company; corporate crime does not exist. White-collar criminals typically commit street crimes as well, thus minimizing the issue of white-collar occupational crimes. Third, the motive for crime never critiques consumerism or the American Dream. 75

Art restorer [PC/RI]

Israeli counterfeiter [PC]

Nephew of organized crime boss [PC] instigates theft; college professor murders [PC/RI] Former U.S. State Department official and journalist [RI] High-end loan shark [PC]

Chinese money launderer [PC]

Counterfeiter [PC]; FBI agent [RI]

Wall Street broker [RI]; Con men running fraudulent telemarketing operation [PC]

S1E1 Pilot

S1E2 Threads

S1E3 Book of Hours

S1E6 All In

S1E7 Free Fall

S1E8 Hard Sell

S1E5 The Portrait

S1E4 Flip the Coin

Perpetrator

Episode

Theft of diamond from business and replacement with a forgery. Caffrey framed for heist. Illegal surveillance of FBI agent by another FBI agent. “Pump and Dump” boiler-room operation where victims buy shares of stock based on fraudulent claims; stock loses value and victims had average loss of $30,000.

Murder of FBI agent, money laundering, and illegal gambling.

Smuggling of Iraqi gold artifacts looted from museum. Framing of an innocent US soldier. Theft of $2.6 million painting from residence.

Smuggling of data sewn into designer dress. Murder of another counterfeiter. Kidnapping of fashion model. Theft from church of 500-year-old Bible. Murder of organized crime boss’s nephew and fencing of stolen Bible.

Forgery of 1800s government bonds with current value of $150 million. Theft of bond. Murder of rare book dealer providing paper for forged bonds.

Crime/Victim

Table 4.1 Perpetrator, crime and victim in each episode of the first two seasons of White Collar

In a pump-and-dump operation, the perpetrator buys “penny” stocks (cheap, thinly traded), pumps up the price through fraudulent claims, then sells their shares. Victims are left with worthless stocks. Wall Street broker runs the fraudulent boiler-room operation separately from his legitimate business, so the episode avoids questions about the improper business practices of financial service companies against their customers.

Making the State Department official a former employee removes the issue of governmental crimes in Iraq. Focus is on the burglary from the private residence, not earlier crime of a museum improperly taking it from the daughter born out of wedlock to the artist. Interagency rivalry between FBI and INTERPOL has some responsibility for the FBI agent’s death. Government agencies do not violate the public’s rights or harm them; government wrongdoing is excessive interagency rivalry. Illegal surveillance is against a government agent, not the public. Government agencies do not violate the public’s rights or harm them.

College professor coded as PC because she indicates a familiarity with high-speed chases and murders someone in the mob.

Art restorer coded PC because he steals a bond from the National Archives and replaces it with a counterfeit, then kills his accomplice by entering the FBI building posing as a lawyer. Perpetrator is possibly linked to organized crime.

Notes

Professional criminal [PC]

Manager of crime syndicate [PC]

S1E12 Bottlenecked

S1E13 Front Man

S1E14 Out of the Box S2E1 Withdrawal

Bank robber [PC]: Bank employee [RI]

Thief [PC]

S1E11 Home Invasion

S1E10 Vital Signs

Federal District Judge (with implications that an FBI agent is also involved) [RI] Doctor and charity [RI]

S1E9 Bad Judgment

Armed bank robbery of $8.2 million, assault on guard.

Murder to enable thefts of jade elephants to bring together the pieces of a 1421 Chinese set. Murder of an accomplice who has stolen supplies and appears to have forged an antique bottle of wine. Caffrey forges another bottle of wine to force the auction house to authenticate them, expecting both would be discovered as forgeries. But the other bottle is genuine; Caffrey has been played to draw attention to the wine and drive up the price. Money needed to repay Russian mafia from earlier job. Two kidnappings. Perpetrator threatens to kill Neal’s friends to extort him to steal gold.

Mortgage fraud committed through document forgery on about nine victims. Bribery. Charity offers girl a new kidney in exchange for a $100,000 donation after she was removed from an organ transplant list. Trafficking of human organs (smuggling) finances the charity founder’s own search for an organ needed because of kidney disease. He has embezzled $30 million.

(Continued)

This episode furthers the subplot, making it problematic to code. It is not included in the analysis. Armed robbery of millions from bank vault with help from individual employee rather than embezzlement or coordinated control fraud (Barak 2012) by the executives.

Passing mention that “Weatherby's” auction house sold six bottles of a 1947 wine at $50,000 each, although the vineyard produced five bottles that year. The unexplored issue is that the auction house received a commission and thus has some conflicts of interest in the authenticity of objects for sale. The authenticity of wine in this episode minimizes the problem of stolen, looted, or forged auction items.

Because the organization is an illegitimate charity, no questions arise about the harmful practices or fraudulent billing practices of for-profit hospitals. A 2012 study added “to the case – advanced by health care researchers and Medicare overseers in at least six government and academic studies in the last three years – that the rise of for-profit providers is fueling waste, fraud, and patient harm in the $2.8 trillion US health care sector” (Waldman 2012). Doctor’s own illness is driving crime, not excessive entitlement, consumerism or the American Dream.

No fraud by financial institutions in mortgage lending, securitization, loan processing or foreclosure practices.

Perpetrator

State senator and campaign employee [RI]; pimp [PC]

Criminology professor [PC/RI] and his students [RI]

Weapons dealer, racketeer, former drug trafficker. [PC]

Murderer, identify thief [PC]

Lawyer [RI]; Mob boss [PC]

US Marshall [RI]; Attorney [PC/RI]

Episode

S2E2 Need to Know

S2E3 Copycat Caffrey

S2E4 By the Book

S2E5 Unfinished Business

S2E6 In the Red

S2E7 Prisoner’s Dilemma

Table 4.1 (Continued)

Theft of $100,000 by underling of crime boss from money laundering operation. Crime boss kidnaps underling’s girlfriend then makes death threats to get the money back. Attempted murder of individual trying to broker an exchange. Investigation into the theft of $100 million Japanese bonds uncovers that the perpetrator had earlier murdered a wealthy person to assume his identity (identity theft). Attempted murder for hire of insurance investigator to cover up crimes. Adoption lawyer fraudulently claims birth mother wants their baby back. Lawyer needs money to pay off gambling debt to mob boss. US Marshall is selling confidential information on the location of witnesses under government protection. The buyer is a defense attorney who is having the witnesses murdered. Both are framing an innocent FBI agent.

Art theft ($4 million painting from gallery), forgery of art work.

Illegal campaign contributions funneled through an escort service. Attempted extortion of FBI agent Burke, who is investigating the senator.

Crime/Victim

Wrongdoing by government official is individualized; no systemic problems or policy concerns. Defense attorney coded as PC because of multiple murder for hire plots.

Lawyer has a solo practice; no questions about the billing practices of large law firms. Gambling debt is the driving force, not consumerism or the American Dream.

Illegal contribution by illegitimate business minimizes political corruption by legitimate business or system of “legalized bribery” (“the beneficiaries of corruption have managed to legalize most of it”) (Friedrichs 2010: 147–148). Professor coded as PC because there was a decade-long series of thefts copied from the techniques of talented criminals. Focus on individual acts, not support for money laundering by financial institutions.

Notes

Smuggler [PC]

A prisoner [PC]

Energy trader [RI]

Billionaire Ponzi scheme architect [PC]

S2E9 Point Blank S2E10 Burke’s Seven S2E11 Forging Bonds S2E12 What Happens in Burma… S2E13 Countermeasures S2E14 Payback

S2E15 Powerplay

S2E16 Under the Radar

Counterfeiter [PC]

CEO of technology firm [RI]

S2E8 Company Man

Three kidnappings and extortion to open World War II German submarine containing billions of dollars of art and antiquities.

Smuggles a ruby and frames another individual. Theft of plate and supplies to make counterfeit $100 bill Kidnapping of FBI agent Burke and extortion; escape from custody. US passport forging operation. Energy market manipulation: trader causing city-wide blackouts during a heatwave by withholding power, which company resells at higher price. The blackouts cause deaths and millions of dollars in losses to individuals and business. Theft of flash drive. Plan to murder.

In an effort to win a defense contract, CEO fraudulently overstates progress while also attempting to sell the company to overseas buyers. When head researcher disagrees with lie and plan, CEO murders him. Employee having affair with researcher attempts to murder CEO.

No widespread Enron-like practices, which include an Enron’s energy trader caught on tape talking about “all the money you guys stole from those poor grandmothers in California.” One description of the tapes noted: “The conversations are amazing, basically a bunch of crooks gloating about the savage rogering they're giving to the people of California and how much money they're making” (Doctorow 2004). No exploration of state crime, even in context of Nazi looting.

Crimes against government, not state crimes.

Crime against government, not state crimes.

These episodes further the subplot, making them problematic to code. They are not included in the analysis.

Murder and woman’s revenge divert attention from problem of defense contract fraud.

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Because the field lacks a consensus definition of white-collar crime, we believe an appropriate comparison for the acts in White Collar is the list Sutherland provided in his presidential address: [M]isrepresentation in financial statements of corporations, manipulation of the stock exchange, commercial bribery, bribery of public officials directly or indirectly . . . to secure favorable contracts and legislation, misrepresentation in advertising and salesmanship, embezzlement . . . misapplication of funds, short weights and measures . . . misgrading of commodities, tax frauds, misapplication of funds in receiverships and bankruptcies. (Sutherland 1940: 2–3) While incomplete, Sutherland’s focus is on crimes committed in legitimate business (1940: 3), but in more than half of the coded episodes of White Collar the perpetrators are professional criminals who steal expensive items, or wealthy mobsters. The crime that appears most frequently is interpersonal murder, and no employees, consumers, or community members die indirectly from executive decisions. (In S2E15, the perpetrator is a rogue energy trader, not an executive.) In about one-third of the shows, a person we labeled a Respectable Individual engaged in crime. However, white-collar criminals on White Collar always acted alone, either in a solo professional practice or simply as a lone wolf. The doctor embezzling $30 million from the charity (S1E10) apparently did not have any help, for example. At other times there is a suggestion of having an accomplice (S1E9, S2E15), but never does a white-collar crime involve two people from a legitimate business working together. In contrast, some of the most devastating white-collar crimes involve control fraud, where the executives work together to corrupt financial controls and loot the company (Barak 2012). Similarly, the Wall Street executive engaged in stock fraud (S1E8) does so through an illegitimate brokerage operation in concert with a con man, thus avoiding all issues about the “legitimate rackets” (Sutherland 1940) run by firms like Goldman Sachs and other financial institutions. The count of Respectable Individuals does not include four instances where the perpetrator was coded both PC and RI. While Sutherland highlights how white-collar criminals use their respectability and resources to continue to commit occupational crimes without recrimination, the Respectable Individuals on White Collar do not commit repeated occupational crimes. They murder and/or, in the case of the college professors, commit crimes like theft related to their field of expertise, not academic dishonesty, conflicts of interest, or crimes related to their professional role. Although the energy trader (S2E15) was not coded as a Professional Criminal, his misdeeds include theft and a planned murder for hire, leaving the idea that crooked energy traders are as unnatural and rare as murder for hire. Likewise, the CEO engaging in defense contract fraud (S2E6) murders, further erasing purely occupation crime and distorting the level of pathology required to be a corrupt defense contractor. Finally, in only two cases did White Collar explore the motives of Respectable Individuals who engage in white-collar crime, and in those cases it did everything possible to downplay structural critiques of consumerism, capitalism, and the American Dream (Messner and Rosenfeld 2013). The adoption lawyer (S2E6) defrauds his clients because of gambling debt to organized crime. Entitlement is not an issue; the social impact of licensed casinos and debt to legitimate financial institutions are erased. The doctor who embezzles from charity (S1E10) needs money to search for the right organ donor, a personal story that raises no questions about problems at for-profit hospitals, payments from pharmaceutical companies, or bankruptcy because of medical bills. 80

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Discussion White Collar does not expose crimes of the powerful or the structural characteristics of capitalism that make it so prevalent. While pretending to be about white-collar crime, White Collar distorts and conceals so much – and in so many predictable ways – that it is a Corporate Agenda for Crime Control and the opposite of the Agenda for Corporate Crime Control. It fits into a pattern of disappearing consciousness of corporate crime and increasing abuses of that power (Reiman and Leighton 2013). It is thus another example of agnotology, a field dedicated to culturally constructed ignorance, especially by special interests obscuring the truth. Ignorance is a strategic ploy: “we rule you, if we can fool you” (Proctor and Schiebinger 2008: 11). Some may argue that plotlines about corporate and governmental crime would not be interesting; however, there are successful big-budget films like Julia Roberts’ Erin Brockovich (pollution from chemical company causes cancer), John Travolta’s Civil Action (pollution from chemical company causes cancer), Al Pacino’s The Insider (informant on tobacco company), and the HBO production Enron: The Smartest Guys in the Room drew popular and critical acclaim. In addition, many television programs revolve around scams of varying complexity that are not necessarily harder to understand than a range of real white-collar crimes. Plots could be easily spiced up with details about strip clubs, prostitutes and cocaine, which the Wall Street Journal notes were involved in the LIBOR interest-rate-fixing scandal (Enrich and Eaglesham 2013) – and are likely a part of other “legitimate” business activities as well. Further, reality presents good raw material for character. Columbia University economist Jeffrey Sachs described the moral environment on Wall Street as being “pathological”: [T]hese people are out to make billions of dollars and [they feel] nothing should stop them from that. They have no responsibilities to pay taxes . . . no responsibilities to their clients . . . no responsibilities to counterparties in transactions. They are tough, greedy, aggressive and feel absolutely out of control in a quite literal sense. (Quoted in Ritholtz 2013) Thus, there are models of successful media and a reservoir of compelling characters that could exist in a world of money, greed, sex, and drugs. Imagine what could be done when, for example, during the first season of White Collar, the pharmaceutical giant Pfizer agreed to a $2.3 billion settlement over illegally marketing drugs – “the largest health care fraud settlement and the largest criminal fine of any kind ever” (Harris 2009). Furthermore, “the government charged that executives and sales representatives throughout Pfizer’s ranks planned and executed schemes to illegally market” other drugs as well. This episode “occurred while Pfizer was in the midst of resolving allegations that it illegally marketed Neurontin, an epilepsy drug for which the company in 2004 paid a $430 million fine and signed a corporate integrity agreement – a company-wide promise to behave.” If White Collar produced a “ripped from the headlines” episode about Pfizer, the plot could help dramatize how illegal marketing means higher costs for health insurance and for taxpayers (through Medicare) as people are prescribed drugs they do not need and suffer harm from the side effects of drugs that are providing no therapeutic benefit. But GE makes MRIs and other medical equipment, so it is not in their interest to shine the light on pharmaceutical companies and doctors who are important customers. Thus, on the show, a single doctor, embezzling from a charity because of his own medical condition, represents wrongdoing in the medical profession. This analysis plays out in a number of other areas because GE is a diversified company that makes consumer appliances, parts for power plants, jet engines, nuclear power plants, wind farms, 81

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and medical equipment. Its lending division provides more than half of the profits, so “many Wall Street analysts view G.E. not as a manufacturer but as an unregulated lender that also makes dishwashers and M.R.I. machines” (Kocieniewski 2011). Media ownership and extensive advertising works to create a positive view of the company and gloss over GE’s habitual criminality, which involves diverse crimes over many decades (Barak et al. 2015: 205–207). In the 1950s, for example, GE and several other companies agreed in advance on the sealed bids they submitted for heavy electrical equipment. This price fixing defeated the purpose of competitive bidding, costing taxpayers and consumers as much as a billion dollars (Hills 1987: 191). Not surprisingly, price fixing and collusive behaviors by legitimate businesses do not appear on White Collar. In the 1970s, GE made illegal campaign contributions to Richard Nixon’s presidential campaign, but on White Collar an escort service is used to funnel illegal campaign contributions and support political corruption. GE settled charges over widespread illegal discrimination against minorities and women, but on the show employees are only hurt when the boss personally murders them. Also during this time, three former GE nuclear engineers resigned to draw attention to serious design defects in the plans for the Mark III nuclear reactor because the standard practice was “sell first, test later” (Hills 1987: 170; Glazer and Glazer 1989). Not surprisingly, defective and dangerous products are not part of White Collar plots. In the 1980s, GE pled guilty to felonies involving the illegal procurement of highly classified defense documents, and 108 counts of felony fraud involving Minuteman missile contracts. In spite of a new code of ethics, GE was convicted in three more criminal cases over the next few years, plus it paid to settle cases involving retaliation against four whistleblowers who helped reveal the defense fraud. (GE subsequently lobbied Congress to weaken the False Claims Act that protects whistleblowers.) In 1988, the government returned another 317 indictments against GE for fraud. A 1990 jury convicted GE of fraud on a contract for battlefield computers, and the fine included money to “settle government complaints that it had padded bids on two hundred other military and space contracts” (Greider 1996: 350; see also Clinard 1990; Greider 1994; Pasztor 1995; Simon 1999). Defense contract fraud on White Collar is neither widespread nor ongoing, but the problem of an individual CEO who makes fraudulent claims about his product, then kills to cover it up. GE is also one of the prime environmental polluters, linked to 52 active Superfund sites in need of environmental cleanup in the US alone. GE is responsible “for one of America’s largest Superfund sites, the Hudson River, where the company dumped more than a million pounds of toxic wastes” over a period of decades (Center for Public Integrity 2007). Instead of cleaning up their part of the 197-mile site, they mounted an eight-year challenge to the Superfund law that requires polluters to remedy toxic situations which they created. Environmental pollution does not appear anywhere on White Collar. GE created a number of finance arms to help people and companies buy its products, and provides credit services to many more, so it has no interest in critiquing consumerism or even greed. “GE Capital is one of the world’s largest and most diverse financial operations, lending money for commercial real estate, aircraft leasing and credit cards for stores such as Wal-Mart. If GE Capital were classified as a banking company, it would be the nation’s seventh largest” (Gerth and Dennis 2009). GE is one of the entities sued by the Federal Housing Finance Agency over “securities law violations or common law fraud” in the sale of mortgage-backed securities to Fannie Mae and Freddie Mac (FHFA 2011). On White Collar, mortgage fraud becomes the actions of an individual judge – perhaps in collaboration with an FBI agent – forging signatures in fewer than ten real estate frauds. It does not expose fraud and abuse of power by financial institutions, misrepresentations in securitized mortgage products, high executive pay and bonuses for those 82

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who drove the economy to crisis, an assault on private property rights by institutions that cheaply hire “robosigners” to file foreclosure affidavits swearing to facts they do not know (Barak 2012; Reiman and Leighton 2013). A review of GE’s diverse crimes indicates that a large number of corporate crimes used in an episode of White Collar would interest viewers in misbehavior that GE has likely engaged in. While we have mapped this tightly to GE, we do not believe there will be a substantial change under the corporate ownership of Comcast. Comcast also requires advertisers for all of their programming, so they cannot illuminate too many illegitimate business practices before offending potential sponsors. In addition, the executives of Comcast may well sit on other corporate boards and own substantial shares in other companies, so they do not have an interest in exposing criminal activities or making the public question whether there is adequate regulatory scrutiny of business.

Conclusion Because the majority of White Collar is devoted to crime of the underworld, it neglects what Sutherland meant by white-collar crime. As such, White Collar is a minimal refutation that television drama is about street crime because there’s little about the “legitimate rackets” (Sutherland 1940). Even when showing actual white-collar crime, White Collar minimizes its scope and presents white-collar criminals as “bad apples” rather than as logical projections of structural problems. Michalowski and Kramer (2006: 11) once noted, “The most cost-effective way to achieve the goal of a large audience is to keep people entertained, and one of the best ways to keep people entertained is through stories that fit ideal-typical images of crime.” This certainly rings true when looking at our findings from White Collar, whose plots are more likely to feature gangsters than banksters and “bad apples” who are typically engaged in street crimes like murder that are portrayed in other primetime crime dramas. The storylines on White Collar are not surprising given that corporate-owned media are obligated more to shareholders than to the public good, and corporate owners will use media to advance their own interests. Bagdikian (2004) notes that these ownership interests lead to reporting the failings of public bodies and the powerless, but insensitivity to failures in the private sector in ways that protect the corporate system and rob the public of the ability to understand the real world. It also leads to more specific failures to cover wrongdoing by the parent companies of media corporations. In general, these media corporations are instrumental in selecting what is broadcast and how it is framed, not only in dramas like White Collar, but in popular news outlets as well. In this sense, we would raise a concern about the disparate treatment of events that occurred only two days apart in April 2013: the terrorist bombings during the Boston Marathon in Massachusetts, and the explosion of West Fertilizer Company in West, Texas. While there are differences in the intentionality of the Boston Marathon bombers and the West Fertilizer explosion (Reiman and Leighton 2013), that difference became key to downplaying an event that resulted in greater loss of life, injury, and the destruction of nearby property – and that holds a mirror to a devastating social problem. While the Boston bombing was front and center on our televisions, computers, social networking sites and in our newspapers, fewer Americans knew what happened in West, Texas, although four people died in Boston and 14 in Texas (11 of them first responders and public safety personnel). Hundreds of people were injured in both locations; however, approximations in Texas were still higher than in Boston. Two buildings and one restaurant were damaged from the bombs in Boston, along with a boat in which one perpetrator hid. In Texas, over 75 homes 83

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were destroyed along with an apartment complex, several schools, a nursing home with over 100 residents, and several city blocks (Mahapatra 2013). Like many white-collar crimes, the explosion at the fertilizer plant in West, Texas tended to be reported as an accident, even though the company had been cited at least twice since 2006. The dangerous chemical ammonium nitrate was housed at the plant and caused the blast. However, the Environmental Protection Agency (EPA) does not regulate the chemical. The Occupational Safety and Health Administration (OSHA) requires the chemical to be stored in a separate fireproof room, but the West Fertilizer Company had not been inspected by OSHA since 1985 so it is difficult to say whether or not they were in compliance (Pace 2013). The fertilizer plant is an example of state-corporate crime, which recognizes that government and business are the most powerful social actors (Michalowski and Kramer 2006). Specifically, state-facilitated crime results from omissions like bureaucratic failure and regulatory dysfunction (Kauzlarich et al. 2003: 247), which combine with profit-seeking behavior. State-facilitated corporate crime is less the product of state negligence than the conscious pursuit of a “businessfriendly” environment that minimizes criminal liability for corporations and their executives, regulates reluctantly, and promotes weak, underfunded, even dysfunctional, regulatory agencies. While the Boston Marathon bombings fitted well with people’s existing notions of dangerousness and threats, it also promoted a Corporate Agenda for Crime Control because fear of terrorism will lead to major surveillance and technology contracts. The corporate-owned media could not explore the explosion in Texas as a crime, and even discussing it as an accident could raise questions about deficiencies in business regulation – either of which might promote an Agenda for Corporate Crime Control. “We rule you, if we can fool you” (Proctor and Schiebinger 2008: 11).

References Associated Press. (2011). Comcast Takes Control Over NBC Universal. Washington Post, January 29. Available at: www.nytimes.com/2011/01/30/business/media/30comcast.html?_r=2&hpw&. Bagdikian, B. (2004). The New Media Monopoly. Boston, MA: Beacon Press. Barak, G. (2012). Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding. Lanham, MD: Rowman and Littlefield. Barak, G., Leighton, P. and Cotton, A. (2015). Class, Race, Gender and Crime, 4th edn. Lanham, MD: Rowman and Littlefield. Center for Public Integrity. (2007). “EPA Document Lists Firms Tied to Superfund Sites.” Available at: www.projects.publicintegrity.org/superfund/report.aspx?aid=849. Charmaz, K. (2004). “Grounded Theory.” In S. Hesse-Biber and P. Leavy (eds), Approaches to Qualitative Research. Oxford: Oxford University Press. Clinard, M. (1990). Corporate Corruption. New York: Praeger. Denzin, N.K. and Lincoln, Y.S. (2003). The Landscape of Qualitative Research. London: Sage. Doctorow, C. (2004). “Enron Traders Gloating about Screwing California.” Available at: www.boingboing. net/2004/06/03/enron-traders-gloati.html. Enrich, D. and Eaglesham, J. (2013). “Clubby London Trading Scene Fostered Libor Rate-fixing Scandal.” Wall Street Journal, May 2. Available at: www.online.wsj.com/article/SB1000142412788732329650457 8396670651342096.html?mod=djemalertNEWS&cb=logged0.02981515240294408. Farhi, P. (2009). “‘Law & Order’: Ripped From the Headlines – and From the Heart.” Washington Post, March 8. Available at: www.washingtonpost.com/wp-dyn/content/article/2009/03/05/AR20090305 04029.html. Federal Housing Finance Agency (FHFA). (2011). “FHFA Sues 17 Firms to Recover Losses to Fannie Mae and Freddie Mac.” Available at: www.fhfa.gov/webfiles/22599/PLSLitigation_final_090211.pdf. Friedrichs, D. (2010). Trusted Criminals. Belmont, CA: Wadsworth/Cengage. Gerth, J. and Dennis, B. (2009). “How a Loophole Benefits GE in Bank Rescue.” Washington Post, June 29. Available at: www.washingtonpost.com/wp-dyn/content/article/2009/06/28/AR2009062802955.html. 84

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Glazer, M. and Glazer, P. (1989). The Whistle-blowers. New York: Basic Books. Greider, W. (1994). “Why the Mighty GE Can’t Strike Out.” Rolling Stone (April 21): 36. Greider, W. (1996). Who Will Tell the People? New York: Simon & Schuster. Harris, G. (2009). “Pfizer Pays $2.3 Billion to Settle Marketing Case.” New York Times, September 2. Available at: www.nytimes.com/2009/09/03/business/03health.html?_r=0. Hills, S. (ed.). (1987). Corporate Violence. Savage, MD: Rowman & Littlefield. Kauzlarich, D., Mullins, C. and Matthews, R. (2003). A Complicity Continuum of State Crime. Contemporary Justice Review, 6(3): 241–254. Kocieniewski, D. (2011). “GE’s Strategies Let It Avoid Taxes Altogether.” Washington Post, March 24. Available at: www.nytimes.com/2011/03/25/business/economy/25tax.html?pagewanted=1&_r=1&hp. Leighton, P. (2010). “A Professor of White Collar Crime Reviews USA’s ‘White Collar’ Series.” Critical Criminologist, vol. 19, no. 4. Mahapatra, L. (2013). “Boston Marathon Bombing vs. Texas Plant Explosion.” International Business Times, April 23. Available at: www.ibtimes.com/boston-marathon-bombing-vs-texas-plant-explosion-taletwo-tragedies-1211349. Messner, S.F. and Rosenfeld, R. (2013). Crime and the American Dream. Wadsworth, CA: Belmont. Michalowski, R.J. and Kramer, R.C. (eds). (2006). State-corporate Crime. Rutgers, NJ: Rutgers University Press. Neuendorf, K.A. (2002). The Content Analysis Guidebook. London: Sage. Pace, J. (2013). “Obama Orders Review of Chemical Plant Rules.” Associated Press, August 1. Available at: www.usnews.com/news/politics/articles/2013/08/01/obama-orders-review-of-chemical-plant-rules. Pasztor, A. (1995). When the Pentagon Was for Sale. New York: Scribner. Proctor, R. and Schiebinger, L. (eds). (2008). Agnotology: The Making and Unmaking of Ignorance. Stanford, CA: Stanford University Press. Reiman, J. and Leighton, P. (2013). The Rich Get Richer and the Poor Get Prison, 10th edn. Boston, MA: Allyn & Bacon/Pearson. Ritholtz, B. (2013). “Jeffrey Sachs’ Speech on Wall Street Corruption.” Available at: www.ritholtz.com/ blog/2013/04/jeffrey-sachs-speech-on-wall-street-corruption/. Simon, D. (1999). Elite Deviance, 6th edn. Boston, MA: Allyn & Bacon. Sutherland, E. (1940). “White Collar Criminality.” American Sociological Review, 5(1): 1–12. Waldman, P. (2012). “For-profit Nursing Homes Lead in Overcharging While Care Suffers.” Bloomberg, December 31. Available at: www.bloomberg.com/news/2012-12-31/for-profit-nursing-homes-leadin-overcharging-while-care-suffers.html. Weber, R.P. (1990/2004). Content Analysis. In Clive Seale (ed.), Social Research Methods. Abingdon, Oxon: Routledge.

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Part II

Crimes of globalization

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5 Capital and catharsis in the Nigerian petroleum extraction industry Lessons on the crimes of globalization Ifeanyi Ezeonu

introduction On April 24, 2013, a devastating but avoidable industrial accident in Savar, a suburb of Bangladeshi capital city, Dhaka, once again provoked an increasing need to interrogate “political economy as a criminogenic force”. On that day, a poorly constructed multi-storey building housing garment factories producing for Western markets collapsed, killing about 1200 people and injuring several others. The major clients of these poorly maintained and poorly regulated factories reportedly included Walmart, Cato Fashions, Benetton, and the Dutch retailer C & A. Critics traced this disaster to the reluctance of the Bangladeshi government to enforce an industrial safety regime for fear of alienating Western corporations which provide the low-paid factory jobs (The Daily Ittefaq, 2013; Manik and Yardly, 2013). In search of poorly regulated and non-unionized manufacturing outposts, Western corporations have found compliant partners among the leaders of the Global South, including Bangladesh, and in the context of this chapter, Nigeria. In Bangladesh, for example, these low-wage garment industries are the largest employers of labour; and the government has created the enabling environment for them to thrive, including lax regulation and a brutal suppression of organized labour (Manik and Bajaj, 2012; Manik and Yardly, 2013). In the absence of an effective regulatory regime and robust labour unions, the corporations have found the perfect environment for neoliberal exploitation. In fact, since the resurgence of market economics in the late 1970s and early 1980s, preventable industrial accidents have become a defining characteristic of Western corporate activities in the developing world. The usual victims are vulnerable populations in the countries concerned. Neoliberal policies have been blamed for the Bhopal chemical accident of December 1984 in India, which killed about 3800 people immediately and several thousand others over time (Broughton, 2005; Eckerman, 2006); the industrial fire accident in a garment factory in Karachi, Pakistan, which killed nearly 300 workers (Hasan, 2012; Walsh, 2012); and most recently, the Soma mine accident in Turkey, in which 301 workers lost their lives (see Ozel, 2014). These avoidable accidents represent some of the deleterious effects of the global ascendance of untrammelled capitalism and the collusion of state apparatuses in this process, even at the expense 89

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of its citizens. Evidence suggests that these accidents were mostly enabled by the increasing reluctance of developing countries, in furtherance of the praxeological ideals of market fundamentalism, to regulate their domestic economies (see The Daily Ittefaq, 2013; Manik and Yardly, 2013; Ozel, 2014; Walsh, 2012; Broughton, 2005). In Nigeria, the crippling effects of such policies, especially in the petroleum extraction industry in the Niger Delta region, is well documented (see Okonta and Douglas, 2003; Human Rights Watch, 1999a). Since Friedrichs and Friedrichs’ (2002) pioneering work on crimes of globalization, a growing number of criminologists have contextualized these market-driven harms as crimes, and have called for the recalibration of the epistemological framework of their discipline to accommodate and account for these forms of criminal behaviour (see Ezeonu, 2008; Ezeonu and Koku, 2008; Wright and Muzzatti, 2007; Rothe et al., 2006). This chapter continues in this tradition with respect to the activities of the petroleum extraction industry in the Niger Delta area of Nigeria. Crude oil deposits in Nigeria were first discovered in commercial quantities in Oloibiri, a small rural community in the Niger Delta area, in 1956. By the early 1960s, oil exploration activities especially by Shell D’Arcy (now Shell Petroleum Development Corporation of Nigeria, or simply “Shell”) had established the presence of huge deposits of crude oil resources across the region. Since then, the Niger Delta has become a site of large-scale oil-extraction activities and the economic engine of the country. It also hosts a significant number of transnational corporations involved in oil extraction. Nevertheless, without a strong regulatory framework, this region has equally become a perfect site for neoliberal experiment. In the past three decades, for instance, economic activities in the area have been sustained at a very high cost to the indigenous population. This cost manifests principally in the contamination of their ecosystem and its concomitant economic and health implications; as well as in the paradoxically high rate of poverty. The economic exploitation of the Niger Delta, and the disabling consequences to the local population, have been aided particularly by various regimes of the Nigerian government, in a mindless pursuit of a neoliberal objective and sometimes in the quest to ingratiate themselves (often with little or no democratic credentials) to Western corporate and political interests. Using the interrogative lens of the criminological heterodoxy known as the “crimes of globalization”, this chapter discusses the political economy of oil extraction in the Niger Delta as a criminogenic event. The chapter examines the harmful activities of transnational oil-extracting corporations in this area, along the lines of a growing body of literature that conceptualizes preventable market-driven harms as criminal. The chapter is divided into three sections. The first section historicizes the development and significance of petroleum resources in the Nigerian economy, as well as the predacious interests of Western capital in the Niger Delta region; the second section articulates the theoretical frame of crimes of globalization; while the final section discusses the political economy of petroleum resource extraction in the Niger Delta as criminogenic.

Historicizing petroleum resources in the Nigerian economy Nigeria, like most Sub-Saharan African states, has been the slaughterhouse of global capitalism since its first citizen was commodified and taken across the Atlantic for profit. The overwhelming population of people of African descent across South and Central America, the Caribbean, and North America demonstrates the expansiveness of this trade. The monstrous effects of the transatlantic slave trade on both the African continent and among the African diasporic population have been extensively discussed (see, e.g., Rodney, 1973; Williams, 1944). In fact, Williams

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(1944) documents a compelling account of the contribution of the transatlantic slave trade to the expansion and consolidation of British capitalism. Similarly, the map of Africa as we know it today is a graphic representation of the commercial partition of Africa among imperial European countries, which at the Berlin Conference of 1885 shared the continent among themselves to avoid trade (and trade-related armed) disputes. This conference precipitated the post-Slave trade scramble for Africa. Since then, the West and its corporations have remained active in the exploration and exploitation of African resources. Like most African states, Nigeria was birthed in this economic exploitation. In his influential book on the political economy of European imperialism in the Niger Delta, the doyen of African history, Kenneth Dike, observes that “the history of modern West Africa is largely the history of five centuries of trade with European nations; commerce was the fundamental relationship that bound Africa to Europe” (Dike, 1956, p.1). By “trade”, Kenneth Dike actually meant the forceful exploitation of African resources by rent-seeking European capitalists aided by their imperial states. Originally, the principal product of interest in the Niger Delta during this period was palm oil, which was very much in demand in a rapidly industrializing Europe, both as a machine lubricant and for soap making. Other commodities of interest included ivory, timber, and gold dust, among other products (Dike, 1956). While trade in crude oil did not start actively until the 1960s, interest in the country’s petroleum resources is as old as European imperialism in Nigeria itself. As far back as 1908, a German company – the Nigerian Bitumen Corporation – had started exploring for oil in the present-day Lagos State before the uncertainties of World War I forced it to cease its operations. Oil exploration was, however, revived in 1937 with the emergence of Shell D’Arcy Exploration Parties, a consortium established jointly by Royal Dutch Shell and British Petroleum. This consortium later became known as the Shell-BP Petroleum Development Company, Limited; often abbreviated as Shell-BP. From November 1937, when the company received its exploration licence, up until around 1957, the exploration rights of Shell-BP covered every part of the country. In 1956, the company made its first discovery of crude oil in commercial quantities in the Niger Delta village of Oloibiri; and between 1960 and 1962, it obtained Oil Mining Leases (OML) covering about 15,000 square miles. The remaining acreage was returned to the Nigerian government (Pearson, 1970; Human Rights Watch, 1999a; Okonta and Douglas, 2003). By the mid-1950s, other transnational petroleum prospecting corporations had also developed interests in the Nigerian emerging oil industry, and accordingly had obtained prospecting licences. These corporations included Tenneco, Gulf, Agip, Safrap, Phillips, Esso, Mobil, Amoseas, and Union. While oil exploration took place across most of the country, the Niger Delta region with the greatest deposits of petroleum resources soon became the economic vertebrae of Nigeria. For instance, the contribution of oil revenue to Nigeria’s foreign exchange jumped from 8 per cent in 1963 to 21 per cent in 1967. In 1967, revenues from the domestic oil industry amounted to £27 million, making up 17 per cent of the government’s tax revenue. By 1974, the federal government of Nigeria drew over 80 per cent of its total revenue, and more than 90 per cent of its export income from the oil industry. These percentage figures remained almost the same several years after, and are often used by the Shell Development Corporation of Nigeria to propagandize its relevance to the Nigerian economy (Pearson, 1970; see esp. pp. 359 and 368; Human Rights Watch, 1999a, p.25; Shell, 2010, 2014). The oil sector has remained a major source of Nigeria’s internal and external revenue. Between 2008 and 2012, the Nigerian federal government earned an estimated $42 billion from its oil and gas joint venture with the Shell Petroleum Development Corporation of Nigeria (SPDC). This is in addition to about $6 billion in tax and royalties around the same period from Shell Nigeria Exploration and Production Company (SNEPCo), which operates the country’s offshore business in the deep sea (see Shell, 2014). While corporations in 91

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this industry often do not release public information on their profits from their Nigerian operations, evidence suggests that they have also benefited enormously from their activities in the country (see Human Rights Watch, 1999a). A path is, thus, created for the addiction of both the Nigerian government and the transnational corporations involved in this industry to oil money. Most of the production and exploration activities in this industry are still undertaken today by virtually the same Western corporations; sometimes these are in collaboration with the national oil company, the Nigerian National Petroleum Corporation (NNPC). The Shell Petroleum Development Corporation remains the biggest actor in the industry (see Okonta and Douglas, 2003; Human Rights Watch, 1999a; Gboyega et al., 2011). Described fittingly as a “Gulliver on the Rampage” (Okonta and Douglas, 2003, p.44), Shell’s tentacles crept across the world, spreading death, poverty and destruction in its areas of operation. With powerful shareholders, including former Queen Beatrix of the Netherlands and Queen Elizabeth II of England, Shell has left a durable footprint of destruction among indigenous populations in countries such as British Borneo, Mexico, Venezuela, Australia, Peru, Brazil, and Bangladesh (Okonta and Douglas, 2003). In Nigeria, its recklessness is well reported (see Pilkington, 2009; Ibekwe, 2013; Okonta and Douglas, 2003; Environmental Rights Action, 2010).

Market economics: from Adam Smith to the latter day “Saints” The Scottish economist, Adam Smith, laid the philosophical foundation of free market economics when in 1776 he published his celebrated book, An Inquiry into the Nature and Causes of the Wealth of Nations (popularly abbreviated as The Wealth of Nations). In this book, he anchored the economic well-being of nations to the selfish activities of profit-seeking entrepreneurs. Smith (1976 [1776]) suggests that the only way to stimulate and sustain economic growth around the world is by allowing private individuals to pursue their self-interest unhindered by the state. He proposes that left on its own, a free market economy would operate on a rationality that would transform individual selfish interests into public virtue. As he aptly puts it: “it is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest” (Smith, 1976 [1776], p.18). Adam Smith argues that in seeking to advance his self-interest and to benefit himself in the midst of market competition, the entrepreneur unwittingly benefits the rest of the society by producing something of value that other members of society are willing to pay for. He believes, therefore, that an unregulated economy would promote a healthy competition and create the incentives for entrepreneurs (in pursuit of their self-interests) to provide the much-needed goods and services in society. Smith’s market economy is, therefore, based on “the dual idea of free markets and competition” (Cropsey, 2002, p. ix). Free market economics dominated much of the nineteenth and the early twentieth centuries, but began to wane in the late 1920s and early 1930s, following the onset and ravages of the Great Depression. This crisis, provoked essentially by the unregulated activities of Wall Street speculators, brought Western economies (and by default, those of the world) to a crash. The magnitude of the crisis was beyond anything imaginable in the United States before this time. The stock market tumbled; industrial productivity (from U.S. Steel to General Motors) fell drastically; and businesses were devastated. The rate of unemployment rose from 3.2 per cent in 1929 to 24.9 per cent in 1933; and increased further to 26.7 per cent a year later. At a certain point during this crisis, 34 million people were estimated to be without any income whatsoever. “City revenues collapsed, schools and universities shut or went bankrupt, and malnutrition leapt to 20%, something that had never happened before in the United States history – even in the harsh early days of settlement” (Johnson, 2000, pp. xiii–xiv). 92

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As most European markets were closely tied to the US economy, the economic slump in the United States quickly extended to Europe. European economies could not withstand the stress, having already been severely weakened by World War I. Germany, Europe’s strongest economy, was further burdened by the obligation to pay war reparations. So, from Washington to Bonn, London to Paris, and the rest of the dependent economies of the world, the Great Depression created enormous hardships. It stultified manufacturing, rapidly increased unemployment and exacerbated the rate of poverty around the world. This economic reality, to a great extent, controverted and delegitimized the simplistic assumptions of Adam Smith about the rationality of the marketplace and the irrelevance of the state as a facilitator of economic development. The duration of the crisis also proved wrong his hypothesis that the market economy is self-regulating and self-correcting. The Great Depression generated “an overwhelming consensus that laissez-faire had failed” (Klein, 2007, p.20) and that governments inevitably needed to intervene to prevent a complete implosion of the global economic system. It therefore offered the enabling environment for governments and some economists to rethink the credibility and economic potentials of a free market. As Polanyi (1944, p.73) warned subsequently, “to allow the market mechanism to be sole director of the fate of human beings and their natural environment . . . would result in the demolition of society”. Following the global crisis triggered by the Great Depression and torn between failed economies based on an unfettered market and an aversion to a socialist one, an alternative economic model proposed by John Maynard Keynes (i.e. Keynesianism) gained ascendancy. Unlike classical economics, Keynesianism stressed the crucial role of the state as an umpire in economic development, especially through its investments in public infrastructure and the development of human capital. It also encouraged the establishment of social safety nets to cushion the effect of the temporary dislocation of (usually poor) people within the capitalist system. Soon, the Keynesian economic model was embraced by most Western states, and became so popular that by the early 1970s, even the Republican US President, Richard Nixon, was reported as saying, “We are all Keynesians now” (Biven, 1989, p.188). However, concerned about the popularity of Keynesian economics in the West, some free market economists, led by Friedrich Hayek, alongside business leaders, philosophers and historians, had met in Mont Pelerin, Switzerland in 1947 to strategize about restoring the domination of the global economy by the forces of the market. The resultant Mont Pelerin Society became, for a long time, the most relentless advocate of a fundamentalist form of market economy, or neoliberalism, as this modern form of market economics came to be known (see Harvey, 2005; Finn, 2006). Members of this society, but especially Friedrich Hayek and Milton Friedman, would eventually play frontline roles in spreading the neoliberal economic philosophy (see Hayek, 1963, 1976, 1979; Friedman, 1982, 1996). The efforts of the Mont Pelerin Society were aided by three major events to hasten the demise of Keynesianism. These events were: the 1973 military putsch in Chile against the democratic government of that country’s Marxist leader, Salvador Allende Gossens; the 1979 election of Margaret Thatcher and the Tory government in Britain; and the coming to power of Ronald Reagan in the United States in 1981. The Chilean military coup was led by General Augusto Pinochet, a self-professed anti-socialist officer; and as events after the coup demonstrated, an unapologetic lackey of the West. Anecdotal evidence suggests that this coup was itself directed by America’s Central Intelligence Agency (CIA). The coup offered market economics a new lease of life. Abandoned essentially by Western governments, its chief exponents found in General Augusto Pinochet’s military dictatorship an opportunity to relaunch their economic experiments unchallenged by contrarian policies or the fear of public accountability demanded during periodic elections. Under cover provided by the dictatorship, which brutally suppressed opponents of “free 93

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market”, Milton Friedman and a cabal of University of Chicago-trained economists (colloquially known as the “Chicago Boys”) took control of Chile’s economy and imposed the neoliberal order in the country. They forcefully deregulated the economy; and imposed the policy prescriptions of the Washington Consensus on the country (Klein, 2007). Williamson (1989) described this Consensus as a cocktail of economic policies aimed at breaking down political borders on behalf of the market, pulling back the state from economic activities and creating the enabling environment for the forces of the market to regulate such activities.1 In the West, the Chilean experiment resuscitated the invocation of the selfish entrepreneur as the engine of economic growth. In Britain, Margaret Thatcher and the Conservative Party (prompted by the likes of F.A. von Hayek) led a vicious attack on the welfare state, organized labour and the right to collective bargaining. In the United States, Ronald Reagan and the Republican Party, who demonized “welfare dependency” and fetishized small government, spearheaded a similar attack (see Klein, 2007). In refocusing on Adam Smith’s selfish entrepreneur as the facilitator of economic growth, neoliberal economists see the role of the state in the new economy as merely that of creating and protecting an environment for market competition (Friedman, 1982; Harvey, 2007). Milton Friedman (1982, p. 2) captures this mindset most succinctly when he argues that the sole duty of the state is “to protect our freedom both from the enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce private contracts, to foster competitive markets”. Generally, supporters of neoliberalism see anything beyond these roles as overreaching. Grover Norquist, an American uber-conservative activist, puts it even more dramatically: “I’m not in favour of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub” (Reed, 2013). With the enormous political power commanded by market-friendly politicians, particularly Margaret Thatcher and Ronald Reagan in the 1980s; the expansive influence of the Bretton Woods institutions; and the implosion of the defunct Soviet Union and its allied economies in Eastern Europe, the process of “drown(ing)” the state in Norquist’s proverbial “bathtub” was consolidated in most countries by the end of the 1990s. Despite the recent global recession, triggered, once again, by the avarice of market economics, its defenders still hold it up as having no alternative. Today, a luxurious private real estate paradoxically named “The Garden” is being developed on the grounds of what used to be the Berlin Wall – the historical landmark of the capitalist–socialist divide (see Nilsson, 2014).

Crimes of globalization: an ontological recalibration of criminology This section of the chapter discusses “political economy as a criminogenic force” (Matthews, 2003, p.5; see also Tombs and Hillyard, 2004). It places market-driven social harm at the epicentre of criminological inquiry. In 1940, Edward Sutherland in his celebrated article, “White-collar Criminality”, extended the criminological searchlight beyond the traditional focus on street crimes by conceptualizing the illegal activities of business corporations and their agents as criminal (see Sutherland, 1940). Since Sutherland’s well-received work, the scope of criminological inquiry has expanded radically. One of the nascent heterodoxies in the discipline has been broadly defined as “crimes of globalization” (Friedrichs, 2007; Friedrichs and Friedrichs, 2002; Rothe et al. 2006; Wright and Muzzatti, 2007; Ezeonu, 2008; Ezeonu and Koku, 2008). Inaugurated in a 2002 influential article published by David Friedrichs and Jessica Friedrichs in the journal Social Justice, this emerging area of criminology is anchored to the argument that the global neoliberal regime (advanced by

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Western states and economists, and managed by international financial institutions such as the WTO, World Bank and the IMF) causes enormous harm in many parts of the world, especially in the Global South. These scholars argue that these harms should be classified as crime “whether or not specific violations of international or state law are involved” (Friedrichs and Friedrichs, 2002, p.16). This position underlines the belief among an increasing number of sociologists and criminologists that violation of laws should not solely determine the way we understand criminality (Ezeonu, 2007; Kauzlarich and Friedrichs, 2003; Friedrichs and Friedrichs, 2002; Barak, 1991), and that paying little attention to social harm in the expansive literature of criminology constitutes one of the greatest flaws of the discipline (Hillyard and Tombs, 2004; Tombs and Hillyard, 2004; Friedrichs and Friedrichs, 2002). Pointing to the weakness of limiting the scope of criminological inquiry to the state legal constructs, which exclude a wide range of identifiable harms and injuries, Friedrichs and Friedrichs (2002, p.17) posit that: If the policies and practices of an international financial institution . . . result in avoidable, unnecessary harm to an identifiable population, and if these policies lead to violation of widely recognized human rights and international covenants, then crime in a meaningful sense has occurred, whether or not specific violations of international or state law are involved. In rejecting the hegemony of legalism in the criminological imagination and in putting market-generated social harm at its epicentre, these scholars have rejuvenated the discipline and helped recalibrate its boundaries along the line that has gained much support (see Hillyard and Tombs, 2004; Tombs and Hillyard, 2004). Presenting the neoliberal dynamics as producing perhaps “the most extensive and far-reaching harms” in societies where they operate, Steve Tombs and Paddy Hillyard have even called for the disbandment of academic criminology and the establishment of a new discipline around the broader problem of social harm as one way of addressing the limitations of traditional criminology (Tombs and Hillyard, 2004; see p.44 for the quotation). However, unlike Tombs and Hillyard (2004), criminologists of globalization want a more expansive discipline that accommodates “a wide range of objectively identifiable” marketgenerated social harms. Scholarships on crimes of globalization no doubt fall within the vortex of heterodoxy described by Reece Walters as “deviant knowledge”. Walters conceives of these forms of knowledge as those which challenge the state construct of crime, and that are “unfavourable to, and/ or critical of, agents of power” (Walters, 2003, p. 2). Traditionally, criminology focuses on the state constructs of crime as reflected in the criminal code. These constructs have mostly been used by the dominant class and/or groups to shape socities in their favour. Thus challenges to traditional criminology are often considered heretical, as they “[mess] around with some of the most powerful constructs the State has at its disposal” (cited in Walters, 2003, p.79). However, since Friedrichs and Friedrichs’ (2002) article, a bourgeoning body of scholarship has moved towards that direction (see Wright and Muzzati, 2007; Rothe et al., 2006; Ezeonu, 2008; Ezeonu and Koku, 2008). This chapter also borrows from their conceptual framework. However, the chapter broadens the conception of crimes of globalization to cover the harmful effects of the global neoliberal project in general whether they are administered by international financial institutions or independently by the state. In other words, the chapter conceives of this form of crime simply as market-generated harms that are both “avoidable” and “unnecessary”. Thus, this school of criminology could also be described as “Market Criminology” (i.e. the criminology of preventable market-generated harms).

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Oil and the plunder of the Niger Delta: a lesson on crimes of globalization Since the early nineteenth century, Western corporations have plundered the resource wealth of southern Nigeria, especially in the Niger Delta. Mass murder of indigenous populations, avoidable market-generated poverty, and corporate-funded human rights abuses have also followed this process (see Dike, 1956; Okonta and Douglas, 2003; Pilkington, 2009; Human Rights Watch, 1999a, 1999b). This section of the chapter discusses the devastating effects of a neoliberal economic regime that governs the extraction of petroleum resources in the Niger Delta area of Nigeria. It focuses on three principal areas in which people’s welfare and the community economy have been impacted by neoliberalism: poverty, environmental pollution, and human rights abuses.

Poverty As James Gustave Speth puts it in his “Forward” to the 1994 Human Development Report: Behind the blaring headlines of the world’s many conflicts and emergencies, there lies a silent crisis – a crisis of underdevelopment, of . . . poverty . . . of thoughtless degradation of environment. This is not a crisis that will respond to emergency relief. Or to fitful policy interventions. It requires a long, quiet process of sustainable human development. (Speth, 1994, p. iii) This observation is particularly true of many Niger Delta communities, especially in their relationships with transnational petroleum extraction corporations that operate in the region and with the repressive apparatus of the Nigerian state that protects these corporations. Studies show that in spite of the enormous wealth the petroleum resources in the Niger Delta has generated for both the Nigerian government and the extraction industry, the majority of the indigenous population who reside in the oil-rich area live in extreme poverty (UNDP, 2006). Corporations that barely operate under any form of regulation continuously decimate even their sources of subsistence, such as farmlands, rivers, and the rich biodiversity. As the anchor of the nation’s economy, the Nigerian federal government has shown little interest in regulating the petroleum industry. This has had a devastating impact upon the lives and livelihoods of people in these communities. Since the 1980s when the Nigerian government introduced an IMF brand of market reforms, poverty has increased in this area. Evidence from the country’s National Bureau of Statistics strongly supports this position. For instance, in what constituted the old Bendel State (now split into Edo and Delta states), the rate of poverty rose from 19.8 per cent in 1980 to 78.44 per cent in 2004. Similarly, in the old Rivers State (now the Rivers and Bayelsa states), the poverty rate rose from 7.2 per cent in 1980 to 49.07 per cent in 2004 (UNDP, 2006, p.35; National Bureau of Statistics, 2004).2 This was a period of rapid expansion of neoliberalism in Nigeria (see, Ezeonu, 2013). While there are a number of extant laws to regulate economic activities with respect to the environment, public welfare, as well as public health (see Okonta and Douglas, 2003; Amnesty International, 2009), these laws are generally poorly conceived, and sometimes barely meet the international standards with respect to oil exploration activities. Often the laws are also so weakly enforced that the petroleum industry “remains largely self-regulated or, frequently, unregulated” (Amnesty International, 2009, p. 41). This weak enforcement of regulations in the petroleum industry is clearly deliberate, given that since the mid-1980s, the federal government had rigorously pursued IMF-type, albeit home-grown, market reforms (see Ezeonu, 2013). 96

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The federal government has a long-term economic interest in the activities of the petroleum industry, being both in partnership with some of the corporations and a major financial beneficiary of the industry generally. While the power to regulate the industry lies principally with the federal Department of Petroleum Resources (a unit of the Federal Ministry of Petroleum Resources), there has been no serious effort (or any discernible desire) by this government’s department to perform this important regulatory function (Amnesty International, 2009). Under this circumstance, the petroleum industry operates imperiously, with little consideration for the lives and welfare of the people. Regarding the activities of the biggest oil corporation in the region, Shell Petroleum Development Corporation, Okonta and Douglas (2003) report that the company has become more than a colonial force, with the ability to command the services of Nigerian security services for its corporate interests. Despite its petroleum resource wealth, the Niger Delta region remains one of the poorest and most underdeveloped in the country. Meanwhile, its oil wealth has been used to develop major cities outside the region, such as Lagos, Abuja and Kano. This same wealth has also financed major construction projects across the country, including the mega-steel development company at Ajaokuta, as well as roads, bridges and other major constructions in the country. Based on the self-assessment of the indigenous population of this region (i.e. “a perception index”), the poverty rate in the entire region, calculated in 2006, stood at 74.8 per cent (UNDP, 2006, p. 36). What is particularly instructive about this situation is: not only the increasing incidence of poverty, but also the intense feeling among the people of the region that they ought to do far better . . . [given] the considerable level of resources in their midst, and the brazen display and celebration of ill-gotten wealth in Nigeria, most of which derives from crude oil wealth (UNDP, 2006, p. 36) To a very great extent, the increasing level of poverty in the Niger Delta is strongly correlated with the disabling effects of petroleum extraction activities in the region. As has been well reported, these extraction activities have completely dislocated the ecology of the indigenous economy. The UNDP (2006, p. 135) reports that the Niger Delta is blessed with “an enormously rich natural endowment in the form of land, water, forests and fauna”. Nevertheless, these resources have often been polluted and/or degraded by petroleum extraction activities. For a number of people, this impacts heavily upon their economic wealth and is a direct cause of their poverty, since as farmers and fishermen, these “natural resources have traditionally been primary sources of sustenance”. As the Amnesty International (2009) further observes, the disabling effects of environmental pollution in the Niger Delta are enormous; and the contamination of the ecosystem often leaves the local population with toxic food and water sources, thereby increasing their susceptibility to different kinds of health challenges. These problems are too serious to be ignored as criminal, especially as the economic activities that often lead up to them are preventable by the corporations; or by the state through a robust regulatory framework that is vigorously enforced. Nevertheless, it is neither the policy of the Nigerian government to regulate the industry, nor the intention of the corporations concerned to self-regulate. This, no doubt, explains the degree of resentment and conflict that often define the relationship between the oil communities and the corporations; and sometimes between these communities and the agents of the Nigerian state who protect the corporations. Despite the expanding body of literature on corporate social responsibility, it is very doubtful that corporations whose principal objective is to maximize profit at all costs could undermine their commitment to the shareholders because of certain ethical considerations (see Friedman, 97

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1996). At least, in the case of the petroleum extraction industry in the Niger Delta, this has not been demonstrated. This is understandable given the position of neoliberal theorists on social justice. For example, Friedrich Hayek, a leading advocate of neoliberalism, completely dismissed the idea of social justice in market-moderated society, describing it as absurd and a “mirage”. In his acerbically amoral defence of self-interest, he pushed back against attempts by any state to directly cushion the effects of poverty through policies supportive of distributive justice, and reminded “those who attack great private wealth” and the advocates of social justice that wealth “would not exist but for the decision of others to risk their resources on its creation”. He further argues that those “who have built up great fortunes . . . have thereby benefited more people through creating opportunities for more rewarding employment than if they had given their superfluity away to the poor” (Hayek, 1976, p. 98). Linking social justice to the destruction of individual liberty, and therefore “socialism”, Friedrich Hayek describes the pursuit of social justice as an “atrocious idea” (Hayek, 1976, p.99), “an empty formula” (Hayek, 1979, p.3), and “that incubus which today makes fine sentiments the instruments of the destruction of all values of a free civilization” (Hayek, 1976, pp. xii and 99; see also Lister, 2013). He argues that the “rules of just conduct” should be left for individuals to decide, and not for corporations or the government (Hayek, 1976, p. 48; Finn, 2006, p. 28). This is equally the position of Milton Friedman, another neoliberal firebrand, who cautions that we should “leave the ethical problem for the individual to wrestle with” (Friedman, 1982, p. 12; see also Friedman, 1996). In other words, these apologists of market fundamentalism were not only opposed to government regulation of the economy, but were also indifferent to even the pretentious chatter of the exponents of corporate social responsibility. In fact, dismissing the “analytical looseness” of corporate social responsibility and its posturing, Milton Friedman (1996, p. 8) declared boldly, “the [only] social responsibility of business is to increase its profits”. This position is not only dangerous but also contradictory, given that Friedman (1982) himself had argued strongly for the need of the state to protect our freedom from those who threaten it. Unfortunately, as fundamentalist market economists have demonstrated, it appears that the only freedoms worth protecting are those of corporations, and of those individuals whose selfish interests the corporations serve. With this form of predatory mindset portrayed by both the theorists and enforcers of neoliberalism, it is not surprising that the youth of the Niger Delta region, following in the courageous footsteps of their great ancestors such as King William Koko, Isaac Adaka Boro and Ken Saro Wiwa, are today resisting the callous and disabling economic activities of transnational corporations in the area.

Environmental pollution As has been demonstrated with respect to the petroleum extraction industry in the Niger Delta, unregulated or poorly regulated markets decimate and continue to threaten the environment (Amnesty International, 2009; UNDP, 2006). Protests against and compensation demands for ecological destructions are often among the major sources of tension and conflict between corporations operating in the extraction industry and their host communities. In the same way that the chief exponents and enforcers of the neoliberal regime mock distributive justice for the poor people of the Niger Delta, they apparently see ethical practices regarding the environment as existing merely in the domain of individual actors, rather than that of corporations. Thus, in their quest to maximize profit, they have wrecked the ecology of the region in the most grievous ways. The region has become, probably, the site of some of the worst ecological disasters in the world, as the expansion in oil production activities has considerably increased incidents of oil 98

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spills. These spills sometimes result from accidents, but also from community sabotage to protest the activities of the petroleum industry (UNDP, 2006). While the Niger Delta ecosystem contains some of the best repositories of biodiversity in Africa, the unregulated activities of transnational oil corporations are increasingly polluting its water sources (including portable water supplies), destroying vegetation, damaging fertile lands critical for agricultural purposes, and poisoning the air. The country’s Department of Petroleum Resources estimated that between 1976 and 1996, about 1.89 million barrels of crude oil were spilled in 4835 incidents (Environmental Rights Action, 2010, p. 1). Similarly, UNDP (2006, p.76) reports that about 3 million barrels of oil were lost in 6817 spillages between 1976 and 2001. A more recent account even put the amount of crude oil barrels lost to oil spillages since 1958, when crude oil extraction started in Nigeria, at between 9 and 13 million (Baird, 2010, p. 1). These are in addition to frequent and unregulated gas flaring, which sometimes takes place close to residential areas. This pollution would have been prevented, or at least better managed, if the corporations actually cared about the lives and livelihoods of the people in their host communities, or the safety of their environment. Okonta and Douglas (2003) point out that in most cases the corporations’ recklessness is often encouraged by the belief that the absence or weakness of regulations would make it difficult to prosecute them successfully. As Hawken (1993) observes, “commerce and [environmental] sustainability [are] antithetical by design” (p. xii), since “the primary freedom of the modern, global marketplace is to grow unremittingly, regardless of the consequences to the environment or society” (p. 78). This position seems particularly true of a developing society like Nigeria, where the global pressure to deregulate the economy and the connivance of a weak and compromised set of government regimes have exposed the natural environment of the Niger Delta to the ravages of market forces. It is instructive that government’s passivity to (or involvement in) the corporate abuse of the environment is common in the developing world. In more industrialized societies, the relationship between business and the natural environment is usually moderated by the state, in spite of neoliberalism. Often public pressure, the environmental movements and occasional pollution scandals (such as the 2010 Deepwater Horizon oil spillage, involving British Petroleum, BP, in the Gulf of Mexico) ensure that corporations are not entirely left to determine their relationship with the environment. Unlike the Niger Delta where corporations often use the state repressive apparatus to ward off communities demanding compensation for oil spillages and environmental pollution (see Human Rights Watch, 1999a), the United State Department of Justice has secured a number of punitive damages against BP in the case of the 2010 Gulf of Mexico spillage. These damages include the criminal convictions of 11 cases of manslaughter, a felony conviction for lying to the United States Congress, and both criminal and civil settlements amounting to $42.2 billion (see Krauss and Schwartz, 2012; Fontevecchia, 2013).

Human rights abuses Perhaps the most egregious harm encouraged and sometimes funded by corporations in the Niger Delta is the violation of the fundamental rights and liberties of the local population who oppose their presence and unethical business practices. While the kangaroo trial and execution of Ken Saro-Wiwa and the other eight Ogoni community and environmental activists by the brutal regime of General Sani Abacha represent the international face of these abuses, the Niger Delta has historically been the killing field of Western corporations and their government backers. Although it is commonly assumed that the exploitation of this region by Western financial interests started with the discovery of petroleum resources in the 1950s, scholars show that the corporate abuse and plunder of the Niger Delta and its people have been going on since the 99

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earliest days of transatlantic slavery in the fifteenth century (Dike, 1956). As Kenneth Dike documents, this region was a major source of slaves to European merchants and corporations, and “from the seventeenth century onwards . . . became the most important slave mart in West Africa” (Dike, 1956, p.25). By the nineteenth century, when slavery had become economically less viable and had been abolished in many Western societies, corporations had switched to trade in palm oil in the Niger Delta area. This was the period of the industrial revolution and of high demand for palm oil, which was used to lubricate machines and for making soaps and margarine. Although European traders initially used middlemen from the region to access palm oil from the southern hinterlands, these middlemen were later displaced by the traders, who used European armies to impose a new trading order controlled by them and which was designed specifically to benefit them (see Dike, 1956). So, as the above literature demonstrates, the current abuse of human rights in the region in pursuit of corporate interests and profit is neither new nor even more brutal than in the past. The only difference is its motivation by the Western corporate interest in a new commodity: petroleum resources. The transnational corporations in the Niger Delta rely heavily on the country’s repressive state apparatus to impose their corporate will on the local population. The state security personnel themselves, with the clear support of political leaders, often carry out these suppressive missions brutally and enthusiastically. The best known of these human rights abuses was the 1995 murder of Ken Saro-Wiwa and eight other Ogoni community leaders, who were tried and executed for alleged murder by the military dictatorship of General Sani Abacha. Of course, it is widely believed that the murder charge was a bogus scheme by both the transnational corporations and the Nigerian government to get rid of Mr Saro-Wiwa who had become a veritable voice against the reckless pollution of his Ogoni homeland. He had become too vocal and uncompromising for both the government and the petroleum industry. In June 2009, Shell agreed to pay the sum of US$15.5 million to the families of the executed men to settle a legal case instituted against it by these families in New York, in which Shell was accused of collaborating with the then military government to execute the men (Pilkington, 2009, p. 2). Similarly, Shell has been accused of funding the Nigerian military operation in the Niger Delta, providing them with both mobility vehicles (land vehicles and patrol boats) and ammunition (see Pilkington, 2009). The Nigerian security personnel are also known to maintain a terrifying presence in the region, principally to protect the industry. Their presence often results in tension and clashes with the local communities. Such conflicts have repeatedly resulted in the military pillage of these communities, during which atrocities such as murder and rape were common. In 1999 during one such conflict, a few policemen protecting some of these corporations lost their lives. In reaction, the then President Olusegun Obasanjo sent the military into the small community of Odi, in Bayelsa State, which was implicated in the death of the policemen. The prowling soldiers severely brutalized members of the community, killing, maiming and raping in the process. The army also mostly razed homes. It is estimated that in the mayhem which followed the military deployment, between 200 and 1000 members of this community were killed by the military, while more than 50 women were raped by the marauding soldiers. Among the dead were old people, women and children who could not escape the mayhem. Victims’ accounts of these rapes are documented (see Amnesty International, 2006, pp. 14–15; see also Human Rights Watch, 1999c; Ibekwe, 2013). The then President Obasanjo refused to apologize for this brutality or to investigate the killings and rapes. No military personnel have been held accountable for these crimes (Amnesty International, 2006). Mr Obasanjo himself, a retired army general, was a former military dictator, and many of his former military colleagues are active in crude oil business in the area. Many of these former 100

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military bosses corruptly acquired crude oil wells during the country’s many years of military dictatorships. Equally, given the significance of crude oil to the country’s economy, the government’s (and Mr Obasanjo’s) compatibility of interest with the industry is understandable. In 2013, a Nigerian Federal High Court, ruling in a case instituted by the Odi community against the federal government in respect of these abuses, ordered the government to pay the community N37.6 billion (about US$235 million) in damages within 21 days (Ibekwe, 2013, p. 1). Nevertheless, the current federal government, led by Goodluck Jonathan, himself a Niger Delta man from Bayelsa State, has so far refused to obey the court order. The fact that Mr Jonathan comes from Bayelsa State explains the strong bonds among the petroleum industry, the federal government and the Nigerian domestic bourgeoisie. As has been demonstrated by the disabling nature and effects of market-generated harms discussed earlier, it no longer makes any ontological sense for criminological inquiry to be limited to the legal constructs of the state. States and corporations are often implicated in legally defined crimes, a fact that scholars of state and corporate crimes have given attention to (see Kauzlarich and Friedrichs, 2003; Sutherland, 1940). However, the expansion of the criminological imagination to accommodate an understanding of the neoliberal political economy as a criminogenic force is still new and marginal in the discipline. But the development of this nascent area of scholarship is helping to remake criminology in the twenty-first century, from a tool of domination and social control to an adjunct of social justice. As Tifft and Sullivan (1980, p. 51) remind us: [I]t is not the social harms punishable by law which cause the greatest misery in the world. It is the lawful harms, those unpunishable crimes justified and protected by law, the state, the ruling elites, that fill the world with misery, want, strife, conflict, slaughter and destruction.

Conclusion The Niger Delta region of Nigeria has been a site of enormous wealth and plunder. For years, transnational corporations have pillaged its resources at the expense of the indigenous communities. Since crude oil was discovered in the area in 1956, these corporations have deeply invested in its extraction and expropriation at a great cost to the lives, livelihoods and safety of the ordinary people in the host communities. The plunder of the Niger Delta has largely been enabled by the Nigerian government in its frantic quest to adjust its domestic economy to the global neoliberal project. The domestic bourgeoisie has also supported it; many of them share both business and class interests with the owners of the foreign capital that exploit the area. This chapter has discussed the harmful effects of the neoliberal political economy in the petroleum extraction industry in the Niger Delta. Borrowing from a budding school of criminology known as “crimes of globalization”, it conceptualizes these harmful effects as criminal events. In doing this, the chapter breaks from the traditional legal construct of crime that has historically legitimized the state dominance of the criminological enterprise. While Friedrichs and Friedrichs’ (2002) conception of the crimes of globalization aptly captures the criminogenic dynamics of the global neoliberal project, the collaborative roles of domestic capitalists, many of whom control the apparatus of state power, encourage a re-contextualization of preventable market-generated harms (whether enabled independently by the state or under pressure from international financial institutions) as “Market Criminology”. This is in recognition of the fact that the source and theatre of criminal victimization in this form of crime is the unregulated or poorly regulated forces of the market. 101

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Notes 1 While John Williamson contests the association of neoliberalism with Washington Consensus (Kennedy, 2010), both concepts run mostly on similar assumptions, especially with respect to the liberalization of trade, market and interest rates, as well as privatization and deregulation (see e.g. Williamson, 1989, 2008). 2 The 2004 rate was calculated by adding the rates for Delta and Edo states, which together formed the old Bendel State; and the rates for Rivers and Bayelsa states, which together formed the old Rivers State. On 27 August 1991, the old Bendel State was split into Delta and Edo States, while the old Rivers State was split into Rivers and Bayelsa States.

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6 State and corporate drivers of global dysnomie Horrendous crimes and the law Anamika Twyman-Ghoshal and Nikos Passas

Introduction The press is awash with accounts of serious cross-border crimes, the responsibility for which is attributed to dangerous and radical groups. This has included the Islamic State, “bad apples” working in banks, organized criminal groups, and rogue state actors. The responses to these kinds of problems have ranged from a tsunami of international conventions against terrorism, transnational crime and corruption, to intensified intelligence operations, military interventions, and humanitarian projects. As the current approaches do not seem to yield the desired results – as crime threats continue to grow – it is important to transcend discourses that individualize and externalize blame and examine structural sources of these risks in search of better, less costly, and more effective policies. Typically, crime control policies focus on supply rather than demand. For instance, policies focus on eliminating the production and exports of illegal drugs rather than trying to reduce the demand that gives rise to profitable illegal markets. In this analysis the approach is to look back and consider the role played by decisions, policies, and initiatives in the Global North by public and corporate actors. This is not merely an attempt at broadening accountability but a way to identify the extent to which neoliberal policies contribute to criminogenic processes. In order to shed light on these criminogenic processes, this chapter employs the analytical framework of global anomie theory (GAT) and focuses on two case studies. The first one is maritime piracy off the coast of Somalia, where efforts have centered on improving the governance of the state, tackling the al Shabaab group, and assisting with famine and economic challenges. The second is the theft of the Chagossian nation, a case of forced eviction of an entire people against a host of basic international legal principles. Despite the globalization of media and availability of information on this case, it is a story that the mainstream media has ignored for the most part. Both case studies deal with what may be termed “horrendous crimes,” a term to capture a set of behaviors broader than those officially defined as illegal or criminal. With this term we refer to practices that constitute a serious threat and cost to society but may be deemed lawful by certain legal standards. We understand the essence of crime as: “misconduct that entails avoidable and unnecessary harm to society, which is serious enough to warrant state intervention and similar to other kinds of acts criminalized in the countries concerned” (Passas, 1990, p. 401). By using this 105

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broader definition we do not distance ourselves from legal standards, but seek to avoid national laws that may be unhelpful in defining global phenomena because of their domestic particularities, biases, and political agendas (Friedrichs, 2007). These crimes include transnational and international crime, as well as state, corporate, and state-corporate crimes. The latter crimes often fall below the radar of conventional criminology, but are crucial to consider since they exacerbate economic inequality within and across nations (UN, 2002) and have broader criminogenic effects. This chapter begins with an outline of the analytical framework, proceeds with the two case studies, and concludes with research and policy implications.

Analytical framework The core argument of global anomie theory (GAT) is that the most important part of crossborder crimes is the globalizing processes and neoliberal practices weakening the normative order that leads to crime (Passas, 2000). Neoliberal globalization also exploits and victimizes vulnerable populations, subjecting them to international, cross-border, and “horrendous” crimes. The combination of globalization and neoliberalism produces opportunities for serious crimes and motivates people to take advantage of them, while at the same time weakening social controls leading to deviance amplification. This framework is consistent with other works that also associate globalization and neoliberalism with the production of crime (Sheptycki, 2005; Franko Aas, 2007), and transnational crimes in particular (Williams and Baudin O’Hayon, 2002). Anomie refers to a societal state where the guiding power of conventional/legal normative standards is weakened. In such an environment deviance and crime rates rise. To the extent that controls do not work, this becomes part of a vicious circle leading to the formation of deviant subcultures and the normalization of misconduct. This process can be set in motion and reinforced by structural disjunctions between culturally induced goals and available legitimate means, sudden social change, as well as other sources such as pathological governance or “dysnomie” and criminogenic asymmetries. GAT seeks to identify the causes of both the initial emergence of misconduct as well as those that fuel it further and maintain or expand criminal patterns. The chronological processes leading to deviance and deviance amplification or normalization are outlined in Figure 6.1 (TwymanGhoshal, 2012). First, the GAT considers the features and impact of globalization and neoliberalism. Globalization is a process of internationalization on an unprecedented scale (Held, 2000; Giddens, 2003), a growing interconnectedness of states and societies, which operates on multiple levels including economy, politics, culture, ideology, and environment (Steger, 2013). Globalization occurs on both an objective material level and a subjective plane of human consciousness (Steger, 2013). Reference group and relative deprivation analysis shows how the meaning and content of success goals and “needs” vary in different parts of the world and social structures (Passas, 1990). The form of globalization that has been dominant over the past few decades is one fueled by neoliberal ideology (Steger, 2013), which advocates “free trade” between nations and disembedding the market from its social context. The role of the nation-state is to enable trade by minimizing state interference and allowing flows of information, money, and objects. In effect, these policies have supported the development of a global economy not bounded by national borders, creating a global division of labor that is focused on mutual dependence and a single international market rather than subsistence and self-sufficiency of individual countries. These policies also rely on consumerism and exponential capital accumulation, while espousing the goals of meritorious success and discourses of equal opportunities. 106

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Figure 6.1 Analytical framework

Market globalist ideas have been promoted by the International Monetary Fund (IMF) and the World Bank (WB) across the developing world, and have required dramatic political transformations that directly affected not only entire national economies but also state capacities to govern their territory. Neoliberal globalization stresses the importance of unfettered materialism and lofty aspirations. It prioritizes the accumulation of wealth over all other objectives (such as reducing poverty, increasing education, protecting local agriculture, environment, etc.), and national strategies are realigned in order to accommodate this purpose, minimizing state interference to promote free (rather than fair) trade (Passas, 2000). These are key features of our contemporary global society, which provide the background conditions for the erosion of law and the dislocation of institutional order. Diverse populations have been exposed and conditioned to capitalist values of material acquisition; alternative priorities; other forms of happiness; new freedoms; and social mobility. At the same time, the majorities of these populations have been subject to worker exploitation, inequities, and injustices. Globalization has restructured the way in which we live, creating local transformations the content of which varies according to location and internal conditions (Sheptycki, 2005). GAT suggests that these globalizing forces raise aspirations, expectations, and hopes to unrealistic levels. Increased mobility, media communications (such as the internet and television), military and aid interventions provide points of internal and external comparisons. Exposure to material and cultural differences render poverty, oppression, inequalities, and other problems less acceptable or explicable. As communities become increasingly interconnected and part of a “global village,” people become aware of existing power, financial, technological, cultural, and other asymmetries. This awareness raises perceptions of absolute but also relative deprivation. 107

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Economic inequalities have been widening both within and across countries in the past three decades (UN, 2013). Social problems and social dysfunction, ranging from mental illness, obesity, drug abuse, to violence and imprisonment are aggravated by unequal societies (Wilkinson and Pickett, 2009). This extreme economic asymmetry has resulted in 85 persons owning as much wealth as the bottom 3.5 billion people (Oxfam, 2014). Moreover, neoliberalism’s minimal interference in the market means the reduction or abolition of welfare state arrangements through waves of privatization and deregulation. The fostering of needs and desires that are subsequently blocked or left unfulfilled for those at the bottom creates strains towards deviance and anomie as people are left without support or safety nets. For those at the top, inconsistent regulation and law enforcement allow selective impunity. Further, when goals are internalized without a legal pathway towards attaining them, the result is systematic frustration, stress, and disappointment. Individual adaptations are diverse (Merton, 1938), but the most relevant ones for our purposes are “innovation” and “rebellion.” The former means the adoption of alternative means to achieve goals even if these are illegal. The latter involves the substitution of both goals and legitimate opportunity structures by radically different ones. Crime may become a solution to these structural problems and contradictions, while internalized controls are neutralized (Sykes and Matza, 1957). Further, GAT points to the potential normalization and amplification of illegal adaptations. If structurally created problems are solved by crime that goes unpunished, these solutions may evolve into deviant subcultures through processes of interaction. Where social controls cannot sanction and curb these behaviors, they may become normative for others. Weak and ineffective social control thus leads to anomie, the “withdrawal of allegiance from conventional norms and a weakening of these norms’ guiding power on behavior” (Passas, 2000, p. 20), which means that deviance occurs without strain. These processes are thus conducive to aggravated instability and lower confidence in official institutions. GAT’s fifth phase considers the impact of neoliberal globalization, normative deviance, failures of the international system, and ineffective civic governance or governability. Good governance acts as a buffer between globalizing forces and their effects on society (Hastings, 2009; Munck, 2005; Giddens, 2003). Deficient governance is linked to organized crime, drug trafficking, money laundering, corruption (Williams and Baudin O’Hayon, 2002), and piracy (Young, 2007; Murphy, 2009; Sakhuja, 2010). Thus, “good” governance is key to crime prevention (Waller and Sansfacon, 2000; UN Habitat, 2007) and crime rate reductions (Neumayer, 2003). The problem, however, is that at the time when good governance is needed, “global dysnomie” makes matters worse. The concept of “global dysnomie” (Passas, 2000) refers to challenged governability or pathological governance as a consequence of the following: • • •

Lack of adequate international standards. The existence of multiple diverse and at times contradictory legal provisions. Inconsistent enforcement of existing international norms, which result from: ° lack of cooperation ° extra-territorial application of domestic standards or ° ad hoc and discriminatory applications of the law.

An added contributing factor to dysnomie is national-level civic governance failures (TwymanGhoshal, 2012, 2014). Civic governance is defined as regulatory authority dispersed across society, including formal and informal institutions to set limits and provide incentives by including civil society in the social control mechanisms. It is the process of fostering a strong civic culture, where decisions are made and implemented across society, rather than a purely top-down 108

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approach; it is about the collaboration of political parties with non-economic institutions and civil society (Giddens, 2003). Civic and international community failures contribute to dysnomie, a patchwork of diverse and conflicting legal traditions and practices where international laws are applied inconsistently reflecting national agendas rather than universal principles.

Somali maritime piracy Maritime piracy is frequently in the news as vessels are captured and held in Somali territorial waters for ransom. Piracy off the coast of Somalia began around the time the government of Siad Barre was ousted in 1991 and has remained an international concern ever since. In order to fully understand the current situation in Somalia we need to look at its recent history that explains much of the country’s insecurity, weak infrastructure, and repeated foreign interventions. From arbitrary colonial divisions (British, Italian, and French) to repeated radical social restructuring after gaining independence in 1960, Somalia has been a country in transition for a long time. Under the rule of Siad Barre, the country went from scientific socialism (through an allegiance with the Soviet Union) through an unsuccessful war with Ethiopia, to a free market economy (through an allegiance with the United States). Mismanagement and militarization generated the need for foreign aid and the experience of new lending policies under IMF and WB structural adjustment programs. Loans came with strict austerity programs, huge reductions in public spending, tax reforms, liberalization, privatization, and deregulation (De Waal, 1993; Chossudovsky, 2003; Mubarak, 1996). Government expenditure on health and education was cut, the public sector shrank, and civil servants’ pay has reduced to $3 per month (Chossudovsky, 2003; Lewis, 2002). In addition, many mechanisms developed to cope with droughts were removed (UNEP, 2005; Marchal et al., 2000). Somali life was radically restructured, from a socialist safety network to shrinking public spending; to a new economic system with a minimalist welfare structure. After the ousting of Siad Barre in 1991, the country descended into a violent and long civil war. The lack of a central government served to intensify neoliberal globalization: rather than disconnecting Somalia from the rest of the world, it accelerated the growth of the commercial economy in Somalia, surpassing pre-1991 figures (Powell et al., 2008; Marchal et al., 2000; Mubarak, 1996). Out of 18 development indicators, 14 showed improvement under anarchy (Leeson, 2007). However, this growth was distributed unequally, making the poor poorer (De Waal, 1993). Somalis were gradually exposed to new referents through access to information via the internet, a larger number of newspapers (Freedom House, 2005), and the growing Somali Diaspora. One of the largest per capita Diaspora networks in the world (Hammond, 2007), it created a reference group, which was geographically distant but emotionally close and trusted. The significant remittance flows from labor importing countries to Somalia support livelihoods and even the survival of extended family members at home. This access to the world served to magnify asymmetries and means–ends discrepancies as injustices were revealed. The structural and cultural transformations fueled means–ends discrepancies and asymmetries. Notably, in the aftermath of 9/11, al Barakaat, the most successful Somali remittance company and business model that combined security and telecommunications, was destroyed by US-led sanctions upon the baseless assumption that it had lent support to al Qaeda and bin Laden (Passas, 2005). Although the ensuing crisis was diminished by the concerted efforts of the donor community, it did cause a “trust deficit” between regulators and remittance companies (Cockayne and Shetret, 2012). 109

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Media and policy attention on Somalia has focused on famine, maritime piracy, and terrorism as critical challenges. However, apart from these problems, it is important to note that interventions from outside the country have produced and worsened crises for Somalis causing additional obstacles, which helps explain the emergence of piracy. The lack of central government since 1991 resulted in the absence of any law enforcement mechanisms and made the country vulnerable to exploitation. Somalia was victimized by two sets of foreign predatory activities, particularly from countries in Europe and Asia: large-scale illegal, unreported, unregulated fishing and toxic waste dumping off the coast of Somalia. Both have been reported by NGOs but have not been covered in mainstream media (FAO, 2005; High Seas Task Force, 2006; UNEP, 2005; Greenpeace, 2010; TED, 1998). These predatory activities had a significant impact on the population, depriving it of resources and exacerbating the “trust deficit” with the international community. These foreign activities provided motives for those living in coastal regions to engage in piracy to protect their livelihoods. That these were not mere rationalizations was confirmed in the wake of the 2004 December tsunami, when toxic waste barrels washed up on Puntland beaches (UNEP, 2005). This boosted public tolerance for piracy, which was seen as necessary to protect coastal waters from further foreign encroachment. Puntland is where the majority of seized vessels have been moored awaiting ransoms in the spike in piracy in the 2000s (Thompkins, 2009). Interviewed pirates explained that they were merely unemployed fishermen who felt compelled to take action to protect Somali waters because of the absence of a central authority (TwymanGhoshal, 2012). With ransom payments coming in, piracy was perceived as a successful solution to a problem: it enabled individuals to make money and feel that justice was served for damages caused by foreigners. The years of successful pirating had a normative effect not only upon those who organized larger piracy operations, but also upon others in Somali society. Pirates became normative referents; the behavior became part of accepted social conduct not only for those facing hardships due to exploitation (folk living off the ocean), but also for others who did not experience strain. Young men who grew up in an environment of conflicting traditions and practices lacked educational and legitimate employment opportunities, and saw piracy as a promising career choice as pioneer pirates of the 1990s became role models. Such deviant subcultures weakened the guiding power of conventional norms and undermined the rule of law. Under Islam, piracy was considered haram, a forbidden act. This established norm was no longer binding and piracy become tolerable, even acceptable. The growth of subcultures beyond those who initially experienced strain and the lack of social control mechanisms contributed to a dysnomic environment. Another critical source of dysnomie was failures of the international system. At an international level, maritime piracy is governed by the UN Convention on the Law of the Sea 1982 (UNCLOS). The convention limits piracy to acts of violence, detention or any act of depredation for private ends occurring outside the jurisdiction of any single state, in a ship-to-ship (or aircraft) conflict (article 101). Yet, most piracies occur in territorial waters, and therefore outside the scope of this Convention. Territorial waters fall under the jurisdiction of nation-states, but not all of them have piracy laws. Countries that have criminalized piracy have diverse and incongruent laws reflecting national priorities. This is illustrated by the way in which coalition forces have dealt with captured Somali pirates. UNCLOS requires that countries take action against pirates (article 100) but it does not specify the mechanism or procedures for seizure, arrest, indictment, or punishment of pirates or handling of their property. This is left to the jurisdiction of the seizing state (article 105). The nationstates which are part of the international coalition to curb Somali piracy have dealt with captured 110

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pirates in different ways, ranging from not engaging with pirate skiffs at all, giving pirates food and supplies and letting them go, firing warning shots at suspicious vessels, killing pirates, sinking pirate boats, confiscating equipment and setting pirates out to sea without provisions (in effect sending them to a slow death), capturing and processing pirates through a foreign criminal justice system (most coalition countries do not want to bring Somali pirates to their own jurisdictions for trial for fear of creating discontent at home), and bombing the coast to destroy the boats and equipment of alleged pirates (Twyman-Ghoshal, 2014). In 1988 the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (SUA) was passed with the aim of filling the gaps left by the UNCLOS definition of piracy. The SUA does not have a two-ship requirement, does not distinguish between territorial waters and the high seas, and is not concerned with the motivation of perpetrators. SUA does not use the term piracy, but applies to acts of violence that are intentional “within a ship” which endanger the safe navigation of a vessel (article 3). In 2008, Security Council Resolution 1846 confirmed that piracy and armed robbery against ships qualify as unlawful acts under SUA. Although SUA has a number of advantages over UNCLOS it is nevertheless considered to be a defective remedy (Tuerk, 2009). For an unlawful act to qualify under SUA it must “endanger the safety of maritime navigation.” SUA therefore fails to address offenses such as theft and armed robbery, which remain the most common forms of contemporary piracy globally (Twyman-Ghoshal and Pierce, 2014). Another key problem is that both SUA and the 2005 SUA Protocol only apply to state parties. Despite having 161 parties and being in force since 1992, SUA has only been used in one case to date. Notably, the two countries responsible for the largest share of piracies in the 2001 to 2010 period, Indonesia and Somalia, are not state parties to SUA (Twyman-Ghoshal and Pierce, 2014). Other international conventions on transnational crime such as the UN Convention against Transnational Organized Crime 2000, the UN Convention for the Suppression of the Financing of Terrorism 1999, and the UN Convention against Corruption 2003 could be used to prosecute all forms of organized piracy (Passas and Twyman-Ghoshal, 2012). However, only state parties to these conventions may use them, if they have the will to do so. International cooperation is imperative when dealing with global crimes. UNCLOS, still the key international piracy legislation, is silent on cooperation in territorial waters and the form of cooperation in the high seas (article 100). Despite the volume of global crimes and “horrendous” harms they cause, modern nationstates lack the political will to face up to the needs of a globalized society and insist on protecting their sovereignty. This is a critical impediment to global norm-making mechanisms. For piracy, the problem is rooted in conflicting national interests; coastal nations (which have resource and boundary claims) conflict with maritime nations (which are concerned with trade issues). The tension between sovereignty and global norm-making mechanisms was clear when Somali piracy escalated in the mid- to late 2000s. Under UNCLOS, hot pursuit is limited to the high seas and ships cannot enter the territorial waters of a nation-state (article 111(3)). Faced with the limited application of UNCLOS, the UN Security Council adopted Resolution 1816 in 2008 which allowed international coalition vessels to sail into the territorial waters of Somalia and to “use all necessary means to repress acts of piracy and armed robbery.” In 2012, this was extended to include the Somali coast, allowing the first European Union aerial offensive that destroyed speedboats, fuel depots, and arms stores allegedly belonging to pirate gangs in Handulle (Puntland). The Security Council was explicit that infringing Somali sovereignty was an extraordinary measure, which applies only to the current situation in Somalia and should not be considered as establishing customary international law. This conflict is also visible in the inconsistent enforcement of international rules in Somalia where international laws on toxic waste dumping or IUU fishing have not been enforced. 111

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Coalition forces have only focused on activities that affect international trade, i.e., maritime piracy and terrorism. The inaction against IUU fishing may be because the countries from which the IUU fishing fleets originate are the same as those contributing assets to counter piracy efforts (Hughes, 2011). The non-universal respect for sovereignty was demonstrated by the acts of the United States and Ethiopia against the Islamic Court Union (ICU). During its six months in power, the ICU achieved an unprecedented level of security in Muqdisho (Pendergast and Thomas-Jensen, 2007), and over much of southern and central Somalia. Basic services were restored, road blocks were removed, rubbish was disposed of, the airport and seaports were opened and rehabilitated, government buildings were re-established, and courts were in session (Barnes and Hassan, 2007). During this time, the number of piracy attacks off the coast of Somalia dropped dramatically. Unhappy with the high levels of insecurity and corruption, Somalis gave support to the ICU, which was the first government since 1991 to show success in uniting the country. In 2006 Muqdisho experienced a wave of assassinations and disappearances, particularly among ICU members. These covert operations were reportedly orchestrated by the United States, which was weary of an Islamist government in Somalia. The US funded Muqdisho warlords to disrupt ICU (Barnes and Hassan, 2007; Pendergast and Thomas-Jensen, 2007). Finally, supported by the US and Security Council Resolution 1725, an Ethiopian military intervention drove ICU out of Muqdisho in the worst level of violence experienced by the city since 1991. In January 2007, the US carried out targeted air strikes against Al Shabaab, a radical wing that emerged out of ICU in the aftermath (ICG, 2007). These US and Ethiopian military interventions infringed Somali national sovereignty in another instance of inconsistent application of international rules. The rise and fall of the ICU had a two-pronged impact on piracy. First, the prosecution of piracy by the ICU in Galmudug displaced many pirates north to Puntland. Second, the international interventions drove ICU from power, removing the one effective Somali counter-piracy strategy. The international community approach towards smaller state formations that developed in Somalia following the 1991 civil war was also inadequate. Regional self-governance efforts in Somaliland, Puntland, and Galmudug have remained unrecognized and unsupported. A weak but functioning self-governing state was able to develop in Puntland, which has the necessary infrastructure and stability for commerce to flourish, but which was too weak to create effective norms and control mechanisms. As subcultures developed, controlling piracy became challenging, especially due to a lack of financial resources, international recognition, and support. To police the coast, the Puntland authorities came up with a commercial solution; they hired foreign security companies to provide coastguard duties. To finance themselves, the companies were allowed to issue fishing licenses to foreign ships unilaterally and without interference from Puntland authorities. The outsourcing of coastguard duties to foreign corporations that operated with no Puntland oversight failed and further undermined the trust of Puntlanders, who were already weary of foreigners in their coastal waters. Neighboring Somaliland adopted a different approach: it used a domestically supervised coastguard staffed and operated by locals. Although small, this coastguard enjoyed popular support and was effective in countering piracy (Hansen, 2009). This modest home-grown coastguard was effective. The Puntland–Somaliland comparison highlights the need for civic governance that allows citizens and groups to articulate their interests, mediate differences, and exercise legal rights and obligations. The inclusion of civil society was essential for the legitimacy of Somaliland’s governing force and was therefore an effective social control mechanism. It suggests that the quality of governance can facilitate or stymie crimes. 112

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The blockage of home-grown anti-piracy efforts and the insistence on an externally imposed central government without broad civic support are yet another illustration of actions adding to dysnomie at the very time Somalis require good governance to deal with the deviance amplification and anomic processes caused by neoliberal globalization.

Forced eviction of Chagossians The second case study looks at the forced eviction of the Chagossians. Between 1967 and 1974, away from the eye of the media and the international community, the entire population of Diego Garcia was forcibly evicted from their homes and displaced to Mauritius and Seychelles. The Chagos Archipelago is a chain of small islands with three main islands: Diego Garcia, Peros Banhos, and Salomon. The islands were settled permanently when they were under French rule in 1783, although visitors from Malaysia, Portugal, and the Middle East date back to 1743. The island became a British colony in 1814. Chagossians today are made up of African, Indian, and Malagasy origins. In 1965, following talks with the United States about developing a military facility on Diego Garcia, the UK separated the Chagos Islands from colonial Mauritius and created a free-standing colony known as the British Indian Ocean Territory (BIOT) (Vine, 2004). In exchange for relinquishing the Chagos Islands to form a new British colony, Mauritius was granted independence, provided a GBP 3 million grant, and given an undertaking that the archipelago would be returned to Mauritius when it was redundant as a defense installation (Lunn, 2012). This deal occurred despite two UN General Assembly Declarations. Declaration 1514 (1960) aimed at preventing the colonial powers from disrupting the national unity and territorial integrity of a country in an effort to maintain their presence and sovereignty. When BIOT was announced, the UN General Assembly passed Resolution 2066 (1965) directing the UK to “take no action which would dismember the territory of Mauritius and violate its territorial integrity.” In 1966 in an Exchange of Notes rather than a treaty, the UK and the US agreed to make Diego Garcia available for US military use (Allen, 2008). The secret agreement was concealed from the US Congress, the British Parliament, and the UN. The only consideration requested by the UK was a reduction of GBP 5 million towards a research and development surcharge for the purchase of a Polaris missile (Brack, 1971, as cited in Vine, 2004). The agreement included a requirement by the US that all inhabitants of the island be removed before the US took possession (Bancoult 1, 2000). The UN Charter’s decolonialization rules mandated the protection of permanent inhabitants. Thus, a “fiction” was created that the island had no permanent inhabitants (The Chagos Islanders, 2012; August Aust, 1970, as cited in Vine, 2009), which was repeated by both the British and the Americans (Vine, 2009). In 1967, BIOT Ordinance No. 1 mandated a compulsory acquisition of land in the Chagos Archipelago from private owners (Vine, 2009). From 1968 islanders who had left for medical or tourist purposes were not permitted to return. Imports to the island were reduced through supply ship visiting restrictions, and medical and educational staff who left due to deteriorating conditions were not replaced (Vine, 2004). After the 1971 Immigration Ordinance that mandated the exile of the entire population, an estimated 1000 to 2000 Chagossians were transported to Mauritius and Seychelles (Vine, 2009; The Chagos Islanders, 2012). Although violence was not used (The Chagos Islanders, 2012), all pet dogs were exterminated in the last days of the mass eviction (Vine, 2009). With only minimal personal belongings, Chaggosians disembarked in the ports and were left to create a new life without any resettlement support (Vine, 2009). The same year, construction of the US base begun, which included demolishing houses of the islanders (The Chagos Islanders, 2012). 113

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Forced eviction is defined as “the permanent or temporary removal against their will of individuals, families and/or communities from the homes and/or land which they occupy, without the provision of, and access to, appropriate forms of legal or other protection” (General Comment No. 7, ICESCR, 1997). There are numerous international conventions that make forced eviction unlawful. These include the Universal Declaration of Human Rights 1948, the International Covenant on Economic, Social and Cultural Rights 1966 (article 11, paragraph 1), and article 5 (e) of the International Convention on the Elimination of All Forms of Racial Discrimination 1965, all of which were in place at the time of the forced eviction of BIOT. More conventions have been introduced since, stipulating that forced evictions constitute a violation of basic human rights; the Convention on the Elimination of All Forms of Discrimination against Women 1979, the Convention on the Rights of the Child 1989 (article 27, paragraph 3), and the Rome Statute of the International Criminal Court 2002. Article 7 of the Rome Statute makes deportation or forcible transfer of a population, which is a “wide-spread or systematic attack directed against any civilian population,” a crime against humanity. The Chagossians suffered two major harms. First, they were deprived individually and collectively of their possessions and homeland. Second, the forced relocation was not supported by any efforts or financial assistance for resettlement. Most Chagossians ended up in dilapidated shacks or slums, impoverished, with high rates of unemployment (Vine, 2004; Lunn, 2012). In the context of post-war decolonialization and decline of British power, the US stepped in (Bezboruah, 1977) and pursued a more discreet form of dominance and exploitation (Mitchell and Schoeffel, 2002). To ensure its economic control over various territories, the US would use “periodic displays of military might . . . within the rules of an economic system most favorable to the United States” (Vine, 2004, p.128). Diego Garcia was one of the US strategic security interests. The islands were a prime location to control critical sea lines of communication – essential for international trade. It served growing US corporate interests in the region and America’s dependence on oil (Bowman and Lefebvre, 1985; Sick, 1983; Larus, 1985). At the same time, the creation of the UN and new international norms led to broad social change. Earlier standards of exploitation by colonial powers were no longer accepted. The commercial needs of established European and US interests had to be pursued in different ways. During this period of [legitimate] means – [state] ends discrepancies, the search for alternative avenues to achieve economic dominance resulted in a new form of imperialism. In this case, the illegitimate means used by powerful state actors included recolonizing a territory (from Mauritius to BIOT) and dislocating an indigenous population in pursuit of their economic objectives. This arrangement violated the new normative order. The circumvention was deliberate, as indicated by the signing of an Exchange of Notes rather than a US–UK treaty (Allen, 2008) and by a “fibbing policy” that repeatedly assured the US Congress and UK Parliament that the island had no permanent residents (Winchester, 2001). Depopulation of Diego Garcia was demanded largely to ensure that no emerging independent state could place restrictions on the use of the military base (Bezboruah, 1977). The UK was a willing accomplice, guaranteeing the removal of the Chagossians from Diego Garcia and neighboring islands (Vine, 2004). In addition to their eviction, Chagossians have been banned from visiting Chagos (Bancoult v. Mcnamara, 2002). The forced eviction of the Chagossians from their homeland is a state crime defined as “acts/actions or inaction/omissions committed by government agencies or caused by public policies whose victims suffer harm as a result of social, political, and economic injustice, racial, sexual, and cultural discrimination and abuse of political and/or economic crime” (Barak, 2011, p. 36). Colonialism is replete with examples of oppression or repression by powerful states over large populations. The UK and US act in the Chagos Archipelago is misconduct similar to 114

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conventional offenses that appear regularly in local media. The difference with the Diego Garcia crimes is that they are downplayed, ignored, or denied by powerful state actors. For years, the British Foreign Office and High Commission discounted the living conditions and poverty of the Chagossians, arguing that the responsibility lies with the Mauritian government. The forced eviction was rationalized initially only by those involved directly but later by governments as a whole, in the name of defense and economic needs. Between the mid-1960s to 1974, three British prime ministers and 13 cabinet ministers had personal knowledge of the facts but none raised an objection (Martin and Pilger, 2004). Following a petition by the UK government, the Law Lords ruled in 2008 that due to the current state of uncertainty (i.e., the post 9/11 climate) the security concerns of the UK and its ally, the US, were of paramount importance (Lunn, 2012). The compensation paid to the Chagossians served as another official excuse. In the 1970s £650,000 was paid to the government of Mauritius to assist in resettlement (Lunn, 2012), and in the 1980s in settlement of a lawsuit £4 million was paid to the Mauritius government in full and final settlement of any Chagossian claims and also included a renunciation to return to Chagos (The Chagos Islanders, 2012). In that same case the Mauritius government added £1 millionworth of land for the Chagossians. The first payment only trickled down to the migrants in small amounts five to ten years after the forced eviction (Vine, 2004). The second payment was distributed to 1344 Chagossians in Mauritius who received £2976 each. No payments were made to Chagossians in Seychelles. Another rationalization has been that Chagossians are integrated in Mauritius and Seychelles, and any repatriation would involve further harm to the group (Martin and Pilger, 2004). It was also argued that the islands cannot sustain the return of Chagossians due to environmental problems. This was based on a feasibility of resettlement study commissioned by the UK government, which found that the eviction of Chagossians was unlawful and that they had the right of abode in the Island, except for Diego Garcia (Bancoult 1, 2000). The findings of the preliminary report in 2000 suggested that there were no obvious reasons why Peros Banhos and Salomon Islands could not be resettled. However, the second part of the report released in 2002 suggested that it would be precarious and expensive. Thus, new Orders were issued in 2004 prohibiting the repatriation of the islanders (Allen, 2008). Yet another study, commissioned by the UK Chagossian Support Association and funded by the Joseph Rowntree Reform Trust, found that resettlement is possible and would require an initial investment of £25 million over the first five years, a sum that is spent yearly on other British Overseas Territories, including St. Helena, Monserrat, and the Falkland Islands (Allen, 2008). Today it is estimated that between 3000 and 5000 US troops and civilians live on Diego Garcia (Vine, 2009), where the US navy has described the living conditions as “outstanding” (Pilger, 2004). One final excuse was that some Chagossians signed a document to renounce their right to ever return to their homeland after the Bancoult 1 settlement. The legality of this has been disputed by Chagossians, who claim that they were not informed of the nature of the document that they were unable to read and put their thumbprint on it (Vine, 2009). These acts violate international and national law; they undermine the credibility and legitimacy of the UN and national bodies such as Congress and Parliament that prove unable and unwilling to deal with these crimes. There was no compelling pressure leading to the theft of the Chagossian nation. There was no security threat from the islanders. Rather, the Diego Garcia military base was part of a US strategy for global economic access without colonies (Vine, 2004; Smith, 2003), and later served bombing raids in Iraq and Afghanistan (Jones, 2011). The Chagossian experience is not unique. Indigenous populations have been evicted in Greenland, Puerto Rico, Marshall Islands, and Japan. The commission of such state crimes is a 115

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manifestation of and contributing factor to global dysnomie, where the enforcement of international laws becomes optional and discriminatory. This undercuts the legitimacy of the international system and creates a precedent used by leaders of other countries too. It normalizes state crime and brings about trends towards anomie, as the guiding force of international norms is diminished. Decolonialization, new human rights, and former colonies’ sovereignty clashed with the interests of [neo-]colonial powers, leading to failures and inconsistencies in the application of international standards and the selective application of national laws. These conflicts of interest continue to hamper justice and fair law enforcement as illustrated by recent cases lodged by Chagossians in the UK, US, and the European Court of Human Rights. All three attempts for an equitable outcome to the crimes of the past have been blocked. In the US, Olivier Bancoult brought a case against former employees of the Department of State and Department of Defense for forced relocation, racial discrimination, torture, and cruel, inhuman and degrading treatment (Bancoult v. Mcnamara, 2002). The US District Court of Columbia dismissed the motion on procedural grounds, stating that federal officers and employees have immunity for any negligent or wrongful acts or omissions while acting within the scope of their employment (under the Westfall Act 1988). In addition the court stated that the cause brought was outside its subject matter jurisdiction and falls under the political question doctrine (Bancoult v. Mcnamara, 2002). In the United Kingdom, initially Olivier Bancoult had a success in the Court of Appeals, stating that the Order in Council preventing the islanders from returning was unlawful and an abuse of power. The government petitioned the Law Lords, who in 2008 overruled the decision, stating that “the government was entitled to legislate for a colony in the security interest of the United Kingdom” (Lunn, 2012, p. 7). This, despite article 73 of the UN Charter that obliges a colonial government like the UK to obey its “sacred trust” to protect the human rights of its people, which includes indigenous people of its colonies who are considered British citizens. Instead, the 2008 decision reinstated the 2004 Orders in Council banning the islanders’ return. The European Court of Human Rights (ECHR) case was also decided on a procedural matter. The decision was that the Convention for the Protection of Human Rights and Fundamental Freedoms did not apply to BIOT. Although the UK had made a declaration that Mauritius was a territory to which the Convention applies, at the time that the UK ratified the right to individual petition (in 1966), the Chagos Islands were no longer part of Mauritius. No such declaration has been made for BIOT. In effect, the applicability of human rights law was deemed to be dependent on the notification by a colonial power, thereby suggesting that a colonial power decides which colonies have human rights and which do not. Thus, even though several laws deem a group’s forced eviction illegal, the rules were not enforced when cases came before national or international courts. The notion that a federal court (as in the US case) will not question a foreign policy decision of the executive branch illustrates a major handicap to the prosecution of state crime. Both the UK and the ECHR have interpreted the respective laws within the confines of state sovereignty and existing power relations, rather than in the spirit of universal human rights. In 2010 the UK established a Marine Protection Area (MPA) around BIOT, with the exception of Diego Garcia. The conservation area prohibits commercial fishing and includes a no-take marine reserve. The decision was made without consultation with the Chagossians (Lunn, 2012). A Wikileak cable shows that one of the main reasons for the MPAs around BIOT was to bar any future Chagossian resettlement on the islands (Jones, 2011). Currently, Mauritius is pursuing a case through the Permanent Court of Arbitration against the UK challenging its power to 116

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establish an MPA around the Chagos Archipelago (The Republic of Mauritius v. The United Kingdom of Great Britain and Northern Ireland). Finally, the internal dynamics, particularly in the UK, reveal contradictory views among the courts, the executive, and special interest groups (mainly Chagossian and human rights groups) when dealing with the BIOT. National-level civic governance was powerless and ineffective in preventing and repairing the harms caused by state crimes. The case shows that civil society is helpless in the face of government misconduct and unable to remedy an old crime – clearly some countries require a democratization of democracy (Giddens, 2003). The UK government had the duty to protect the rights of all of its citizens, including Chagossians, but this was trumped by perceived needs of a colonial power that abused its control over a former colony.

Conclusion and implications At the theoretical level, this chapter found the GAT framework helpful in two cases of serious transnational misconduct. GAT suggests that globalization and neoliberalism are conducive to processes leading to anomie, dysnomie, and serious crime. This occurs because of discrepancies in economy, politics, culture, and law that are multiplied, made more palpable and criminogenic. It also occurs because of deliberate state violations and lack of enforcement of domestic and international laws. The process of globalization provides opportunities and motivations for deviance by and against nation-states as it simultaneously contributes to breaking down state apparatus for controlling and preventing crime. Governability is affected by neoliberal policies that fuel wealth and power inequalities, undercut normative standards and control mechanisms, and shrink welfare safety nets. These processes produce problems and pressures for individuals and groups, the solutions to which are more likely to be deviant. Deviance is neutralized and, when successful and allowed to continue unabated, becomes normative for others in society, even to those who do not endure the same pressures. As deviance becomes normalized, governability is further undermined and weakened. Large populations become vulnerable to both crime and exploitation by powerful government and corporate actors. These two case studies have illustrated the externalities of neo-liberal globalization. Piracy, smuggling, terrorism, and continuing dysnomie in Somalia are intimately connected with governmental and private actors from many countries. Illegal and unreported overfishing by foreign fleets, unconscionable dumping of toxic waste, military covert and overt operations by the US and Ethiopia, ill-conceived Western counter-terrorism measures, outsourcing of government functions to private companies, foreign aid interventions that ignored and disrupted local control efforts and civic governance, and unsanctioned crimes committed against Somalis are all part of the picture. In sum, neoliberal globalization processes are conducive to the massive victimization of innocent parties not only in Somalia and its Diaspora but also the entire ethnic group of Chagossians. Powerful states dispossessed them, declared their land as ‘unpopulated’, deprived them of human rights, silenced their voices, and frustrated their efforts for reparation and justice for decades in national and international courts. When the ECHR refers to “the callous and shameful treatment” of Chagossians, it confirms that they were “expelled from their homes” on the islands, and recognizes “the hardships which immediately flowed from that” (The Chagos Islanders v. The United Kingdom, 2012, p. 24) before declaring itself unable to repair the harms, the effects of a dysnomie are evident. These cases have indicated that the governance challenge at hand includes the capture or manipulation of international organizations and the biased, inconsistent, and wanting application 117

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of international and national standards. Together with the resulting impunity of Perpetrators of horrendous crimes and de facto rewards for gross misconduct, which weakens the legitimacy of global institutions and norms. Global dysnomie, though not inevitable, seems to be growing. Scholars and policy analysts should focus on debunking neoliberal globalism as a means of international consensus building, and assist in the development of home-grown initiatives and good civic governance. The case studies expose double standards and inexcusable abuse of power. Investigative and critical journalism is thus necessary. It is unacceptable that the globalized media allows the Diego Garcia theft and the wanting foreign interventions in Somalia either to be kept out of the news or covered superficially with partial truths and out of context. The awareness-raising task is also a top priority for scholars who can establish the facts, generate original data, and produce empirical analysis of the externalities of neoliberal globalization leading to pragmatic and sustainable salutions. Evidence-based debates on these issues should hopefully promote genuine political will for change, bring about more informed lawmaking and enforcement, increase the effectiveness of humanitarian aid, technical assistance facilitate the promotion of local and better governance, increase security, and boost economic growth. Scholars have a role in finding a better and more sustainable way of connecting the local with the global in the framework of international norms that are more consistently and fairly applied.

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Cases Bancoult v. McNamara. 227 F. Supp. 2d 144 – Dist. Court, Dist. of Columbia, 2002. Chagos Islanders v. The United Kingdom, no. 35622/04 ECHR 2012. Available on the European Court of Human Rights website: www.hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-115714. R (Bancoult) v. Secretary of State for Foreign and Commonwealth Affairs (No. 1) [2000] EWHC Admin 413(“Bancoult 1”). R (Bancoult) v. Secretary of State of Foreign and Commonwealth Affairs (No. 2) [2006] EWHC 1038 (“Bancoult 2”). The Republic of Mauritius v. The United Kingdom of Great Britain and Northern Ireland. Available on: www.pca-cpa.org/showpage.asp?pag_id=1429.

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7 Truth, justice and the Walmart Way Consequences of a retailing behemoth Lloyd Klein and Steve Lang

The retailing revolution was predicated on maximized profits through the control of manufacturing, distribution, and consumption. Walmart was an important force in the transformation of the original retailing revolution. Walmart’s business model emphasized enhanced earnings through cost cutting in all aspects of manufacturing and retailing. Gupta (2013) documents that Walmart is responsible for 13 percent of the US$2.35 trillion United States economic development while 140 million Americans shop at Walmart and the retailing giant employs 1 percent of the American workforce. We take a close look at Walmart, and other such corporate retailing businesses, and spotlight this business process and its ultimate consequences on workers. But our wider goal is to develop a larger and more important analysis of the how Walmart and similar businesses exploit developing countries for enhanced corporate profits. Bypassing environmental standards, creating dangerous manufacturing conditions, and subverting workers’ rights to form protective unions, these industrial behemoths use foreign nations as convenient bases for importing cheaply manufactured goods to the United States. Neoliberalism sustains the immense political and economic power employed by the corporate sector. Cooperation between corporations and governmental structures enable corporate entities to negotiate favorable terms on retail employee compensation, lower costs associated with trade exports from developing countries, and control international manufacturing subsidiaries producing retail goods in markets outside the United States. In essence, there was an increased reliance on outsourcing the production of retail goods starting in the 1970s and continuing to the present day. The global flow was increasingly centered offshore and in developing nations characterized by lower labor costs and minimal regulatory constraints. Over time, calculated business decisions formulated by corporate interests exerted a significant impact on employment, dissemination of goods and services, and the overall well-being of the immediate area where the particular business manages its retail or service operations. Consideration of corporate profitability under the standard business model is a leading factor in the role of corporate retail outlets. The overall impact of retail practices serves to enhance the lives of community residents or inversely create a whole new set of latent problems unforeseen in the community planning process enabling establishment of that business. The “Walmart Effect” emerged when neoliberal arrangements enabled Walmart and other retailing firms to pursue outsourcing trends favoring production overseas, control over employee compensation, and the 121

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ability to control the workplace through preventing unionization and luring customers into their stores with promises of “low prices.” How did this larger process evolve to the point that we can understand the impact of neoliberal corporate-governmental processes favoring Walmart and other retail corporations? An analysis of several different historical periods and retail business innovations help us understand the evolution of Walmart and the company’s contemporary corporate practices. There was a time in the history of American manufacturing when domestic factories would hire workers assigned to the job of producing a litany of goods ranging from household appliances to automobiles, and actually supply stores with the produced goods for the intended purposes of consumer acquisition and consumption. The end result was a product produced in America for consumer purchase and use. In addition, this process was instrumental in the support of the retail establishments offering the product and the strengthening of the American economy through job creation and the collection of taxes on business profits. The economic viability of the early retail stores was subsequently impacted by the increase in franchises such as Woolworth and other stores collected into a centralized mall or strip mall space. These larger retail firms with a national (and subsequent international base) came to dominate the landscape in many urban and suburban areas. Many of these mall structures were anchored by major department stores selling a wide range of products (Klein, 1999). Walmart was created with Sam Walton’s expansion of a small 5 and 10 cent store into a department store with a focus as a discount outlet. Walmart subsequently expanded throughout the southern and Midwestern regions of the United States. The expanded Walmart stores and the subsequent Super Walmart centers offering more products and additional services impacted local business the same as department stores and the establishment of localized malls or strip malls. Small business could not compete on the same price level and still maintain a profit. Thus, many locally based stores did cease their business operations and leave the main streets in urban areas and towns throughout the United States (Lichtenstein, 2009). The catalog business relying on mail and phone orders in department stores such as J.C. Penney and Sears, Roebuck, and Company continued to thrive for a while. But the retail landscape was clearly changing. Similar retailing outlets such as Kmart, Target, Family Dollar, and other such franchise outlets appropriated the business model created by Sam Walton. The other businesses offered the same retail goods and negated the need to order most retail merchandise through catalogs. In addition, the competition for profits led to conspicuous corporate strategies to reduce the cost associated with the manufacturing and retailing of consumer goods. The reduced factory wages in developing nations and inattention to preserving basic protective measures for the health of the workers would have significant consequences for the labor force workers within the international manufacturing sector. In addition, low wages and lack of benefits paid to retail workers selling the foreign goods in domestic US retail stores had an impact on the everyday lives of the employees.

The retailing revolution and consequences of international growth The retailing revolution was strongly dependent upon outsourcing. As Friedman (2005) observed, outsourcing involved the displacement of labor from American factories into various manufacturing locations around the globe. Goods were produced for cheaper costs and exported globally. The developing trend of outsourced foreign manufacturing production reversed the “made in America” model. As a result of these manufacturing changes, the extent of exports was significantly higher than the total volume of imports coming into the United States. According to the Economic Policy Institute (2007), the total US trade deficit with China reached $235 billion in 122

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2006. Between 2001 and 2006, this growing deficit eliminated 1.8 million US jobs. The world’s biggest retailer, US-based Walmart was responsible for $27 billion in US imports from China in 2006 and 11 percent of the growth of the total US trade deficit with China between 2001 and 2006. Walmart’s trade deficit with China alone eliminated nearly 200,000 US jobs during this period. The focus on profit margins and the resultant impact on American economic growth served to maintain Walmart’s retailing profits while driving the continued expansion of retail outlets. Increasingly, manufactured goods are produced at lower cost in factories emulating the traditional sweatshop conditions not seen worldwide since the advent of the Industrial Revolution, with greater retail profits resulting. Consumer goods produced in disparate places such as Bangladesh, China, India, and other developing countries were imported for sale into Western countries for retail distribution and the generation of profits. It must be emphasized that distribution is spread out among a myriad number of retail outlets. Whereas many critics attribute these processes to the seemingly deleterious influence of Walmart, we must also include the participation of retailing establishments such as KMart, Target, Best Buy, and the lower end Family Dollar/Dollar General stores. These establishments serve to actively engage and participate in the ongoing exploitation of workers and the “race to the bottom.” The desire for decreased costs and enhanced profits, while selling goods at relatively inexpensive prices, was achieved through finding less expensive labor markets (Lichtenstein, 2009). The chosen labor markets in developing countries may be categorized according to two factors: (1) Walmart’s direct subcontracting of manufacturing with China and other countries; and (2) the pressure placed upon suppliers to subcontract on their own in order to meet the pricing levels demanded by Walmart executives. In the first case, Walmart works directly with other foreign entities to procure factories and subcontracted laborers paid to produce goods at the lowest possible prices. The result is retail goods sold in the United States and throughout the world (Gupta, 2013). It should be noted that Apple and other major corporations are also involved in the same process. In the second case, Walmart contracts with suppliers for specific products with the stipulation that the products must be manufactured at low cost. The only way to attain this standard is the relocation of manufacturing to developing regions where the suppliers subcontract with local factories (Greenwald, 2005). The runaway factory in its relocation to places emphasizing deregulation of labor laws, environmental standards, and harmful working conditions was a 1960s development suiting the needs of Walmart and other retailing businesses (Kravis and Lipsey, 1982). Corporate manufacturing was summarily shifted to the southern United States, followed by Mexico, and finally to Japan, China, India, Bangladesh, and numerous other developing countries. The aforementioned race to the bottom was facilitated when retailing outlets operating prior to the establishment of Walmart and their retail competition utilized global regions wherein exploitative work conditions could serve to maximize corporate profits. Workers in China, Japan, Bangladesh, and other places were paid approximately 15 cents per hour for the sewing of garments, manufacturing of everyday consumer items, and most items retailing in the various American discount stores. Such practices encouraged Walmart’s global expansion and the active participation of their competitors. There are two other factors important in the understanding of how international growth facilitated this invidious and exploitative process. The first factor is a focus on the basic business model justifying the relocation of manufacturing in areas conducive to lessened labor and production costs. The “Walmart Way” was predicated upon low prices and an assured high level of profitability for the retailing giant (Lichtenstein, 2009). The outsourcing of production to international locations offered significant advantages, including lowering the costs of production, and the process was completed with the exploitive practices imposed upon retail staff in stores 123

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across the United States and around the world (Massengill, 2013). Without publicly accounting for the fact that cost savings came from the underpaid workers producing these goods and the low wages paid to “Walmart Associates,” Walmart was able to advertise its low prices. The arrangements for these overseas factories were negotiated between Walmart (and other retailing outlets) and the governments of numerous countries around the globe. Workers in places like China are assigned living spaces close to the factory. This is not unlike production in the United States where workers in locations such as outside Chicago lived in towns created by factory owners (Lindsey, 1943). Overseas governments ensured that workers followed basic procedures and continued the operation of the factory assembly processes. Managers were trained and sent from Walmart Headquarters in Bentonville, Arkansas. Trained managerial personnel ensured that the process of procuring laborers and the continued manufacturing process remained operational. In addition, local business professionals were trained to work alongside the corporate executives in the daily functioning of the factory system.

Walmart and the “China Syndrome” The advent of the 1960s and the expansion of domestic companies into transnational entities saw a great opportunity for generating corporate profits. Numerous corporations moving overseas to places like Japan set the model in place. The same formula of low wages and cheaper operating costs was consistent for the major electronics corporations producing and retailing consumer goods. The runaway sweatshop became more common and accepted as a business model conducive to facilitating the mass production of goods at decidedly lower costs. Imports into the United States began inching up at the expense of exports to foreign markets (Branson et al., 1980). The Walmart model was predicated upon building a loyal consumer base through the continued practice of providing lower consumer prices. Such an outcome could not be attained if the same production process was contained within the United States. Walmart and other retailing corporations were facing the cost associated with constructing factories, paying workers’ salaries at union levels in states where labor was organized, costs associated with environmental control standards, and the expense associated with materials used in the manufacture of consumer goods. These problems, as previously noted, could be circumvented through expansion into a region of the world where cheap labor and a laissez-faire attitude toward regulation of labor and manufacturing processes was accepted. The continued expansion of capital flow was predicated upon neoliberal cooperation in giving Walmart autonomy over their labor processes and economic model. Walmart and other retailing companies entered this continually expanding transnational scene with the establishment of manufacturing facilities in China (Chan, 2011). Several factors are essentially associated with this global expansion. Walmart’s intention was clearly to produce more consumer goods at a lower cost utilizing the economic advantages of lower wages, nonunionization, non-regulation of working and environmental conditions, and the facilitation of exports into America through negotiated trade agreements between China and the United States. Walmart was also avoiding taxation on profits generated overseas and benefiting from the lower import fees assessed through long-standing trade agreements. Such a scenario has been depicted in several noteworthy documentaries on Walmart and its strategy to establish manufacturing centers in China (Greenwald, 2005; PBS, 2011). According to information in both documentaries, Walmart established factories in China that summarily underpaid workers, subverted adequate working conditions, and negotiated substantially lower payments to the Chinese government than would be the case if they paid corporate taxes in America. Chinese workers were paid as little as 15 cents per hour and worked six days a week 124

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under sweatshop conditions. Chinese workers would produce clothing, children’s toys, and other goods purchased by consumers in Walmart stores throughout the United States. Most of these workers were brought into the urban-based factories from their original residence on farms throughout the country. The workers would have to pay for a small apartment out of their own low wages whether they lived in the assigned space or not. Walmart was not the owner of the factories and not responsible for the recruitment of the Chinese workers. Walmart (and other corporations maintaining similar practices) subcontracted with business agents representing Chinese manufacturing entities to have their products produced in this manner and exported to the United States for retail sales. These business agents negotiated deals with factories for the manufacture of the desired products. The Chinese factory operators were responsible for the day-to-day operation of the manufacturing process. Walmart’s overall participation was focused on the training and monitoring of the ongoing factory operations. Walmart, as the parent company, would bring in an executive to deal with any difficult situations arising from employee issues or political matters related to the Chinese government. In addition, Walmart maintained support from the United States government attaining high-level intervention in specific situations demanding political intervention with the Chinese government. The actual working conditions in the Chinese factories were dangerous to the welfare of the workers. Workers were utilizing hazardous chemicals, dealing with extreme heat, and overcrowded factory floors. This situation is not unlike similar conditions during the 1900s wherein American workers were beset by similar sweatshop conditions. A parallel may be drawn to the Triangle Shirtwaist Factory fire in 1912 with its similarity in the exploitation of factory workers (Drehle, 2003). The dangerous conditions led to an infamous fire that claimed the lives of over 100 workers who were either trapped in the structure or forced to jump from windows. We have seen such occurrences in both China and Bangladesh (the latter country’s issues are detailed in the next section). Some recent events within the past few years have included fires in a Chinese factory engaged in the production of Apple’s popular iPhones. The impact of this incident included decidedly negative publicity for Apple and a major delay in the shipment of phones to consumers ordering the devices (Clifford and Greenhouse, 2013).

Bangladesh and the rise of the labor backlash against Walmart The ever-expanding flight of global capital into other developing nations produced similar impacts. Walmart, Sears, and other retailing outlets reached out to Bangladesh as a source of products produced by a low-paid labor force in dangerous or unhealthy manufacturing conditions. Just as in China and India, Walmart and other retailers contracted with a factory to produce clothing. The factory was contained in an aging building structure with the usual lack of safe working conditions and adequate compensation paid to the workers. Events occurring in Bangladesh underscored the rather hazardous and exploiting situation for workers in other parts of the world. We focus on two serious factory accidents occurring two years apart. The Tazreen Fashions factory fire occurred on November 24, 2012 with at least 112 workers killed and an estimated 150 injured. A fire ravaged the nine-storey Tazreen Fashions factory located in Ashulia, Dhaka, Bangladesh. Five of the 14 production lines were making Walmart clothing and managers failed to clear the factory for a fire drill due to a tight production deadline. Just as in the Triangle Shirtwaist Factory fire, workers attempting to exit the building upon hearing the smoke alarm were blocked from leaving due to locked collapsible gates. The workers were sent back to their workstations and told that there wasn’t a fire. Two years later, the Rana Plaza building collapse occurred and was considered the deadliest catastrophe in the history 125

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of the global garment industry. Rana Plaza was an eight-storey building located in Savar, Bangladesh. It consisted of five garment factories and employed approximately 5400 people engaged in producing apparel for many brands. On April 23, 2013, major cracks were apparent in the walls of the building. However, managers required that workers return to work the following day. Workers were told that the building had been repaired. Over 3000 garment workers were inside the building when it collapsed that morning. At least 1138 garment workers were killed in the collapse with approximately 2500 injured (Bajaj, 2012). Butler (2013) reported that one in six clothing factories used by Walmart in Bangladesh had failed a safety review stressing structural, fire, and electrical safety issues in the months following the collapse of the Rana Plaza building. One factory was so unsafe that it had to be shut down and another had an illegal eighth floor. Construction was temporarily halted at two factories. Bajaj (2012) reported that Walmart and a number of leading retail firms failed to compensate the families of more than 1200 workers. The international Labor Organization worked with Bangladeshi Officials, labor groups, and several retailers in generating a compensation fund for the families of the 1200 workers who perished in the disaster and the more than 1800 workers who were injured. Several of the European retailers cooperated in the effort but Walmart, Sears, Children’s Place, and other retailers were unresponsive to the plight of the deceased or injured workers. It was revealed that Walmart had contracted for at least 55 percent of the factory production. Rajan Kamalanathan, Walmart’s vice-president for ethical sourcing, stated that Walmart did not intend to participate in the compensation funds. He said that “there was no production for Walmart in Rana Plaza at that time of the tragedy” and that the Walmart-related production at Tazreen was unauthorized (Greenhouse, 2013). Walmart, The Children’s Place, and Sears all declined to participate in the compensation fund. Sears claimed that an unauthorized contractor had been producing on its behalf in Tarzeen. Walmart, Sears, and 24 other Canadian companies joined in an alliance to upgrade factory safety in Bangladesh. Greenhouse (2013) further reports that some industry analysts claim that Walmart, Sears, and other American retailers are “reluctant to join the compensation efforts because they fear it could be seen as an admission of wrongdoing, perhaps leading to legal liability.” Greenhouse (2013) reported on speculation from some critics that American corporations fear looking hypocritical if they contribute to a compensation fund after asserting that any production done for them in the factories was unauthorized. There is an interesting contradiction between Walmart’s claims and the actual production agreement with Bangladesh factories. Following the factory collapse in 2013, Walmart released a list of more than 200 factories that had been banned from producing its merchandise due to “serious or repeated safety problems, labor violation or unauthorized subcontracting” (Grabell, 2013). According to reports, at least two of the factories on the Walmart list continued to send massive shipments of sportswear and girls’ dresses to Walmart stores during the months following the factory disaster. The pattern is not confined to the period following the Rana Plaza disaster. Information conveyed by Propublica documents that Walmart was implicated in the same ruse going back several years. In June 2011, Walmart claimed to have banned the Bangladeshi garment factory Mars Apparels from producing goods for their stores. However, documentation from US Customs records and Mars owners reveals that Mars shipped tons of sports bras to Walmart. The Mars Apparel factory arrangement continued two years after Walmart claimed to have terminated business with the factory. Another Bangladeshi clothing maker, Simco Dresses, was officially blacklisted in January 2013 but continued shipping to Walmart Canada into March 2013. A Walmart spokesman claimed that the Mars shipments were permitted because of confusion over whether Walmart’s standards applied. Mars was producing garments with a Fruit of the Loom Label. Thus, it was not clear whether Mars needed to meet Walmart’s standards or Fruit of the Loom’s. 126

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Grabell (2013) further observes that the shipments raise questions about Walmart’s ability to monitor its worldwide supply chain and questions its efforts to ensure decent working conditions within factories situated in low-wage countries. There was another telling factor in this situation. Walmart’s power as a major player in the retailing sectors becomes significant. Bangladeshi factory owners claimed that Walmart’s approach of publishing a blacklist with minimal details might unfairly harm family businesses. Perhaps the best way to sum up Walmart’s controlling role may be attributable to Dan Schlademan, a United Food and Commercial Workers leader charged with directing the union’s Making Change at Walmart campaign, who stated: “It’s either a question of Walmart just telling people what they want to hear or it’s that Walmart has created a supply chain system that they have no control over.” The aftermath of these factory disasters led to a call for reform from the International Labor Organization (ILO). Several European retail firms signed a binding pact pledging to maintain fire and safety codes within the Bangladeshi factories. As detailed by the Huffington Post, “ that contract, known as the Accord on Fire and Building Safety in Bangladesh, will require Western brands to underwrite safety improvements in dangerous factories, with financial commitments established on a sliding scale according to how much business each company has in the country” (Huffington Post, 2013). However, Walmart and a number of American retailers refused to participate in this agreement. Walmart announced that it planned to develop its own safety program to address the dangerous working conditions in factories in Bangladesh. Walmart would conduct “in-depth safety inspections” at every factory facility in Bangladesh where retail products for the company were produced. Walmart pledged to make the reviews public within six months while instituting new standards in worker safety. Walmart’s decision came after seven major retail brands agreed to work together and sign a strong, legally binding safety accord with sanctions facing companies that failed to live up to its standards. Reaction came from Scott Nova, Director of the Worker Rights Consortium, a nonprofit organization that strongly backed the safety accord. Nova argued that the program proposed by Walmart was not “meaningfully different from previous, non-binding pledges to address worker safety concerns. We are past the point where non-binding self-regulatory initiatives from Walmart is going to fool anyone” (Huffington Post, 2013). Walmart was now at a crossroads in their relationship with workers and the union movement.

Walmart and the battle over unionization The factory disasters in Bangladesh emphasized Walmart’s treatment of workers and their corporate opposition to unions. The closest that Walmart came to a concession with worker protection was a global pact with Gap, Target, and other American retail stores. The global pact called for inspecting clothing factories within the next nine months and concentrating on renovation of those factories. Workers would be paid while the factory remained closed. This North American alliance would offer financial assistance to workers temporarily displaced by factory improvements or who lose their jobs when factories are closed for safety reasons. The troubling news, according to Scott Nova, was that the North American alliance did not properly empower workers. The global accord, on the other hand, gave worker representatives the power to initiate enforcement proceedings against companies that fail to comply with their obligations. With the involvement of local unions, factory workers would be informed of the potential danger of a factory and retain their right to refuse entry into potentially unsafe buildings. The global accord also established a board made up of labor and retail representatives that would oversee dispute resolutions that would be enforceable in the courts of the country where the company is based (D’Innocenzio, 2013). 127

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The intent of the North American alliance, as contrasted with the global alliance, was to block or minimize the presence of unions. Walmart had a long history opposing and fighting unions. On the domestic front, Walmart was staunchly against the establishment of unions in their retail stores from the beginning of their operations. Sam Walton never had to consider the presence or impact of unions given the original 5 and 10 cent store, and the early Walmart retailing operations were located in right-to-work states where unions were virtually non-existent. The issue of unions would eventually emerge when Walmart tried to expand into states or countries where worker organization was commonplace. Ehrenreich (2011) documents how Walmart vehemently opposed unions and even went so far as to monitor interactions between employees. Discussions within the store, break room, and even the parking lot were noted. Labor union supporters would be fired and strong dictums handed down sanctioning such behavior among other employees. Walmart was not reticent to close a store or refuse to establish a retail outlet rather than permitting a union to exist. Such is the case in Chicago, New York City, and even as far away as Germany. The labor situation in Chicago and New York rested on Walmart’s request to open stores in the urban area. However, Walmart’s initiative was thwarted by a long-standing rejection of labor unions in any of their retail outlets. In the case of New York City, Walmart’s proposal to open a retail store in Brooklyn was defeated in a hearing conducted by the NYC Council. Testimony focused on Walmart’s anti-labor practices and the practice of low wages extended to the “associates” employed to serve customers in the various stores. Ironically, Charles Barron, a New York City politician, suggested that he was engaged in negotiating an agreement with Kmart for retail expansion (Harris, 2011). The same process applied in Chicago and Washington, DC. In the case of Chicago, there was an eventual agreement where Walmart did open some stores in the area. The Washington, DC situation was somewhat more complex. The original proposal to permit Walmart access to open retailing outlets was dependent upon an ongoing proposal to raise the minimum wage. Walmart opposed this practice and was ready to leave the area. However, the mayor vetoed the minimum wage proposal and Walmart did open some stores in the area (Davis and Debonis, 2013). On the international front, Walmart has been unsuccessful in opening stores in South Korea, Russia, and India and took action to close a retail outlet in Germany (Berfield, 2013). In the case of Russia, Walmart wanted to buy a local company but could not come to an agreement with regard to price. Walmart encountered problems in India when the Indian government insisted on applying a requirement that foreign retailers source 30 percent of the products they sell from small and medium-sized Indian businesses. The Indian government was investigating allegations that Walmart violated rules governing foreign investment in the retail industry, and that Walmart was conducting an internal probe on possible violations of US anti-corruption laws. In the case of Germany and South Korea, after opening stores in both countries, Walmart closed them in 2006. In South Korea, Walmart also stuck to its American marketing strategies, concentrating on everything from electronics to clothing and not on what South Koreans go to big markets for: food and beverages. Germany was a more complex issue. A BusinessWeek article claims that “Germans didn’t like Walmart employees handling their groceries at the check-out line. Male customers thought the smiling clerks were flirting. And many Europeans prefer to shop daily at local markets.” Further, the Huffington Post (2011) pointed out that Walmart probably could not handle the pro-union culture of Germany. Prior to pulling out of Germany altogether in 2006, Walmart closed at least one store that was already unionized prior to the retail company’s takeover of the various German outlets. More recently, Walmart has seemingly realized the extent of international resistance to their retail practices. According to Bose and Rose (2014), Chinese consumers are reluctant to buy Walmart products due to concerns over their safety and authenticity. In business circumstances 128

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similar to those in Germany, consumers would rather shop at local retail stores and purchase brands that are familiar and “genuine.” Walmart’s business share in China dropped from 11.3 percent to 10.4 percent. As a result, Walmart will be closing 29 stores in China. These developments come as United States and European markets are declining due to increased competition and resistance to Walmart’s overall business practices.

Conclusions An assessment of Walmart and the resultant impact upon socio-economic change tells us much about the development of the retailing revolution and the globalization of transnational corporations. Walmart became a force unto itself, producing a significant impact upon the production sector, factory workers, and the consumer sector to which the goods were marketed and sold. There is a clear sense of control over these sectors, as the cost of production and the price of retail goods are interrelated. This would not normally be a serious issue given Adam Smith’s focus on laissez-faire economy and the natural adjustment of these processes. However, Walmart’s tight stranglehold over both production and consumption constituting a virtual monopoly served to raise a number of questions about corporate control. Thus, Walmart became an important economic force to be reckoned with by international communities, government entities, and the combination of factory workers and retail associates increasingly engaged in Walmart’s growing web of influence. An examination of Walmart and the resultant problems of factory worker exploitation, insufficient retail associate wages, environmental issues, and workplace conditions would not be complete without understanding the implications of a fundamental contradiction between the actions of Walmart internationally and domestically. There was the transnational Walmart engaged in the exploitation of workers and the resources of international entities. When Walmart would receive condemnation for these practices, the company reacted by ameliorating some of these conditions with improved wages and supervision. However, the same caring attitude did not seem to carry over to the retail side of the business back in the US where workers faced the same old restrictions on the ability to unionize and Walmart Associate wages were still low. Within their retail outlets, the result is a corporation concerned with public relations over the real implications of its domestic policies. What may we conclude from an overall analysis of Walmart and their employed corporate practices? Walmart is clearly a corporate behemoth and cannot be “leashed” by the various government entities. Their attitude is “my way or the highway.” They will close retail establishments if the economic situation goes against their retail model, either by municipal or governmental authorities rejecting the “Walmart Way” or in cases of workers organizing. In the case of the latter, workers will either be fired or disciplined and the entire retail business will be shuttered. In essence, Walmart’s stance enables us to revisit and reinvent the old adage once applied to General Motors: What’s good for Walmart is good for America and the world. Challenges to this assertion from labor organizations and grassroots groups (including Making Change at Walmart) indicate that the corporate ideology is not shared by entities outside Walmart’s self-contained corporate bubble. Consumers and concerned officials are responsible for responding to Walmart’s exploitative practices. Failure to do so leads us to conclude with the observation that “we have the enemy and they are us.” Questions from this examination emerge regarding the “Walmart Way” and the plight of American workers and the ongoing suppression of the union movement. Walmart, Kmart, and other business entities stress profits over wages and benefits provided to their retail associates. Walmart and other retail businesses are the latest in a long series of attacks on labor and 129

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the welfare of employed workers. The unionization movement in the manufacturing industry, which began in the early twentieth century in the US and peaked in the 1970s, began to seriously decline with outsourcing to and competition from abroad in the 1980s, and has been further eroded by the increasing number of businesses choosing to preclude workers’ rights and benefits. Walmart adopted a neoliberal model that was consistent with government officials who often overlook exploitative practices. The illogical ideological rationale: As a private business, Walmart was somehow to be exempted from adhering to the rights of their employees to form unions and could opt for a “right-to-work standard” precluding unions altogether. The case study in Germany and other places gives us a hint as to the presumptive power wielded by Walmart in both its domestic and international settings. Finally, some questions must also be framed regarding Walmart’s role in perpetuating the exploitation of workers in developing nations. The case studies in China and Bangladesh indicate the degree to which these policies would impact upon the balance of economic imports and exports. Ninety percent of American imports originate in China and the balance of trade strongly favors the Chinese business community. The larger implications of this economic situation strongly influence our budgetary interest payments to China and the ability to which we can balance the budget and achieve economic growth. This last point is beyond the purview of the current analysis offered in this chapter. However, it is important to realize that these relations in international trade have a significant impact upon the American economy.

References Bajaj, V. (2012) “Fatal Fire in Bangladesh Highlights the Danger Facing Garment Workers.” New York Times, November 25. Berfield, S. (2013) “Where Walmart Isn’t: Four Countries the Retailer Cannot Conquer.” Business Week, October 10. Bose, N. and Rose, A. (2014) “Walmart’s Chinese Syndrome a Symptom of International Woes.” Reuters, February 21. Branson, W., Giersch, H. and Peterson, P. (1980) “Trends in United States International Trade and Investment since World War II.” In The American Economy in Transition, edited by Martin Feldstein. Chicago, Ill: University of Chicago Press, pp. 183–274. Butler, S. (2013) “One in Six Walmart Factories in Bangladesh Fail Safety Review.” Guardian, November 13. Chan, A. (ed.) (2011) Walmart in China. New York: ILR Press. Clifford, S. and Greenhouse, S. (2013) “Fast and Flawed Inspections of Factories Abroad,” September 1, The New York Times at NYTimes.com. Available at: www.nytimes.com/2013/09/02/business/global/superficialvisits-and-trickery-undermine-foreign-factory-inspections.html?pagewanted=all&_r=0. D’Innocenzio, A. (2013) “Gap, Walmart, Target Agree to Factory Safety Pact.” San Jose Mercury News, July 10. Davis, A. and Debonis, M.D. (2013) “Walmart Opens First Two District Stores.” Washington Post, December 4. Drehle, D. (2003) Triangle: The Fire That Changed America. New York: Atlantic Monthly Press. Economic Policy Institute (2007) The Walmart Effect: Its Chinese Imports have Displaced nearly 200,000 U.S. Jobs. Robert S. Scott, June 25. Ehrenreich, B. (2011) Nickle and Dimed: On Not Making It in America. New York: Picador. Friedman, T. (2005) The World is Flat: A Brief History of the Twenty-First Century. New York: Ferrar, Straus, & Giroux. Grabell, M. (2013) “Walmart Accepted Clothing from Banned Bangladesh Factories.” ProPublica, June 12. Greenhouse, S. (2013) “U.S. Retailers Decline to aid Factory Victims in Bangladesh.” New York Times, November 25. Greenwald, R. (2005) The High Cost of Low Price. Robert Greenwald, Producer. California: Brave New Films. Gupta, A. (2013) “The Walmart Working Class.” Presentation at the New Left Forum and published in the Socialist Register, Vol. 50. Harris, E. (2011) “Wal-Mart Skips Council Hearing as Impact on Stores is Assailed.” New York Times, February 3. Huffington Post (2013) “Walmart’s Bangladesh Factory Inspection Standards to be Improved.” November 14. 130

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Klein, L. (1999) It’s in the Cards: Consumer Credit and the American Experience. New York: Praeger. Kravis, R.E. and Lipsey, R.E. (1982) “The Location of Overseas Production and Production for Export by U.S. Multinational Firms.” Journal of International Economics 12: 201–223. Lichtenstein, N. (2009a) The Retail Revolution: How Walmart Created a Brave New World of Business. New York: Metropolitan Books, Henry Holt & Company. Lichtenstein, N. (ed.) (2009b) Wal-Mart: The Face of Twenty-first Century Capitalism. New York: The New Press. Lindsey, A. (1943) The Pullman Strike: The Story of a Unique Experiment and of a Great Labor Upheaval. Chicago, Ill: Phoenix Books–University of Chicago Press. Macarey, D. (2011) “Why Did Walmart Leave Germany.” Huffington Post, August 29. Massengill, R. P. (2013) Wal-Mart Wars: Moral Populism in the Twenty-first Century. New York: State University of New York Press. Public Broadcasting System (2004) Is Walmart Good for America? Frontline Series.

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8 Human trafficking Examining global responses Marie Segrave and Sanja Milivojevic

Introduction In the 15 years since the Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children (hereinafter the Palermo Protocol; the Protocol) was opened for signature, security and crime prevails as the overarching paradigm that informs international, regional and national responses to human trafficking. There is a growing body of robust, critical scholarship that has interrogated the validity of the tsunami of counter-trafficking policy and legislation that followed in the wake of key international commitments in 2000. However, the urgency of countertrafficking efforts continues apace, with an ever-expanding network of counter-trafficking efforts operating independently and collaboratively across national and regional borders. The purpose of this chapter is to take stock of the counter-trafficking strategies that are in place and to consider the limits of conceptualising human trafficking as a crime, particularly in relation to its ability to adequately capture the various forms of gendered exploitation that occur in connection with the migration–labour nexus that impacts upon those least able to negotiate lawful migration and labour options in countries of transit or destination. Within the context of the political economy of globalised capital, featuring the celebration of the freedom of mobility and labour (related, of course, to markets, products, money, technologies, and certain groups of people), there is the often ignored and/or silenced, undesired and restricted. This may matter less to markets and products that are undesirable – for guns, drugs, money there is no issue of harm – but in the case of the impact upon restrictions on people (and their migration and labour) there is a growing recognition of the collateral damage of being classified as a global non-citizen. This chapter seeks to consider the burden of this damage and the intransience of human trafficking as the overarching justification for regulatory systems that claim to be in place to protect, identify and prevent victimisation and exploitation of the most vulnerable. As we argue, one of the most compelling analyses of counter-trafficking strategies recognises that they work in concert with other state initiatives that seek to shore up state power (often, in relation to human trafficking, in the name of state benevolence), as well as to disconnect state practices from the environments that sustain exploitative conditions. As non-government and government-led strategies effectively operationalise shared definitions, understandings and responses to human trafficking, the call to identify the conditions that sustain exploitation is increasingly drowned out. 132

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This chapter begins with a survey of counter-trafficking strategies at the international and regional level, offering some examples of the connection between these mechanisms and nationally implemented policies. It details the consistent elements of defining and responding to human trafficking, including the examination of how we assess the success of such initiatives. Indeed, as we will argue, it is in the measure of success that priorities and assumptions about how this practice/phenomenon is conceived are revealed. We then examine the alternative conceptualisations of human trafficking outside of this predominant agenda, namely human rights, pertaining to slavery, forced labour and gender discrimination. In this context we examine how we draw boundaries for naming and identifying exploitation and the consequence of this in relation to methodology and research. Finally, we argue that human trafficking remains a concept that is at once a crime which requires a legal response while also being a concept that endures within a morally impenetrable vacuum. The outcome of this is that critiques of broader state practices being heard in the debate are largely not acted upon, not least because in other areas of concern (border control, migration regulation within and at the border) state priorities are not negotiable. In this sense, despite early iterations of theorisations of globalisation and the loss of state power, we see instead the shoring up of power through the entangled exercise of border regulation, criminal justice and a narrowly defined state benevolence to victims of crime.

History: the boundaries of human trafficking historically and contemporaneously The historical and contemporary global, regional and national anti-trafficking frameworks rest on a conceptualisation of trafficking that link this practice to three key pillars: (transnational and/ or organised) crime, (commercial) sex and (undocumented) migration (Milivojevic and Pickering 2013; see also Weitzer 2014). Anti-trafficking interventions in both the Global North and Global South are developed, applied, validated and evaluated on assumptions (rather than evidence) that human trafficking is a crime that involves crossing borders, a crime largely located in the sex industry, and with clearly defined (ideal) offenders and victims (Milivojevic and Segrave 2012). Consequently, as others and we have established, trafficking is conceptualised as crime that needs to be policed, legislated, regulated and supressed through criminal justice measures deployed at the border and beyond (Segrave et al. 2009; Lee 2011; Weitzer 2014). These interventions, as will be demonstrated herein, leave little to no room for understanding the broader social context in which vulnerability of those who are silenced and restricted is created and enforced. In the crime-fighting narrative that dominates contemporary anti-trafficking frameworks, there is no consideration that root causes of exploitative practices and vulnerability of women and men negotiating the migration–labour nexus need to be captured and addressed as condicio sine qua non successful anti-trafficking interventions. What is missing is an acknowledgement that nation-state practices contribute to and enable exploitative and restricting conditions in the international labour market and global mobility more broadly. We will return to these concerns later in this chapter, following the outline of the historical development of traffickingas-a-crime anti-trafficking framework.

The Palermo Protocol and the Trafficking in Persons Report In the early 2000s, human trafficking was moved from the sphere of human rights to the sphere of international law within the context of transnational organised crime. This move reflected the transition of human trafficking, organised crime and migrant smuggling ‘from the margins into the mainstream of international political concern’ (Gallagher 2009: 790). It was widely 133

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reported that ruthless traffickers were profiting greatly from the trade, with guesstimates about the profit from the business varying from US$7 to 28 billion (Zhang 2009) and traffickers were depicted as ‘highly organised, extremely violent’, and as a perpetual threat ‘to law and order and national security’ (Galian 2000: 11; see also O’Brien 2013; Milivojevic and Pickering 2013). With increasing concerns regarding the threat of organised crime, permeable borders became the site of containment for individual nation-states. Consequently, trafficking ‘was not treated separately from the overall migration policy approach to intensify controls and repress illegal immigration’ and to limit the impacts and reach of organised crime (Apap et al. 2002: 7). These patterns were evident both within individual nation-states across wealthy nations such as Australia, but also within the context of growing regional powers vis-à-vis the European Union where the abolishment of internal borders was soon replaced with increasingly restrictive and punitive migration policies across Fortress Europe. Consistently these measures were justified by the need to prevent organised crime, including human trafficking rings, and to protect vulnerable women from the Global South (Apap et al. 2002; Andrijasevic 2003; Lee 2011). As Berman (2003: 39) has argued, the anti-trafficking rhetoric enabled ‘the complex circumstances of trafficking and other forms of gendered migration [to] function as a metonym for crime and an opportunity to intensify border control in the name of protecting citizens and women’. Restoring order at the border began to dominate policy and legislative frameworks in national, regional and international counter-trafficking efforts. Prioritising border policing, prosecution of traffickers and repatriation of victims emerged as fundamental policy responses, providing also the key measurements for success of anti-trafficking interventions (Segrave et al. 2009; Berman 2010). Motivated by the international political drive to address human trafficking, nation-states started pouring money into anti-trafficking programs, while a plethora of international and national governments’ agencies, NGOs, committees, commissions and academics began to engage with the issue (Kelly 2005; Anderson and Andrijasevic 2008; Zhang 2009). The culmination of this process was the Palermo Protocol, passed in November 2000 in Palermo, Italy. This document firmly located trafficking within the context of transnational organised crime, as the Protocol was passed as a supplementary protocol to the UN Convention against Transnational Organized Crime. Trafficking, according to the Protocol, is defined as a process consisting of ‘the recruitment, transportation, transfer, harbouring or receipt of persons’, by means of: the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability, or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. (UNODC 2004: 42) As Edwards (2007) and Gallagher (2009) have outlined, the Palermo Protocol is an instrument of international law. There is a detailed description and analysis of the Protocol in its final format that has followed its passing in 2000 (see Segrave 2014) with the primary conclusion being that the instrument is firmly focused on criminal justice, primarily prosecution and punishment of offenders, notwithstanding the articulated recognition within the Protocol of the human rights of victims. Back then, human trafficking was specifically and strategically located outside of the human rights regime and indeed it has been argued that this has been its greatest contribution: its location under the auspices of the UN Office on Drugs and Crime has been argued as enabling international, regional and national legal and policy reforms that are rarely seen in response to 134

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human rights instruments (see Gallagher 2009: 793). However, this remains the subject of debate. One key concern was and remains the depiction of human trafficking as primarily an issue of crime, specifically of organised crime, and the requisite legal response this supported. It is well-travelled ground to note the limitations of this framework – with an emphasis on targeting crime while other issues and priorities take a back seat, namely upholding the rights of victims (Agustin 2005; Kapur 2005; Berman 2003; Bumiller 2008). Importantly, an understanding of the complex conditions which give rise to human trafficking in its myriad forms is also sidelined (Edwards 2007; Segrave et al. 2009). Some argue that it is other existing human rights instruments that might better serve to respond more effectively or more specifically to human trafficking in its myriad variations (cf. Hathaway 2009). However, our primary interest is to point to the consequences of the dominant focus, driven by the Palermo Protocol’s logic of law and order. Before doing so we consider some boundaries and limitations of the Palermo Protocol, and other alternative mechanisms for responding to human trafficking that are in place at the international level. While the Protocol defines exploitation broadly, an offering that includes at a minimum the exploitation of prostitution or other forms of sexual exploitation, forced labour, slavery or slavery-like practices, and servitude or removal of organs, it fails to define ‘abuse of power’, ‘vulnerability’, ‘control’ (Weitzer 2014: 8), or ‘consent’ (Doezema 2002). It may be argued that the Protocol offers breadth, enabling nation-states to respond to human trafficking in its specificity in context. Indeed, the ambiguity in defining elements of the definition is partially the result of intense lobbying of feminist groups during the two-year period of negotiations (Doezema 2002), but also an outcome of the fact that the Protocol is not a human right but ultimately a criminal justice instrument (Anderson and Andrijasevic 2008). However, the breadth of the Protocol has created significant problems in measuring anti-trafficking efforts, limiting the ability for accurate accounts of the impact and effectiveness of counter-trafficking strategies. Importantly, as we have noted elsewhere (Milivojevic and Segrave 2012: 237), the presumptive link between organised crime and human trafficking that forms the basis of the Protocol and the Convention connection has been the subject of significant debate and counter-evidence (see also Turner and Kelly 2009). The Protocol also links all forms of trafficking – whether it be trafficking for the purposes of sexual or other forced labour, slavery or removal of organs – and provides a framework for the requisite response, assuming that the same response is required based on the recognition that these practices fit under the remit of transnational organised crimes.1 The Protocol focuses on prevention via criminalisation, with additional efforts around protecting and assisting victims of human trafficking with respect to their human rights (see the Palermo Protocol, Article 5 and Section II). Yet there is little evidence that this is the most effective response to achieve the intended aim of reducing, if not eliminating, human trafficking. At the international level meaningful data and analysis of the impact of counter-trafficking efforts are not predominant. At the national and international level we see the reliance on monitoring data that is descriptive of implementation efforts, rather than offering insight into impact (see Milivojevic and Segrave 2009;). Even with the recent creation of the Working Group on Trafficking in 2005 to oversee implementation and identify weaknesses and gaps of the Palermo Protocol, the recommendations reflect an absence of reporting of measurable impacts and also concern from some states that the Protocol is too narrow (CTOC Working Group on Human Trafficking 2013: 7). This suggests that despite an effort to oversee its implementation, a monitoring body is unable to provide any useful evaluation that could lead to an informed review of the current strategy, as opposed to coming together to clarify how the strategy should be implemented. Border management is closely linked to the prevention commitment within the Protocol – despite being in some ways at odds with the commitments and concerns upheld within the 135

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Smuggling Protocol, one of the other two supplementary protocols to the Convention. This has been a consistent concern. This is articulated in provisions such as Article 11, which provides that nation-states ‘shall strengthen, to the extent possible . . . border controls as may be necessary to prevent and detect trafficking in persons’ (UNODC 2004: 47), without specifying what such border control should entail (Edwards 2007). Saving ‘trafficking Cinderellas’, victims with ‘gut wrenching testimonies of broken dreams, withered illusions, rape and humiliation’ (Mirkenson cited in Doezema 2000: 31) was a key rationale for the reinforcement of external borders of the Global North and the introduction of restrictive migration and mobility policies (Apap et al. 2002; Segrave et al. 2009; Lee 2011; Milivojevic and Pickering 2013). Border control enables the prevention strategy pertaining to the prevention of crime and the prevention of victimisation to become one and the same. Recent and past work examining the decision-making processes of immigration and other officials at national borders, whether it is at ports (Weber and Gelsthorpe 2000) or airports (Pickering and Ham 2014), points to the importance of interrogating the implementation of such policies. Their research, conducted over a decade apart and in different national contexts and institutional settings, points to the consistency of gendered and racialised accounts of ‘risk’ in relation to both potential criminalisation and potential victimisation. These accounts raise questions about how the international commitments adopted under the auspices of being a signatory to the Palermo Protocol translate into practice and how this evidence can be used to make states accountable and to enable the international community to consider the clarity of its recommendations and provisions for implementation. In addition to border management, ‘clamping down’ on trafficking through the law and order, criminal justice interventions is clear in the language used to describe anti-trafficking efforts post the Protocol, with phrases such as ‘war on trafficking’ dominating the early narratives (DeStefano 2007; Kempadoo 2007). The US administration under George W. Bush was especially concerned about eradicating trafficking through linking the practice to national security and sex work, and has implemented its own national strategy that has had a global impact (Wasileski and Miller 2012: 111; Outshoorn 2005). The US Trafficking in Persons Report (TIP Report), arguably one of the most influential instruments on anti-trafficking, ranks nation-states based on whether they meet the minimum standards in combating trafficking as defined by the US, and focuses on 3Ps: Prevention of trafficking, Protection of victims and Prosecution of traffickers (USDOS 2014). The report has undergone change since its first publication in 2001, in terms of its focus, the breadth of human trafficking it is concerned with and the number of nations that are subject to assessment. However, while the 2014 Report focuses on ‘The Journey from Victim to Survivor’, and although President Obama has argued that ‘we must . . . address the underlying forces that push so many into bondage’ (USDOS 2014: 6), successful prosecutions and enactment of laws prohibiting trafficking are still key benchmarks for nation-states to achieve the highest-ranking assessment (Tier One – USDOS 2014: 40). Prevention of trafficking and protection of victims are difficult to measure and report upon, and are prioritised behind criminal justice outcomes. Many national anti-trafficking efforts adopt a similar model of reporting; measuring success via descriptive numbers of criminal justice statistics including the number of victims who access support during this time (see Milivojevic and Segrave 2012). Yet the criminal justice outcomes are rarely used to question the logic of the response. While estimates by the USDOS put the number of humans – men, women and children – trafficked across international borders each year in 2007 to be between 600,000 and 800,000, in 2014 the global law enforcement data provided in the most recent TIP Report suggested that annual prosecutions and convictions across the globe are below 10,000 and 6,000 respectively (USDOS 2014: 45). The emphasis on criminal justice measures, embraced by the structure and emphasis within the Palermo Protocol and enforced by the diplomatic pressure that accompanies individual 136

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nation-states’ desire to receive a favourable TIP ranking, belies the data which suggest very little other than that we need to reconsider the logic of investing so heavily in law and order. We also need to think very carefully about the construction of victimisation and offending. However, human trafficking is not isolated to the Palermo Protocol and TIP Report for identification, definition and action on the international stage. In part this is due to the breadth of what is encapsulated by human trafficking: there are elements of issues pertaining to gender, labour and migration within incidents of human trafficking that enable trafficking to be the subject of other international frameworks. It also reflects the breadth of international law and the human rights canon. As Edwards notes (2007: 10), there are a ‘large number of instruments which touch upon legal obligations relating to trafficking’ that generate the attention and efforts of the myriad associated international agencies with commitments to a wide variety of counter-trafficking efforts. We will briefly outline some key instruments that are in place complementing the contemporary international/regional anti-trafficking framework.

The slavery, labour and gender-based anti-trafficking frameworks We begin first with the broadest of the international instruments that encapsulates slavery, a term often used interchangeably (although not unproblematically: see Doezema 2000; Weitzer 2014) with human trafficking. The 1926 Slavery Convention was broadly committed to the prevention and suppressing of the slave trade via all appropriate measures. This Convention was followed by the 1956 Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions and Practices Similar to Slavery, which expanded its definition of slavery to include the notion of the ‘slave trade’ as: all acts involved in the capture, acquisition or disposal of a person with intent to reduce him to slavery; all acts involved in the acquisition of a slave with a view to selling or exchanging him; all acts of disposal by sale or exchange of a person acquired with a view to being sold or exchanged; and, in general, every act of trade or transport in slaves by whatever means of conveyance. (Article 7(c) of the Supplementary Convention) While there are many nation-states which are parties to this Convention, it remains largely unenforced and is rarely used in relation to cases of human trafficking (Edwards 2007: 25). While the Palermo Protocol defines trafficking as ‘slavery or practices similar to slavery’ (Article 3(a)), it has been argued that the Protocol promotes a ‘partial perspective on the problem of modern slavery’ and that the existing slavery-specific instrument would be better suited to the breadth of situations within which human slavery occurs internationally (Hathaway 2009: 4).2 Others argue that the protocols are weak and were rendered obsolete by its inadequate enforcement (see Gallagher 2009). Slavery is also upheld within Article 8 of the 1966 International Covenant on Civil and Political Rights (ICCPR), which makes reference to forced and compulsory labour, servitude and slavery. Via the Human Rights Committee monitoring of the implementation of the ICCPR this mechanism has been used as a way to report on what are perceived as state parties’ failures to uphold their obligations. For example, the 2013 review of the US in relation to the ICCPR saw a shadow report submission by the United States Human Rights Network in relation to US compliance pertaining to issues of slavery and human trafficking (see USHRN 2013). However, the ICCPR, despite its significance within the Human Rights canon, is not leading the counter-trafficking fight, although the Committee may comment on trafficking issues. 137

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More recently, in June 2014, the International Labor Organisation (ILO) adopted the legally binding ILO Protocol on Forced Labour which ‘aims to advance prevention, protection and compensation measures, as well as to intensify efforts to eliminate contemporary forms of slavery’ (ILO 2014). The ILO recognise human trafficking as sitting under the umbrella of ‘forced labour’, thus enabling global estimates of forced labour to be produced that fail to differentiate between the continuum of exploitative practices this may include, such as human trafficking (ILO 2012). The ILO estimate that globally ‘20.9 million people are victims of forced labour globally, trapped in jobs into which they were coerced or deceived and which they cannot leave’, and clarifies that forced labour includes ‘forced labour imposed by the State, and forced labour imposed in the private economy either for sexual or for labour exploitation’ which may include but is not limited to instances of human trafficking (ILO 2012: 13). Within a labour-focused, rather than slavery-focused, framework, the efforts to respond can arguably be more focused on improving labour conditions and regulations globally to achieve better outcomes for workers regardless of citizenship status. However, it may also be argued that this framework has no relationship to the practices of human trafficking for organ removal and, potentially, trafficking for the purposes of marriage, and as such it is making a clear distinction between types of human trafficking without acknowledging this. We have also argued elsewhere that the ‘forced’ element of forced labour can serve to undermine and/or silence agency, thus focusing attention away from the interconnected legal and political issues that impact upon migrant labours generally (Segrave 2014). Beyond the slavery and labour frameworks lies the gender-focused approach. Within the 1979 Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) Article 6 refers specifically to the requirement that state parties ‘take all appropriate measures, including legislation, to suppress all forms of trafficking in women and exploitation of prostitution of women’. CEDAW, through the Committee on the Elimination of the Discrimination Against Women, oversees state reports on efforts to address gender-based issues as per the Convention, including human trafficking to which CEDAW devoted a dedicated event during the fifty-second session in 2012. CEDAW has played a role in articulating prevention strategies and victims’ rights as well as calling for root causes of trafficking to be addressed (Edwards 2007: 30); however, its gendered focus necessarily delimits the breadth of practices it may actively address. The divisions and differences between the approaches described earlier and the Palermo Protocol and TIP Report are not merely rhetorical or conceptual; rather, they directly ‘impact the understanding of the phenomenon and the approach taken to protection, and redress, whether at an international or national level’ (Edwards 2007: 11). Critically, as the discussion has outlined, none of these instruments easily attends to human trafficking in terms of the breadth of what trafficking encapsulates or in terms of the requirements for reducing, if not ending, human trafficking. It is critical to examine international frameworks because these set an agenda for the international community and this is evident in the ready adoption of the Palermo Protocol which has had the greatest impact, alongside the TIP Report, in influencing the development of counter-trafficking measures globally (see Gallagher 2009). Buying into international conventions provides reasoning and justification for the response of nation-states which makes challenging the wisdom and logic of such approaches increasingly difficult. At the same time, the role of the state in creating, sustaining and promoting exploitative practices within the labour–migration nexus is entirely bypassed. In order to deconstruct the problematic approach to defining and responding to trafficking, and how we measure the success of anti-trafficking initiatives, we need to look into the ways in which trafficking knowledge has been constructed thus far. 138

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Knowing about human trafficking Our focus now is to turn to the challenges raised by the lacklustre international and national priority frameworks for addressing human trafficking. We focus here on three issues raised earlier but explored here in further detail. The first is the absence of evidence. The second is the importance of attending to citizenship. The third is the need to hold states accountable, which we argue that currently no institution or organisation locally or internationally is able to do. These are interrelated issues. Evidence as we have noted is largely absent in the area of human trafficking. We have witnessed over the past few years the increasing commitment to addressing ‘all’ forms of human trafficking, which is expanding beyond the early narrow focus on sex trafficking to include forms of labour-related trafficking. However, as we have argued elsewhere, ‘while the parameters of the understanding of and the response to human trafficking have broadened, the details of the nature of the response have remained relatively unchanged’ (Segrave 2009: 205). We are becoming increasingly aware, in nations such as Australia and the UK, that unlawful non-citizens are subject to a range of exploitative work practices not all of which will meet the legal requirement of human trafficking and not all of which will come to the attention of authorities as victimisation, not least because they involve non-citizens working irregularly (Segrave 2014). ‘Illegal’ workers are a concern and problem for nations globally, and Australia is not alone in making various commitments to the detection and deportation of unlawful migrant workers. While some are willing to acknowledge that there is overlap between irregular migration status and victimisation, identifying that nations should respond to this by extending generosity to victims as per the Protocol (CTOC 2013), for those implementing policy priorities on the ground, making decisions when face-to-face with individuals, the ability to make these distinctions is influenced by organisational priorities and personal bias (Segrave et al. 2009; Pickering and Ham 2014). Evidence requires understanding with whom immigration and other authorities are coming into contact, when and how, and the process that follows. Without understanding the decision-making process and context, how can we make sense of the number of those identified, and the numbers ultimately prosecuted? So, too, evidence requires attending to the impact of efforts – including efforts that are intended to help or support victims that may not achieve this desire. It is assumed, as we have argued in relation to Australia, that victims of human trafficking primarily require welfare-oriented support (counselling, housing, medical) rather than assistance in finding another job, or to seek compensation for harm and/or payment for unpaid labour (see Segrave 2009). Yet when it comes to non-citizens exploited in the workplace, but not trafficked, we provide them with financial support and none of the supports we offer to trafficking victims (see Segrave 2009). If we are not offering anything that appeals to victims, as we have found in our research in Thailand and Australia (Segrave et al. 2009), then the incentive for victims to remain in the criminal justice process is limited but so too, potentially, is the desire or willingness to participate in criminal justice processes in the first instance, thus reducing what we know and understand about the diversity of exploitative practices that are occurring. That is, the current raft of victim support provisions cannot be determined to be effective because some victims access them. Across every component of the counter-trafficking strategy in place in individual nations, what we need is evaluation that provides both quantitative and qualitative insight and context, which enables a better-informed assessment of what is and what is not adequately addressed within the current response. The second concern is to address the intersection of citizenship and illegality, and this must be situated within the global economy and the continued shifting power of the nation-state. It is clear that examining the intersection of illegal migrant work–exploitation–criminalisation–trafficking 139

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requires analysis of the illicit international political economy of labour, where labour itself is a commodity that is part of the illicit market, and the negotiation of migrant lives and livelihoods in the midst of numerous national and international tensions and priorities. This requires holding the state to account for exploitation that is occurring not just because of what it is failing to do but also in fact as a result of what it is doing (see Segrave 2014). Migration labour and economics policy and practice are intimately connected and, as a consequence, efforts in one area have implications and impacts for practices and patterns across all three areas. Internal border enforcement practices extend beyond the criminalisation of asylum seekers and irregular migrants to include labour regulation and the rescue of victims of trafficking (Segrave 2014). In so doing they ‘serve to reinforce the identity and perceived security of the nation-state and its legitimate members’ (Weber and Pickering 2011: 20), including the identity of legitimate labour and legitimate victims, adding a further layer to contemporary practices described by Bosworth as ‘governing through migration control’. This brings us to our final idea that is to point to the limits of international protocols. While some, such as Gallagher (2009), celebrate the importance of global agreements and efforts to address trafficking, we argue that international agreements can have the unintended impact of effectively relieving nations of the duty to attend to the specificity of an issue that is playing out within their jurisdiction (Milivojevic and Segrave 2012). Signing the Palermo Protocol, adopting what the USDOS TIP Report is looking for and delivering on this, all adds up to a performance of counter-trafficking that may have little relevance within one nation compared to another. Nations such as Australia that are wealthy islands have very different human trafficking circumstances to deal with compared to nations such as Thailand, South Africa or the United States. States also, in adopting these approaches, are not challenged to look more carefully at what we have already noted; that is, the ways in which national policies and priorities across a range of fields including labour, migration,and criminal justice can produce and sustain conditions within which exploitation such as human trafficking occurs. Although isolating human trafficking within a framework that is overshadowed by the Convention on Transnational Organised Crime complexity is largely silenced by the persistent call for shoring up criminal justice efforts and ensuring support to those victims who are identified as such (by the legal litmus test).

Conclusion As we have indicated and others have noted, there is ‘no lack of international human rights standards that address both rights and obligations of states in relations to the issue of private exploitation’ (Gallagher 2009: 817); however, they are not being applied in instances of trafficking and/or trafficking-related (by which we mean cases that do not meet the standard of proof requirements for investigation or prosecution) exploitation. It remains the Palermo Protocol and the diplomatic pressure of the US Department of State annual assessment via the TIP Report that laid the ground for what nations should be doing. Our concern with the Palermo Protocol and the TIP Report is that together they fail to locate the context within which human trafficking occurs, thus rendering criminal justice measures as a standard measure through which to determine the success and/or effectiveness of national counter-trafficking efforts. They also remain broad and non-specific in relation to what is meant by human trafficking, barely engaging with the logic of assuming that how we can prevent and respond to organ trafficking is equal to that of how we may prevent and respond to labour trafficking that occurs in the fishing industry off the shores of South East Asia. Gallagher defends the developments internationally as critically important steps towards addressing trafficking, recognising that ‘trafficking and its associated harms are multidimensional 140

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problems that do not, in the end, belong to one discipline or one branch of law’, and further that ‘combating contemporary exploitation may not be possible but any serious attempt will require a full arsenal of modern, smart weapons, not just one precarious blunt sword’ (Gallagher 2009: 847–848). We would argue that the Palermo Protocol remains a blunt instrument. In this chapter we outlined the apparent failure of various frameworks that were supposed to address trafficking; a failure in part that enables nation-states to continue to look outward rather than inward for ways to understand human trafficking and how best to respond. We argue that the main concern is not the instruments in and of themselves but their effective delimiting of trafficking as a ‘problem’ that states must develop ‘weapons’ for, a position that promotes a reactive, defensive strategy that fails to consider the intersection of migration, labour, finance, gender and race. Finally, what the international instruments fail to do is to reflect upon how states play a key role in constituting vulnerability and opportunity for exploitation and profit making. This is not to suggest that the nations are deliberately doing so, but rather that national priorities pertaining to border enforcement, labour regulation, targeting transnational organised crime and responding to victimisation are presented as separate and distinct areas that in practice are all intimately connected to the activities of the state apparatus, the accumulation of capital, and the commodification of crime control.

Notes 1 It is worth noting that the extent to which transnational organised crime delimits the recognition of trafficking within national or international mechanisms is the subject of disagreement (see Hathaway 2009; Gallagher 2009). 2 In making this argument, however, Hathaway recognises the need for the largely unaccountable implementation of the decades-old slavery conventions to be updated into a more clearly defined and prescriptive response mechanism.

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Available at: www.ushrnetwork.org/sites/ushrnetwork.org/files/24_page_313-317_criminalization_ of_victims_cuny_and_ujc.pdf. Wasileski, G. and Miller, M. (2012) ‘Rethinking gender violence: Battered and trafficked women in Greece and the United States’, in Brysk, A. and Choi-Fitzpatrick, A. (eds) From Human Trafficking to Human Rights: Reframing Contemporary Slavery. Philadelphia: University of Pennsylvania Press. Weber, L. and Gelsthorpe, L. (2000) ‘Deciding to detain: How decisions to detain asylum seekers are made at ports of entry’. Institute of Criminology, University of Cambridge. Weitzer, R. (2014) ‘New directions in research on human trafficking’. The ANNALS of the American Academy of Political and Social Science 653, pp. 6–24. Zhang, S. (2009) ‘Beyond the “Natasha” story – A review and critique of current research on sex trafficking’. Global Crime10(3), pp. 178–195.

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9 Globalization, sovereignty and crime A philosophical processing Kingsley Ejiogu

Introduction The moral and ideological roots of human rights and sovereignty of nations may be traced back to philosophers like Thomas Hobbes, Jean Jacques Rousseau and John Locke. These philosophers established that the sovereignty of a nation is predicated on the nation’s ability to create and enforce laws within its sovereign boundaries – otherwise understood as social control. Bassiouni (2011) observed that the Enlightenment age in Europe formalized the conceptual philosophies that propelled issues of human rights onto the global platform in the nineteenth century. Incidentally, just as globalization was significant in establishing and enforcing laws on human rights, it created opportunities and new platforms for undermining those same rights. The evolution of the processes and structures of globalization impact upon the conceptual framework of human rights and crime control as it attempts to erode the littoral sovereignty of nations. Globalization thus extends the physical littoral borders of individual nations to a nonlittoral world within the cyberspace accessible to agents of social and behavioral change as in the former state. Bassiouni (2011) is in agreement that the concepts of sovereignty and human rights are under test by the evolving processes, emerging systems and actors of globalization and their interrelated agencies of privatization, states and groups. Primary among these evolving systems is the creative synergy between transnational crimes and the virtual community (Denning and Baugh, 1999; Cohen, 2002). The operative procedure of undermining human rights in transnational crime such as terrorism, and the intensive agenda and rise of state and institutional private armies, find linkages in diminishing state sovereignties and the neoliberal economy. Irrespective of arguments to the contrary, there is definitely a shift in the order of global governance and international diplomacy. This order is more reflective of an increasing interest in the democratic political culture aligned with its economic private sector-led successes and liberal tendencies. The challenge is to find a manageable route to adjust to these changes, especially for cultures hostile to democratic change re-created in the virtual borderless world of the cyberspace. State and insurgent crimes are transmitted and reflected in uprisings, terrorist activities, human rights repressions and direct state insurgencies, overreaching international diplomacies such as war crime tribunals and the creation of private armies. But of significance and much less examined is the impact of the rise of new 144

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powers, and questions about the authority of old powers to control dominant ideas about global culture currently dramatized and empowered by the reach of the Internet. The imperative is to understand the direction of global thought against changing values of what constitutes crimes (state and non-state), human rights, national armies and sovereign boundaries; and hypothetically how one phenomenon is invariant rather than based on the other. On the new global political agenda three dimensions of policy are critical to understand the new direction of international sovereignty and crime creation and control: human rights abuse, terrorism and private armies, and the third technology, links through the rest as the potent operative agency. The purpose of this chapter is to join the criminological dialogue and activity on the re-creation of crime cultures across the world. How does the virtualization of society place the sovereignty of nations with weak state institutions at risk of hegemony by transnational crimes and global institutions? In particular, the crimes explored in this chapter cover the transnational crimes of terrorism and human rights abuse. The question of terrorism and insurgency is ironically a query of human rights and sovereign determination. The criminal responses advanced by the interaction of society with the Internet does not in any way point toward the creation of new crime types, but seems to reflect necessary societal structural growth processes that follow any new phenomenon. However, it is vital to understand the adaptive criteria for devising crime control strategies on this global virtual scale. To buttress this argument, the study will seek answers through a philosophical dimension. Bassiouni (2011) notes that globalization as a structural reformation of human socialization and interrelations among nations is in transition into a future beyond prediction. At the same time, emerging societal-organizational forms that are embedded within the contemporary global forces of capital and anti-capital accumulation will have shaped those future relations. Accordingly, certain pertinent questions need answers in order to understand the creation and control of global crimes, the dominance and appropriation of power by special interest-led international institutions, and the increasing reductive influence of sovereign boundaries. The chapter commences by examining the consequences of the global political economy and relationships in defining and determining the role of terrorism as a maligned agent of change, as well as the implications of globalization for noxious state and non-state human rights abuse. Subsequently, it explores the criminological axis of the international human rights agenda, in the context of the virtualization of communities and the implications of the use of a private army in warfare on state sovereignties and its possible third dimension as a sequestered agent of terrorism. The non-littoral borders of globalization make the attrition of weak sovereign entities into smaller, non-functional insurgent groups a fait accompli of the Internet new world. In the conclusion, suggestions are provided on the need for present-day criminological thought and processes to be mindful of the evolving changes wrought by globalization in the re-creation of criminal harms and institutional control at the intersection of sovereign boundaries.

Terrorism and virtualization Just as advances in technology have meshed national destinies within one globalized entity so that activities at one end of the world elicit immediate responses from the other, it has also conditioned psychologies, moral panics and global paranoia about crime and reality (See Tonry, 2009). As we create the global person, it is essential to also follow his perception of this new reality for international and state social control purposes, by understanding how the forces that direct his new world condition each other. Indeed, social control practices need to originate reflections from the international perspective, especially for a nation like the United States whose moral grandstanding and statecraft elicit direct political, economic and violent responses across the world, greatly 145

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impacting subsisting regime authorities, citizen perception, agenda and participation in government crime policies and control. From a global lens, policies that consider only domestic situations are unmindful of the political power of US technologies, advanced via interactive platforms of the Internet like Facebook and Twitter, and the reach of US democratic moral arbiter that advances equality, social justice, and the possibilities of extending the proverbial good life to everyone, irrespective of nation, race, class or gender. The reality is that people around the world are responding to the products of the US democratic culture beyond and within sight of their sovereign governments. Freedom of thought, assembly and the pursuit of happiness are indeed concepts of great genius. Nonetheless, greater attention is allotted to US military might when issues of international power negotiations are considered than its sociopolitical statecraft. Like crime, military might is profuse around the world, among new powers emerging with strong economies and technology to place challenging concerns. Globalization is controlled by the same natural order of change that is necessary for the growth, development, ascendancy and dominance of powers. This changing order necessarily evolves with attached criminal behavioral patterns. The impact of a nation’s military might is strengthened by the power of its political ideology and information technology. It is this ideology and technology that appears more like the new power, and should be watched more closely as it creates a new world across cultures steeped in norms and values thousands of years older than the United States. Terrorism is one transnational crime that has earned emphasis, appeal and reach through the use of the virtual tools of the Internet. It is instructive at this early start that terrorist groups have proven capacity to absorb powers and followership to negate state authorities through overwhelming insurgencies and the use of virtual recruitment tools. But terrorism raises a variety of questions in the advancement of the new global agenda. The global agenda here mentioned is the shrinking portfolio of sovereign governance and thought into one virtual global psyche within the cyberspace. Combs (2003) provides an illustrative definition of terrorism as “a synthesis of war and theater.” With this definition comes the belief that terrorism has another set of stage actors as a political appendage employed to label groups and governments not favorable to the global agenda. In addition, terrorism arouses traditional contentions about crime from the legal, political and military perspectives (Griest and Malay, 2003; Vetter and Perlstein, 1991). Ironically, while governments struggle to contain the criminal offshoots of globalization (Andreas, 2011), they sponsor terrorism outside their frontiers, and domestically to subdue their own citizens (Combs, 2003). Terrorism is used by nationalist and internationalist movements and as instruments of state policy directed against individual groups, communities, and democratic as well as autocratic regimes. It is important to emphasize this point to understand the erratic nature of terrorist labeling and unraveling among the world’s major powers, and why understanding terrorism’s critical agenda in the borderless world of cyberspace is relevant for sorting out the future of the nascent post-sovereign global relation and the implications for human rights. Unraveling the relationship between nations and terrorism necessitates a review of the role of globalization in extending the reach, operational tactics and technology of terrorism. As cited in Andreas (2011, p. 403), the United Nations Office of Drugs and Crime states that “Organized crime has globalized and turned into one of the world’s foremost economic [and] armed powers and Transnational crime has become a threat to peace and development, even for the sovereignty of nations.” This threat is reflected in the ease with which transnational crime is re-created to recruit converts across the virtual world. In the book Understanding Terrorism:

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Challenges, Perspectives, and Issues, Martin (2009) examined the impact of globalization upon the growth of terrorism. Globalization armed terrorist groups for asymmetrical warfare by providing the impetus and technology for unpredictability. Because the primary goal of globalization was to improve profits, the negative consequences of its operations were probably never articulated. In the words of the present US Secretary of State, while serving as Senator, John Kerry, “We are compelled by the globalization of crime to globalize law and law enforcement” (Andreas 2011, p. 403). This statement by Senator Kerry is a marker in the evolution of the globalization of social control. Globalization of law enforcement comes with the challenges of jurisdictional coordination and time frames, and uniformity of social control approaches, investigations, prosecution and perceptions of justice (Dervan, 2011). Globalization opened the world for terrorists to access resources and create sympathizers. In this way stateless terrorist groups emerged with a global agenda and an ideology to dominate the world, like the current rampaging ISIS (Islamic State in Iraq and Syria). The use of cyberspace by terrorists reveals a conflict between professed intentions of championing the cause of the oppressed, and advancing self-urges of grandeur, political clout, religious fervency and criminal covetousness. Solutions and applications in international political relationships are often couched in context and relativity. For instance, despite the overwhelming global war on terrorism, state sponsored terrorism is still generally subsumed. Martin (2009) identified the local and international ramifications of this “terror from above.” In the international scene, state terror evident in the recent incursions of Russia into Ukraine is a foreign policy tool for garnering political, economic and hegemonic speed. The governments involved in this crude practice, clouded by these advantages, justify their antics with ideological posturing. Terror from above like other brands of terrorism aims to better the lot of certain groups by exterminating another as seen in the Jewish genocide in Hitler’s Germany and the ethnic genocide in Rwanda. Such domestic repressive activities of the state commonly localized are globally idealized in the cyber world. Within the context of the cyberspace, could globalization of law enforcement assume a form of terror from above for nations with weak state institutions? The cyberspace advances extreme capacities to create the environment for genocide, cultural and ideological domination. The coercive powers of the state camouflage its terror practices. The practice of global control has grown into the emergence of full portfolio private armies. Whether from above or below, terrorism at most is a crude form of political, economic and ideological negotiation. That its idealization now persists through the borderless reach of the cyberspace among political actors is a pointer to a missing link in the negotiation of human coexistence. Sticking with Combs (2003), the dramatization of violence before an audience within the changing dimension of global governance and the virtual new world of the cyberspace, today’s terrorist could easily assume tomorrow’s hero. This relates to the troubling assumption by “power-dominant values” that their specific interests are everyone else’s. The power of the Internet to share these values also hemorrhages the power of individual nations to control expanding criminal values. While globalized sovereign boundaries dissolve, powerful interests struggle for inclusions and exclusions within the multi-diametric political, economic, judicial and security cyberspace unfolding. What power-dominant value will finally emerge? How will the changing forces of economic dominion from new and emerging powers like China seek to alter some aspects of these values by having their perspectives grafted in? Some of these contending forces apply unconsciously, such that when we think we are seeing one thing, we are in fact witnessing another. For instance, how do the different cultures within international political security negotiations perceive each other’s increasingly visible ambitions, insecurities and attitudes?

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Globalized crime and human rights State crime traverses nations with clear and legally binding notions of human rights and underdeveloped and dictatorial regimes in parts of the world where such notions are clearly unaffirmed. State human rights abuse includes those abuses done within the state, and those done without, that could be considered extraterritorial where they are advanced beyond the boundaries of sovereign domains. Globalization has had a destabilizing impact upon cultural autonomy (Roach, 2005). At the same time, Schwarzmantel (2005) has underlined the compatibility of cultural autonomy to the cosmopolitan melting point of norms and values where each culture may maintain its uniqueness within the normative dictates of a plurality of cultural forms. Such future transformations include the evolving makeover of typical criminal behavior and control to global forms; a close metaphor of “globalization of behavior.” In the article ‘Criminalizing war: Criminology as ceasefire’, Ruggiero (2005) examined aspects of crime during the prosecution of war to identify pacifist elements within the field of criminology. It is important to ask if criminology as a discipline inadvertently or reluctantly allows the criminal elite behavior of state officials to continue unchecked. Ruggiero’s in-depth analysis criticized mainstream criminology for the avoidance of the issue of war as a crime type. Ruggiero favors the unlikely prospect of the criminalization of war. Risk management is a concept utilized for political and policy decisions. This is a question of the application of cultural variations to determine measures taken in response to and management of risk. Criminology would benefit from the acknowledgment of the uncertainty and limitations involved in the conceptualization of risks for different cultures in order to advance alternative solutions. However, with the globalization of law enforcement, who monitors powerful nations when they advance state aggression against the less powerful, either through the use of state military infrastructure or the use of private entrepreneurs in the guise of private military contractors (PMCs), including the utilization of a global agenda of sociopolitical re-engineering via the cyberspace? Incidentally, there are a few platforms from which to examine how nations with weak state institutions can have their opinions and notions of crime control given equal consideration in the globalization of crime control policies. It is irrelevant to restate that very significant levels of transnational crimes are increasingly being transmitted from these weaker nations, as the virtualization of communities has insignificant spatial relevance. Although authoritarian infringement of human rights is noxious, the tenets of sovereignty make it challenging to bring the nations under legal conformance to its ideals. State crime exacerbates with economic scarcity, while the violation of human rights is commonly associated with poor statecraft. The structure of democratic institutions limits the use of violence of coercion and repression. The dynamics of state coercion and repression is as much a natural act as it is a social and political fact. For instance, Gaston (2008) questioned the maladaptive use of private military contractors as agents of war. Such uses should be articulated under relevant international laws and procedures for addressing human rights abuses. Private military contractors have no abiding limits to human rights abuses due to legal lapses (Gaston, 2008; Welch, 2009). The globalization of national armies is evident in the national diversity of about 113,000 US Private Security Contractors (PMSC) deployed during the Iraq War (Cancian, 2008; Stiglitz, 2002; Wouters, 2010). The mercenary soldiering industry diminishes the security of state boundaries and national allegiances (Staden, 2008; Kinsey, 2008). It is essentially a global army. The PMSC, just like the global cyberspace, are highways of power with relevant ethical and legal dimensions. Both effectively cross sovereign and cultural centers of states, nations, powers and dominions, tying up one global common of sovereign security as a commodity. 148

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The implications for underwriting possibilities of unencumbered human rights infringements granted by pseudo-sovereign powers to these institutions exist. The theoretical perspective articulated here is that the contemporary actions of these institutions and systems effectively build on the foundation advanced by Barranca (2009) on the unbecoming conduct and threats to national sovereignties of globalization. There is the need to create a process that allows the sovereign state power of crime control, even when a transnational crime type is considered, against the imposition of global institutional control.

Contemporary criminology on global crime control Labeling theorists view labels of criminality imposed by the state as concepts that can change from state to state depending on societies’ existing value systems. Therefore, crime defined by state laws runs through a polar continuum that is value related. The Durkheimian exposition of societal anomie identified that crime is normative even in a society of saints (Calhoun, 2002). State laws are also value ridden depending on the dominant interests upon whose authorities those laws are made. The perfect law may not have been created and perhaps will never be. These checks on the application of sovereign laws around the world are imperative to control the human predilection for subjectivity. Jeremy Bentham’s foundational expository in criminology accurately classified humans as self-interested beings. However, certain forms of crime receive much levity by criminological thought and a very small measure of monitoring and control. Orthodox criminology holds the greatest blame for these lapses; though other parts of the discipline in totality cannot be excused either. Historically, the self-interest of active nation-states and organized societies has been used to perpetrate heinous criminal acts against individuals, groups and less powerful states. These acts of state crime aroused the academic and humanist passions of young intellectuals of Cesare Becarria and Jeremy Bentham’s day to elucidate the theories of due process and human rights (Draper, 2002). Over the past 200 years, these preformed natural rights have flourished in democratic cultures. With the reluctance of criminology to assume its role to identify, study and disseminate knowledge of criminal behavior of all kinds, state crimes just like corporate crimes are valued as lesser crimes, or no crimes at all. Savelsberg et al. (2002) suggest that this is a natural tendency for class protectionism, in which case mainstream criminology (as opposed to critical criminology, which has developed over the past quarter of a century a rich literature on state criminality as reflected in Part VI of this handbook) turns a blind eye to a major form of elite deviance, or out of self-interest, being that the state is the major consumer and sponsor of criminological literature. Hence, the impact of the state upon the hegemony of positivist criminology and its research occurs through academic funding and the development/reorganization of academic programs that, for example, focus on retail and stateless terrorism while ignoring wholesale or state terrorism (Chomsky, 1988). In addition to studying the former types of terrorism, critical criminology also studies the unfunded latter forms of state terrorism (Barak, 1991). An examination of state crimes at the turn of the century reveals that the impact of criminological thought has had no measurable effect, for example, on state-supported terrorism activities (e.g., US torture at Abu Graib and Guantanomo Bay) deferring to International Human Rights Law. Kauzlarich et al. (2001) observed that state crime has been studied for the past three decades, but its pace has not matched some of the other fields of criminological inquiry. On the other hand, one may argue that the inquiry of state criminology has been developing at an equal or faster pace than the inquiry of white-collar criminology, especially given the fact that the latter has been around for more than 75 years. Comparatively speaking, the former literature has been experiencing a proliferation in its productivity (see the reference lists from the chapters in 149

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Part VI and VII of this handbook) when placed side by side with the dearth of published whitecollar crime research (McGurrin et al., 2013). Admittedly, to date neither field of inquiry has had any effect on state policy or on the sanctions and/or criminal enforcement of the violations of powerful state and white-collar law-breakers. Is criminology relevant to issues of human rights? How has the discipline fared? What are its goals and future projections? The agenda of global values and the rise of non-spatial virtual communities tasks criminology to ask critical questions. What makes state crimes uncensored? And does a state by its sovereignty embody the right to commit human rights crimes with impunity? Being self-interested in nature, it is possible that interests would clash regularly between sovereign entities and groups where one group puts their own well-being above others. In such cases fights and wars would be inevitable. In the present-day global community, interests are more widely and quickly distributed through the reach of the cyberspace beyond the control of individual states, as new communities of interests, behaviors and actions from across physical sovereign boundaries. Therefore, states as determinants and promoters of human rights are in question and under threat. This brief thought process established the global concept of human rights. What role is expected of criminology in these situations? Barak (1990) argued that the crimes of the state are frequently ignored by criminology. And to absolve criminology of aiding and abetting likely criminal state behavior, he advocated that criminology could critically approach issues of state crime through “investigation of state interventions, overlapping activities of criminal versus non-criminal organizations, and the distinction between individual and state actors” in order to understand the impact upon the human rights of state-sponsored intrusive activities such as surveillance and wiretapping. Barak asserts that contemporary criminological literature is state-centric, almost always following state definitions of crime and criminality. He observed that the main problem is the detachment of criminological analysis from the nature of social and politico-economic stratifications, institutional arrangements and inequalities. Also of concern is the diversion of scholarship to analytical perspectives that are primarily based on ideological premises and idiosyncrasies of actors in the political industry. In the spirit of understanding how the study of crime and the reaction to crime can proceed without the understanding of social injustice and a state’s law and order policies, criminology requires a refocusing, a recall of the sociological and psychological rendering of its early beginnings; an integration of the social relations of the political and economic arrangements with an understanding of the meaning of life and humanness to properly advance into a future where its focus will go back to the concepts of right and justice for the individual person (Barak, 1990). Here, perhaps, criminology must quickly deconstruct old attitudes of the status quo and seek to be relevant to a global future that is indiscreet of national boundaries as well as of individual and group social status. The future platform for criminological thought on crime, sovereignty and human rights infringement must necessarily involve cyberspace as a nation’s transit between monitoring and controlling their individual localities to placing claims on non-spatial virtual localities that are neither theirs nor anybody else’s. Thus, criminology must find new philosophical pathways to re-create social control sovereignty that mediates the concerns of emerging nations whose sovereignties are increasingly under threat from the new polemics of institutions and global criminal behavior and law enforcement (Andreas, 2011) by redirecting its thoughts around the individual, the local and the global. In the contemporary neoliberalist inventions of the privatization of governance, criminology as the theoretical arm of the discourses of crime is increasingly being overwhelmed because of the slow response to align theory to immediate practice. Edward et al. (2007) have also examined this criminological dilemma and reluctance to adopt critical positions in their articulation of the polemics of criminology and criminal justice. As criminology loses more of its 150

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theoretical purity, it is difficult to anticipate that it will continue to advance its paths away from critical analysis of state crimes and its implications for global human rights. The main problem for criminology aligns with the long-standing academic dialogue between the mainstream and critical criminology. This discourse is even more interesting in the case of terrorism. Paradoxically, sociological and psychological explanations take precedence in the examination of terrorism compared to criminology (Gibbs, 2010). Indeed, because these two related disciplines strictly articulate their conceptual directions within the human social world, and cognitive behavior respectively, it has aided their quick understudy of the terror phenomenon; compared to criminology which seems undecided whether to examine terrorism as a crime or the manifestation of institutional deprivation of the underprivileged. Ruggiero (2005) identified what he terms the “sociology of misery” among criminologists who examine issues of political violence as a conventional crime. Deviance is viewed as a progressive battle between society and the socioeconomically deficient individual or group. Even so, crime and political violence for some may be based on considerations beyond lack, deficiency or even abundance. Uncritical criminological studies and essays often appear to be the work of Salvationists structured to fight for social justice by condemning institutional actors and being sympathetic to the apparent weaker actors irrespective of the situational elements and typology of the engagement. In this sense, Ruggiero explains that some forms of violent protest, though not immoral, have deviant implications. It is important for criminology to explain why crimes committed by political agitators of the Right (e.g., neo-Nazis, the Klan) receive less strident examination compared to eco-terrorists of the Left. Further, criminology is limited by the lack of uniformity in the definition of violent social and political habits like terrorism (Forest et al., 2011). This is not to say that all assumptions in the field should have similar origins, definitions or goals. In reality the suggestion of disciplinary uniqueness demands a sort of conformity and direction in relation to the terms that act as its vehicle of cultural transmission. If, beyond its social and political masquerade, terrorism is essentially a violation of both criminal and international law, then expectation is for criminological inquiry to provide acceptable theories with which practitioners and researchers can confront the problem of reducing the need for asymmetrical criminal harm committed for and against the state. In one sense, such a suggestion is ongoing, in part, such as utilizing opportunity or social leaning theories as a means of explaining non-state, but not state, terrorist activities (Forest et al., 2011). Perhaps criminology has been shy of navigating an area replete with potholes because, as noted by Ruggiero (2005), the offender (the political violent actor) righteously feels holier than the victim – whether, in the case of the US state, it is torturing an “enemy combatant” or assassinating him by a drone-fired missile; or, in the case of ISIS, it is beheading another news journalist. To examine the frameworks for criminological answers to the global terror question of the twenty-first century, criminologists should follow the lead of Left realist criminology. While much of the Left realist literature has focused on state-initiated acts of terror, it does so to be inclusive of all forms of terrorism and to counter the overwhelming emphasis of the Right, of mainstream criminology and of the state to focus only on retail, stateless terrorists. In other words, to achieve an integrated analysis and understanding of terrorism, criminology must focus on both wholesale and retail terrorism, not on one or the other. Moreover, similar to street crime, global transnational crimes like terrorism must be assessed alongside the socioeconomic and formal state apparatus of social control that may be used to restrain terrorists working on behalf of or against the state. Left realism generally articulates the functions of society in the creation of the offense and offender, and treatment of the victim. It is implied that to prove the fact of crime in the act of terrorism, crime demands a definition beyond individual and group theoretical dilutions. However, critical criminology examines the forces that act and react to the forces of social control of 151

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offending, the role of the informal social forces of society in the creation of an offense, and victimization. Sadly, it does not provide much credence to the existence, functions and development of moral predication. In fact, while agreeing that criminology needs to pay additional attention to the development of the explanatory models for terrorism, Gibbs (2010) noted that this quest must begin by examining its underlying causes. Globalization has transformed and enlarged the opportunities of crime on an international scale, enabling these criminal systems to exploit the political and socioeconomic and ideological differences across the world and key gaps in law formation and enforcement practices in nations with weak institutions of governance (Hall, 2012). At the same time, because of the inherent contradictions of the accumulation of global capital (Harvey, 2014), the transnational agenda of crime control must be conscious of the dilemmas involved in disseminating a uniform neoliberal agenda across a diversity and plurality of world cultures that experience these policies very differently in terms of their well-being.

Conclusion This chapter has examined the evolving values of globalization in relation to transnational crimes of terrorism and human rights abuses at the meeting point of sovereign boundaries. The chapter points to the critical role of cyberspace in predicting the future of crime control across nations. Globalization in relation to cyberspace is creating new societal values in virtual communities with diminishing allegiance to discrete spatial sovereign boundaries. In this way crime and behavior receive globalized identities, sympathizers and controls. Incidentally, profits and power remain a major factor in the changing dimension of global policy and relationships from broken sovereign walls to the rise of private armies. Gains and power are also the creative force of interest groups and virtual communities. Perhaps there are really no new crimes; old ones are merely re-created as human sensibility evolves and adapts to new thinking (Garland, 1997). The global path of the development of transnational crimes such as terrorism or human rights abuses necessarily follows the new borderless world of the Internet. While economic power will continue to direct tomorrow’s global values in cyberspace, the engulfing powers of the democratic culture and novel forms of globalized criminal behaviors will likely come with them. Depending on whether or not nation-states have gained or suffered from the dynamics of neoliberalism, privatization and austerity will shape whether or not they will support or resist the forces of capitalist state social control. Concomitantly, bourgeois and democratic governance has facilitated the sustaining momentum of capital expansion. This governance has also acted to globalize the world as it breaks down sovereign communities into communities of interest in virtual locations. Any attempt to short-change this process due to ideological puritanism would find obvious difficulty in retaining the support of the people whom the products of economic success and the pursuit of happiness have so acculturated to now seek freedom by all means. With the ascendancy of transnational crimes, criminology has as a duty not to retain the semblance of the theoretical puritan but to provide a platform for weaker nations to negotiate their own crime control agenda beyond their broken sovereign walls. The philosophical pathways that underpin global crime and the heuristic mechanisms of its transnational control are demanding of serious criminological inquiry.

References Andreas, P. (2011). Illicit globalization: Myths, misconceptions, and historical lessons. Political Science Quarterly, 126(3), 403. Barak, G. (1990). Crime, criminology and human rights: Towards an understanding of state criminality. Critical Criminology, 2(1), 1–16. 152

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Barak, G. (ed.) (1991). Crimes By the Capitalist State: An Introduction to State Criminality. Albany, NY: State University of New York Press. Barranca, S.M. (2009). Unbecoming Conduct: Legal and Ethical Issues of Private Contractors in Military Situations. Vice Admiral James B. Stockdale Center for Ethical Leadership at the US Naval Academy in Annapolis, MD. Available at: www.isme.tamu.edu/ISME09/Barranca09.pdf. Bassiouni, M. (2011). The future of human rights in the age of globalization. Denver Journal of International Law and Policy, 40(1–3), 22–43. Calhoun, C.J. (2002). Classical Sociological Theory. Oxford: Wiley Blackwell, p. 106. Cancian, M. (2008). Contractors the New Element of Military Force Structure. Parameters. Available at: www.usamhi.army.mil/USAWC/Parameters/08autumn/cancian.pdf. Chomsky, N. (1988). The Culture of Terrorism. Boston, MA: South End Press. Cohen, F. (2002). Terrorism and the cyberspace. Network Security, 5(31), 17–19. Combs, C.C. (2003). Terrorism in the Twenty-First Century. Upper Saddle River, NJ: Pearson Education. Denning, D.E. and Baugh, W.E. (1999). Hiding crimes in cyberspace. In B.D. Loader and D. Thomas (eds) Cybercrime. London: Routledge. Dervan, L.E. (2011). International white collar crime and the globalization of internal investigations. Fordham, URB, L.J., Vol. 39, pp. 361–389. Draper, A.J. (2002). Cesare Beccaria’s influence on English discussions of punishment, 1764–1789. History of European Ideas, 26, 177–199. Edward, R., Maguire, E.R. and Duffee, D. (eds) (2007). Criminal Justice Theory: Explaining the Nature and Behavior of Criminal Justice. Abingdon, Oxon: Routledge. Forest, B., Greene, J.R. and Lynch, J.P. (2011). Criminologists on Terrorism and Homeland Security. New York: Cambridge University Press. Garland, D. (1997). ‘Governmentality’ and the problem of crime: Foucault, criminology, sociology. Theoretical Criminology, 1(2), 173–214. Gaston, E.L. (2008). Mercenarism 2.0? The rise of the modern private security industry and its implications for international humanitarian law enforcement. Harvard International Law Journal, 49(1), 221–248. Gibbs, J.C. (2010). Looking at terrorism through left realist lenses. Crime, Law, Social Change, 54, 171–185. Griest, P.L. and Malay, S. (2003). Terrorism in Perspective. Thousand Oaks, CA: Sage. Hall, T. (2012).Geographies of the illicit: Globalization and organized crime. Progress in Human Geography, 37(3) 366–385. Harvey, D. (2014). Seventeen Contradictions and the End of Capitalism. Oxford: Oxford University Press. Kauzlarich, D., Matthews, R.A. and Miller, W.J. (2001). Toward a victimology of state crime. Critical Criminology, 10(3), 173–194. Kinsey, C. (2008). International Law and the Control of Mercenaries and Private Military Companies. Cultures and Conflicts. Available at: www.conflits.revues.org/index11502.html (accessed 3 June 2010). Martin, G. (2009). Understanding Terrorism: Challenges, Perspectives, and Issues. Thousand Oaks, CA: Sage. McGurrin, D., Jarrell, M., Jahn, A. and Cochrane, B. (2013). White collar crime representation in the criminological literature revisited, 2001–2010. Western Criminology Review, 14(2), 3–19. Roach, S.C. (2005). Cultural Autonomy, Minority Rights and Globalization. Aldershot, Hampshire, UK/Burlington, VT: Ashgate. Ruggiero, V. (2005). Criminalizing war: Criminology as ceasefire. Socio and Legal Studies: An International Journal, 14(2), 239–257. Savelsberg, J., King, R. and Cleveland, L. (2002). Politicized scholarship? Science on crime and the state. Social Problems, 49(3), 327–348. Schwarzmantel, J. (2005). Karl Renner and the problem of multiculturalism. In E. Nimni (ed.) NationalCultural Autonomy and its Contemporary Critics. London/New York: Routledge, pp. 63–73. Staden, A.V. (2008). The irresistible temptation of privatizing security: A Dutch perspective. Security and Human Rights, 3, 201–207. Stiglitz, J.E. (2002). Globalization and Its Discontents. New York: Norton, pp. 3–22. Tonry, M. (2009). Explanations of American punishment policies: A national history. Punishment and Society, 11(3), 377–394. Vetter, H.J. and Perlstein, G.R. (1991). Perspectives on Terrorism. Pacific Grove, CA: Brooks-Cole. Welch, M. (2009). Fragmented power and state corporate killing: A critique of Blackwater in Iraq. Crime, Law and Social Change, 51(3–4), 351–364. Wouters, P. (2010). The political, legal, and military implications of outsourcing to private military companies. Management and Economics, Revista Academeiei Forteor Terestre, 1(57). 153

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Part III

Corporate crimes

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10 Corporate crimes and the problems of enforcement Ronald Burns

Introduction Corporations primarily exist to generate profit. As such, they consistently seek to gain competitive advantages directed toward maximizing profits. Unfortunately, some of their actions fall outside of the law, violate human rights, and/or harm society. Combined, their crimes are more costly than street crime. The primary intentions of the corporate actors are not necessarily to harm or injure anyone or anything; however, pressures to perform result in violations and harms that traditionally have gone largely unnoticed by the general public and law enforcement. Competition, pressures from various sources (e.g., shareholders, supervisors), globalization, limited law enforcement responses, and related factors contribute to the occurrence and perpetuation of corporate crime. Society is changing at a constant and rapid pace. Technological developments and advancements, and international travel, commerce, and communication have changed the way we live and how crime is committed. In light of these changes, there is some concern that law enforcement/ regulatory agencies are not prepared for what is occurring and what is ahead with regard to corporate crime. Accordingly, this chapter addresses several important areas of corporate crime, including the history of corporate crime, theoretical approaches used to explain corporate crime, and research and methodological issues pertaining to corporate crime, including discussion of current corporate crime enforcement efforts in the United States, the limitations of these efforts, and reasons for these limitations. Particular attention is devoted to the groups primarily charged with exposing and enforcing corporate crime, as well as legislative efforts and prosecutorial issues pertaining to corporate crime. The chapter concludes with a look at what may be done to better address corporate crime, and a brief account of international corporate crime enforcement efforts. Corporate crime is a subcategory of white-collar crime that generally “involves offences committed by companies or their agents against members of the public, the environment, creditors, investors or corporate competitors” (Grabosky and Braithwaite, 1986, p. 2). Among the different types of corporate crime are corporate violence, corporate theft, corporate financial manipulation, and corporate political corruption (Friedrichs, 2010). Ultimately, corporate crime is a complex term that incorporates many different actions and behaviors committed by various groups. 157

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Enforcement efforts related to corporate crime extend beyond law enforcement and regulatory officials simply identifying corporate misbehavior and making arrests. In particular, enforcing corporate crime involves investigations to discover violations, investigations to construct cases against violators, efforts to secure voluntary compliance, and initiating legal action to stop the violation or punish the violator (Frank and Lynch, 1992). In summarizing the need for the enforcement of corporate crime, Michalowski and Kramer (2006, p. 175) note, “Insofar as they control nearly all production and distribution, corporations must be held responsible for maximizing social well-being, not just for generating private profit.”

History Edwin H. Sutherland is credited with introducing the term “white-collar crime,” which includes corporate crimes. Other commenters prior to Sutherland’s influential work referenced crimes of the powerful, although not as pronounced and concise as Sutherland, and several scholars have clarified his definition to more accurately address white-collar crime. Among those who earlier referenced what is today considered white-collar crime were Cesare Beccaria, Karl Marx, Friedrich Engels, and E.A. Ross (Friedrichs, 2010). Sutherland’s work helped set the stage for empirical evaluations of corporate crime, which contributed to clarifying the term white-collar crime. Among the early researchers who examined corporate crime and criminals were Donald Cressey (1953), who interviewed imprisoned embezzlers, and Marshall Clinard (1952) and Frank Hartung (1950) who studied black market offenses in World War II and violators of the wartime regulations in the meat industry, respectively. The study of white-collar and corporate crime waned during the 1960s, yet received notable attention in the 1970s and early 1980s. Despite recognition of the term white-collar crime in the twentieth century, white-collar crime, including what would today be considered corporate crime, existed throughout much of history. For instance, Green (1990) cites examples of laws throughout history, including a fourteenth-century BC law prohibiting judicial bribe taking, and examples of white-collar crime in ancient Greece and ancient Persia. Geis (1988) cites the example of Henry III (1216–1272) passing laws to prohibit the practice of purchasing large amounts of food and then controlling the prices. Green (1990) also noted that by 1812, England had passed complex regulations regarding labor practices. To be sure, the offending groups were not incorporated in the same sense as modern corporations, although their actions could be deemed corporate crime, and there are many other examples throughout history which provide evidence of corporate crime, and enforcement efforts directed toward it. Corporate deviance existed long before corporate crime, given that the laws regulating corporate behavior emerged in a piecemeal manner over time. Throughout history, corporations were permitted to engage in a harmful, immoral, and deviant manner as there was little regulation restricting their behavior. The regulation of corporate behavior largely emerged in relation to corporate scandals and public concern, although the proliferation of corporations themselves, which was spurred by the Industrial Revolution and advancements in transportation that facilitated the distribution of goods, also contributed to the need for greater regulation of corporate behavior. Public concern for the enforcement of corporate crime fluctuates largely in response to the exposure of notably problematic corporate crimes. For instance, several high-profile cases around the turn of the twenty-first century (e.g., those involving Enron, WorldCom, and Adelphia) generated much concern for corporate misconduct. Politicians responded through legislative efforts, and authorities cracked down on corporations, holding them more accountable and requiring 158

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them to make their actions and records more accessible to the authorities. Eventually, the public concern that emerged surrounding these events subsided, as the public and politicians directed their attention to other social problems, such as the terrorist attacks and related concerns for homeland security. Similar situations occurred throughout history, for instance, as the Food and Drug Administration (established in 1906), the Food Safety Inspection Service (1907), and the Federal Trade Commission (1914) were created to address public concern regarding corporate harms (Lynch et al., 2000). The courts and legislators have been notably influential in efforts to enforce corporate crime. For instance, early state laws were unable to regulate corporate practices that were typically interstate in scope; thus the US Supreme Court gave the federal government the power to regulate interstate commerce, and generally transferred the primary regulatory responsibility for larger corporations from the states to the federal government (Friedrichs, 2010). Further, the US Congress passed the Sherman Antitrust Act in 1890, which included both civil and criminal provisions, and protected the public from monopolization and business practices that resulted in a restraint of trade (Berger, 2011). A laissez-faire economic philosophy with relatively little regulation characterizes the nineteenth century in the US. Earlier federal regulatory and law enforcement agencies focused on banking and agriculture, and during the later 1800s and early 1900s several regulatory agencies were created to help address corporate crime. For instance, the Interstate Commerce Commission was created in 1887 to regulate the railroad industry, and became the first federal regulatory agency charged with specifically regulating potentially harmful activity (Friedrichs, 2010). Further, the Securities and Exchange Commission was created following the stock market crash of 1929 via the Securities Act of 1933 and the Securities Exchange Act of 1934. The agency was designed to restore investor confidence and provide investors with more reliable information to ensure honest dealing. Laws that would assist with the enforcement of corporate harms, however, emerged only slowly (Lynch et al., 2000). Similar to the development of today’s regulatory agencies, the history of the federal law enforcement agencies is characterized by the emergence of various agencies in response to pressing social issues. Federal law enforcement agencies originated at different times, although the federal agencies that currently play important roles in the enforcement of corporate crime did not emerge until relatively later in the development of the US. For instance, the Federal Bureau of Investigation emerged in 1908, and the Secret Service originated in 1865. The Bureau of Internal Revenue, a precursor of the Internal Revenue Service, was set up by the Revenue Tax Act of 1862 which created the first personal federal income tax in the US. Federal law enforcement experienced much growth and maturation from the second half of the nineteenth century through the early part of the twentieth century, as the nation grew and needs arose (Bumgarner et al., 2013). David Friedrichs (2010) identified cycles of regulatory expansion that have occurred throughout the twentieth century in the US. He noted that the first cycle was the Progressive era (1900–1914), when public concern for the abuses of large corporations generated “significant government intervention in harmful corporate and occupational activities on behalf of the public interest” (p. 284). The second period of regulatory initiatives emerged during the New Deal era of the 1930s, which was inspired in part by the 1929 stock market crash and Great Depression which occurred following the actions of unregulated abuses by major corporations and major financiers. The third period of expanding federal regulation began in the Great Society era of the 1960s and 1970s, which included a growing awareness and public protest over harmful corporate behavior. There were 28 regulatory agencies policing corporate crime by the 1960s; the number jumped to 56 over the next two decades as public concern regarding corporate misbehavior increased (Meier, 1985). 159

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Recognition of corporate harms against the environment, including high-profile incidents such as the illegal dumping of hazardous waste (e.g., in Love Canal), generated much public concern regarding corporations wrongfully and illegally harming the environment. Public concern largely contributed to the creation of the Environmental Protection Agency in 1970, a federal regulatory agency that helps protect the environment. Concern for corporate crime is further evidenced in the creation of the Consumer Product Safety Commission, Occupational Safety and Health Administration, and Mining Enforcement and Safety Administration between 1970 and 1973 (Friedrichs, 2010). Despite these periods of pro-regulation, there have been several periods when deregulation was the primary focus. In fact, the latter part of the twentieth century and the beginning of the twenty-first century are characterized by political efforts to deregulate industry, as the emphasis on government regulation of the economy began to erode in the late 1970s. Congress initially gave the president power to make regulatory rules in 1790 and to other officials in the executive branch in 1813 (Bryner, 1987). Presidents can hamper regulatory efforts in various ways, for instance, through reducing the budgets and staffs of regulatory agencies, and appointing individuals who favor deregulation to head regulatory agencies. As an example, George W. Bush appointed J. Steven Griles, a lobbyist for the mining industry, to head the Bureau of Mines (Berger, 2011). Relatively recently, support for the deregulation of financial markets was largely evident beginning with the Reagan administration and continuing through George W. Bush’s terms in office. President Obama has strongly emphasized regulation during his terms in office, and perhaps ushered in a new period of regulation that may provide great promise for the control of corporate crime. President Clinton, a democrat, leaned more toward pro-regulation than the latter-day Republican presidents, as he addressed some notable antitrust cases and environmental regulation. However, he was generally supportive of deregulation of financial markets (Berger, 2011).

Theoretical overview Various theoretical perspectives help explain why corporate crime exists, and no single theory explains its incidence. Explaining corporate crime is clouded by efforts to explain such behavior on a macro level, or in relation to the larger society (e.g., the effects of capitalism), in relation to the impact of organizations, or based on differences among individuals. The impacts of capitalism in particular are noted in Marxist or neo-Marxist theory (Engels, 1895, 1958), which generally suggests that capitalism creates classes in which the powerful control less powerful groups. The emphasis on generating power and control, then, would presumably encourage corporate crime. Radical and critical perspectives on crime became increasingly popular during the 1970s, and were influenced by Marxist theory. These theories focused more on the criminalization process, or how crime is conceived and responded to, rather than the particular causes of crime. The historically lax enforcement of corporate crime, it is argued, is largely attributable to government authorities and other powerful groups in society showing a limited interest in responding to the crimes of the powerful. Frank and Lynch (1992) highlighted the contrast in thought regarding assessments of the most significant barriers to the regulatory effectiveness in addressing corporate crime. They noted that pluralist theorists typically focus on organizational factors, including the lack of resources for effective enforcement, limited expertise on behalf of the personnel, insufficient incentives to formally act, and an organizational culture that encourages regulators to seek voluntary compliance. Conflict theorists, however, primarily focus on the power of the corporate sector to influence regulatory power, which ultimately hampers enforcement efforts. 160

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The characteristics and influences of an organization or corporation have also been examined and used to explain corporate crime. For instance, corporations may have cultures that encourage misconduct through active or subtle persuasion, or tolerance or indifference toward misconduct. Some organizations have been identified as crime coercive or crime facilitative. The former encourage personnel to commit crime, whereas the latter provide conditions conducive to corporate crime (Needleman and Needleman, 1979). Various organizational factors, both internal and external, appear to influence the occurrence of corporate crime. For instance, the pressure to generate profits could be influential, as could economic crises in which the ability to generate profits is hampered. Further, the nature of the work performed in some corporate sectors generates greater opportunities to engage in corporate crime, and to have different levels of potential detection and likelihood of sanction. Many theories used to explain corporate crime are micro level in nature; they focus on the individual. For instance, the roots of criminological theory are grounded in the works of Jeremy Bentham (1789, 1948) and Cesare Beccaria (1764, 1963), who generally believed that individuals make rational decisions and should be held accountable for them. Beccaria noted that individuals seek to maximize pleasure and minimize pain; a concept that certainly provides a starting point for the study of why individuals engage in corporate crime. For example, introducing more severe penalties for corporate offending would, according to proponents of rational choice, deter individuals. Toward this end, Gallo (1998) noted that law enforcement efforts have impacted corporate crime given that the actors involved are generally informed, rational individuals who are deterred by the threat of being caught. Examinations of rational choice and corporate offending include Piquero et al.’s study (2005a), which found that the desire for control influenced rational choice considerations. Further, Paternoster and Simpson (1993) provided a theoretical perspective to corporate misconduct that includes both personal and organizational factors such as consideration of the severity of sanction, perceived level of legitimacy and fairness, and characteristics of the criminal event. Individual-level theories are often categorized according to biological, psychological, and sociological theories. Sociological theories have generated the most interest among scholars attempting to explain corporate crime. Biological or biosocial theories are becoming increasingly noted in the research literature; for instance, Beaver and Holtfreter (2009) found a statistically significant Gene X Environment interaction which increased the likelihood of fraudulent behaviors in the sample they studied, although only among male participants with a high number of delinquent peers. Aside from this and a handful of other studies, biological theories have been used sparingly in efforts to explain corporate crime. Psychological theories of corporate crime have focused on traits such as personality, mental processes, the impacts of early childhood traumas, and related issues. Personality traits are among the more commonly studied explanations of corporate crime (Friedrichs, 2010). Research in the area mostly suggests that personality is not a particularly strong predictor of engagement in corporate crime, as white-collar offenders typically appear to be psychologically normal (Coleman, 1998). Some studies, however, suggest that white-collar crime offenders are more likely to demonstrate high levels of hedonism, narcissism, and conscientiousness (Blickle et al., 2006). Other researchers noted that individuals with a desire for control were significantly more willing to violate the law than their counterparts (Piquero et al., 2005a). Among the more commonly cited sociological theoretical explanations of corporate crime are differential association, variations of Merton’s version of anomie, neutralization theory, control theory, and several integrated theories. These and other sociological theories generally focus on the influences of society on corporate crime. 161

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Edwin Sutherland’s influential introduction of the term “white-collar crime” coincided with his belief that his theory of differential association could help explain why individuals from all classes commit crime. His theory is largely predicated on the belief that behaviors (including criminal behavior) are based on learning from associations and interactions with significant others (Sutherland, 1940). Along these lines, corporate crime could be explained in part by the negative influences of co-workers within a corporation. Various adaptations of Robert Merton’s (Merton, 1968) work on anomie offer insight into the occurrence of corporate crime. Merton’s theory generally explained crime through proposing that some individuals without legitimate means to achieve their goals resort to illegitimate means to attain them. With consideration of Merton’s work, Langton and Piquero (2007) examined the ability of Agnew’s (Agnew, 1992) general strain theory using data from convicted whitecollar offenders and found that the theory was useful for predicting some types of white-collar offenses; however, it may not be generalizable to those who commit corporate-type offenses. Further, Schoepfer and Piquero (2006) found some support for institutional anomie theory in relation to embezzlement. Sykes and Matza (1957) earlier introduced neutralization theory in their assessment of how juvenile delinquents justified their illegal behaviors and eased their guilt. The techniques of neutralization include denial of victim, denial of injury, denial of responsibility, condemning the condemners, and appealing to higher loyalties. This theory has also been used to explain corporate behavior; for instance, Piquero et al. (2005b) found that neutralization techniques played an integral role in decisions to engage in corporate crime, especially for older persons and if profit was involved. The use of rationalizations to justify wrongful behavior exists across a wide range of white-collar offenders (Shover and Hochstetler, 2002), and neutralization theory does not necessarily explain why corporate crime initially occurs. Instead, it provides an understanding of how offenders rationalize or attempt to justify their actions. Travis Hirschi (1969) earlier offered a control theory of juvenile delinquency which generally proposes that individuals are controlled by forces and will engage in misbehavior without the necessary social bonding. Empirical support for control theory is found in a study of automobile corporation executives in which subjects who reported stronger attachments and commitments were less likely to admit to white-collar offenses than their counterparts who had weaker bonds (Lasley, 1988). Some scholars attempted to integrate theories to better explain white-collar and corporate crime. Among those who proposed integrated theories of white-collar crime is Braithwaite (1989), who used structural Marxist theory and differential association theory. Researchers have also noted the interconnectedness of white-collar crimes, for instance, with the introduction of state-corporate crimes, which are “criminal acts that occur when one or more institutions of political governance pursue a goal in direct cooperation with one or more institutions of economic production and distribution” (Kramer et al., 2002, p. 263). Research in the area includes the examination of the role of the G.W. Bush administration with regard to state-corporate crime in relation to global warming, with consideration of the government’s ties with energy companies (Lynch et al., 2010).

Research and methodological issues Various research and methodological issues surround the enforcement of corporate crime. Primary among them are the need to prevent, identify, and respond to corporate misbehavior. These enforcement-oriented practices are strongly impacted by legislative efforts which guide corporate behavior and enforcement actions, and prosecutorial practices which help determine sanctions for and can have deterrent effects on corporate crime. 162

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Enforcing corporate crime Enforcement efforts directed toward corporate crime have largely been reactive in nature, and when they have proactively addressed corporate crime their actions have been directed toward small businesses and subordinate managers (Benson and Cullen, 1998; Friedrichs, 2010). Reacting to a problem means that the problem exists, and similar, unexposed problems are likely occurring. The reactive approach taken by those tasked with enforcing corporate crimes is reflective of the history of law enforcement in general, although recent efforts by local police departments have stressed a more proactive approach, which could perhaps serve as a blueprint for all authorities responsible for enforcing corporate crime. Corporate crime is notably underreported and there is a lack of systematic documentation of its incidence (e.g., Burns and Lynch, 2004). What is known about corporate crime generally comes from agency records (e.g., arrest records, criminal complaints), victim input, self-report studies, and direct observation of corporate crime. Each of these sources contains many limitations, which subsequently hampers efforts to understand and respond to corporate crime. Corporate crime enforcement efforts often require great efforts, inter-agency cooperation, and many resources. They can involve both public agencies and individuals in the general public. Among the primary government agencies that largely help expose corporate crime are government regulatory agencies, law enforcement agencies, and politicians. Prominent among the nongovernment groups and individuals that largely assist in exposing corporate crime are the media, informants, whistleblowers, and the general public. A primary challenge in the enforcement of corporate crime has been the lack of transparency regarding such behavior. Further, corporate crimes are particularly costly in many respects, for instance, as they pertain to victim costs, prosecution, regulation, and enforcement. In commenting on the challenges associated with prosecuting corporate crimes, Cullen and colleagues noted that “the decision to prosecute is complex because prosecutors must balance their desire to enforce the law against the reality of limited resources” (Cullen et al., 2006, p. 347). Periods following corporate scandals enable regulators to assume more of an enforcement-oriented approach which contrasts with their more traditional approach of trying to balance their compliance and enforcement missions (Snider, 2009). In her examination of the enforcement of corporate crime following the Enron scandal, Brickey (2006, p. 419) noted that “The corporate fraud prosecution cycle following Enron’s collapse ha(d) an unparalleled number of criminal trials of senior corporate executives in just three years.” Despite the widespread effects of corporate crime, limited effective enforcement and regulatory practices persist. Compared to conventional crime, corporate crimes are heavily underreported, which makes it appear that they don’t occur as often as they do and are not as problematic as they truly are. The lack of reporting stems from many factors, including victims being unaware of the harms they incur from corporate crime. Further, corporate crimes are more discreet, as the effects of the illegal behavior are often removed in time from the actual commission of the crime. Corporate crime offenders are typically not present at the scene of the crime. In addition to these differences, the intent of corporate crime is not always so apparent (e.g., Ivancevich et al., 2003), as corporate offenders are less likely than conventional criminals, particularly violent offenders, to wish to inflict harm. Instead, corporate offenders generally wish to generate (often additional) capital. Corporate crimes are often viewed as “mistakes” or “the cost of doing business,” and the associated harms are often attributed to recklessness or negligence. Ultimately, the inability to directly link corporate harms with corporate decisionmaking, and the challenges associated with determining a corporate actor’s intent, result in much 163

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misinterpretation of corporate crime, the underreporting of corporate crime, and the lack of enforcement of such practices. Government groups, individuals, and groups from the general public help expose corporate crime. Among the groups in the general public are informants, whistleblowers, the media, consumer interest groups, consumers, and the general public itself. Whistleblowers and informants are helpful in the sense that they are privy to inside information. Consumer interest groups contribute by tracking faulty products that help identify corporate misconduct. The media have been particularly influential in exposing corporate crime through investigative journalism. One of the more influential pieces of investigative journalism was Upton Sinclair’s 1906 book The Jungle, in which he exposed harmful practices in the meatpacking industry, generated public uproar, and contributed to the creation of the 1906 Pure Food and Drug Act and the Meat Inspection Act. The general public and consumers expose corporate crime in several ways, perhaps most significantly by demonstrating concern for corporate misbehavior, which in turn perpetuates political response, and making efforts to recognize corporate crime when it occurs. Despite the benefits and assistance of these and other groups, the exposure and enforcement of corporate crime has largely remained the responsibility of law enforcement and regulatory agencies. Law enforcement in the United States is decentralized, as law enforcement agencies exist at the local, state, and federal levels. Most law enforcement personnel work at the local level, and this group most often interacts with the public and closely monitors local activities. Such large numbers and close proximity to the citizenry would suggest that local law enforcement plays a significant role in exposing and enforcing corporate crime. However, local law enforcement agencies are particularly limited in this regard, and have responded in a piecemeal manner to corporate crimes, often in response to citizen complaints. Among the limitations are local police officers being preoccupied with conventional crime, their lack of access to corporate practices, jurisdictional issues, their lack of resources, a lack of specialization and training, and their general lack of concern for corporate crimes which they generally view as the responsibility of other law enforcement groups and regulatory agencies. State law enforcement agencies generally suffer the same limitations, and are notably smaller in number and more distant from the public than are local law enforcement agencies. Federal law enforcement groups are largely responsible for exposing and enforcing the laws regarding corporate crime. Federal agencies have nationwide jurisdiction and greater levels of specialization to directly address most forms of corporate crime compared to other law enforcement groups. The complexity of many corporate crimes requires specialized training and education, specifically with regard to accounting, auditing, and business administration (Schlegel, 2000). There are dozens of federal law enforcement agencies, although the large majority do not primarily focus on corporate crime, as their legal jurisdiction is much wider. Primary among the other federal agencies that house personnel with interests in exposing and enforcing corporate crime include regulatory agencies such as the Securities and Exchange Commission, the Food and Drug Administration, the Consumer Product Safety Commission, and the Environmental Protection Agency. For instance, the Securities and Exchange Commission seeks to protect investors and maintain the integrity of the securities market, and typically deals with cases involving insider trading, accounting fraud, and offering false or misleading information regarding securities and the companies that offer them (Ivancevich et al., 2003). Although regulatory investigators have the authority to enter and inspect corporations without warrants or probable cause and regularly collect information regarding corporate behavior as they pertain to regulatory reporting requirements, investigating and prosecuting corporate crime remains a difficult task (Frank and Lynch, 1992). Compounding the difficulties is the fact that federal regulatory agencies are generally understaffed and lack the funding to adequately address 164

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corporate crime. These challenges have been particularly problematic during the presidential administrations that supported deregulation (Berger, 2011). Regulatory agencies regulate industry, and in doing so have to recognize the interests of both society and the corporations within the industry which they regulate. Corporate crime enforcement efforts have at times been accused of infringing the free market, and at other times have been accused of not doing enough to protect society. Regulatory enforcement of corporate crime has generally adopted two distinct styles: persuasion and prosecution. Persuasion involves encouraging corporations to conform, and relies on compliance, education, negotiation, and cooperation. It is the softer of the two approaches. Prosecution involves a reliance on the imposition of the law to encourage and sanction. Historically, regulatory practices have leaned toward persuasion, and prosecute when efforts directed toward persuasion fail. Another approach, selfregulation, or voluntary compliance, is supported by advocates of deregulation who believe that companies can monitor their own behaviors. Proponents of deregulation argue that regulatory enforcement actions generate additional problems and hamper economic progress. The particular styles adopted by the various regulatory agencies vary according to several factors, including economic and legal challenges in implementing regulations, the detectability of corporate crimes, and the political environment (e.g., Kagan, 1989). Regulators and other law enforcement officials have often been reluctant to adopt a strict enforcement approach, or the legalistic style of enforcement, due in part to the complexities associated with many corporate crimes, and the extensive resources often required to effectively formally adjudicate them. In turn, they often rely on their civil powers instead of invoking the criminal law (Lynch et al., 2000), enabling corporate offenders to avoid the construction of the negative images associated with “criminals” as opposed to “individuals who violated civil law.” Corporate self-policing or self-regulation has been proposed to address the limitations associated with the enforcement of corporate crime. Self-regulation seems an effective approach given the hidden nature of corporate crime, the lack of resources of corporate crime enforcement groups, the corporate self-interest in maintaining a positive reputation, and the fear of stricter government intervention and regulation. It is also a more cost-effective approach from the government’s perspective. However, it has been noted that self-regulation is unlikely to be effective or extensive unless external pressures encourage corporations to seriously engage in self-regulation (Braithwaite and Fisse, 1987). Further, Stretesky and Lynch (2009) examined the US Environmental Protection Agency’s Self-Policing Policy which waives or reduces penalties when companies voluntarily discover, disclose, and address environmental violations, and found that facilities which used the policy had similar subsequent Toxic Release Inventory (TRI) emissions as sites that did not use the policy, and added that formal enforcement actions were the best predictor of TRI reductions. Private police agencies have grown in large numbers since World War II, and they also play a role in exposing and enforcing corporate crime. These agencies, however, as they exist in the corporate or business setting, have often concealed rather than expose and enforce corporate misbehavior (Friedrichs, 2010), due in part to their interests in protecting the groups for whom they are employed.

Legislation and prosecution Several systems of law are used independently or simultaneously to address corporate crime. Victims may file civil suits against the corporation that harmed them, or the government may invoke the criminal law or use various administrative, regulatory controls. A benefit of private civil suits is that the victim(s) is compensated for harms. Private civil suits occur rarely relative to 165

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the extent of corporate crime victimization, although they would seemingly serve as a deterrent to corporate crime, since the civil damages awarded in civil suits are frequently many times larger than the maximum fine that the government could impose (Frank and Lynch, 1992). There is disagreement, however, regarding the effectiveness of private civil suits in deterring corporate crime, as it is argued that the financial costs and potential negative publicity would act as a deterrent, although there are examples over time in which corporate leaders have made explicit decisions to expose themselves to private civil suits based on their belief that the costs of settling the cases would be less than the profits generated (Frank and Lynch, 1992). The famous Ford Pinto case in the early 1970s in which Ford calculated that it would be cheaper to settle cases rather than recall and repair the harmful vehicles provides clear evidence (Dowie, 1977). The laws they are required to enforce hamper those tasked with enforcing corporate crime. Primary among the obstacles in enforcing corporate crime has been limited and ineffective legislative actions, which are sometimes, and perhaps often, the result of corporations using their social, political, ideological, and economic capital in shaping the law. Such power is also used to counter regulatory enforcement strategies used against them (Snider, 2009). Nevertheless, several legislative efforts have helped authorities enforce corporate crime, and to some extent discouraged corporations from engaging in crime. Among the notable legislative efforts are the Crime Control Act of 1990, which provides banking regulators with expanded tools to address fraud and other crimes in the savings and loan industries; the Racketeering Influence and Corrupt Organizations Act (1970), which seeks to prohibit the use of an enterprise and racketeering, and was originated in response to organized crime but has also contributed to combatting corporate crime; the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which enhanced many penalties associated with crimes committed by financial institutions; the Foreign Corrupt Practices Act, which prohibits companies that report to the Securities and Exchange Commission from collaborating with foreign parties to influence their decision to obtain or retain business; and the Comprehensive Control Act, or the Federal Sentencing Guidelines that Congress passed in 1984 and was later amended in 1990. Among other contributions, the guidelines provided consistency in the sentencing of corporate offenders. Certainly, other legislative acts have contributed to the enforcement of corporate crime, including mail and wire fraud statutes, and insider trading laws (Shichor et al., 2002). One relatively recent legislative effort was the 2002 Sarbanes-Oxley Act, which emerged in response to the collapse of Enron and other major corporate scandals. Among other goals, the Act sought to address corporate crime through mandatory financial reporting and increased penalties for corporate offenders. It also promotes accountability through protecting whistleblowers, emphasizes criminal liability, and demonstrates a more proactive and enforcementoriented approach that differs from the reactive approach assumed in the past. Further, the Act has increased the allocation of resources devoted to the Security and Exchange Commission and the Department of Justice to fight corporate crime. There are conflicting views regarding the Act’s effectiveness, as it is suggested that it contributed to the increased adjudication of corporate offenders with the goal of deterrence and retribution (Meeks, 2006), although it is also suggested that judges have been somewhat reluctant to impose tougher sentences, and the potential deterrent effects of this aspect of the legislation have been hampered (Harvard Law Review Association, 2009). The successful prosecution of corporate crimes is important for the effective enforcement of corporate crime, although it has been challenging on a number of fronts. Primary among the difficulties associated with prosecuting corporate crimes are the heavier burden of proof required in criminal courts compared to civil courts, determining whether to prosecute the corporation or individuals within the corporation, political pressures, a lack of resources, and the complexities 166

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associated with many corporate crimes. Further, the relatively lenient fines historically meted out to corporate offenders have discouraged prosecutors from using the criminal courts (Frank and Lynch, 1992). Research suggests that regulators generally believe the criminal laws have much potential to address corporate crime; however, they are reluctant to use the criminal justice system due to its perceived inefficiency and leniency (Snider, 2009). Prosecution is often used after methods of persuasion and encouragement of compliance fail. Prosecutors who wish to file criminal as opposed to civil charges face the burden of having to demonstrate guilt beyond reasonable doubt. In civil courts, the level of proof required is a preponderance of evidence, which is easier to demonstrate. With regard to deciding to prosecute corporations or individuals, it was suggested that “the preferred statutory scheme should generally provide for both individual and enterprise liability, with the appropriateness of each to be determined case by case through the exercise of sound prosecutorial discretion” (Cullen et al., 2006, p. 356). Historically, punishment has seldom been directed at individuals (Ermann and Lundman, 1996). The goals of prosecuting corporate crimes differ from those of prosecuting street crime, which have largely involved special deterrence and incapacitation. In contrast, the primary prosecutorial goals for corporate crime have more directly focused on general deterrence (Cullen et al., 2006). There are some exceptions to the historical use of light sentences for corporate offenders, although “these actions have yielded significant, but not lasting, financial and other consequences for large organizations” (Ermann and Lundman, 1996, p. 41).

Conclusions Despite the many historical challenges encountered with the enforcement of corporate crime, there is much room for hope. Change, however, is necessary. Society is changing, which dictates that social control efforts must adapt. Anticipating the future enables effective planning, and the onus is on law enforcement officials, regulators, politicians, corporations, and society in general in all countries to help confront corporate crime. Several commenters have offered their thoughts on how to best address corporate crime in the future. For instance, Berger (2011) noted that there needs to be a greater societal emphasis on ethics and professionalism; and regulatory, political, and media reform with the goal of making corporations more accountable and law-abiding. Others suggested that a multi-pronged approach is needed to ensure trust in the free enterprise system, and to promote fair and balanced corporate practices in the US. Such an approach, it is argued, should include corporate managers making proactive efforts to discourage misbehavior, stricter accounting systems, stronger governance systems, and more effective sentencing practices, such as more freely imposing prison sentences upon corporate offenders (Ivancevich et al., 2003). Reactive techniques have been ineffective in meeting the goals of deterrence and punishment (Meeks, 2006). Technological changes must also be anticipated in efforts to enforce corporate crime. The ease with which corporations interact with other corporations, political leaders, and consumers in various countries is unprecedented, facilitating the spread of corporate crime. Technology and its advancement create new avenues for crime. Technological advancements also generate new avenues for enforcement. Investigations are facilitated, for instance, through more effective analyses of more easily attainable data and technological devices that improve upon historical enforcement practices. For example, advancements in night vision and other detectionenhancing products assist regulators with regard to the illegal dumping of hazardous waste. Future efforts directed toward the enforcement of corporate crime may be enhanced through more freely using the criminal law to address corporate harms, and using the threat of adverse publicity. Corporations rely heavily on their images and reputations (Burns, 1999), and thus 167

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drawing substantial negative attention to corporations engaged in illegal behavior could go far toward discouraging such practices (e.g., Braithwaite and Geis, 1982; Gallo, 1998). Unfortunately, there is no single means by which effective change can occur. Various proactive efforts in several areas of regulation, law enforcement, legislation, politics, and other areas are needed. Each proposed approach to combat corporate crime must be considered with regard to resources, context, societal change, the need to balance enforcement with regulation, operationalization, and avoiding over-regulation. Progress toward more effective enforcement of corporate crime has occurred, for instance, with the crackdown on corporate crime around the turn of the twenty-first century. The hope is that the many challenges and obstacles experienced in the past may be overcome. Society is changing at a rapid pace, which provides both optimism and pessimism regarding the enforcement of corporate crime. On an international level, the US is not alone with regard to its limited response to corporate crime.

Enforcing corporate crime globally The large majority of studies on corporate crime have focused on issues within the boundaries of nation-states, which, in today’s society, “is misleading and potentially dangerous” (Wonders and Danner, 2002, p. 166). Among other limitations, the lack of an international focus on corporate crime neglects the globalism of many leading corporations, and the expected continuation of globalism in general. The many limitations of current efforts to address corporate crime globally include a lack of cooperation among law enforcement and regulatory agencies in different countries, jurisdictional issues, political pressures, differing bodies of laws, international relations, different levels of interest in doing so, and varying degrees of resources. There is no global law enforcement or regulatory agency, although INTERPOL and the United Nations seem well positioned to oversee and respond to harmful corporate behaviors of a global nature. These groups, however, suffer several significant challenges in doing so, which is unfortunate, as commerce, travel, communication, business, and crime are increasingly becoming international in nature. Comparatively, many other countries face the same difficulties as the US. China, for example, is the world’s most populous country and has become the world’s fastest growing major economy. Like the US, China lacks large, systematic data sources on corporate crime and an unwillingness to fund major studies in the area. Accordingly, corporate crimes remain hidden from the general public due to the country not wanting the image of being rife with upper-class crime, and because government officials may very well be involved in the crimes personally and do not wish to draw attention to them (Ghazi-Tehrani et al., 2013). The country, amidst its phenomenal growth, lacks coordinated efforts and resources to control corporate crime, for instance, as they pertain to the production and distribution of counterfeit goods. Strong political connections with business leaders, jurisdictional problems, and untamed environmental harms largely challenge the country. Much like the US, China’s economic interests have often outweighed concerns for corporate crime (Ghazi-Tehrani et al., 2013). In discussing how China can best address corporate crime as its economy and population continues to grow, Ghazi-Tehrani and colleagues (2013, p. 256) noted that the country would benefit from “increased and better-coordinated enforcement than by adding more unenforced laws.” They added that of equal importance, China should collaborate and coordinate with other countries and third-party organizations to help ensure better regulation. Standing in the way of progress in these areas, they noted, is the country’s need to balance enforcement efforts with concern for the country’s continued growth. 168

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Corporate crime is and has been a notable social problem. Enforcement efforts in the area have improved throughout history, although many challenges remain. The problems associated with corporate crime and the relatively limited enforcement responses to it are not confined to the US, as other countries, including China, face similar difficulties with regard to corporate crime and its enforcement. In fact, efforts to “scare,” “force,” or “threaten” corporations into operating within the boundaries of the law have been limited in their effectiveness, as they may work under some conditions and with some organizations. Understanding why individuals and organizations engage in corporate crime and recognizing the limitations of efforts to control these crimes provide a foundation for further discussion of what may be done to better address these crimes. It is hoped that we can build on the present work and make progress in several areas, for instance, by encouraging corporations to view social control efforts as something other than impediments to the “bottom line.” Further, we can work toward promoting and establishing corporate cultures of compliance in which socially responsible behavior becomes the sine qua non. Ultimately, however, it is much easier to write about changing corporate cultures than it is to actually change them.

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11 Corporate-financial crime scandals A comparative analysis of the collapses of Insull and Enron Brandon A. Sullivan

Introduction This chapter examines two major historical corporate-financial crimes in the American energy industry. Corporate-financial crime scandals have frequently occurred throughout history (Markham, 2006), causing immeasurable harm to society while receiving inadequate attention from academics, practitioners, and policy makers compared to traditional street crimes (Geis, 2007; Lynch et al., 2004; Simpson, 2002). Incentives in the securities market and corporate cultures and structures encouraging organizational deviance create opportunities for corporatefinancial crimes, only some of which become widely known through highly publicized scandals. Research into these crimes illuminates potential measures to prevent abuses undermining the legitimacy of the financial and justice systems. This chapter uses open source information from scholarly accounts and newspapers to present a comparative historical case study of two corporate-financial crime scandals: Insull and Enron. Insull involved the misuse of securities and complex corporate financing structures to carry out a massive fraud with over US$750 million in losses. Insull developed an innovative strategy for power distribution in the early 1900s, as a small Chicago utility company grew into one of America’s largest utility conglomerates. Insull sold utility securities to many small investors who believed these investments were sound, even though profits were heavily inflated and debt was hidden through deceptive accounting. Enron used similar accounting strategies to mask fraud, relying on mark-to-market (or fair value) accounting to speculatively inflate assets and remove debt from balance sheets using shell corporations. Enron collapsed when the debt could no longer be hidden, resulting in the largest corporate bankruptcy in American history at the time, at over US$60 billion in losses. Enron was the first, and arguably most egregious, in a long list of corporate-financial scandals from the 2000s. Both Insull and Enron are similarly large and negatively impactful corporate-financial crimes in the energy industry separated by 70 years. Both Enron and Insull exemplify what Black (2005) termed “control fraud,” where company leaders use their businesses to defraud others while at the same time manipulating external and internal controls to both carry out the crimes and prevent detection. Control frauds are highly deceptive even to so-called experts and are touted as safe and profitable investments. Companies 172

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like Insull and Enron were at one time presented as models of positive business practices in corporate America, despite being largely insolvent for a number of years prior to their collapse. Similar claims were made about other businesses that turned out to be control frauds deeply entrenched in corporate-financial crime, including many Savings and Loans (S&Ls) in the 1980s and major Wall Street firms in the late 2000s (Barak, 2012). Control frauds, using accounting fraud as their primary weapon and shield, typically report sensational profits, followed by catastrophic failure. These fictitious profits provide means for sophisticated, fraudulent CEOs to use common corporate mechanisms such as stock bonuses to convert firm assets to their personal benefits. (Black, 2005, p. xiv) These frauds are carried out by exploiting criminogenic environments lacking effective regulation and enforcement, and further tilt the scales in their favor through political contributions and lobbying for deregulation (Black, 2005). Despite the persistence of major corporate-financial scandals, no serious attempt has been made to address root causes of corporate abuse on a policy level. Similar scandals like WorldCom, Tyco, Adelphia, Global Crossings, HealthSouth, and Fannie Mae undermine public confidence and trust in business and government, culminating from the near-endemic failure of existing regulatory structures. While calls for reform often result from major corporate-financial crimes, enacted policies are either watered down over time through corporate lobbying efforts for deregulation or failures to address fundamental underlying problems. Many opportunities for corporate-financial crimes could be limited by simple policies designed as checks in corporate structures and eliminate potential conflicts of interest (Benson and Simpson, 2009). Further research will aid in identifying policy alternatives and crime prevention mechanisms to reduce harms caused by corporate-financial crime. This chapter emphasizes the failure of policies to prevent corporate-financial crime and the need for policy makers to address root causes of problems instead of mitigating their symptoms. This chapter offers an in-depth examination of the scandals themselves and the policy lessons to be drawn from them. First, case histories of Insull and Enron are described in detail. Second, specific aspects of both cases are reviewed, including the societal, control, and organizational contexts. Third, policy implications are discussed, focusing particularly on unaddressed problem areas.

Insull The first case is the collapse of the Insull utility holding companies in the early 1930s. The concentration of corporate power in Insull holding companies created a house of cards dependent on continuous speculative investment. Insull took out enormous debts and failed to recognize signs of instability brought on by worsening economic conditions. The Insull scandal was a major contributing factor to the 1930s Securities Acts and other New Deal regulations aimed at addressing conflicts of interest and providing stability in banking, securities, and utilities industries. In the early 1900s, only the wealthy could afford electricity. Power companies had individual lines, central power stations were rare, and small generators powered most buildings instead of central stations (Cudahy and Henderson, 2005). More than 30 power companies in Chicago provided electricity for different buildings and streets from individual generators (McDonald, 1962). Streetcar companies would use their generators during morning and evening commutes when transportation levels were greatest and street-lighting companies only used their generators 173

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at night. This began to change in 1892 when Thomas Edison’s former personal secretary, Samuel Insull, left the newly created General Electric to become president of a small, Chicago-based power company called Chicago Edison Company and secured power within the company by purchasing a substantial amount of stock (McDonald, 1962; Munson, 2005). Insull had vast knowledge of both the financial and technological aspects of the electricity industry, providing a competitive advantage against other Chicago utilities (Cudahy and Henderson, 2005). Insull believed the existing power supply structure was an incredibly inefficient and wasteful system because it kept prices too high for the average American to afford electricity (Munson, 2005). Chicago Edison constructed the Harrison Street Station, the largest centralized power station in the world at the time, to provide cheaper and more efficient electricity (Cudahy and Henderson, 2005). Insull established an anti-competition philosophy within his companies and sought to dominate the utilities industry. This attitude permeated the entire organizational culture of Chicago Edison, as salesmen were pushed to undercut prices of smaller companies. Insull blocked competition by establishing power facilities restricting other companies from supplying their customers. Insull also bribed politicians and streetcar companies to purchase power from Chicago Edison, becoming the sole issuer of electricity for several government-run transportation systems (Cudahy and Henderson, 2005). Insull’s efforts paid off, as the companies grew dramatically throughout the early 1900s. Achievements included: customer growth, from 5000 in 1892 to 200,000 in 1913 (Munson, 2005); increased electricity sales 12 per cent annually from 1900 to 1920 (Munson, 2005); increased construction projects, from $500 million in 1902 to $2 billion in 1912 (Munson, 2005); decreased consumer costs, from 20 cents per kilowatt-hour in 1897 to 5 cents in 1906, then 2.5 cents in 1909 (McDonald, 1962); expanded to 400 communities in 13 states (Cudahy and Henderson, 2005); developed over 30 state regulatory commissions with centralized, monopoly control over electricity distribution (Munson, 2005); ownership of Insull securities by thousands of individual investors, with sales increasing from 6000 in 1921 to over one million by 1930 (Cudahy and Henderson, 2005) under the perception of Insull securities as a safe investment, as the 1929 stock market crash did not immediately impact utility holding companies (Munson, 2005). Insull’s increasingly complex utility company structure is characteristic of control fraud, requiring a tremendous amount of constantly flowing capital to be sustained. Middle West Utilities was set up as a utility holding company to control the Insull expansion. Insull convinced many investors of middle to lower socioeconomic status of the security of electricity investments (Munson, 2005), highlighting the relative safety of investing in utilities with marking tactics such as the phrase: “if the light shines, you know your money is safe” (Cudahy and Henderson, 2005, p. 52). Guaranteed dividends encouraged wide investment, providing funding for Insull to acquire numerous other electric companies (Bonbright, 1972; Munson, 2005). The seeds of Insull’s downfall were planted when a private investor named Cyrus Eaton bought large amounts of Middle West securities. Fearful of losing control, Insull Utility Investments (IUI) was created to protect against an outside takeover (Munson, 2005), creating a new layer of holding companies on top of the pyramid of existing Insull-controlled companies (Cudahy and Henderson, 2005). Corporation Securities of Chicago (Corp) was also created as another holding company to purchase shares of stock in IUI. Each holding company owned stock in the other, with Insull managing both companies. However, the actual number of power-generating utility companies in the conglomerate was decreasing while utility holding companies were growing rapidly. After the stock market crash, utility companies maintained strong financial grounding due to the consistent demand for electric power, but holding companies themselves were not as stable. Insull’s business practices did not change to reflect the plummeting financial market, although dividends began to be issued in stock rather than cash to retain enough capital to 174

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continue expansion (Munson, 2005). Insull reassured investors and company employees that the companies and investments were sound. He then took out $20 million in additional loans from J.P. Morgan to purchase $56 million in IUI securities owned by Eaton, offering his companies as collateral (Cudahy and Henderson, 2005; Munson, 2005). When Insull could no longer pay interest on the loans, New York bankers appointed accounting firm Arthur Andersen to audit the holding companies. Up until that point, Insull was able to manipulate auditors to obtain favorable reviews, but this leverage could not be exerted over independent auditor Arthur Andersen. Andersen accountants re-examined Middle West’s bookkeeping and discovered the company was insolvent, having been profitless for years and funded entirely by IUI and Corp investors (Cudahy and Henderson, 2005). IUI and Corp were declared worthless stocks (NYT, 1934c). When the worthless value of the utility companies was publicized, investors rapidly attempted to sell their securities and Samuel Insull was forced to resign from leadership positions in his conglomerate of utilities and holding companies. Insull investments dropped over US$150 million in value in one week in September 1931, with share prices falling from US$570 to US$1.25. Middle- and lower-class shareholders lost their entire investment at a combined total of over US$750 million (Wasik, 2006). The newly created Securities and Exchange Commission (SEC) subsequently opened an investigation into the holding companies, citing accounting irregularities, asset value inflation, and securities misrepresentation (Munson, 2005). Samuel Insull left the United States for Europe as criminal indictments were issued against him and other executives for embezzlement, fraud, and larceny. He maintained innocence of these charges of engaging in control fraud, admitting that mistakes were made in misjudging the financial condition of companies but investors were not purposely defrauded (NYT, 1934b). In a subsequent criminal trial, Insull and his 16 codefendants were acquitted of all charges (NYT, 1934a). Both federal and state prosecutors again unsuccessfully attempted to convict Insull on related charges in the months to follow but Insull escaped criminal sanctions (Cudahy and Henderson, 2005). New Deal legislation recognized that control frauds like Insull had swindled the American people and rested on the assumption that “big business” could not be regulated effectively by the states alone (Cudahy and Henderson, 2005). Reforms included federal regulation of securities (Securities Act of 1933 and Securities Exchange Act of 1934) and utilities (Public Utility Holding Company Act of 1935 and Federal Power Act of 1935). This legislation contributed to the long-term stability, consistency, and reliability in energy distribution as well regulated utilities retaining monopolies over defined geographic locations. Although not without problems, this model became the standard for generations until renewed criticisms of regulation in the 1970s, eventually contributing to the development and downfall of Enron.

Enron Enron was once well respected, having been named the most innovative company in America six years in a row by Fortune, but this reputation turned to one of greed and fraud after Enron collapsed amidst accusations of securities fraud and inside trading. Enron involved similar complicated financial structures as Insull, resorting to speculative risk-taking to inflate stock values and cash in stock options to the personal benefit of the company’s executives. Fraud began when executives became primarily concerned with increasing stock prices to attract investors, relying heavily on control fraud and accounting manipulations instead of furthering legitimate business ventures. Enron illustrates the dangers of both organizational deviance through deception and manipulation of financial markets, and the increasing complexity and lack of transparency of corporate finance. Along with the collapse of WorldCom, Enron was responsible for the passage 175

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of corporate governance reforms in the Sarbanes-Oxley Act of 2002, which aimed to increase accountability for executives, accountants, and securities analysts. Enron emerged in 1985 under the direction of Chairman and CEO Kenneth Lay, becoming the first interconnected natural gas pipeline in the United States (Healy and Palepu, 2003). Lay sought to expand Enron’s operations by changing the energy supply structure through deregulating natural gas markets and allowing greater flexibility in pricing and partnerships. Enron took advantage of the newly deregulated energy market by trading financial contracts de-emphasizing direct control of physical assets (Van Niel, 2009). Under the leadership of Chief Operating Officer (COO) Jeffrey Skilling, Enron began to purchase other energy companies, pipelines, broadband fiber optic cable lines, and electricity plants to control major sectors of the energy distribution chain (Healy and Palepu, 2003; Van Niel, 2009). This strategy of increasing control over distribution and trading energy allowed Enron to legally siphon off and store energy to sell long-term contracts at higher rates (Skeel, 2005). The complexity of Enron’s business dealings revolved around control fraud, consisting of a maze of accounting strategies disguising the company’s true financial condition. Two techniques critical to the fraud were mark-to-market accounting and “special purpose entities” (SPEs). Mark-to-market allows transactions to be recorded based on projected future earnings instead of actual, immediate earnings. Instead of listing actual prices of buying and selling natural gas, Enron listed projected profits on various long-term contracts made with third parties, recording profits even if the project actually lost money (Healy and Palepu, 2003). For example, Enron lost over US$1 billion building a power plant in India whose generated energy was unaffordable to the Indian citizens but still recorded US$20 million in earnings (McLean and Elkind, 2003). With Enron’s losses being portrayed as profits, Enron Chief Financial Officer (CFO) Andrew Fastow heavily utilized over 300 SPEs that functioned as shell corporations to remove debts from Enron’s balance sheet (Healy and Palepu, 2003; Van Niel, 2009). As both the CFO of Enron and the manager of the SPEs, Fastow had insider knowledge of the company’s financial dealings, allowing him to personally profit from the transactions. Enron assumed most of the risk from the SPE projects, but the SPEs hid the growing debt and project losses, creating the artificial impression that the company was fiscally sound. Another common pattern of control fraud involved an executive compensation structure allowing company assets to be converted into personal profits, as many top executives were paid in stock options instead of cash (Coffee, 2002). Initially intended to attract top talent and align the interests of shareholders and managers, stock options created an incentive for executives to artificially inflate stock prices and sell back the stock at the higher price to make multi-million dollar personal profits (Healy and Palepu, 2003; McLean and Elkind, 2003). Enron’s stock prices increased from US$19 per share in 1997 to US$40 in 1999 and then to US$90 in 2000 (Windsor, 2009). The true value of the stock options was hidden from investors because they were not claimed as expenses on financial statements, further disguising the heavy debt load (Van Niel, 2009). This focus on short-term profits instead of long-term stability contributed heavily to Enron’s collapse. By 2001, Enron’s true fiscal condition could not be hidden. As new projects failed, Enron executives could no longer continue making the company appear profitable. On August 14, 2001, Skilling announced his resignation as CEO and President of Enron, having taken over the position from Lay just six months earlier (Oppel and Berenson, 2001). Lay resumed control of Enron and cited personal reasons for Skilling’s resignation (Windsor, 2009). Lay tried to reassure investors and employees by stating that the company’s condition remained healthy. At the same time, however, Enron executives (including Lay and Skilling) cashed their stock options and made millions of dollars while employees of Enron-owned businesses were locked out of their accounts, and forced to watch their life savings completely dissipate (McLean and Elkind, 2003). 176

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In late 2001, Enron restated financial earnings from overvalued profit projections for several prior years to reflect numerous profitless projects. Some US$618 million in losses were rereported along with US$600 million in decreased profits and US$3 billion in newly disclosed debt (Windsor, 2009). By November 29, 2001, credit rating agencies reduced the value of Enron securities to junk status (NYT, 2001). On December 2, 2001, Enron filed for bankruptcy and tens of thousands of employees lost their jobs. Investors, creditors, shareholders, and employees of Enron were severely harmed by the collapse, particularly those investing their retirement savings in Enron (Oppel and Sorkin, 2001; Windsor, 2009). Many Enron executives were indicted and convicted. Skilling was sentenced to 24.3 years in prison and Fastow to six years, while Lay’s sentence was commuted when he passed away (NYT, 2006). Accounting firm Arthur Andersen was found guilty of obstruction of justice for shredding thousands of Enron-related documents in the wake of the collapse, ultimately leading to the 90-year-old firm’s collapse.

Discussion The corporate-financial crimes of Insull and Enron are not anomalies occurring in a vacuum, but result from complex interactions among social institutions, corporations, and individuals. While the factors discussed later contribute to environments of organizational deviance, they do not explain how or why these contexts and organizational characteristics come together and eventually erupt into corporate-financial securities frauds. Without considering the historical context of the criminogenic environment produced through structural relations within a developing system of public–private finance, these corporate-financial scandals are often portrayed as mechanistic, knee-jerk or determinist reactions or innovations by “collective action” to facilitate the survival of these organizations by way of fraudulence (Barak, 2012). These crimes are distinctive (although massive in size, scope, and impact) illustrations of control fraud carried out by leaders of firms to amass large amounts of unwarranted power and wealth. In order to provide explanations for these forms of organizational deviance, analyses must incorporate theories of fraud stemming from a political economy of crime. Control fraud theory provides the theoretical basis for understanding how these crimes develop in criminogenic environments to produce corporate-financial fraud. Several interrelated contexts provide the basis for understanding the corporate-financial crimes of Insull and Enron, including the societal, control, and organizational contexts. This structural analysis focuses on the political-economic environment (societal context), the lack of control mechanisms to prevent these control frauds from developing (control context), and the organizational processes and structure of interactions shaping organizational deviance (organizational context).

Societal context The societal context focuses on the political-economic environment surrounding the Insull and Enron scandals, including stock market speculation, increasingly concentrated corporate power, political influences on regulatory oversight, and the introduction of new players in markets lacking appropriate regulation. Rampant stock market speculation in the 1920s was a breeding ground for fraud. Constant expansion of utilities pushed prices down for many, but this rapid expansion was built on a house of cards. While Insull weathered the early effects of the Great Depression, company executives massively inflated stock values and took on excessive debt before finally collapsing in 1932. Enron followed similar patterns of speculative stock price 177

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manipulation, as fraudulent reporting and accounting tricks replaced traditional, disciplined business and accounting practices in many well-known and powerful corporations (Cunningham, 2003), fueling economic expansion but hiding the true value of company securities (Rockness and Rockness, 2005). For both Enron and Insull, political and legislative actions encouraged illegal and unethical behavior through either corruption or negligent inaction. In addition to a history of bribing public officials to gain exclusive contracts and a large contribution to presidential candidate (and former head of Illinois Commerce Commission) Frank Smith harming his reputation, Insull continued expanding operations despite an ailing economy, in large part through the encouragement of the Hoover administration and state politicians. In the wake of the 1929 stock market crash, politicians and industry leaders worked together to reassure the public of the soundness of the financial system by continuing to spend, maintain employment counts, and promote the soundness of the failing market (Wasik, 2006). Insull continued to acquire debt, despite the deepening depression, and eventually overextended, leading to the demise of the unstable Insull holding company structure. After the 1970s changes in political finance laws, corporations and their employees were permitted to contribute to campaigns and create political action committees (PACs), increasing corporate influence over policy making (Prechel and Morris, 2010). Corporate lobbyists for Enron in the late 1990s became large political contributors to candidates supportive of deregulation and limits on existing regulatory powers (O’Brien, 2005). Securities issuers influenced policy makers to limit liabilities for accountants for fraud and prevented attempts to restrict non-audit (consulting) services provided by firms simultaneously serving as auditors (Coffee, 2002; Gerding, 2006; Rockness and Rockness, 2005). An attitude of non-intervention in business pervaded both Insull and Enron as new market opportunities opened up with little transparency and oversight. Political-economic changes increasingly concentrated power and wealth in a few elite corporations at the expense of smaller, more dispersed companies. Insull took advantage of the lack of centralized power utilities to monopolize power generation and distribution under holding companies, as once independently operated utilities came under the control of a small number of owners like Insull. Enron’s promotion of deregulation enhanced their power in energy trading to increase revenue and acquire many smaller companies. Enron executives knew that by advocating ambiguous regulatory changes and expanding to unknown markets (broadband, energy, and weather trading), they could vastly expand their market share and control multiple sectors of the energy industry. These unprofitable trading schemes covered up by accounting manipulations allowed Enron to appear highly successful for many years, but ultimately led to the company’s downfall. The laissez-faire attitude toward regulation dominated the societal context of Insull and Enron, with proponents arguing that businesses are best left to be self-regulated, with direct government oversight kept to a minimum. The central goal of the Insull utility companies was to create a private monopoly over power distribution. Insull took a different approach than other, similar corporate-financial frauds by advocating for the regulation of utility companies to counteract pushes for public ownership. To Insull, private monopolies would keep corrupt politics out of private business, drive down consumer prices, and increase service quality (Anderson, 1981; McDonald, 1962; Munson, 2005). In one respect, this was a creative adaptation of the laissez-faire economic approach, as Insull recognized the greater ease of manipulating state regulators than unpredictable scrutiny from hundreds of municipal governments. Insull became a chief advocate of state regulation to allow legal monopoly over much of the utilities industry (Wasik, 2006). State regulators in turn advanced utilities by negotiating price reductions, effectively functioning as an industry advocate. 178

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Since the reforms of the Insull scandal, energy distribution had been heavily regulated. These regulations began to erode with the Natural Gas Policy Act of 1978, which allowed consumers to choose from among multiple suppliers instead of locking them into regional distributor contracts (Van Niel, 2009). The Energy Power Act of 1992 brought about similar structural changes in electricity distribution, as third-party entities were permitted to purchase and redistribute blocks of wholesale electricity from power generators and to local companies (Van Niel, 2009). Brokers became middlemen negotiating deals between consumers and suppliers, with the goal of eliminating restrictions on energy movement between regions to create more efficient distribution and drive down consumer costs. However, this changing political-economic environment was ripe for control fraud, as many new third-party brokers were opportunists seeking easy money in the newly deregulated market. The political-economic environment of the 1990s catered to the interests of large corporations and securities issuers at the expense of individual investors, and ultimately the integrity of the financial system as a whole. The prevailing wisdom, which persists in the present day, is for free market forces to operate without (or with minimal) government restrictions. Enron not only benefited from deregulation, but Enron executives Ken Lay and Jeff Skilling were chief proponents of deregulation. This contributed to a regulatory infrastructure with limited capacity to prevent the worst harms from the Insull and Enron scandals.

Control context The control context focuses on social control mechanisms, including formal government agencies and non-governmental and informal control systems, such as industry organizations, stock exchanges, and self-imposed oversight entities. The governmental authority to govern sales of securities was not in place until after Insull’s collapse. There was no oversight mechanism for reining in potential control frauds until they were already on the verge of collapse. Once the SEC was in place in 1934, an investigation and subsequent charges were issued against key Insull executives, although far too late to prevent massive investor losses. By the time of Enron, a regulatory structure overseeing securities markets had been in place for nearly 70 years. However, neither government regulators (SEC) nor informal control agents (ratings agencies, auditors, analysts, etc.) were able to uncover the fraud until Enron was already on a highly publicized downward spiral. This is typical of control frauds, where effective market discipline is not adhered to, but instead collective willful ignorance is exercised, with non-existent or suspicious business practices and non-transparent financial transactions ignored or accepted as signs of healthy company growth. Regulators consistently lacked the proper resources (and political will) to identify the Enron fraud until the company was on the verge of collapse (Skeel, 2005). The SEC ultimately failed to closely audit Enron’s financial transactions and accounting irregularities (Van Niel, 2009). In fact, the SEC had earlier examined Enron’s use of mark-to-market accounting rules and legitimized these subjective and speculative profit estimations (McLean and Elkind, 2003). At the same time, the SEC reduced observations of major accounting firms, further compounding fraudulent opportunities. However, these failures were due in part to a political-economic climate limiting the ability of the SEC to effectively enforce securities laws (O’Brien, 2005). During periods of economic growth, regulators and policy makers face pressures to avoid restricting economic opportunities and corporate profits (Gerding, 2006). Regulators are often marginalized by these political constraints hindering the investigation and sanctioning of corporate-financial fraud. Non-governmental control mechanisms were non-existent or ineffective. Key evaluation and oversight entities that are supposed to be independent, objective evaluators of financial and 179

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trading practices, ultimately helped to create the Enron illusion. Their failure to appropriately evaluate Enron’s condition effectively condoned the fraudulent accounting methods used to manipulate stock values. Investors, analysts, rating agencies, and creditors generally did not ask appropriate questions about how Enron made massive profits, instead seeming content to blindly accept Enron as a successful company. Enron failed to produce basic accounting products such as balance sheets, income statements, and cash flow statements. Financial analysts responsible for overseeing the soundness of the securities market were employed by investment banks doing business with Enron and issued inaccurate stock value assessments due in large part to conflicts of interest in funding stock research, contributing to Enron’s deception (Aronson, 2002). Even after accounting irregularities became public in October 2001, Lehman Brothers and Merrill Lynch both rated Enron stock with strong buy recommendations. Enron paid more than US$125 million in fees to these and other investment banks from 1998 to 2000, creating a conflict of interest undermining the objectivity of their evaluations (Healy and Palepu, 2003; McLean and Elkind, 2003). Others conflicts of interest and/or acts of collusion existed among Enron and Insull auditors. Insull manipulated self-appointed auditors to approve fraudulent accounting records until J.P.  Morgan appointed Arthur Andersen as auditor, which ultimately uncovered the control fraud. Ironically, Arthur Andersen was hired by Enron nearly seven decades later and was instrumental in covering up their accounting fraud, ultimately leading to Andersen’s demise. Andersen was paid US$52 million, half for auditing and half for consulting (Van Niel, 2009), which in part influenced them not to report Enron’s true financial condition for fear of losing business. Had Andersen brought this to light, the firm would likely have been fired as auditor, but brought much-needed public scrutiny and SEC investigations. Arthur Andersen instead relinquished its once stellar reputation for honesty and integrity for short-term profits.

Organizational context The societal and control contexts alone do not explain how these frauds ultimately developed, but rather form the criminogenic environment essential for the Enron and Insull control frauds to flourish. The organizational context addresses specific behaviors of both companies and their executives in executing control fraud. Central to these frauds is organizational deviance, where collective actions are taken to carry out corporate-financial crime, regardless of whether or not these actions are illegal at the time. Excessive risk-taking and speculation included manipulation, deception, omission, and destruction of evidence to cover up wrongdoing. More money could be made through these illegitimate means than legitimate business operations, as fraudulent behavior became normalized within each company. Both Insull and Enron are classic examples of stock manipulation, as stock values were artificially inflated through overly complex and fraudulent accounting practices. Stock prices of Insull’s IUI and Corp were highly priced even though the companies held little capital and few assets aside from one another’s stock. Enron, on the other hand, used SPEs as shell corporations to hide debt and make the company appear profitable when it was actually losing money. Since much of Enron executive pay was issued in stock options, there was an incentive to increase the stock price and then sell the stock back before the price dropped, which is what many key executives did prior to the collapse. Unchecked fraud resulted in the concentration of vast amounts of artificial wealth, inflating bubbles that would eventually destroy both companies. Both Insull and Enron increasingly relied on speculative securities trading to increase their stock value, often resorting to fraudulent tactics to meet unrealistic Wall Street projections. Organizational cultures in both companies were 180

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overtaken by social pressures to maintain consistent and increasing profits, leading to the inflation of stock values to give the appearance of healthy fiscal performance and allow executives to cash their stock options, taking millions of dollars out of the company. Insull executives profited enormously from the fraud, although they lost their money when the companies collapsed, while Enron executives took massive amounts of money out of the company for personal gain. While speculation and risk-taking are not inherently dangerous and can be essential for advancing legitimate innovations, companies not producing real goods or services and taking excessive risk for the sake of money alone pose a hazard to the financial system. Complex finance made understanding what was occurring particularly difficult, offering a partial explanation for why the fraud was not detected until after the scandal had come to public light. The complexity of the financial structures was overwhelming to the point that not even those inside the companies fully understood them. The Insull financial holding company structure was so complicated that even Samuel Insull himself did not entirely understand how it worked. Enron executives knew that as long as new projects were created to show profits on balance sheets, numbers would appear favorable and investors would trust their money with the company. The iconic status of Insull and Enron allowed them to raise capital without having to explain their financial structures. Although enough information (or perhaps, more appropriately, the lack of transparent records) was available to the public for a rational investor to sense something suspicious (Cudahy and Henderson, 2005), few were able to dissociate themselves enough to question the fiscal “black boxes” until long after the scandals became public. The chaos ensuing from the Enron and Insull collapses is characteristic of other cases of corporate-financial crime, with the political-economic environment, lack of effective controls, and profit-driven organizational deviance. These corporate-financial crimes had been ongoing for many years, but came to light relatively quickly as both companies went rapidly downhill in highly publicized scandals revealing the severe consequences of the control frauds. The Insull and Enron collapses brought severe economic and social hardships for ordinary investors, many of whom were middle- and lower-class Americans. When Enron was finally forced into bankruptcy, tens of thousands of employees and investors lost their jobs and life savings. Other social costs included loss of confidence in corporations and securities, psychological distress, and criminal justice system efforts to sort through the resulting chaos.

Implications This comparative case study identified commonalities and differences between the Insull and Enron scandals, including multiple factors weakening efforts to address corporate-financial crime. Laws changed after Insull to criminalize behaviors not illegal at the time were the foundation for later criminal indictments of Enron executives, including the 1930s Securities Acts that created the SEC. After the collapse of Enron (and WorldCom several months later), confidence in the stock market eroded and the Sarbanes-Oxley Act of 2002 was quickly passed, aimed retroactively at addressing Enron and similar corporate misconduct (Skeel, 2005). President George W. Bush upon signing the Sarbanes-Oxley Act called it the “most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt” (Bumiller, 2002). While designed to increase the accountability of corporate executives, accountants, and securities analysts, many key elements precipitating control fraud were left largely unaddressed. Perhaps the most striking example of the failure to learn from history is illustrated in the differences between the handling of the aftermath of Enron and Insull and large-scale corporatefinancial frauds in the late 2000s. While Enron and other control frauds at the time were followed by attempts to address the frauds through criminal prosecutions, elite financial fraud ceased to be 181

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taken as seriously only a few short years later. Once the criminal prosecutions of the early 2000s had concluded, business as usual returned with even fewer resources for investigating corporatefinancial crime. After 9/11, 500 of the 2300 FBI white-collar crime agents were transferred to national security, representing a lack of commitment to addressing financial fraud as priorities shifted toward counter-terrorism (Black, 2013). While control efforts were seriously lacking for Enron, subsequent developments from the subprime mortgage crisis proved to be even more widespread and damaging. In lieu of criminal prosecution, deferred prosecution agreements (DPA) became even more prominent, as virtually no companies are now indicted without a DPA already in place (Spivack and Raman, 2008). This indicates a shift in focus away from criminal liability and toward cooperation with corporate lawbreakers with the goal of achieving the desired behavioral changes without the risk of negatively impacting the company. Failures of control mechanisms demonstrate that laws on the books are not sufficient to address major corporate-financial crime. Regulators and prosecutors with sufficient resources, motivation, and political will to tackle the problem are essential. The subprime mortgage crisis and subsequent bail-out of major financial institutions exemplified many persistent problems posed by corporate-financial crime. Regardless of the fact that these frauds largely contributed to the near collapse of the global economy, no serious efforts have been made to prosecute the fraud contributing directly to the 2008 financial crisis, with politicaleconomic considerations directly preventing the administration of justice in cases of fraud perpetrated by elite banks (Barak, 2012; Pontell et al., 2014). Department of Justice (DOJ) Assistant Attorney General Lanny Breuer argued that he could not bring criminal charges due to the lack of evidence to achieve a conviction and worried openly about the potential economic impact of prosecuting large financial institutions (PBS, 2013). Although he later backtracked, arguing that the DOJ aggressively pursues corporate-financial crime, Attorney General Eric Holder remarked before the Senate Judiciary Committee: I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute – if you do bring a criminal charge – it will have a negative impact on the national economy, perhaps world economy. . . . I think it has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate. (C-SPAN, 2013) The idea is that large banks are essential to the economy, and with the economy being stubbornly fragile, prosecuting frauds would destabilize a weak recovery. These prevailing political-economic attitudes of government officials and politicians allowed fraud to flourish in the name of stability, but this perspective is fundamentally flawed, as control fraud theory demonstrates that unchecked fraud erodes confidence in the financial system and inflates the bubble of the next financial crisis. These recent developments illustrate the unlearned lessons from Enron and persistent threats from corporate-financial crime. A common limitation of the existing framework is the reliance on regulators who often have similar views to those they are supposed to be regulating. Regulators are often taken from the industry they are responsible for regulating, creating an inherent conflict of interest. The justification is that industry insiders are capable regulators due to their intimate knowledge of industry inner workings. The give-and-take relationship between regulators and industries has made regulatory systems increasingly complex and many ordinary individuals lack the capacity for understanding these complications, thus supporting the insider-only preference. While the SEC was first created due to Insull and related securities frauds of the 1920s/1930s, the SEC 182

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later proved to be an inadequate regulator, as it failed to uncover abuses both prior to and after the passage of the Sarbanes-Oxley Act of 2002 (King et al., 2009). Part of the problem may be attributed to an inadequate enforcement budget (Skeel, 2005), but also to an ideological perspective of many regulators favoring self-regulation as a more effective approach than command and control. Several ideas have been proposed to address regulator conflict of interest. One alternative is to promote individuals from outside an industry to regulatory agencies. CFOs and CEOs could be required to report to outside regulators in non-technical language. This would eliminate the perceived need for industry insiders with intimate industry knowledge. This was one response to the BP oil crisis, as the Minerals Management Service (MMS) had followed this pattern and the agency was broken into several pieces with new leadership from outside the industry appointed to restructure oversight of the oil and gas industry (Soraghan, 2010). This could be a step in the right direction for reform, but relationships between industry and regulators should be given greater attention. Another alternative is to require the assignment of independent auditors and analysts to companies instead of allowing them to choose their own auditors. This idea was proposed during the 2010 financial regulatory reform discussions to address credit rating agencies whose positive ratings on subprime mortgage-backed securities contributed to the 2008 financial crisis. The proposal to create new conflict-of-interest rules for ratings companies by requiring the random assignment of ratings agencies was dropped during final congressional negotiations (Herszenhorn, 2010). While many other ideas have been discussed, regulatory failure is likely to continue in the future. Political constraints continue to weaken reform efforts. Regulatory effectiveness depends heavily upon the political will to appoint effective external regulators, which is not likely to be resolved without a reconsideration of the fundamental role of regulatory agencies in overseeing the private sector. Improved corporate citizenship is a necessary element in reducing corporate crime, but claims by corporate offenders that they are best left to fix themselves should be treated with cautious skepticism. The limits of self-regulation evident in Insull and Enron illustrate the dangers of an entirely hands-off approach to corporate law enforcement. Creative methods of addressing ethical shortcomings should be assessed, implemented, and evaluated. One strategy involves improved ethics training for business students and corporate leaders to promote awareness of the damages caused by reckless, purely profit-focused decision making and the negative influences of criminogenic corporate cultures. Enron brought increased focus to the previously obscure topic of business ethics in MBA schools (McBarnet, 2006), as graduates were concerned only with obtaining large profits by any means necessary (Grey and Clark, 2002). Further research on these programs should be conducted to determine their effectiveness. These problems lack clear and easy solutions. Potentially harmful relationships between government and corporations are well established and elites seem content with maintaining the status quo. One basic solution may rest in simply raising public awareness that these exchanges can result in large-scale social harm if unchecked. After Enron, despite claims by many that the recent corporate crime waves only consisted of a few “bad apples,” there was a broader realization that these problems are not limited to just a few corporations (McBarnet, 2006; Moohr, 2007). However, public anger was largely directed toward individual corporate offenders instead of targeting the criminogenic environment. Reform measures more often than not contain numerous loopholes later exploited while key provisions are watered down over time. Politicians alone should not be relied upon to address problems they helped to create. The public must demand accountability for government and corporate actors by becoming more aware of elite corporatefinancial crimes and pushing for balanced measures promoting stability and justice in the financial and justice systems. 183

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References Anderson, Douglas D. (1981). Regulatory politics and electric utilities: A case study in political economy. Boston, MA: Auburn House Publishing Company. Aronson, Neil H. (2002). Preventing future Enrons: Implementing the Sarbanes-Oxley Act of 2002. Stanford Journal of Law, Business and Finance, 8, 127–153. Barak, Gregg. (2012). Theft of a nation: Wall Street looting and federal regulatory colluding. New York: Rowman & Littlefield. Benson, Michael L. and Simpson, Sally S. (2009). White-collar crime: An opportunity perspective. New York: Routledge. Black, William K. (2005). The best way to rob a bank is to own one: How corporate executives and politicians looted the S&L industry. Austin, TX: University of Texas Press. Black, William K. (2013). Mueller: I crippled FBI effort v. white-collar crime, my successor will make it worse. Available at: www.neweconomicperspectives.org/2013/08/mueller-i-crippled-fbi-effort-v-whitecollar-crime-my-successor-will-make-it-worse.html. Bonbright, James C. (1972). Public utilities and the national power policies. New York: Da Capo Press. Bumiller, Elizabeth. (2002, July 31). Corporate conduct: The President; Bush signs bill aimed at fraud in corporations, New York Times. Available at: www.nytimes.com/2002/07/31/business/corporate-conductthe-president-bush-signs-bill-aimed-at-fraud-in-corporations.html. Coffee, John C. (2002). Racing towards the top? The impact of cross-listings and stock market competition on international corporate governance. Columbia Law and Economics Working Paper No. 205. Posted June 15, 2002. Available at: www.papers.ssrn.com/sol3/papers.cfm?abstract_id=315840. C-SPAN. (2013). Justice Department Oversight. Available at: www.c-span.org/video/?311311-1/justicedepartment-oversight. Cudahy, Richard D. and Henderson, William D. (2005). From Insull to Enron: Corporate (re)regulation after the rise and fall of two energy icons. Energy Law Journal, 26(35), 1–90. Cunningham, Lawrence A. (2003). The Sarbanes-Oxley yawn: Heavy rhetoric, light reform (and it just might work). Connecticut Law Review, 35, 915–987. Geis, Gilbert. (2007). White-collar and corporate crime. Upper Saddle River, NJ: Pearson Prentice Hall. Gerding, Erik F. (2006). The next epidemic: Bubbles and the growth and decay of securities regulation. Connecticut Law Review, 38, 393–450. Grey, Kenneth R. and Clark, George W. (2002). Addressing corporate scandals through business education. International Journal on World Peace, 19(4), 43–62. Healy, Paul M. and Palepu, Krishna G. (2003). The fall of Enron. Journal of Economic Perspectives, 17(2), 3–26. Herszenhorn, David M. (2010, June 15). House–Senate talks drop new credit-rating rules, New York Times. Available at: www.nytimes.com/2010/06/16/business/16regulate.html?_r=0. King, Matthew R., Corrigan, Elizabeth and Dukin, Craig F. (2009). Securities fraud. The American Criminal Law Review, 46, 1027–1098. Lynch, Michael J., McGurrin, Danielle and Fenwick, Melissa. (2004). Disappearing act: The representation of corporate crime research in criminological literature. Journal of Criminal Justice, 32, 389–398. Markham, Jerry W. (2006). A financial history of modern U.S. corporate scandals: From Enron to reform. Armonk, NY: M.E. Sharpe. McBarnet, Doreen. (2006). After Enron will “whiter than white collar crime” still wash? British Journal of Criminology, 46, 1091–1109. McDonald, Forrest. (1962). Insull. Chicago, IL: University of Chicago Press. McLean, Bethany and Elkind, Peter. (2003). The smartest guys in the room: The amazing rise and scandalous fall of Enron. New York: Portfolio. Moohr, Geraldine S. (2007). Of bad apples and bad trees: Considering fault-based liability for the complicity corporation. American Criminal Law Review, 44(4), 1343–1364. Munson, Richard. (2005). From Edison to Enron: The business of power and what it means for the future of electricity. Westpoint, CT: Praeger. NYT. (1934a, November 25). Insull acquitted with all 16 aids in quick jury vote. New York Times. NYT. (1934b, May 8). Insull is landed; says he will fight for “vindication”. New York Times. NYT. (1934c, October 24). Says Insull sold his “dying” stock. New York Times. NYT. (2001, November 29). The markets: Stocks and bonds; Investors pull back as Enron drags down key indexes. New York Times. Available at: www.nytimes.com/2001/11/29/business/the-markets-stocksbonds-investors-pull-back-as-enron-drags-down-key-indexes.html.

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NYT. (2006, October 23). Enron Scorecard. New York Times. Available at: www.nytimes.com/ref/ us/20061023_ENRON_GRAPHIC.html. O’Brien, Justin. (2005). Ethics, probity, and the changing governance of Wall Street: Cure or remission? Public Integrity, 7(1), 43–56. Oppel, Richard A. and Berenson, Alex. (2001, August 15). Enron’s chief executive quits after only 6 months in job. New York Times. Available at: www.nytimes.com/2001/08/15/business/enron-s-chief-executivequits-after-only-6-months-in-job.html. Oppel, Richard A. and Sorkin, Andrew Ross. (2001, December 3). Enron’s collapse: The overview; Enron Corp. files largest U.S. claim for bankruptcy. New York Times. Available at: www.nytimes.com/2001/12/03/ business/enron-s-collapse-the-overview-enron-corp-files-largest-us-claim-for-bankruptcy.html. PBS. (2013). The Untouchables. Frontline. Available at: www.pbs.org/wgbh/pages/frontline/ untouchables/. Pontell, Henry N., Black, William K. and Geis, Gilbert. (2014). Too big to fail, too powerful to jail? On the absence of criminal prosecutions after the 2008 financial meltdown. Crime, Law and Social Change, 61(1), 1–13. Prechel, Harland and Morris, Theresa. (2010). The effects of organizational and political embeddedness on financial malfeasance in the largest U.S. corporations: Dependence, incentives, and opportunities. American Sociological Review, 75(3), 331–354. Rockness, Howard and Rockness, Joanne. (2005). Legislated ethics: From Enron to Sarbanes-Oxley, the impact on corporate America. Journal of Business Ethics, 57(1), 31–54. Simpson, Sally S. (2002). Corporate crime, law, and social control. New York: Cambridge University Press. Skeel, David A. (2005). Icarus in the boardroom: The fundamental flaws in corporate America and where they came from. Oxford/New York: Oxford University Press. Soraghan, Mike. (2010, June 16). Interior’s new oil industry watchdog has little energy experience. New York Times. Available at: www.nytimes.com/gwire/2010/06/16/16greenwire-interiors-new-oil-industrywatchdog-has-little-43108.html?pagewanted=all. Spivack, Peter and Raman, Sujit. (2008). Regulating the “new regulators”: Current trends in deferred prosecution agreements. The American Criminal Law Review, 45(2), 159–193. Van Niel, Jeremy D. (2009). Enron: The primer. In N.B. Rapoport, J.D. Van Niel and B.G. Dharan (eds), Enron and other corporate fiascos: The corporate scandal reader (2nd edn, pp. 61–84). New York: Foundation Press. Wasik, John F. (2006). The merchant of power: Samuel Insull, Thomas Edison, and the creation of the modern Metropolis. New York: Palgrave Macmillian. Windsor, Duane. (2009). Business ethics at “the crooked E”. In N.B. Rapoport, J.D. Van Niel and B.G. Dharan (eds), Enron and other corporate fiascos: The corporate scandal reader (2nd edn, pp. 123–150). New York: Foundation Press.

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12 Corporate social responsibility, corporate surveillance and neutralizing corporate resistance On the commodification of risk-based policing Hans Krause Hansen and Julie Uldam

Introduction Multinational corporations (MNCs) are increasingly under fire and challenged by indigenous peoples, local communities and others affected by the detrimental consequences of corporate activity for their local environment and livelihoods. The oil industry in particular constitutes a site of controversy, with civil society groups exposing companies’ misconduct to public scrutiny (Du and Viera, 2012; Van den Hove et al., 2002). One of the most notorious events in the oil industry is the Brent Spar case. In 1995, Shell’s plans to dump the Brent Spar oil storage platform in the North Atlantic were blocked, as Greenpeace initiated a campaign that brought the plans into the limelight (Livesey, 2001). The same year Shell was criticized for not making an effort to intervene when the Nigerian military regime of Sani Abacha executed nine Ogoni activists who had opposed Shell for exploiting their people and land in the Niger Delta (Livesey, 2001). In 2010 BP was brought into the limelight when their Deepwater Horizon platform spilled 780,000 m3 of oil into the Gulf of Mexico (Du and Viera, 2012). Following BP’s attempt to clean up the area, local communities are still experiencing oil surfacing in areas deemed ‘clean’ by BP, sickness from toxic exposure, and a collapse in fish stocks and local livelihoods (Platform, 2014). Following this, civil society groups – both local Gulf Coast communities and civil society organizations in London where BP is headquartered – have raised questions about the oil company’s inadequate restoration initiatives in the wake of the oil spill (Bridge the Gulf, 2012; UK Tar Sands Network, 2011). A common response by oil companies has been to monitor the activities of their critics. When considering the significance of corporate efforts in more detail, a number of important questions emerge. These include not only how corporate surveillance (CS) is carried out in practice and what its impact might be on the critics, but how it goes together with private forms of regulation, including Corporate Social Responsibility (CSR) (O’Callaghan, 2007; Vogel, 2010; Scherer and Palazzo, 2011; Gane, 2012). In this chapter we focus on these two types of corporate response to resistance and their intersections – corporate surveillance of people critical of corporate conduct 186

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and CSR – and we theorize their significance for our understanding of the role of corporations in governance processes. Attempts to conceptualize this bricolage of corporate responses to public resistance already exist in the literature. For instance, the concept of corporate counter-mobilization strategies (Kraemer et al., 2013) suggests the existence of dynamic interactions between corporations’ CSR activities, surveillance and social movement organizing. CSR activities typically revolve around two issues, both of which may involve considerable public relations and marketing communications activity directed towards employees, investors, and specific communities. First, they address corporate codes of conduct, transnational standards for transparency, and financial and socio-environmental principles to be followed by corporations. Second, they emphasize the centrality of the so-called ‘business case’, including the financial benefits of being a ‘good corporate citizen’ involved in local community projects that purportedly benefit community members at large (Carroll and Shabana, 2010; Palazzo and Richter, 2005). Nonetheless, such CSR initiatives often generate civil society criticism. Corporations are accused of window dressing and hiding the dangers and shortcomings of corporate capitalism (e.g. Banerjee, 2008; Fleming and Jones, 2013). In particular, CSR activities may obscure the reason why MNCs expand their operations globally in the first place, such as the search for profits, the economic incentives relating to lower taxes and salaries, as well as lax host country regulation outside the West (Hilson, 2012). It is in response to this deepening of criticism from various fronts, including activists and watchdogs capable of creating sustained public attention to the consequences of corporate activity, that companies monitor the activities of their critics so as to salvage the reputational benefits of their CSR initiatives. The methods used include covert surveillance and infiltration to anticipate and contain the criticism (Lubbers, 2012). The chapter is structured as follows. The first section attempts an in medias res illustration of corporate promotion of CSR alongside corporate surveillance of activists, building on our own empirical studies and other recent research. Our focus is on MNCs in the extractive industry, specifically oil, gas and mine companies. In relation to their extractive activities, MNCs combine corporate social responsibility initiatives with surveillance of activists operating in the Global North as well as in the South. We first turn our attention to Europe and specifically to the UK. We focus on MNCs offering cultural sponsorships in the name of CSR while monitoring climate justice activists who protest against these activities. We analyse files from BP and Shell on individual activists in the UK obtained through Subject Access Requests under the Data Protection Act 1998 as well as press responses from the two oil companies.1 We then take a brief look at CSR and corporate surveillance and intelligence practices by MNCs operating in communities in the Global South. The extractive industry has been chosen as our key analytical object because it is characterized by social, economic and political conflicts and contestation ranging from the very local to the regional and transnational. In particular, mine, oil or gas projects leave a large environmental footprint, and their capacity to generate economic activity wields a huge influence on social, political and environmental dynamics within and across societies and regions (Du and Viera, 2012). This outline of the forces at work in corporate attempts to counter their critics paves the way in the second section for a discussion of the theoretical implications of our analysis. On the basis of a synthesis of recent literatures relating to policing and governance we argue that the contemporary bricolage of CSR and corporate surveillance may usefully be understood in relation to wider social changes, including the proliferation of private and hybrid forms of policing to protect new sites of private authority within global governance. While in various ways drawing on intelligence gathering, these forms of policing both contribute to and thrive on the emergence of global information markets where information about various forms of risk is produced 187

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and commodified. Today, corporations are better equipped than ever to anticipate, respond to and contain criticism.

Corporate counter-mobilization: corporate social responsibility and corporate surveillance CSR initiatives in the extractive industry target various publics, ranging from consumers and citizens living at a distance from the extractive process, to the local communities affected directly by it. Whereas in the Global North CSR activities typically seek to complement already existing state regulations and initiatives in a variety of issue areas, in the Global South CSR activities are played out in very different institutional contexts: extreme public sector resource scarcity, a much weaker enforcement of legislation, a lack of governmental monitoring of corporate activity, as well as widespread corruption (Matten and Moon, 2008). Governmental commitment to international conventions, most of them non-binding in the first place, are generally non-existent. It is against this background that there is considerable room for corporate self-regulation, giving way to assumptions that corporations are capable of filling ‘governance gaps’ as well as ‘policing themselves’ in the absence of strong state agencies (Börzel and Risse, 2010; Hilson, 2012). While in some regions such ‘gap-filling’ and ‘self-policing’ has involved the deployment of private military forces and the cooptation or even killing of protesters, there has also generally been a growing focus on CSR (Hilson, 2012). Nonetheless, many of the CSR activities in the extractive sector are often questioned as attempts to divert attention away from corporate misconduct, including cooperation with suppressive military forces and reluctance to take responsibility for human and environmental assaults (Platform, 2014). In response, corporations monitor the activities of their critics. Here, corporate uses of surveillance are not limited to communities in the Global South, but are also evident in Western countries where activists seek to bring into public limelight corporate misbehaviour in solidarity with indigenous peoples. In the following we illustrate these dynamics with examples from the UK, Indonesia and Guatemala. In the UK, CSR initiatives promoted by extractive MNCs have attracted various forms of criticism. Over the course of the past two decades BP and Shell have increased their sponsorships of art and culture in the UK (Chong, 2012; Liberate Tate, 2012). BP has sponsored Tate, one of the leading galleries in the UK, and the 2012 Olympics and the Cultural Olympiad, which included a Shakespeare Festival. The sponsorship involved the appointment of BP as Sustainability Partner of the Games. Shell has sponsored the Southbank Centre in London. This includes the Shell Classics International, an annual series of classical music. In protesting against oil sponsorships of UK’s cultural institutions, groups such as the Reclaim Shakespeare Company and Shell Out Sounds have organized pop-up performances of Shakespeare-inspired scripts in Stratford and guerrilla choir performances at the Southbank Centre. More generally, a wide variety of movements have criticized corporations for using cultural sponsorships in the West to divert attention from their activities in the Global South (Uldam, 2014). In response, extractive MNCs engage in the monitoring of these activists. This is illustrated in the following email with the subject line ‘Video of Reclaim Shakespeare Company at British Museum’ in which BP identifies two members from a civil society group that calls for the Royal Shakespeare Company to drop BP as a sponsor: A video from Sunday’s British Exhibition [sic] ‘pop-up’ performance. http://vimeo. com/46239547. The usual crowd were part of the action. James Anderson was once again prominent and I think he, along with Sophie Harvey, are ones to keep an eye out for in particular over the next few weeks. (BP email, 24 July 2012, 13:08) 188

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What seems to be a systematic practice of identifying activists may be further illustrated in the following email with the subject line ‘Tar Sands meeting (not in London)’. The email identifies individuals and notes that the promotion of local alternatives to relying on tar sands as a resource for energy may be expected to be taken up by the activists in question: FYI – Tar Sands Network are holding a meeting in Oxford this Sunday http://tarfreetowns. org/news/launching-tar-free-oxford/ in what appears to generate more members/increased interest in their issue which means that in all likelihood our regular activists (Sophie Harvey, possibly Alice Gordon and James Anderson) are likely going to engaged [sic] with that. (BP email, 2 August 2012, 17:08). The identification of named ‘regular’ individuals suggests that the monitoring of critics is a regular part of BP’s practices. In some cases the practice of monitoring of activists also reveals that corporations seek to avoid raising their own profile more than necessary by keeping silent about the substance of the criticism raised. This they do by simply abstaining from commenting on the issues raised by activists, or by referring to general notions of freedom of expression and rule of law. Shell’s responses to an employee of a non-profit organization, who had been criticizing the company for violating human rights in Nigeria, provide an illustration of this tactic: [David Butler] has written a piece or two recently [links to two articles] I don’t think we should respond, but I will ask the web watchers to keep an eye on retweeting etc. (Shell email, 3 March 2011, 09:38) Responding to the criticism is only considered necessary if the criticism has potential to gain visibility among wider publics. This is further captured in a reply discussing the extent to which the critical article has reached beyond the readership of the two platforms on which it was featured: Agree that responding to this article in particular would raise the profile unnecessarily, especially as it was published in February 2010 and has apparently not generated much reaction: I ran the article through [redacted] to check if any bloggers have linked through to it on their blogs – there were no hits; and the comment section at the end of the article is empty. (Shell email, 3 March 3 2011, 12:14) In another case, however, Shell in fact responded in public to critiques by issuing a statement: Shell respects the right of individuals and organisations to engage in a free and frank exchange of views about our operations. Recognising the right of individuals to express their point of view, we only ask that they do so within the law and with their safety and the safety of others in mind. (Quoted in the Guardian, 1 March 2013) By making this public statement, Shell constructs an appearance of inclusivity, albeit without engaging with the substance of the criticism, which questions the ethics of the company’s operations. Such corporate surveillance is often carried out by means of contracting with risk assessment and PR agencies. One example that relates to the UK is the risk assessment agency Exclusive Analysis (EA). EA produces analyses of socio-political environments so as to ‘forecast reputation 189

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risks’ for a variety of sectors, including the extractive industries. In May 2012 the Head of Indicators and Warning from EA contacted a freelance documentary photographer who had covered political protest in the UK for news media, including the Guardian. In the email, he described his job as ‘producing objective forecasts of civil unrest in the UK’. He explained that he had been ‘analysing the actions of many of the groups that you have encountered over the years’, just as he had ‘followed Climate Camp, Rising Tide, UK Tar Sands Network and UK Uncut and others regularly on social media’ (email, 2 May 2012). While there is no specific mention of oil companies, EA specializes in providing risk assessment to the energy sector. Several of the groups that the agency monitors are concerned with issues of climate change, and with a history of criticizing BP and Shell. In her research on corporate spying on activists in Europe, Lubbers (2012) shows how former intelligence officials (e.g. from police or military agencies) are hired by private companies to conduct intelligence gathering, working exclusively for the interests of a company. This facilitates information flows between public authorities and private companies, as private security and intelligence agents use their connections with former colleagues. Companies can thus access information about the whereabouts of corporate critics known to the police as activists engaged in civil disobedience (Lubbers, 2012). For BP, for example, monitoring the activities of activists entails keeping up to date on the police’s handling of individual activists, as the following email shows: [Redacted] is keen to know what was the outcome of Brian Jones’s detention last week: was he arrested & charged or released without charge? (BP email, 17 April 2006, 17:04) In all, BP’s and Shell’s monitoring of activists, with the intention to anticipate and contain criticism, is closely connected to their efforts at constructing and protecting the image of being socially responsible corporations. This dynamic is manifest in the Global North as well as in the South. Extractive companies involved in the surveillance of activists in communities in the Global South, often in conjunction with local elites, is a phenomenon widely documented in the literature (e.g. Imai et al., 2007; Welker, 2009). For example, an environmental activist seeking to document environmental damage to the quality of water close to a gold-mine in Guatemala run by Canadian Goldcorp was subject to surveillance and threats, and ultimately had to leave the community (Imai et al., 2007: 139). Companies also use local elites as the ‘first line of corporate defence’ against activists. This is a strategy which is combined with community welfare projects sponsored by companies and clearly relates to wider CSR commitments (Kraemer et al., 2013; Welker, 2009). As Welker observes (2009: 143) with reference to the US-based Newmont Mining Corporation’s operation in Indonesia, local civilians are drawn ‘into the sphere of corporate security through community development’. Corporate sponsorship of community development is important to cultivate allies, gain access to territories, and to obtain detailed knowledge about what is going on. Optimistic studies on CSR have pointed to the disciplining effects of protests against oil and mining companies’ operations, arguing that indigenous people and communities can push companies to adopt CSR policies (e.g. Kapelus, 2002). This has the potential to contribute to win-win scenarios. However, as the examples show, while companies do respond by adopting CSR policies, they also respond with a range of other counter-mobilization strategies, such as surveillance and related intelligence practices.

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Theorizing the role of CSR and corporate surveillance in global governance The earlier observations raise a number of important issues that we address in the remainder of this chapter. In particular, we discuss how we can theorize the role played by corporate surveillance and intelligence practices alongside CSR initiatives at a time when MNCs operate in a wide variety of structurally different settings, facing multiple and generally critical publics. Here we suggest that the contemporary nexus between CSR and corporate surveillance may be usefully understood in relation to the proliferation of hybrid forms of policing to protect new sites of private authority. While ultimately aiming at the production of security and order (Kempa et al., 1999), these forms of policing both contribute to and thrive on the emergence of global information markets where intelligence about various forms of risk is produced and monetized. This intelligence is valuable to corporations as they seek to protect the reputational benefits of their CSR activities with efforts to anticipate and contain civil society criticism. Traditionally, policing and its associated surveillance and intelligence practices have mainly been associated with governmental authority, i.e. the state. However, in recent years researchers have begun to investigate the role of non-state actors, including corporations in policing, surveillance and intelligence. For instance, business ethics scholars have examined intelligence-gathering among companies, with a particular focus on the thin line between legitimate corporate intelligence practices vis-à-vis competitors and the questionable if not unethical and illegal industry of espionage proper (e.g. Crane, 2005). While also focusing on the role of these practices in relation to issues pertaining to market competition, management and communication scholars have started examining the ways in which companies try to anticipate criticism, most recently on the basis of ‘big data’ and various forms of sentiment analyses (Coombs and Holladay, 2007; Hearn, 2010; Jones et al., 2009). Scholars of political science, international relations, law and criminology have focused in more detail on the growing corporate employment of risk management and military personnel to resolve various security-related tasks (Gill and Phythian, 2012). What is particularly interesting in these strands of literature is not only the recognition of the important role of surveillance and intelligence practice as performed by private actors for issues relating directly to issues of market competition (business intelligence and spying), but also that governance functions conventionally undertaken by public authorities have become a matter for corporations to perform. Corporate policing has become increasingly important. As Joh (2005: 615) has observed, many corporations ‘seek to safeguard property and the lives of those on that property, to plan against risks of all kinds – street crime, riots, terrorism, natural disasters, and so on – to be first-response problem solvers, and to maintain a public reputation’. In corporations that span multiple legal jurisdictions, the workforce assigned to various forms of policing and security prevention and problem solving can be large. In Nigeria, for example, by the late 1990s, 20 per cent of Shell’s workforce was devoted to security tasks, with the company relying on an extensive system of surveillance of protests and conflicts (Watts, 2005). Part of this story is also the surge of private investigative and intelligence companies since the end of the Cold War, firms that are staffed with former government employees and work largely unchecked by law enforcement agencies. As a former government MI5 security agent comments: The big change in recent years has been the huge growth in these companies. Where before it was a handful of private detective agencies, now there are hundreds of multinational security organizations, which operate with less regulation than the spooks themselves. (Armstrong, 2008: 2; see also Ruskin, 2013)

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Other research has also shown how former intelligence officials from police or military agencies are hired by private companies to do intelligence gathering (Lubbers, 2012). These intersections between public and private policing are unfolding in the face of a growing role for non-state actors, especially corporations, in assuming tasks that (especially in the Western world) were previously managed by governments and public agencies. Private authority, privatized regulation, political CSR, multi-stakeholder and civil regulation are among the concepts that have been used in the literatures to depict these developments (e.g. Cutler et al 1999; Haufler, 2006; Scherer and Palazzo, 2011). These concepts in various ways point to important developments, but we have to include other literatures as well in order to understand not only how CSR and corporate surveillance and the rationales that underpin them take shape, but also how these practices, as we have already observed, in fact transcend established distinctions between public and private forms of policing (Kempa et al, 1999; O’Reilly, 2010). Where is, for example, the exact boundary between the public and private in the CSR and surveillance practices illuminated in the earlier section? The following discussion provides suggestions for how we can conceive of these issues. One first point is that surveillance generally aims at getting intelligence for the purpose of control, and as such it involves the gathering of information through acts of monitoring, and subsequent analysis and evaluation of information (Lyon, 2007; Gill and Phythian, 2012: 43). In a wider sense, as we can derive from our empirical observations in this chapter, intelligence is about the production of strategic knowledge, which, following Rathmell (2002: 89), is ‘targeted and actionable’, involving ‘predictive knowledge for specific consumers’. The production of intelligence may involve secret methods and sources, as our examples from Shell and BP suggest, but these are not defining for intelligence as such (Rathmell, 2002; Gill and Phythian, 2012: 31). A second point relates to governmentality. Governmentality refers to the particular rationalities and technologies deployed in the conduct of conduct, and it is conventionally distinguished from two other dimensions of governmental power: (1) the techniques and practices by which human beings are made subjects to regular and predictable routines, also termed discipline, and (2) sovereignty, which refers to the command of central authority over territory. Crucially, governmentality is not exclusive to the state and its institutions of government. It may also form part of non-state institutions, ranging from state agencies to social movements and corporations. Thus, governmentality dissolves the otherwise conventional boundaries between public and private, state and civil society, national and international. However, this does not imply that the state is abandoned as a locale from which ‘many “private” powers derive their support for their authority’ (Garland, 1997: 175). From this vantage point, an extended concept of policing may be developed. Policing has become intrinsically related to risk rationalities and risk management technologies that draw upon market logics (Ericson and Haggerty, 1997; see also Power, 2007). While the repressive, punitive or deterrent measures to control have always been part of policing, the production of knowledge of ‘risky’ sites, processes and populations has become of growing importance. As such, risks are not first-order things but rather the product of social processes by which objects become recognized and described as risk. When objects of concern are described in terms of risk, ‘they are placed in a web of expectations about management and actor responsibility’ (Power, 2007: 6). ‘Risk-based policing’ is based on the gathering of information in order to prevent and make predictions. Thus, policing becomes a matter of intervening before the event rather than reacting to it (O’Malley, 2010). It is in this light that we may think of corporations’ attempts to anticipate reputational risks posed by activists through surveillance, and also the efforts to contain them through tactics of silencing their critique, as a form of risk-based policing. Such risk-based policing not only targets 192

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specific named individuals, however, as our examples with Shell and BP suggest. Andrejevic’ s (2014) distinction between targeted and generalized surveillance suggests that risk-based policing combines different forms of surveillance and intelligence practices. Whereas the former monitors particular named citizens, the latter refers to the monitoring of public opinion more broadly, relying on ‘increasingly ubiquitous and comprehensive forms of data collection’, popularly known as big data (Andrejevic, 2014: 56). Big data analysis is mostly in the hands of government and corporations, which use big data to ‘nudge, persuade, to influence’ (Richards and King, 2013: 44). In this context, governments and corporations are central players in an expanding information market where all sorts of data – small and big – about risks is commodified. By commodification we mean the process through which such information is incorporated into capitalist accumulation, to draw upon a Marxist conception of commodification (Scholte, 2005: 161). Risk information becomes commodified through its hardware (equipment such as computers), software (digital programs that process information through the hardware), service (specialized IT consultancy companies) and content (facilitated by telephone companies and satellites, online service providers and cable suppliers). As Scholte remarks, ‘information and communications have become important to capitalism not only as infrastructure to facilitate other processes of accumulation, but also as major objects of accumulation themselves’ (Scholte, 2005: 171). Hoogenboom (2006) has coined the term ‘grey intelligence’ to refer to the hybrid nature of contemporary intelligence practices that rests on such risk information produced by a wide range of actors in information markets. These include private entrepreneurs delivering informal intelligence products, such as: background information on (potential) employees; risk analyses of markets, competitors and countries; fraud investigations into internal fraud, due diligence reports of potential merger partners and for instance personal information (political interests, social behaviour, financial position etc.) of employees. (Hoogenboom, 2006: 380) The rise of information markets where intelligence is commodified for risk management purposes reflects that ‘risk’ has produced new actors and networks engaged in a much wider ‘risk industry’ (Ericson, 2007). More than a state-corporate symbiosis proper (O’Reilly, 2010), the risk industry is an assemblage of governmental, commercial, non-governmental and hybrid actors that supply powerful actors with managerial instruments, information about benchmarks for best practice in ‘risky’ areas or zones, rankings and other devices.

Discussion and implications Recent reporting suggests that MNCs’ surveillance of their critics is widespread (Lubbers, 2012; Ruskin, 2013). This is reflected in our examples from the oil industry, where BP and Shell monitor individual citizens in order to anticipate reputational risks and contain criticism. We suggest that in the context of a growing role for non-state actors, especially corporations, in assuming tasks previously managed by governments, these practices may usefully be understood as riskbased policing that both produce and draw on ‘grey intelligence’ that spans public, private and civil society domains, and is subject to commodification processes on information markets. Grey intelligence resonates well with broader theoretical discussions about polycentric governance (Scholte, 2005), with Foucauldian studies of neoliberal governmentality and not least with studies of policing (Haggerty and Ericson, 1997; Kempa et al., 1999; Joh, 2005; Williams, 193

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2005; Baer, 2008; O’Malley, 2010; Sklansky, 2011). It suggests forms of social control based on organizational rationalities and technologies deployed by state as well as non-state actors, and it implies the proliferation of market rationalities and procedures within policing (whether public or private). Such tendencies are particularly clear in the extractive industries, where major extractive companies deploy knowledge, expertise and technologies delivered by private guards, risk analysis bureaux and other commercial actors, such as the printed media. The supply of such ‘risk management tools’ may facilitate the enrolment of corporations into the fighting of ‘bad things’, conventionally thought to be the key task of state authority, while cultivating their competitiveness aspirations (Hansen, 2011). In other words, rather than being simply exercised through a centralized bureaucratic apparatus such as the state, we need to also consider policing as a form of power that is exercised through logics of problematization, calculation and intervention undertaken by a host of different actors. The expansion of corporate surveillance comes at a time when corporations are promoting their commitment to CSR more insistently than ever, in communities in the Global South as well as in the North where global justice activists criticize CSR initiatives as ‘greenwashing’ (Hilson, 2012). In both of these contexts, corporate policing is impossible without information gathering and intelligence, relying on the deployment of risk and surveillance technologies (Ericson, 2007; Lyon, 2007; Andrejevic, 2014). It is with these developments in mind that our analysis of extractive MNCs’ surveillance of activists should be considered as a modest first step towards understanding the dynamics of corporate surveillance and CSR today, and their broader significance for corporate power and governance. We suggest that future research may usefully address two interrelated issues. The first issue concerns the theorization of the different modes of surveillance and intelligence afforded by neoliberal governmentalities and the particular forms of policing associated with them. There is much to gain, we believe, by further refining the concepts of information markets and grey intelligence, their underlying political economy, and importantly, the different ways in which state, market and civil society actors deploy different surveillance models, ranging from panoptic to synoptic (Sadler and Lloyd, 2009; Gane, 2012). The second issue concerns the place of corporations within regimes of surveillance from the perspective of ‘targeted’ and ‘generalized’ surveillance (Andrejevic, 2014). In this respect, the proliferation of monitoring technologies that enable intelligence gathering on the basis of big data warrants particular attention. The power of big data resides in its predictive capacity, and in particular, its power to enable pre-emption. (Kerr and Earle, 2013: 67). Pre-emptive predictions do not adopt the perspective of individuals, but are typically made from the perspective of a corporation or a state, which seeks to anticipate certain types of action. Pre-emptive predictions raise new questions about responsibility. By combining ‘targeted’ and ‘generalized’ surveillance, corporations are now capable of predicting pre-emptively the activities of their critics – in communities and in the north – and thus better contain them, in much more encompassing ways than previously. This observation raises important concerns about the boundaries of privacy, about who is privileged by these technologies and who is marginalized and, of course, about the wider rationales of corporations’ engagement with CSR, and their policing of critics.

Note 1 All civil society individuals have been anonymized to protect their families. With a single exception (the human rights non-governmental organization [NGO]), none of the groups have been anonymized. This decision has been made with informed consent from the activists included in this study. The Data Protection Act allows individuals to request copies of personal information that UK-based organizations hold on them www.legislation.gov.uk/ukpga/1998/29/contents. 194

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13 Walmart’s sustainability initiative Greening capitalism as a form of corporate irresponsibility Steve Lang and Lloyd Klein

Introduction As the world’s largest retailer, Walmart has reshaped the institutional structure of the global economy and the market for consumer goods because of its “market-making capacity” that enables it to specify the rules of conduct and standards of performance for thousands of its global suppliers. The Walmart protocol has emerged as a new template of twenty-first-century capitalism that has shifted the balance of power and control from the manufacturer to the retailer, making “the retailer the king and the manufacturer of his vassal.” Walmart is more than a company that buys and sells products. As Nelson Lichtenstein has argued, “By its very existence and competitive success, it rezones our cities, determines the real minimum wage, channels capital throughout the world, and conducts a kind of international diplomacy with scores of nations.” In short, the company’s management “legislates” for the rest of us key components of American social and industrial policy (Lichtenstein, 2006: 5). The retail giant is also influencing environmental and sustainability issues, policies and practices. Its mission to make consumption smarter and more sustainable is exerting far-reaching and troubling impacts throughout the globe. As we will demonstrate, Wamart’s sustainability agenda reflects and reinforces a disturbing neoliberal trend in environmental governance that views environmental threats and problems as marketable and profitable business opportunities. While, in the past, the inevitable harmful environmental and social costs associated with unbridled capitalism were denied or dismissed as irrelevant externalities, they are increasingly coming to be viewed as assets that can be addressed and solved by market-based solutions. The hegemonic triumph of market knows the best discourse reflected in Walmart’s embrace of sustainability with its emphasis on greening consumption, deflects attention away from regarding environmental problems as resulting from systemic and structural features of unregulated capitalism, and in turn, naturalizes and legitimates a depoliticized, individualized and highly commodified approach to solving them. While the environmental harm and devastation caused by corporate generated consumption has been well documented, this chapter will focus on how such notions have been buried and replaced by the delusionary and powerful notion that consumption can be a positive force for environmental betterment (Brisman and South, 2014; Bluhdorn and Welch, 2007). As the world’s largest “cathedral of consumption” (Ritzer, 2011), Walmart has become a leader of the growing religion of sustainable consumption with its proclamation that the 197

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purchasing power of individual consumers can solve the environmental crisis. By obscuring the fact the power resides in the hands of corporations as opposed to individuals, such an ideology paves the way for unsustainable environmental practices that harm people and the planet.

From the discourse of sustainability to the rise of green consumerism The discourse of sustainability has become both ubiquitous and elusive in discussions about environmental problems. The term rose to prominence following the publication of a 1987 report by the World Commission on Environment and Development entitled Our Common Future, where it was defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” The stress on sustainability represented a paradigm shift away from the prevalent view, which held that the economic logic of capitalism was inherently environmentally destructive and that there might be limits to continuous economic growth and development. One of the major appeals of sustainability discourse was that it replaced environmental pessimism focused on limits to growth with a more positive pro-growth stance. At the core of sustainable development is the notion that economic growth, environmental protection, and social equity concerns are compatible. Instead of viewing economic growth and development as an environmental negative, proponents of sustainability argued that it was possible to strike a balance between economic growth, environmental protection, and social equity. Advocates of sustainability constantly envision win-win scenarios where making profits and protecting the environmental health of people and the planet go hand in hand. This win-win discourse is commonly referred to as the three Es or the sustainability triad. The rise of sustainability as a political discourse is wrapped up in the wider process of neoliberalization, in which market-led economic development is prioritized over ecological and social justice. For the most part, existing forms of sustainability have actually downplayed, and sometimes entirely ignored, the environment and equity side of the sustainability triad in favor of economic growth. The discourse of sustainability has helped to bring about a shift in attitudes toward the harmful environmental consequences of consumerism. Unbridled consumption had long been regarded as a major source of the modern environmental crisis. During the first US Earth Day celebration held in 1970, unlimited economic growth and the excessive consumption that accompanied it were vilified as environmental evils. Environmental activists pointed out that our consumer culture created a culture of waste that used up resources and damaged the environment. According to Majfud (2009), “Trying to reduce environmental pollution without reducing consumerism is like combating drug trafficking without reducing the drug addiction.” In a relatively short period of time, partly as a result of the emphasis on sustainable development, consumption went from being an environmental sin to a positive virtuous activity that was viewed as beneficial for both the economy and the environment. By the twentieth anniversary of Earth Day, instead of attacking the ethos of consumption, many environmental organizations and activists began to preach the gospel of green consumerism and environmentally conscious shopping. Instead of damaging the environment, many came to regard shopping as a way to save it. For advocates of sustainable consumption, people’s buying power began to be viewed as a powerful force for change.

Walmart’s environmental moment and codifying the sustainability of its suppliers The gospel of green consumerism received a major boost in 2005 when Walmart launched its sustainability initiative which, according to Goleman (2009: 81), set off an “ecological earthquake” that marked the dawning of the era of “radical transparency” in the ecological marketplace. 198

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Walmart began touting the discourse of sustainability in the aftermath of negative publicity campaigns conducted by labor, community, and environmental organizations that portrayed the company as a behemoth that exploited its workers, squeezed its suppliers, and devastated communities and the environment. What began as a purely defensive public relations strategy emerged as a sound business strategy after the company realized that its various greening strategies were big money savers. Its initial formulation had three goals: to be supplied totally by renewable energy, to create zero waste, and to sell products that sustain our resources and the environment. At a press conference in 2005 shortly after the Katrina disaster, former Walmart CEO Lee Scott asked, “What if the very things many people criticize us for – our size and reach – became a trusted friend and ally to all just as it did in Katrina?” (Walmart Sustainability Hub). At first he admitted that “a Walmart environmental program sounded more like a public relations campaign than substance” but soon came to realize that being a good steward of the environment and an efficient and profitable business are not mutually exclusive. While one of its major sustainability goals is “to sell products that sustain people and the environment,” Walmart is quite outspoken about how going green and adopting sustainable practices is less about ecological enlightenment and more about the ability to maximize profits. For Friedman, Walmart’s sustainability agenda is not only good for the company; it represents a sustainability model that could save the ecological health of the entire planet. What he refers to as the “Walmart environmental moment” starts as a defensive public relations branding strategy and almost accidentally: someone in the shipping department takes it seriously and comes up with a new way to package the latest product and saves $100,000. This gets the attention of the C.E.O., who turns to his P.R. adviser and says, “Well, isn’t that interesting? Get me a sustainability expert. (Friedman, 2007) As part of its broader mission to make the production and consumption of goods smarter, more efficient, and transparent, Walmart developed a sustainability index to measure, monitor, and rate the environmental footprint of the products it sells across the entire supply chain. As part of its strategy to collect and index data on thousands of products and to measure their impacts upon people and the planet, the company created a research consortium that would tap into a global pool of experts from academia, environmental organizations, and the corporate world. Utilizing life cycle analysis tools and concepts, these efforts by Walmart would codify and measure the sustainability performance of its suppliers.

Walmart’s greening strategy as an exemplar of ecological modernization Walmart’s shift toward sustainability is closely associated with the emergence of ecological modernization theory, which, much like the discourse of sustainability, views environmental degradation not as an impediment but as an impetus for economic growth. Eschewing notions based on limits to growth and fear and distrust of technology, industrialization, and consumerism, the discourse of ecological modernization views “continued industrial development as offering the best option for escaping the ecological crisis of the developed world” (Foster, 2012: 219). This starts from the conviction that the ecological crisis can be overcome by technical and procedural innovation and calls for a new phase of industrialization organized around new technology, intensive environmental reforms such as industrial ecology, environmentally conscious manufacturing, and ecological design (Cohen, 2006). For ecological modernization proponents the “ecological deficiency” of industrial society is the driving force for a new round of industrial innovation that would enable firms to internalize the environmental externalities without disrupting their ability 199

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to make profits, with the result that improving the environmental bottom line and the economic bottom line become one and the same (Foster, 2012: 219). Instead of focusing on the downstream impacts of the industrial process and cleaning up the damage and pollution that has already occurred, ecological modernization theory involves a paradigm shift that calls for transforming the upstream side of the production process so that pollution and environmental damage doesn’t occur in the first place. Closely related to this are consumption chains or the strong emphasis on the consumption side of global production. By using ideas of industrial ecology to focus on the entire life cycle of products, including the processes of extraction, production, use, and eventual disposal, Walmart has adopted a core idea of ecological modernization theory, becoming a particular form of American-style ecological modernization (Schlosberg and Rinfret, 2008). By greening consumption and making it more efficient, Walmart is putting into practice the long-standing motto of ecological modernization discourse: “pollution prevention pays” (ibid.).

The greening of Walmart and neoliberal environmentalism Walmart’s sustainability initiative has received both praise and ridicule. Numerous scholars and environmentalists, many of them former critics of the retail giant, have argued that despite its many faults, Walmart may be the only entity capable of making sustainable production and consumption a reality. As the world’s largest employer with immense power and influence over the manufacturing and production process, Walmart could finally bring about environmental changes that many had been fighting for but were unable to achieve. Former Sierra Club President Adam Werbach exemplifies this attitudinal shift in favor of a more corporate-friendly environmentalism. Despite once describing Walmart as “a new breed of toxin that could wreak havoc on a town,” he began working with the retail giant on its sustainability agenda, which he has hailed as a green revolution that could transform business and save the world (Sacks, 2007). For Werbach and many other sustainability proponents of green capitalism, corporations are no longer regarded as the enemy but as the friend of the environment. Such ideas have led some to argue “that it is getting harder and harder to hate Walmart ”(Alter, 2006). The notion that corporations can solve environmental problems better than government reflects a growing acceptance of neoliberal market-knows-best strategies that promote privatization, free trade, deregulation, and global competitiveness. According to Peck and Tickell (2002), neoliberalism consists of two phases: the ‘roll-out’ neoliberalism of the 1970s and 1980s in which state regulation of the economy and cuts in social spending characteristic of welfare state capitalism were progressively dismantled in order to unleash the free market, and a roll phase in which assorted private–public partnership schemes and governance structures come to replace the functions of the state in many spheres of society ranging from prisons to parks to schools, and more. Walmart’s sustainability initiative combines aspects of both neoliberal tendencies. On the one hand, Walmart funnels campaign cash to politicians who vote against environmental regulation and protections to ward off and roll back unwanted government regulation that might curtail its profit-making ability (Mitchell, 2014). On the other hand, it has developed strategic partnerships with both major and small-scale environmental organizations, NGOs and assorted non-profits that serve both ideological as well as economic functions. The Environmental Defense Fund touts working with Walmart as a win-win proposition because it is able “to leverage what the retailer does best – creating efficient systems, driving change down through its supply chain and accessing a huge customer base – in order to dramatically advance environmental progress.” According to Bloom, (2014: 8), “in working with public and non profits, Walmart is able to outsource costs, risks and responsibilities of developing local supply chains.” 200

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Walmart’s emphasis on public–private partnerships reflects a troubling global environmental governance trend that Dauvergne and Lister (2012) refer to as “big brand sustainability.” Increasingly, multinational corporations like Walmart are hailed as “global sustainability champions” that in the absence of strong governmental regulatory mechanisms enables them to behave as global environmental regulators. While these trends would suggest a need for stronger state regulations and tougher international legal constraints, such ideas are losing out on the ideological front. Increasingly, the notion that large corporations like Walmart can voluntarily regulate and police themselves more effectively than government is coming to be viewed as legitimate by many in the environmental movement who have been frustrated by slow progress and small gains. The tendency to place faith in the beneficence of corporate environmentalism is reflected in the increased importance granted to the emerging field of life cycle analysis, which is, as we have seen, a core component of Walmart’s sustainability indexing program. Unlike other fields such as medicine and nutrition that companies might use to gain information and knowledge about products that could bolster their brand image, the discipline of life cycle analysis is a corporate invention. The field itself is a product of corporations with vested commercial interests who rely on life cycle analysis to create so-called objective and scientific environmental knowledge about products (Friedberg, 2014). Once again, this reflects the neoliberal tendency to embrace market-based solutions as the means for solving environmental problems instead of relying on government regulation. The celebration of corporate partnership models that are hailed as being more effective than state-led governance represents a victory for corporations like Walmart who are able to boost both their environmental reputation as well as their bottom line. More importantly, and far more problematically, these practices represent the triumph of the ongoing neoliberalization of global environmental governance and the legitimation and naturalization of the misguided notion that corporations know what is best for people and the planet.

Enlisting citizen consumers to the Walmart Way Walmart often claims that its sustainability initiative is a response to the purchasing power of environmentally conscious consumers who are concerned about products manufactured under conditions that exploit workers and degrade the environment. The gospel of sustainable consumption with its chorus of environmentally concerned citizens voting with their dollars is the latest version of the consumer sovereignty ideology being used to mystify where power resides in a capitalist economy. The consumer sovereign ideal suggests that not only do consumers benefit by being able to choose from a variety of goods, but they possess the power to drive the economy by suggesting what goods and services will be made available (Cabrera and Williams, 2014). Such a notion abuses one of the key insights at the core of C.W. Mill’s “sociological imagination,” namely the ability to recognize how our “personal troubles” are connected to “public issues” that transcend the individual. For example, the modern feminist movement was able to reframe women’s psychological pain as a symptom of gender inequality and patriarchal oppression, insisting that “the personal is political.” In a similar vein, environmental social movements have often reframed people’s personal or private misfortunes so that they are viewed as social problems that are caused by social structural forces. In the case of environmental toxics and environmental health, the movements reframed people’s personal experiences as public issues by telling them that the miscarriages, birth defects, cancers, and high rates of asthma in their communities were not private or personal tragedies but the result of irresponsible corporations polluting their environment. In recent years, child obesity and its associated health problems has recently undergone the transformation from a personal problem into a public issue about access to healthy and nutritious food. 201

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The discourse of sustainable consumption with its mantra of citizens voting with their dollars downplays social structural causes of environmental problems and shifts the focus to the individual consumer. It transforms a public environmental issue into private troubles, with the result that people go from being citizens concerned with changing political and economic structures and institutions into individual consumers concerned with protecting or enhancing their lifestyle. Maniates refers to individual responses to environmental problems as the “individualization of responsibility” and the inability to think institutionally. He argues, “when responsibility for environmental problems is individualized, there is little room to ponder institutions, the nature and exercise of political power, or the ways of collectively changing the distribution of power and influence in society” (Maniates, 2001: 36). Consumption in a global capitalist economy is not an individual act performed by sovereign consumers but rather a set of practices embedded in wider economic, social, and cultural systems. While Walmart stores may seem like a consumer paradise where individuals exercise their freedom of choice, the emphasis on individual buying power obscures the degree to which choices are “constrained, shaped and framed by institutions and political forces that can be remade only through collective citizen action, as opposed to individual consumer behavior” (ibid.). The armies of citizens who flock to Walmart aren’t changing the corporate structure as much as strengthening and legitimating its stranglehold (Johnson, 2008). As Guthman and DuPuis (2006: 443) write, “we have all but abandoned notions of citizenship as participation in the public sphere for a more individualist notion of self as the citizen consumer whose contribution to society is mainly to purchase the products of global capitalism.” Likewise, Reich (2005) has argued that people have split personalities when it comes to Walmart. They act as citizens who call for the company to clean up its environmental act at the same time as they endlessly consume in search of bargains. For Barber (2007), the notion of citizen consumer advocacy is quite limited and does not address the structural inequality wrought by a capitalist system that seeks perpetual expansion through the manufacture of wants and needs of well-heeled consumers. Meanwhile, the green citizen consumer idea co-opts a more skeptical attitude toward the social and environmental impacts of excessive consumption. It also reinforces and helps legitimate the neoliberal corporate-friendly environmentalism championed by Walmart and its supporters that is severely limited because of its reliance on the market to address environmental concerns. In other words, environmentally concerned citizens are reduced to choosing from a wide variety of bottled waters rather than choosing from a variety of options to fix the structural and systemic conditions that generate unhealthy and unsafe water in the first place. Another problem with the sustainable citizen consumer model is the ease with which it lends itself to the co-optation and commodification of dissenting and alternative consumption strategies. There is a long critical tradition which argues that counter cultural and oppositional ideas to mainstream values are easily absorbed as another lifestyle and identity product for flexible neoliberal global capitalism which thrives on branding differences that ultimately reinforce and strengthen consumption as a way of life. The illusion that these consumers are active agents driving the turn toward sustainability meshes perfectly with Walmart’s business model, which has perfected the art of co-opting counter-cultural or alternative practices and transforming them into a marketable, commodified norm. Walmart’s sustainable food initiatives are a case in point.

Walmartization and the politics of sustainable food Increasingly, sustainable food production and consumption practices have become a key component of Walmart’s wider sustainability initiative. As the largest food retailer in the world, it has come to dominate the agricultural systems just as it did with manufacturing, with the result that 202

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there is a growing consolidation of every aspect of the food chain from farm to fork. In 2006 Walmart began marketing organic foods and in 2010 it launched its heritage agriculture initiative which focuses on promoting and supporting local and regional farmers. Walmart has also undermined ideas of the food justice movement that link personal actions to larger social, political, and economic processes, and focuses attention on the fact that the low cost of food is dependent, in part, on the unjust treatment of agricultural workers. The food justice critique of industrialized agriculture also combines an analysis of racial and economic injustice with practical support for environmentally sustainable alternatives that can provide empowerment and access to healthy food for people in marginalized communities (Alkon and Agyeman, 2011: 6). For Schlosser (2008), the movement for a just sustainable agriculture will never be sustainable without including ordinary working people, the poor, and people of color, and “without them it runs the risk of degenerating into a hedonistic narcissism of the few.” As part of this healthy food initiative, Walmart has pledged to increase charitable nutrition assistance programs and to use its enormous market power and highly efficient global logistics system to make healthy organic food more affordable. This has become an important part of its new urban strategy where it frames its ability to provide sustainable, healthy, and affordable food to low-income neighborhoods experiencing “food deserts” as it gains access to communities traditionally opposed to big box retail stores. To help with these efforts, the company has enlisted local politicians and community activists as well as notable public figures such as Michelle Obama who on several occasions has praised the company’s efforts to sell healthier and affordable food. Walmart’s foray into sustainable food has both champions and critics. Proponents argue that despite its many sins, Walmart can be a force for good. Walmart’s size and reach make it a game changer because, “Being able to say to farmers in the Central Valley if you grow this we will buy your stuff ” is very hard to resist (Rowe, 2011). In other words, Walmart’s emphasis on efficiency and waste reduction applied across the food chain “can bring fruits and vegetables back to the land where they once flourished and deliver them to the people who need them most” (Kummer 2010). Critics argue that when it comes to regional food and organic farming that there are agricultural fundamentals for “Why Walmart can’t fix the food System” (Food and Water Watch, 2012). By compelling its suppliers to streamline their production process, is intrinsically damaging to the essence of the local and organic food movement, which depends on small-scale production (Food and Water Watch, 2012), rather than on Walmart’s sustainable agriculture strategy accelerates the growth and concentration of a new type of factory farming which Pollan has referred to as “industrial local” (Thompson and Gokcen, 2007). Perhaps the most troubling aspect of Walmartization is the ease with which the company enlists potential enemies and transforms them into willing accomplishes in the “greening” of capitalism.

Partnering with or co-opting community? While many in the food justice movement are calling for a return to small farms and local operated stores, such a strategy is facing many structural constraints imposed by subsidies to large-scale agribusinesses, monopolistic pricing, and policies of global neoliberalism. Increasingly, as a result of such constraints, many food activists, like other mainstream environmental organizations, are contradictorily stressing the need to partner with jumbo corporations like Walmart as a means of realizing some of their social justice aims. For those who support partnering, some reluctantly embrace “working with the enemy” because it represents the only game in town, while others have become cheerleaders for what has been referred to as “American style ecological modernization” (Schlosberg and Renfrit, 2008). 203

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A notable example of Walmart’s efforts to promote food justice is its pledge of support for food justice activist Will Allen, founder of the non-profit organization Growing Power Inc., which links the personal consumption of food to larger issues of poverty, foodlessness, and joblessness. Growing Power seeks to help communities build sustainable food systems that are equitable, ecological, and economically viable. For Allen, food activists can no longer afford not to invite big corporations like Walmart to the table of the food justice movement. For him, such idealism would do more harm than good. In a response to waves of criticism from supporters for his acceptance of a million-dollar grant from Walmart he issued the following statement: Keeping groups that have the money and the power to be a significant part of the solution away from the Good Food Revolution will not serve us . . . by accepting grants like these we retain the power for how corporate money is spent, and the grassroots movement stays grassroots. (Allen, 2012) Catering to people who care about fair trade and social justice issues on the part of Walmart is just another example of a “good” business decision designed not only to hold on to or increase market share, but also to win people over through public relations strategies that manufacture mass consent (Lichtenstein, 2009; Massengill, 2013; Walker, 2014). Walmart’s steady rise to power has not gone uncontested. Its efforts to expand have spawned anti-Walmart movements across the globe. One response on the part of Walmart to mounting opposition and protest has been to engage in enhanced public relations. In 2005, for example, after coming under attack from union-based web organizations like Wake-Up Walmart and Wal-Mart Watch, Walmart hired Edelman Public Relations to improve its negative image as a company that exploits its workers. Initially, Walmart’s attempts failed miserably because of the discovery that a so-called grassroots community organization that appeared to represent a groundswell of spontaneous support was in fact an organization founded by Walmart and its PR consultants. Gradually, Walmart adopted a more sophisticated multi-pronged public relations approach, already described herein as incorporating ideas associated with sustainability, corporate responsibility, and food justice discourses as a means of reaching out to ordinary people and to those community leaders who preach about these values. Sites (2011) has shown how in the case of Chicago, Walmart’s victory to open a store despite opposition came about because it was able to reach out to groups that had been historically excluded from many of the economic benefits of redevelopment schemes and to incorporate them as junior partners in exchange for concessions that were largely symbolic (Sites, 2011). Walmart’s marketing of organic food taps into and reinforces the individualization of environmental problems that is also characteristic of many alternative food movements. For many people, eating organic foods isn’t a political act as much as a way to improve their heath, a practice that Szasz has called an “inverted form of quarantine” (Szasz, 2007). In a similar vein, Pollan (2001) discusses two types of organic food consumers: health seekers who eat organic food for health reasons, and “true organics” who view eating organically produced food as a political act, a way of critiquing and resisting the industrialized food system. In many cases, alternative food movements embrace a form of neoliberalism from below that corporations like Walmart turn to their political and economic advantage. For example, the locavore food movement’s skepticism about government intervention and its embrace of small-scale market-based solutions and voting with one’s dollars to bring about social change is very compatible with Walmart’s sustainable food marketing strategies. In promoting organic and local agriculture and adding them to their growing list of green products, Walmart is helping 204

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to transform structural and systemic problems into individualized matters of consumer choice (Busa and Garder, 2014). By partnering with community food activists and depoliticizing their concerns, Walmart facilitates and transforms potential threats from industrializing the food system and “Monsanto-izing” its production, instead, into profitable opportunities, with the result that “food enterprise trumps engagement with broader issues of food justice” (Henrichs, 2013: 15). Once again, these innovations in green marketing and the appropriation of the language of sustainability, combined with Walmart’s vast economic power, creates the same kind of asymmetrical supply chain relations in the agricultural system that it has achieved in all of its other business activities (Henrichs, 2013: 16.)

Conclusion: Walmart wars and the Walmartization of the planet Walmart has become a symbolic target for those being harmed by the larger worldwide restructuring of the economy, and the term Walmartization has come to stand for the process that negatively impacts the growing armies of service workers, their communities, and the larger environment. Walmartization or the “Walmart Effect” is not unlike Ritzer’s notion of McDonaldization that not only refers to a particular company, but also to a new version of Weberian rationalization and to a business template that is becoming hegemonic as another model of neoliberal and global capitalism. Despite several successful anti-Walmart campaigns to prevent the retail behemoth from entering new communities, these struggles have not put a stop to Walmartization. For example, during Walmart’s second failed attempt to open a store in New York City, local city council member Charles Baron accused the company of trying to bribe the locale with a community benefits agreement. While Baron attacked Walmart, he wasn’t against working with Target, another big box retailer, to establish a “better deal” for the community. In other words, the actions of the council member did not deter the dominance of big box retail or the destruction of small (local) businesses. On the contrary, forming a “community” partnership with Target whose labor and environment record is basically no different than Walmart’s does nothing to ameliorate the negative effects on labor, the community, or the environment. Walmart’s version of sustainability or the greening of capitalism is deceptively dishonest, as it prioritizes profits over both workers and the environment. Its emphasis on “sustaining people” is more about saving money for consumers to buy more products rather than protecting the health and safety of people who produce and sell those products. Walmart’s emphasis on sustainability represents an awareness of growing consumer trends as well as a business strategy to capture market share. This strategy also helps the company to differentiate itself from its competition, enabling Walmart to get better at what it does best: drive down costs to generate more profits (Henrichs, 2013). Walmart’s greening strategy with its promise of making consumption more sustainable has also reinforced an ideology of privatized and depoliticized “citizen consumerism” while at the same time helping to boost its tarnished image. Although the ideas of green consumerism and sustainable consumption did not originate with Walmart, they have surely helped to elevate them. Moreover, while Walmart’s attempts to make consumption smarter and more efficient have helped raise awareness about the negative environmental and social costs of consumption, the idea that endless consumption as a way of life might be destructive and unsustainable is never questioned. Despite being laced with heavy doses of corporate responsibility and sustainability rhetoric, Walmart’s initiatives on behalf of environmental concerns and better consumerism still take a back seat to its concerns for economic growth and the bottom line. While Walmart talks about applying the sustainability index across the supply chain, such efforts stop far short of providing 205

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many of its own workforce with a living wage and health benefits. Its efforts to make people aware of the environmental footprint of the products that they buy don’t translate into any substantial changes to its business model. While Walmart claims that it takes its corporate responsibility seriously and incorporates the concerns of its critics and workers alike, the company turns a deaf ear to any kind of talk about the unionization because it is convinced that letting unions into its stores would compromise its extraordinarily successful business model based on an unrelenting push to cut costs to achieve narrow profit margins (Lichtenstein, 2009: 246). In closing, Walmart’s sustainability paradox that embraces sustainability outside of its organization’s supply chain but not inside its stores with respect to its workforce and their communities (Gordon, 2014) is not surprising given its hegemonic acceptance of the unsustainable idea that unbridled neoliberal consumer capitalism is somehow compatible with environmental health and social justice.

References Alkon, A.H. and Agyeman, J. (eds) (2011) Cultivating Food Justice: Race, Class, and Sustainability. Boston, MA: MIT Press. Allen, W. (2012) Growing Power Blog, “A note from Will on Corporations and the Good Food Revolution.” Available at: www.growingpower.org/blog/archives/date/2011/09 (accessed July 10, 2014). Alter, L.(2006) ‘It’s Getting Harder and Harder to Hate Walmart’. Treehugger, May 17. Available at: www. treehugger.com/corporate-responsibility/its-getting-harder-to-hate-wal-mart.htm (accessed June 29, 2014). Barber, B. (2007) Consumed: How Markets Corrupt Children, Infantilize Adults and Swallow Citizens Whole. New York: W.W. Norton. Bloom, D.J. (2014) ‘Subsidizing Sustainability: The Role of the State and Civil Society Implementing WalMart’s Local Produce Sourcing Program’, in D.R. Cahoy and J.E. Colburn (eds) Law and the Transition to Business Sustainability Perspectives on Sustainable Growth. London: Springer International Publishing, pp. 57–83. Bluhdorn, I. and Welch, I. (2007). Eco Politics – Beyond the Paradigm of Sustainability: A Conceptual Framework and Research Agenda. Environmental Politics, 16(2): 185–205. Brisman, A. and South, N. (2014) Green Cultural Criminology: Constructions of Environmental Harm, Consumerism, and Resistance to Ecocide. New York: Routledge. Busa, J. and Garder, R.( 2014) ‘Champions of the Movement or Fair-weather Heroes? Individualization and the (A) Politics of Local Food. Antipode, first published online July 4: 1–19. Cabrera, S. A. and Williams, C. (2014) ‘Consuming for the Social Good: Marketing, Consumer Citizenship and the Possibilities of Ethical Consumption’. Critical Sociology, 40(3): 349–367. Cohen, M.J. (2006) ‘Ecological Modernization and its Discontents: The American Environmental Movements Resistance to an Innovation Driven Future’. Futures, 38: 547–548. Dauvergne, P. and Lister, J. (2012) ‘Big Brand Sustainability: Governance Prospects and Environmental Limits’. Global Environmental Change, 22: 36–45. Food and Water Watch (2012) ‘Why Walmart Can’t Fix the Food System’. Available at: www.food andwaterwatch.org/tools-and-resources/why-walmart-cant-fix-the-food-system/ (accessed June 20, 2014). Foster, J.B. (2102) ‘The Planetary Rift and the New Human Exceptionalism: A Political Economic Critique of Ecological Modernization Theory’. Organization & Environment, 25(3): 211–237. Friedberg, S. (2014) ‘It’s Complicated: Corporate Sustainability and the Uneasiness of Life Cycle Assessment’ Science as Culture. Available at: www.tandfonline.com.proxy.uchicago.edu:pdf (accessed August 2, 2014). Friedmann, T. (2007) ‘Lead, Follow or Move Aside’. New York Times, September 26. Goleman, D. (2009) Ecological Intelligence: How Knowing the Hidden Impacts of What We Buy Can Change Everything. New York: Broadway Books. Gordon, P. (2014) ‘The Two Walmarts’, in A.Y. Mermod and S.O. Idowu (eds) Corporate Responsibility in the Global Business World. New York: Springer, pp. 207–217. Guthman, J. and DuPuis, M. (2006) ‘Embodying Neoliberalism: Economy, Culture and the Politics of Fat’. Environmental and Planning D: Society and Space, 24: 427–448. Henrichs, C.C. (2013) ‘Regionalizing Food Security: Imperatives, Intersections and Contestations in a Post 9/11 World’. Journal of Rural Studies, 29: 7–18. 206

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Johnson, J. (2008) ‘The Citizen Consumer Hybrid: Ideological Tensions and the Case of the Whole Foods Market’. Theory and Society, 37: 229–270. Kummer, C. (2010) ‘The Great Grocery Smackdown’. Atlantic, March. Available at: www.theatlantic.com/ magazine/archive/2010/03/the-great-grocery-smackdown/307904/ (accessed June 10, 2014). Lichtenstein, N. (ed.) (2006) Wal-Mart: The Face of Twenty-first Century Capitalism. New York: The New Press. Lichtenstein, N. (2009) The Retail Revolution: How Walmart Created a Brave New World of Business. New York: Metropolitan Books, Henry Holt and Company. Majfud, J. (2009) ‘The Pandemic of Consumerism’. UN Chronicle, 46. Maniates, M. (2001) ‘Individualization: Plant a Tree, Buy a Bike, Save the World?’ Global Environmental Politics, 1(3): 31–52. Massengill, P.P. (2103) Walmart Wars: Moral Populism in the Twenty-first Century. New York: New York University Press. Mills, C.W. (1959) The Sociological Imagination. London: Oxford University Press. Mitchell, S. ( 2014) ‘Are Walmart’s Green Claims Simply Greewashing?’ Renewable Energy World. Available at: www.renewableenergyworld.com/rea/news/article/2014/03/are-walmarts-green-claims-simplygreenwashing (accessed July 16, 2014). Peck, J. and Tickell, A. (2002) ‘Neoliberalizing Space’. Antipode, 34(3): 380–404. Pollan, M. (2001) ‘Naturally’. New York Times, May 13. Available at: http://www.nytimes.com/2001/05/13/ magazine/naturally.html (accessed June 25, 2014). Reich, R. (2005) ‘Don’t Blame Wal-Mart’. New York Times, February 25. Available at: www.nytimes.com/ 2005/02/28/opinion/28reich.html (accessed July 25, 2014). Ritzer, G. (2011) The McDonaldization of Society. Thousand Oaks, CA:Pine Forge Press. Rowe, J. ( 2011) ‘The Greening of Wal-Mart’. The American Prospect, April 19. Available at: www.prospect. org/article/greening-wal-mart. Sacks, D. (2007) ‘Working with the Enemy’. Fast Company. Available at: www.fastcompany.com/ magazine/118/working-with-the-enemy.html (accessed July 20, 2014). Schlosberg, D. and Rinfret, S. (2008) ‘Ecological Modernization American Style’. Environmental Politics, 17(2): 254–275. Schlosser, E. (2008) ‘Slow Food for Thought’. The Nation, September 22. Available at: www.thenation.com/ article/slow-food-thought (accessed July 27, 2014). Sites, W. (2011) ‘Urban Movements and Thin Political Organization: A Comparison of the Anti Walmart and Immigration Rights Struggles in Chicago’. Paper Presented at RC21 Conference, Amsterdam. Szasz, A. (2007) Shopping Our Way to Safety: How We Changed From Protecting the Environment to Protecting Ourselves. Minneapolis: University of Minnesota Press. Thompson, C.J. and Gokcen, C-B. (2007) ‘Countervailing Market Responses to Corporate Co-optation and the Ideological Recruitment of Consumption Communities’. Journal of Consumer Research, 34: 135–152. Walker, Edward T. (2014) Grassroots for Hire: Public Affairs Consultants and American Democracy. New York: Cambridge University Press. Walmart Sustainability Hub, Online. Available at: www.news.walmart.com/executive-viewpoints/twentyfirst-century-leadership (accessed July 20, 2014).

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Part IV

Environmental crimes

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14 Climate change, ecocide and crimes of the powerful Rob White

Introduction Climate justice is ultimately a matter of addressing the systemic and organisational crimes of the powerful that are destroying environments and contributing to global warming and climate change. The race by the powerful to exploit increasingly scarce environmental resources is placing an incredible strain on vulnerable ecosystems worldwide. As well as directly and indirectly contributing to global warming and climate change, these activities are also increasingly a source of violent social conflict. This chapter discusses the systemic and organisational crimes of the powerful in relation to climate change. The concept of ecocide is drawn upon to frame and highlight the nature of these crimes and to what is at stake for humans, animals, plants, ecosystems and planetary well-being. Fundamentally, it is global capitalism and its key institutions that lie at the heart of global warming and the processes that sustain and extend rapid climate change.

Climate change and ecocide Scientists in different disciplines have expressed concerns about global warming for many years. Even though these concerns have been systematically denied and downplayed by contrarians, many with friends in high places (Brisman, 2012; Kramer, 2013), climate change is accepted by the majority of people today as a serious and urgent issue. This is because global warming is transforming the biophysical world in ways that are radically and rapidly reshaping social and ecological futures. The Intergovernmental Climate Change Panel (2013) reports the following: •

• •

Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia. The atmosphere and ocean have warmed, the amounts of snow and ice have diminished, sea level has risen, and the concentrations of greenhouse gases have increased. Each of the past three decades has been successively warmer at the Earth’s surface than any preceding decade since 1850. Ocean warming dominates the increase in energy stored in the climate system, accounting for more than 90 per cent of the energy accumulated between 1971 and 2010. 211

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•

•

Over the past two decades, the Greenland and Antarctic ice sheets have been losing mass, glaciers have continued to shrink almost worldwide, and Arctic sea ice and Northern Hemisphere spring snow cover have continued to decrease in extent. The rate of sea-level rise since the mid-nineteenth century has been larger than the mean rate during the previous two millennia.

Climate change has been associated with varying types of ‘natural disaster’ which are projected to increase in intensity and frequency in the foreseeable future. These include such phenomena as floods, cyclones, extreme heat spells and cold snaps. As discussed in this chapter, narrow sectoral interests embedded in present socio-economic dynamics are driving global warming as well as responses to regulating or taxing the emissions that contribute to it. Juxtaposed against and contrary to these specific interests are the collectivist ideals of ‘universal human interests’ and ‘ecological citizenship’. The appeal of ecological citizenship as a concept stems in part from recognition of the universal interests that underpin the relationship of human beings with the environment. Ecological citizenship allows for stepping outside prescriptive patriotism (e.g. Australia first, America first, China first) when global ecological health and well-being demands a planetary response (e.g. Earth first). Ecological citizenship is also tied to the notion of ‘Earth Rights’ and the survival needs of all species and biospheres on the planet (see Cullinan, 2003; White, 2013). Yet, the reality is that those least responsible for, and least able to remedy the effects of, climate change are the worst affected by it (Shiva, 2008; Bulkeley and Newell, 2010). The specific interests and rights of the poor, the disadvantaged and those who do not control their means of production are basically overridden by the actions of the powerful – hegemonic nation-states such as the United States and China, and transnational corporations propped up by global systems of finance and regulation. The world is dominated by a political economic system that is inherently unequal and that is intrinsically protective of particular interests rather than universal human and ecological interests. The destruction of the environment in ways that differentially, unequally and universally affect humans, ecosystems and nonhuman species may be conceptualised criminologically as a specific type of crime. The concept of ecocide provides an example of this harm-defining process. Ecocide has been defined as ‘the extensive damage, destruction to or loss of ecosystems of a given territory, whether by human agency or by other causes, to such an extent that peaceful enjoyment by the inhabitants of that territory has been severely diminished’ (Higgins, 2012: 3). Where this occurs as a result of human agency, then it is purported that a crime against humanity has occurred. The notion of ecocide has been canvassed at the international level since at least the 1960s (Gray, 1996; Higgins et al., 2013). For example, there were major efforts to include it among the crimes associated with the establishment of the International Criminal Court, although the final document refers only to war and damage to the natural environment. Nonetheless, environmental activists and international lawyers have continued to call for the establishment of either a specific crime of ‘ecocide’ and/or the incorporation of ecocide into existing criminal laws and international instruments (Higgins, 2012). Recent efforts have sought to make ‘ecocide’ the fifth International Crime against Peace (Higgins, 2010, 2012). The strategic urgency and ideological impetus for this has been heightened by the woefully inadequate response to global warming by governments, individually and collectively, around the world. Climate change is rapidly and radically altering the basis of world ecology; yet very little substantive action is being taken by states or corporations to rein in the worst contributors to the problem. Establishment of the crime of ecocide is premised upon the idea of Earth stewardship. Paradigms of trusteeship and stewardship are very different to those based on private property and individualised 212

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conceptions of ownership. As Walters (2011: 266) points out, ‘Ownership implies that you can use land but don’t have responsibility to others to care for it’. Conversely, the Earth may be seen to be ‘held in trust’, with human beings responsible for providing the requisite stewardship. Threats to Nature rights may be conceptualised, in essence, as a crime of ecocide, and thus open to sanction. Why the push for ecocide as a crime, and why now? The obvious answer is that climate change and the gross exploitation of natural resources are leading to the general demise of planetary well-being. The ‘choices’ ingrained in environmental exploitation (of human beings and of the nonhuman world) stem from systemic imperatives to exploit the environment for the production of commodities for human use. In other words, how human beings produce, consume and reproduce their life situations is socially patterned in ways that are dominated by global corporate interests. The power of consumerist ideology and practice manifests itself in the manner in which certain forms of production and consumption become part of a taken-for-granted common sense – the experiences and habits of everyday life. The normal operations of capitalist enterprise, singularly and collectively based on production of carbon emissions, in turn, contribute to global warming, as indicated by the Intergovernmental Panel on Climate Change (2013): • • •

The atmospheric concentrations of carbon dioxide, methane and nitrous oxide have increased to levels unprecedented in at least the last 800,000 years. Carbon dioxide concentrations have increased by 40 per cent since pre-industrial times, primarily from fossil fuel emissions and secondarily from net land use change emissions. Continued emissions of greenhouse gases will cause further warming and changes in all components of the climate system. Limiting climate change will require substantial and sustained reductions of greenhouse gas emissions.

In light of these worrying trends, why then does global warming continue apace? To answer this we need to explore further the nature of contemporary global capitalism.

Global capitalism and transnational corporations The systemic pressures associated with the global capitalist mode of production (CMP) inevitably lead to the exploitation of human beings, ecosystems and species, and the degradation of the environment via pollution and waste, as well as global warming and climate change. The problem is the dominant political economic system. Environmental ‘crimes’ are committed in the pursuit of ‘normal’ business outcomes and which involve ‘normal’ business practices (see Roth and Friedrichs, 2015). This can be distilled down somewhat by reference to specific industries, such as the ‘dirty industries’ of coal and oil and how they engage in particularly damaging practices. But the overarching imperative to expand and increase production and consumption nonetheless obtains for all industries plugged into the global CMP. The specific organisational form which global capitalism takes is that of the transnational corporation (TNC). These corporations act and operate across borders, and involve huge investments of resources, personnel and finances. They are also amalgamating (via mergers and take-overs) and expanding (via horizontal and vertical integration of business operations). Their ‘crimes’ are occasionally explicit and legally acknowledged (as in the case of BP and the Gulf oil spill). More often than not, the social and ecological harms associated with TNCs are not criminalised. Some writers see the corporate form as intrinsically criminogenic (Glasbeek, 2004, 2003; Bakan, 2004). In this view, the corporation has been designed precisely in order to, first, facilitate the gathering of investment capital for large-scale ventures through selling shares in the 213

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companies. Originally, investment was nearly always associated with the expansion of production. Today, most investment is speculative (in futures, options and shares themselves). Second, the corporation allows the separation of the corporate identity from that of the shareholder. If the venture succeeds, the shareholder receives dividends and the shares tend to rise in value; if the venture fails leaving large debts, this is nothing to do with the shareholder who has no responsibility. From this viewpoint, the duty of company directors is to maximise the interests of shareholders (i.e. to increase their return on investment); they have no duty to advance, or even consider, any other interest, economic or social. There may be talk of a triple bottom line in which accounts seemingly balance the economic, the social and the environmental, but the reality is that profit is the only meaningful measure of corporate success. The first duty of the corporation, therefore, is to make money for shareholders, and thus for executives and managers to always put their corporation’s best interests first. This makes them ruthless and predatory, and always willing to externalise costs and harms, regardless of the lives destroyed, the communities damaged, and the environments and species endangered (Bakan, 2004). Morality, in this context, is entirely contingent upon local social, economic and regulatory conditions. Where corporations can ‘get away’ with immoral cost cutting, profitable activities that are nonetheless harmful to others, and market advantage, they will. This impetus to place profit before anything else is ingrained in the nature of global capitalist competition. As Robinson (2000; cited in White, 2008a: 116) observes, this has worldwide consequences: Many have noted that there is a direct relationship between the increasing globalisation of the economy and environmental degradation of habitats and the living spaces for many of the world’s peoples. In many places where Black, minority, poor or Indigenous peoples live, oil, timber and minerals are extracted in such a way as to devastate eco-systems and destroy their culture and livelihood. Waste from both high- and low-tech industries, much of it toxic, has polluted groundwater, soil and the atmosphere. The globalization of the chemical industry is increasing the levels of persistent organic pollutants, such as dioxin, in the environment. Further, the mobility of corporations has made it possible for them to seek the greatest profit, the least government and environmental regulations, and the best tax incentives, anywhere in the world. There is thus an identifiable nexus between capitalism as a system, and environmental degradation and transformation. In essence, the competition and pollution and waste associated with the capitalist mode of production have a huge impact on the wider environment, on human beings and on nonhuman species (for example, in the form of pollution and toxicity levels in air, water and land). One impact of unsustainable environmental practices is the pressure exerted on companies to seek out new resources (natural and human) to exploit as existing reserves dwindle due to overexploitation and contamination from already produced wastes. At the heart of these processes is a political culture which takes for granted, but rarely sees as problematic, the proposition that continued expansion of material consumption is not only possible ad infinitum but will not harm the biosphere in any fundamental way. Built into the logic and dynamics of capitalism is the imperative to expand (Foster, 2002), a tendency that is reinforced and facilitated by neoliberal ideologies and policies. Ecocidal destruction is thus ingrained in the present political economy. Under capitalism there are constant pressures to increase productive forces and a tendency towards cyclical crises (as witnessed by the Global Financial Crisis of 2008). Periodic crises lead to system propensities towards commodification of all that is necessary in order to live and all that really matters. The four elements – water, air, earth (land), sun (energy) – are, for example, ever more subject to conversion into something that produces value for private interests. Capitalism 214

Climate change and ecocide Table 14.1 Commodification of nature Production and nature

Consumption and nature

Exploitation of workers and of nature that transforms each into a commodity

Circuits and processes of exchange that realize the monetary value of exploitation

Surplus value as source of profit [access to relevant labour pools]

Profit as realization of surplus value [markets for commodities]

Scarcity as source of profit [access to natural resources and exploitable animals and plants]

Waste related to and as source of profit [cost minimalization, recycling, externalization of costs and harms]

is always searching for things that can be transformed from simple use-values (i.e. objects of need) into exchange-values (i.e. commodities produced for exchange). This extends to ‘Nature’ as it does to other kinds of objects. For example, what may have been formerly ‘free’ (e.g. drinking water) is now sold back to the consumer for a price (e.g. bottled water or metered water). Effectively, consumption has been put to the service of production in the sense that consumer decisions and practices are embedded in what is actually produced and how it is produced (see Table 14.1). Yet it is through consumption practices, and the cultural contexts for constantly growing and changing the forms of consumption, that production realises its value. Commodity production and consumption take place within a global system that is hierarchical and uneven. That is, sovereignty is historically and socially constructed through the prism of colonialism and imperialism, with certain nation-states holding greater power and resources (including military might) than others. The relationship between local, national, regional and global interests is construed within diverse social and political formations (e.g. the United States, European Union, Association of South-East Asian Nations, African Union), but these, in turn, reflect the continuing legacy of a world divided into the ‘haves’ and ‘have-nots’. The contours of this division are dictated by the strength of ownership and control over the means of production exerted regionally and globally by particular nation-states in conjunction with and in the interests of particular corporations. At the top of the hierarchy of nation-states is the United States. The appropriation of nature does not merely involve the turning of natural resources into commodities, and entrenching inequality via the global market, but also frequently involves capital actually remaking nature and its products biologically and physically. It has been observed, for instance, that ‘A precapitalist nature is transformed into a specifically capitalist nature’ (O’Connor, 1994: 158) in the form of genetic changes in food crops, the destroying of biological diversity through the extensive use of plantation forestry, and so on. Indeed, the industrialisation of agriculture (incorporating the use of seed and other patents) is one of the greatest threats to biodiversity, since this is one of the leading causes of erosion of plant genetic and species diversity. The basic means of life of humans is being reconstituted and reorganised through global systems of production (Croall, 2007), and in many cases the longer term effects of new developments in the food area are still not known. The contours of global capitalism are crucial to any discussion of climate change insofar as how, or whether, certain human activity is regulated and facilitated is still primarily a matter of state intervention. The strategies that nation-states use to deal with environmental concerns are contingent upon the class interests associated with political power. In most cases today the power of TNCs finds purchase in the interface between the interests and preferred activities of the corporation and the specific protections and supports proffered by the nation-state. The latter may be reliant upon or intimidated by particular industries and companies. Tax revenue and job creation, as well as media support and political donations, may hinge upon particular state-corporate 215

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synergies. This of course can undermine the basic tenants of democracy and collective deliberation over how best to interpret the public or national interest. The structure and allocation of societal resources via the nation-state also has an impact upon how environmental issues are socially constructed. Spending on welfare, health, transportation, education and other forms of social infrastructure makes a major difference in people’s lives. Recent fiscal crises (especially noticeable in European countries such as Greece, Ireland and Spain) and the effects of the global economic crisis have had the global impact of making ordinary workers extremely vulnerable economically. Under such conditions, there is even greater scope to either reduce environmental protection, or to increase environmentally destructive activity for short-term economic gain. In such circumstances, state legislation and company practices that are seen to put fetters on the profit-making enterprise will be withdrawn or markedly reduced. The lack of concerted global action on climate change is due in large measure to the actions of large transnational corporations, especially those in the ‘old energy’ sectors such as coal-mining. Given that the top private corporations are economically more powerful than many nation-states, and given that they own and control great expanses of the world’s land, water and food resources, these corporations are individually and collectively a formidable force. On occasion, as well, business competitors may combine to use their collective muscle to influence world opinion or global efforts to curtail their activities. For example, analysis of how big business has responded to global warming reveals a multi-pronged strategy to slow things down (Bulkeley and Newell 2010). Some of these include the following: • • • • • •

Challenging the science behind climate change. Creating business-funded environmental NGOs. Emphasising the economic costs of tackling climate change. Using double-edged diplomacy to create statemates in international negotiations. Using domestic politics (particularly in the United States) to stall international progress. Directly influencing the climate change negotiations through direct lobbying.

It is only continuous pressure from below (grassroots groups and global activists), and the occasional exercise of political will from enlightened politicians from above (as is evident in some Latin American countries such as Bolivia), that moderates the exercise of this corporate power.

Climate change, ecocide and state-corporate crime The perpetrators and responders to global warming tend to be one and the same: namely nationstates and transnational corporations. Globally, there is widespread state support for risky business that contributes to global warming. The oil and coal industries, the ‘dirty’ industries, are still privileged, coal seam hydraulic fracturing continues to threaten prime agricultural land, and natural resource extraction relies upon deep-drill oil exploration, mega-mines and mountaintop destruction. It is the scale and pace of resource extraction that is of immediate and particular concern. Australia is an exemplar of this as it continues to disrupt outback regions and put the Great Barrier Reef in jeopardy in order to take advantage of Chinese demand for its natural resources. At a systems level, the treadmill of production embodies a tension or ‘metabolic rift’ between economy and ecology (Foster, 2002, 2007; Stretesky et al., 2014; Lynch and Stretesky, 2014). Pro-capitalist ideologies and practices ensure continued economic growth at the expense of ecological limits. Effective responses to climate change need to address the deep-seated inequalities and trends within the treadmill of production that go to the heart of the ownership, control and exploitation of resources. 216

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When it comes to climate change, corporate and state actors in interaction with each other create harm in at least four significant ways (Kramer and Michalowski, 2012): 1 2 3 4

Denying that global warming is caused by human activity. Blocking efforts to mitigate greenhouse gas emissions. Excluding progressive, ecologically just adaptations to climate change from the political arena. Responding to the social conflicts that arise from climate change by transforming themselves into fortress societies that exclude the rest of the world.

The global status quo is protected under the guise of arguments about the ‘national interest’ and the importance of ‘free trade’ that reflect specific sectoral business interests. Social need and universal human interests are not being addressed due to the resistance and contrarianism perpetrated by powerful lobby groups and particular industries, including lobbying against global agreements on carbon emissions and the use of carbon taxes. Simultaneously, there is state and TNC agreement about desired (and profitable) changes in land use, such as deforestation associated with cash crops, biofuels, mining, and intensive pastoral industries. Indeed, tropical deforestation is now responsible for some 20 per cent of global greenhouse emissions (Boekhout van Solinge, 2010). Indonesia and Brazil have become respectively the third and fourth CO2 emitting countries of the world, mainly as a result of the clearing of rainforest. States have given permission and financial backing to those companies engaged in precisely what will radically alter the world’s climate the most in the coming years: greenhouse gas emissions. The exploitation of Canada’s Alberta tar sands provides another case of crimes of the powerful. This massive industrial project involves the active collusion of provincial and federal governments with big oil companies. The project is based on efforts to extract and refine naturally created tar-bearing sand into exportable and consumable oil. It involves the destruction of vast swathes of boreal forest, it contributes greatly to air pollution, and it is having negative health impacts on aquatic life and animals, and for human beings who live nearby (see Smandych and Kueneman, 2010; Klare, 2012). Most importantly, it is the single largest contributor to the increase of global warming pollution in Canada. Placed within the larger global context of climate change, the scale and impact of the Alberta tar sands project fits neatly with the concept of ecocide (Higgins, 2013) as well as the concept of state-corporate crime (Kramer and Michalowski, 2012). The role of the federal and provincial governments has been crucial to the project, and in propelling it forward, regardless of manifest negative environmental consequences. The issue of state/corporate collusion can also be examined through the lens of the politics of denial, involving various techniques of neutralisation (see Sykes and Matza, 1957; Cohen, 2001). This refers to the ways in which business and state leaders attempt to prevent action being taken on climate change while actively supporting specific sectoral interests. Typically, such techniques involve the following kinds of denials: • • • • •

Denial of responsibility (against anthropocentric or human causes as source of problem). Denial of injury (‘natural’ disasters are ‘normal’). Denial of the victim (failure to acknowledge differential victimisation, especially among the poor and residents of the Global South). Condemnation of the condemners (attacks on climate scientists). Appeal to higher loyalties (economic interests should predominate over ecological concerns).

The net result is no action or inaction in addressing the key factors contributing to climate change, such as carbon emissions. 217

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There is a close intersection, therefore, between global warming, government action or inaction, and corporate behaviour (Lynch and Stretesky, 2010; Lynch et al., 2010) and how these contribute to the overall problem of climate change. Harm is perpetrated, for instance, by government subsidies for coal-fired power stations and government approval of dams that destroy large swathes of rainforest. In the light of existing scientific evidence on global warming, continued support by governments for such activities represents intentional harm that is immoral and destructive of collective public interest in the same moment that particular industries and companies benefit. In Australia, for instance, Environment Minister Greg Hunt has proclaimed that he takes climate change seriously. Nonetheless, in 2014 he approved a Queensland coal-mining project, Australia’s largest ever, subject of course to ‘the absolute strictest of conditions’. Left out of these ‘conditions’ was any mention of the mine’s impact upon atmospheric carbon levels, as one commentator pointed out: When Carmichael coal is exported to India and burned, it will release 100 million tonnes of carbon dioxide each year for the mine’s lifetime of more than half a century. This is about one-fifth of Australia’s annual total from all sources, way beyond any single enterprise in our history. (Boyer, 2014: 13) As this incident further illustrates, not only is there state-corporate collusion in perpetrating harm, but responsibility for such harm is frequently externalised as well. This externalisation occurs both directly (‘we are selling the coal to India’) and indirectly (‘no one country can do it alone’). Economy yet again trumps ecology, and is defended by those whose ostensible task is precisely to protect the environment. The problem with trying to tackle corporate harm is that virtually every act of the corporate sector is deemed, in some way or another, to be ‘good for the country’ (see White, 2008b). This ideology of corporate virtue, and the benefits of business for the common good, is promulgated through extensive corporate advertising campaigns, capitalist blackmail (vis-à-vis location of industry and firms) and aggressive lobbying of government and against opponents. Anything which impedes or opposes business-as-usual is deemed to be unreasonable, faulty, bad for the economy, not the rightful domain of the state, will undermine private property rights, and so on. In other words, the prevailing view among government and business is that, with few exceptions, the ‘market’ is the best referee when it comes to preventing or stopping current and potential environmental harm. Powerful business interests (which, among other things, provide major financial contributions to mainstream political parties) demand a ‘light touch’ when it comes to surveillance of, and intervention in, their activities. In this framework, the state should not, therefore, play a major role in the regulation of corporate activities beyond that of assisting in the maintenance of a general climate within which business will flourish. To address corporate harm, then, requires a political understanding of class power, and a rejection of formally legal criteria in assessing criminality and harm. It is therefore from beginning to end a political process. As such, it implies conflict over definitions of conduct and activity (e.g. as being good or bad, harmful or not so harmful, offensive or inoffensive), over legitimacy of knowledge claims (e.g. media portrayals, expert opinion), and over the role and use of state instruments and citizen participation in putting limits on corporate activity (e.g. via regulations, public access to commercial information). 218

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Late capitalism, neo-liberalism and the battle for common sense For critical criminology, class analysis means acknowledging that capitalism ipso facto equates to a society that is necessarily divided by socio-economic interests, and that is ultimately transformed through struggle around these interests. Acknowledging the evils of global capitalism also demands analysis of how and why it succeeds at an ideological as well as systemic level. This requires that attention be given to the contours of the battles surrounding ‘common sense’. In this regard, the concept of ‘hegemony’ continues to retain its specific analytical power. Hegemony refers to processes of contestation in which social life is practically organised by specific and dominant meanings and values (Williams, 1977; Gramsci, 1971). Class-specific interests are reflected in generalised notions that are incorporated into the everyday lives of individuals such that they appear as natural, universal and neutral – ‘the national interest’, ‘community’, ‘liberty’, ‘freedom’, ‘individual responsibility’. Hegemony is a continuous process of socialisation in which the influence and pervasiveness of ruling class thought is such that the social order, for most within it, is largely taken as a ‘given’. It is through the major social institutions that the dominant cultural values, norms and aspirations are transmitted, congealing into largely non-conscious routines; that is, the norms and customs of everyday experience and knowledge (Swingewood, 1977). The content of contemporary ruling class common sense may broadly be described as neoliberalism (see Harvey, 2005). Key ideas and sentiments include the individual as the basis of social order, personal responsibility as the basis of accountability, and self-interest as the basis of morality. These elements may be contrasted with those which emphasise the collective good, communal responsibility and solidarity, and the importance of addressing the general welfare and social needs. Contemporary notions of ‘human nature’ are construed in terms of competition, self-interest and possessive individualism. One of the signatures of the hegemonic process is that it allows for contradictory and fragmented notions to be combined at the level of lived experience. People may simultaneously reject the message of climate science (in part due to the push-back by industry and other powerful interest groups) and yet recognise that things are nonetheless changing. Commonsense experience is likewise also constituted through emotions, and ‘the affective’ is powerful in terms of both driving climate change denial (people are frightened by the thought of confronting the consequences of global warming) and specific responses to the threats posed by climate change (the emphasis on defending one’s own turf and interests at the expense of others). Thus, the rational and the irrational are intertwined at the level of lived experience in ways that are paradoxical and nonsensical, but which nonetheless are integral to constructions of neoliberal subjectivity. Historical analysis demonstrates empirically that social inequality is intrinsic to the capitalist system (Piketty, 2014). This has been exacerbated and further entrenched over the past three decades of aggressive neoliberalisation (Harvey, 2005). The key policies and practical trends associated with this are familiar; including reduced trade protection, user-pays, privatisation and deregulation. Institutionally the policies and ethics of neoliberalism are reflected in reliance upon the market for the allocation of goods and services, the shrinking of the welfare state, assertion of the role of the state as ‘night-watchman’ (albeit with little government oversight for those at the top), and an emphasis on strong law and order and defence of private property (that includes strict control over those at the bottom). The net result is impoverishment for many at the same time that social privilege has skyrocketed for the few. Particularly in places like the United States, it is indeed the case that the rich have gotten richer and the poor are getting prison (Reiman, 2007). Not surprisingly, the core policies and practices of neoliberalism are implicated in the politics surrounding climate change. In this instance, neoliberal hegemony rests upon the deployment of a broad spectrum of strategies which, while each policy may appear as distinct and contradictory, 219

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are integrated in such a way as to produce the eventual capitulation to the free market (Abboud, 2013). They include denialism or contrarianism, construing carbon emission markets as the solution, and placing faith in geo-engineering projects like space reflectors. In the end, these will not work (see Abboud, 2013; Brisman, 2015). These ‘solutions’ inevitably fashion responses to, rather than resolutions of, the key contradictions of the present age – namely the preservation of the capitalist growth economy versus a sustainable ecology. While contemporary contributions to global warming happen by design, there is no grand plan. It is an outcome of a global system of production and consumption that is fundamentally premised upon private profit and narrow selfinterest. The triumph of neoliberalism is simultaneously the death-knell of collective well-being. The conjunction of economic polarisation and ecological calamity, fostered and propelled by global capitalism under the rubric of the neoliberal agenda, is heightening social inequalities and geographical disparities. It is an age of great uncertainties and insecurities. A major political problem for the Left is that ‘security’ is being materially constructed on the basis of ‘dog eat dog’, and ‘protect what you have’. This is likewise part of the neoliberal moment, in that how individuals are forced to fend for themselves has been elevated to the level of moral good – to fail at getting a job, an income, suitable welfare and an education is construed as personal failure in the marketplace, not a failure of the marketplace. Put bluntly, you deserve what you do not get, and make sure you hold on tight to what you do get. Such attitudes are also being reproduced in the commonsense response to climate change. It is a recipe for the construction of ‘fortress Earth’ for each of us (White, 2014). The looming future is one of securitisation and scarcity, and of major social conflicts over resources. In the face of this, the tendency is to retreat into a fortress mentality that is protective of immediate perceived personal and community interests. In the neoliberal universe it is the top dog that gets the reward and there is little consideration given to the rest. Indifference and lack of interest and sympathy are the social products of this era. The key message is to look after ourselves first and protect our particular fortress (whatever form it takes), because no one else will. The role of corporate power and neoliberal common sense in the demise of planetary well-being is thus assured.

Constructing an alternative The task for the Left is to go beyond exposition of these wrongdoings and harms (at both system and TNC levels) and to seriously consider matters of strategic intervention. It is easy to criticise already existing environmental harms generated by global capitalism. Yet, rarely is an alternative vision of ‘what ought to be’ part of the dialogue (Albert, 2014). At some stage, however, we need to articulate not only what we are ‘against’, but also what we are ‘for’. This can be as simple as describing certain ideals that provide a rough outline of the values and visions underpinning a society worth striving towards. Such ideals may include, for example: • • • • • •

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That wealth should be redistributed in equitable ways, and colonial harms and historical disadvantages addressed, including by compensation. Nationalisation of resources and industries, including banks and the finance sector, for the public benefit of all. Universal welfare, health and educational provision, for the benefit of all. Collective bargaining rights, for the benefit of those who actually do the work. Provision of public transportation, national parks, marine reserves, solar power, for the sake of ecological health. Control and containment of carbon emissions and dirty industries, for climate change mitigation.

Climate change and ecocide

These ideals are based firmly on the notion that society is more than a mere collection of individuals, and that freedom from want is the platform for freedom to develop one’s capacities to the fullest. It is to recognise that popular support exists and may be harnessed for measures that benefit everyone (universal provision of health care, education, welfare, clean environments) while, by contrast, selective provision undermines this sentiment and reinforces the targeting of ‘at-risk’ populations, in ways which end up treating them as if they are the problem and a social drain. In this alternative scenario, meeting social need and acknowledging the public good implies solidarity, collective responsibility and shared input. As this chapter has highlighted, the interests of the powerful are increasingly tied up with the diminishment of Nature’s bounty in the pursuit of economic viability and growth for both corporations and states. Yet human subsistence is based on the use of a combination of renewable (e.g. fresh water, forests, fertile soils) and non-renewable (e.g. oil and minerals) resources, and the ability of the planet to provide a range of naturally sourced goods and services. In the context of already visible threats from global warming and climate change there is a need to find new ways to negotiate the fragile and contested landscape of economic, ecological and planetary well-being. The task ahead is twofold. On the one hand, it remains important to expose injustice. This requires critical scrutiny of systems of production and consumption, and detailed analyses of corporate activity and business practices. On the other hand, it demands fighting for justice, through advocacy of radical egalitarianism (involving eco-justice for human beings, ecosystems and nonhuman species), communal appropriation of ‘private’ property, and democratic control over land, air, water and energy. Each area of endeavour needs to be directed at transformation as well as challenging the status quo, at changing things as well as critiquing them. Otherwise we are left with the stark realities generated by global capitalism, the most deadly of which is a rapidly warming planet.

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Gramsci, A. (1971) Selections from the Prison Notebooks. New York: International Publishers. Gray, M. (1996) ‘The international crime of ecocide’. California Western International Law Journal, 26: 215–271. Harvey, D. (2005) A Brief History of Neoliberalism. Oxford: Oxford University Press. Higgins, P. (2010) Eradicating Ecocide: Laws and Governance to Prevent the Destruction of our Planet. London: Shepheard-Walwyn Publishers. Higgins, P. (2012) Earth is our Business: Changing the Rules of the Game. London: Shepheard-Walwyn Publishers. Higgins, P., Short, D. and South, N. (2013) ‘Protecting the planet: A proposal for a law of ecocide’. Crime, Law and Social Change, pp.1–16. Intergovernmental Climate Change Panel (2013) Working Group I Contribution to the IPCC Fifth Assessment Report Climate Change 2013: The Physical Science Basis: Summary for Policymakers. 27 September. Klare, M. (2012) The Race for What’s Left: The Global Scramble for the World’s Last Resources. New York: Metropolitan Books, Henry Holt and Company. Kramer, R. (2013) ‘Public criminology and the responsibility to speak in the prophetic voice concerning global warming’, in E. Stanley and J. McCulloch (eds) State Crime and Resistance. London: Routledge. Kramer, R. and Michalowski, R. (2012) ‘Is global warming a state-corporate crime?’, in R. White (ed.) Climate Change from a Criminological Perspective. New York: Springer. Lynch, M. and Stretesky, P. (2010) ‘Global warming, global crime: A green criminological perspective’, in R. White (ed.) Global Environmental Harm: Criminological Perspectives. Collumpton, Devon: Willan Publishing. Lynch, M. and Stretesky, P. (2014) Exploring Green Criminology: Toward a Green Criminological Revolution. Farnham, Surrey: Ashgate. Lynch, M., Burns, R. and Stretesky, P. (2010) ‘Global warming and state-corporate crime: The politicalization of global warming under the Bush administration’. Crime, Law and Social Change, 54: 213–239. Michalowski, R. and Kramer, R. (2006) State-corporate Crime: Wrongdoing at the Intersection of Business and Government. New Brunswick, NJ: Rutgers University Press. O’Connor, J. (1994) ‘Is sustainable capitalism possible?’, in M. O’Connor (ed.) Is Capitalism Sustainable?: Political Economy and the Politics of Ecology. New York: The Guilford Press. Piketty, T. (2014) Capital in the Twenty-first Century. Cambridge, MA: The Belknap Press of Harvard University Press. Reiman, J. (2007) The Rich Get Richer and the Poor Get Prison: Ideology, Class and Criminal Justice. Boston: Allyn & Bacon. Roth, D. and Friedrichs, D. (2015) Crimes of Globalization: New Directions in Critical Criminology. London: Routledge. Shiva, V. (2008) Soil Not Oil: Environmental Justice in an Age of Climate Crisis. Brooklyn, NY: South End Press. Smandych, R. and Kueneman, R. (2010) ‘The Canadian-Alberta tar sands: A case study of state-corporate environmental crime’, in R. White (ed.) Global Environmental Harm: Criminological Perspectives. Collumpton, Devon: Willan Publishing. South, N. (2012) ‘Climate change, environmental (in)security, conflict and crime’, in S. Farrell, T. Ahmed and D. French, Criminological and Legal Consequences of Climate Change. Oxford: Hart Publishing. Stretesky, P., Long, M. and Lynch, M. (2014) The Treadmill of Crime: Political Economy and Green Criminology. London: Routledge. Sykes, G. and Matza, D. (1957) ‘Techniques of neutralization: A theory of delinquency’. American Sociological Review, 22(6): 664–670. Swingewood, A. (1977) The Myth of Mass Culture. London: The Macmillan Press. Walters, B. (2011) ‘Enlarging our vision of rights: The most significant human rights event in recent times?’ Alternative Law Journal, 36(4): 263–268. White, R. (2008a) Crimes Against Nature: Environmental Criminology and Ecological Justice. Collumpton, Devon: Willan Publishing. White, R. (2008b) ‘Class analysis and the crime problem’, in T. Anthony and C. Cunneen (eds) The Critical Criminology Companion. Sydney: Federation Press. White, R. (2013) Environmental Harm: An Eco-Justice Perspective. Bristol: Policy Press. White, R. (2014) ‘Environmental insecurity and fortress mentality’. International Affairs, 90(4): 835–851. Williams, R. (1977) Marxism and Literature. Oxford: Oxford University Press.

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15 Privatization, pollution and power A green criminological analysis of present and future global water crises Bill McClanahan, Avi Brisman and Nigel South

Introduction Water pollution, whether from point sources (e.g., the Deepwater Horizon oil spill in the Gulf of Mexico in April 2010) or non-point sources (e.g., quotidian stormwater runoff), exhibits local, national, regional and global dimensions, and constitutes one of the most pervasive threats to global ecological health (see Carrabine et al., 2009: 402–404; White and Heckenberg, 2014:158; see generally Brisman, 2002). For example, freshwater animal species face an extinction rate five times that of terrestrial animals because of the extent of water pollution and overfishing (Harwood, 2010). Inadequate access to safe and sanitary supplies of freshwater causes over 3 percent of all human deaths worldwide and is the leading cause of death for children under 5 years old (Prüss-Üstün et al., 2008). Although developing nations bear the brunt of insufficient access to clean water (see, e.g., LaFraniere, 2006), problems of accessibility are less likely to impact the developed and post-industrial world unless they affect agricultural production or recreation. Thus, water pollution and access to clean water are often conceptualized as problems with different socioeconomics and geopolitics. This chapter attempts to recast issues of water and harm – to redirect the streams of thought on water-related issues – by exploring the ways in which the global spread of the privatizing and commoditizing logics of neoliberalism has led to restricted and unequal access to clean water, created a regulatory atmosphere favorable to powerful corporate polluters, and pushed for the reconceptualization of water as a saleable commodity rather than as an element of the commons. More specifically, we seek to contextualize access-restricting water privatization, corporate polluting of oceans, rivers, streams, and estuaries, municipal water regulation schemes that criminalize – or otherwise hinder – water reuse, and corporate profiteering from the bottling and selling of water as events and movements detrimental to ecological health and sustainability, yet beneficial to powerful corporate, economic, and political actors and institutions. We begin by explaining some recent examples of pollution issues and events occurring in the Global North, followed by some examples of access-reducing issues at play in the Global South. Next, we make a case for merging these two problems, arguing that to conceptualize water issues in the Global North as relating solely to issues of pollution, while imagining those in the Global South as pertaining exclusively to matters of access, is to ignore the myriad ways that these issues and problems exist and interact across the spatial lines of geopolitics and socioeconomics. 223

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Water pollution in the Global North Within the spatial and social context of the developed and industrial Global North, crime and harms relating to water are most readily understood as ones relating to water pollution. While we find it appropriate and necessary, as noted earlier, to dismantle some of the binary lines commonly used to conceptualize water-related harms as issues of either access or pollution dependent on geopolitical context, the visibility and ecological and social impact of two relatively recent water pollution events in the Global North help to illustrate the impact that the crimes of powerful state-corporate actors have on water: the Deepwater Horizon oil spill in April 2010 and the 4-methylcyclohexylmethanol (MCHM) spill in West Virginia’s Elk River in January 2014. On April 20, 2010, a massive explosion rocked British Petroleum’s (BP) Deepwater Horizon oil exploration rig, located in the Macondo Prospect, a large multi-rig exploration and extraction site off the coast of Louisiana.1 The explosion, which was caused by a variety of factors including profit-driven time-saving measures enacted by engineers under pressure from BP to increase productivity (Daly and Henry, 2010), took the lives of 11 workers on the rig. In the wake of the explosion and collapse of the rig, the uncapped drilling site released a torrent of oil into the marine ecosystem for 87 days, with US officials estimating the total extent of the spill at roughly 4.9 million barrels. In addition to the workers who lost their lives in the explosion, the resultant oil spill is estimated to have injured over 8000 marine mammals, birds, and sea turtles, and adversely affected the delicate but robust marine ecosystem (Ocean Portal Team, 2010; see also Brisman and South, 2014: 45, n.13). In addition to the ecological impacts of the disaster, the spill brought about myriad social problems by compromising the water that gave local residents their economic and social livelihood, causing the loss of up to one million jobs available to coastal residents (Weisenthal, 2010) already working in a local economy devastated by Hurricane Katrina in 2005 (see generally Adams, 2013). On January 9, 2014, a container holding MCHM – a chemical used in the processing of coal – spilled over 7000 gallons of its contents into the Elk River, a 172-mile-long tributary of the Kanawha River running through central West Virginia. Residents of Charleston, West Virginia, who noticed a “sweet licorice” smell in the air, first identified the spill and it was quickly traced to the faulty and outdated storage containers owned and managed by Freedom Industries (Constantino, 2014; Gabriel, 2014).2 Freedom Industries’ tanks were located on the banks of the river, directly upstream from the West Virginia American Water intake and treatment and distribution center, which provides potable water to 16 percent of West Virginia’s population – 300,000 residents in nine of the state’s counties (Gabriel, 2014; Osnos, 2014; Pearce, 2014). Following the spill, hundreds of residents who came into contact with the contaminated water – either from the river directly, or from taps serviced by the American Water facility – fell ill, displaying a range of symptoms including nausea, burned skin and eyes, vomiting, exhaustion, diarrhea, and rashes (Atkin, 2014; Heyman and Fitzsimmons, 2014). Cleanup efforts did not begin immediately following the detection of the spill, slowed, in part, by confusion over the extent and chemical makeup of the leak (Palmer, 2014). Both of the above incidents highlight instances of powerful corporate interests in the Global North engaging in behaviors that result in massive ecological and social harm in the form of water pollution. While the rules of the market would logically dictate that – to take the first example – marine and coastal economies should be rigorously protected from pollution, and – to take the second – the profitability of water companies is best served when water quality is good, nonetheless there are occasions when corporate and state interests disrupt or ignore regulatory systems and requirements for similar reasons of profit, and act in concert or collusion not to prevent or mitigate disastrous water pollution events but rather to allow them (see generally Davenport 224

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and Southall, 2014; Osnos, 2014). In the case of the Deepwater Horizon oil spill, the Deepwater Horizon oil rig had been cited 18 times in the ten years prior to the disaster and had experienced 16 fires and other incidents worthy of inspection by the US Coast Guard; BP, however, routinely disregarded these incidents and warnings from regulatory authorities without repercussions for their drilling licenses (Jordans and Burke, 2010). Workers on the rig had also frequently expressed consternation over the safety of the operation – concerns that were ultimately ignored by BP and its partner companies Transocean Ltd. and Halliburton Company (Urbina, 2010). Not only was the unsafe operation allowed to continue in the face of such concerns and incidents, but the immediate response to the spill was marked by further regulatory failure, as information from BP initially minimized the extent of the ecological damage and made efforts to manage the spill an internal corporate matter rather than a spreading ecological disaster threatening hundreds of miles of gulf coastline (Buchanan, 2013; see generally Brisman and South, 2014: 26). Similarly, in the Elk River incident in West Virginia, state regulatory miscarriage marked not only the conditions leading to the pollution event, but also the response. Such failure occurred across multiple lines: Freedom Industries,3 the company that owned and operated the chemical storage facility known as a “tank farm” (Osnos, 2014: 38), had only had their facility inspected twice since 1991: once in 2010 in response to a neighbor’s complaint noting a licorice smell, and a second, cursory check in 2012 to determine if Freedom Industries was in need of updated permits, wherein inspectors determined that the company was currently compliant with their permits. The containers themselves, furthermore, were highly substandard (Brodwin, 2014) – a fact that may have been noticed had Freedom Industries not been exempt from West Virginia Department of Environmental Protection inspections because the company does not produce the chemicals it stores (Davenport and Southall, 2014; Farrington, 2014; Heyman and Fitzsimmons, 2014). Moreover, Freedom Industries did not really appreciate the risks to human and ecological health presented by MCHM, the leaking chemical, and so did not understand – or did understand but did not care about – the risky nature of storing the chemical on the banks of a major river (see generally Karlin, 2014). Freedom Industries failed to report the spill after it had come to its attention (Farrington, 2014; Kroh, 2014); instead, residents near the river reported the spill to the state regulatory authorities (Gabriel and Davenport, 2014). The company also neglected to put into place a protocol to alert the local water company in the event of a chemical incident. In addition to the failures of Freedom Industries, West Virginia American Water – a company with annual revenues nearing US$3 billion that has been publicly traded since its divestment from a German parent corporation in 2008 – had no plan in place to stop the intake of water from the Elk River in the event of a spill (Brodwin, 2014; Osnos, 2014). (Indeed, it took the water company several days to develop a methodology to measure the level of contamination from the Freedom Industries’ spill (Maher and Morath, 2014).) While Freedom Industries and West Virginia American Water did not display quite the same level of hubris of BP in ignoring regulatory warnings made by agencies with little power to enforce regulation, they acted just as irresponsibly by failing to take even the most basic steps to ensure the safety of their facilities and the neighboring ecology (Desvarieux, 2014). Instead, the two companies elected to knowingly operate risky facilities in virtually total absence of regulatory oversight (Desvarieux, 2014; Osnos, 2014). In the absence of effective environmental regulatory oversight (for a discussion, see Du Rées, 2001; South, 2013; South et al., 2014; Stretesky et al., 2013), powerful corporate and state actors are left to answer only to the call of capital (see generally Barlow and Hauter, 2014; Corporate Crime Reporter, 2014). It is, to be sure, the search for increased profits that contributes to many of these highly visible environmental disasters (and many others that attract far less media attention (see Sheppard, 2014)). In privileging economic growth over ecological health and stability, those in power – from regulatory actors and agencies bought and paid for by industry lobbyists, 225

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to corporate chiefs engaged in the socially and ecologically reckless search for profits – frequently reflect a philosophy that cannot be understood as simply anthropocentric, as many of the victims of the crimes of the powerful are human. In other words, these are not just instances of corporate state entities valuing human life over nonhuman life and its ecosystems. Instead, the philosophy guiding these powerful state and corporate actors is often one of pure econocentrism in that it prizes economic growth over both human and nonhuman health and ecology (Ruggiero and South, 2013). The two highly visible and well-reported4 pollution events described earlier illustrate the willingness of corporate offenders and ineffective regulators in the Global North to cut corners and ignore concerns wherever doing so may increase profits or economic productivity, frequently to the detriment of humans, nonhumans, and natural ecosystems.

Issues of water access in the Global South In considering water issues in the Global South, one of the primary sources of problems of access, inequality and conflict has been privatization schemes that replace local and municipal control of water with corporate commoditization. Privatization, as it is commonly practiced, not only turns the sale of water over to corporate interests, but also the regulation of water supplies (see Barlow and Hauter, 2014). The result of many water privatization plans is not only an increase in the price of water, but also a decrease in regulatory checks to ensure water safety. With an increasing number of developing countries moving to a neoliberal model that calls for privatized water supply systems, those without economic and social capital are often left with harmfully limited access to clean water. Given the global spread of the neoliberal logics and architectures of privatization, commodity fetishism, and the prizing of consumer capitalism, it is likely that water privatization will continue apace. Water privatization is frequently made a requirement of IMF and World Bank loans and assistance given to countries in the Global South in what appears to be a bold concession to the water privatizing corporate giants of the Global North, such as Suez, Nestlé, and Veolia (Barlow and Clarke, 2004). In a noted example of the hubris of water privatizing corporate actors, captured in the 2005 documentary film We Feed the World, Peter Brabeck-Letmathe, then CEO of Nestlé, characterized viewing water as a “human right” as an “extreme view,” going on to share his belief that “water is a foodstuff like any other, and should have a market value” (quoted in Union Solidarity International, 2013). Although Brabeck-Letmathe has backtracked somewhat from his dismissal of a right to water as an “absurd notion” (Murphy, 2014), the perspective presented in the 2005 film encapsulates the familiar and pervasive logic of water privatization: under the neoliberal model of privatization, water is to be seen as a commodity, not part of the commons, and so access to water is to be “regulated” along economic lines (see Deutsch, 2006). Sadly, this model has taken hold across great swathes of the Global South, although it is being met with some resistance (McClanahan, 2014). For example, in 1998, the government of Bolivia, under the supervision of the World Bank, passed laws that effectively privatized the water supply system of Cochabamba, a region that over one million Bolivians call home, 60 percent of them indigenous. Concessions to manage – and profit from – the water system were granted to Bechtel, a multi-billion-dollar global engineering and construction corporation. Bechtel, upon taking control of the Cochabamba water supply, immediately tripled prices and cut off water services to those unable to pay, going so far as to charge for rainwater gathered in homemade and traditional catchment systems. In response, the Coalition in Defense of Life and Water was formed, quickly organizing a referendum that demanded the cancellation of all Bolivian water contracts with Bechtel. When the Bolivian authorities refused to back down, protestors took to the streets and were met with repressive 226

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violence from the state military, leaving dozens wounded and one 17-year-old protestor dead. The Bolivian government eventually capitulated, severing all contracts with Bechtel (South, 2010: 242). Prior to the 1998 agreement between Bechtel and the Bolivian state, the Bolivian authorities had granted water concessions to other international interests. In 1997, again under pressure from the World Bank, the water supply system of La Paz, a major city and governmental hub of more than two million residents, was sold off to multinational French water giant Suez. Suez immediately violated their agreement with Bolivia, overcharging dramatically for water connections and use, providing selectively to the wealthy and urban residents of La Paz, and failing to improve infrastructure and water quality. Throughout the El Alto region – the hilly landscape surrounding metropolitan La Paz, and home to the bulk of the region’s indigenous peoples – a fierce resistance to Suez’s control of water broke out. General strikes in January 2005 crippled the cities of El Alto and ground business to a halt, leading eventually to the ousting of two presidents, Gonzalo Sanchez de Lozada and Carlos Mesa. Their successor, Evo Morales, became the first indigenous leader in Bolivia’s history. In January 2007, Morales and Bolivia celebrated the final removal of Suez and the return of public water to El Alto and La Paz. Morales later described Bolivian opposition to water privatization simply: “Water is life. Water is humanity. How could it be part of private business?” (Rizvi, 2011). The corporate capture of water supply systems in the name of neoliberal privatization constitutes, then, a significant blow to those wishing to ensure access to clean water. Not only does water privatization raise consumer costs to outrageous levels that make adequate access difficult; privatized water systems – particularly those in nations with still-developing infrastructure and oversight – have a fairly abysmal track record when it comes to their provision of sanitary water, attributable to profit motivations gaining primacy over water purity motivations (see Union Solidarity International, 2013; cf. Murphy, 2014, describing water privatization’s “checkered history”). Through this lens, the activist response in those regions targeted for privatization is concerned primarily with issues of access, and secondarily with issues of pollution. These examples illustrate the ease with which water issues are conceptualized along the binary lines of access and pollution, as if never the twain shall meet. This tendency within public and criminological imaginations to divert water issues into one of these two streams – to treat issues of pollution as primarily affecting the first world nations of the Global North, while framing issues of access as primarily relevant to the developing nations of the Global South – has left us blind to the increasing likelihood that, with the global adoption of neoliberal logics advocating access-reducing water privatization schemes and the growing effects of climate change, those in the Global North face increased water shortages, while those in the Global South face increased pollution. With that in mind, we will now examine and explain the connections between, and various responses to, issues of access and pollution.

Pollution and access: connecting the streams Despite the tendency to conceptualize water issues in the Global North as relating to pollution, there are major contemporary issues of drought affecting wide swathes of the United States (see Prud’homme, 2011); recently, Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, and Washington have all experienced unseasonable and dangerous levels of drought (see, e.g., Associated Press, 2014a, 2014c; Bostok and Quealy, 2014; Burke, 2014; Dwyer, 2014; Murphy, 2014; Powell, 2014; Reid, 2014; Smith, 2014; Walker, 2014; Woody, 2014a, 2014b). These droughts present myriad problems in the western United States, affecting not only everyday home consumers of water (who may face use restrictions), but also agricultural and industrial 227

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users, as well as fire management departments and services; indeed, the 2014 wildfires in Washington were caused, in large part, by the unseasonable drought and lack of snowfall during the previous winter (Payne, 2014). While some drought-prone areas in the Global North now regularly enact legislation to limit water use (see, e.g., Associated Press, 2014a, 2014b; Barnett, 2014; Powell, 2014; Steinmetz, 2014) – or attempt to curb water usage via emergency declaration (see, e.g., Hamilton, 2014) – the majority of Americans still have giant conceptual hurdles to leap in understanding and responding to increasing water scarcity (Barnett, 2014). As Barlow and Hauter remark, (2014: 43), “[t]he United States has one of the best public water supply systems in the world.”5 Similarly, Murphy (2014) explains, “Most people view water as an infinite, inexhaustible resource, much like air.” Thus, water scarcity, especially in the context of overflowing markets selling bottled water, seems unfathomable to most Americans. But, as Murphy (2014) cautions, for most practical purposes, water – especially clean, safe, drinking water – is “resolutely finite and exhaustible.” Water scarcity is likely to increase, Murphy (2014) continues, “as the global population hurtles toward the 9-billion mark, as agricultural and fuel extraction guzzle more and more water, and as climate change adds growing stress to existing supplies.” Furthermore, it is likely that failing parts of the Global North will face problems of sustainability in the future, as the case of the city of Detroit demonstrated in summer 2014 (Clark, 2014). The false perception of abundance and unfettered access fostered by the availability and ubiquity of bottled water, however, ultimately contributes to problematic practices relating to issues of both access and pollution. As Brisman and South (2013, 2014; see also Kane and Brisman, 2014; South and Walters, 2014) have noted, the selling of bottled water involves the construction and perpetuation of various myths relating to access to clean water. Consumers within the Global North are encouraged, through the languages of marketing and conspicuous consumption, to distrust the water that flows from their taps – water that costs a fraction, per liter, of bottled water (see Editorial, 2008; Licon, 2014; Standage, 2005), and does not require the more than 1.5 million barrels of oil necessary to make the water bottles that Americans use each year (see Editorial, 2007; see generally Standage, 2005).6 Water sellers incorporate into their marketing imagery tailored to evoke traditional notions of water purity – the glacier, the mountain stream, the natural aquifer – and promote the image of bottled water as an ethical, “green,” or health-conscious alternative to tap water, while, through stringent testing standards, municipal tap water supply systems maintain purity levels that are significantly higher than those of their bottled competitors (Editorial, 2008; Standage, 2005).7 These myths touch the core of American water consciousness in that they appeal to a public increasingly inundated with and concerned about events involving water pollution, such as the BP and Elk River spills described earlier, as well as the discovery of large amounts of pharmaceutical compounds in public water supplies in 2008 (Donn et al., 2008) and the 2013 rupture of an Exxon oil pipeline in Arkansas (Caplan-Bricker, 2013) – all of which have each garnered significant media attention focused primarily on how these events compromise water quality and the health of marine ecosystems. Indeed, the Exxon Valdez spill in 1989 still occupies a place in the public imagination and vernacular as a truly catastrophic event, over 25 years later. The willingness – even eagerness – of the public to seriously consider these harmful events further illustrates the tendency, within the Global North, to consider pollution the most pressing issue relating to water. Although we do not wish to diminish the importance of water pollution, the propensity within the developed world to give primacy to this issue over other water-related concerns highlights what we may be missing by failing to consider equally important issues of water access. Indeed, the reality that water sellers try so stringently to obfuscate is that issues of water access and water pollution are quickly becoming inextricably linked. The catchment, manufacture, 228

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transportation, and sale of bottled water – those energy-intensive processes that ultimately coalesce to give the developed world such a mistaken perception of water abundance and easy access – is a significant contributor to the global degradation of water quality. Furthermore, as global warming continues apace, it is likely that some regions already affected by drought will be hit even harder, while others may find themselves water-rich (Lee, 2009: 11; see also Barringer, 2011; Bostok and Quealy, 2014). Similarly, the rise in hydraulic fracturing (commonly known as “fracking”) – the horizontal drilling technique which uses huge volumes of chemicals, fine sand, and water to crack open shale formations to unlock oil and gas reserves – is likely to blur the boundaries between access and pollution. Fracking operations consume a precious and scarce resource (water) at the same time that they frequently contaminate the well water of those living nearby, thereby replacing our need for energy with a need for water, as well as causing issues of access by way of issues of pollution (see Barlow and Hauter, 2014; Burke, 2013; Editorial, 2011; see generally Kane and Brisman, 2014). The constantly shifting geographies of water wealth and drought, combined with the increased likelihood of water pollution made possible by the opening of Arctic seas for shipping and oil exploration (see Brisman, 2013), the ascendancy of fracking, and the continuation of harmful consumptive practices all make it increasingly likely that the conceptual and spatial boundaries between access and pollution will further disintegrate. This erosion will make the exchange of technologies, methods, and logics developed to reduce pollution and combat privatization an imperative for those wishing to ensure access to clean water, as well as those wishing to reduce non-point source pollution.

Conclusion In this chapter, we have tried to illustrate how water pollution and access to clean water are not discrete issues peculiar to different geographies: they are problems that share the same powerful corporate state source. Fracking can create problems of access to clean water as a result of pollution; the consumption of bottled water causes pollution due to excessive waste, as a result of disingenuous marketing and misguided consumer behaviors; water companies sacrifice maintenance programs to buttress shareholder returns. Currently, 884 million people worldwide have no access to safe water and 2.6 billion have poor and unsafe sanitation (Pretty, 2013: 477). Unfortunately, “global demand for water is expected to increase by two-thirds by 2025, and the United Nations fears a ‘looming water crisis.’ To forestall a drought emergency, we must redefine how we think of water, value it, and use it” (Prud’homme, 2011: SR3). This point has not been lost on corporations, entrepreneurs, financial profiteers, and investors. As Deutsch (2006: C1) reports, “Everyone knows there is a lot of money to be made in oil. But a fresh group of big businesses is discovering there may be even greater profit in a more prosaic liquid: water.” To further distill this point, William S. Brennan Sr., portfolio manager for the Praetor Global Water Fund in Paris, asserts, “Whenever you flush a toilet, take a shower, drink a glass of water, someone is making money” (quoted in Deutsch, 2006: C5). It need not be this way. As Barlow and Hauter (2014: 45) point out, water is essential to life and vital to human dignity: “Water is the lifeblood of our communities. It is essential for health and well-being. Its substance is beyond value and transcends the physical – it’s sacred.” While we should be cherishing and protecting this precious resource, we have not done so. The United Nations, as well as many individual countries, have recognized access to safe, clean water and to sanitation as a basic human right but, at the same time, increased privatization of water resources and operations has frustrated the realization of this right. Barlow and Hauter (2014: 45) argue that it is incumbent upon consumer groups, civil society, and faith communities to block corporate takeovers of public 229

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water systems that were established for the common good in order to ensure universal access to safe water, and they call for measures such as establishing forms of trust funds to provide dedicated money for water and sewer systems, banning fracking, and enshrining the right to water in national and regional or local law. Without responsible public provision of water and sewer services, suffering from the lack of safe, clean water and sanitation will continue. As with deteriorating air quality and limits to food sustainability, the issues of water purity and scarcity present challenges we are failing to properly acknowledge and respond to. Unless we begin to do so, a worrying forecast from the United Nations Population Fund will likely come true: in 2025, more than 60 percent of the world’s population will live in areas where safe water is scarce (Deutsch, 2006).

Notes 1 The “Deepwater Horizon oil spill” is also referred to as the “BP oil spill,” “the Gulf of Mexico oil spill,” “the BP oil disaster,” or “the Macondo blowout.” (The Macondo Prospect (Mississippi Canyon Block 252, abbreviated to MC252) is an oil field about 40 miles (60km) southeast of the Louisiana coast and the location for the drilling rig explosion in April 2010 that led to the major oil spill in the region – hence the name, “the Macondo blowout” (Brisman and South, 2014: 43, n.3).) 2 Freedom Industries later revealed that a second coal-processing compound, a mixture of polyglycol ethers known as PPH, had leaked and contaminated Charleston’s water system (Barrett, 2014; Osnos, 2014: 40). 3 Here, we find Freedom Industry’s chosen name to be of particular interest: Scott (2010: 31) writes of the discursive establishment of “patriotic sacrifice zones” in the social and spatial context of Appalachian coal extraction, wherein the harms to human and natural ecologies are justified or celebrated by linking those harms with a nationalist patriotism. Efforts by Freedom Industries and other corporate interests to link themselves with a patriotic spirit – and the potential of that link to minimize criticism of the corporate pollution and ecological harm driven by extractive industrial actors – is something we will explore further in future work. 4 A cursory search of The New York Times archive suggests that over 1000 articles relating directly to the Deepwater Horizon oil spill have appeared in that publication alone between April 2010 and July 2014. Similarly, a search for terms relating to the Elk River chemical spill shows over 100 articles published in The New York Times alone in the seven months between the disaster and this writing. Note, however, that some residents of Charleston have indicated that the Elk River chemical spill did not receive sufficient media attention. Osnos (2014: 47) reports: “In Charleston, people told me that their ordeal had received less national coverage than the latest virus on a cruise liner.” For an analysis of media coverage of the Deepwater Horizon oil spill, see Paulson et al. (2015). 5 While the United States may have a very good public water supply system, its treatment plants and pipes are in need of serious and costly repair if Americans are to continue to enjoy safe drinking water (see, e.g., Koba, 2013). 6 To be fair, the United States is not the world’s top consumer of bottled water. According to Licon (2014), that honor goes to Mexico: “Mexicans consume 69 gallons (260 liters) of bottled water per capita each year, mostly from 5-gallon (20-liter) jugs delivered by trucks to restaurants and homes. The number in the U.S. is 31 gallons (116 liters).” As Licon (2014) explains, in Mexico City, the nation’s capital, 95 percent of the drinking water is clean; the water leaves treatment plants in drinkable form, but travels through old underground pipes and dirty roof-top water tanks to consumers who, rightly so, distrust the water flowing from their taps. 7 According to Licon (2014), “[h]igh consumption of bottled water does not translate to healthier lifestyles.” In Mexico, which, as noted above, is the world’s top consumer of bottled water, “[s]even out of ten Mexicans are overweight and the country has surpassed the U.S. in obesity rates” (Licon, 2014).

References Adams, Vincanne. (2013). Markets of Sorrow, Labors of Faith: New Orleans in the Wake of Katrina. Durham, NC: Duke University Press. Associated Press. (2014a). Arizona town near Grand Canyon runs low on water. Associated Press/Yahoo! News, May 12. Available at: www.news.yahoo.com/arizona-town-near-grand-canyon-runs-lowwater-062051573.html. 230

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Associated Press. (2014b). Drought leads to water restrictions in Utah. The Washington Times, July 16. Available at: www.washingtontimes.com/news/2014/jul/16/drought-leads-to-water-restrictions-in-utah/. Associated Press. (2014c). Satellites show major Southwest groundwater loss. Associated Press/Yahoo! News. July 25. Available at: www.news.yahoo.com/satellites-show-major-southwest-groundwater105431089.html. Atkin, E. (2014). Federal Report shines light on health impacts of West Virginia chemical spill. Thinkprogress. org, April 23. Available at: www.thinkprogress.org/climate/2014/04/23/3430021/west-virginia-spillresults/. Barlow, M. and Clarke, T. (2004). Water Privatization. Report prepared for The Polaris Institute, January. Available at: www.globalpolicy.org/component/content/article/209/43398.html. Barlow, M. and Hauter, W. (2014). Great American water crisis. Utne Reader, 181 (January/February): 43–45. Barnett, Cynthia. (2014). Water works. Utne Reader, 181 (January/February): 46–51. Barrett, Paul M. (2014). A second chemical spilled in West Virginia, and the company said nothing until now. Bloomberg Businessweek, January 23. Available at: www.businessweek.com/articles/2014-01-23/asecond-toxic-chemical-spilled-in-west-virginia-and-freedom-industries-said-nothing-until-now. Barringer, Felicity. (2011). Indians join fight for an Oklahoma lake’s flow. The New York Times, April 12: A1, A13. Bostok, Mike and Quealy, Kevin. (2014). Mapping the spread of drought across the U.S. The New York Times, updated July 31. Available at: www.nytimes.com/interactive/2014/upshot/mapping-the-spreadof-drought-across-the-us.html?_r=0. Brisman, Avi. (2002). Considerations in establishing a stormwater utility. Southern Illinois University Law Journal, 26(3): 505–528. Brisman, Avi. (2013). Not a bedtime story: Climate change, neoliberalism, and the future of the Arctic. Michigan State International Law Review, 22(1): 241–289. Brisman, Avi and South, Nigel. (2013). A green-cultural criminology: An exploratory outline. Crime Media Culture, 9(2): 115–135. Brisman, Avi and South, Nigel. (2014). Green Cultural Criminology: Constructions of Environmental Harm, Consumerism and Resistance to Ecocide. London and New York: Routledge. Brodwin, D. (2014). How the Elk River spill makes the case for better regulation. US News, February 21. Available at: www.usnews.com/opinion/economic-intelligence/2014/02/21/elk-river-chemical-spillmakes-the-case-for-better-regulation. Buchanan, S. (2013). BP’s missteps delayed its 2010 spill response, trial witnesses say. Huffington Post, October 5. Available at: www.huffingtonpost.com/susan-buchanan/bps-missteps-delayed-its_b_4051053. html. Burke, Garance. (2013). Fracking fuels water fights in nation’s dry spots. Associated Press/Yahoo! News, June 17. Available at: www.news.yahoo.com/fracking-fuels-water-fights-nations-133753148.html. Burke, Garance. (2014). Water flows uphill? Maybe, in California drought. Associated Press/Yahoo! News, May 7. Available at: www.news.yahoo.com/water-flows-uphill-maybe-california-drought-181712447.html. Caplan-Bricker, Nora. (2013). This is what happens when a pipeline bursts in your town. Newrepublic. com, November 2013. Available at: www.newrepublic.com/article/115624/exxon-oil-spill-arkansas2013-how-pipeline-burst-mayflower. Carrabine, E., Cox, P., Lee, M., South, N., Plummer, K. and Turton, J. (2009). Criminology: A Sociological Introduction. New York: Routledge. Clark, Anna. (2014). Going without water in Detroit. The New York Times, July 4: A19. Constantino, M. (2014). Trouble on the Elk: A chronology of the West Virginia water crisis. Charleston Daily Mail, January 9. Available at: www.media.charlestondailymail.com/chemicalleak.php. Corporate Crime Reporter. (2014). Ed Rabel, Booth Goodwin, West Virginia and the chemical spill. Corporate Crime Reporter, January 13. Available at: www.corporatecrimereporter.com/news/200/edrabel-booth-goodwin-west-virginia-and-the-chemical-spill/. Daly, M. and Henry, R. (2010). BP cut corners in days before oil well blowout in Gulf of Mexico, documents say. NOLA.com, June 14. Available at: www.nola.com/news/gulf-oil-spill/index.ssf/2010/06/ bp_cut_corners_in_days_before.html. Davenport, Coral and Southall, Ashley. (2014). Critics say spill highlights lax West Virginia regulations. The New York Times, January 13: A8. Desvarieux, Jessica. (2014). Previously unreported second chemical spilled into West Virginia river. Truthout/ The Real News Network, January 23. Available at: www.truth-out.org/news/item/21406-previouslyunreported-second-chemical-spilled-into-west-virginia-river. 231

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Deutsch, Claudia H. (2006). There’s money in thirst. The New York Times, August 10: C1, C5. Donn, J., Mendoza, M. and Pritchard, J. (2008). Pharmaceuticals lurking in US drinking water. NBCNews.com, March 10. Available at: www.nbcnews.com/id/23503485/ns/health-health_care/t/ pharmaceuticals-lurking-us-drinking-water/. Du Rées, H. (2001). Can criminal law protect the environment? Journal of Scandinavian Studies, 2: 109–126. Dwyer, Liz. (2014). Dry as a bone: Lake Mead’s H2O situation just got a whole lot worse. Takepart.com, July 16. Available at: www.takepart.com/article/2014/07/16/lake-mead-water-drought-emergency. Editorial. (2007). In praise of tap water. The New York Times, August 1: A22. Editorial. (2008). Water and what else? The New York Times, October 18: A22. Editorial. (2011). Natural gas and clean water. The New York Times, March 23: A26. Farrington, Brendan. (2014). After 5 days, W. Va.’s water crisis nears its end. Associated Press/Yahoo! News, January 13. Available at: www.news.yahoo.com/5-days-w-va-39-water-crisis-nears-090623762.html. Gabriel, Trip. (2014). Thousands without water after spill in West Virginia. The New York Times, January 11: A9. Gabriel, Trip and Davenport, Coral. (2014). Calls for oversight in West Virginia went unheeded. The New York Times, January 14: A12. Hamilton, Matt. (2014). California trying to cut water, but is it working? Associated Press/Yahoo! News, July 26. Available at: www.news.yahoo.com/california-trying-cut-water-working-152038502.html. Harwood, B. (2010). Gaia’s freshwater: An oncoming crisis. In Eileen Crist and H. Bruce Rinker (eds), Gaia in Turmoil: Climate Change, Biodepletion, and Earth Ethics in an Age of Crisis (pp. 151–163). Cambridge, MA: The MIT Press. Heyman, Daniel and Fitzsimmons, Emma G. (2014). Wait continues for safe tap water in West Virginia. The New York Times, January 12: A14. Jordans, F. and Burke, G. (2010). Rig had history of spills, fires before big one. Huffington Post Business, April 30. Available at: www.huffingtonpost.com/huff-wires/20100430/us-gulf-oil-spill-the-rig/. Kane, Stephanie C. and Brisman, Avi. (2014). Water and climate change. Anthropology News, 55(7–8) (July/ August): 8–9. Available at: www.anthropology-news.org/index.php/2014/04/22/water-and-climatechange/. Karlin, Mark. (2014). Founder of WV chemical spill company Is a twice-convicted felon. BuzzFlash, January 13. Available at: www.truth-out.org/buzzflash/commentary/item/18414-founder-of-wvchemical-spill-company-is-a-twice-convicted-felon. Koba, Mark. (2013). Got water? Keeping it flowing could get expensive. CNBC/Yahoo! News, June 14. Available at: www.finance.yahoo.com/news/got-water-keeping-flowing-could-145800298.html. Kroh, Kiley. (2014). W. Virginia declares state of emergency after huge chemical spill. AlterNet/Think Progress, January 10. Available at: www.alternet.org/environment/w-virginia-declares-state-emergencyafter-huge-chemical-spill and http://thinkprogress.org/climate/2014/01/10/3145221/west-virginiaemergency-coal-chemical-spill/. LaFraniere, Sharon. (2006). In oil-rich Angola, cholera preys upon poorest. The New York Times, June 16: A1, A14. Lee, James R. (2009). Climate Change and Armed Conflict: Hot and Cold Wars. London and New York: Routledge. Licon, Adriana Gomez. (2014). Mexico City bets on tap water law to change habit. Associated Press/ Yahoo! News, January 24. Available at: www.news.yahoo.com/mexico-city-bets-tap-water-law-changehabit-050312859.html. Maher, Kris and Morath, Eric. (2014). Water ban continues in West Virginia. MarketWatch, January 11. Available at: www.marketwatch.com/story/water-ban-continues-in-west-virginia-2014-01-11-151032837. McClanahan, Bill. (2014). Green and grey: Water justice, criminalization and resistance. Critical Criminology, 22(3): 403–418. Murphy, Sara. (2014). Coca-Cola and Nestle are sucking us dry without our even knowing. The Motley Fool, March 2. Available at: www.fool.com/investing/general/2014/03/02/coca-cola-and-nestle-aresucking-us-dry-without-us.aspx. Ocean Portal Team, The. (2010). Gulf oil spill. Ongoing report, available at: www.ocean.si.edu/gulf-oil-spill. Osnos, Evan. (2014). Chemical Valley. The New Yorker, April 7: 38–49. Palmer, R. (2014). West Virginia chemical spill cleanup: Questions arise over cleanup, preparedness. International Business Times, January 15. Available at: www.ibtimes.com/west-virginia-chemical-spillcleanup-questions-arise-over-cleanup-preparedness-1541892.

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Paulson, Nels, Zagorski, Kim and Ferguson, D. Chris. (2015). On harm and mediated space: The BP oil spill in the age of globalization. In Avi Brisman, Nigel South and Rob White (eds), Environmental Crime and Social Conflict: Contemporary and Emerging Issues. Farnham, Surrey: Ashgate, pp. 265–83. Payne, C. (2014). Pacific Northwest burns as drought leads to unprecedented wildfire activity. Inhabitat.com, July 28. Available at: www.inhabitat.com/pacific-northwest-burns-as-drought-leads-to-unprecedentedwildfire-activity/. Pearce, M. (2014). Many reported sickened after West Virginia chemical spill, survey says. Los Angeles Times, May 21. Available at: www.latimes.com/nation/nationnow/la-na-west-virginia-spill-sick-20140521story.html. Powell, Benjamin. (2014). Water: The price is wrong. The Huffington Post, June 20. Available at: www. huffingtonpost.com/ben-powell/water-the-price-is-wrong_b_5512504.html. Pretty, Jules. (2013). The consumption of a finite planet: Well-being, convergence, divergence and the nascent green economy. Environmental and Resource Economics, 55(4): 475–499. Prud’homme, Alex. (2011). Drought: A creeping disaster. The New York Times, July 17: SR3. Prüss-Üstün, A., Bos, R., Gore, F. and Bartram, J. (2008). Safer water, better health: Costs, benefits and sustainability of interventions to protect and promote health. Report prepared for the World Health Organization. Available at: www.whqlibdoc.who.int/publications/2008/9789241596435_eng.pdf. Reid, Tim. (2014). In California drought, big money, many actors, little oversight. Reuters/Yahoo! News, April 25. Available at: www.news.yahoo.com/california-drought-big-money-many-actors-little-oversight110415148--finance.html. Rizvi, Haider. (2011). Bolivian President denounces water privatisation. Inter Press News Service, July 27. Available at: www.ipsnews.net/2011/07/bolivian-president-denounces-water-privatisation/. Ruggiero, V. and South, N. (2013). Green criminology and crimes of the economy: Theory, research and praxis. Critical Criminology, 21(3): 359–373. Scott, R. (2010). Removing Mountains: Extracting Nature and Identity in the Appalachian Coalfields. Minneapolis: University of Minnesota Press. Sheppard, Kate. (2014). After chemical spill, poll finds most West Virginians want tougher regulations. The Huffington Post, February 24. Available at: www.huffingtonpost.com/2014/02/24/west-virginiachemical-spill_n_4848922.html?&ncid=tweetlnkushpmg00000048. Smith, Scott. (2014). California drought spawns well drilling boom. Associated Press/Yahoo! News, Apr. 13. Available at: www.news.yahoo.com/california-drought-spawns-well-drilling-boom-143021112.html. South, Nigel. (2010). The ecocidal tendencies of late modernity: Transnational crime, social exclusion, victims and rights. In Rob White (ed.), Global Environmental Harm: Criminological Perspectives (pp. 228–247). Cullompton, Devon: Willan Publishing. South, Nigel. (2013). Environmental regulation: Ambiguity, ambivalence and legislative balancing acts. Environmental Scientist (Journal of the Institution of Environmental Scientists), 22(4): 20–22. South, Nigel and Walters, Reece. (2014). Eco-crimes and Fresh Water. Paper presented at the British Society of Criminology Annual Conference 2014. University of Liverpool, Liverpool, UK (July 10). South, Nigel, Brisman, Avi and McClanahan, Bill. (2014). Green criminology. Oxford Bibliographies Online: Criminology, April 28. DOI: 10.1093/OBO/9780195396607-0161. Available at: www. oxfordbibliographies.com/view/document/obo-9780195396607/obo-9780195396607-0161.xml. Standage, Tom. (2005). Bad to the last drop. The New York Times, August 1: A17. Steinmetz, G. (2014). Empires, imperial states, and colonial societies. In M. Saski, J. Goldstone, E. Zimmermann and S.K. Sanderson (eds) Concise Encyclopedia of Comparative Sociology (pp. 58–74). Leiden: Brill. Stretesky, P.B., Long, M.A. and Lynch, M.J. (2013). Does environmental enforcement slow the treadmill of production? The relationship between large monetary penalties, ecological disorganization and toxic releases within offending corporations. Journal of Crime and Justice, 36(2): 233–247. Union Solidarity International. (2013). Nestlé chairman says water is not a human right. Union Solidarity International, October 1. Available at: www.usilive.org/nestle-ceo-says-water-isnt-a-human-right-tellhim-hes-wrong/. Urbina, I. (2010). Workers on doomed rig voiced concerns about safety. The New York Times, July 21. Available at: www.nytimes.com/2010/07/22/us/22transocean.html. Walker, Alissa. (2014). NASA made an underground water map to see just how bad the drought is. Gizmodo, July 24. Available at: www.gizmodo.com/nasa-made-an-underground-water-map-to-see-just-howbad-1610315490.

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16 Unfettered fracking A critical examination of hydraulic fracturing in the United States Jacquelynn A. Doyon and Elizabeth A. Bradshaw

Introduction Faced with declining global oil reserves, the government and oil and gas industry have touted hydraulic fracturing as the solution to increased domestic oil production and energy independence. Although government and industry representatives have continuously asserted that the process is safe, evidence has linked hydraulic fracturing to problems such as contaminated water, the uncontrolled release of methane gas, and even tectonic impacts resulting in earthquakes. Currently, the regulation of fracking is minimal, especially at the federal level as a result of the Energy Policy Act of 2005 and the “Halliburton Loophole.” Creating an unfettered environment for natural gas extraction, the Halliburton Loophole exempts oil and gas companies from key environmental protection laws such as the Clean Water Act and the Safe Drinking Water Act, among others. Lacking a comprehensive regulatory framework at the national level, a myriad of policies have developed that vary widely between (and even within) states. At the local level, citizens have turned to grassroots organizing to regulate – and in some cases ban– hydraulic fracturing and its harmful effects. This chapter seeks to examine the human health and environmental effects of fracking and efforts to regulate the practice at the federal, state and local levels.

Problem overview Hydraulic fracturing (or “fracking”) is a process used to extract natural gas and oil from shale formations deep underground. In order to extricate these fossil fuels, an exorbitant amount of highly pressurized, chemical-laden water is injected into wells below the surface. Fissures and fractures within the shale bed develop as a result, emitting previously unreachable (or economically unattainable) oil or natural gas. Although fracking has been implemented commercially for over half a century, it has only recently been used for “unconventional” drilling (in shale or coal beds) and at extreme depths, ranging from around 2,000 to 10,000 feet below the surface. In addition, the technique of horizontal (as opposed to strictly vertical) fracking has been developed over the past few decades, where after extending vertically a well then turns horizontally to reach additional reserves, stretching sometimes over a mile. As many politicians and industry representatives have argued, the process of fracking has presented benefits to the United States over the past several years, including a drop in the price of 235

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natural gas, a decline in US dependence on foreign energy and some job creation (Graham 2012). Despite these professed benefits, hydraulic fracturing poses numerous environmental and human health risks. Across the US and abroad, concerns have been raised over the amount of water needed per well, the toxic chemicals used in the process, the contamination of local groundwater near fracking wells, and increased seismic activity (e.g., earthquakes) linked to high-pressure injection wells. In order to successfully fracture the shale bed, oil and gas companies have developed complicated mixtures of water, sand and chemicals, many of which are toxic and undisclosed to the public. This blend is then highly pressurized, injected into the well and used to break up the shale bed. Natural gas then escapes from these small fissures (typically less than 1.0mm wide) which are held open by proppants such as sand or aluminum oxide, and flows back up the well pipe (International Energy Agency 2012). Much of the debate over fracking centers around the lack of disclosure of each chemical composition used in these “frack fluid” mixtures, as well as their retrieval and disposal (King 2012). Although the industry stresses that chemicals make up only 0.5 to 2.0 percent of the fracking fluid, this percentage is significant considering that millions of gallons of water are used to frack each well (Earthworks 2014). If, for example, five million gallons of water were used for a particular well, that mixture would include 25,000 to 100,000 gallons of potentially harmful chemicals. Typically, hydraulic fracturing fluid is roughly 90 percent water, about 9 percent sand and 1 percent chemical additives (Coman 2012). Throughout the industry, 944 products containing 632 different chemicals have been identified in the various frack fluid compositions (Colborn et al. 2011). Examples of some of the chemicals found in that “1 percent” commonly include hydrochloric acid, ethylene glycol, ammonium persulfate, citric acid, potassium chloride, potassium carbonate, and isopropanol (Coman 2012). In some instances, frack fluids have also been found to include benzene, diesel fuel, and even arsenic (Coman 2012) and formaldehyde (McFeeley 2012). Research indicates that: [m]ore than 75 percent of the chemicals could affect the skin, eyes, and other sensory organs, and the respiratory and gastrointestinal systems. Approximately 40–50 percent could affect the brain/nervous system, immune and cardiovascular systems, and the kidneys; 37 percent could affect the endocrine system; and 25 percent could cause cancer and mutations. (Colborn et al. 2011: 1039) Although it varies greatly depending on the specific well site, only 15 to 80 percent of the frack fluid is recovered after use, while the rest remains underground (Coman 2012). Due to the threats posed to human and environmental health, many public, private and governmental organizations have called for the disclosure of chemical additives in fracking fluids. Most companies and corporations that participate in hydraulic fracturing are reluctant to release the chemical composition of their particular fracking fluid, arguing that full disclosure would reveal “trade secrets.” After much resistance from the industry, a nationwide chemical registry called FracFocus was established in 2011 to provide public disclosure of chemicals used by each company practising hydraulic fracturing. FracFocus is managed by the Ground Water Protection Council and the Interstate Oil and Gas Commission (FracFocus 2014). The objective of this database was to offer individuals and organizations public access to chemicals used in wells specifically in their area, but also around the nation (the registry currently contains information on over 77,000 wells around the United States) (FracFocus 2014). It should be noted, however, that while fracking is active in 29 states, currently only 14 states require corporations to publicly disclose their chemical compositions (McFeeley 2012). 236

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In 2014, the Secretary of Energy Advisory Board formed a Task Force to specifically analyze the effectiveness of FracFocus 2.0 (U.S. Department of Energy 2014). Although the report acknowledges that FracFocus has improved public disclosure, it also “recommends a number of actions that will further improve the effectiveness of the FracFocus disclosure of chemical additives and improve transparency for regulators, operating companies, and the public” (U.S. DoE 2014: 2). Some of the primary issues the Task Force identified were the need to eliminate the use of “exemptions,” which allows companies to exclude chemicals based on the grounds that full disclosure will reveal trade secrets (U.S. DoE 2014). Currently, 84 percent of registered wells on FracFocus have invoked a trade secret exemption (U.S. DoE 2014). The Task Force recommends: [a] “systems approach” that reports the chemicals added separately from the additive names and product names that contain them, [which] generally should provide adequate protection of trade secrets. The Task Force further calls for state and federal regulators to adopt standards for making a trade secret claim and establish an accompanying compliance process and a challenge mechanism. (U.S. DoE 2014: 2) In addition to full disclosure, the Task Force also calls for increased accuracy in reporting, improved quality of the data on the registry, and an independent audit to assess accuracy and compliance (U.S. DoE 2014).

Case study: hydraulic fracturing in the US Water use and well contamination The process of fracking entails exorbitant amounts of water, requiring anywhere from 50,000 to eight million gallons per well (Coman 2012; Graham 2012). Water used for this method of extraction is generally fresh water taken from wells, lakes or rivers (U.S. DoE 2014). Since not all of it can be reclaimed, fracking results in the permanent removal of billions of gallons of water from the global hydrologic cycle every year (Graham 2012; Kerns 2011). The industry often highlights that only about 1 percent of the total water use in the United States is used for fracking, yet what those opposed to fracking stress is that all other water use (home use, agriculture, etc.) returns to the water cycle (Graham 2012). Thus, significant hydrologic effects result from the permanent removal of water from the cycle, especially in more arid regions in the Western part of the US (Graham 2012). Gas is a wonderful resource. . . . Water is as well. And to discount the importance of water in the short term, to assume without an scientific knowledge that water will be protected or it’s not at risk, makes the country . . . vulnerable to having made a great mistake and possibly regretting not implementing . . . simple steps . . . in the first place. (Lustgarten, quoted in Graham 2012) In addition to the loss of water, fracking has been linked to contamination of local water resources. According to non-profit organization ProPublica, over 1,000 cases of underground contamination had been documented across the US by 2008, one of which led to the explosion of a home when methane seeped from fracking fissures into a residential water supply (Lustgarten 2008). Researchers at the University of Texas at Arlington examined 100 private drinking wells within 3 kilometers of a well site on the Barnett Shale in north Texas and found arsenic, selenium and 237

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strontium exceeding the Drinking Water Maximum Contaminant Limit (MCL) of the Environmental Protection Agency (Fontenot et al. 2013). Lower levels of these same contaminants were found even beyond 3 kilometers from well sites, and almost one-third of the samples also contained methanol and ethanol (Fontenot et al. 2013). In Pennsylvania and New York, methane contamination rose sharply in 68 private drinking wells near fracking well sites; the closer the water well was to an active drilling site, the greater the likelihood of thermogenic methane (Holzman 2011). Additional contamination has occurred on the surface, leaking from tanks or wastewater pits (where frack fluids are stored once retrieved from the well), or from trucks when transported. These chemicals then leach into local groundwater supplies, causing myriad issues. Contamination has also been blamed on poor gas well construction. In many instances, failure to adequately seal well pipes or cement casings, or to use well casings of proper thickness, has led to the accidental release of gas, frack fluid and other substances (Davis 2012; Holloway and Rudd 2013). Occasionally, fracked wells will experience an uncontrolled release of fluids, known as a “blowout” (Holloway and Rudd 2013). Blowouts may occur at the surface or below the surface, and are often due to well casing or cement failure (Holloway and Rudd 2013).

Investigations into groundwater contamination Despite the growing number of academic and journalistic studies documenting the effects of fracking, research by the federal government has been limited. However, the Environmental Protection Agency has investigated claims of well contamination due to fracking in Pavillion, WY, Dimock, PA and Parker County, TX. Although the EPA has acknowledged the potential for contamination of groundwater, the agency has failed to implement policies to regulate the practice. Furthermore, the agency’s actions seem to reflect an overarching policy in which investigations into groundwater contamination are neglected, abandoned or ignored. In 2004 the EPA released its conclusions from a study assessing the potential for contamination of underground sources of drinking water due to the injection of hydraulic fracking fluids into coal bed methane reserves (CMR). Although CMRs are different from shale gas, hydraulic fracturing is used to extract both resources. The first phase of the study was limited to gathering existing information on hydraulic fracturing, requesting public comment to identify and review incidences of groundwater contamination that had not previously been reported, and to make a determination regarding whether a second phase of investigation is needed (U.S. EPA 2004: ES16). Despite the possibility that fracking may release “potentially hazardous chemicals into” drinking water, the study concluded that the drilling process poses “little or no threat” and “does not justify additional study at this time” (U.S. EPA 2004). Recognizing that the diesel fuel used during normal fracturing process introduces benzene, toluene, ethylbenzene and xylenes (BTEX) into the groundwater, the EPA entered into a voluntary agreement with three major service companies to no longer use diesel fuel as a hydraulic fracture fluid additive without a permit under the Safe Drinking Water Act. Nonetheless, a recent report by the Environmental Integrity Project (2014) revealed that between 2010 and July 2014 at least 351 wells were fracked using diesel fuels without a permit by 33 different companies. Furthermore, little is being done by the EPA to further enforce the ban on using diesel in the fracking process.

Safe Drinking Water Act and the ‘Halliburton Loophole’ Following its release, the report was used by politicians and the oil and gas industry as a justification to expand fracking across the US. Most significantly, the EPA’s report was cited by Congress as support for the passage of the Energy Policy Act of 2005 which exempted hydraulic 238

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fracturing under the Safe Drinking Water Act’s underground injection control regulatory program as well as key requirements in the Clean Water Act of 1972. Specifically, the Act allows for “the underground injection of natural gas for purposes of storage” as well as “the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities” (U.S. EPA 2004). These exemptions became known as the “Halliburton Loophole” after Vice President Dick Cheney’s former company which is credited with inventing the technique of hydraulic fracturing in the 1940s. However, Ben Grumbles, the former assistant EPA administrator under the George W. Bush administration, has publicly criticized the misuse of the EPA’s report by industry, arguing that the EPA “never intended for the report to be interpreted as a perpetual clean bill of health for fracking or to justify a broad statutory exemption from any future regulation under the Safe Drinking Water Act” (Grumbles 2011). In 2011, the EPA released a report entitled Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources which claimed that fracking was responsible for aquifer contamination in the town of Pavillion, Wyoming; the first report based on scientific evidence to support such a claim. Working in coordination with the state of Wyoming, Encana (the owner of the well) and the local community, the EPA began investigating quality concerns in private drinking water wells in 2008. The draft report revealed that groundwater in the aquifer below Pavillion contained compounds associated with gas production practices such as hydraulic fracturing. After releasing the report for public comment with the initial intention of submitting the findings to an independent scientific review panel, the agency turned over responsibility for concluding the study to the state of Wyoming in 2013 whose research will be funded by Encana – the company at fault for the contamination (Mead 2013). Data provided to the agency by residents, the Pennsylvania Department of Environmental Protection, and Cabot Oil and Gas Exploration prompted an EPA inquiry into elevated levels of water contaminants in wells in Dimock, PA. Claiming that the levels of contamination uncovered were below federal safety levels, the agency closed its investigation into groundwater contamination in Dimock, concluding that no further action was needed (U.S. EPA 2012). After drilling resumed in Dimock, reports of methane leaks continued to surface. Published by the National Academy of Sciences, a May 2011 report by Duke University researchers (known as the “Duke Study”) established a link between methane contamination and hydraulically fractured gas wells in Dimock as well as aquifers overlying the Marcellus and Utica Shale formations of northeastern Pennsylvania and upstate New York (Osborn et al. 2011). As the authors conclude, “Based on our groundwater results and the litigious nature of shale-gas extraction, we believe that longterm, coordinated sampling and monitoring of industry and private homeowners is needed” (2011: 8175). The EPA, however, has been unable to fulfill such a role. In Parker County, Texas, the EPA publicly accused Range Resources of causing natural gas to migrate into water wells as a result of hydraulic fracturing in December 2010 and subsequently imposed an emergency order mandating that the company had to correct the problem. Based on sampling of wells completed by Range, the EPA concluded that there was no widespread methane contamination at actionable levels. However, lacking quality assurance information for Range’s sampling program, many questions about contamination remained (U.S. EPA 2013). The EPA then withdrew an administrative order which alleged that Range had polluted drinking water wells and dropped a lawsuit filed against the company. It was later revealed that the agency had withheld scientific evidence against the driller and decided not to take action after Range threatened not to participate in a national study on fracking (Plushnick-Masti 2013). As a report by the Inspector General at the EPA found, the agency was justified in taking action against Range based on evidence collected by independent geologist 239

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Geoffrey Thyne which revealed that the water and gas samples collected from residential wells did in fact contain methane, benzene and other contaminants. Moreover, test results indicated that it was possible for methane levels to accumulate in affected homes, potentially causing an explosion (U.S. EPA 2013: 7). Nonetheless, the agency decided to withdraw from litigation, citing multiple reasons such as the costs and legal risks of the ongoing court cases, the belief that the homeowners were no longer in danger since they had ceased using their well, and Range Resources agreed to participate in a national study on fracking and water contamination (U.S. EPA 2013: 16). As Earthworks (2013) posited, “EPA’s withdrawal from Parker County appears to be part of a larger pattern, in which the Obama administration has blocked or abandoned investigations of whether drilling or hydraulic fracturing polluted drinking water.” Led by Democratic Representative Matt Cartwright (PA), eight members of Congress have written to Gina McCarthy, head of the EPA, asking her to investigate and address the issue of water contamination in Pavillion, WY, Dimock, PA and Parker County, TX (Cartwright 2014). As the letter highlights, a patchwork of state regulations, exemptions from many of our federal environment laws and a lack of enforcement have forced communities living in and near to heavily drilled areas to pay the price for this boom. Water contamination is just one of the impacts felt by communities across the country. (Cartwright 2014) Nonetheless, at this point the EPA has neglected to undertake further investigation into groundwater contamination resulting from fracking operations in Pavillion, Dimock or Parker County.

Injection wells and earthquakes Although the process of hydraulic fracturing in general has been loosely linked to seismic activity, the disposal of the wastewater from fracking has been scientifically linked to earthquakes. When not stored in wastewater pits or in transit for treatment, flowback water that returns to the surface through the well (which can be anywhere from 20 to 80 percent of the water mixture used) is often subsequently released into deep injection wells (Holloway and Rudd 2013). Deep injection wells are regulated differently across the US but most are monitored by the EPA under the Underground Injection Control Program (U.S. EPA n.d.). The pumping of fluids below the earth’s surface has been documented since the 1960s to cause seismic events (Frohlich 2012), which are referred to as “induced seismic events” (Holloway and Rudd 2013: 96). Disposal of fracking fluids into these injection wells has shown a marked increase in seismic activity near active shale beds in several states across the nation. In one survey conducted over a period of two years on the Barnett Shale in Texas, over 67 earthquakes with a magnitude of 1.5 or larger were recorded (Frohlich 2012). The study found that “all 24 of the most reliably located epicenters . . . occurred within 3.2 km of one or more injection wells” (Frohlich 2012: 1). It should be stated that deep injection wells themselves have not been shown to be a solitary cause of earthquakes, but instead that these wells are increasing the probability that earthquakes will occur (Frohlich 2012). Under EPA’s UIC Class II program and approved state Class II programs, injection wells are subject to regulation in an effort to protect drinking water sources. The UIC Class II program oversees and enforces fluid injection into wells used for oil and gas production. In a recent report, the Government Accountability Office (GAO) (2014) found that both the state and federal programs were inadequately addressing developing risks such as: seismic activity, excessively high pressure in geologic formations resulting in surface outbreaks of fluids, and the use of diesel fuels. 240

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According to the report, the EPA is not conducting two key oversight and enforcement activities, including annual on-site state program evaluations, as well as approving and incorporating state program requirements into federal regulations (GAO 2014: 39). Furthermore, while the EPA collects a large amount of data on each state’s Class II program, the data are neither complete nor comparable to provide a national level report. Currently, the agency is working to create a national database of UIC results though the data will not be available for two to three years (GAO 2014: 1). All of these inadequacies have weakened the EPA’s ability to effectively oversee hydraulic fracturing injection wells. At present, the EPA is conducting a national study that considers the impacts of five stages of the hydraulic fracturing water cycle, including water acquisition, chemical mixing, well injection, flowback and produced water, and wastewater treatment and waste disposal. Although the report is expected to undergo peer review in late 2014, the results will not be available to the public until 2016 (U.S. EPA 2012).

Occupational hazards of hydraulic fracturing Compared to the oil and gas industry at large, workers involved in hydraulic fracturing are at a greater risk for occupational hazards. According to a recent report by Food and Water Watch (2014a: 1): Fracking sites, where many laborers work, operate 24 hours a day and are densely packed with personnel, equipment and machinery. . . . While on the job, workers can be exposed to countless hazardous materials, radioactive toxins, temperature extremes and airborne pollutants and respiratory irritants such as diesel particulate matter and silica. As preliminary findings from the Center for Disease Control and Prevention found, workers gauging flowback tanks can be exposed to higher than recommended levels of benzene (Esswein et al. 2014). Moreover, the Occupational Safety and Health Administration (OSHA) and the National Institute for Occupational Safety and Health (NIOSH) have also identified exposure to airborne silica (or sand used as a propping agent) as a health hazard for workers involved in certain hydraulic fracturing operations (OSHA 2014). In addition to silica hazards, NIOSH also identifies other safety hazards faced by those working at oil and gas drilling sites including being hit by moving equipment, poor lighting, being caught in pinch points, falling from heights, being struck by high-pressure lines or unexpected releases of pressure, fires or explosions from flowback fluids containing ignitable materials, and working in confined spaces (such as sand storage tanks, frac tanks and sand movers) without taking the proper precautions (OSHA 2014). All of these hazards contribute to a higher than average worker fatality rate for those involved in hydraulic fracturing operations. Between 2003 and 2012, the fatality rate for oil and gas sector workers on the whole was 6.5 times the fatality rate of all US workers. For workers involved in the especially dangerous job of drilling oil and gas wells, the fatality rate was 12 times the average job in the US (Food and Water Watch 2014a: 2).

Implications By passing legislation such as the Halliburton Loophole and failing to fully investigate instances of water contamination, seismic activity and workplace safety, the federal government has relegated the duty of regulation of hydraulic fracturing to the states. As a result, states are given great latitude in implementing environmental protections which vary widely across the nation. 241

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As Warner and Shapiro (2012: 488–489) note, “The 2005 Energy Act created an unusual situation in which Congress (as directed by the White House) willingly gave up considerable power over fracking by handing off its authority to the states. A hodgepodge of policies has resulted.” For example, in 2008 towns in New York placed a moratorium on the practice pending further review and the state has had a ban on fracking since 2010 when former Governor David Paterson issued an executive order instituting a six-month moratorium that was contingent upon a review of the environmental impacts of fracking, which has yet to be completed (Sadasivam 2014). In contrast, some states such as Pennsylvania have been supportive of the industry and have even passed legislation preventing local communities from passing ordinances limiting fracking (Community Environmental Legal Defense Fund 2012). At the local level, communities have taken a variety of different types of actions to restrict oil and gas development, including protesting, passing ordinances asserting the right to self-govern, creating laws regulating local land use, and enacting moratoria and bans on fracking. These methods have had varied success in the US and across the globe. The 2010 documentary Gasland by director Josh Fox and its proliferation across the internet helped spawn the emergence of the global anti-fracking movement. Through grassroots participation and political influence by mainstream environmental groups, the global anti-fracking movement has been successful in shaping emerging regulatory frameworks (Wood 2012: 6). The global and strategic risks accounting firm Control Management performed an analysis of the global anti-fracking movement on behalf of the oil and gas industry, and identified four broad camps of the movement: those desiring a better deal from the gas industry; those advocating further study into the environmental and economic impacts of unconventional gas development; those demanding a complete ban on hydraulic fracturing; and – in the majority – those demanding tighter regulation of gas development. (Wood 2012: 3) Communities in the US and across the world are exercising increased local control of the fracking industry through the use of local regulations, especially moratoriums (which are temporary) and bans (which are more permanent). The Community Environmental Legal Defense Fund (CELDF) is a non-profit organization working with local communities to pass self-governance ordinances. Community rights ordinances explicitly assert the right to local self-governance which recognizes the ability of local communities to resist threats to their health and safety. Working with CELDF, Pittsburgh became the first community to ban fracking by adopting a Community Bill of Rights ordinance prohibiting the practice. Similarly, communities in Pennsylvania, New York, Maryland, Ohio and New Mexico have also adopted “rights-based” ordinances banning fracking (CELDF 2014). Armstrong (2013: 381), however, cautions that local governments should be hesitant to follow the untested path of community rights and instead should pursue the legally recognized authority over land use within their jurisdiction to restrict fracking. While local communities are unable to expressly prohibit fracking outright due to conflicts with state and federal law, restrictions on land use such as siting, aesthetics, noise levels and hours of operation can limit the practice (Armstrong 2013: 364). However, many communities adopting this approach have been confronted with lawsuits (CEDLF 2014). As Armstrong (2013: 369–370) stresses, communities across the US which seek to control fracking through land use ordinances must recognize its limitations. First, land use regulations may have limited application depending on landownership, such as public lands owned by the state which are excluded from local zoning. Second, state and federal law 242

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pre-empts inconsistent local law. Third, communities must consider the potential for regulatory takings liability, meaning that they must evaluate whether the regulation equates to government appropriation of private property without just compensation. Thus, in developing land use regulations, local communities must carefully structure ordinances so as to not to conflict with state and local law to avoid legal challenges. After Dryden and Middlefield (two small towns in upstate New York) passed fracking bans in 2011, they faced lawsuits from companies and landowners arguing that they did not have the authority to impose limits on drilling activity. While the lawsuits were initially dismissed, intermediate-level courts as well as the state Court of Appeals have upheld the decision upon appeal. The ruling grants towns the authority to decide whether to permit and how to regulate fracking within its borders. Even if states decide to permit fracking, cities and towns still have the option to impose local ordinances that restrict the practice (Sadasivam 2014). Other states and municipalities in the US have also taken action to halt fracking. California has seen movement towards banning fracking, with Beverly Hills, Santa Cruz County, California City and Los Angeles County all enacting prohibitions in 2014. During the state’s recent record drought, farmers have begun relying on groundwater to nourish their crops. Amidst concerns that wastewater from fracking may have been injected underground and contaminated the water source, California officials ordered an emergency shutdown of 11 injection disposal well sites (Gusher 2014). In contrast, Colorado’s Governor John Hickenlooper, who is a strong supporter of the industry, publicly announced that he will sue any city or town in the state that bans oil and gas drilling in their borders (CBS Denver 2013). Nonetheless, three out of the four cities with fracking bans on the ballot in 2013 (including Boulder, Fort Collins and Lafayette) passed the initiatives (Sreeja 2013). As of July 8, 2014, within New York state, there are currently a total of 79 municipal bans, 99 moratoria and 87 movements for prohibitions (either bans or moratoria) (FracTracker 2014). Nationwide, as of August 26, 2014 there were 432 measures passed that prohibited fracking across 23 states and the District of Colombia (for a detailed inventory of local actions against fracking see Food and Water Watch 2014b). National moratoriums have also been established in France and Bulgaria, and municipal bans have been passed in numerous countries across the globe, including Australia, Canada, Spain, Switzerland and New Zealand (Keep Tap Water Safe 2014). As the growing number of towns enacting prohibitions shows, citizens are increasingly turning to local government as a means of restricting fracking. In the absence of federal and state oversight, local communities have begun to take matters into their own hands to protect themselves from the dangers of fracking, yet these measures differ greatly within and between states. Despite these movements, more uniform regulation of the oil and gas industry is desperately needed to provide sufficient health, safety and environmental oversight.

Conclusions Hydraulic fracturing is not a new phenomenon, but the methods now employed during the process (such as horizontal drilling) have brought national attention to what was previously a relatively unknown practice. Human and environmental health concerns have propelled fracking into the spotlight and spawned a national debate, largely within the past five years. Early – and now outdated – research by the EPA prompted an exemption of fracking from regulation under the Safe Drinking Water Act (known as the Halliburton Loophole), allowing for unencumbered drilling. Compounding this, contemporary research on the impacts of fracking is often not conducted by independent entities, but is instead sponsored by the fracking companies themselves (as in the case of Encana in Pavillion, Wyoming), raising questions about its impartiality. 243

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Public pressure from grassroots organizations has prompted action on the local, state and federal levels, as new research and analysis of the practice has been put into motion over the past decade. These grassroots organizations have also given a voice to otherwise marginalized groups impacted by fracking, such as private landowners and others whose water supply comes from wells in affected areas. Calls for transparency of the chemicals contained in frack fluid have led to a national registry, FracFocus. While this is certainly a step in the right direction, protection of “trade secrets” has led to additional loopholes for major corporations, as 84 percent of registered wells claim exemptions. Thus, FracFocus is not comprehensive and does little to publicly disclose the toxic chemicals used in hydraulic fracturing. Further jeopardizing the safety of local water supplies, fracking has also been linked to increased seismic activity. Moreover, the toxic hazards of working in the fracking industry have put workers at a greater risk for fatal and nonfatal injuries on the job. Due to the human health and safety and environmental effects of hydraulic fracturing, greater oversight is needed. The lack of federal regulation over fracking has resulted in a “hodgepodge” of policies across the nation (Warner and Shapiro 2012). Left unfettered, this process has led to a range of social and environmental consequences that are not fully understood. When powerful corporations provide funding for research into the effects of fracking (which has direct implications for state and federal regulation), the results of such studies must be viewed with skepticism. Further impeding regulation are the exemptions from the Clean Water and Safe Drinking Water Acts enjoyed by the oil and gas industry under the Halliburton Loophole. Without repealing this legislation, little progress can be made in regulating the harmful effects of fracking. Although substantial progress has been made by the local organizations that fight for moratoriums on fracking, it is no secret that money buys power in this country – as evidenced by lawsuits filed by the industry, and threatened by governors. Unless uniform legislation based on independent scientific research is put in place, the “economic logic” of hydraulic fracturing will only continue to fuel its progression.

References Armstrong, J. (2013) “What the Frack Can We Do? Suggestions for Local Regulation of Hydraulic Fracturing in New Mexico.” Natural Resources Journal, 53: 357–381. Bernstein, M. and Cottingham, K. (2014) “Characterizing Compounds used in Hydraulic Fracturing: A Necessary Step for Understanding Environmental Impacts.” American Chemical Society, August 14, 2014. Available at: www.eurekalert.org/pub_releases/2014-08/acs-anl071614.php. Cartwright, M. (2014) “Press Release: Cartwright Drafts Letter to EPA Urging Action on Water Contamination Issues.” April 1, 2014. Available at: www.cartwright.house.gov/sites/cartwright.house.gov/files/ Rep%20Cartwright%20EPA%20Investigations%20Letter.pdf. CBS Denver. (2013) “Hickenlooper Threatens to Sue Any Town, City That Bans Fracking.” February 26, 2013. Available at: www.denver.cbslocal.com/2013/02/26/hickenlooper-threatens-to-sue-any-towncity-that-bans-fracking/#at_pco=cfd-1.0. Colborn, T., Kwiatkowski, C., Schultz, K. and Bachran, M. (2011) “Natural Gas Operations from a Public Health Perspective.” Human and Ecological Risk Assessment ,17: 1039–1056. Coman, H. (2012) “Balancing the Need for Energy and Clean Water: The Case for Applying Strict Liability in Hydraulic Fracturing Suits.” Environmental Affairs Law Review, 39(1): 131–160. Community Environmental Legal Defense Fund. (2012) “Pennsylvania Legislature Preempts Community Decision Making on Fracking.” March 2012. Available at: www.celdf.org/pennsylvania-legislaturepreempts-community-decision-making-on-fracking. ——. (2014) “Gas Drilling and Fracking.” Available at: www.celdf.org/-1-95. Davis, C. (2012) “The Politics of ‘Fracking’: Regulating Natural Gas Drilling Practices in Colorado and Texas.” Review of Policy Research, 29(2): 177–191. Earthworks. (2013) “Inspector General: EPA Justified in Intervention to Protect Drinking Water from Fracking-enabled Pollution.” December 24. Available at: www.earthworksaction.org/media/detail/ inspector_general_epa_justified_in_intervention_to_protect_drinking_water_f#.UrnOtmRDueA. 244

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——. (2014) “Hydraulic Fracturing 101.” April 24, 2014. Available at: www.earthworksaction.org/issues/ detail/hydraulic_fracturing_101. Environmental Integrity Project. (2014) “Fracking Beyond the Law: Despite Industry Denials, Investigation Reveals Continued Use of Diesel Fuels in Hydraulic Fracturing.” August 14. Available at: www. environmentalintegrity.org/wp-content/uploads/Fracking-Beyond-the-Law.pdf. Esswein, E., Snawder, J., King, B., Breitenstein, M. and Alexander-Scott, M. (2014) “Preliminary Field Studies on Worker Exposures to Volatile Chemicals during Oil and Gas Extraction Flowback and Production and Testing Operations.” August 21, 2014. Center for Disease Control and Prevention. Available at: www. blogs.cdc.gov/niosh-science-blog/2014/08/21/flowback-2/#_Recommendations_for_Protecting. Fontenot, B.E., Hunt, L.R., Hildenbrand, Z.L., Carlton Jr., D.D., Oka, H., Walton, J.L., Hopkins, D., Osorio, A., Bjorndal, B., Hu, Q.H. and Schug, K.A. (2013) “An Evaluation of Water Quality in Private Drinking Water Wells Near Natural Gas Extraction Sites in the Barnett Shale Formation.” Environmental Science and Technology, 47: 10032–10040. Food and Water Watch. (2014a) “Toxic Workplace: Fracking Hazards on the Job.” August. Available at: www.documents.foodandwaterwatch.org/doc/fracking_hazards_worker_safety.pdf. ——. (2014b) “Mapping the Movement.” Available at: www.foodandwaterwatch.org/water/fracking/ fracking-action-center/map/. FracFocus Chemical Disclosure Registry. (2014) April 24, 2014. Available at: www.fracfocus.org/. FracTracker. 2014. “Current High Volume Horizontal Hydraulic Fracturing Drilling Bans and Moratoria in NY State.” FracTracker. Available at: www.fractracker.org/map/ny-moratoria/. Frohlich, C. (2012) “Two-year Survey Comparing Earthquake Activity and Injection-well Locations in the Barnett Shale, Texas.” Proceedings of the National Academy of Sciences, Early Edition: 1–5. Graham, L. (2012)“Fracking for Natural Gas, the Benefits and the Risks.” Michigan Radio, April 26, 2012. Available at: www.michiganradio.org/post/fracking-natural-gas-benefits-and-risks. Grumbles, B. (2011) “Presidential Pipeline: A Message From Clean Water Alliance President Ben Grumbles.” Clean Water America Alliance,” May 16. Available at: www.uswateralliance.org//pdfs/pipeline 2011.05.17.pdf. Gusher, K. (2014) “State Poised to Shut Down 11 Local Oil Injection Wells.” Bakersfield Californian, July 3, 2014. Available at: www.bakersfieldcalifornian.com/business/kern-gusher/x634489929/State-poisedto-shut-down-11-local-oil-injection-wells. Holloway, M.D. and Rudd, O. (2013) Fracking: The Operations and Environmental Consequences of Hydraulic Fracturing. Hoboken, NJ: Wiley & Sons. Holzman, D.C. (2011) “Natural Resources: Methane Found in Well Water near Fracking Sites.” Environmental Health Perspectives, 119(7): A289. International Energy Agency. (2012) Golden Rules for a Golden Age of Gas: World Energy Outlook Special Report on Unconventional Gas. Paris, France: OECD/IEA. Keep Tap Water Safe. (2014) “Global Bans on Fracking.” August 27. Available at: www.keeptapwatersafe. org/global-bans-on-fracking/. Kerns, T.A. (2011) “A Human Rights Assessment of Hydraulic Fracturing for Natural Gas.” Environment and Human Rights Advisory. Available at: www.earthworksaction.org/files/publications/EHRA_ Human-rights-fracking-FINAL.pdf. King, G.E. (2012) “Hydraulic Fracturing 101: What Every Representative, Environmentalist, Regulator, Reporter, Investor, University Researcher, Neighbor and Engineer Should Know About Estimating Frac Risk and Improving Frac Performance in Unconventional Gas and Oil Wells.” Presented at the SPE Hydraulic Fracturing Conference, The Woodlands, TX, February 6–8. Society of Petroleum Engineers. Available at: www.fracfocus.org/sites/default/files/publications/hydraulic_fracturing_101.pdf. Lustgarten, A. (2008) “Buried Secrets: Is Natural Gas Drilling Endangering U.S. Water Supplies?” ProPublica, June 20, 2014. Available at: www.propublica.org/article/buried-secrets-is-natural-gas-drilling-endangeringus-water-supplies-1113. McFeeley, M. (2012) “State Hydraulic Fracturing Disclosure Rules and Enforcement: A Comparison.” Natural Resources Defense Council. Issue Brief IB: 12-06-A. Mead, M. (2013) “News Release: Wyoming to Lead Further Investigation of Water Quality Concerns Outside Pavilion with Support of EPA.” Office of Governor Matt Mead, June 20. Available at: www. governor.wy.gov/media/pressReleases/Pages/WyomingtoLeadFurtherInvestigationofWaterQuality ConcernsOutsideofPavillionwithSupportofEPA.aspx. Occupational Health and Safety Administration. (2014) “Hazard Alert: Worker Exposure to Silica during Hydraulic Fracturing.” United States Department of Labor. Available at: www.osha.gov/dts/hazardalerts/ hydraulic_frac_hazard_alert.html. 245

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Osborn, S., Avner, V., Warner, N. and Jackson, R. (2011) “Methane Contamination of Drinking Water Accompanying Gas-well Drilling and Hydraulic Fracturing.” Proceedings of the National Academy of Sciences, 108(20): 8172–8176. Available at: www.pnas.org/content/early/2011/05/02/1100682108.full. pdf+html. Plushnick-Masti, R. (2013) “EPA Changed Course After Oil Company Protested.” The Associated Press, January 16. Available at: www.news.yahoo.com/epa-changed-course-oil-company-protested-082012084. html. Sadasivam, N. (2014) “New York State of Fracking: A ProPublica Explainer.” ProPublica, July 22. Available at: www.propublica.org/article/new-york-state-of-fracking-a-propublica-explainer. Sreeja, V.N. (2013) “Three Colorado Cities Vote in Favor of Anti-fracking Measures While Initiative Fails in Broomfield by 194 Votes.” International Business Times, November 6. Available at: www.ibtimes.com/ three-colorado-cities-vote-favor-anti-fracking-measures-while-initiative-fails-broomfield-194-votes. U.S. Department of Energy (2014) Secretary of Energy Advisory Board Task Force Report FracFocus 2.0. February 24. U.S. Environmental Protection Agency. (n.d.) Underground Injection Control Program. August 10, 2014. Available at: www.water.epa.gov/type/groundwater/uic/index.cfm. ——. (2004) Evaluation of Impacts to Underground Water Sources of Drinking Water by Hydraulic Fracturing of Coalbed Methane Reservoirs. Available at: www.water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_coalbedmethanestudy.cfm/. ——. (2011) Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources. Available at: www.water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/upload/hf_study_ plan_110211_final_508.pdf. ——. (2012) Study of the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources: Progress Report. Available at: www2.epa.gov/sites/production/files/documents/hf-report20121214.pdf. ——. (2013) Response to Congressional Inquiry Regarding the EPA’s Emergency Order to the Range Resources Gas Drilling Company. Available at: www.epa.gov/oig/reports/2014/20131220-14-P-0044.pdf. U.S. Government Accountability Office. (2014) DRINKING WATER: EPA Program to Protect Underground Sources from Injection of Fluids from Oil and Gas Production Needs Improvement. Available at: www.gao.gov/ assets/670/664499.pdf. Warner, B. and Shapiro, J. (2012) “Fractured, Fragmented Federalism: A Study in Fracking Regulatory Policy.” Publius: The Journal of Federalism, 43(3): 474–496. Wood, J. (2012) Control Management. (Global and Strategic Risks Accounting Firm). The Global AntiFracking Movement: What it Wants, How it Operates and What’s Next. Available at: www.controlrisks. com/~/media/Public%20Site/Files/Oversized%20Assets/shale_gas_whitepaper.pdf.

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17 The international impact of electronic waste A case study of Western Africa Jacquelynn A. Doyon

Introduction The burgeoning business of personal electronics has created profitable markets not only in production and consumption, but also in disposal. A lack of uniform regulation coupled with lax enforcement of what legislation does exist permits the transboundary shipment of often illegal electronic waste (or e-waste). For decades, this waste has been routinely shipped from industrialized nations to developing nations, which lack the resources to properly manage and dispose of electronic waste. Nations in the Asian Pacific such as China and India have historically received the bulk of this waste, but as regulation and restrictions increase in this region, e-waste is frequently rerouted. The western coast of Africa has recently become a destination for waste, with the ports of Lagos, Nigeria and Accra, Ghana, for example, now receiving between them more than 750,000 tons of e-waste annually. This has led to already marginalized populations having to bear the burden of physical and environmental harms associated with the improper disposal of electronic waste. In addition, a lack of awareness of theses harms in both developed and developing nations has only exacerbated the problem. Although well intentioned, national and international regulation has proven to be relatively ineffective at curtailing the illegal shipment of e-waste. Focusing specifically on the transport of e-waste from industrialized nations to the ports of Accra and Lagos, this case study will seek to illuminate not only the central issues, but also the larger implications of continued electronic consumption and improper disposal.

Problem overview Electronic waste The evolution and increased market of personal electronics has led to the annual generation of an excessive amount of hazardous electronic waste. E-waste consists of electronic products (computers, televisions, VCRs, cell phones, MP3 players, etc.) that have reached the end of their useful life (as decided by the consumer) and must be discarded. Most of these products could be reused, refurbished or recycled, but many end up in the toxic electronic waste stream that circles the globe. E-waste is an international concern as certain components of the products contain hazardous materials, depending on their condition and density. For example, cathode 247

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ray tubes (CRTs) that were used in older model televisions and computer monitors can contain several pounds of lead each, and are very difficult to dismantle and dispose of safely. In addition, other e-waste products contain cadmium, beryllium or brominated flame retardants (BFRs), all of which present considerable risks to human and environmental health. Proper recycling and disposal methods are imperative in order to protect surrounding populations and habitats. Electronic waste is an excellent example of perceived product obsolescence that has permeated both consumer and waste markets, as relatively new devices are routinely discarded and replaced with the most recent model. This continued stream of cast-off electronics has created the opportunity for a market in e-waste, which flows from developed nations to developing nations. Although China and India receive a bulk of both legally and illegally transported electronic waste, the western coast of Africa has also become a notable recipient. This is particularly disconcerting, since this region is the least equipped to properly manage and dispose of hazardous e-waste. While this market exists either through export or import in nearly every nation in the world, a lack of awareness of the life cycle of refuse among the general public is perhaps its most valuable supplier. In addition, national and international legislation governing the transboundary shipment of electronic waste does little to slow the movement of these potentially hazardous products. The (often illegal) market of toxic trade has turned even the disposal of waste into a criminal enterprise, which has in turn garnered the attention of criminologists.

Perceived obsolescence and profitability Technological advancement in the personal electronics marketplace has led to an increase in consumption that has concurrently decreased the lifespan of products. Much of this may be attributed to the concept of perceived obsolescence, where consumers are led to believe that their product has become obsolete in light of a more recent, updated version. According to the Consumer Electronics Association (CEA) (2014), United States consumers are expected to spend an industry record of $208 billion on personal electronic devices in 2014, despite a recent downturn in the US economy. Mobile internet devices (such as smart phones and tablets) are the most popular, with 138 million and 77 million units sold respectively in 2013 (CEA 2014). Worldwide, over 211 million TVs were sold in 2009, with roughly 35 million being purchased in the US alone. In 2010, US consumers bought 3.3 million HD TVs specifically for the Superbowl, up from 2.6 million in 2009 (Electronics TakeBack Coalition n. d.). In addition to the most popular devices, industry analysts also predict increases in sales for high-quality headphones, soundbars, bluetooth wireless speakers, automotive electronics, electronic gaming, etc. (CEA 2014). Although these devices are entertaining and in many instances useful, they only continue to contribute to the global e-waste problem. In 2000, the United States generated 1.9 million tons of electronic waste; by 2012, this number had jumped to over 3.4 million tons (U.S. EPA 2014). This rapid increase in e-waste is due in large part to perceived obsolescence. Cell phones, for example, have an average lifespan of only one year in the United States (Slade 2007), consumers generally keep laptops for two years, and LCD televisions for five years (Onteng-Ababio 2014). But what is also important to note is that there are always new electronic products to buy. For example, there are now MP3 players for music, Kindles and other devices for reading, and iPads and other tablets for all of the above. Any individual consumer may have several personal electronic gadgets, and may update one (or all) of them on a regular basis. Although the vast majority of electronics are simply “thrown away” – upward of 70 percent in the United States – an increasing percentage is being recycled each year (U.S. EPA 2014). When a product is recycled via an electronics recycling company in a developed country, the consumer is 248

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generally charged a fee. Depending on the size, weight and complexity of the product, consumer electronics can be free to recycle, or can cost upward of $40. On average, it costs the consumer between $10 and $50 to recycle a desktop computer or CRT television. It then costs the recycler around $20 to properly dismantle and recycle that product, which leaves little room for profit. Because most consumers (especially in the US) are not accustomed to “paying” someone to take their unwanted goods, and because they can often “donate” them to resale shops for free, most electronics recycling firms in the US are operating at less than half of their capacity (Frontline 2009), again leaving little room for profit. This has led many firms to export their electronic waste instead. From a business perspective, the decision to transfer electronic waste to an unregulated nation is perfectly cogent; not only does the shipping company avoid the costly recycling process in their home nation, but they also stand to make an additional profit through the sale of their used electronics. Instead of absorbing the cost to properly dismantle a product, the recycler could instead sell the computer to a buyer in an undeveloped nation and earn about $15 for the unit, netting a profit of approximately $35 for one unit (Gibbs et al. 2010). Considering that recyclers ship entire containers filled with used electronics, the profit is considerable. While there are some benefits to transferring end-of-life (EOL) electronics to developing nations (i.e., providing consumers with products they may not otherwise have had access to), most impacts are negative. Because most recipient nations of e-waste do not have the infrastructure to properly recycle irreparable goods, these products left in open-air dumps are broken down, often by women and children. Harsh chemicals (such as sulfuric acid) are frequently used during the dismantling and extraction processes, and heavy metals (such as lead, chromium, mercury and cadmium) are released into the air, soil and/or water supply (Eugster et al. 2008). This happens on a daily basis, with little to no oversight or regulation (Eugster et al. 2008). Some western African nations (such as Nigeria and Ghana) have an established informal recycling sector with limited formal recycling abilities. In the e-waste industries of these nations, both the second-hand import and the increasing volume of domestic e-waste trigger these informal disposal practices (Schluep 2010). Although it should be noted that this waste stream does generate both jobs and income for residents in receiving nations, the “employment” is less than desirable. Working conditions include the handling of toxic materials and exposure to dangerous vapors in both formal and informal sectors. Increased national and international regulation of electronic waste is urgently needed.

E-waste regulation and legislation International regulation of e-waste In 1989, the Basel Convention on the Control of Transboundary Movements of Hazardous Waste was adopted in Basel, Switzerland in response to the egregious toxic dumping occurring during the 1980s in African nations. These waste sites garnered international attention when it was revealed that the hazardous substances had been imported from developed nations. Rising environmental awareness and legislation in the industrialized world had led contractors and other entities to seek cheaper disposal options for their toxic materials, which led them to Africa. The Basel Convention was designed to monitor the “Toxic Trade” in order to protect human and environmental health (Basel Convention). The primary objectives of the Convention are to (1) reduce hazardous waste generation and promote environmentally safe disposal, (2) restrict the transboundary movement of hazardous waste if it cannot be safely managed in the receiving nation, and (3) develop and maintain a regulatory system to monitor transboundary shipments of 249

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hazardous waste when permissible (Basel Convention). Only three nations have not ratified the Convention since it entered into force in 1992: Afghanistan, Haiti and the United States. In the years following the adoption of the Basel Convention, critics claimed that it did more to legitimize the shipment of hazardous waste than it did to actually hamper it. The regulatory system permitted the transference of waste, so long as the exporting nation had notified and received permission from the receiving nation. Unfortunately, as there was still money to be saved and money to be made from each party respectively, hazardous waste was still routinely transferred to nations that were unable to properly manage it. Concerned parties (consisting primarily of developing nations and Greenpeace) met and developed the Decision II/12, also known as the “Basel Ban,” which is designed to ban the shipment of hazardous wastes from OECD (Organization for Economic Co-operation and Development) nations to non-OECD nations. Several nations were very much in opposition to this, including Australia, Canada, Germany, Japan, South Korea, the United Kingdom and the United States (BAN 1998). Many African nations favored a complete ban on importing waste to the continent altogether, in order to end transboundary pollution into already disadvantaged regions. Even though current regulations are much less stringent than originally intended, those involved in the e-waste trade have found ways to circumvent international regulation (Clapp 1994). One loophole under the Basel Convention is that it is designed to prevent the illegal shipment of hazardous and toxic waste destined for final disposal; but it does not prevent the transboundary movement of items that are listed as “recyclable.” This unfortunately leads to irreparable electronics mixed in with working electronics which are then transferred under the guise of recycling. Estimates suggest that only somewhere between 25–50 percent of shipments labeled for recycling actually contain reusable products; the rest is irreparable “junk” (LaDou and Lovegrove 2008; Liddick 2011; Schmidt 2006). When these products cannot be used, they are often burned (releasing dangerous substances into the air), improperly buried or dumped into bodies of water (allowing dangerous substances to leach into the ground and water supply), stacked in empty lots, or stored in dilapidated warehouses.

Regulation of e-waste in the United States Since it is not a ratified party of the Basel Convention, the United States lacks comprehensive e-waste legislation. Many wastes listed as hazardous under the Basel Convention are classified as non-hazardous or as non-waste in the US and are therefore not covered under national environmental regulation, such as the Resource Conservation Recovery Act (RCRA) or the Toxic Substances Control Act (TSCA) (Liddick 2011). It should be noted that while there is not yet national e-waste legislation, some states, including California, Maine, Washington and Minnesota, have implemented mandatory e-waste recycling initiatives (U.S. House of Representatives 2009). Limited regulation of harmful electronic waste in the United States falls under the Resource Conservation and Recovery Act (RCRA) by way of the “CRT Rule,” which specifically manages the recycling and disposal of cathode ray tubes (CRTs). There are stringent rules that require corporations to have approval from the EPA to both dispose of and/or export CRTs (U.S. EPA 2006). Disappointingly, a 2008 report by the Government Accountability Office (GAO) found rampant illegal export of CRTs from the United States to developing nations (primarily China) (GAO 2008). The summation of the report calls for the expansion of the list of products that are considered “hazardous” in the US, increased enforcement of the CRT rule, and the ratification of the Basel Convention (GAO 2008). What is promising is that there is some movement in the US towards national legislation. In June 2011, the Responsible Electronics Recycling Act (H.R. 2284) was introduced in the House of Representatives. Had it passed, the bill would have established policies banning the export of electronic waste from the United States, and enacted 250

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criminal penalties for violation (112th Congress, 2011). After facing much opposition (quite possibly as a result of lobbying) the bill died in Congress, but it does represent the potential for future e-waste legislation in the United States.

Hazardous waste in Africa Africa is of particular importance when discussing hazardous waste because it was the first developing region to resist toxic dumping from industrialized nations (while other regions, particularly China, were still ambivalent). Several African governments, along with NGOs and IGOs, worked to protect their nations from toxic waste during the framing of the Basel Convention. [Some] wanted the waste trade across borders to continue to be legal. Waste dealers and waste producing firms that were reaping large profits on such deals obviously wanted to have no restrictions on their activities. . . . The less industrialized recipient states . . . were strongly in favor of an outright global ban of the trade. (Clapp 1994: 24) Following what many in Africa saw as the failure of the Basel Convention to protect them from industrialized waste dumping, some African nations worked with non-governmental organizations (NGOs) to implement a complete waste import ban, separate from the Convention (Clapp 1994a). This effort to stop the import of toxic waste into Africa has been supported by NGOs since the 1990s (Clapp 1994a) and is even stronger in response to the growing trend of e-waste. The intention of the ban was to halt the shipment of waste from OECD nations to non-OECD nations. The ban, however, is more symbolic than effective, as there is no legislation or regulation to bolster it. Both local and international environmental groups have supported and assisted African nations in their efforts – despite this, African nations (particularly on the western coast) are attractive destinations for e-waste. As the market for illegally transferred electronic waste continues to expand, several entities are taking advantage of the infirmity of current legislation. Smaller electronics recycling firms circumvent (via the “recycling loophole”), or in some instances, blatantly violate national and international law in order to increase profits. Small-time buyers in importing nations stand to also make a moderate profit, which is tempting enough to persuade them to engage in illegal importation, often by bribing customs officials (Schoenberger 2002). Large corporations and even international organizations have recognized the economic benefits of exporting waste. Former chief economist of the World Bank, Larry Summers, stated that Africa is vastly under-polluted and that “the economic logic of dumping a load of toxic waste in the least wage country is impeccable” (as quoted in Clapp 1994a: 19). For decades, the economic logic has indeed been sound; continued exportation of e-waste allows for the continued import of new electronic goods, which concurrently stimulates national and international capitalist economies. What should be noted regarding e-waste regulation and legislation in the United States and abroad is that there is significant political involvement from not just electronic recyclers, but also producers of personal electronics. For example, at a recent Basel Convention meeting in 2013, lobbyists for the Information Technology Industry Council (ITI) (which includes such industry manufacturers as Dell, HP, Sony, Samsung, LG, and Apple) pressured legislators “for exemptions from established controls on the export of electronic waste . . . proposed exemptions would allow untested or non-functional electronic waste . . . to be considered non-waste and subject to free-trade” as long as the items were “repairable” (BAN 2013). This is particularly incongruous with the “corporate persona” of these companies, as many of them project “green” images 251

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denouncing e-waste export altogether (BAN 2013). An exemption such as this, coupled with the recycling loophole, could effectively cripple what limited power the Basel directive currently has. Lobbyist organizations in the United States have largely prevented national electronic manufacturer “take back” policies which would remove a vast majority of these harmful products from the e-waste cycle to begin with (Atasu and Van Wassenhove 2012; Bennion 2011). Rick Goss, a member of a powerful “tech industry” lobbying group (the Information Technology Industry Council), felt it was unlikely that any federal law on e-waste would pass. [Rick Goss] told the electronics trade association IPC in February [2011] that there is little accord between computer and electronics companies or retailers and recyclers about how to shape legislation. “Members of Congress are clear that they don’t have the appetite or the time to try to negotiate an outcome” Goss said. (Bennion 2011) In total, records indicate that over $630,000 was spent to lobby against the Responsible Electronics Recycling Act (H.R. 2284) in 2011 (Resource Recycling 2012). It is likely due to lobbying practices that the United States is behind in e-waste legislation compared to other industrialized nations; it appears that the industry is willing to “spend now” in order to avoid regulation that will impact them financially in the future.

Case study: electronic waste in western Africa The increase in the traffic of electronic waste to the western coast of Africa is of particular concern, as most African nations lack the infrastructure for recycling electronics, and most products entering these nations are irreparable and therefore become waste within a few months of shipment (BAN 2005). Indeed, most of Africa lacks waste management programs, e-waste collection capabilities, and even public awareness of the issue (BAN 2005). As would never be tolerated in the United States and other industrialized countries, developing nations routinely accept imported waste that they cannot manage.

Nigeria As the leading dumping ground for electronic waste in Africa, and the most populous nation on the continent, Nigeria is an obvious focal point in e-waste research. Already burdened with poor social indicators, Nigerians also face poor environmental conditions in their major cities and ports, as well as in rural areas. In addition to e-waste pollution, the nation suffers from deforestation, desertification, oil pollution (from numerous oil spills), water pollution, coastal erosion, floods, urban decay, and industrial pollution (CIA World Factbook: Nigeria 2013). Nigeria was the first country in Africa to sign the Basel Convention and maintained considerable influence over the text of the document as well (Odubela et al. 1996). In spite of this, it cannot be ignored that Nigerian ports are some of the most active and lucrative in the e-waste industry; it is estimated that close to half a million second-hand computers are dumped in Nigeria every month (Consumers International 2008). Internet usage in Nigeria has increased from just over 100,000 users in 2000, to over 45 million users in 2012 (Nigerian Communications Commission 2012), making Nigeria eleventh in world internet usage. Clearly, the increase in the demand for electronic products has made the nation (and, most notably, the port of Lagos) an important player in the trade of e-waste. Lagos is a trade port not just for Nigeria, but also for much of western Africa. An estimated 500 containers of second-hand computer-related electronics enter through the port each month, 252

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with each container holding approximately 800 monitors, equating to about 400,000 secondhand or scrap units per month, and over five million units annually (BAN 2005; Nnorom and Osibanjo 2008). In total, Lagos is importing somewhere between “15,000–45,000 tons of scrap recyclable electronic components, which may contain as much as 1,000–3,600 tons of lead” each year (Nnorom and Osibanjo 2008: 1475), a figure that is only increasing. For example, estimates suggest that over 540,000 tons of e-waste is filtered through Lagos annually, with over 100,000 tons entering illegally (Ogungbuyi et al. 2012). Significant quantities of these products are either beyond repair, or beyond economically sound repair, and about 75 percent is so outdated or damaged that it is discarded or dumped (often indefinitely) before any form of reuse can take place (BAN 2005). As for origin, assessments indicate that around 45 percent of imports were from European nations, another 45 percent from the United States, and approximately 10 percent from nations such as Japan and Israel (BAN 2005; Nnorom and Osibanjo 2008). These nations are legally required to test their exports to determine if the products were subject to national or international regulations (or both) of transboundary movements of hazardous and electronic waste. Failure to do so violates provisions of both the Basel Convention and OECD regulations, of which the aforementioned nations are all a party to at least one (if not both). Unlike these developed nations, e-waste is a major problem for Nigeria. With virtually no material recovery operations, these units are instead disposed of in local open-air dumps (Nnorom and Osibanjo 2008). In 2005, the Basel Action Network (BAN), a non-profit NGO that seeks to uphold the Basel Convention, coordinated a study on e-waste in Nigeria and found mounds of irreparable electronic waste. There were stacks of thousands of obsolete, second-hand electronics (i.e., computers, printers, monitors, scanners, copy machines) which were too old for use “even for Africa” (BAN 2005: 15). Usable materials are quickly sold or transported to other major electronics markets throughout Lagos, such as the Ikeja Computer Village or the Alaba market on the outskirts of the city (BAN 2005), but non-functioning products quickly become a burden on the environment, as well as the population. A lack of regulation of e-waste disposal has led to much of the waste landing in standard dump sites, which are unlined, unmonitored, and lack leachate recovery systems of any kind (BAN 2005). These dump sites, which are at least government established, are a step up from informal dumps that exist randomly throughout the area. According to BAN (2005), it is a very common practice to adopt an unused patch of ground or wetlands for use as a dump site. Due to the high water table, this quickly becomes a major issue in Lagos, as the waste and toxic contaminants leach into the local water supply. Compounding this is the practice of burning piles of e-waste in order to reduce volume, which occurs in both formal and informal dump sites. This leads to the releasing of dangerous and toxic chemicals into the air (BAN 2005). Despite knowledge of the harmful environmental and human impacts of burning e-waste (i.e., the production of brominated and chlorinated dioxins, polycyclic aromatic hydrocarbons, and heavy metal emissions), government officials have been unable to regulate dump site managers, who claim that the e-waste dumps “catch fire spontaneously” (BAN 2005: 22). A lack of government involvement and monitoring is evidenced by the piles of dumped waste on the sides of roads, in area swamps, between homes and buildings, and encroaching on environments of wildlife. Even domesticated animals are found grazing amidst the mounds of burning e-waste, leading to ingestion of harmful materials that may then be passed on to humans who may consume these cows, chickens, goats, etc. and/or their by-products. These dumps are reportedly filled with “toxic ash, broken CRT glass, dead animals, medical wastes, used chemical containers, food scraps, etc., all mingled together” (BAN 2005: 23). To exacerbate the issue, foragers of these dump sites include not only livestock, but also children who play and work amidst the toxic trash (BAN 2005). In one dump, old computers and monitors are being routinely 253

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pushed into a swamp in order to create a bridge over what is quickly becoming a pile of burning debris (BAN 2005). Visual images such as these demonstrate the urgency of this issue in the developing world.

Toxic waste legislation in Nigeria Following a scandal of illegally dumped toxic and radioactive wastes imported from Italy in 1987 (also known as the “Koko Incident”), the Nigerian government promulgated the Harmful Wastes Decree which provides the legal framework for the control of the disposal of hazardous and toxic wastes in the nation (Echefu and Akpofure 1998). Under the “Special Criminal Provisions” of this Act, it is a criminal offense for any person to “carry, deposit, dump, or be in possession, for the purpose of carrying, depositing or dumping, any harmful waste anywhere on Nigerian soil, inland waters or seas” (Harmful Wastes Decree 1988; Kalu 2006). It is also a criminal act to: transport or cause to be transported, or be in possession for the purpose of transporting harmful waste; or to import or cause to be imported or negotiate for the purpose of importing any harmful waste; or to sell, offer for sale, buy or otherwise deal in any harmful waste (Harmful Wastes Decree 1988). Immediately following the Decree, Nigeria passed the Federal Environmental Protection Agency Act in 1988 which established the first Federal Environmental Protection Agency for the nation (Federal Environmental Protection Agency Act) (FEPA 1988), as well as a National Policy on the Environment (NPE), which became the working document for environmental protection and preservation in Nigeria. Unfortunately, even with significant legislation governing the general protection of the environment as well as the regulation of harmful and hazardous waste, there is no specific legislation governing the handling of electronic waste, and most legislation available is outdated, poorly enforced, or both (Nnorom and Osibanjo 2008: 1475). Limited funding is another major impediment to the effective management of toxic wastes in nations like Nigeria. While the awareness of the need for environmental protection is growing worldwide, environmental concern has yet to sway the distribution of government funding priorities in many nations, including Nigeria.

Ghana Approximately one-third of the size of Nigeria, Ghana is still a significant player in the electronic waste trade. With a population of about 25.7 million, Ghana constitutes a small portion of the population for the continent (CIA World Factbook: Ghana 2013), yet it is an increasingly popular destination for much of the waste intended for Africa. Akin to Nigeria, the nation suffers from deforestation, frequent droughts, soil erosion, and water pollution, as well as overgrazing, poaching and habitat destruction, and inadequate supplies of potable water (CIA World Factbook: Ghana 2013). Agbogbloshie, a popular dump site in Accra (Ghana’s capital), is an excellent example of the growing e-waste trade in Ghana. Although dumping has only been occurring in the region for about seven years, it is already receiving hundreds of thousands of tons of e-waste annually (Frontline 2009), most notably from the US and European nations. We are talking about several tons of obsolete discarded computers, monitors, etc. We don’t have the mechanism or the system in place in this country to recycle these wastes. Some of these items come in under the guise of donations, but when you examine the items they don’t work. (Mike Anane, Director of the League of Environmental Journalists in Ghana, cited in Consumers International 2008: 2)

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An assessment of e-waste in Ghana by the Secretariat of the Basel Convention calculated that annual imports to the country would double by 2020 (Secretariat of the Basel Convention 2011). While a significant portion of these shipments is waste, there are some usable pieces that are quickly absorbed by Ghanaians, such as cell phones. The rate of cell phone subscribers has increased by more than five times the rate in 2000 (UN Data 2012), with approximately 79 percent of the population now subscribing to cell phones services (Pew Research 2014). As recently as 2002, cell phones were so valuable in Ghana that they could be traded for land (Farrar 2008). The increase in demand for cell phones led to importation of the devices from industrialized nations, often through the electronic waste stream. Up from around 200,000 in 2000, there are now over 24 million cell phones in the nation (CIA Factbook: Ghana 2013). The accessibility of the port of Accra is a likely explanation for the expanding availability of the product in Ghana. Aside from cellular phones, numerous other electronics are transported into Ghana via the port of Accra. Lumped in with televisions, fax machines, refrigerators, MP3 players, air conditioners, etc. are another popular commodity – personal computers. The Agbogbloshie dumpsite in Accra is a modern “computer graveyard” (Ross 2008: 1), though “graveyard” may be an overstatement, as it implies that these discarded devices are being buried. On the contrary, they are disposed of in the same way in Agbogbloshie as in many other e-waste dumpsites – simply abandoned in piles, often on the side of the road (Kuper and Hosjik 2008). Journalists found Ibrahim Adams, a 15-year-old resident of Accra, as he was picking through one of these dumpsites. “My headmaster sent me home last week because I hadn’t paid the school fees. I’m looking in the computers for copper and iron which I can sell to pay the [school] fees,” [he says]. (Ross 2008: 1) Residents such as Ibrahim are receiving a seemingly endless supply of e-waste, as Ghana reportedly imports an estimated 215,000 tons of electronics each year, with a majority of this tonnage containing computers and monitors (Amoyaw-Osei et al. 2011). It is estimated that only around 25 percent of the shipments received in Ghana contain working electronic products that can be resold to local communities (Kone 2010). When searching through these piles of broken and discarded computers, one National Geographic reporter found a monitor with a price tag from a chain of Goodwill stores in Frederick, Maryland, suggesting that even well-intentioned consumers’ products can end up across the ocean (Carroll 2008). Not dissimilar to other ports receiving e-waste, a vast majority of these shipments contain products that are no longer workable or repairable. While usable products are quickly absorbed into the consumer market, broken electronics even more quickly fill the waste sites. Women and children are frequently found “working” in the waste sites, retrieving valuable metals from circuit boards. “All these old mother boards and other types of circuit boards are being cooked day in and day out, mostly by women, sitting there, breathing the lead tin solders. It’s just quite devastating” (Frontline 2009: 2). Surrounding these women are piles of waste either pushed into the nearby wetlands, or burning in open areas. One National Geographic reporter offers a vivid description of his encounter with Karim, a 15-year-old boy tending fires in the e-waste dumps near Accra. [Karim] hoists a tangle of copper wire off the old tire he’s been using for fuel and douses the hissing mass in a puddle. With the flame retardant insulation burned away – a process that

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has released a bouquet of carcinogens and other toxics – the wire may fetch a dollar from a scrap-metal buyer, (Carroll 2008: 1) Repeated accounts describe these areas as covered in waste, with images of women, young children, and even livestock perusing the remnants of western electronics (BAN 2005; Carroll 2008; Kuper and Hojsik 2008) In addition, a recent study completed in 2008 by Greenpeace found numerous hazardous chemicals and very high levels of toxicity in soil and water samples taken in Accra, Ghana (Kuper and Hojsik 2008; Ross 2008). Most toxic substances found in the samples either come from the electronic goods themselves, or are formed when hazardous materials in the products are burned. In some cases certain metals were present at concentrations over 100 times higher than typical background levels for soils, including the highly toxic metal lead. Contamination with other toxic metals, such as cadmium and antimony, was also detected (Kuper and Hojsik 2008: 8). In addition, the study identified two plastic softeners (phthalates) that are toxic to the reproductive system, as they often interfere with sexual development in mammals, particularly in males (Kuper and Hojsik 2008). The phthalates are released into the environment when PVC wire covers and cables are burned in order for individuals to gain access to the valuable copper inside. In addition, there was widespread presence of PBDEs, which are found in chemicals used as flame retardants. Some of the chemicals found in Accra are now banned in Europe and the United States because of their ability to bio-accumulate in ecosystems, and their link to slowed brain development in mammals (Kuper and Hojsik 2008). Other samples taken in Accra contained chlorinated dioxins (which are toxic chemicals known to cause cancer) at levels “just below the threshold defined as being ‘indicative of serious contamination’” (Kuper and Hojsik 2008: 8). Severe contamination such as this is of particular concern because residents of Accra, especially children, frequent these dump sites. While in Ghana, Greenpeace documented dump site workers at the Agbogbloshie scrap market as primarily children between the ages of 11 and 18, but some were as young as 5. A majority of the young workers were male and had been sent to the dumps by their parents to earn money for the household (Kuper and Hojsik 2008). The Agbogbloshie market and surrounding areas are even more vulnerable to environmental degradation because of the location of the dump sites: the market is on flat ground by the Densu River and frequently floods after heavy rainfall. The flooding then carries the contaminated surface dusts and soils into surrounding lagoons and back into the Densu River itself, which supplies half the drinking water to the capital city of Accra (Kuper and Hojsik 2008). The products which are polluting the soils, waters, and air in Accra and surrounding areas are from US, Japanese, and European brands such as Phillips, Sony, Microsoft, Nokia, Dell, Canon, and Siemens. Labels retrieved by one Greenpeace mission traced discarded electronics back to the Danish Royal Guard and (ironically) the United States Environmental Protection Agency (Kuper and Hojsik 2008). While in Ghana, Greenpeace noted shipping containers filled with e-waste coming from Germany, Korea, Switzerland, and the Netherlands arriving in Tema Harbor, the largest port in Ghana (Kuper and Hojsik 2008). Again, all of these nations have standing policies under the Basel Convention, the EU, and the OECD (or some combination thereof) to prohibit the shipment of e-waste to peripheral nations. These policies are often circumvented under the pretense of recycling “reusable” goods to developing nations. For example, the EU allows the export of “second-hand goods” so long as they are tested for use, properly packed, and labeled for resale. However, a EU Commission official estimates that up to 75 percent of these secondhand goods labeled for reuse are broken and inoperative (Kuper and Hojsik 2008). Mike Anane, 256

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a Ghanaian and an environmental campaigner, told Greenpeace, “[p]eople in developed countries bring [electronic equipment] here ostensibly to bridge the digital gap; but in actual fact they are creating a digital dump” (Kuper and Hojsik 2008: 10).

Toxic waste legislation in Ghana The ports of Ghana are perhaps more attractive to e-waste brokers than those of Nigeria, as the nation has even more lax environmental regulation. Even the Ghanaian EPA agrees that national guidelines are needed in order to regulate the importation of used electronics into the country, along with additional controls monitoring the safe recycling of e-waste (Kuper and Hojsik 2008). Current regulations in Ghana date back to 1992, when the most recent Constitution of the Republic of Ghana was drafted. The National Environmental Action Plan (NEAP) was first developed in Ghana in 1991 under the National Environmental Policy. The goal of this policy is to improve environmental surroundings and living conditions for citizens. Although Ghana has numerous laws and regulations that have some relevance to the control and management of hazardous wastes, these statutes fail to address the hazards presented by such waste to human beings and the environment (Anoyaw-Osei et al. 2011). Section 10 of the EPA Act establishes the Hazardous Chemicals Committee that is required to monitor the use of hazardous chemicals by collecting information on the importation, exportation, manufacture, distribution, sale, use, and disposal of such chemicals (Amoyaw-Osei et al. 2011: 22). Again, there is no specific regulation of reference to e-waste, but certainly these regulations would be applicable. Ghana does have a Chemicals Control and Management Center (CCMC) under the EPA that is designed to manage the disposal or destruction of unwanted or obsolete hazardous and toxic wastes, but this has proved a great challenge for the nation. The landfill sites where much of the dumping is carried out are not designed to hold toxic and hazardous waste, and incinerators for the disposal of particular wastes are simply not available in the nation (Amoyaw-Osei et al. 2011). Although good intentions exist behind the regulatory framework of hazardous substances in Ghana, it is an understatement to say that these policies are ineffective. A lack of legislation governing e-waste specifically is of concern, but it is likely that even if such legislation were to be established, it would go without enforcement, as do so many other environmental regulations in Ghana. Furthermore, the infrastructure of proper recycling and disposal for hazardous and toxic materials is more or less non-existent in the state, which presents perhaps the largest problem. Ghana, much like Nigeria, cannot effectively manage the electronic waste flow that is flooding its borders.

Implications and conclusion It is irrefutable that as the market for personal electronics expands, so too will the market for electronic waste. For decades, industrialized nations have been shipping their unwanted waste (hazardous, toxic, and now electronic) to developing nations where there are fewer restrictions and higher profits to be made. This process has illuminated several problems which are inherent within the consumer electronics industry, including the issue that increased legislation banning the illegal disposal of e-waste in core nations inevitably promotes the transfer of this waste to other (usually developing) nations. The need for cheap electronics in these regions has created an industry of affordable second-hand goods that are imported by countries which are the least equipped to properly dispose of them. Many have argued that the largest contributors to the e-waste stream are the consumers themselves through both perceived obsolescence and a lack of consumer awareness. Although it is unlikely 257

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that the personal electronics industry will stop advertising their new products, there are several ways to increase consumer knowledge about electronic waste. Although multiple NGOs have attempted to raise awareness (Basel Action Network, Greenpeace, etc.) they are limited in their reach; an intergovernmental campaign may be needed to effectively reach consumers. In addition, manufacturers may include information pertaining to proper recycling and disposal within the packaging of their products. Some industrialized nations and some states within the US have implemented Take Back policies, which require the manufacturer to “take back” the product and properly recycle or refurbish it. An expansion of these programs around the globe would also be beneficial. Furthermore, there needs to be increased international regulation of electronic waste flow. Even within nations that have comprehensive e-waste legislation (i.e., nations in the EU), a majority of electronic products end up in landfills due to lack of consumer awareness and spotty enforcement. In nations like the United States (which are in the process of establishing more effective regulation), only 30 percent of e-waste is still actually spared from landfills and recycled. However, as enforcement and consumer responsibility increase, so will the flow of e-waste to developing nations. This suggests that effective policy on one side of the world can lead to structural and environmental issues on the other. In order to ameliorate the situation, all exporting and importing nations of e-waste must ratify and adhere to the directives of the Basel Convention, and work in collaboration to ensure fair importing and exporting practices. Exporting and importing nations need to devote greater resources to enforcement, as well as to customs and border regulation. Greater regulation and financial restriction of national and international lobbying groups is also necessary in order to manage outside influence on policy. Provisions of the Basel Convention should be strengthened rather than revised; industry loopholes that permit the transport of “recyclable” or “repairable” products should be revisited and perhaps removed. Without these steps, importing nations will remain abysmally vulnerable to the hegemonic nations and corporations that dominate the multi-billion-dollar electronic waste industry. Just as developed nations have a vested interest in exporting e-waste, so do developing nations have an interest in importing it. The exchange of consumer electronics brings products to populations that would otherwise not have access to them. That being said, it should not (and cannot) be expected of these economically disadvantaged nations to have the capacity and infrastructure to manage the end-of-life (EOL) cycle for these items. Proper checking, tracking, and management of exports of e-waste can reduce the shipment of unusable products to nations that are unable to properly dispose of them. Increased enforcement of all legislation pertaining to e-waste can help to manage legal transport, and intercept illegal transport. The informal and formal dump sites in Nigeria and Ghana cause injury and destruction to both human and environmental health. It cannot be ignored that though both sides may be argued to be “benefitting” from the exchange, the developing world (and, more specifically, the personal electronics and e-waste industries) are procuring profit at the expense of already marginalized populations. What has not even been addressed is the concern that many of these developing nations bear the burden of not only the disposal of these products, but also the environmental harms generated during production. Components needed for each product (such as precious metals) are mined in developing nations, assembly and packaging (which generates high levels of pollution) occurs primarily in developing nations, and consumption is enjoyed by consumers in the industrialized world. The life cycle of electronic products has been engineered in such a way to benefit (through low wages, high profits, and consumer consumption) wealthier nations, corporations, and individuals, through the exploitation of already disadvantaged nations and peoples. If existing conditions continue uninterrupted – if Western consumers and corporations 258

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continue to enjoy the benefits of their products and profits and bear no burden of their costs – the developing world, including Ghana and Nigeria, will continue to import, burn, and bury the consequences.

References 112th Congress. 2011. H.R. 2284: Responsible Electronics Recycling Act. Available at: www.govtrack.us/ congress/bills/112/hr2284#summary. Amoyaw-Osei, Y., Agyekum, O.O., Pwamang, J.A., Mueller, E., Fasko, R. and Schluep, M. 2011. Ghana E-Waste Country Assessment: SBC E-Waste Africa Project. Coordinated by the Basel Convention, March. Atasu, A. and Van Wassenhove, L. 2012. An Operations Perspective on Product Take-back Legislation for E-waste: Practice, Trends and Research Needs. Production and Operations Management, 21(3): 407–422. Basel Action Network (BAN). 1998. Why the US Must Ratify the Entire Basel Convention (Or Not at All): Briefing Paper No. 2. Available at: l. mu6y,kik.,po8n79=m’.i8u31 (accessed June 21, 2011). Basel Action Network (BAN). 2005. The Digital Dump: Exporting Re-use and Abuse to Africa. BAN Media Release, October 24. Basel Action Network (BAN). 2013. Electronics Industry Lobbies to Classify e-Waste as non-Waste to allow Export to Developing Countries. BAN Media Release, May 3. Available at: www.ban.org/2013/05/03/ electronics-industry-lobbies-to-classify-e-waste-as-non-waste-to-allow-export-to-developingcountries/ (accessed May 14, 2014). Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal. Available at: www.basel.int/ (accessed April 10, 2011). Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal: Online Reporting Database. 2012. Summary Tables on the Transboundary Movements Among Reporting Parties 2001–2009. Available at: www.basel.int/Countries/NationalReporting/ReportingDatabase (accessed January 22, 2012). Bennion, J. 2011. Drowning in Electronics: Where the Law Stands on E-waste. PBS: Frontline. Available at: www. pbs.org/frontlineworld/stories/ghana804/resources/ewaste.html (accessed March 8, 2013). Carroll, C. 2008. High-tech Trash: Will Your Discarded TV End Up in a Ditch in Ghana? National Geographic Magazine, January. CIA World Factbook. 2013. Ghana. Available at: www.cia.gov/library/publications/the-world-factbook/ geos/gh.html (accessed August 22, 2013). CIA World Factbook. 2013. Nigeria. Available at: www.cia.gov/library/publications/the-world-factbook/ geos/ni.html (accessed August 22, 2013). Clapp, J. 1994. Africa, NGOs and the International Toxic Waste Trade. Journal of Environment and Development, 3: 17–48. Consumer Electronics Association. 2012. Corporate Report 2012: The Next Generation of Innovation. CEA. Consumer Electronics Association. 2014. CE Industry Revenues to Reach Record High of $208 Billion in 2014, According to CEA Sales and Forecast Report. Available at: www.ce.org/News/News-Releases/ Press-Releases/2013-Press-Releases/CE-Industry-Revenues-to-Reach-Record-High-of-$208.aspx (accessed April 10, 2014). Consumers International. 2008. E-waste: West Africa Continues to Drown in the Rich World’s Obsolete Electronics. April. Duan, H. and Eugster, M. 2007. Employment Analysis of WEEE Recycling and Disposal. Internal working paper of EMPA (Swiss Federal Laboratories for Materials Processing). Echefu, N. and Akpofure, E. 1998. Environmental Impact Assessment in Nigeria: Regulatory Background and Procedural Framework. United Nations Environment Program, UNEP Division of Technology, Industry and Economics. UNEP Environmental Impact Assessment Training Resource Manual Studies of EIA Practice in Developing Countries. Electronics Take Back Coalition. (n.d.) E-waste in Landfills: Most E-waste is Trashed, Not Recycled. Available at: www.electronicstakeback.com/designed-for-the-dump/e-waste-in-landfills/ (accessed April 14, 2013). Eugster, M., Huano, D., Jinhui, L., Perer, O., Potts, J. and Yang, W. 2008. Sustainable Electronics and Electrical Equipment for China and the World: A Commodity Chain Sustainability Analysis of Key Chinese EEE Product Chains. International Institute for Sustainable Development. 259

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Farrar, L. 2008. Africans get Upwardly Mobile in Cell Phone Boom. CNN Tech. Available at: www.articles. cnn.com/2008-08-07/tech/mobile.phone.poverty_1_mobile-phone-cell-phones-phone-functions?_ s=PM:TECH (accessed May 9, 2012). Federal Environmental Protection Agency Act of Nigeria (FEPA). 1988. Available at: www.nigeria-law.org/ Federal%20Environmental%20Protection%20Agency%20(Amendment)%20Decree%20No.%2059%20 1992.htm (accessed March 14, 2012). Frontline. 2009. Ghana: Digital Dumping Ground. Available at: www.pbs.org/frontlineworld/stories/ ghana804/video/video_index.html (accessed June 2, 2011). Gibbs, C., McGarrell, E.F. and Axelrod, M. (2010)Transnational White-collar Crime and Risk: Lessons from the Global Trade in Electronic Waste. Criminology and Public Policy, 9: 543–560. Government Accountability Office (GAO). 2008. Electronic Waste: EPA Needs to Better Control Harmful U.S. Exports through Stronger Enforcement and More Comprehensive Regulation. Report to the Chairman, Committee on Foreign Affairs, House of Representatives. August. Harmful Wastes Decree (Special Criminal Provisions, etc.). 1988. Nigeria. Available at: www.unep.org/ padelia/publications/comp4Nigeria.pdf (accessed April 20, 2012). Kalu, V.E. 2006. Toxic Wastes and the Nigerian Environment: An Appraisal. Department of Private Property & Property Law, University of Benin, Benin City. Kone, L. 2010. Toxic Colonialism: The Human Rights Implications of Illicit Trade of Toxic Waste in Africa. Consultancy Africa Intelligence. Available at: www.consultancyafrica.org/index.php?option=com_ content&view=article&id (accessed October 20, 2011). Kuper, J. and Hosjik, M. 2008. Poisoning the Poor: Electronic Waste in Ghana. Greenpeace Special Report, August. LaDou, J. and Lovegrove, S. 2008. Export of Electronics Equipment Waste. International Journal of Occupational and Environmental Health, 14: 1–10. Liddick, D.R. 2011. Crimes against Nature: Illegal Industries and the Global Environment. Santa Barbara, CA: Praeger. Nigerian Communications Commission. 2012. Industry Data. Available at: www.ncc.gov.ng/industrystatistics/industry-data.html (accessed May 3, 2012). Nnorom, I.C. and Osibanjo, O. 2008. Material Flows and Management Practices in Nigeria. Waste Management, 28: 1472–1479. Odubela, M.T., Soyombo, O., Adegbite, F. and Ogungbuyi, K. 1996. Transboundary Illegal Shipments of Hazardous Waste, Toxic Chemicals (Pesticides) Contraband Chlorofluorohydrocarbons (CFCs): The Nigerian Experience. Fourth International Conference on Environmental Compliance and Enforcement. April 22-26. Ogungbuyi, O., Nnorom, I.C., Osibanjo, O. and Schluep, M. 2012. E-waste Country Assessment of Nigeria. E-Waste Africa Project of the Secretariat of the Basel Convenention, May. Onteng-Ababio, M. 2014. Electronic Waste Management in Ghana: Issues and Practices,I In Sustainable Development: Authoritative and Leading Edge Content for Environmental Management, edited by S. Curkovic (pp. 149–166). Intech Online. Pew Research: Global Attitudes Project. 2014. Emerging Nations Embrace Internet, Mobile Technology: Cell Phones Nearly Ubiquitous in Many Counties. Available at: www.pewglobal.org/2014/02/13/ emerging-nations-embrace-internet-mobile-technology/ (accessed May 10, 2014). Resource Recycling. 2012. Looking at Lobbying for Quarter 4 (Q4). Available at: www.resource-recycling. com/node/2460 (accessed August 14, 2012). Robinson, D. 2000. Environmental Racism: Old Wine in a New Bottle. Echoes Magazine, 17(July): 18–20. Ross, W. 2008. Computers Pile Up in Ghana. BBC News. Available at: www.newsvote.bbc.co.uk/mpapps/ pagetools/print/news.bbc.co.uk/2/hi/africa/7542489.htm (accessed October 20, 2011). Schluep, M. 2010. E-waste Management in Developing Countries with a Focus on Africa. ITU Symposium on ICTs and the Environment and Climate Change, Cairo, Egypt. Schmidt, C.W. 2006. Unfair Trade: E-waste in Africa in Environews: Spheres of Influence. Environmental Health Perspectives, 114: 232–235. Schoenberger, K. 2002. Where Computers Go to Die: Poor Cities in China become Dumping Ground for E-waste. Basel Action Network, Toxic Trade News. Available at: www.ban.org/ban_news/2002/021123_ where_computers.html (accessed January 2012). Secretariat of the Basel Convention. 2011. E-Waste Africa Project: Ghana E-Waste Country Assessment. Slade, G. 2007. Made to Break: Technology and Obsolescence in America. Cambridge, MA: Harvard University Press. UN Data. 2012. Ghana: Country Profile. United Nations Statistics Division. Available at: www.data. un.org/CountryProfile.aspx?crName=Ghana (accessed May 10, 2012). 260

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UN Data. 2012. Nigeria: Country Profile. United Nations Statistics Division. Available at: www.data. un.org/CountryProfile.aspx?crName=Nigeria (accessed May 10, 2012). U.S. Environmental Protection Agency. 2006. Hazardous Waste Management System; Modification of Hazardous Waste Program; Cathode Ray Tubes; Final Rule. Available at: www.epa.gov/osw/laws-regs/ state/revision/frs/fr215.pdf (accessed May 10, 2014) U.S. Environmental Protection Agency. 2014. Municipal Solid Waste Generation, Recycling and Disposal in the United States: Tables and Figures for 2012. Office of Resource Conservation and Recovery. Available at: www.epa.gov/osw/nonhaz/municipal/pubs/2012_msw_dat_tbls.pdf. U.S. House of Representatives 2009. Committee on Science and Technology. Electronic Waste: Investing in Research and Innovation to Reuse, Reduce and Recycle. February 19.

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Part V

Financial crimes

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18 Bad banks Recurrent criminogenic conditions in the US commercial banking industry Robert Tillman

In the shadow of the financial crisis that began in 2008, another disturbing trend may be found: a surge in failures among US banks. Between the beginning of 2008 and the end of 2011, 355 commercial banks were declared insolvent and closed by federal authorities. These failures will ultimately cost the federal insurance fund that guarantees deposits at an estimated US$57 billion. If the 57 thrift institutions and savings banks that also failed during this period are included, those losses increase to nearly US$90 billion (Federal Deposit Insurance Corporation (FDIC, 2011). While this wave of insolvencies began at about the same time as the larger financial crisis that was triggered by the collapse and near-collapse of Wall Street investment banks, its causes were very different. These were primarily small, local institutions – often referred to as community banks1 – that largely did not invest in the exotic financial instruments that threatened the investment banks. Rather, their demise was typically connected to risky loans made in the local and regional markets, often involving commercial real estate whose value dropped precipitously as the US economy sharply declined in the late 2000s. One of the striking aspects of this wave of insolvencies is how closely it resembles, in form, the epidemic of failures in the 1980s that led to the closing of over 2000 savings and loan institutions and commercial banks. Analyses of failed institutions in both eras found that they tended to be young (recently chartered), experienced very rapid growth usually funded by “hot money” (brokered) deposits,2 had loan portfolios that were heavily concentrated in commercial real estate, and were located in regions that had experienced “booms and busts” in their real estate markets (FDIC, 1997; National Commission, 1993; U.S. Department of Treasury, Office of the Comptroller, 2006). Cole and White have characterized the current crisis as “déjà vu all over again” and have argued that “the parallels of the causes of the two crises, taking place twice within 20 years, makes [sic] it highly implausible to argue that the recent commercial real estate bust was a ‘black swan’ that could not have rationally been anticipated” (2012, p. 27). A number of economists have proposed that financial crises of this sort are not anomalies or rare occurrences in otherwise stable economies, but are inherent and cyclical features of advanced economies (Minsky, 2008; Palley, 2010; Roubini and Minh, 2010). Economists, however, have had less to say about the role that fraud and corruption have played in these crises. Sociologists and criminologists have had more to say about this and have linked systemic financial crises to white-collar crime with the concept of criminogenic markets. Studies in a variety of institutional 265

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contexts have described the ways in which changes in markets and regulatory systems have created both widespread instability in those markets and pervasive opportunities for fraud and abuse. Analyses of financial institution fraud have focused on the roles that deregulation, political corruption and financialization have played in creating systemic incentives for insiders to loot their institutions (Akerlof and Romer, 1993; Calavita et al., 1997; Tillman and Indergaard, 2005). A phenomenon largely unexplored is the possibility that these criminogenic markets may emerge, decline, and then re-emerge. These markets may display a pattern of development in which they emerge, capture the public’s attention, become the subject of enforcement actions and policy changes, recede as policy makers and the public become complacent, and then re-emerge possibly in a different form or in a different place. The fact that criminogenic markets don’t just disappear despite often vigorous campaigns to eliminate them suggests that they are connected to larger social institutions and ideologies. The broader question, then, concerns the underlying conditions and processes that create and re-create criminogenic markets over time and make them resistant to reform. The analysis that follows will proceed by first providing a brief history of the crises in the banking and thrift industries during the 1980s and the legislative efforts to reform those industries in the early 1990s. In the next section, the conditions that led up to the more recent banking crisis and the dimensions of the epidemic of bank failures in the period 2008 to 2011 are described. Then the forms of fraud and corruption found at a subset of failed banks whose directors and officers were accused of misconduct are described and linked to changes in the market and regulatory policies. Finally, these events are placed in a broader theoretical context provided by economic theories of financial crises and instability.

Problem overview The recent crisis in the US banking industry offers a good example of recurring criminogenic markets involving small to medium-sized commercial banks and other lending institutions. This chapter will describe how the criminogenic environment that surrounded the banking industry in the 1980s was re-created in the 2000s, albeit on a smaller scale, when lawmakers and regulators, guided by the view that “this time is different” (Reinhart and Rogoff, 2009), ignored the lessons of the recent past and implemented policies that loosened restrictions on these institutions. Corrupt bankers took advantage of this relaxed regulatory environment and regional economic booms, particularly in commercial real estate, to engage in a variety of reckless and corrupt practices, leading their banks to insolvency and collapse. How this could have happened provides considerable insights into the nexus of financial crises, financial crimes, and politics. The 1980s and early 1990s witnessed a severe crisis among US lending institutions. Between 1985 and 1992, over 2100 savings institutions and commercial banks failed, the largest number since the Great Depression (FDIC, 2011). Hardest hit was the savings and loan industry which was rescued from total collapse only with a US$125 billion, taxpayer-funded bailout (Curry and Shibut, 2000, pp. 26–35). Analyses of the causes of the S&L debacle concluded that the major causes included: deregulatory laws and policies which allowed thrifts to engage in much riskier activities than had previously been allowed; a failure, indeed a corruption, of congressional and regulatory oversight; widespread fraud and abuse by thrift insiders and their cronies outside the institutions; and a collapse in real estate values in certain high-growth regions of the country (Calavita et al., 1997). Similar factors were behind the wave of bank insolvencies. Although many of the more sweeping deregulatory policies enacted in the 1980s were directed at thrifts, many commercial banks were forced to engage in risky and speculative behavior as a result of competitive pressures from savings and loans (FDIC, 1997). 266

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At both banks and thrifts failure was most common among recently chartered institutions and institutions that departed from the traditional activities of home mortgage and small business loans to engage in highly speculative activities, many of which were facilitated by deregulatory laws and policies. These included fueling rapid growth in assets with brokered deposits that paid high interest rates and committing significant proportions of the institutions’ loan portfolios to commercial real estate loans, particularly what are known as acquisition, development and construction (ADC) loans used to fund a wide variety of real estate ventures (National Commission, 1993; FDIC, 1997). Calavita and Pontell singled out these two factors as key ingredients in the S&L debacle. The increased availability of brokered deposits made possible by deregulation created a situation in which: Overnight, ailing savings and loans could obtain huge amounts of cash staving off their impending insolvency. . . . Like a narcotic, the more these institutions took in brokered deposits, the more they depended on them, and the more they were willing to, and had to, pay more to get them. (Calavita and Pontell,1990, p. 317) For “go-go” S&Ls of the 1980s this new cash was most often used to fund acquisition, development, and construction (ADC) loans, often made to cronies who used the money to build shopping centers, apartment complexes, hotels, and to invest in other risky ventures (Calavita and Pontell, 1990, p. 318). For developers these were low-risk loans, since they were not personally liable in the event of default and nor were bank executives, since the deposits were federally insured. Thrifts handed out multi-million-dollar loans for projects with no marketability studies and which were doomed to failure from the start. Failure at both banks and thrifts was also highest at young institutions, many of which had been chartered just several years before they collapsed under policies that encouraged new entrants into the market. By 1983/1984, over 225 new banks were being chartered every year. So many new banks were being created in Texas that one Houston banker quipped, “Everyone who has two nickels to rub together is opening a bank or trying to” (FDIC, 1997, pp. 107–108). These three factors – the ability to easily charter a bank or thrift institution, the ability to pump up an institution’s funds with federally insured brokered deposits, and the ability to use those deposits to make large loans on highly speculative commercial real estate ventures (often to cronies and business associates) – made thrifts and commercial banks ideal vehicles for generating huge, short-term profits. Of course, these same factors greatly threatened the long-term survival of the institution. But then many of the insiders were not concerned about the long-term survival of their institutions because they were simply using them to enrich themselves. Not only were many of the practices at failed institutions in this era speculative and risky, they were also fraudulent. Almost all studies of the banking crisis of the era have concluded that fraud and abuse were prominent causal factors. Estimates of the proportion of bank failures in which fraud and abuse played a role vary from 24 to 50 percent (FDIC, 1997, p. 34). Studies of the role of fraud in thrift failures generally find the proportion to be higher. A study by Calavita et al. found evidence of serious criminal violations at 66 percent of a sample of 686 failed savings and loan institutions (Calavita et al., 1997, p. 31). Public outrage over the S&L scandals prompted Congress to pass several pieces of legislation aimed at reforming the thrift and banking industries, the two most significant of which were the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA, 1989), which covered thrifts, and the Federal Deposit Insurance Corporation Improvement Act of 1991 267

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(FDICIA, 1991), which covered primarily banks. Both laws attempted to reregulate lending institutions, countering many of the deregulatory policies enacted in the 1980s. Both laws, as well as regulatory policies, tightened up the requirements for obtaining a charter for a bank or thrift, making it harder for individuals to open new banks with little experience and little capital (FDIC, 1997, p. 110). Both laws also placed more stringent restrictions on institutions’ access to brokered deposits. The FDICI Act required that only commercial banks that were “well capitalized” could accept brokered deposits. However, it also provided a mechanism for institutions to apply for a waiver to the rule if they were “adequately capitalized.” Institutions that were “under-capitalized” could not apply for a waiver (FDICIA, 1991). The FDICI Act also imposed uniform standards on real estate lending by commercial banks. Finally, the 1991 law dealt with a problem that has been cited as a causal factor in the wave of thrift and bank failures in the 1980s: infrequent on-site examinations by regulators (FDIC, 1997, pp. 426–432; National Commission, 1993, p. 50). During the early 1980s regulators moved away from the traditional 12-month examination schedule and the time between examinations increased dramatically, particularly in regions of the country with large numbers of bank and thrift failures. At the same time, the number of bank examiners employed by state and federal agencies declined significantly (FDIC, 1997, pp. 426–432). The 1991 FDICI Act sought to reverse this trend by requiring that all but the most highly capitalized banks with relatively small assets be examined every 12 months. By the mid-1990s the feeling in Congress and among regulators was that the banking crises of the 1980s were over, the deregulatory excesses that contributed to them had been reversed, and the banking industry had been stabilized. However, as the FDIC noted in a retrospective survey of regulatory reform in the early 1990s, “deregulation had never left the legislative and policy agenda, even when the thrift and banking industries were in greatest difficulty. Not surprisingly, this held true as times grew better”(FDIC, 1997, p. 126). Written in 1997, this statement turned out to be more accurate than the report’s authors may have realized.

Case study The regulators’ optimism would seem to have been justified by a dramatic decline in the number of bank failures. As the data in Figure 18.1 display, after reaching a peak of over 200 in 1989, the number of commercial banks that failed annually was in the single digits during the mid-1990s. And the trend continued until 2008. Indeed, in 2005 and 2006 there were no commercial bank failures. But things began to change rapidly in 2008, a year in which 19 banks failed. The next two years saw failure rates that were reminiscent of the 1980s, with 120 banks failing in 2009 and 132 in 2010. In 2011, the number declined to 84 but was still significantly higher than it had been prior to 2008. While the number of failed commercial banks was higher in the crisis of the late 1980s than in the more recent period, the losses per institution were considerably higher in the latter period. In 1989, at the peak of the earlier crisis, the median loss per institution was US$9.9 million (in 2011 dollars). In 2010, when failures peaked at 132, the median loss per institution was more than seven times greater, at US$69.2 million (in 2011 dollars). Not included in these figures is IndyMac Bank, which when it failed in 2008 was technically a savings and loan institution and not a commercial bank and whose losses were estimated at the time to total over US$12.75 billion. Expressed in 2011 dollars, the losses at IndyMac were greater than twice the costs of bailing out Lincoln Savings and Loan, the infamous S&L that was the poster child for fraud and corruption in the savings and loan industry during the 1980s. What happened to cause this sudden spike in failed lending institutions? Certainly it was connected to the general downturn in the economy and the financial crisis that began in the fall 268

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200 100000 150

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Figure 18.1 Bank failures and median loss, by year of failure, 1980 to 2011

of 2008. One explanation, popular with executives at failed banks, is that many small banks that eventually went under would have remained solvent, despite the economic recession, had they had access to the same government funds (TARP) that large banks did (U.S. Congress, 2010). Another, related explanation holds that overzealous regulators moved too fast to shut down the banks and had they allowed them to stay open they could have worked their way out of their problems (Independent Community Bankers of America, 2010). In both explanations the sudden rise in bank failures was caused by events external to the banks themselves. This argument, however, is belied by analyses which have concluded that most failures were caused by specific conditions and practices within the institutions. An analysis of failed banks by the FDIC’s Office of the Inspector General found that those institutions tended to be those that: (1) were recently chartered; (2) were dominated by a single official; (3) relied heavily on brokered deposits; (4) experienced rapid asset growth; (5) had heavy concentrations of Commercial Real Estate (CRE) and ADC loans in their loan portfolios; and (6) had compensation arrangements that rewarded loan officers for the quantity not the quality of the loans they made (2009, pp. 11–13). In other words, failed banks were not the victims of unforeseen economic events, but were instead the victims of recklessness and greed on the part of the insiders who managed them. Yet, at the same time, state and federal regulators monitored banks in the US relatively closely as compared to companies in other industries. Therefore, bankers at failed institutions could not have engaged in these practices without the tacit consent, or at least benign neglect, of regulators. To understand how this happened we have to look more closely at the changed regulatory environment of the early 2000s.

The “golden age of banking” In the summer of 2003, the heads of the two most important banking regulatory agencies, the FDIC and the Office of Thrift Supervision (OTS), posed for a photo-op with representatives from the banking industry who held chainsaws and garden shears over a stack of papers 269

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wrapped in red tape. In case the point was not obvious, the screen behind them announced: “Cutting Red Tape” (Appelbaum and Nakashima, 2008). This event aptly symbolized the new attitude among banking regulators in Washington under the Bush administration who sought a return to more “relaxed regulation” and “cooperative” relationships with those they oversaw in the industry. The following year the new head of the FDIC, Donald Powell, a former bank executive from Texas, told a meeting of the American Bankers Association that they were living in the “golden age of banking,” an era of long-term prosperity in the banking industry that could only continue if “regulatory burdens,” particularly those imposed upon small banks, were reduced (FDIC, 2004). Putting their words into actions, Powell and other federal regulators implemented a series of changes in their agencies’ policies that would have a significant impact upon the banking industry. These changes took place in three critical areas. The first was a significant reduction in the level of bank supervision. Between 1991 and 2006, the total number of FDIC employees involved in the supervision of banks declined by nearly 50 percent (Straw, 2005, p. 413). One of the “highlights” of Powell’s tenure as head of the FDIC was, according to the agency, a 27 percent decline in staffing at the regulatory body (FDIC, 2005). This occurred during a period when, following the enactment of the U.S. Patriot Act, the FDIC was required to take on many new responsibilities (Straw, 2005, p. 413). This reduction in staffing was made easier by the fact that Congress had recently changed the requirements for the frequency of on-site examinations, allowing many institutions to be examined on an 18-month rather than a 12-month cycle. Examiners also adjusted to these changes by reducing the number of total hours they spent on examinations and the number of loans they reviewed (Straw, 2005, pp. 406–414). These changes were significant because later audits of failed institutions found time and again that examiners missed critical evidence of mismanagement and malfeasance or failed to follow up with disciplinary actions when they did uncover violations of banking rules (Dash, 2009). A second area where regulators ignored the lessons of the recent past was in policies regarding brokered deposits. As discussed earlier, reform legislation of the early 1990s sought to curb the abuses of the 1980s by restricting access to brokered deposits by all but “well-capitalized” institutions. Despite these restrictions, brokered deposits at FDIC insured institutions grew from US$120 billion in 1999 to US$765 billion in 2008; a more than six-fold increase. Federal regulators facilitated the dramatic growth in brokered deposits in two ways. First, the FDIC could grant waivers to “adequately capitalized” banks that were seeking to achieve growth by taking in brokered deposits. In a five-year period beginning around 2004, the FDIC received 240 waiver applications (FDIC, Office of the Inspector General, 2009b). During roughly the same period, the FDIC granted 65 percent of all waiver applications (Lipton and Martin, 2009). Second, even when regulators found evidence that banks were violating the restrictions on brokered deposits they often failed to take swift and forceful action. A good example of both of these forms of regulatory failure is found in the case of Integrity Bank, a “faith-based” Georgia bank. Opened in 2000, the bank failed in 2008; two years later two of its former executive vice-presidents were convicted on charges of bank fraud. A later audit of the institution revealed that in the months leading up to its failure, examiners ignored a number of “red flags” indicating the bank’s weak condition and approved three successive applications for brokered deposit waivers, enabling the bank to stay in business and continue to hemorrhage money (FDIC, Office of the Inspector General, 2009c), culminating in losses of over US$70 million (FDIC v. Skow et al., 2011, p. 4). Perhaps the most significant regulatory lapse of the era was the failure to restrict community banks’ lending to commercial real estate ventures. Over the past 20 years increased competition from non-bank lenders has led community banks to move away from residential mortgage loans 270

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and towards a focus on CRE lending (U.S. Government Accountability Office, 2011, p. 41). These loans are riskier than residential mortgage loans because of the volatile nature of the commercial real estate market. One measure of this concentration is the ratio of CRE loans to total capital. In 2006, concerns about the risks banks faced in this market led regulators to implement new guidelines that limited most banks to CRE concentrations of no more than 300 percent (U.S. Government Accountability Office, 2011, p. 15). That year, 31 percent of all commercial banks exceeded the CRE threshold (FDIC, Office of the Inspector General, 2008). Despite the new guidelines, the average CRE concentration ratio at community banks actually increased between 2006 and 2008. Increased exposure to CRE loans also greatly increased the likelihood that a bank would fail. One analysis found that out of 106 banks that failed, 102 had high CRE concentration levels (U.S. Government Accountability Office, 2011, pp. 15–17). Many observers have argued that bank examiners often simply ignored the guidelines or failed to stringently enforce them (Vekshin, 2011). This pattern is well illustrated in the case of Silver State Bank, located in a suburb of Las Vegas that closed in 2008 after only 12 years in business with over US$225 million in overdue commercial loans and total losses estimated at US$553 million. Silver State appeared to flourish in the booming environment of Las Vegas in the early 2000s, taking in millions of dollars in brokered deposits and making loans to developers who built shopping centers and apartment complexes for a fast-growing population. According to the FDIC’s Office of the Inspector General, bank examiners had expressed concern about Silver State’s high levels of commercial real estate loans as early as 2003, but “took limited actions to mitigate the bank’s aggregate level of risk exposure” (2009d, pp. 5–6). Or, as a former VP at the bank said, “There was no attempt to say ‘Quit – stop,’ . . . What they said was ‘Track it, slice and dice the numbers, stratify the data, stress test it’” (Bernstein and Thompson, 2009). This pattern of benign neglect on the part of regulators turned up at many other failed banks. The laissez-faire attitude displayed at the FDIC was part of a broader culture that emphasized self-regulation and had become entrenched at many of the financial regulatory agencies in the early 2000s. The former head of the FDIC, Sheila Bair, described the regulatory environment of the era as being afflicted by the “serious disease” of “deregulatory dogma.” In a later memoir she described how during her tenure “regulation had fallen out of fashion” and the prevailing attitude was: “the golden age of banking was here and would last forever” (Bair, 2012, pp.16–17).

Criminogenic banks To date, relatively few bankers have faced criminal charges, making it difficult to determine how many bank failures during the recent crisis were caused by criminal fraud. However, we can get a sense of how they were able to exploit economic conditions and loopholes in regulations to loot their institutions from professional liability lawsuits filed by the FDIC. These suits consist of accusations of professional misconduct against officers, directors, and others at failed institutions.3 The goal of these suits is often to recover monies from directors’ and officers’ insurance policies. By the end of 2013, the FDIC had filed a total of 71 professional liability suits against commercial banks, their officers, and directors. Important information may also be found in audits conducted by the FDIC’s Office of the Inspector General that review the causes of failure at closed banks. Additional information on most of the characteristics of these institutions is available from Uniform Bank Performance Reports (UBPRs). A profile of the failed banks at which professional liability suits had been filed is presented in Table 18.1 along with data for comparison groups, defined in the UBPR database in terms of asset size. 271

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Agea Brokered deposits/assetsb Asset growthc CRE loans/total capitald ADC loans/total capitale Losses per institutionf Total losses N

Failed/sued banks

Comparison group

18.0 19.1 20.5 1368.2 580.7 $154m $22.7b 71

NA 4.8 10.7 347.2 90.1 – –

Notes a Years from date bank established to closure. Median. b Brokered deposits as a percentage of total assets in quarter before closure. Mean. c Average annual percentage change in total assets 5 years prior to quarter before closure and 1 year prior to quarter before closure. Mean. d Commercial real estate loans as a percentage of total capital. Median. e Acquisition, development and construction loans as a percentage of total capital. Median. f Median. Source: Federal Deposit Insurance Corporation, “Uniform Bank Performance Reports” database.

The collective losses to the insurance fund that guarantees deposits at these institutions totaled over US$22 billion. The median loss per institution was US$154 million. The variation in estimated losses was significant – ranging from US$10.2 million to US$4.25 billion. The institutions named in these suits were young banks, with a median age of 18 years. Two of them had been in business for less than three years when they failed. Comparable data for comparison group banks are not available, but for all commercial banks active at the end of 2011, the median age was 86 years. The failed institutions relied heavily on brokered deposits. As a percentage of total assets these “hot money” deposits averaged 19.1 percent in the quarter before failure but less than 5 percent at comparison banks. These deposits fueled very rapid growth at many of the sample institutions where the average annual rate of growth (20.5 percent) was nearly twice (10.7 percent) the average rate at comparable banks. In the FDIC lawsuits, the most frequently cited factor in the failure of the banks was exposure to commercial real estate loans. The heavy concentration of these loans in the portfolios of failed banks is evident in the UBPR data. Expressed as a percentage of CRE loans to total capital, this measure averaged 1368 percent at the failed banks, nearly four times the rate at comparison banks and well over four times the threshold of 300 percent established by federal guidelines. The most problematic category of CRE loans are those made for ADC loans. The data show that sample institutions had committed much higher proportions of their portfolios to these risky loans. Measured as a percentage of total assets, commitments to these loans were more than six times higher at failed institutions than at comparison group institutions. In short, these data paint a picture of mismanaged/corrupt banks which failed in the period 2008 to 2011 that was very similar to the profile of failed S&Ls during the 1980s. They were young institutions that grew very rapidly with heavy infusions of brokered deposits. They used these deposits to fund very risky loans intended to support commercial real estate ventures, many of which were doomed to failure in a rapidly deteriorating market. The common denominator for many of the defaulting loans made at these banks was that they did not merely represent “bad” loans in which the institution’s officers failed to appreciate the 272

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risks associated with them, but instead they represented evidence of “looting” by bank insiders. According to Akerlof and Roemer, to establish a case for looting, it is necessary to show that loans were made, or assets purchased, in circumstances in which no reasonable person could expect a future positive payoff in any future state of the world, but for which the present payoff was very high. (Akerlof and Romer, 1993, pp. 27–28) In the case of corrupt banks, officers would ignore the most basic standards of underwriting to extend loans to developers who had not demonstrated the economic viability of their projects, had not provided adequate collateral, and who often lied about their own financial wherewithal to repay the loans. While these loans were obviously destructive to the institution, they were of significant benefit to bank officers who were able to book huge commissions, increase their bonuses and the value of their stock options by manipulating the value of their bank’s stock, and who, in some cases, themselves had a financial stake in the project being funded. A good example of these blatant forms of corruption and conflicts of interest by insiders is found in the case of Westernbank of Puerto Rico. Until its failure in 2010, Westernbank was the second largest bank in Puerto Rico, with peak assets of US$17.9 billion. Its failure would cost the Deposit Insurance Fund approximately US$4.25 billion. To put this figure into perspective, the collapse of Lincoln Savings and Loan, the poster child for the S&L debacle, was estimated to have resulted in losses of US$3 billion. Adjusted for inflation, this means that the Puerto Rican bank’s failure was 80 percent as costly as the most costly thrift failure of the 1980s. After its collapse, regulators discovered numerous loans in which officers and directors or their relatives had a direct financial interest. In one of these, the bank made a US$12 million loan to a development company to purchase and develop property in Florida. Undisclosed in the original loan documents was the fact that the company was 50 percent owned by a bank director, with the other 50 percent owned by his business partner, who, over the years, had lent him large sums of money. One of the guarantors on the loan was the director’s daughter, who was unable to pay off the loan when it ultimately defaulted, costing the bank US$7.6 million (FDIC v. Stipes, 2012, p. 24). The above example of insider self-dealing illustrates an important feature of these criminogenic banks: how closely their rises and falls were tied to local commercial real estate markets and local developers. This pattern is strikingly similar to the relationships between S&L owners and real estate developers during the 1980s. Akerlof and Roemer describe “how S&Ls could be looted in symbiotic deals with parasitical developers” (1993, p. 36), particularly in the boomand-bust real estate market of the 1980s in Texas, as thrifts would make real estate loans “without serious regard as to whether they would default” (1993, p. 41). One of the consequences was a glut in the supply of office buildings, as builders, with loans from corrupt thrifts, continued to build even after the vacancy rate for office space exceeded 20 percent. A very similar pattern may be found among the failed banks sued by the FDIC. Evidence of cronyism and corruption in lending was described in the FDIC’s suit against 1st Centennial, a failed California bank that specialized in single-family residence tract construction loans: During calendar year 2007, when the real estate market was obviously cooling nationwide, and particularly in the Inland Empire area of California, Defendants, in reckless abandon of their duty to engage in safe and sound banking practices, increased, 1st Centennial’s ADC loans from 292% to 383% of total capital . . . [and] by December 31, 2008 the Bank’s percentage of ADC loans had increased to an astronomical 1,264 % of total capital. . . . Defendants routinely loaned to borrowers with little or no liquidity and they failed to analyze 273

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key factors that made projects unmarketable. They also loaned to their friends and repeat customers without scrutinizing the risks of projects and creditworthiness of borrowers. (FDIC v. Appleton, 2011, pp. 2–4, emphasis in original) This pattern of reckless lending was repeated at numerous failed banks across the country, particularly those located in areas that had experienced building booms in the early 2000s. As in the aftermath of the S&L crisis, this overfunding of ADC projects led to a glut of new residential properties on the market that would later keep housing prices down and impede economic recovery.

Discussion The recurrence of criminogenic markets in the banking industry must be seen in the context of the broader turmoil experienced in that industry and in relation to financial crises in general. Our understanding of these phenomena is enhanced by economic theories that specify the dynamics underlying financial crises and economic instability. It is to these theories that the discussion now turns, beginning with the work of the late Hyman Minsky. Minsky is probably best known for his financial instability hypothesis, a central tenet of which may be summarized as “success breeds excess breeds failure.” In times of economic prosperity, financial institutions take on more and more risk – banks, for example, make more loans to finance speculative ventures – ignoring the lessons of previous financial crises (Minsky, 2008, pp. 236–237). These trends lead to a “euphoric economy” in which “businessmen and bankers” show a “disregard [for] the possibility of failure” (Minsky, 2008, p. 237). Lending practices by bankers and other lenders reflect a cyclical process in which they progress from relatively conservative financing strategies to riskier “Ponzi-financing” strategies which are “often associated with fringe or fraudulent financial practices” (Minsky, 2008, p 231, emphasis added), which produce instability in financial markets, which in turn can lead to financial crises and recession. Accompanying these reckless business practices, euphoric economies also often experience reduced oversight by regulatory bodies – what Minsky referred to as “thwarting systems” because they tend to thwart the tendency towards economic instability (Ferri and Minsky, 1991). Minsky’s theory was largely ignored by mainstream economists until the 2008 crisis in the subprime mortgage industry brought it renewed attention from within and outside academia. Among the recent efforts to revitalize and apply Minsky’s theory, one seems particularly relevant to the recent wave of commercial bank failures. In a series of articles and monographs, Thomas Palley has argued that in addition to the business cycle described by Minsky, there exists a “super-Minsky cycle that works over several business cycles” (2010, p. 31). In general, the “super-Minsky cycle” can be thought of as allowing more and more financial risk into the system. The cycle involves the twin developments of “regulatory relaxation” and “increased risk taking.” (Palley, 2010, p. 32) The process of “regulatory relaxation,” according to Palley, consists of three dimensions. The first is the well-known tendency towards regulatory capture in which industry leaders come to exert undue influence over the governmental bodies designed to oversee them. The second dimension is “regulatory relapse” in which regulators “forget the lessons of the past and buy into arguments regarding the death of the business cycle . . . [resulting in a] willingness to weaken regulation on the grounds that things are changed and regulation is no longer needed” (Palley, 2010, p. 32). The third dimension he terms “regulatory escape,” in which innovative financial products and practices are allowed to escape the regulatory net, thereby increasing risk. 274

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On the other side, market participants are encouraged to take on more and more risk through three related processes. First, new financial products are offered which allow borrowers to take on more debt (e.g., subprime mortgages). Second, like regulators, market participants are subject to memory loss, forgetting the lessons of previous financial crises. Finally, increased risk taking is facilitated by cultural developments that glorify and encourage risky and possibly destructive financial activities (e.g., a “greed is good” philosophy promulgated by the media). While Palley formulated his theory to account for financial crises generally and the recent US crisis triggered by the collapse of the subprime mortgage industry specifically, it also provides a broad outline of events that led up to the recent wave of failures among US commercial banks. By the year 2000 there was ample evidence of the factors that led to the crises in the savings and loan and commercial banking industries in the 1980s. Post-mortems of failed lending institutions conducted by numerous government agencies, special commissions, and academic researchers all pointed to the same red flags that distinguished those institutions. Yet, it appears that much of this evidence was simply ignored or reinterpreted by members of Congress and by regulators in light of current events. The sanguine view of the conditions in the banking industry, shared by regulators, politicians, and bankers alike, was guided by a viewpoint that Reinhart and Rogoff refer to as “this time is different” (2009). This syndrome often takes hold in the economic booms that precede financial crises, and “is rooted in the firmly held belief that financial crises are things that happen to other countries at other times.” While acknowledging the errors that led to previous crises, the prevailing view holds that “We are doing things better, we are smarter, we have learned from past mistakes” (Reinhart and Rogoff, 2009, p. 15). This form of willful amnesia continues to dominate many post-financial crisis policy discussions on financial regulation in Washington (Norris, 2014).

Implications In this chapter I have attempted to contribute to the literature on financial institution fraud by extending the concept of criminogenic markets to include situations where the criminogenic features of markets and industries may return after subsiding following reform efforts. Using the banking crisis of the late 2000s as a case study, I have sought to show how the effects of reform efforts can be reversed when policy makers and market actors, arguing that “this time is different,” ignore the lessons of the past and allow the conditions to return that created previous financial crises. This should serve as a reminder that the criminogenic potential of markets can remain even after their crime-facilitative features have seemingly been modified. Significantly, this criminogenic potential was unleashed by local and regional real estate booms which created many opportunities for fraudulent lending and contributed to a business environment in which these practices became commonplace and generally unquestioned. Thus, the conditions that gave rise to criminogenic markets in the banking industry both in the 1980s and the 2000s were local and national in origin. Changes in regulatory policy that were set in Washington were not enough, by themselves, to trigger these events but had to combine with overheated local commercial real estate markets and networks of close relationships between local developers and bankers to produce the criminogenic effects. I would speculate that other criminogenic markets also display this combination of local and national characteristics.

Notes 1 The FDIC defines community banks as those with assets of less than US$1 billion. 2 Brokered deposits are referred to as “hot money” because of their volatility. Brokers often move these deposits from bank to bank seeking higher interest rates. 275

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3 US law requires that directors and officers at lending institutions “administer the institution’s affairs and to protect the interests of depositors and shareholders with personal honesty and integrity, and prohibits them from advancing their own personal interests or those of others over the interests of the institution” and holds them “liable for damages resulting from the breach of their duties” (FDIC, 1998, p. 243).

References Akerlof, G. and Romer, P. (1993) “The economic underworld of bankruptcy for profit.” Brookings Papers on Economic Activity, 2: 1–73. Appelbaum, B. and Nakashima, E. (2008) “Banking regulator played advocate over enforcer.” Washington Post, November 23. Available at: www.washingtonpost.com/wp-dyn/content/article/2008/11/22/ AR2008112202213.html (accessed November 13, 2011). Bair, S. ( 2012) Bull by the Horns. New York: Free Press. Bernstein, J. and Thompson, A.C. (2009) “The small bank bust.” ProPublica, January 26. Available at: www. propublica.org/article/the-small-bank-bust-090126 (accessed November 13, 2011). Calavita, K. and Pontell, H. (1990) “‘Heads I win, tails you lose’: Deregulation, crime and crisis in the savings and loan industry.” Crime and Delinquency, 36: 309–341. Calavita, K., Pontell, H. and Tillman, R. (1997) Big Money Crime: Fraud and Politics in the Savings and Loan Crisis. Berkeley: University of California Press. Cole, R. and White, L. (2012) “Deja vu all over again: The causes of U.S. commercial bank failures this time around.” Journal of Financial Services Research, 42: 5–29. Curry, T. and Shibut, L. (2000) “The cost of the savings and loan crisis: Truth and consequences.” FDIC Banking Review, 2: 26–35. Dash, E. (2009) “Post-mortems reveal obvious risk at banks.” New York Times, November 18. Available at: www.nytimes.com/2009/11/19/business/19risk.html?pagewanted=all&module=Search&mabReward =relbias%3Ar%2C[%22RI%3A9%22%2C%22RI%3A17%22]&_r=0 (accessed March 1, 2009). Federal Deposit Insurance Corporation (1997) “History of the eighties – lessons for the future.” Available at: www.fdic.gov/bank/historical/history/vol1.html (accessed November 30, 2011). ——. (1998) “Managing the crisis: The FDIC and RTC experience.” Available at: www.fdic.gov/bank/ historical/managing/ (accessed February 5, 2011). ——. (2004) “Remarks by FDIC chairman Don Powell ABA annual convention New York, New York.” Available at: www.fdic.gov/news/news/press/2004/pr10104.html (accessed September 9, 2011). ——. (2005) “FDIC accomplishments under Chairman Powell: 2001–2005.” Available at: www.fdic.gov/ about/learn/board/powellAccomplishments.htmlhttp://www.fdic.gov/about/learn/board/powell Accomplishments.html (accessed December 15, 2011). ——. (2011) “Failures and assistance transactions.” Available at: www2.fdic.gov/hsob/SelectRpt.asp?Entry Typ=30 (accessed November 30, 2011). Federal Deposit Insurance Corporation, Office of the Inspector General (2008) “FDIC’s consideration of commercial real estate concentration risk in FDIC-supervised institutions.” Available at: www.fdicig. gov/reports08/08-005.pdf (accessed November 13, 2011). ——. (2009a) “Semiannual Report to the Congress: April 1, 2009– September 30, 2009.” Available at: www.fdicoig.gov/semi-reports/SAROCT09/OIGSemi_FDIC_09-9-09.pdf (accessed January 3, 2011). ——. (2009b) “FDIC’s brokered deposit waiver application process.” Available at: www.fdicoig.gov/ reports09/09-015.pdf (accessed November 13, 2011). ——. (2009c) “Material loss review of integrity bank, Alpharetta, Georgia.” Available at: www.fdicig.gov/ reports10/10-022.pdf (accessed March 1, 2011). ——. (2009d) “Material loss review of Silver State Bank, Henderson, Nevada.” Available at: www.fdicig. gov/reports09/09-008.pdf (accessed December 23, 2011). Ferri, P. and Minsky, H. (1991) “Market processes and thwarting systems.” Working Paper No. 64, Jerome Levy Institute. Independent Community Bankers of America. (2010) “ICBA announces 2010 policy priorities.” Available at: www.icba.org/news/newsreleasedetail.cfm?ItemNumber=69726&sn.ItemNumber=1733&tn. ItemNumber=1915 (accessed December 21, 2011). Lipton, E. and Martin, A. (2009) “For banks, wads of cash and loads of trouble.” New York Times, July 3. Available at: www.nytimes.com/2009/07/04/business/04brokered.html?pagewanted=all&module=

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Search&mabReward=relbias%3Ar%2C[%22RI%3A9%22%2C%22RI%3A17%22] (accessed July 6, 2009). Minsky, H. (2008) Stabilizing an Unstable Economy. New York: McGraw-Hill. National Commission on Financial Institution Reform, Recovery and Enforcement. (1993) “Origins and causes of the S&L debacle: A blueprint for reform.” Washington, DC. Norris, F. (2014) “Financial crisis, over and already forgotten.” New York Times, May 22. Available at: www. nytimes.com/2014/05/23/business/the-financial-crisis-already-forgotten.html?module=Search&mab Reward=relbias%3Ar%2C[%22RI%3A9%22%2C%22RI%3A17%22] (accessed May 22, 2014). Palley, T. (2010) “The limits of Minsky’s financial instability hypothesis.” Monthly Review,61: 28–43. Reinhart, C. and Rogoff, K. (2009) This Time is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press. Roubini, N. and Minh, S. (2010) Crisis Economics: A Crash Course in the Future of Finance. New York: Penguin. Straw, C. (2005) “Unnecessary risk: How the FDIC’s examination policies threaten the security of the bank insurance fund.” Legislation and Public Policy, 10: 395–426. Tillman, R. and Indergaard, M. (2005) Pump and Dump: The Rancid Rules of the New Economy. New Brunswick, NJ: Rutgers University Press. U.S. Congress, House Committee on Financial Services, Subcommittee on Financial Institutions and Consumer Credit. (2010) “The condition of financial institutions: Examining the failure and seizure of an American bank.” 111th Congress, January 21. U.S. Department of Treasury, Office of the Comptroller of the Currency. (2006) “Concentrations in commercial real estate lending, sound risk management practices.” Federal Register, Docket No. 06-01. Washington, DC: U.S.G.P.O. U.S. Department of Treasury, Office of the Inspector General. (2010) “Semi-annual report to Congress: October 1, 2009–March 31, 2010.” Washington, DC: U.S.G.P.O. U.S. Government Accountability Office. (2011) “Banking regulation: Enhanced guidance on commercial real estate risks needed.” GAO-11-489:14. Washington, DC: U.S.G.P.O. Vekshin, A. (2011) “FDIC failed to limit commercial real-estate loans, reports show.” Available at: www. bloomberg.com/apps/news?pid=newsarchive&sid=ay69xSKX9MM8 (accessed February 2, 2011).

Cases Federal Deposit Insurance Corporation, as Receiver of Westernbank Puerto Rico v. Frank Stipes, et al. (2012), Case no. 3:11-cv-02271-GAG (D PR). Complaint. Federal Deposit Insurance Corporation, as Receiver of Integrity Bank of Alpharetta, GA v. Skow, et al.(2011), Case no. CV-0111 (NDGA). Complaint. Federal Deposit Insurance Corporation, as Receiver for 1st Centennial Bank v. Appleton. (2011), Case no. CV110476 (CDCA). Complaint.

Statutes Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), pub. L. no. 102–242, 301, 105 stat. 2236. Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), pub.L. 101–173, 103 stat. 183.

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19 Financial misrepresentation and fraudulent manipulation SEC settlements with Wall Street firms in the wake of the economic meltdown David Shichor

Introduction In the wake of the Great Depression, which started with the stock market crash in October 1929, the Securities Act of 1933 was enacted. It was designed to end the prevailing laissez-faire practices that led to the crash. This Act, which is often referred to as the “truth in securities act,” mandated full and correct disclosure about the securities offered to the public. Shortly after, the Securities Exchange Act of 1934 created the Securities Exchange Commission (SEC) as an administrative agency to enforce the securities law. The SEC, together with the Federal Deposit Insurance Corporation (FDIC) that was established by the Glass-Steagall Act of 1933, aimed at reinforcing confidence in financial institutions and the stock market. The rules set in these acts established a protocol for disclosing material information, prohibited market manipulation, and aimed to insulate investors from the effects of stock market collapse (Reichman 1992). However, in accordance with the capitalist ethos of caveat emptor, these acts did not try to determine whether a given financial product is beneficial to or harmful for investors (Johnson and Kwak 2010). As is well known, the legislative and regulatory efforts were not able to prevent fraudulent and abusive practices in the financial markets, especially after deregulation began in earnest with the Reagan, Bush I, and Clinton administrations. Lack of full disclosure and misrepresentation of facts always remained prevalent in the financial industry. For example, Susan Shapiro (1984) in her study of the Securities and Exchange Commission, found that the first violation category by financial firms was “misrepresentation.” Since the early and late neutralization and deregulation of the enactment of the Securities Act and the establishment of the SEC beginning with the Carter administration, there have been several major financial scandals in the United States. One of the most notorious was the Savings and Loan debacle in the 1980s. Largely, as a result of deregulatory policies, individuals, some with checkered backgrounds, were allowed to buy financially troubled Savings and Loan institutions at bargain prices, while many limits on the types of investments they were allowed to make were lifted. To attract deposits, thrifts paid increasingly high interest rates to depositors. This practice, coupled with the increase of federal insurance from US$40,000 to US$100,000 for each account,

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opened the door for unlawful risk taking and “looting” of the companies by their own top officials (Calavita and Pontell 1990; Shichor 2012). Shortly after the Savings and Loan scandal, in the early 2000s a slew of insidious practices and violations of the “truth in securities” law by major companies such as Enron and WorldCom were revealed. As a response to these violations and to the public outcry that followed, the Congress passed the Sarbanes-Oxley Act in 2002. This act aimed at increasing the oversight over corporations by having independent outside auditors, and requiring top executives to certify financial statements in order to ensure full and correct disclosure of corporate financials (Friedrichs 2010). In spite of the passing of the Sarbanes-Oxley Act, fraudulent manipulations by major financial firms continued. Often, they knowingly recommended such investments to their clients that were likely to lose money. In 2003, following an investigation into allegations of “undue influence of investment banking interests on securities research at brokerage firms,” there was a US$1.4 billion settlement between the SEC and ten financial firms which had allegedly used tainted research where their analysts were recommending stocks of companies that they were seeking business while privately finding them worthless (BBC 2003).

The SEC and the economic meltdown The most severe economic crisis since the Great Depression started to unfold in the later part of 2007. It is commonly tied to the fraudulent practices of mortgage origination, securitization of mortgages, and the marketing of complex esoteric financial products such as derivatives (Nguyen and Pontell 2010; Barnett 2011). Many lenders offered “interest only” variable rate mortgages to home buyers who could not qualify for ordinary fixed loans. While down payments were small and initial interest rates were unusually low, soon after, the monthly payments increased steeply, which was often not explained to borrowers eager to realize the “American dream” of home ownership. Mortgage brokers often did not verify or fraudulently reported higher incomes of buyers to qualify them for loans. It was assumed that home values would continue to increase and buyers would be able to meet payments through refinancing their homes. This approach fueled a refinancing boom and many borrowers used their homes as ATM machines. This situation led to continuously increasing housing prices and borrowers’ spending, driving many of them deeper into debt. Many lenders purposely made bad loans and some of them encouraged their agents to push borrowers into higher interest subprime mortgages, even when they could qualify for lower rate mortgages, because there were higher profits to be gained on those loans (Geis 2012). Banks and financial firms found other ways to profit from the housing boom. While traditionally banks either held on to mortgage loans or sold them to Fannie Mae or Freddie Mac, during the boom they increasingly securitized (packaged together mortgages of various interest rates) and sold them to investors. The details of these products were often not fully disclosed and/ or were misrepresented in a business environment created by the deregulatory policies of the past few decades (Johnson and Kwak 2010). When the “housing bubble” which was fueled by the influx of cheap money looking for higher returns burst, and many borrowers were not able to pay their mortgages, tens of thousands of homes were foreclosed, causing a steep decline in the values of many securitized products. Misrepresentation and fraudulent manipulation of securities was a known and often used practice by financial firms. Shapiro (1984: 10) in her study of the SEC observed that in Wall Street “the manipulation of information is a favorite pass time.” She posited that the relationship between firms and their investors is based on trust, that is, the “impersonal guarantee that representation of enterprise or risk or financial condition can be taken at face value and that 279

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fiduciaries are not self-interested” (Shapiro 1984: 2). Later, Shapiro (2005) focused on the problematic nature of an “agency relationship” prevailing in Wall Street. In this relationship “one party acts on behalf of another,” and the agents are supposed to provide expertise to their clients who lack the knowledge to evaluate the quality of service provided to them. When agents do not serve their clients’ best interests, they violate the trust bestowed upon them, which is often a breeding ground for white-collar crime. In the recent economic crisis, conflicts of interests were rampant among financial firms and mortgage brokers on the one hand, and borrowers and investors on the other. Often, “agents” gave such advice that not only benefitted themselves, but ran directly against their clients’ interests. Relating to this issue, Paul Volcker, former head of the Federal Reserve, bemoaned the current “proprietary trading instinct” of agents in the financial industry “which gives rise to a very aggressive kind of behavior in an effort to make a killing for yourself as well as for the company” (Gelb 2012: 34–36).

The SEC’s regulatory policies The SEC has the authority to investigate alleged violations of the securities laws. It has the options of taking administrative action involving a hearing before an administrative judge, taking a civil action by referring a case to a federal court, and recommending a criminal action to be taken by the Department of Justice or by a federal district prosecutor. In general, the regulatory system tends to use more persuasive than punitive methods. In this vein, O’Brien (2013: 178) observed that the SEC tends to use “creative enforcement” strategies by “circumventing the necessity of going to trial.” This strategy often leads to negotiated settlements between the SEC and firms involved in alleged wrongdoings. The first criminal trial relating to the subprime mortgage crisis involved two Bear Stearns fund managers, Ralph Cioffi and Matthew Tannin. In October 2009 they were charged with misleading investors and failing to disclose the financial details of their funds that collapsed in 2007 (Geis 2012). The main allegations were based on e-mails which indicated that they became alarmed when securities tied to subprime mortgages started to slide. While they advised their clients to stay invested, Cioffi pulled out US$2 million of his own money from the fund that he managed. In addition, they concealed the level of redemption from the funds, to prevent a run by the investors. In October 2007, one of them even suggested closing the funds because of negative prospects for recovery. Shortly after that, the funds lost US$1.6 billion in value. Nevertheless, the jury found no evidence beyond reasonable doubt that Cioffi and Tannin tried to mislead investors and they were found not guilty. Later, the SEC did file a civil suit against them alleging that they had misled investors. In June 2012, Cioffi and Tannin settled with the SEC without admitting to or denying the allegations. The outcome of the above trial has influenced the SEC not to pursue the criminal venue in subsequent subprime crisis cases (Will et al. 2013). The agency opted rather to pursue settlements in which the outcome is known, relatively large sums may be recovered, and the agency can maintain a good “track record.”

SEC enforcement policies Settlements between the SEC and financial companies whose alleged activities led to the economic meltdown became a focus of scrutiny. In a highly publicized case, in April 2010, the SEC charged Goldman Sachs with fraud in the structuring and marketing of a synthetic financial instrument tied to subprime mortgages. The main allegation was that Goldman Sachs failed to 280

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disclose that the hedge fund Paulson & Co. was involved in the creation of the synthetic instrument known as ABACUS 2007-AC1 which was marketed to investors. Paulson took a short position (betting that the price would decline) against the product, because the selected mortgages were likely to experience credit problems. In addition, Goldman Sachs itself was ready to bet against the product that it recommended to its clients. When Paulson made approximately US$15 million for the structuring of ABACUS 2007AC1, investors lost more than US$1 billion (Barak 2012). Goldman Sachs was aware of the potential criticisms of its trading practices, and steered away from having any formal obligation to act for the benefit of its clients. The marketing book of ABACUS stated that: “Goldman Sachs does not provide investment, accounting, tax or legal advice and shall not have a fiduciary relationship with any investor” (quoted in O’Brien 2013: 191). Goldman Sachs also declared that it could be “an active participant on both sides of the market and have long or short positions in, or buy and sell, securities, commodities, futures, options or other derivatives identical or related to these mentioned herein.” Finally, it was declared that the firm “may have potential conflicts of interest due to present or future relationships” with any collateral (p. 192). Thus, Goldman Sachs tried to cover all bases by making sure that the disclosure of its practices, which many would consider as unethical, would not be unlawful. As Hagan (2010: 197) has pointed out, since the deregulation of derivatives in 2000 these “deceitful practices may actually have been legal.” While a Goldman Sachs brochure stated its trading policies, the lack of disclosure that Paulson Co. was involved in selecting the ABACUS portfolio was considered to be a violation. At the same time, a statement in the marketing brochure was apparently considered to be enough to justify a deceitful practice such as betting against a product that the same company recommended to its clients. Goldman Sachs tried also to neutralize its responsibility for its clients’ losses by denying that the buyers were innocent victims (Sykes and Matza 1957), claiming rather that they were sophisticated investors guided by greed who took risks in order to make profits in the “hot” securities market. The ABACUS case demonstrates the problems of regulating business practices that again would be considered by many as unethical but which are not illegal. Dealing with this issue, Green (2006) pointed to what he called the “morally ambiguous character of white collar crime” (p. 29) and observed, “harms caused by conduct that is unlawful are often undistinguishable from harms caused by conduct that is lawful” (p. 40). Apparently, Goldman Sachs’ conduct was morally acceptable in Wall Street. It seems clear that executives of financial firms did not view their actions as morally wrong, but instead considered them as business practices aimed at satisfying their shareholders’ expectations for profits, and keeping up with their competitors. Since there was no law prohibiting a firm from marketing such securities that it bets on their decline, and it was disclosed in its brochure that it may do so, there was no ground for formal actions against the firm even if, as stated, many would consider this practice as unethical and deceitful. Nevertheless, on July 15, 2010 the SEC announced that Goldman Sachs would pay US$550 million to settle charges that it had misled investors in the marketing of ABACUS 2007-AC 1 and “will reform its business practices” up until that date, which was the largest sum paid in a settlement by a Wall Street firm. In the settlement Goldman Sachs acknowledged that the marketing material contained “incomplete information” and that it was a “mistake” (a denial of mens rea) not to disclose Paulson’s involvement in the selection of the portfolio while that company’s interests were adverse to those of Goldman Sachs’ investors (Puzzenghera 2012). In spite of the factual misrepresentation and the lack of full disclosure of the real nature of ABACUS 2007-AC1, Goldman Sachs did not admit to any wrongdoing. While the US$550 million settlement seems high, Goldman Sachs had previously received US$10 billion from the U.S. Treasury’s Troubled Asset Relief Program (TARP), was highly 281

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profitable, and repaid TARP with interest over a short period of time. The fine was only 2.5 percent of the firm’s profit made in the previous year of the settlement. At the same time, the firm paid out US$16.2 billion in salaries and bonuses for 2009 (MSNBC 2010). Besides the fine, the settlement required organizational changes in the role of the internal legal counsel, the compliance personnel, and the outside counsel in the review of marketing materials. Furthermore, it also required more education and improved training of employees involved in securities offerings. The prospect that Goldman Sachs would make substantial changes in its business practices was questionable at best, since the firm was a “repeat offender,” a fact which apparently did not stop the SEC taking the company’s promises for improvement at face value. The Senate Subcommittee, which conducted an investigation into the causes of the economic meltdown, concluded that Goldman Sachs was a major culprit in the financial crisis. However, the Department of Justice (DOJ) in August 2012 decided not to initiate criminal charges against the firm, because an “exhaustive review by DOJ concluded that the burden of proof could not be met for a successful criminal prosecution” (Puzzanghera 2012). In relation to this decision, the subcommittee’s chairman Carl Levin declared, “Goldman Sachs actions were deceptive and immoral.” While many would agree with Senator Levin’s remark, the decision not to initiate criminal proceedings may be understood, since in light of the statements included in the marketing brochure Goldman Sachs may have been sheltered from being found legally guilty. SEC settlements tend to follow a more compliant approach than a punitive approach to regulation. This policy allows closure of cases without the firms receiving the stigma of being convicted in the courts. At the same time, the SEC is able to claim that its enforcement efforts resulted in winning a large fine and improving the agency’s “track record.” Analyzing SEC’s settlement policies, Johnson (2007) maintained that the agency is focusing on serving its own interest when choosing the terms of settlements. According to him, the agency seeks out arrangements that involve “the least effort in terms of resources and risks” (p. 268). Following this policy, the SEC secures fines of millions of dollars from firms that made billions through allegedly wrongful practices. The settlements, which routinely include a “neither admit nor deny” clause, allow the agency to receive the fines without risking an unsure judicial process in which its resources are often outmatched by financial firms that are “too big to fail.” Following this strategy, it is relatively easy to claim that the settlements are serving the public interest, since they ensure “positive results” by “penalizing” firms which are allegedly involved in wrongdoing and by recovering ill-gotten monies they have made. Johnson claimed that in many cases adjudication could serve better the public interest than settlements by establishing a precedent, by confirming res judicata (a final judgment that cannot be raised again), and by creating transparency. US District Court Judge Jed S. Rakoff became a leading critic of the “neither admit nor deny” clause included in SEC settlements. In a highly publicized case, in November 2011, Judge Rakoff, who had had several previous disagreements with SEC decisions, rejected a proposed settlement between the SEC and Citigroup. According to the consent judgment, Citigroup agreed to pay US$285 million for allegedly misleading investors in the sale of mortgage-related securities. Applying what Groff (2013) calls the “judiciary-centric perspective” in viewing the proposed settlement, Rakoff characterized the fine as “pocket change,” since investors lost over US$700 million while the company made large profits. In addition, he was critical of the inclusion of the “neither admit nor deny” statement in the settlement, which according to him meant that the allegations were not based on evidence and he could not know whether the settlement was “fair, reasonable, adequate, and in the public interest.” Rakoff claimed that imposing penalties based on allegations which are neither proven nor acknowledged cannot be considered fair or reasonable, and it does not provide a basis for determining adequacy. According to him, the proposed settlement does not serve the public interest, because it asks the Court to employ its 282

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authority without knowing the exact facts. He declared that in the wake of the major economic crisis, “there is an overriding interest in knowing the truth” (USDCNY 2011: 15). Judge Rakoff reminds us that a major mandate of the SEC is to ensure transparency in the financial markets; thus it is in the public interest to determine whether any criminal acts were involved in the case. He maintains that the public needs to be assured that the government acts justly and the courts have to provide this assurance (Macchiarola 2012). The SEC appealed the rejection of the settlement, and a panel of the Court, which opposed Rakoff ’s decision, stayed the proceedings until an appellate decision was rendered. On June 4, 2014, the Court overturned Rakoff ’s rejection. The panel and the Court accepted the SEC’s assertion that the settlement is in the public interest. They agreed with the SEC that requiring the admission of liability would hurt public interest, because a large number of cases would end up in court, causing delays in reaching final decisions, and costing more money and resources without the assurance that the agency would win most of the cases. The panel maintained that while judges are not supposed to rubberstamp every settlement, they should not determine policies for executive agencies (Frankel 2012). This ruling touched upon not only the “turf ” issue between the regulatory agency and the courts, but also raised the issue of the separation of powers by questioning whether the judicial branch could interfere with the policies of an executive branch agency. As noted, it was not the first time that Judge Rakoff disagreed with a proposed SEC settlement. For example, in September 2009 he rejected the consent judgment between the SEC and Bank of America, which was accused of failing to adequately disclose information to its shareholders about Merrill-Lynch’s payment of US$5.8 billion bonuses prior to its merger with the bank. Judge Rakoff wanted to know why the SEC was ready to allow the bank to pay the US$33 million fine from the shareholders’ money, rather than from the executives’ pocket that withheld critical information from the shareholders. He declared that the settlement is not just, because: the SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger, the bank’s management gets to claim that they have been coerced into an onerous settlement by overzealous regulators . . . all this is done at the expense, not only of the shareholders, but the truth. (Quoted in Bernard 2009) As expected, the SEC defended the settlement, claiming that it was in accordance with the law, but this did not stop Rakoff criticizing it. In February 2010 Judge Rakoff reluctantly agreed to a settlement of US$150 million on this case. This sum reflected more the gravity of the violation than the previous one. However, the increased payment harmed the shareholders more than Bank of America because their equity was even more reduced than before. Rakoff admitted that this settlement was “far from ideal” but he felt that in his previous ruling he had already gone too far in ignoring the principle of judicial restraint and did not want to push further. Nevertheless, he commented that since the penalties are not directed at the individuals responsible for the nondisclosure, it is unlikely that the settlement will have a serious impact in changing corporate practices (Geis 2012).

Controversy about the “neither admit nor deny” clause In spite of its overturn, Rakoff ’s decision in the Citigroup case ignited increasing criticism of settlements, especially regarding the “neither admit nor deny” clause. Several judges raised the concern that the inclusion of the above clause into SEC settlements failed to provide the public 283

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with clear information about the defendant’s misconduct. Therefore, this kind of arrangement may not serve the public interest since, according to the critics, knowing the truth is of paramount interest to the public. Similarly, in a case not directly related to the mortgage crisis in December 2010, a settlement was proposed between the SEC and two executives of Vitesse Semiconductor Corporation. According to reports, four executives were allegedly involved in fraudulent options backdating. The proposed settlement, which included the “the neither admit nor deny” clause, involved relatively modest disgorgements and civil penalties taking into consideration that the two officers pleaded guilty to “parallel criminal charges.” In addition, the two officers cooperated with the government in the criminal case and with the SEC’s civil action against the two other executives. Judge Rakoff expressed the same reservations about this settlement as he did about the others (Macchiarola 2012). In response, the SEC pointed to the limits of the Court’s inquiry and to the need to acknowledge that as a regulatory agency it has the primary responsibility to police the securities industry. In spite of his criticism, Judge Rakoff approved this settlement. One of the recurring disputes between the SEC and its critics centered on the question of whether or not the settlements that include the “neither admit nor deny” clause serve the public interest. Judge Rakoff ’s and other critics’ argument was that it is the mission of the agency to present the truth to the public, especially because the courts’ approval provides legitimacy to the settlements. Critics claim that in a democratic society the public has the right to know whether government agencies act justly in meting out penalties. The public has to be reassured that government’s actions are not arbitrary; otherwise an anomic situation may emerge in which the standards for business practices are not clear or become confusing and contradictory. An important concern regarding the “neither admit nor deny” clause is that it misses the potential deterrent effects (both special and general) of a formal guilty plea or a formal civil sanction. This concern was reinforced by the fact that, as mentioned, several of the firms which agreed to a settlement were repeat offenders, proving that previous settlements did not deter them from continuing to pursue unethical and deceitful business practices (Wyatt 2011). In addition, the “neither admit nor deny” phrase conceals the full details of the wrongdoing; thus it may impede justice by leading to arbitrariness, discrimination, uneven responses, lack of sufficient evidence, and circumvention of the court system. Furthermore, by not revealing the full details of the wrongdoing, this policy is likely to reduce the alertness of potential victims. SEC officials defended their policies on pragmatic grounds, claiming that settlements save time, reduce public expenses, and eliminate the risk of turning to the courts where the outcome of a case is in doubt (Wyatt 2012). As mentioned earlier, the not-guilty verdict of the criminal trial of Cioffi and Tannin influenced SEC prosecutors to seek settlements, rather than to turn to the criminal courts (Will et al. 2013). The SEC could argue that settlements with major financial firms are in the public’s interest because they bring a quick and sure resolution of alleged violations, and they provide the recovery of substantial sums of money from the implicated firms. The SEC was also concerned that if the “neither admit nor deny” option would not be allowed, corporations and their executives would fight allegations of any violations, not only because of the potentially negative publicity, but also because admitting wrongdoing could be used in civil litigations. Thus, executives would be reluctant to agree to consent judgments, fearing that admittance of wrongdoing might lead to the ending of their careers and/or to losing their personal assets. Following this scenario, many executives would turn to the insurance companies carrying their “directors’ and officers’ liability insurance” (D&O) policies to cover judgments against them. This situation could cause further problems, because D&O policies have conduct-based exclusions where infractions such as fraud or other intentional violations are involved. Consequently, in many cases, admitting wrongdoing could result in the loss of 284

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insurance coverage, which would make executives reluctant to seek or accept any settlements (see USI 2012). Considering the potential consequences, SEC officials felt that the exclusion of the “neither admit nor deny” clause would tie their hands in trying to resolve complex cases, would slow down the enforcement process, would be costly, and therefore would not serve the public interest. On the other hand, studies found that companies’ concerns for their reputations may deter future violations (see Clinard and Yeager 1980; Fisse and Braithwaite 1983). Reichman (1992), in dealing with regulations in the securities industry, observed, “threats to reputation offer important social restraints in modern business contexts” (p. 252). However, there are many instances where the public ignores well-publicized corporate malfeasance. In particular, the “neither admit nor deny” phrase tends to decrease the adverse effects of publicity which may be further mitigated by the company’s readiness for a settlement. For example, there is ample evidence that many firms which acted unethically or even criminally during the recent financial crisis are now doing well and increasing their investor basis. In this vein, Jonathan Macey (2013), an expert on corporate and securities law, argues that the importance of corporate reputation has seriously declined vis-à-vis the importance of the financial success of a firm. Critics maintain that settlement policies further tolerate and even accept corporate fraudulent and deceitful business practices. As mentioned, corporate executives tend to view settlements as part of the cost of doing business by using shareholders’ money, without considering the ethical aspects of their actions and without taking responsibility for the harm they have caused. As implied, “neither admit nor deny” statements spare accused firms from the stigma of being unscrupulous operators, and allow their high-level executives to maintain a veneer of respectability, reaffirming their self-concept of being “respectable” citizens. In spite of the overturn of Judge Rakoff ’s rejection of the settlement between the SEC and Citigroup, the case did bring some changes in the SEC’s enforcement policies. For example, the agency announced that it will not allow alleged wrongdoers to “neither admit nor deny” in those civil fraud cases in which they do admit involvement in a criminal violation (Wyatt 2012). In addition, in January 2012 the SEC announced that it would change its policy of including the “neither admit nor deny” phrase, primarily in those settlements in which there are parallel criminal proceedings and where the accused are required to admit their violations. During the year following that announcement, seven “admit” settlements were secured. Interestingly, five of these settlements did not have parallel criminal proceedings. The details regarding in which cases and under what conditions “admit” settlements are made will have to be reviewed in the future when more information is available (Hansen 2014).

Lack of criminal sanctions In the wake of the major financial crisis, questions were raised about the lack of criminal sanctions against those who were involved in unethical, deceitful and often criminal manipulations of the securities market. Naturally a great deal of attention focused on the enforcement policies of the SEC, which preferred to reach settlements with financial firms that were involved in alleged wrongdoing, rather than referring cases to the court system. Barak (2012) claims in this vein that the non-prosecution of securities fraud is a conscious policy of the SEC and the Department of Justice. He suggests that this strategy was not aimed at improving control over the financial system, but rather to develop a damage control mechanism. According to Barak, the above policy has resulted in: “(1) conciliatory efforts by the government, namely by the SEC and the DOJ, to restore institutionalized business as usual; and (2) compensatory efforts by private investors, individual or corporate, to seek damages for their losses” (p. 96). 285

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Undoubtedly, the SEC policies were influenced by the political connections of Wall Street firms, which was underscored by the fact that several of the recent Treasury secretaries and top government officials have been former executives of or closely associated with Wall Street firms. In addition, top Department of Justice officials worked for law firms that represented major banks before taking up their current positions. A recent article pointed to the “revolving door” between high-level government office holders and financial executives as a reason for the lack of criminal prosecutions related to the economic meltdown (Boyer and Schweizer 2012). According to the article, Phil Angelides, Chair of the Financial Crimes Inquiry Commission investigating the causes of the 2007 to 2010 economic crisis, declared that the lack of persecutions is “perplexing at best. It’s deeply troubling at worst.” In a newly published book, Nomi Prins (2014), a former Wall Street executive, confirmed that the “revolving door” between the Treasury Department and the banking industry strongly influences SEC enforcement policies. However, Judge Rakoff, in a recent article explaining “why have no high-level executives been prosecuted,” discards the “revolving door” argument. He suggests other major factors that were instrumental in determining Department of Justice and SEC policies. First, the SEC is prioritized to focus on Ponzi schemes following its failure to uncover Madoff ’s fraudulent scheme. At the same time, the SEC experienced budget limitations, prompting it to go after cases that could be easily resolved, while Department of Justice prosecutors went after insider trading cases that were more easily prosecutable than security fraud cases. Second, the government has created many conditions that have led to the financial crisis, including deregulation which weakened oversight and allowed banks instead of holding mortgages for interest income to securitize them for higher profits, encouraging banks to grant loans to low-income individuals without documenting their ability to make payments [known as “liars’ loans”], and pressuring big banks to take over troubled financial companies (e.g., Merrill-Lynch, Bear Stearns), without making accountable the bailed-out firms for their unethical and unlawful practices. Finally, there was shifting enforcement from focusing on high-level individuals who may bear responsibility for the financial crisis to prosecuting suspected companies. This change was often rationalized as an attempt to improve corporate culture and frequently resulted in deferred prosecution agreements and in settlements between the SEC and corporations. Rakoff criticized this policy by claiming that prosecution of individuals has a deterrent effect which outweighs the promise of change in corporate culture. Furthermore, he found it to be morally questionable not to punish a company since it hurts its employees and shareholders (Rakoff 2014). While Rakoff ’s analysis is enlightening, the discarding of the “revolving door” thesis is not convincing. There are so many cases of high-level officials moving back and forth between government positions and Wall Street firms that making the denial of the existence of this syndrome is hard to accept. A good example of the “revolving door” is the case of Phil Gramm, the ex-chairman of the Senate Banking Committee and a champion of deregulation, who upon his retirement from the Senate in 2002 immediately became a high-ranking executive at UBS Warburg Bank (Barak 2012).

Conclusion In line with Judge Rakoff ’s assertion that the focus on penalizing corporations has significantly contributed to the lack of punishment of top Wall Street executives who were involved in creating the financial crisis, McDonald (2012) suggests that personal liability should be imposed upon the executives of corporate offending. While it is true that it is much easier to settle with corporations than to settle with or bring to trial their high-powered executives, nevertheless, this policy should be reconsidered, not only because of the potential deterrent effect that criminal 286

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proceedings may have on executives (see Simpson and Koper 1992), but also because “justice” demands it. Davis (1976), in dealing with the discretionary power of regulatory agencies, maintained that they practice selective enforcement of rules and laws. According to him, “the most frequent reasons for refraining from enforcement is leniency,” since “the power to be lenient is the power to discriminate” (p. 170). Thus, leniency toward top executives who were at the helm of financial firms that heavily contributed to the economic meltdown fuels a sense of injustice in the public. Clearly, prevailing SEC policies of settlements and the selective enforcement of laws do not have a significant deterrent effect to prevent deceitful practices in the securities market. Senior executives of major financial institutions know that the authorities are reluctant to delegitimize the existing economic order by criminalizing financial firms who are the backbone of the capitalist economy. Moreover, based on recent history, financial executives feel safe in knowing that the government will bail out their companies if renewed manipulations get them into trouble, because they are “too big to fail” and are “too powerful to jail” (Pontell et al. 2014). Hence, the continuing securitization of mortgages, the renewed creation of derivatives, and the unabated concentration of economic power and political influence of the financial industry create “moral hazard” (incentive to take on more risks by firms and executives knowing that they are shielded from negative consequences), which should inevitably lead to another economic crisis (Johnson and Kwak 2010; Hagan 2010). One of the ways to decrease fraudulent practices and rampant risk taking by financial companies is for the SEC to impose personal liability on top corporate officials, even if this policy change may take more time, more effort, and more challenges than do the reaching of settlements (see McDonald 2012; Miles 2014). In addition, making executives responsible for their firms’ misdeeds could reduce, but obviously not completely eliminate, the public’s feeling of injustice fueled by the selective enforcement of laws and regulations.

References Barak, G. (2012) Theft of a Nation. Lanham, MD: Rowman & Littlefield. Barnett, H.C. (2011) The securitization of mortgage fraud. Sociology of Crime, Law and Deviance 16: 65–84. BBC News (2003) Wall Street settles analyst scandal. April 28. Bernard, S. (2009) Judge overturns Bank of America–SEC settlement over Merrill bonuses. Associated Press, July 14. Boyer, P.J. and Schweizer, P. (2012) Why can’t Obama bring Wall Street to justice? Newsweek, May 14, pp. 26–30. Calavita, K. and Pontell, H.N. (1990) “Heads I win, Tails you lose”: Deregulation, crime, and the crisis in the savings and loan industry. Crime and Delinquency, 36: 309–341. Clinard, M.B. and Yeager, P.C. (1980) Corporate Crime. New York: Free Press. Davis, K.C. (1976) Discretionary Justice. Urbana, IL: University of Illinois Press. Fisse, B. and Braithwaite, J. (1983) The Impact of Publicity on Corporate Offenders. Albany, NY: State University of New York Press. Frankel, A. (2012) In powerful Citi ruling, 2nd Circuit stresses deference to SEC. Reuters, March 16. Friedrichs, D.O. (2010) Trusted Criminals: White Collar Crime in Contemporary Society. Belmont, CA: Wadsworth. Geis, G. (2012) The great American economic meltdown of 2007 and onward. In Shichor, D., Gaines, L. and Schoepfer, A. (eds) Reflecting on White-collar and Corporate Crime. Long Grove, IL: Waveland, pp. 175–195. Gelb, L.H. (2012) Oh, those greedy bankers. Newsweek, September 24: 34–37. Green, S.P. (2006) Lying, Cheating, and Stealing: A Moral Theory of White-collar Crime. New York: Oxford University Press. Groff, L. (2013) Is too big to fail too big to confess? Scrutinizing the SEC’s “no-admit” consent judgment proposals. Boston College Law Review, 54: 1727–1763. Hagan, J. (2010) Who Are the Criminals? Princeton, NJ: Princeton University Press. 287

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Hansen, M. (2014) “neither admit nor deny” settlements at the SEC. Available at: www.jdsupra.com/legalnews/ neither-admit-nor-deny-settlement-at-881012/. Johnson, D.L. (2007) SEC settlement: Agency self-interest or public interest. Fordham Journal of Corporate and Financial Law, 12: 627–668. Johnson, S. and Kwak, J. (2010) 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. New York: Pantheon Books. Macchiarola, M.C. (2012) “Hallowed by history but not reason”; Judge Rakoff ’s critique of the Securities and Exchange Commission’s consent judgment practice. CUNY Law Review, 16: 51–96. Macey, J.R. (2013) The Death of Corporate Reputation. Upper Saddle River, NJ: FT Press. McDonald, R. (2012) Setting examples, not setting: Toward a new SEC paradigm. Texas Law Review, 91: 419–446. Miles, G.L. (2014) Let judges judge: Advancing a review framework for government securities settlements where defendants neither admit nor deny allegations. Connecticut Law Review, 46 (3): 1111–2014. MSNBC (2010) Goldman Sachs 2009 pay up as profit soars. Available at: www.msnbc.com/id/34972351/ ns/business-personal_finance/t/-goldman-sachs-p. Nguyen, T.H. and Pontell, H.N. (2010) Mortgage orientation fraud and the global economic crisis: A criminological analysis. Criminology and Public Policy, 9(3): 591–612. O’Brien, J. (2013) The facade of enforcement: Goldman Sachs, negotiated prosecution, and the politics of blame. In Will, S., Handelman, S. and Brotherton, D.C. (eds) How They Got Away With It: White Collar Criminals and the Financial Meltdown. New York: Columbia University Press, pp. 178–202. Pontell, H.N., Black, W.K. and Geis, G. (2014) Too big to fail, too powerful in jail? On the absence of criminal prosecutions after the 2008 meltdown. Crime, Law and Social Change, 61: 1–13. Prins, N. (2014) All the Presidents’ Bankers: The Hidden Alliances that Drive American Power. New York: Nation Books. Puzzanghera, J. (2012) Goldman Sach’s won’t face U.S. charges for mortgage securities. Los Angeles Times, August 10. Rakoff, J. S. (2014) The financial crisis: Why have no high-level executives been prosecuted? The New York Review of Books, January 9. Reichman, N. (1992) Moving backstage: Uncovering the role of compliance practices in shaping regulatory policy. In Schlegel, K. and Weisburd, D. (eds) White-collar Crime Reconsidered. Boston, MA: Northeastern University Press, pp. 244–268. Shapiro, S.P. (1984) Wayward Capitalists: Targets of the Securities and Exchange Commission. New Haven, CT: Yale University Press. Shapiro, S.P. (2005) Agency theory. Annual Review of Sociology, 31: 263–284. Shichor, D. (2012) Criminal and legal “looting” in corporations. In Shichor, D., Gaines, L. and Schoepfer, A. (eds) Reflecting on White-collar and Corporate Crime. Long Grove, IL: Waveland Press, pp. 135–153. Simpson, S.S. and Koper, C.S. (1992) Deterring corporate crime. Criminology, 30: 347–376. Sykes G.M. and Matza, D. (1957) Techniques of neutralization: A theory of delinquency. American Sociological Review 22: 664–670. United States District Court Southern District of New York (2011) U.S. Securities and Exchange Commission v. Citigroup Global Markets Inc. USDCNY, November 28: 1–15. USI (2012) Loss of SEC “neither admit nor deny settlements” could have significant impact. Sagacity, 3(1): 1–2. Will, S., Handelman, S. and Brotherton, D.C. (eds) (2013) How They Got Away With It: White Collar Criminals and the Financial Meltdown. New York: Columbia University Press. Wyatt, E. (2011) Promises made, and remade, by firms in S.E.C. fraud cases. The New York Times, Business Day, November 7. Wyatt, E. (2012) SEC changes policy on firms admission of guilt. The New York Times, Business Day, January 6.

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20 A comprehensive framework for conceptualizing financial frauds and victimization Mary Dodge and Skylar Steele

Victims of financial frauds often receive scant attention, which seems to diminish the importance of their standing, losses, and associated harms. Academics, reporters, community members, and policy makers recognize the complexities of recovery when financial fraud occurs, but the complicated nature of the offenses impede forward movement toward understanding the consequences for victims. Victim satisfaction in the aftermath of financial fraud related to receiving restitution, believing the offender was punished, or righting injustice, remains low, especially when they are ignored or blamed for their losses. The reasons for slighting victims of financial fraud are varied and not yet completely understood, but represent an important area of exploration (Dodge 2013; Moore and Mills 1990; Levi 2001; Szockji and Fox 1996). Despite increased public awareness of the economic, societal, and personal harm of financial fraud, this category of offenses receives less attention compared to street crime (Croall 2007; O’Donnell and Willing 2003; Perri 2011). Conventional street crimes are embedded in the public consciousness as the most serious threat, although the chances of being a victim of financial fraud or white-collar crime are much higher (Croall 2007; Friedrichs 2010). Victims of street crimes grab media coverage and popular culture emphasizes violence deemed as exciting, egregious, and wanton. Cases denoted as “crimes of the century,” for example, typically involve kidnapping, murder, and racial injustice in which public outcry is considerable. Crimes that are ingrained in the public consciousness, as noted by Geis and Bienen (1998), are steeped in mystery, ambiguous evidence, denials of guilt, and outrageous behavior. White-collar and financial scandals rarely rise to this level of public concern, although they certainly contain all the elements associated with crimes of the century. The maleficent aspects of the savings and loan scandal, Enron, WorldCom, Madoff ’s Ponzi scheme, and the 2008 great economic meltdown shocked sensibilities, and inspired somewhat modest and short-term outrage. The devastation of financial fraud continues to seem tame in comparison to crimes against property and persons for a number of reasons that are more fully explored in this chapter. In addition to individual harms, this chapter examines the widespread nature and costs of financial crimes that create profound social distrust. Equally important is the examination of current movements to identify, understand, and compensate victims through public policy. A Social Construction Framework is proposed as a method to more fully understand

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the relationships among policy makers, corporate and individual offenders, and victims of financial fraud. Financial frauds cover a large number of offenses, which are often ambiguous and difficult to identify. In fact, they may include actions that are yet to be seen as illegal and stand out as unethical or morally depraved. Vague notions of these offenses, aside from definitional issues of what constitutes financial and white-collar crime, muddle the best intentions to determine the costs of governmental, corporate, and professional transgressions. Workplace violations that create hazardous conditions cause huge economic losses. Corporate crimes such as price fixing, unsafe products, and antitrust violations result in huge financial burdens to consumers, taxpayers, and vulnerable populations. Professional crimes by lawyers and doctors undermine public trust and, like other crimes, may result in serious injury and death. Financial frauds vary enormously in scope and type, and may, for example, involve banking, investments, insider trading, junk bonds, embezzlement, hedge funds, or Ponzi schemes. The costs of financial fraud are difficult to determine, but estimates present frightening figures at both the organizational and individual levels. Organizations in the US, according to Barak (2012), suffer losses as high as US$1 trillion annually related to internal fraud. The 2012 Global Fraud Study projected losses in occupational schemes at over US$3.5 trillion annually. These types of schemes are defined as “the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or asset” (Report to the Nation on Occupational Fraud and Abuse 2012: 6). The Federal Bureau of Investigation (FBI) reported at year-end 2011 that the agency was pursuing 726 corporate financial frauds with estimated losses to public investors exceeding US$1 billion. The FBI also estimated that mortgage fraud in Operation Stolen Dreams amounted to losses of over US$3 billion dollars. Mass marketing fraud (e.g., lotteries, sweepstakes, Nigerian letters) victimizes millions of Americans and costs hundreds of millions of dollars annually. Nationwide Ponzi schemes defraud investors of an estimated US$10 to US$15 billion annually and telemarketing boiler rooms that often run such frauds result in losses of approximately US$40 billion annually (Wells 2014). The direct economic costs defined by specific monetary losses suffered by victims of financial fraud are enormous. In addition, financial fraud involves indirect harms (e.g., higher taxes, more expensive goods and services, increased insurance rates), physical injury (e.g., personal injury, loss of life), and consequential or societal costs associated with the loss of public trust, alienation, and de-legitimation (Friedrichs 2010; McGurrin and Friedrichs 2010). The more serious direct costs of financial fraud to victims are represented by economic losses, which are much greater compared to other types of crime (Moore and Mills 1990). Critics of mainstream victimology studies, however, have long noted the emphasis on street crime by criminologists and policy makers (Friedrichs 1983; Karmen 2010; Whyte 2007). Policy makers’ determination to increase associated punishments for conventional street crime while ignoring white-collar crime often causes additional turmoil for victims (Friedrichs 1983; Karmen 2007; McGurrin and Friedrichs 2010; Whyte 2007). Sentencing mandates for street crime, although being revisited, show a distinct “get-tough” stance by policy makers. Historically, white-collar criminals received punishments that were viewed by offenders as minimal and part of the “cost of doing business.” The large number of financial fraud schemes uncovered over the past decade have, in some respects, changed perceptions of the seriousness of punishment in these cases, although whether a significant number of offenders are receiving harsher sentencing remains unknown (see, e.g., Podgor 2007; Weissmann and Block 2007). Headlines and anecdotal evidence would suggest that financial fraudsters are receiving severe punishment (see Table 20.1). The symbolic nature of long-term prison sentences, according to Perri (2011), suggests that the courts are sending a message that these types of crimes will not be tolerated and acknowledge 290

Financial frauds and victimization Table 20.1 Financial fraud and sentencing Name

Offense

Estimated costs

Estimated no. of victims

Chalana McFarland Joseph B. Brunson (3 Hebrew Boys) Thomas Petters Bernard Madoff Sholam Weiss

Mortgage fraud Ponzi scheme and religion Ponzi scheme Ponzi scheme Insurance scam

$20 million $82 million

unknown 7,000

$3.8 billion $50 billion $125 million

434 51,700 25,000

Prison sentence 30 years 27 years 50 years 150 years 835 years

that they inflict great harm on society, although some cases appear to represent disproportionate and extreme consequences. He argues that a better method of approaching crime and punishment is to “examine the harm a crime exacts on its victim(s)” (Perri 2011: 44).

Victimology and fraud The study of victimology is easily traced back to the work of Hans von Hentig and Benjamin Mendelsohn, who are credited with coining the term in the 1930s and 1940s (Karmen 2010). Mendelsohn’s first typology of victims included six categories: completely innocent, minor guilt or ignorant, guilty as the offender, more guilty than the offender, most guilty, and imaginary. Only the completely innocent victims were described as blameless for their situations. Victims with minor guilt or seen as ignorant, according to Mendelsohn, were self-placed in a compromising position, which represents on the surface perhaps the best category for those taken in by financial fraud within this typology. Blaming the victim, however, is problematic. Von Hentig (1941) argued that the relationship between victim and offender should serve as the focal point for understanding victimization. He also included biological, psychological, and sociological aspects of victimization. The idea that victim precipitation and victim provocation blames the parties taken advantage of as responsible for what befalls them is unlikely to be clear cut and may depend on a continuum, as suggested by von Hentig (McGurrin and Friedrichs 2010; Schafer 1968). Despite Edwin Sutherland’s call for a focus on white-collar crimes during the same time period when studies of victimology were developing, little attention was paid to the victims of fraudsters (Croall 2007; McGurrin and Friedrichs 2010). Moore and Mills (1990) noted the scarce attention paid to white-collar crime victims, despite great strides in establishing federal and state victims’ bills of rights. Only in the 1970s did victims of white-collar crimes begin to receive attention (McGurrin and Friedrichs 2010). Victims of financial fraud are still neglected in criminological research, despite some headway. The inherent difficulties of establishing typologies, harms, and numbers create a complicated area of research. The economic crisis of 2008, for example, included a high number of investment banks and financial institutions, millions of families who faced foreclosure, hundreds of millions of investors and savers in the stock market, and millions of Americans who lost their jobs (McGurrin and Friedrichs 2010). Investment scams are likely to have serious repercussions for victims and organizations (Heeren 2012), but untangling victimization in financial frauds represents a serious challenge. Victim data related to financial frauds are difficult to obtain. Several examples of the victims of financial fraud include retail organizations, banks, individuals, and corporations, which makes the development of a typology challenging. Two major sources of crime data in the United States are the Uniform Crime Report (UCR) and the National Incident Based Reporting System (NIBRS), managed by the FBI. Both databases provide little insight into financial fraud victims. 291

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Although local law enforcement reports to the UCR and NIBRS provide victim information, the data are incomplete for financial fraud (Heeren 2012; Barnett 2003). The National Crime Victimization Survey (NCVS) was designed to assess street crime, though as Heeren notes, asking victims about white-collar and financial offenses in the NCVS could represent a future source of data. Another source of data is the National White Collar Crime Center (NW3C), which conducts a survey in the US that explores public perceptions of crime seriousness, victimization, and reporting behavior. The NW3C 2010 survey found that 24 percent of the participating households reported being a victim of the following types of schemes: mortgage fraud, credit card fraud, identity theft, unnecessary home or car repairs, price misrepresentation, and losses related to false stock broker information, fraudulent business ventures, and internet scams (Huff et al. 2010). All the categories are representative of some type of financial fraud at varying levels of economic losses. The survey results showed that only 11.7 percent of these victimizations were reported to law enforcement, although over half of the household victimizations were reported to one or more external party (e.g., credit card companies). The increase in reporting, according to the NW3C, suggests less stigma and self-blame from individual victims; although only 21 percent of household reports involved an agency with criminal investigative or prosecutorial power.

Identifying victims Victimology is a mainstay of criminological study that was promulgated into popularity partly by the victim’s rights movement, although research on financial fraud and white-collar crime has yet to come to full fruition. Gottschalk (2013) classified victims of white-collar crime as employers, banks, tax authorities, customers, and shareholders. He identified employers as the largest group of victims followed by banks. Gottschalk’s research, however, categorizes victims based on a sample of 323 convicted white-collar criminals and merely labels victims according to the positions and actions of the offenders. Victims may also be external or internal, according to Gottschalk. A company (as the offender) that manipulates a bank or shareholders is engaging in external fraud. In contrast, when employees steal from an organization, the company is an internal victim. Bernard Madoff ’s scheme, for example, involved internal and external victims because of its wide-reaching nature, which included individuals who lost their retirement savings, employees, businesses, and nonprofit foundations (Glodstein et al. 2010; Gottschalk 2013). Financial fraud may involve an individual offending against another individual, an organization defrauding an individual, or an individual committing crime against an organization (Buttons et al. 2012; Levi 2008; Whyte 2007). Victimization in financial fraud is undiscerning when it comes to gender, race, ethnicity, socioeconomic standing, or age; although some groups are believed to be easier targets in certain types of offenses. In other words, victimization includes the entire population (Barak 2012). Research shows that victims of financial fraud are typically a diffuse group and, in some cases, targets may even fail to recognize their victimization or experience little harm (Croall 2007; Kane and Wall 2006; Shichor 1989; Shichor et al. 2001). In other cases, middle- and lower-class offenders may take advantage of financial and insurance organizations (Heeren 2012; Holtfreter 2005; Weisburd et al. 1991). One research study reported that 40 percent of 745 victims interviewed were unaware of the fraud until a third party informed them (Buttons et al. 2012). Scant statistical data are available to explore victims of financial fraud and much of what is known is based on case study methodology. Only a few scholars have examined the victims of financial fraud (see, e.g., Barak 2012; McGurrin and Friedrichs 2010; Ganzini et al. 1990; Lewis 2012). Vulnerable target populations for financial fraud are identified as consumers, minority 292

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groups, women, and the elderly (Croall 2007; Levi 2006). In the 1980s and early 1990s, the elderly, despite low representation in the population (11 percent), accounted for 30 percent of the victims of fraudulent investment schemes (Ganzini et al. 1990). Ponzi schemes represent a financial fraud that results in huge losses and multiple victims. The low-risk investment, as labeled by the perpetrator, typically involves groups of friends and coworkers (affinity groups) who trust and share information on investments (Ganzini et al. 1990). Research conducted in the early 1990s explored the victimization of 77 targets of a Ponzi scheme in Oregon (Ganzini et al. 1990). The researchers identified the following demographics among the victims: 100 percent Caucasian, 87 percent married, average age of 53 (ranging from 40 to 60), 48 percent female, 60 percent had some college education, and 33 percent were somewhat or very religious. Ganzini and colleagues’ (1990) exploration of 80 Ponzi schemes in Utah discovered that the majority occurred and were perpetrated by members of the Church of Latter Day Saints. The number of investors for each fraud ranged from 50 to 1200 and the group suffered losses as high as US$67 million per scheme. Ponzi scheme targets related to affinity were highest among the elderly followed by religious and ethnic groups (Marquet Report 2011). The Marquet Report on Ponzi targets discovered that victimized affinity groups were 34 percent elderly, 30 percent religious, and 21 percent ethnic. Blaming the victims of financial fraud is an easily adopted perspective when images of getrich-quick schemes, stupidity, or caveat emptor (buyer beware) are attributed to individuals. These views are less likely to describe corporations or financial institutes who are victimized. Walsh and Schram (1980) explored the connection between blaming rape victims who may be portrayed as sexually promiscuous or provocative, and white-collar crime victims who are labeled as greedy. The “true” victim perspective continues to rely on the image of an innocent person who suffers at the hands of dangerous, unknown offenders, which discounts the harm done to white-collar crime victims (Croall 2007; Friedrichs 2010). In a free market economy caveat emptor wrongly places blame on the victims, who failed to fully understand the consequences of their actions or were willing to engage in risky investments for easy money (Shichor 1989). In many cases, the greed motivation may encompass both victim and offender (Shupe 1991). Like early studies of victimology, the continuum of responsibility may range from completely innocent to fully responsible (Karmen 2010). Victim blaming contributes to failure to report the crime because of the embarrassment of “being taken in” by the fraudsters (Levi 2001; Schichor et al. 2001). The fallout of victimization beyond direct monetary harm is less understood. The psychological trauma following a financial loss may be severe. Victims often see themselves as contributing to their own victimization, which may tend to exacerbate feelings of shame or embarrassment (Buttons et al. 2012, ; Shover et al. 1994, 2003). Studies conducted in the 1980s showed that victims of crime often experience intense anger along with feelings of vulnerability and fear (Fisher 1984; Wortman 1983). Enron employees who lost their jobs, savings, and retirement accounts expressed feelings of anger and betrayal (Bragg 2002). Many victims reported feelings of violation, diminished selfesteem, stress, loss, isolation, and helplessness (Buttons et al. 2012; Kempa 2010; Moore and Mills 1990). The results of the victimization and feelings can be “trivial or devastating, transitory or enduring” (Moore and Mills 1990: 409). Victims of the Southern Industrial Banking Corporation fraud expressed feelings of anger and depression (Ganzini et al. 1990). Psychological trauma is particularly evident in financial losses of over $10,000 (Kempa 2010; Levy and Pithouse 1992). In the majority of cases, victims want compensation for their losses (Levi 1999). Buttons and colleagues’ (2012) survey explored the desired outcomes for victims. Victims in their study expressed the need for a sympathetic response and wanted someone to listen to their experiences. Overwhelmingly, victims expressed the need for a single point of contact and place where 293

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they could obtain information. Discontent with the outcome and lack of support is a common complaint among victims (Buttons et al. 2012). Shichor and colleagues (2001) found that the majority of victims of an investment fraud were unsatisfied with the outcome of the cases. The victims of Bernard Madoff ’s Ponzi scheme represent a robust case of the results of financial fraud and reactions to victimization. The Ponzi scheme perpetrated by Bernard Madoff may represent the most explored case study of financial fraud and victimization. Madoff was a respected member of the business community and made promises to investors that this was a failsafe method of making a profit. The victims of Madoff ’s schemes included European banks, sophisticated and wealthy investors, small companies, and retirees. The pushback by Madoff ’s victims appeared to be motivated by the need for restitution (Lewis 2010). Madoff ’s victims acting as groups and individuals, according to Lewis, persisted in writing letters to the courts and elected representatives, and organizing a campaign to gain recognition. Madoff ’s victims became organized as they sought justice and financial compensation. Several testified about the dire consequences of the fraud in front of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. Lewis discovered that many of the victims felt ignored, and maintained that the media and the public had treated them unfairly.

The pathways to reporting and prosecuting Reporting financial fraud represents a significant challenge to victims and merely reporting the crime to the police is inadequate. Multiple law enforcement and regulatory agencies are likely to be involved with varying state and federal court jurisdictions. Law enforcement may be the first point of contact, although arrests and indictments are more likely to come from federal agencies. Victims may find it difficult to enter a criminal complaint, although many state and local district attorneys’ offices maintain a special economic crimes unit. Research finds that the path for reporting frauds is difficult to maneuver and frustrating for victims, and in some cases may fail to involve the criminal justice system, particularly in instances involving smaller (Buttons et al. 2012; Huff et al. 2010) or larger (Barak 2012; Will et al. 2013) financial losses. In addition, businesses risk reputational damage if fraud within the organization is revealed; this appears to be especially true for non-profit organizations. Consequently, many companies and organizations, as victims of fraud, handle fraud perpetrated by “insiders” through internal investigations and remedies. Similarly, as perpetrators of financial fraud against workers, consumers, and investors, large-scale organizations and companies, like the Wall Street banksters that caused the Great Recession which followed the financial implosion of 2008, too prefer “self-regulation” or civil restitution rather than criminal prosecution as preferable alternatives for controlling the damage to their reputations. Previous studies showed that prosecution is more likely to occur when the victim is an organization rather than an individual (Holtfreter 2005). Complex financial fraud (e.g., market manipulation and insider trading) receives less attention and little resolution, which results in failed attempts to restore victims’ sense of well-being (Kempa 2010). The lack of criminal prosecution is understandable because the majority of financial frauds become civil matters or regulatory violations. Successful prosecutions in large-scale financial scandals are unlikely. Further, large monetary settlements assist only a small percentage of the individual victims (Dodge 2013). Civil lawsuits may be effective in some cases, although they present many obstacles. The high cost of legal representation, huge investments of personal time, and failure to gain full restitution for losses may dissuade many victims from pursuing justice. The Corporate Fraud Task Force was successful in prosecuting 1236 corporate fraud cases. In addition, the US Attorney’s office and law enforcement agencies initiated Operation Stolen 294

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Dreams to target mortgage fraud, which was estimated at over US$3 billion in losses. The prosecution included 1517 criminal defendants and 191 civil actions. The amount recovered to date exceeds US$190 million – a small amount in comparison to the victims’ losses. Separating the financial disbursements to bank bailouts versus individuals is difficult, but perhaps a worthwhile endeavor (Dodge 2013). The economic crisis of 2008 (also known as the real estate and subprime mortgage crisis) resulted in widespread victimization. McGurrin and Friedrichs (2010) noted that millions of Americans were subject to home foreclosures. Additional victims, identified by the researchers, include investors who suffered from stock market losses of an estimated US$7 trillion in value in 2008 and millions of Americans who lost money from declining retirement accounts. Identification of the victims in this case represented a special challenge because, according to the researchers, borrowers misrepresented their income and assets, although they did so at the prompting of loaners. Evidence suggests that mortgage lenders purposely took advantage of vulnerable and unsophisticated buyers (McGurrin and Friedrich 2010).

Building a social construction framework Conceptualizing and explaining financial fraud crimes can prove difficult and adequate theoretical perspectives are rare. The typical characteristics of both criminal and crime are absent in financial fraud. Instead, the criminal is often an adviser of sorts – trusted, respected, and kind – and certainly no one to fear. Or the criminal may be an organization with powerful incentives to make profits and often impenetrable by ordinary legal processes. The criminal case against Ford Motor Company for three counts of reckless homicide was tried and lost. The underlying motive to criminally charge Ford was connected to the small amounts of money victims’ survivors would garner in a civil case, although a successful conviction in the criminal case would likely have bolstered the success of later lawsuits (Cullen et al. 1984; Geis et al. 1995). Financial frauds by powerful individuals and corporations challenge concepts of crime and punishment. Crime exists as a cultured definition, with scenarios and vignettes creating a profile of a criminal and a crime. Financial fraud deviates from the typical definition of crime, but is arguably made possible and defined similarly through social constructs (Barak 1994a). The Social Construction Framework (SCF), first developed by Schneider and Ingram (1993), was designed as a means of understanding policy processes and social groups. SCF offers an explanation for how and why certain social groups maintain an advantage or disadvantage in the political process, and describes the potential political, economic, and social impacts of policy making. Target populations are groups or individuals selected for behavior change by policy makers as an exercise in political power (Ingram and Schneider 1991). The feed-forward effects of the SCF describe the consequences of the content and intent of a policy (Schneider and Sidney 2009). Punitive policies may, for example, restrict benefits or be more onerous for target groups, suggesting that they are unworthy of government resources and a role in the political process. The social construction matrix identifies four groups: contenders, advantaged, dependants, and deviants (see Figure 20.1). The social construction of each group ranges from positive to negative and the degree of political power is on a continuum from weak to strong. Contenders have high political power but are viewed as untrustworthy or morally suspect. Advantaged groups have “high levels of political power resources and enjoy positive social construction as deserving people important in the political and social hierarchy in general, and more specifically, in social welfare” (Ingram et al. 2007: 101). Dependants are seen positively in social construction, but have low political power. Deviant groups score low on both power and social construction. 295

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Figure 20.1 Social construction framework Source: Adapted from Schneider and Sidney (2009). Adapted and reproduced with kind permission from Wiley.

Financial fraud offenders more likely fit within the contenders group that has influence and control over the policy decision-making process. The negative social construction may account for an increase in prosecution and harsher sentencing for financial crimes, although these elements remain sporadic. Calavita and Pontell (1994) suggested that financial frauds threatening government organizations are prosecuted more vigorously compared to private sector crimes. In other words, policy makers in extreme cases may set an example to encourage general deterrence from contenders such as WorldCom, Tyco, or Enron, while ignoring corporate crimes against the advantaged and dependent groups. Despite the horrendous behavior of Wall Street in 2008, little or no legislation or regulation has addressed the illegal or unethical practices that instigated the incident (McGurrin and Friedrichs 2010). Crimes committed in the private sector often require intense public scrutiny to face strong prosecutorial attention (Griffin 2007). Using a social construction matrix to describe financial fraud helps define a certain level of ambiguity surrounding the social perceptions of atypical offenders and how public opinion of offenders and victims influences the policy process and victimization. Overseeing and influencing the social construction matrix is the government. Policy makers are likely the most powerful outsiders because of their ability to target certain groups, although 296

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contenders have great influence on the legislative process, while also being viewed less favorably from a social context. Because of the government’s broad-reaching policy implications, financial crimes against the government implicitly demand action be taken quickly. When a crime is committed by or against an entity with a negative social construction but with high power, a perception of worthiness of offender and victim may dictate prosecutorial decisions that discount the seriousness of the crime. Green (2014) posits that certain types of white-collar crimes are morally ambiguous, “merely aggressive” behavior. Business and political practices often tread a fine line concerning legality. Large corporations may counter or justify certain charges or accusations with a legitimate business interest. For instance, a charge of extortion could easily be described as “hardball negotiating” (Green 2014: 506). Large corporations argue that success is based on sound business practices involving intense negotiations and accounting practices designed to lower or eliminate any unnecessary costs. As a neutralization, an executive may explain inquiries into tax evasion or fraud as “creative accounting” or “legal ‘tax avoidance’” (Green 2014: 506). To a certain extent, society expects politicians to accept hefty campaign contributions – it seems a presidential election cannot commence without some form of a questionable contribution being reported in the news media. What may be questioned as bribery may simply be explained as an anonymous contribution (Green 2014: 506). The political power and perspectives of contenders establish them as more worthy of special treatment by policy makers. In a social construction matrix, corporations and their executives are regarded as having a hefty amount of power or leverage, yet they are viewed negatively. This perspective may be attributed to big businesses’ exploitation of less powerful groups of victims. These contenders must take advantage of other categorical subsets of the social construction groups, such as the advantaged and dependants. Victims of financial crime often fall within the advantaged and dependent target groups. Unlike violent street crimes, harm to victims of white-collar crime is not conceptually clear; victims are often more difficult to identify, and typically larger in number. Advantaged victims of financial fraud may appear on the matrix as having high power and positive construction, but to admit their victimization may lower their status, hypothetically and literally, toward the dependent group. Home owners, small business proprietors, and members of the military are considered advantaged, yet this group is often most at risk of becoming a victim of financial fraud. The housing crisis culminating in 2008 was partially blamed on the subprime lending system. Mortgage brokers were systematically rewarded for placing buyers in loans with high costs, contrary to typical fiduciary guidelines (Nguyen and Pontell 2010). The offender–victim dynamic thus created is unique to financial fraud because a rational choice is made by an individual or representative of the contenders category to victimize someone without the knowledge, skills, or abilities to fully protect themselves or who are anxious to change their social status. The dynamic is dangerous because contenders typically have the power needed to allow others to gain social stature, which often involves specialized knowledge unavailable to the target group. As described by Rosoff and colleagues (2007, p. 212), “there can be little doubt that the quest for financial success and competitive superiority makes our culture relatively hospitable to white-collar crime.” Most financial crime is motivated by situational competition (Rosoff et al. 2007). For instance, the social construction matrix used to describe the power and perception of different societal groups could easily be transformed into a chart showing cyclical reliance from one group to another (see Figure 20.2). In order for contenders to continually be prosperous and powerful, the advantaged must be targeted. Consequently, advantaged groups are exploited by contenders in an effort to advance or maintain competitive superiority. This reliance occurs as a two-way dependency. Without the contenders, for example, the advantaged would be unable to own homes or attain loans to start a small business. 297

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Contenders

Advantaged

Deviants

Dependants

Figure 20.2 The cyclic nature of the SCF groups

The advantaged must maintain superiority over the dependants in a similar manner – although perhaps not as blatantly and with less severe and widespread impacts. Small business owners must yield a profit to remain advantaged, which creates situational competition. Children, mothers, and the elderly are several examples of dependants, showing a different level of vulnerability. Senior citizens are the target group of many financial frauds (Policastro et al. 2013). Dependants are perhaps are more likely to be targeted for financial fraud by both the contenders and advantaged groups. The deviant category is the most difficult to place in a cyclical fashion. Deviants comprise what most people commonly think of as the street criminal. While a certain dependency in a cyclical fashion exists between the deviants and the dependants, deviants show more of a web network toward the contenders, the advantaged, and the dependants. While outside the scope of analysis, this may be partially attributed to a lack of conformity to situational competition and lack of opportunity. In most cases of financial fraud, determining an individual or entity to hold accountable is difficult. As an organization, placing individual blame on a systematic method of increasing profit is virtually impossible (Green 2014). Within the social construction matrix cycle, accountability may be most difficult to establish within the contenders level. Power in a large corporation is often shared, and, according to Green, decisions are made on an institutional level. Establishing a framework of accountability loops to social construction and perceived notions of criminality is an area ripe for future empirical research. Levi (2006) suggested that the mass media treat white-collar and financial frauds similar to celebrity gossip (see also Barak 1994b). Mass media are considered to be one of the key sources for a “social construction of reality” (Rosoff et al. 2007: 212). As a result, the social construction of the impacts of crimes committed by contenders is often severely underestimated. Combined with a lack of accountability, the contenders will remain a socially constructed elite – needed, hated, and idolized throughout the construct of society.

Conclusion The harbinger of the future, according to McGurrin and Friedrichs (2010: 154), is that the US will face an economic meltdown that will victimize taxpayers, investors, homeowners, and consumers on an epic scale: “what is urgently needed is a sense of proportionality about the different forms of crime victimization, and far more attention to those forms of harm that are caused by the most privileged segments of society.” Many prominent white-collar crime scholars are delving into the complexities of victimization, although definitional issues, the widespread nature of the acts, and lack of data continue to hinder efforts (Ganzini et al. 1990; Lewis 2010; McGurrin and Friedrichs 2010; Szockji and Fox 1996). 298

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Globally, nations are attempting to establish means of supporting financial fraud victims, although programs are slow to develop (Friedrichs 2010). The “fraud justice network” developed in England and Wales explores the variety of systems needed to address the harms against victims of fraud (Buttons et al. 2012). In the US, the federal government has made great strides in compensating consumers of mortgage fraud. In 2014, Citigroup agreed to a US$4 billion civil penalty to the Justice Department. The agreement includes US$2.5 billion for consumer relief to modify mortgages for home owners. Bank of America paid over US$16 billion with US$7 billion targeted to assist home owners. The actual cost of the settlements to financial institutions, however, is unknown given their ability to claim tax deductions for charitable donations, the unclear directives set by the government, and accounting loopholes (see, e.g., www.dallasnews.com/ business/headlines/20140820-how-much-of-17b-settlement-will-bank-of-america-really-pay. ece). While these settlements are a step forward for victims, they may be “just the cost of doing business.” Understanding financial fraud and victimization will require substantial future research. The use of the Social Construction Framework represents a starting point for empirical studies and policy decisions related to regulation, prosecution, and sentencing. The challenges of exploring financial fraud and victimization present a complex web of variables that are difficult to distinguish, categorize, and count.

References Barak, G. (ed.) (1994a) Varieties of Criminology: Readings from a Dynamic Discipline. Westport, CT: Praeger. —— (ed.) (1994b) Media, Process, and the Social Construction of Crime: Studies in Newsmaking Criminology. New York: Garland. —— (2012) Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding. Lanham, MD: Rowman & Littlefield. Barnett, C. (2003) “The measurement of white-collar crime using Uniform Crime Reports (UCR) data.” NIBRS Publication Series, Washington, DC: U.S. Department of Justice. Bragg, R. (2002) “Enron’s collapse: Workers feel pain of layoffs and added sting of betrayal.” The New York Times. Buttons, M., Tapley, J. and Lewis, C. (2012) “The ‘fraud justice network’ and the infra-structure of support for individual fraud victims in England and Wales.” Criminology and Criminal Justice, 13: 37–61. Calavita, K. and Pontell, H.N. (1994) “The state and white-collar crime: saving the savings and loans.” Law and Society Review, 28: 297–324. Croall, H. (2007) “Victims of white-collar and corporate crime.” In P. Davies, P. Francis and C. Greer (eds), Victims, Crime and Society. Los Angeles, CA: Sage. Cullen, F.T., Maakestad, W.J. and Cavender, G. (1984) “The Ford Pinto case and beyond: Moral boundaries and the criminal sanction.” In G. Geis, R.F. Meier and L.M. Salinger (eds), White-collar Crime: Classic and Contemporary Views. New York: The Free Press. Dodge, M. (2013) “The importance of integrating victimology in white-collar crime: A targeted comment on Barak’s analysis in Theft of a Nation.” Western Criminology Review, 14(2): 27–30. FBI Financial Crimes Report to the Public Physical Years (2010-2011)Available at: www.fbi.gov/statsservices/publications/financial-crimes-report-2010-2011. Fisher, C.T. (1984) “A phenomenological study of being criminally victimized: Contributions and constraints of qualitative research.” Journal of Social Issues, 40: 161–178. Friedrichs, D.O. (1983) “Victimology: A consideration of the radical critique.” Crime and Delinquency, 29: 283–294. —— (2010) Trusted Criminals: White Collar Crime in Contemporary Society. Belmont, CA: Wadsworth Cengage Learning. Ganzini, L., McFarland, M.D. and Bloom, J. (1990) “Victims of fraud: Comparing victims of white collar and violent crime.” The Bulletin of the American Academy Psychiatry and the Law, 18(1): 55–63. Geis, G. and Bienen, L. (1998) Crimes of the Century. Boston, MA: Northeastern University Press. Geis, G., Meier, R.F. and Salinger, L.M. (1995). White-collar Crime: Classic and Contemporary Views (3rd edn). New York: The Free Press. 299

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Glodstein, D., Glodstein, S.L. and Fornaro, J. (2010) “Fraud trauma syndrome: The victims of the Bernard Madoff scandal.” Journal of Forensic Studies in Accounting and Business, 6: 1–9. Gottschalk, P. (2013) “Victims of white-collar crime.” Matters of Russian and International Law, 3: 91–109. Green, S.P. (2014) “Moral ambiguity in white collar criminal law.” Notre Dame Journal of Law, Ethics and Public Policy, 18: 501–519. Griffin, L.K. (2007) “Compelled cooperation and the new corporate criminal procedure. New York University Law Review, 82: 311–382. Heeren, J.W (2012) “White-collar crime and its victims.” In D. Shichor, L. Gaines and A. Schoepfer (eds), Reflecting on White-collar and Corporate Crime: Discerning Readings. Long Grove, IL: Waveland. Holtfreter, K. (2005) “Is occupation fraud ‘typical’ white-collar crime? A comparison of individual and organizational characteristics.” Journal of Criminal Justice, 33, 353–365. Huff, R., Desilets, C. and Kane, J. (2010) “The 2010 national public survey on white collar crime.” Available at: nw3c.org. Ingram, H. and Schneider, A.L. (1991) “The choice of target populations.” Administration and Society, 23: 333–356. Ingram, H., Schneider, A. L. and DeLeon, P. (2007) “Social construction and policy design.” In P.A. Sabatier (ed.) Theories of the Policy Process. Boulder, CO: Westview Press. Kane, J. and Wall, A. (2006) “The 2005 National Public Survey on White Collar Crime.” Available at: nw3c.org. Karmen, A. (2010) Crime Victims: An Introduction to Victimology. Belmont, CA: Wadsworth Cengage Learning. Kempa, M. (2010) “Combating white-collar crime in Canada: Serving victim needs and market integrity.” Journal of Financial Crime, 17(2): 251–264. Levi, M. (1999) “The impact of fraud.” Criminal Justice Matters, 36: 5–7. —— (2001) “White collar crime victimization.” In N. Shover and J.P. Wright (eds), Crimes of Privilege. Oxford: Oxford University Press. —— (2006)“The media construction of financial white-collar crimes.” British Journal of Criminology, 46: 1037–1057. —— (2008) “Organized frauds and organizing frauds: Unpacking the research on networks and organizations.” Criminology and Criminal Justice, 8: 389–419. Levi, M. and Pithouse, A. (1992) “The victims of fraud.” In D. Downes (ed.) Unraveling Criminal Justice. London: Macmillan. Lewis, L. (2010) “Madoff ’s victims go on the offensive”, Society, 47: 534-542. —— (2012) Con Game: Bernard Madoff and his Victims. New Brunswick, NJ: Transaction Publishers. Marquet Report on Ponzi Schemes (2011) Marquet International. Available at: www.marquetinternational. com (accessed September 4, 2012). McGurrin, D. and Friedrichs, D.O. (2010) “Victims of economic crime: On a grand scale.” International Journal of Victimology, 8: 147–157. Moore, E. and Mills, M. (1990) “The neglected victims and unexamined costs of white-collar crime.” Crime and Delinquency, 36: 408–418. Nguyen T.H. and Pontell, H.N. (2010) “Mortgage origination fraud and the global economic crisis.” Criminology and Public Policy, 9: 591–612. O’Donnell, J. and Willing, R. (2003) “Prison time gets harder for white-collar crooks.” USA Today, 12: 1. Perri, F.S. (2011) “White-collar criminals: The kinder, gentler offender?” Journal of Investigative Psychology and Offender Profiling, 8: 217–241. Podgor, E. (2007) “Throwing away the key.” Yale Law Journal Pocket Part. Available at: www.thepocketpart. org/2007/02/21/podgor.html. Policastro, C., Gainey, R. and Payne, B.K. (2013) “Conceptualizing crimes against older persons: Elder abuse, domestic violence, white-collar offending, or just regular ‘old’ crime.” Journal of Crime and Justice, DOI: 10.1080/0735648X.2013.767533. Available at: www.dx.doi.org/10.1080/0735648X.2013.767533 (accessed September 4, 2014). Report to the Nation on Occupational Fraud and Abuse (2012) Available at: www.acfe.com/uploadedFiles/ ACFE_Website/Content/rttn/2012-report-to-nations.pdf (accessed September 4, 2014). Rosoff, S., Pontell, H. and Tillman, R. (2007) Profit Without Honor: White-collar Crime and the Looting of America. Upper Saddle River, NJ: Pearson Prentice Hall. Schafer, S. (1968) The Victim and his Criminal. New York: Random House. Shichor, D. (1989) “Corporate deviance and corporate victimization: A review and some elaborations.” International Review of Victimology, 1: 67–88. 300

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Shichor, D., Sechrest, D. and Doocy, J. (2001) “Victims of investment fraud.” In H.N. Pontell and D. Schichor (eds), Contemporary Issues in Crime and Criminal Justice: Essays in Honor of Gilbert Geis. Upper Saddle River, NJ: Prentice Hall. Schneider, A. and Ingram, H. (1993) “Social construction of target populations: Implications for politics and policy.” The American Political Science Review, 87(2): 334–347. Schneider, A. and Sidney, M. (2009) “What is next for policy design and social construction theory?” The Policy Studies Journal, 37(1): 103–119. Shover, N., Coffey, G.S. and Hobbs, D. (2003) “Crime on the line: Telemarketing and the changing nature of professional crime.” British Journal of Criminology, 43(3): 489–505. Shover, N., Fox, G.L. and Mills, M. (1994) “Long-term consequences of victimization by white-collar crime.” Justice Quarterly, 11: 75–98. Shupe, A. (1991) The Darker Side of Virtue: Corruption, Scandal, and the Mormon Empire. Buffalo, NY: Prometheus Books. Szockji, E. and Fox, J.G. (1996) Corporate Victimization of Women. Boston, MA: Northeastern University Press. von Hentig, H. (1941) “Remarks on the interaction of perpetrator and victim.” Journal of Criminal Law, Criminology, and Police Science, 31: 303–309. Walsh, M.E. and Schram, D.D. (1980) “The victim of white-collar crime: Accuser or Accused?” In G. Geis and E. Stotland (eds), White-collar Crime: Theory and Research. Beverly Hills, CA: Sage. Weisburd, D., Wheeler, S., Waring, E., and Bode, N. (1991). Crimes of the Middle Classes: White-collar Offenders in the Federal Courts, New Haven, CT: Yale University Press. Weissman, A. and Block, J.A. (2007) “White-collar defendants and white-collar crimes.” Yale Law Journal Pocket Part. Available at: www.thepocketpart.org/2007/02/21/weissmann_block.html. Wells, J.T. (2014) “What is a Ponzi scheme?” Available at: www.acfe.com/ponz-schemes.aspx. Whyte, D. (2007) “Victims of corporate crime.” In S. Walklate (ed.), Handbook of Victims and Victimology. Cullompton, Devon: Willan. Will, S., Handelman, S. and Brotherton, D. (eds) (2013) How They Got Away With It: White Collar Criminals and the Financial Meltdown. New York: Columbia University Press. Wortman, C.B. (1983) “Coping with victimization: Conclusions and implications for future research.” Journal of Social Issues, 39: 195–221.

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Part VI

State crimes

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21 Transnational institutional torturers State crime, ideology and the role of France’s savoir-faire in Argentina’s Dirty War, 1976 to 1983 Melanie Collard

Introduction Despite the wealth of historical evidence of the occurrence of torture, among other state crimes, in Argentina during the Dirty War (1976–1983) there have been only limited scholarly efforts to investigate the role of France in such atrocities. This chapter explores ongoing debates in relation to France’s complicity in the making of Argentine torturers. It furnishes the reader with a detailed study of France’s military relationship to Argentina, with a particular focus on the period from 1957 to 1962. Central to my argument is the view that Argentine officers were trained by the French military – whose skills were based on the experience they had acquired in the wars in Indochina and Algeria – for ‘Revolutionary Warfare’, a doctrine based on a furious anticommunist ideology that helped justify the practice of torture, and led to its institutionalisation in Argentina during the Dirty War (1976–1983). In order to address this transnational complicity, this chapter affords an analysis of primary data from my own fieldwork in Argentina and France supported by secondary data drawn from authors such as Mazzei (2002), Périès (1999), Ranalletti (2005) and Robin (2004). It seeks to analyse these data within a transnational state crime framework – which consists in examining torture as a behaviour which is perceived as deviant by the international community and by certain domestic audiences – in order to produce a more complex and layered understanding of a specific universal human right violation: torture. Indeed, examining torture through criminological eyes offers the opportunity to make connections between the structural, institutional, social and personal frames through which such a form of violence is undertaken and experienced. While Green and Ward (2004) provide one of the most coherent frameworks for understanding state crime (see also Barak 1991; Rothe and Mullins 2011), the transnational nature of state terror and torture is one of the few dimensions of their work that could be developed further. As well as the Argentine literature which has suggested that ‘Argentina imported from France the theory and practice of the anti-subversive war well before the Americans finalized it’ (Llumá 2002a: 6), documents recently declassified by the French government, the French Ministry of 305

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Foreign Affairs and the French army confirm that the theory surrounding ‘Modern Warfare’ came from the hands of French military assessors. As a result of their experience in Indochina and Algeria, French counterinsurgency experts had reconceptualised their understanding of revolutionary war and developed a methodology of counter-revolutionary warfare that they applied in their colonial theatres, all of which they then transmitted to the Argentine military. As this chapter will demonstrate, the transfer of French expertise started in 1957, remained important throughout the 1960s and would find a new significance in the mid-1970s. In the first section of this chapter I shall explain the genesis of the French doctrine of revolutionary war by describing the particular situation of the French army after the Second World War and the lessons it subsequently learned from its significant defeats in Indochina (1946–1954) and Algeria (1954–1962). In doing so, I will develop the concepts of revolutionary war, which will enable me to then discuss the role of civil population in this specific type of warfare with the redefinition of enemy, the development of the ‘intelligence’ gathering and, finally, the arguments that brought the French first and then the Argentinians to justify the practice of torture. In the second section I shall assess the changes undergone by the Argentine army following the overthrow of General Perón in September 1955. These changes meant the incorporation of the French doctrine of revolutionary war, whose internalisation of principles and practices would have dramatic consequences for Argentine society during the late 1970s and early 1980s. I shall attempt to reveal the doctrinal and methodological influence of the French advisers on the Argentine army, not only from the experience of Argentine personnel who took courses in Paris (France being the favourite destination of those officers who were trained abroad at this time), but also from the actions of a French military mission in Buenos Aires at the Escuela Superior de Guerra from 1957 to 1962.

The genesis of the doctrine of revolutionary war The renewed winds of democracy that blew in France after its liberation from the Germans very quickly came into conflict with the country’s colonial inheritance of outdated imperialism, which broke out almost immediately in Indochina (1946–1954), followed by Algeria (1954– 1962). During the first of these decolonisation wars, the French army had to fight a different breed of enemy: the Viet Minh guerrillas who, led by Ho Chi Minh, had the support of Mao Tse-Tung’s China and the Soviet Union. During this war, torture was employed, unsystematically perhaps, but very widely nevertheless (Grimal 1985: 121). After seven years, in May 1954, the war ended with the surrender of the French garrison at Dien Bien Phu and the humiliating French acceptance of the Geneva Accords. This was to be a very hard lesson that the French set out to analyse in depth to ensure it did not happen to them again. They understood that there was nothing conventional about the type of warfare practised in Indochina, at least in its early phases. It was a guerrilla war with swift strikes or fast offensive incursions into enemy or neutral territory; these tactics were undertaken either by well-trained commandos or assault groups, or by civilians with little military training but armed with an unshakeable faith in what they were doing as militias. And it was precisely this mass participation by civilians that was new (OliveiraCézar 2003: 71). French Colonel Roger Trinquier explained it further: Warfare is now an interlocking system of actions – political, economic, psychological, military – that aims at the overthrow of the established authority in a country and its replacement by another regime. To achieve this end, the aggressor tries to exploit the internal tensions of the country attacked – ideological, social, religious, economic. (Trinquier 1964: 3–5, emphases in original) 306

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Consequently, French officers began to study the texts that nourished their adversaries: Marx, Engels, Lenin, Lawrence of Arabia and, most significantly, the one that summarised and surpassed them all: Problems of Strategy in China’s Revolutionary War, written in 1936 by Mao Tse-Tung for the instruction of his officers in the Red Army. According to the latter, population support is ‘as essential to subversion as water is to fishes’ (AMA/Mom 1959: 491).1 On this basis the entire theory of revolutionary war would be developed (AMA/Badie 1957: 548; AMA/de Naurois 1958a: 116; AMA/ Grand d’Esnon 1960: 343). In military terms, the people became the terrain or battlefield, and the frontiers that separated adversaries were no longer geographical, but ideological (AMA/Mom 1959: 505). On 10 November, less than six months after the fall of Dien Bien Phu and while France’s defeated army was returning home, a nationalist rebellion broke out in Algeria. The Front de Libération Nationale (FLN) (National Liberation Front), a guerrilla movement that played the leading role in the war against French domination, led the rebellion. This conflict was another example of the process of disintegration of the French colonial empire: in addition to financial problems, tensions were germinating between the two ethnic groups that made up the population of Algeria. On one side were the Pieds-Noirs – that is, nearly one million French nationals born on Algerian soil – and, on the other, the Muslim community (Grimal 1985: 146). This situation committed the unstable French Fourth Republic to a new, long war, this time waged in a vast territory close to mainland France. Both military superiority and brutal police repression failed to quell the rebellion, which extended over the entire territory of Algeria at the same time as terrorist violence increased. The FLN used the same techniques, followed the same gradual development and based themselves on the same tactical principles as those used successfully by Viet Minh guerrillas (Oliveira-Cézar 2003: 71). This was more than enough for the French military to believe at that time, and for a long time after Algerian independence in 1962, that communism had opened in Algeria a new front in its quest for world domination. This was exactly the same mistake as the Argentine military made at the start of the 1960s when they interpreted the insurrectional acts of the Peronist resistance as covert manifestations of international communism (Oliveira-Cézar 2002: 27). Fresh from the disastrous experience in Indochina and armed with the lessons learned from it, the French army entered Algiers. Realising that a pro-FLN population was the enemy’s centre of gravity, the French military – newfound experts on subversive warfare – interpreted the people not as the end but as the means, and their conquest was an indispensable phase in any revolutionary war (Vidal-Naquet 1963: 40). Indeed, if the objective of a traditional war was the conquest of enemy territory, and in revolutionary war the territory was the people themselves, it follows that the battlefield was now the minds and men’s spirits (AMA/Sánchez de Bustamante 1960: 602–603). Therefore, the conquest or neutralisation of the civilian population became a priority objective for the theoreticians of counter-revolutionary war. Since, according to this interpretation, the ‘enemy’ hides within and blends into the population with its support, an essential consequence of a revolutionary war is that any difference between combatants and civilians disappears: the entire population falls under suspicion and everybody becomes a potential enemy. This prefigures the concept of the ‘enemy within’, which is then extended to all opposition activity: any uprising, disturbance, protest, demand or social anxiety was founded, according to this yardstick, in Marxist infiltration. It is the generalisation and abuse of the idea that the enemy may be hidden among the population that divides the whole of society in a Manichean way, transforming any opponent, no longer into a potential ally of communism, but into a ‘subversive’ (Trinquier 1964: 24). Consequently, in the counter-revolutionary struggle, the key problem is that of obtaining information – or renseignement – enabling one to know the enemy’s organisational structure. According to the drafters of the revolutionary war doctrine, interrogation is the main tool for obtaining information, and recourse should be made to any means in order to get it, including the 307

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torture of those who are merely suspects (Mazzei 2002: 125; Vidal-Naquet 1963: 41). In Algeria, the insurrection was clearly developing into an intelligence war – in the military sense of the term – since it was being waged against a closely regimented population and, in such a situation, torture by the French military and troops was accepted as an absolutely normal daily practice (García 1995: 43). Thus, torture was not an epiphenomenon of the Algerian War: it was central to the army’s defence of a colonial empire in its waning years (Branche 2001; Fanon 1963; Lazreg 2008; MacMaster 2004). Its systematic use was the direct outcome of the French theory and doctrine of revolutionary war – Doctrine de Guerre Révolutionnaire – that developed in the 1950s (Branche 2001: 326). Indeed, the French doctrine was based on a furious anti-communist ideology that helped justify the practice of torture and led to its institutionalisation (Vidal-Naquet 1963: 15). The French army applied these ‘revolutionary war techniques’ during the Algerian War: they divided Algiers into zones, unified their files of suspicious characters, created civil defence and clandestine detention centres, and systematically used torture in order to obtain the valuable information used to dismantle the structure of Algerian nationalism (Llumá 2002a: 12–13). In the short term these tactics resulted in France winning a decisive victory in the Battle of Algiers, achieved when the French decapitated the FLN’s leadership. This victory would serve as a doctrinal exemplar in the development of twentieth-century counter-revolutionary theory and practice. In the longer term, however, the debate on the tactics used – particularly torture – would re-emerge in the French press and, somewhat paradoxically, precipitated the loss of Algeria (Maran 1989; Paret 1964; Vidal-Naquet 1963, 2001). On 19 March 1962, the Evian Agreements concluded between the Algerian National Liberation Front and the government of General de Gaulle ended the French colonial presence and a war which cost more than a million lives, most of them Algerian civilians (AMA/Orfila 1962). As a consequence, 700,000 Europeans had to leave North Africa (Mazzei 2002: 111; Vidal-Naquet 1963: 45–46). The evacuation of the colony meant enforced repatriation for a large number of people who left Algeria for fear of reprisals and anti-colonial sentiment. The Pieds-Noirs had to seek new horizons and Argentina was among their favourite destinations (Palacio 1968: 30–32). The majority of the French who arrived in Argentina with the defeat of colonialism in North Africa behind them presented two characteristics: furious anti-communism and magnified Catholicism. And the country they encountered was one where those two features also coincided; this turned Argentina into a particularly favourable space for the social insertion of the new arrivals. Indeed, it enabled the most politically engaged of them easily to link their North African past with the new reality of Argentina, ‘not for any dream of restoring colonialism, but rather to update their narrative and go back to old ways, such as clandestinely, code names, apocryphal reports, megalomania, contacts with the military world, the intelligence community and the crusade spirit’ (Ranalletti 2005: 293). The fact that France had lost its colonial wars in Indochina and Algeria apparently did not matter: the French doctrine of revolutionary war became very attractive to other governments and went far beyond the borders of Algeria (Garrigou-Lagrange 1959: 515; Paret 1964: 9). As Périès explained, the expansion of the application of the French doctrine of revolutionary war far beyond France and its colonial territories confirms its ‘transnational dimension’ (1999: 697). It was the transnational dimension of the doctrine that made possible the transfer of the French savoir-faire in torture practices prior to the Argentine Dirty War (1976–1983).

Franco–Argentinian military rapprochement at the institutional level: introducing a doctrine that justifies torture Following the overthrow of General Perón in September 1955, Argentina entered a new phase. Perón’s election in 1946 had introduced more economic and social rights to the working classes 308

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(Rouquier 1978); the proscription and persecution of his political party triggered a spiral of violence that was, in reality, a confrontation between these classes and the upper/middle classes (James 1990). The basic goal of Perón’s opponents was the reversal of the redistribution of wealth that had taken place during his first two governments (from 1946 to 1955). A frightened bourgeoisie launched a frenetic anti-communist campaign with the aim of cracking down on the radical activism of the Peronists; little by little this morphed into a tragic struggle in the bourgeoisie seen as the defence of ‘Western Christian civilisation’ (Ranalletti 2005: 297). This essentially local conflict then assumed international dimensions when Argentina joined the Cold War on the side of the regional bloc led by the United States (Rouquier 1978: 156–159). This meant that its true cause – social inequality – was never addressed properly: all forms of opposition and social protest came to be interpreted as manifestations of supposed communist penetration of the country. This is at the root of the association made in Argentina by so many members of the armed forces and civilian population for placing the events of the Perónist resistance within a Marxist framework – an interpretation that was completely without foundation until the 1966 meeting of the Latin American Solidarity Organisation (Oliveira-Cézar 2002: 27; Ranalletti 2005: 291). As a consequence, the Argentine army underwent major transformations during the second half of the 1950s. With the fall of Perón, the ‘liberal’ wing of the army began a profound de-Perónisation and reorganisation process (Lopez 1987), and sought to replace the Doctrine of National Defence by new and untraditional forms of warfare arising from the Cold War: nuclear war and revolutionary war (Mazzei 2002: 105–106). The Argentinian armed and security forces began this process of renewal, on both the doctrinal and technical levels, in addition to ‘stepping up their traditional politicisation’ (Ranalletti 2005: 299). They moved into the role of internal political police, responsible for countering the ‘communist influence’ and ‘subversion’, relegating their function as the armed wing of the state for its external defence to a secondary level: For a long time, the primary mission of the army was to defend territorial integrity against any encroachments by neighbouring countries, specifically Chile, whose designs on Patagonia in particular have always caused concern to the Argentinian military. . . . But nowadays, subversive war is the key issue of concern to the military. It is a matter of defending an ‘inner frontier’ against the Castro-communism that has become enemy number one. This explains the great attention paid here to the vicissitudes of the guerrilla war in Bolivia and the sense of relief after the failure of Che Guevara’s venture there. (ADF/Doc. 141/3)2 This context saw the definitive eclipse of German influence on the Argentine army (Périès 1999: 759; ADF/Doc. 141/3), which was replaced by the dominance of North American and French traditions: [W]ithout external wars for over a century or any immediate threat from its neighbours, the Argentinian armed forces no longer had an opportunity to exercise their natural role, that of sword of the state. With studies by American and French authors on the global nature of strategy and on localised or subversive wars, the idea of frontier war practically disappeared, making way for the notion of a war to be waged against the enemy within. The hostile neighbour was no longer the subject of strategic studies, but rather the compatriot in the conscious or unconscious service of a revolutionary power. (ADF/Doc. 188/1) 309

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In the North American case, this was related to the dominant position achieved by its army after the Second World War and, in particular, to the incorporation into its doctrine of the problem of nuclear war. The French military, for its part, strengthened its relationship with the Argentine army – with which it had been linked ever since the Perón government – by offering its revolutionary war doctrine. This doctrine, already explained, had grown out of the French defeat in Indochina, after which a group of French officers, in order to avoid taking responsibility for their failure to reinstate colonial control, came to the conclusion that they were facing a new type of war for which they did not have the strategic resources to fight. War was no longer the classic confrontation between opposing armed forces for control of a territory and/or its economic resources, but was total combat, waged in the ‘hearts and minds’ of the population: ‘A modern war – revolutionary or subversive – but always communist in nature’ (Llumá 2002a: 6). In this new kind of war, information is the key: it must be obtained at all costs. Consequently, torture becomes acceptable and is seen as the most radical and effective instrument of counterinsurgency action. In the first phase of the fight against the communist aggression they believed to be under way, the Argentine military entrusted the essence of their training to their French colleagues. A ‘process of decontextualisation’ of the doctrine of revolutionary war by the French in Argentina led to a ‘transformation of the objectives and methods used by the Argentine armed forces in the Cold War context’ (Périès 1999: 743): After the fall of Perón in 1955, the dominant influence on the Argentine army tended to be that of the United States. This was the era of the Inter-American Defense Pacts, American military missions and American material. However, the traditional mistrust felt against the dominant power on the continent very quickly led the Argentinians to follow with increasing interest the thoughts of General de Gaulle, who incarnated in their eyes the policy of a country keen to preserve its independence faced with the hegemony of the superpowers. (ADF/Doc. 188/1) This change in military tradition happened when an internal line of the Argentine army, then led by Colonel Carlos Jorge Rosas, tried to secure a degree of decision-making autonomy in the military. This prestigious Engineers Officer had been a military attaché in France and a student at the Paris École Supérieure de Guerre from 1953 until 1955. In 1957 he was appointed Professor of Tactics and Strategy, and deputy principal of its Argentine equivalent. In that role, he is often regarded as being responsible for the ‘importation’ of the French revolutionary war doctrine. Indeed, in a relatively recent article in the Revista de la Escuela Superior de Guerra, General Isaías García Enciso asserted that ‘the French influence in the Argentine army was introduced by Colonel Rosas’ (AMA/Picciuolo 1996: 34). According to Lieutenant Colonel Robert Louis Bentresque: It was Chivo Rosas who was behind the idea that the Argentinians could avoid a conflict by having the French come, who had already been beaten. That is why they asked for a mission. And so there were two French officers permanently assigned as advisers to the Argentinian School of War. (Lieutenant Colonel Robert Louis Bentresque, interviewed by Périès (1999: 760–761)) This research supports the idea that the strategy devised by Rosas was that of seeking finance and procurement in France in order to offset US influence. The Argentine military was introduced to 310

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French military doctrine with the help of the following: (1) several other Argentinian senior rank officers who had also taken training courses in various French centres, in particular the Paris École Supérieure de Guerre (including Lieutenant Colonels Pedro Tibiletti (1954–1956), Cándido Hure (1955–1957), Manrique Miguel Mom (1956–1958), Alcides López Aufranc (1957–1959) and Edgardo Daneri (1958–1960)); and (2) French diplomatic representation in Argentina (Mazzei 2002: 115–116; Périès 1999: 875–876). Indeed, as mentioned by the Military Attaché to the French Embassy in Buenos Aires, Colonel A.R. Bernard, in a secret communication with the Secretary of Defence in Paris on 29 March 1956: After the revolution of September [which overthrew the second Peronist government in 1955], the Argentine army is undergoing a complete reorganization process and it is interesting to note that some of its most influential members are looking at France to find inspiration, or even a reference model. . . . Colonel Rosas, recently graduated from our school, is offering to restructure the Escuela Superior de Guerra according to French norms. (ADF/Doc. 74/4) From the perspective of French interests, we are glad to see some commands entrusted to generals or higher ranks whose feelings of friendship for our country are not in doubt. Colonel Lopez Aufranc, a former student of our Schools of War and of General Staff, has for a long time had a trusting, ongoing relationship with our Military Attaché services. . . . He has always shown support for the arrival and then maintenance of a French military advisors’ mission. The same applies to General Rosas. (ADF/Doc. 141/1) Those ‘French norms’ were the very ones that had been ‘applied by the French against the FLN of Algeria since 1954’ (Llumá 2002a: 6), namely their theories of counter-revolutionary warfare. The French military considered the FLN to be a communist-type revolutionary organisation because it did not understand the nationalist nature of the phenomenon (Llumá 2002b: 21). A few months later, in July 1956, the French ambassador in Buenos Aires revealed the ‘exceptional political interest to increase the effort in strengthening ties and cohesion between the French and Argentine armed forces’ to the Secretary of State in France, Christian Pineau (ADF/Doc. 74/5). Shortly after the overthrow of General Perón, and especially after the intensification of acts by the Perónist resistance, a group of general staff officers put their trust in the visiting French officers because they were the only Western specialists in revolutionary war on account of their extensive experience in policing activities in an urban setting (Oliveira-Cézar 2003: 73–74). Military contacts between France and Argentina increased following Colonel Rosas’ stay at the École Supérieure de Guerre in Paris (1953–1955), which may be seen as the start of a significant exchange of officers and advisers who would share the savoir-faire developed in the light of the French colonial wars. Those contacts appeared mainly in the form of: (1) training courses at the Paris École Supérieure de Guerre; and (2) the establishment of a French military mission into the Buenos Aires Escuela Superior de Guerra (ADF/Doc. 229/1; ADF/Doc. 229/5). These exchanges would allow the French to ‘pass their experience from Indochina and Algeria on to Argentine officers’ (Oliveira-Cézar 2002: 27). French specialists in torture were able – ‘with the authorisation of their superiors in the cabinet ministries and the military general staff ’ (Alleg 2006: 101) – to pursue new careers well beyond the borders of Algeria. With its ups and downs, this influence would continue well into the launch and organisation of the 1976 dictatorship. 311

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Training courses at the Paris École Supérieure de Guerre Argentina has traditionally sent staff officers for training to France. Prestigious Argentine officers studied at various French military institutions, especially the Paris Higher School of War, École Supérieure de Guerre: the place where the elite of the French army was trained. Others received this influence during long missions to France. The goal of the École Supérieure was to select and train small groups of officers who would be posted to the General Staffs of their own countries later on. As the Attaché of Armed Forces at the French Embassy in Buenos Aires explained to the French Secretary of External Affairs concerning the importance of these training courses: [T]he direct and indirect transfer of our culture are obvious long term investments in this country which, if we turn our back on it, will turn to other Western nations or countries. (ADF/Doc. 2234/6) Joining this group was an impressive body of international students, a quarter of whom came from Latin America, and a further 22 per cent from Argentina (Périès 1999: 709; Robin 2004: 168–169). The École Supérieure started training Latin American military from 1951 onward and, between 1951 and 1962, the proportion of trainees coming from South America represented more than a quarter of the foreign officers present at the Higher School (Périès 1999: 709). Immediately after Brazil, Argentina was the second most represented country, with nine trainees hosted in the École Supérieure’s 65th cohort (1952–1954) (Périès 1999: 710). The Argentinian selection was made according to the merits in each promotion (their class ranking): the first was sent to France, the second to Spain, the third to Germany and the fourth to the USA (Llumá 2002a: 6). According to a former student, it was a ‘real privilege’ to be sent to Paris (General Reynaldo Benito Bignone, as interviewed by Robin (2004: 316–317)). Upon their return home, the majority of these officers were politically active, though not always with the same ideology (Oliveira-Cézar 2003: 74), and fulfilled roles in the leadership of their Argentine equivalent, the Escuela Superior de Guerra. This was what happened in the case of Colonel Carlos Rosas, deputy principal in 1957 and 1958, and in the cases of Lieutenant Colonels Pedro Tibiletti and Cándido Hure, the Argentine Higher School’s principal and deputy principal in 1960. Others graduating from France were Lieutenant Colonel Manrique Miguel Mom, whose teaching work in the Higher School of War was influential, as reflected in a pair of published articles on revolutionary war (AMA/Mom 1958, 1959), and Lieutenant Colonel Alcides López Aufranc, who described his personal experience of the Paris École Supérieure in the following words: When the events of 13 May 1958 occurred in Algiers, precipitating the rise to power of General de Gaulle, the French students of the École Supérieure’s 71st cohort were sent to North Africa in order to reinforce the general staffs, forming a new division created to direct psychological action. We foreign students were authorised to join personnel in the Theatre of Operations for two weeks, visiting from the Commander in Chief ’s Command Post to tiny villages with Muslim self-defence, including the electrified barriers on the borders with Tunisia and Morocco. (AMA/López Aufranc 1959: 611) These exchanges were seen as essential to the military collaboration between the two countries. This extended to the point where, on 16 March and 6 April 1956, the French ambassador in Buenos Aires revealed to the Secretary of State in France that Colonel A.R. Bernard, Military 312

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Attaché to the French Embassy in Buenos Aires, had extremely important reasons to support the admission of two Argentine officers (instead of one) to the École Supérieure de Guerre in Paris: I fully concur with the opinion of Colonel Bernard and I would be pleased if the department wanted to make a case with the Ministry of War for the political interest attached, at a time when the Argentine army is being completely reorganised, to an exceptional effort being made to promote its incorporation of our methods and military norms. (ADF/Doc. 74/2) [C]olonel Bernard asks that a certain amount of information be sent to him on our logistical military institutions, in order to send them to a French trained general of the Argentinian artillery. I would be grateful to the Department if it would kindly support this request with the Minister of National Defence, the importance of which goes without saying. (ADF/Doc. 74/3) On 3 September 1958, the very recent simultaneous influence of the French military advisers at the Escuela Superior de Guerra (as we shall see in the next section) gave birth to an official document which described the planned visit of 120 Argentinian officers to France; these students would also go to Algeria in the middle of its liberation war: The Command of the Argentine army has made known its desire to organise an end-ofcourse visit to Europe and Africa at the end of 1958 for officers: 1) of the Argentinian Higher School of War (60 officers); 2) of the Army Higher Technical School (30 officers); 3) possibly, of the Higher School of Intelligence (30 officers). The plan for the visit provides: a) for the Higher School of War: – A stay in France from 10 to 26 November 1958 . . ., – a stay in Algeria from 17 to 19 December 1958. (ADF/Doc. 74/6) A few days later, the French Secretary of State had ‘the honour to inform the French Ambassador in Buenos Aires’ that the plan made by the command of the Argentine army to organise an end-of-course visit for pupils of three military schools had met with his ‘full approval’ (ADF/ Doc. 74/7). Shortly after, the French General Staff of National Defence would also have ‘the honour of informing the General Staff of the Argentine Armed Forces that in principle agreement can be given to the command of the Argentine army for the planned visit to France’ (ADF/Doc. 74/8). As French political analyst Georges Gabriel Périès explained: ‘It’s not any officer who would start teaching and spreading the doctrine of Revolutionary War at the École Supérieure de Guerre, but frustrated soldiers who just came out of two wars that they lost’ (Périès 1999: 786). One can easily imagine the impact that their attitude and mindset were going to have upon Argentine officers attending their conferences.

French military mission at the Buenos Aires Escuela Superior de Guerra In 1957, a French military mission – which came from the troubled army that had fought the Battle of Algiers the same year – arrived in Buenos Aires (ADF/Doc. 74/16). It was originally composed of Lieutenant Colonels François Pierre Badie (AMA/Badie 1957, 1958a, 1958b, 1958c, 1958d, 1959) and Patrice de Naurois (AMA/de Naurois 1957, 1958a, 1958b, 1958c, 1958d, 1958e) who were later joined by Lieutenant Colonels Robert Louis Bentresque 313

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(AMA/Bentresque 1959, 1960) and Jean Nougués (AMA/Nougués 1960). Their advisory work concerning the gradual conversion from the doctrine of national defence to that of revolutionary war began in the Escuela Superior de Guerra – the ‘army’s principal theoretical training centre and the natural ambit for these changes to appear the most and the most quickly’ (Mazzei 2002: 106) – and was immediately reflected in a series of articles and lectures always translated by General Rosas and published in its main organ, the Revista de la Escuela Superior de Guerra [the Higher School of War Review] (Llumá 2002a: 7; Rouquier 1978: 471). Up until that point, articles in this quarterly publication had largely been dedicated to nineteenth-century Argentinian military history and the Second World War. Starting in 1957, topics broadened and more attention was paid to nuclear war and revolutionary war. In the latter case, which is what this thesis is concerned with, the hypothesis of conflict studied at the Higher School changed: the focus moved from the old ‘Plan BC’ – that is, a potential war against Brazil and/or Chile – to the revolutionary war, i.e. internal civil war (Llumá 2002a: 7). Indeed, from 1958 to 1962, the Revista de la Escuela Superior de Guerra published a large number of articles on revolutionary and counter-revolutionary war. Even before their presence as advisers became official at the end of 1959 (ADF/File #74), the French military advisers, along with other French guests inspired by their own military experience, wrote these articles. These articles associated total control of the population with the methods of dividing the territory into sectors, intelligence or ‘seeking information by any means’, psychological action and civilian-military action (López 1987: 144–160; Oliveira-Cézar 2002: 27–28, 2003: 74). Both this series of publications and the physical presence of this group of French military assessors at the Escuela Superior de Guerra were the starting point of the course on counterinsurgency that came to set the scene for the humanitarian disaster that would take place two decades later. They built the pillars that would uphold the doctrine of the ‘Dirty War’ and ideologically trained some of the men who would become generals in the 1970s. It was the success of this French military mission in Argentina that led to its institutionalisation on 11 February 1960. General Rosas had initially organised this mission by facilitating the individual contracts of French advisers Lieutenant Colonels François Pierre Badie and Patrice de Naurois (ADF/Doc. 74/9, ADF/Doc. 74/10, ADF/Doc. 74/11). The agreement, signed between the French Armed Forces Minister and the Argentine Republic’s Secretary of State for War with immediate effect, was about the technical assistance that the Argentine army had already been receiving from the French army. In this way the French instructors who had been in Argentina for several years were given legal status (ADF/Doc. 74/12). According to the provisions of the agreement, the mission consisted of three senior officers of the rank of lieutenant colonel or colonel in the French army that were to pass the benefit of their technical and professional knowledge on to the Argentine army (ADF/Doc. 74/12/Article 2). Their role consisted, in particular, of providing teaching within the Escuela Superior de Guerra – the Buenos Aires equivalent of the Paris École Supérieure de Guerre (Article 3). In addition to these three senior officers, and upon the request of the government of Argentina, other French army personnel were to be assigned to the mission on a temporary basis at the expense of the Argentine authorities (Article 4). The length of the each mission member’s stay in Argentina was normally 24 months, starting from the date of his journey to Buenos Aires (Article 1). He had an obligation not to divulge or reveal, in any way, to a foreign government or to any person, secrets or confidential matters of which he may become aware as a natural consequence of his role, or by any other means, it being understood that this obligation was to remain wholly in force after the roles as advisers to the Argentinian army had ended (Article 6). The Argentine government, by the offices of the Secretariat of War, was to pay the remuneration of the members of the mission (Article 12) and the costs of their and their families’ travel to Buenos Aires (Article 13). 314

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Furthermore, during their stay in Buenos Aires, the members of the mission enjoyed immunity from the civilian jurisdiction of Argentinian courts for acts or infractions inherent to the exercise of their official duties (Article 9) and the same tax exemptions as members of the diplomatic mission of France to Argentina (Article 10). The instruction French teachers gave at the Escuela Superior de Guerra was ‘highly appreciated in Buenos Aires’ (ADF/Doc. 74/17).

Conclusion We have covered a phase of the French presence in Argentina that resulted from the transfer of French experience with subversion, set against the backdrop of the Cold War and the loss of the Algerian colony. Having arrived at this point, we must ask ourselves what verdict stands regarding the presence of the French military mission in the Argentine army from 1957 to 1962. It may reasonably be stated that it established the theoretical, methodological and even semantic basis that informed the repressive actions of the Argentine army during its Dirty War in the 1970s. Although the French military advisers did not refer to ‘torture’ as such, they certainly brought a vision in which this practice was accepted: they transferred the ideology of counter-revolutionary war; they provided the bibliography to justify its techniques; and they taught Argentine officers the importance, in this particular type of war, of gathering information at all costs. During those five years, the Argentine army developed its entire structure of ‘anti-subversive’ repression and the basis was established for the development and internalisation of the so-called ‘Doctrine of National Security’ (Mazzei 2002: 137). Willing to share its experience, the French military started advising the Argentine state in the ways and means of dealing with internal subversion. Indeed, following the establishment of an important French mission in 1957, it has been proven that Argentina’s armed forces were trained by French advisers at the Escuela Superior de Guerra in Buenos Aires to wage a ‘new type of war’. As we have seen, their training focused on counterinsurgency methods developed by the French in Indochina and Algeria, such as interrogation techniques – meaning torture (Carlson 2000: 71; MacMaster 2004: 8; Rouquier 1978: 471–472). From the late 1950s up until the early 1960s, articles about the doctrine of revolutionary war written by French officers appeared in the Argentine Higher School of War’s official magazine, La Revista de la Escuela Superior de Guerra. In other words, through conferences, lectures, articles in military reviews and technical training exercises, the French advisers, followed by their Argentine disciples (who would end up surpassing their masters), emphasised from 1957 onward that the battlefield would now be the population itself and that information on potential subversives had to be gathered at all costs, even through the use of torture (Robin 2004: 201). For a long time, however, that training ‘had no practical relevance for Argentina, especially in the urban areas’ (Heinz 1995: 75–76). In fact, the ‘New War’ described by the French assessors did not exist in Argentina at the beginning of the 1960s: ‘It was an anticipated war that the Argentine military would actually fight less than twenty years later’ (Carlson 2000: 73). Yet, even in the 1960s, ‘Argentina and its people constitute [d] an objective that [was] too important for international Marxism to overlook’ (AMA/Nougués 1962: 30). It was precisely because the Argentine government was looking for an effective way to stop rebellious Perónists, who were supposedly taking part in the communist ‘conspiracy’ against the established order (Ranalletti 2005: 291), that the French counterinsurgency doctrine quickly found ‘fertile ground’ in Argentina (Amaral 1998: 183; Robin 2004: 202). By sharing their specific savoir-faire in revolutionary war, the French prepared the ground for the institutionalisation of torture that would be implemented between 1976 and 1983 in Argentina. They therefore deserve the label of ‘transnational institutional torturers’. 315

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Notes 1 Military articles of the Archivos Militares Argentinos (AMA), Argentine Military Archives (see Appendix 2). Hereafter, reference to articles of the AMA will be made as follows: AMA/Name of the author + date + page number. For example, here, ‘AMA/Mom 1959: 491’ refers to a quote found in the article of the Argentine military archives, written by Mom in 1959 at page 49 ; that is, Mom (1959) ‘Guerra Revolucionaria: Causas-Proceso-Desarrollo’, Revista de la Escuela Superior de Guerra, No. 334, p. 491. 2 Diplomatic documents of the Archives Diplomatiques Françaises (ADF), French Diplomatic Archives (see Appendix 1). Hereafter, reference to documents of ADF will be made as follows: ADF/File number + Document number. For example, here, ‘ADF/Doc. 141/3’ refers to a quote found in Document #3 of File #141 of the French diplomatic archives ; that is, Dossier 141 – Cote 18-6-1; No. 159/AM; A.s. L’Armée Argentine; Buenos Aires, le 29 Janvier 1969, L’Ambassadeur de France en Argentine (Dimitri de Favitski), à Son Excellence Monsieur Michel Debré, Ministre des Affaires Etrangères, Direction d’Amérique (Doc.141/3).

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Rothe, D. and Mullins, C. (2011) State Crime: Current Perspectives. Piscataway, NJ: Rutgers University Press. Rouquier, A. (1978) Pouvoir Militaire et Société Politique en République Argentine.Paris: Presses de la Fondation Nationale des Sciences Politiques. Trinquier, R. (1964) Modern Warfare: A French View of Counterinsurgency, translated by D. Lee. New York: Frederick A. Praeger. —— (1980) La Guerre. Paris: Albin Michel. Vidal-Naquet, P. (1963) Torture: Cancer of Democracy. France and Algeria 1954–62. Harmondsworth: Penguin Books. —— (2001) Les Crimes de l’Armée Française. Algérie 1954–1962. Paris: La Découverte.

APPENDIX 1: French diplomatic archives by documents File #74 – America 1952–1963; Argentina: Military Matters, National Defence Dossier 74 – Cote 18-6-1; No. 383/AM; A.s. Stage d’officiers argentins à l’École Supérieure de Guerre; Buenos Aires, le 16 Mars 1956; L’Ambassadeur de France en Argentine, à son Excellence le Ministre des Affaires Étrangères, Direction d’Amérique. (Doc.74/2) Dossier 74 – Cote 18-6-1; No. 480/AM; A.s. Documents demandés par l’Armée Argentine; Buenos Aires, le 6 Avril 1956, L’Ambassadeur de France en Argentine, à Son Excellence Monsieur le Ministre des Affaires Étrangères, Direction d’Amérique. (Doc.74/3) Dossier 74 – Cote 18-6-1; No. 404/AM; Buenos Aires le 29 Mars 1956; Le Colonel A.R. Bernard, Attaché Militaire Naval et de l’Air près de l’Ambassade de France en Argentine, à Monsieur le Ministre de la Défense Nationale et des Forces Armées, 2°Division, 51, Bd. LatourMaubourg, Paris. (Doc.74/4) Dossier 74 – Cote 18-6-1; No. 926/AM; A.s. Relations entre l’Armée française et l’Armée argentine; Buenos Aires, le 5 Juillet 1956; L’Ambassadeur de France en Argentine, à Son Excellence Monsieur le Ministre des Affaires Étrangères, Direction d’Amérique. (Doc.74/5) Dossier 74 – Cote 18-6-1; No. 529/AM; Objet: Projet de voyage de fin d’étude de l’École de Guerre Argentine; Paris, le 3 Septembre 1958, Le Président du Conseil, à Monsieur le Ministre des Affaires Étrangères, Direction d’Amérique. (Doc.74/6) Dossier 74 – Cote 18-6-1; No. 41/AM; A.s. Projet de voyage de fin d’études de l’École de Guerre Argentine; le 10 Septembre 1958, Le Ministre des Affaires Étrangères, à Monsieur le Président du Conseil, État Major de la Défense Nationale, Affaires Politiques. (Doc.74/7) Dossier 74 – Cote 18-6-1; No. 614/AM; Objet: Projet de voyage en France de l’École de Guerre Argentine; Paris, le 11 Septembre 1958, Note pour le Général d’Armée Major Général des Armées E.M.G.A./2ème Division. (Doc.74/8) Dossier 74 – Cote 18-6-1; No. 1092/AM; Objet: Project d’accord relatif aux assesseurs militaires français; Buenos Aires, le 9 Octobre 1959, Le Colonel François Serralta, Attaché Militaire Naval et de l’Air près de l’Ambassade de France en Argentine, à Monsieur le Ministre des Armées (TERRE), Etat Major de l’Armée, 2° Bureau. (Doc.74/9) Dossier 74 – Cote 18-6-1; No. 1072/AM; A.s. Envoi du project d’accord relatif aux assesseurs militaires français; Buenos Aires, le 20 Novembre 1959; L’Ambassadeur de France en Argentine (Armand Blanquet Du Chayla), à Son Excellence Monsieur le Ministre des Affaires Étrangères, Direction d’Amérique. (Doc.74/10) Dossier 74 – Cote 18-6-1; No. 2870/AM; Objet: Mission française auprès de l’Armée Argentine; Paris, le 20 Novembre 1959, Le Premier Ministre (Michel Debré) à Monsieur le Ministre des Armées, Etat Major Général des Armées. (Doc.74/11) Dossier 74 – Cote 18-6-1; Projet d’accord mettant à la disposition de l’Armée Argentine une mission d’assesseurs militaires français (accord signé le 11 Février 1960). (Doc.74/12) 317

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Dossier 74 – Cote 18-6-1; No. 523/AM; A.s. Visite du Général Demetz et Mission d’Assesseurs Militaires en Argentine; Buenos Aires, le 3 Juin 1960, L’Ambassadeur de France en Argentine (Armand Blanquet Du Chayla), à Son Excellence Monsieur le Ministre des Affaires Étrangères, Direction d’Amérique. (Doc.74/16) Dossier 74 – Cote 18-6-1; Assistance technique de l’Armée francaise à l’Armée Argentine; 20 Juin 1960. (Doc.74/17)

File #141 – America 1964–1970; Argentina: National Defence Dossier 141 – Cote 18-6-1; No. 115/AM; A.s. Personnalités militaires et leur repartition dans les principaux commandements des trois armes; Buenos Aires, le 28 Janvier 1964, Christian de Margerie, Ambassadeur de France en Argentine, à Son Excellence Monsieur le Ministre des Affaires Étrangères, Direction d’Amérique. (Doc.141/1) Dossier 141 – Cote 18-6-1; No. 159/AM; A.s. L’Armée Argentine; Buenos Aires, le 29 Janvier 1969, L’Ambassadeur de France en Argentine (Dimitri de Favitski), à Son Excellence Monsieur Michel Debré, Ministre des Affaires Étrangères, Direction d’Amérique. (Doc.141/3)

File #188 – America 1971–1975; Argentina: Military Matters of the Country, and Connections with France Dossier 188 – Cote 18-6-2; No. 555/AM; A.s. L’Armée en Argentine; Buenos Aires, le 11 Juin 1973, Jean-Claude Winckler, Ambassadeur de France en Argentine, à Son Excellence Monsieur Michel Jobert, Ministre des Affaires Étrangères, Direction d’Amérique. (Doc.188/1)

File #229 – America 1976–1981; Argentina: National Defence, Military Matters Dossier 229 – Cote 18-6-1; No. 358/AM; A.s. Aide Militaire à l’Argentine; Paris, le 10 Juin 1976, Note du Ministère des Affaires Étrangères, Direction des Affaires Politiques. (Doc.229/1) Dossier 229 – Cote 18-6-1; A.s. Coopération Technique Militaire avec l’Argentine; Paris, le 5 Juin 1981, Note du Ministère des Relations Extérieures, Direction des Affaires Politiques. (Doc.229/5)

File #2234 – America 1982–1984; Argentina: Military Matters, Connections with France Dossier 2234 – Cote 8-2-3; No. 624/ARG/AFA; Objet: Demande de stages au profit de l’Argentine pour le cycle continu 1983-1984; Buenos Aires, le 22 Septembre 1982, Le Colonel Michel Dudjari, Attaché des Forces Armées près l’Ambassade de France en Argentine, à Monsieur le Ministre des Relations Extérieures, sous Direction de l’Aide Militaire (Sous-couvert de Monsieur l’Ambassadeur de france en Argentine). (Doc.2234/6)

APPENDIX 2: Argentine Military Archives by Articles Badie, F.P. (1957) ‘La Resistencia Interior Francesa durante la Ocupación Alemana entre 1940-1945’. Revista de la Escuela Superior de Guerra, No. 327, pp. 537–551. —— (1958a) ‘Las Operaciones Anglo-Francesas contra Port Said (Noviembre 1956)’. Revista de la Escuela Superior de Guerra, No. 328, pp. 76–95.

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—— (1958b) ‘Operaciones Anfibias Conjuntas. Operación “Mosquetero” Revisada’. Revista de la Escuela Superior de Guerra, No. 329, pp. 282–305. —— (1958c) ‘Protección de Fronteras’. Revista de la Escuela Superior de Guerra, No. 330, pp. 503–518. —— (1958d) ‘La Guerra Psicológica’. Revista de la Escuela Superior de Guerra, No. 331, pp. 665–686. —— (1959) ‘La Guerra Revolucionaria en China’. Revista de la Escuela Superior de Guerra, No. 334, pp. 516– 549. Bentresque, R.L. (1959) ‘Un Método de Razonamiento en Guerra Subversiva’. Revista de la Escuela Superior de Guerra, No. 335, pp. 733–754. —— (1960) ‘Los Acontecimientos de Laos’. Revista de la Escuela Superior de Guerra, No. 339, pp. 615–629. de Naurois, P. (1957) ‘Una Concepción Francesa: La División Mecanizada Rápida’. Revista de la Escuela Superior de Guerra, No. 327, pp. 553–573. —— (1958a) ‘Algunos Aspectos de la Estrategia y Táctica Aplicados por el Viet Minh durante la Campaña de Indochina’. Revista de la Escuela Superior de Guerra, No. 328, pp. 97–128. —— (1958b) ‘Una Teoría para la Guerra Subversiva’. Revista de la Escuela Superior de Guerra, No. 329, pp. 226–240. —— (1958c) ‘La Nato: Origenes y Contenido del Tratado del Atlantico Norte Organización de la Nato’. Revista de la Escuela Superior de Guerra, No. 330, pp. 519–540. —— (1958d) ‘Guerra Subversiva y Guerra Revolucionaria’. Revista de la Escuela Superior de Guerra, No. 331, pp. 687–702. —— (1958e) ‘Un Metodo de Razonamiento para un Problema Tactico’. Revista de la Escuela Superior de Guerra, No. 331, pp. 703–719. Grand d’Esnon, H. (1960) ‘Guerra Subversiva’. Revista de la Escuela Superior de Guerra, No. 338, pp. 339–363. López Aufranc, A. (1959) ‘Guerra Revolucionaria en Argelia’. Revista de la Escuela Superior de Guerra, No. 335, pp. 611–648. Mom, M.M. (1958) ‘Guerra Revolucionaria: El Conflicto Mundial en Desarrollo’. Revista de la Escuela Superior de Guerra, No. 331, pp. 641–664. —— (1959) ‘Guerra Revolucionaria: Causas-Proceso-Desarrollo’. Revista de la Escuela Superior de Guerra, No. 334, pp. 489–515. Nougués, J. (1960) ‘Características Generales de las Operaciones en Argelia’. Revista de la Escuela Superior de Guerra, No. 337, pp. 174–204. —— (1962) ‘Radioscopia Subversiva en la Argentina’. Revista de la Escuela Superior de Guerra, No. 344, pp. 24–43. Orfila, J.R. (1962) ‘Del Proceso Salán, ¿Surgen Experiencias asimilables al Mando Militar Actual?’ Revista de la Escuela Superior de Guerra, Nos 345–346, pp. 174–199. Picciuolo, J.L. (1996) ‘La Escuela Superior de Guerra después de la Revolución de 1930 y hasta Mediados del Siglo XX’. Revista de la Escuela Superior de Guerra, No. 523, pp. 9–35. Sánchez de Bustamante, T.A. (1960) ‘La Guerra Revolucionaria’. Revista de la Escuela Superior de Guerra, No. 339, pp. 602–614.

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22 Para-state crime and plural legalities in Colombia Thomas MacManus and Tony Ward

In this chapter we use the example of Colombia to illustrate the complex and fluid nature of law, ‘the state’, ‘civil society’ and their relations to organized violence. Throughout the history of Colombia, the legally constituted state has rarely been able to exercise an effective monopoly of the organized use of force within its territory. Since ‘La Violencia’, the civil war of the late 1940s and early 1950s between the republic’s two major political factions, portions of Colombian territory have been controlled by guerrilla forces opposed to the state – and arguably constituting de facto states with their own legal systems – while the state has partially delegated the delivery of organized violence to paramilitary forces, sometimes referred to as the paraestado, or para-state. In this context, what is ‘state’ or anti-state, crime or crime control, is often an ambiguous issue.

Development of paramilitary groups: self-defence to ‘Bacrim’ Collusion between paramilitaries and state security forces in the worst human rights violations has long been a well-documented feature of the Colombian situation (see e.g. Rochlin 2007; Crandall 1999; Arvelo 2006). Hristov (2009) argues that the death squads and paramilitaries are an ‘essential but unofficial and illegal’ part of the Colombian state’s ‘coercive apparatus’. Richani (2013) argues that Colombia’s long history of political violence is rooted in the chronic failure of the state to establish itself as a legitimate arbiter of disputes over landownership. The immediate origins of both the guerrilla and paramilitary forces may be traced to the early 1960s, in the aftermath of La Violencia. The rival factions formed a power-sharing arrangement known as the National Front, but were faced with a number of peasant self-defence groups and ‘independent republics’ who accepted neither the new political order nor the increased concentration of land in large commercial farms (Brittain and Petras 2010: 8–12). The state’s response, financed and masterminded by US military advisers, was ‘Plan Lazo’, which involved both a conventional military offensive and the deployment of ‘self-defence’ militias to collect intelligence on rebels and their support networks, and to join the military in combating the insurgency (Zárate-Laun 2001). Guerrillas in the ‘independent republics’ and their Communist Party allies responded by forming the Fuerzas Armadas Revolucionarias de Colombia – Ejército del Pueblo (Revolutionary Armed Force of Colombia – Popular Army) (FARC – EP or ‘FARC’) in 1964. 320

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‘Civil patrols’, equipped with weapons normally reserved for the armed forces, were authorized by government Decree in 1965 (Stokes 2005). Since that time, such ‘auxiliary forces’ have formed an essential part of a counterinsurgency strategy ‘which has primarily focused on undermining what they perceive to be the civilian population’s support for the guerrilla’, by attacking and stigmatizing their alleged sympathizers ‘such as human rights defenders, peasant farmer leaders, trade unionists and other social activists, and civilian communities living in areas with a guerrilla presence’ (Amnesty International 2005: 3). Local economic elites and politicians have ‘at best tolerated and at worst supported’ the army’s creation of civilian ‘self-defence’ groups, finding them useful in clearing land of unwanted peasants, resolving labour disputes by employing anti-union terror, and eliminating political opponents and nascent social movements (ibid.: 4; Crandall 1999). Paramilitary forces were also created and funded by the ‘narco-bourgeoisie’ in guerrillacontrolled areas, who resented the guerrillas’ imposition of revolutionary taxes and a relatively equitable allocation of profits between the peasant growers of coca and the cocaine exporters (Brittain and Petras 2010). These landowners recruited and armed their own local paramilitary forces to rid their areas of guerrilla influence (Crandall 1999: 228). In 1981, Muerte a Secuestradores (Death to Kidnappers, ‘MAS’) was established by an alliance of interests, including large-scale illegal drug traffickers and businessmen, ‘a foreign oil company’ (González 2004: 13), ranchers and politicians (LeGrand 2003). Although ostensibly targeting guerrillas who kidnapped traffickers and their relatives, their activities quickly spread to ‘persecuting innocent civilians, including independent journalists, human rights defenders, judges, and labor unionists who denounced their actions’ (González 2004: 13). The 1965 decree authorizing civil patrols, later reformulated as Law 48 of 1968, remained in effect until 1989 when it was revoked as a result of international pressure and also in response to the massacre of a judicial commission investigating murders by paramilitary groups (Porch and Rasmussen 2008; Tate 2009). Landowners and sections of the military continued to support paramilitary activities (Avilés 2006a) and they were soon legalized again. In February 1994, the government issued Decree 356, establishing Servicios Especiales de Vigilancia y Seguridad Privada (special services of vigilance and security) and allowed the Ministry of Defence to assist anyone to provide for his or her own security (Avilés 2006b). In September 1994, President Samper’s administration authorized the creation of the Community Associations of Rural Vigilance/Surveillance (Asociaciones Comunitarias de Vigilancia Rural (CONVIVIR)) on the basis of Decree 356. These organizations ‘would ostensibly be limited to a “defensive function”, supporting the armed forces with intelligence about local communities’ (Avilés 2006a: 397). In 1997, faced with growing evidence that CONVIVIR groups, some of which were old paramilitary groups in a new guise, were implicated in serious human rights violations, the Constitutional Court ruled that issuing restricted weaponry to civilians and CONVIVIR groups was unconstitutional (Amnesty International 2005). Following this ruling, most of the existing groups were unified under the umbrella of the Autodefensas Unidas de Colombia (AUC) (Hristov 2010). Paradoxically, the loss of legal status led to the rise of an organization that could control a large territory and assume ‘an open state-like form’, funded by taxing peasants, landowners and businesses, including multinational corporations (Löfving 2009: 162). Under the hardline government of former President Alvaro Uribe (2002–2010), the AUC agreed to disband because, as two of its leaders explained in interviews with Richani, Uribe’s adoption of their key political objectives took away their reason to exist (Richani 2013: 225). By 2008, the Colombian government claimed that more than 31,000 paramilitary combatants had been demobilized and that continuing violence was the work of criminal gangs in the illicit narcotics industry. It seems clear, however, that much of the AUC’s personnel (Richani (2013) 321

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estimates over 40 per cent) and mid-level command structure remained active under a variety of new names. Amnesty International (2010, 2011, 2012) reported an increasing level of threats to civil society, ‘social cleansing’ killing of civilians, and collusion with security forces: The government claimed that violence attributed to these groups was solely drug-related and criminal in nature. However, the tactics employed by these groups to terrorize the civilian population, including death threats and massacres, reflected those used by paramilitary groups prior to demobilization. (Amnesty International 2010) More recently, the government has been at pains to present the groups in a different light, devoid of ideological motivation, and has promulgated a decree describing the ‘Bacrim’ (bandas criminales emergentes) as armed groups that converge in strategic zones of narcotics trafficking and engage solely in criminal activity, without any sort of political ideology (Decree 2374 of 2010). Others, including the NGOs Conflict Analysis Resource Centre and Nuevo Arco Iris, prefer to call these groups ‘neo-paramilitaries’, while the Toledo Centre for Peace calls them ‘armed postdemobilization structures’ (Massé et al. 2010). According to Amnesty International (2013), the so-called Bacrim have been responsible for: serious human rights violations, including killings, enforced disappearances and ‘social cleansing’ operations in poor urban neighbourhoods. Some were committed with the collusion or acquiescence of the security forces. The victims were mainly trade unionists and human rights defenders, as well as representatives of Indigenous Peoples and Afro-descendent and peasant farmer communities. (Amnesty International 2013: 66)

Parapolitics and the Judiciary The Colombian state is far from monolithic, and some prosecutors and judges have made determined efforts to challenge the links between the state and the political elite, commonly referred to as ‘parapolitics’ (parapolitica). In 2006, computers seized from a demobilized paramilitary warlord revealed the existence of a secret pact between paramilitaries and politicians to ‘refound’ the motherland (López Hernández 2010). In 2007, the Office of the Procurator General accused a former director of DAS (Departamento de Administración de Seguridad) of being linked with paramilitary groups and set up an investigation into links between public servants and paramilitaries (Amnesty International 2007). In November 2007, the Supreme Court ordered the arrest of three congressmen for links to paramilitary groups, including Álvaro García Romero, ‘for allegedly ordering the massacre by paramilitaries of some 15 peasant farmers in Macayepo, Bolívar Department in 2000’ (ibid.). Mario Uribe, cousin and ‘close political companion’ (Brodzinsky 2008) to President Alvaro Uribe, was arrested for having links to paramilitary groups in 2008. By 2012, 45 congressmen and seven governors had been convicted for their use of paramilitary intimidation to get elected and a further 140 former congressmen had investigations pending against them, while, according to the Prosecutor General’s Office, ‘more than 11,000 politicians, officials and businessmen are suspected of having made pacts with the AUC’ (Alsema 2012). Rafael García, a former senior officer of DAS, alleged that DAS had (for three years) worked in ‘extremely’ close contact with several paramilitary groups. García revealed that DAS had provided paramilitaries with lists of union leaders and academics, who were subsequently threatened or killed; collaborated with the paramilitaries to carry out electoral fraud which resulted in 300,000 322

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additional votes for Uribe; and collaborated with paramilitaries in a plot to assassinate several Venezuelan leaders, including Hugo Chavez (Human Rights Watch 2006). In January 2011, the Office of the Attorney General charged seven senior DAS officials with ‘illegal wiretapping and membership of paramilitary groups’ (Amnesty International 2011). In September 2012, former DAS director Jorge Noguera was sentenced to 25 years for the murder of academic Alfredo Correa de Andreis and for ‘links to paramilitary groups’ (Amnesty International 2012). On 31 October 2011, DAS was abolished and replaced by the National Intelligence Directorate (Hinchliffe 2011; Amnesty International 2012). In 2009 the Constitutional Court struck down parts of the ‘Justice and Peace’ (Justicia y Paz) law (975 of 2005), which allowed paramilitaries to serve reduced penal sentences if they surrendered and agreed to confess to human rights violations (Amnesty International 2008). Those not accused of human rights violations would in effect have been amnestied. The Constitutional Court held that this was contrary to the right to truth, justice and reparation. In response, Congress passed a new law under which paramilitaries could receive de facto amnesties if they signed the ‘Agreement to Contribute to the Historic Truth and Reparation’ (Amnesty International 2011). This law was upheld by the Constitutional Court (Amnesty International 2012).

Shadow states and alternative legal systems When both the AUC and the FARC were at their peak in the 1990s and early 2000s, they could both be characterized as ‘shadow states’ (Hunt 2006), exercising state-like power without the international recognition or much of the physical infrastructure of a formal state. Both controlled substantial amounts of territory within which they levied ‘taxes’ on the drugs trade and the conventional economy, and both sought public support on the basis of their ability to create a degree of social order that the state was unable to provide. Although the FARC controls much less territory than in the past and has had to revert to a strategy of dispersed guerrilla combat (Richani 2013: 211), and despite the supposed demobilization of the AUC, this remains at least partly true today. ‘All violence as a means is either lawmaking or law-preserving,’ wrote Walter Benjamin (1986); ‘If it lays claim to neither of these predicates, it forfeits all validity.’ In other words, anyone who claims some kind of entitlement to use violence either purports to act on behalf of an existing legal order, or their violent act initiates a new legal order in defiance of the state’s monopoly of violence. León (2009) argues that ‘[i]n many parts of Colombia, democracy is a hollow word, and the only real justice is the one guerrillas or paramilitaries mete out’. Both the guerrillas and the paramilitaries have shown a predilection for dramatic, ‘lawmaking’ acts or threats of violence. In one of the narratives by displaced people that make up Alfredo Molano’s The Dispossessed, a farmer describes being summoned with other farmers to a meeting with guerrillas, who told them that drugs, informants or ‘criminals’ would not be tolerated. ‘Anyone who breaks our law will get two chances before we kill him or her. The first, to correct their mistake. The second, to go. The third is the end’ (Molano 2005: 90). According to Brittain (2010: 214) this ‘three-strike’ policy is characteristic of the FARC, but their penal repertoire is not limited to expulsion or death: they also impose restitution of stolen property, and forms of community service, which a member of FARC’s secretariat explained as being designed to combat individualism and show offenders ‘that the community is part of them’ (ibid.). Brittain described the FARC as establishing ‘communal judicial bodies’ and ‘unarmed police forces’ (2010: 215) to uphold its ‘Rules of Coexistence’. These Reglas de Convivencia ‘stipulate laws and sanctions regarding issues such as carrying arms, fishing and hunting, working hours, liquor consumption, prostitution, [intra-family] violence, drug abuse, and cutting trees’ (Richani 2013: 85). 323

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In establishing set rules, judicial processes with elements of ‘restorative justice’ and a graded repertoire of sanctions, the FARC goes further than the paramilitaries towards mimicking the penal apparatus of a liberal state. Taussig notes that the precursors of the FARC, the ‘independent republics’ established by leftist guerrillas during La Violencia, created elaborate legal codes couched in ‘impeccably statist and bureaucratic’ language (2003: 92), whereas the bureaucratization of paramilitary justice took the simpler form of death lists carried on laptops. The military organization of the FARC is also much more bureaucratic and disciplined than that of the paramilitaries (Sanín 2008). The relatively legalistic character of the FARC may reflect its political ideals, but also the fact that it has a greater need than the paramilitaries to arbitrate between conflicting interests. While the paramilitaries operate fairly straightforwardly in the interests of the state, landowners, the ‘narco-bourgeoisie’ and themselves, the FARC has attempted to create a juridical environment within which the narcotics industry can flourish, while also enforcing concessions to the interests of the peasant farmers who grow the crop (Brittain 2010; Richani 2013). Conflict resolution appears to be crucial to guerrilla legitimacy (Hunt 2006). Taussig (2003) describes a state with two legal systems: the official one characterized by enlightened laws and lenient sentences, and an unofficial one based on assassination. In the town he studied, the police in the 1980s and 1990s ‘were visible and clean, but at night it was a different matter. Together with their friends they were killing viciosos, rateros, transvestis (drug addicts, thieves and transvestites)’, among others. Along with revenge killings by civilians, this ‘was the real criminal justice system, and everyone knew about it except me’ (Taussig 2003: 67). These murders, he argues, prepared the ground for the intervention by the paramilitaries in 2001, who were widely perceived to have been invited by local businesspeople, politicians and/or the police, to conduct a limpieza (cleansing) in the town. Their campaign of terror and murder appeared to Taussig to command considerable support from rich and poor alike. And apparently it worked. In July 2002, 17 months after the paramilitaries arrived in town, they ‘were killing two or three “delinquents” a week’ and the army intelligence service was also suspected of involvement in many murders. There was no longer any sign of vandalism, disputes in the streets or strikes; and the central plaza was ‘full of smart new yellow taxis . . . for businessmen and engineers travelling to the new factories in the tax-free industrial park’ (Taussig 2003: 188–189). In conventional criminological terms, the limpieza seems to have been a successful exercise in general deterrence and selective incapacitation.

Outside the state? The peace community of San José de Apartadó CODHES (2011) estimates that over 5,200,000 people were forcibly displaced in Colombia between 1985 and 2011. Paramilitary groups are the ‘primary force responsible for displacement’ (García-Godos and Lid 2010: 491), which usually takes place in areas with fertile land or valuable natural resources (Hristov 2009: 76). One such area is the land surrounding the Comunidad de Paz de San José de Apartadó (‘Peace Community’). The Peace Community comprises a group of settlements that refuse to take sides in the armed conflict, seeking to run their own affairs independently of the state, the guerrillas or the paramilitaries. This refusal to cooperate with any of the competing systems of violence constitutes another kind of ‘lawmaking’ challenge to sovereignty over the area. The community has suffered enormously at the hands of armed actors, and report that over 200 members have been murdered (interview, Community of Peace, November 2013). In February 2005, eight people ‘were killed by the paramilitaries and the army’, including a 6-year-old girl and an 18-month-old boy (interview, Peace Community, November 2013). In 2008, the Attorney General Office investigated 69 soldiers for the killing. In November 2008, an 324

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army captain was arrested for his role in the massacre (Amnesty International 2008). However, the Peace Community is still under threat from the military-paramilitary complex. On 21 July 2014, a government soldier reportedly stated that ‘the time has arrived for that son-of-a-bitch Peace Community, we are coordinating with the paramilitaries for the extermination of that son-of-a-bitch Peace Community’ (Amnesty International 2014). The community leaders feel that the paramilitaries have filled a vacuum left by the state in their territory: ‘there’s a [paramilitary] control of the social, economic and political contexts here in the region’ (interview, Peace Community, November 2013). In the absence of the state, the Peace Community has taken on the day-to-day running of their community: internally we are extremely autonomous, we have our own laws and we have our own internal structure, so if someone from the community commits a mistake regarding our process, we look at how to deal with that. The internal standards we have are not giving information to any of the armed actors, not using weapons, having neutrality . . . we say no to illicit crops – and the reparation of victims. . . . The principles that the peace community at San Jose Apartadó have are of great importance, these principles were created in 1997 and we saw that if we were with the army, or the paramilitaries or the guerrillas, that the others would kill us. If we were with the army, the guerrillas would come in, if we were with the guerrillas, the paramilitaries of the army would come in. (Interview, Peace Community, November 2013) As to whether they were interested in receiving health, education, and other services that are normally provided by the state, ‘it doesn’t really matter, because they’ve never fulfilled them anyway’ (interview, Peace Community, November 2013). Describing what happens if someone does something against the principle of the Community: The person is talked to . . . three times, and if in that three times the person isn’t willing to make a commitment to not continue that activity then they’re removed from the community. Only one person has left the community, because of illicit crops . . . we had to tell the person to leave, that they couldn’t be a part of the community anymore . . . illicit crops have brought us too many problems, the government was using that as a way of taking away people’s land, taking away community land and it’s not just something that we can accept. (Interview, Peace Community, November 2013) Interestingly this approach somewhat resembles that of the FARC described earlier, but without the death threats.

Human rights and civil society Reflecting on the violence of the 1990s, the Colombian philosopher Luís Alberto Restrepo Moreno articulates a position which resonates with our own approach to state crime (Restrepo 2001; cf. Green and Ward 2000). The state, the paramilitaries and the government alike, he argues, all seek legitimacy for their use of violence; but they can achieve legitimacy only by respecting human rights, conceived of not in terms of international law but rather as a minimal ethical code for human coexistence. The task of determining how far they comply with this code falls to civil society. Much as we sympathize with this position, it faces an obvious objection. If by civil society is understood those associations, substantially independent of the state and other agents of organized 325

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violence, that seek to articulate some form of ‘public opinion’, then there is no guarantee that the criteria of legitimacy it articulates will coincide with any reasonable definition of human rights. Payne (2000) argues that ‘uncivil movements’, defined as ‘political groups within democracies that employ both civil and uncivil political action to promote exclusionary politics’ (Payne 2000: 1), rely heavily on the ability to garner broad public support for their cause. In order to achieve public acceptance, paramilitaries have engaged with the technologies and structures of civil society: Despite their criminal activities and brutal record, paramilitary leaders have learned to harness the persuasive power of new technologies, including the Internet, and organizational forms traditionally used by the left, such as creating NGOs, sponsoring peace marches, and developing foundations. (Tate 2009: 130) The paramilitary ‘self-defence’ group Asociación de Ganaderos y Campesinos del Magdalena Medio (ACDEGAM) – long reported to have strong links to both paramilitary groups and narcotraffickers (Semana 1989) – spawned the political party Movimiento de Restauración Nacional (MORENA) (Hristov 2009) in 1989. MORENA was established by Ivan Roberto Duque, secretary general of ACDEGAM, with Armando Valenzuela Ruiz and Fernando Vargas (Fernández Andrade 2002). DAS has since uncovered evidence of MORENA’s involvement in assassinations, terrorism and weapons possession (Hristov 2009). The Nazi group Movimiento Tercera Fuerza called Armando Valenzuela Ruíz a ‘bastion for the national socialist struggle’ (‘valuarte [sic] para la lucha nacionalsocialista’) (Coronell 2013). Fernando Vargas, a ‘self-proclaimed’ spokesman for the victims of guerrillas, alleged Nazi sympathizer and former adviser to the army, launched the first of the right-wing NGOs – Comité Nacional de Víctimas de la Guerrilla (VIDA) (Coronell 2013) – which proceeded to actively condemn ‘the activism and research carried out by Colombian human rights NGOs’ (Tate 2009: 112) in the media, while not carrying out any substantial projects. While uncivil movements like MORENA should arguably be excluded by definition from the concept of ‘civil society’, both sides in the ideological struggle seek to link their opponents to illicit violence and thereby place them beyond the pale of civil society. The stigmatization and criminalization of civil society by the state in Colombia has been a fact of life for decades. The use of anti-terror law is most pronounced against the leftist civil society organizations. On the left, the recently founded Marcha Patriótica (MP) was formed at the behest of a Communist Party senator (among others). MP includes many ‘survivors’ of the Unión Patriótica, the political party launched by FARC in 1985 under a peace deal with the government, and decimated within a few years by paramilitary assassinations (Dudley 2004); but the echoing name is described by the organization as ‘simply a coincidence’ (interview, Marcha Patriótica, August 2014). However, in 2012, the Colombian Defence Minister, Juan Carlos Pinzon, accused the FARC of financing MP (CARACOL 2012). To date, about 350 members of MP have being prosecuted, and about 50 have been murdered (interview, Marcha Patriótica, August 2014). Despite the difficulties facing civil society, a vital part in resisting and exposing human rights abuses is undoubtedly played by NGOs such as CINEP (Centre for Popular Research and Education) and the Jose Alvear Restrepo Lawyers’ Collective (CAJAR).These groups have a complex, fluctuating relation with the state: With Turbay [President 1978–1982], we were complete enemies because there was a lot of repression. We were respected by certain governments because we were like an informative organisation; serious work and serious investigations . . . Uribe we were completely against. 326

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Because basically every single struggle relating to human rights was seen as work related to guerrillas. President Uribe never accepted that there was actually an internal struggle. (Interview, CINEP, September 2013) CAJAR reported that: There are different levels of interlocution or communication and relationships. We don’t consider ourselves an organization that’s against the state, but we have a fundamental focus of representing victims: victims that were affected by human rights violations, committed by state actors. So we have a lot of different kinds of communication with the state. We talk with all the ministries, the Ministry of Health, the Ministry of Defence, we talk with the Presidency, we talk with the institutions of control . . . Human Rights Ombudsman offices . . . and also smaller institutions like the governors, the mayorships . . . but with other institutions . . . there’s a very strong level of tension, especially with Ministry of Defence. (Interview, CAJAR, December 2013) Note that this organization sees its remit as being human rights violations by state actors. The hostility of the paramilitaries to human rights has made any serious dialogue unlikely: I remember during the paramilitary takeover of certain regions in the country you couldn’t say anything about human rights . . . if anything was said around human rights it would have to be because it was Leftist or associated with the guerrilla. When I went to work in the Maria Magdalena, on the one hand we were getting funding from the European Union to do human rights work, but we could never say that when we actually carrying out the work. We had to say we were working on strengthening the relationship between organisations and building a better environment to live together. But we couldn’t say ‘human rights’. . . . It’s funny, it’s ironic, because the constitution which was re-written in 1991, is one of the most progressive constitutions in Latin America and has lots of things about human rights. (Interview, CINEP, November 2013) What an NGO comes to define as a human rights violation is the result of a complex organizational process. This is particularly evident in the case of CINEP, which was established by the Jesuits, and where the founder, Father Giraldo, remains very much in charge: We receive cases from databases around the country, and the people who run these databases have been trained by CINEP to collect the data. They classify them according to the human rights (civil only [i.e. not social, economic, etc.]) violations, determine whether it’s a single case or multiple cases; whether it’s kidnapping, torture or a massacre. The second step of classification is to determine whether it is a violation of human rights or international humanitarian law. (Interview, CINEP, November 2013) Any abuse by the guerrillas is likely to be classified as a ‘violation of international humanitarian law’, as CINEP legalistically insists that human rights violations can only be committed by state actors (interview, CINEP, November 2013). The third step is that: CINEP then decides what’s going to be published and they distribute reports to local offices for feedback – they all have the CINEP handbook for this purpose. The fourth step: the 327

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whole report is reviewed by Father Giraldo, who decides whether it will be published or not. He has been making these decisions for 25 years. The whole process takes about a month. (Interview, CINEP, November 2013)

Conclusion It is not easy for criminologists to study a country in which illegal organizations form an integral part of the coercive apparatus of the state; in which murder by armed gangs is a form of crime control; and in which guerrillas kidnap and murder civilians but also maintain some of the trappings of a liberal penal system. Distinctions between crime and crime control, between state and non-state actors, and between political violence and common criminality are elusive in Colombia – although Colombia is hardly alone in that respect. Colombia may be seen as containing a plurality of legal and normative systems and state-like structures, in the sense of agencies that coercively impose some set of rules and some form of order within a territory (and in some cases also levy taxation and/or provide public services). Within these orders that are in a broad sense ‘legal’ there is a wide spectrum of degrees of legality, in the sense of conformity to the ‘rule of law’ – relatively clear, open and stable rules (Raz 1979, ch. 11), and relatively consistent, open and accurate procedures for establishing violations and authorizing sanctions. There are also varying degrees of legitimacy, in the sense of popular consent and adherence to a conception of human rights (Ward and Green 2000). In these terms, the Peace Community of San José perhaps comes closest to operating a fully legitimate, though informal, legal system, with the paramilitaries and their successors farthest away, while various elements of the official state and the guerrillas occupy a range of positions in between. Civil society organizations such as CINEP also play an important ‘policing’ role, in the sense that they supply what is often the most effective available ‘fact-finding’ procedure in relation to breaches by state agencies of national or international law, although they lack any formal power of sanction. This way of thinking about law and crime is, of course, indebted to the tradition of legal pluralism in anthropology and socio-legal studies (see e.g. Merry 1988). We have no space to explore that literature here, but we suggest that an engagement with legal pluralism could make a significant contribution to understanding the crimes of the powerful.

References Alsema, A. (2012) ‘Parapolitics Scandal’, Colombia Reports Fact Sheet, 5 July 5. Available at: www. colombiareports.co/parapolitics/ (accessed July 2014). Amnesty International (2005) ‘The Paramilitaries in Medellin: Demobilization or Legalization?’ Available at: www.amnesty.org/en/library/asset/AMR23/019/2005/en/1f14c436-d4d5-11dd-8a23-d58a49c 0d652/amr230192005en.html (accessed July 2014). Amnesty International (2007) Annual Report 2007. Available at: www.amnesty.org/en/region/colombia/ report-2007 (accessed July 2014). Amnesty International (2008) Annual Report 2008. Available at: www.amnesty.org/en/region/colombia/ report-2008 (accessed July 2014). Amnesty International (2009) Annual Report 2009. Available at: www.amnesty.org/en/region/colombia/ report-2009 (accessed July 2014). Amnesty International (2010) Annual Report 2010. Available at: www.amnesty.org/en/region/colombia/ report-2010 (accessed July 2014). Amnesty International (2011) Annual Report 2011. Available at: www.amnesty.org/en/region/colombia/ report-2011 (accessed July 2014). Amnesty International (2012) Annual Report 2012. Available at: www.amnesty.org/en/region/colombia/ report-2013 (accessed July 2014). 328

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Amnesty International (2013) Annual Report 2013.Available at: www.amnesty.org/en/region/colombia/ report-2013 (accessed July 2014). Amnesty International (2014) Armed Forces Threaten Peace Community, Urgent Action Document – Colombia, UA: Amnesty International Index Number: AMR 23/027/2014, July 24. Arvelo, J.E. (2006) ‘International Law and Conflict Resolution in Colombia: Balancing Peace and Justice in the Paramilitary Demobilization Process’. Georgetown Journal of International Law, 37: 411. Avilés, W. (2006a) ‘Paramilitarism and Colombia’s Low-intensity Democracy’. Journal of Latin American Studies, 38(2): 379–408. Avilés, W. (2006b) Global Capitalism, Democracy, and Civil – Military Relations in Colombia. Albany: State University of New York Press. Benjamin, W. (1986) ‘Critique of Violence’. In P. Demetz (ed.) Reflections. New York: Schoken. Brittain, J. (2010) Revolutionary Social Change in Colombia: The Origin and Direction of the FARC-EP. New York: Pluto Press. Brodzinsky, S. (2008) ‘Colombia’s “Parapolitics” Scandal Casts Shadow over President’. Guardian, April 23. CARACOL (2012) Marcha Patriótica es financiada por las Farc: Mindefensa, August 9, 2012. Available at: www. caracol.com.co/noticias/judiciales/marcha-patriotica-es-financiada-por-las-farc-mindefensa/20120809/ nota/1741884.aspx (accessed August 2014). CODHES (2011) ‘De la seguridad a la prosperidad democrática en medio del conflicto’. Documento 23. Bogotá: CODHES. Coronell, D. (2013) ‘La huella nazi: Los nazis del movimiento Tercera Fuerza usan la esvástica y la cruz solar para identificarse’. Semana. Available at: www.semana.com/opinion/articulo/la-huella-nazi/342869-3 (accessed August 2014). Crandall, R. (1999) ‘The End of Civil Conflict in Colombia: The Military, Paramilitaries, and a New Role for the United States’. SAIS Review, 19(1): 223–237. Dudley, S. (2004) Walking Ghosts: Murder and Guerrilla Politics in Colombia. London: Routledge. Fernández Andrade, E.M. (2002) El narcotráfico y la descomposición politica y social: el caso de Colombia. Mexico City: Plaza y Valdes. García-Godos, J. and Lid, A.O.K. (2010) ‘Transitional Justice and Victims’ Rights Before the End of a Conflict: The Unusual Case of Colombia’. Journal of Latin American Studies, 42(3): 487–516. Giraldo, J. (1996) Colombia: The Genocidal Democracy. Monroe. Maine: Common Courage Press. González, F. (2004) ‘Conflicto Violento En Colombia: Una Perspectiva de Largo Plazo’. Controversia: 10–17. Guáqueta, A. (2009) ‘The Way Back: Reintegrating Illegal Armed Groups in Colombia Then and Now’. In M. Berdal and D. Ucko (eds) Reintegrating Armed Groups After Conflict: Politics, Violence and Transition. London: Routledge. Hinchliffe, T. (2011) ‘Colombia Introduces new National Intelligence Agency’. Colombia Reports. Available at: colombiareports.co/colombia-replaces-das-with-new-national-intelligence-agency/ (accessed September 2014). Hristov, J. (2009) Blood and Capital: The Paramilitarization of Colombia. Athens: Ohio University Press. Hristov, J. (2010) ‘Self-defense Forces, Warlords, or Criminal Gangs? Towards a New Conceptualization of Paramilitarism in Colombia, Labour’. Capital and Society, 43(2): 13–56. Human Rights Watch (2001) ‘The ‘Sixth Brigade: Military – Paramilitary Ties and U.S. Policy in Colombia’. Available at: www.hrw.org/reports/2001/colombia/ (accessed July 2014). Human Rights Watch (2006) ‘NOTICIAS, Colombia: Uribe Must End Attacks on Media, 17 April 2006’. Available at: www.hrw.org/es/news/2006/04/16/colombia-uribe-must-end-attacks-media (accessed July 2014). Hunt, S. (2006) ‘Languages of Stateness: A Study of Space and el Pueblo in the Colombian State’. Latin American Research Review, 41(3): 88–121. LeGrand, C.C. (2003) ‘The Colombian Crisis in Historical Perspective’. Canadian Journal of Latin American and Caribbean Studies, 28(55/56): 165–209. León, J. (2009) Country of Bullets: Chronicle of War. Albuquerque: University of New Mexico Press. Löfving, S. (2009) ‘Paramilitaries of the Empire: Guatemala, Colombia, and Israel’. In B. Kapferer (ed.) State, Sovereignty, War: Civil Violence in Emerging Global Realities. Oxford: Berghahn Books. López Hernández, C. (2010) Y refundaron la patria: De cómo mafiosos y políticos reconfiguraron el Estado colombiano. Bogotá: Random House Mondadori. Massé, F., Munévar, J., Vanegas, E. and Renán, W. (2010) La Evolución de las Estructuras Armadas Post-desmovilización: Pasado, Presente y Futuro. Madrid: Centro Internacional de Toledo para la Paz. Merry, S.E. (1988) ‘Legal Pluralism’. Law and Society Review, 22(5): 869–896. 329

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Michael, R.P. (1992) ‘Wanted: Criminal Justice. Colombia’s Adoption of a Prosecutorial System of Criminal Procedure’. Fordham International Law Journal, 16(3): 608–634. Molano, A. (2005) The Dispossessed: Chronicles of the Desterrados of Colombia. Chicago, IL: Haymarket. Payne, L.A. (2000) Uncivil Movements: The Armed Right Wing and Democracy in Latin America. Baltimore, MD: Johns Hopkins University Press. Porch, D. and Rasmussen, M.J. (2008) ‘Demobilization of Paramilitaries in Colombia: Transformation or Transition?’ Studies in Conflict and Terrorism, 31(6): 520–540. Raz, J. (1979; 2nd edn 2009) The Authority of Law. Oxford: Oxford University Press. Reilly, K.C. (2008) ‘Colombia: The 2008 Extraditions and the Search for Justice’. University of Notre Dame, Center for Civil and Human Rights, Working Paper No. 3, winter. Restrepo, M.L.A. (2001) ‘The Equivocal Dimensions of Human Rights in Colombia’. In C. Bergquist, R. Peñaranda and G. Sánchez (eds) Violence in Colombia 1990–2000: Waging War and Negotiating Peace. Wilmington: Scholarly Resources. Richani, N. (2013) Systems of Violence: The Political Economy of War and Peace in Colombia (2nd edn). Albany: State University of New York Press. Rochlin, J.F. (2007) Social Forces and the Revolution in Military Affairs: The Cases of Colombia and Mexico. New York: Palgrave Macmillan. Sanín, F.G. (2008) ‘Telling the Difference: Guerrillas and Paramilitaries in the Colombian, War’. Politics and Society, 36(1): 3–34. Semana (1989) ‘“Morena” Se Destapa: La extrema derecha pide pista electoral’. Semana, September 11. Semana (2003) ‘Habla Mancuso’. Semana, August 11. Semana (2004) ‘¿Con quien se esta negociando?’ Semana, June 13. Stokes, D. (2005) America’s other War: Terrorizing Colombia. London: Zed Books. Tate, W. (2009) Counting the Dead: The Culture and Politics of Human Rights Activism in Colombia. Oakland: University of California Press. Taussig, M. (2003) Law in a Lawless Land: Diary of a Limpieza in Colombia. London: University of Chicago Press. Ward, T. and Green, P. (2000) ‘Legitimacy, Civil Society and State Crime’. Social Justice, 27(4): 76–93. Zarate-Laun, C. (2001) ‘Colombia: Closing the Circle of Violence’. Against the Current, 95 November 22. Available at: www.solidarity-us.org/site/node/1019 (accessed January 31, 2015).

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23 Australian border policing and the production of state harm Michael Grewcock

Introduction We have here an environment that is inherently toxic. . . . If we take the definition of torture to be the deliberate harming of people in order to coerce them into a desired outcome, I think it does fulfil that definition. Peter Young, former Director of Mental Health for Australia’s immigration detention centres (quoted in Marr and Laughland 2014) Are the conditions bad? Absolutely . . . I could write endlessly about the heroism I’ve witnessed and feats of individual triumph, or about the shocking and traumatic events I witnessed. However, what is most troubling is that we are intentionally harming ordinary people – taking away their freedoms, rights and dreams. Ai-Lene Chan, GP, who worked at Nauru and Christmas Island immigration detention centres (Chan and Kerridge 2014)

For the past 25 years, successive Australian governments have implemented a criminogenic border policing regime that, as the above quotes indicate, has resulted in systemic human rights abuses against thousands of innocent people. While this regime applies to any person without a visa, its main target is the unauthorized refugee typically seeking entry to Australia by boat from transit states such as Indonesia and Malaysia, in order to claim protection in accordance with Australia’s obligations as a signatory to the 1951 UN Refugee Convention. As I have discussed elsewhere (Grewcock 2009), Australia’s attempts to prevent and deter so-called boat people from seeking asylum form part of a broader pattern of exclusion by developed states of refugees from the developing world. However, Australia’s policies represent the front line of this offensive and are characterized by practices that thus far remain unique.1 The cornerstone of Australia’s regime is a policy of mandatory detention introduced in 1992 for any person categorized as an unauthorized non-citizen.2 Under this policy, asylum seekers who arrive without a visa become liable to indefinite detention while a decision on their status as a refugee is made; forced transfer between centers that can be thousands of kilometres apart; and possible permanent removal from Australian territory. Since August 2012, unauthorized asylum seekers have been liable to transfer to Australian funded detention facilities on Nauru and Manus 331

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Island (PNG), where local immigration officials assess their claims for protection. Those determined to be refugees under this process but who were detained after July 2013 are denied any form of resettlement in Australia. Such measures, combined with increasingly militarized interdiction programs designed to physically prevent unauthorized refugees from reaching Australian territory, increase the levels of risk to unauthorized refugees by forcing them to undertake more hazardous journeys; stranding them in precarious living conditions in transit states; or incarcerating them in the highly abusive environments of Australia’s on-shore and off-shore immigration detention network (Weber and Pickering 2011). The determination of Australian governments to deter unauthorized arrivals has institutionalized various forms of malign neglect, if not the deliberate infliction of harm, upon those who have infringed Australia’s border controls. At a minimum, this constitutes entrenched forms of victimization (Ward 2004) but the scale and severity of the regime require that it be understood as a form of state criminality or organizational deviance (Green and Ward 2004) defined by Australia’s multiple breaches of its formal and rhetorical commitments to human rights; the denial of the legitimate expectations of refugees; and the systemic harms inflicted upon them (Grewcock 2009). This chapter provides an overview of this regime and identifies some of the key elements underpinning violent and abusive border policing practices that are normalized as government policy; implemented through routine and arbitrary administrative decisions; enforced by a range of police and military agencies; conducted with limited transparency; and protected by complex lines of accountability. The chapter also discusses how the various forms of resistance deployed by refugees have been crucial to highlighting the deviant and criminal nature of the state’s activities.

The five phases of “border protection” Australian state responses to unauthorized refugees rest on a carefully constructed juxtaposition between national borders (and by implication the social worlds of those encompassed by them) under existential threat from irregular travel; and unauthorized, illegitimate and deviant boat arrivals, whose refusal to wait patiently in a notional (and entirely fictional) queue renders them worthy subjects of the most uncompromising forms of deterrence. This paradigm is deeply entrenched within mainstream politics with both the major political parties – the Liberal National Party Coalition and the Australian Labor Party – promoting variations of it as a means of validating their own political authority. Thus, the Coalition successfully fought the 2013 federal election on a four-point platform that included “Stopping the Boats”; while in 2012 and 2013 the incumbent Labor government reintroduced the current framework for off-shore detention and processing in an attempt to neutralize vociferous attacks from the Coalition and much of the media that it was “losing control of the borders” (Grewcock 2014). This reflected a pattern of bipartisan support in the Parliament for those measures designed to disrupt and deter unauthorized refugees with the differences between the two major parties being inflated for electoral purposes around issues of tactics rather than substance. Essentially, there have been five phases to this pattern. First was the period 1992 to 2001, when Australia’s mainland immigration detention network was established on the back of the mandatory detention policy introduced by the Labor government and maintained by the Coalition government after 1996. Typically, detention centers were located in remote locations such as Woomera in central South Australia and Port Hedland in north Western Australia. These centres were often hastily commissioned, with rudimentary facilities that were extensively criticized by Australia’s peak human rights monitoring organizations (i.e. HREOC 1998).

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Second was the period 2001 to 2007, when the Coalition government implemented the “Pacific Solution.” Under this regime, which was introduced following the Australian navy’s refusal to allow a Norwegian merchant vessel, the Tampa, to land in Australian territory after rescuing 438 people from a sinking fishing boat, unauthorized arrivals became liable to forced transfer to Australian-funded detention centers on Nauru and Manus Island in Papua New Guinea. A number of significant off-shore Australian territories on the major routes between Indonesia and Australia, including Christmas Island, were excised from Australia’s migration zone. Those detained on Nauru and Manus Island had their claims processed mainly by Australian immigration department officials; successful applicants were officially to be resettled in states other than Australia, although many were eventually settled in Australia when it became obvious that other states would not take them. Successful applicants detained in Australia were issued only with temporary protection visas, which required holders to reapply after three years, denied them rights to family reunion and severely limited access to welfare and other government-funded services. Conditions within the detention centers continued to be criticized as highly abusive, especially in relation to children (HREOC 2004), and the government began the construction of purposebuilt high-security centers such as Baxter in South Australia and the Christmas Island center 1600 kilometers off the coast of Western Australia (Grewcock 2009; Leach and Mansouri 2004; Marr and Wilkinson 2003; Pickering 2005). Third was the period 2007 to August 2012, when the Labor government formally ended the Pacific Solution and abolished temporary protection visas. Labor’s main strategy, which had minimal success in its own terms, was to develop a “regional solution” that incorporated neighboring states into Australia’s border policing framework; disrupted unauthorized movement by refugees in the region, and facilitated resettlement outside Australia. Labor also opened the Christmas Island Detention Center in 2008 and considerably expanded the detention capacity of Australian detention sites as the numbers of unauthorized arrivals spiked in 2010 to 2012. The fourth phase began in August 2012, when Labor reintroduced off-shore processing following recommendations from an Expert Panel on Asylum Seekers it had appointed to investigate how to reduce the risks of asylum seekers making unauthorized sea journeys. The entire Australian mainland was excised from the migration zone; anyone arriving after 13 August 2012 became liable to detention on Nauru and Manus Island, although initially the hastily reopened facilities did not have sufficient capacity to take them; and were subject to indefinite delays in the processing of their claims according to a “no advantage” principle. Successful applicants remained eligible for resettlement in Australia but were denied rights to family reunion (Grewcock 2014; Isaacs 2014). The fifth and current phase commenced on 19 July 2013, when the newly installed Labor Prime Minister Kevin Rudd announced that no unauthorized refugee arriving after that date would be resettled in Australia. Instead, arrangements were being put in place for Australia to fund resettlement programs in Papua New Guinea and Nauru. In September 2013, the Coalition won office and maintained the off-shore processing and resettlement policy introduced by former Prime Minister Rudd. In September 2014, an agreement was signed with the government of Cambodia to enable resettlement of refugees detained on Nauru, and in December 2014 temporary protection visas were reintroduced for refugees who arrived in Australia before July 2013. After taking office, the Coalition also immediately established the military-led Operation Sovereign Borders under which boats have been forcibly returned to Indonesia and some refugees transferred to purpose-built lifeboats and pushed back. In July 2014, an Australian naval border patrol intercepted a boat carrying 41 Sri Lankan nationals, who were handed back to the Sri Lankan authorities despite being liable to criminal charges. Some 157 Sri Lankan nationals intercepted on a second boat were detained on an Australian Customs vessel on the high seas for 333

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four weeks before being transferred to an Australian detention center and subsequently Nauru after initiating proceedings before the High Court of Australia.3 At the time of writing, the government is claiming that the turn-back strategy has been a great success. Marking the first anniversary of Operation Sovereign Borders, the Minister for Immigration and Border Protection declared: 45 ventures have been stopped before they even set sail . . . and 12 ventures, with 383 people on board, have been turned back at sea. . . . In addition . . . over 1600 potential illegal immigrants have been disrupted in countries including Malaysia, Sri Lanka and Indonesia before they could attempt to travel by illegal boat. (Morrison 2014) The Minister’s boast that almost 2000 people have been forcibly kept out reflected the glib way in which highly coordinated state interventions against potentially vulnerable refugees are presented as a resounding political victory, if not a public good. This is not unique to the current government. The identification of target refugee populations as “potential illegal immigrants” has operated as a legitimizing principle for the various forms of exclusion deployed throughout each of the phases outlined earlier. Common to each of these phases is an approach to refugees that defines their legitimacy according to their travel arrangements rather than their protection needs. Those who fail or are unable to obtain a visa at their point of departure are alienated through Australian domestic law as non-citizens devoid of more universal rights to protection; criminalized through the use of detention and their association with illicit forms of travel; and subjected to multiple forms of abuse through detention and other measures. For the Australian state, the authentic refugee is a person who is resettled entirely on terms set by the Australian government rather than a person who has sought protection by any means available. This not only undermines the basic philosophy underpinning the 1951 Refugee Convention, which explicitly prohibits the penalization of those who cross a border unlawfully in order to claim protection,4 but also entrenches popular perceptions of the refugee as an undesirable individual in need of management (Agier 2011) – a subject requiring uncompromising state control and deterrence.

The normalization of abuse The normalization of arbitrary detention since 1992 has been sustained by the legal and administrative imperatives to detain unlawful non-citizens and the development of an extensive policing and detention infrastructure. Australia’s immigration detention complex has evolved into a multilayered system comprising centers throughout Australia; on the Australian territory of Christmas Island; and on the independent Pacific states of Nauru and Papua New Guinea (PNG). Private companies contracted by the Australian government operate all of these centers but the Nauru and Manus Island (PNG) centers formally come within the jurisdiction of those states. The forms of detention also vary, from basic imprisonment in a center through to community detention in locked residential facilities. As of 31 July 2014, 3702 people (including 712 children) were in various forms of detention in Australia; 1146 (including 183 children) were detained on Nauru and 1127 were detained on Manus Island (DIBP 2014). Figures 23.1, 23.2 and 23.3, published by the Department for Immigration and Border Protection, illustrate the scale and fluctuating use of the immigration detention in Australia including Christmas Island since 1990. Children detained in Australia include 54 unaccompanied minors as at 31 March 2014 and 128 infants born in detention between 1 January 2013 and 31 March 2014. Some 321 children had been held in an immigration detention facility in Australia for more than six months as at 334

Source: DIBP (2014, fig. 3).

Figure 23.1 Immigration detention population from 1990 to 31 July 2014

Source: DIBP (2014, fig. 5).

Figure 23.2 Average days in immigration detention centres in Australia from 2012 to 31 July 2014

Source: DIBP (2014, fig. 3).

Figure 23.3 Children in immigration detention in Australia from 2012 to 31 July 2014

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January 2014; 38 children had been held in an immigration detention facility in Australia for more than one year as at January 2014; and the average length of time spent in an immigration detention facility in Australia as at 31 March 2014 was 231 days (AHRC 2014). The raw data do not reveal the extent to which human rights bodies, peak medical bodies, medical professionals and monitoring agencies such as Australia’s Commonwealth Ombudsman have criticized immigration detention in Australia as systemically abusive and in breach of multiple formal human rights obligations. In particular, the detention of children, hundreds of whom have been below the age of criminal responsibility (usually 10 in Australian jurisdictions), deviates from all legal and social norms. There is now an extensive body of literature cataloging the long-term psychological trauma, declining physical health and widespread self-harm arising from detention (see, e.g., HREOC 1998, 2004; AHRC 2012; Commonwealth Ombudsman 2013). Moreover, there appears to be a relationship between specific shifts in government policy and the amplification of the risks associated with detention. Between July 2013, when off-shore resettlement was introduced, and January 2014, there was a six-fold increase in recorded incidents of self-harm, particularly among those liable to transfer from Christmas Island to Nauru or Manus Island (Laughland 2014a). The inherently harmful nature of detention was summarized before a parliamentary inquiry in 2005 by a senior psychiatrist who had treated detainees in the Woomera and Baxter centers: Better mental health services in detention will not help, because the environment is so toxic that meaningful treatment cannot occur. It is not clear to what degree the detainees will recover, but some show significant signs of traumatisation a year after release. ( Jureidini 2005) Similarly, a psychiatrist reporting for the National Inquiry into Children in Immigration Detention conducted by the Australian Human Rights Commission in 20145 wrote: The environment of detention on Christmas Island is harsh and brutalising. It is physically and psychologically unsafe and inappropriate for children and families. . . . We saw considerable evidence of emotional, behavioural, mental health and developmental illness and disability in adults and children detained on Christmas Island. (Mares 2014) In December 2013, 15 doctors working at the Christmas Island centers signed an 80-page letter detailing serious concerns about the standards of health care at the center and the compromising ethical position in which they they found themselves when patients were being forcibly transferred or otherwise denied access to health care facilities (Marr 2013; Sangarran et al. 2014). Australia’s human rights monitoring agencies are denied access to the Nauru and PNG centers but in May 2014, a leaked report by five independent clinical experts on health care at the Nauru center voiced similar concerns and found also that asylum seeker children were “at significant risk of sexual abuse” (quoted in Laughland 2014b). On Manus Island, where medical professionals had complained of the inadequate facilities since the center was reopened (Whitmont and Cohen 2013), one detainee died after being left for a week with symptoms of septicaemia in September 2014 (Whyte 2014a). The risks to the physical and mental health of detainees arising from the indefinite deprivation of liberty are compounded by the direct dangers to their personal safety, especially in the off-shore centers. In February 2014, Reza Barati, an Iranian Kurd detained on Manus Island, was killed during violent attacks on detainees within the detention center by members of the local community, PNG police and detention staff, one of whom was identified in the report commissioned by the Australian Immigration Department as delivering the fatal blow (Cornall 2014). 338

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Figure 23.4

Drawing by child in detention on Christmas Island

Source: Australian Human Rights Commission (www.humanrights.gov.au/our-work/asylum-seekers-and-refugees/ national-inquiry-children-immigration-detention-2014). Thanks to the Australian Human Rights Commission for their kind permission to reproduce this image.

In September 2014, Greens Senator Sarah Hanson-Young detailed allegations from Nauru that female asylum seekers were told by guards that they must expose their bodies in order to be allowed to shower for more than two minutes; that guards offered illicit drugs in return for sex from asylum seekers; that an Australian guard ordered two underage asylum seekers to have sex in front of him; and that one asylum seeker was threatened that she would be raped when she left the center by a guard and his wife (Whyte and Gordon 2014). Although Reza Barati died as a result of extreme interpersonal violence, for which it may be possible to attribute individual legal blame, his death forms part of a continuum of routine harm and structural violence (Galtung 1969) being inflicted upon detainees for which Australian governments have refused to take political responsibility. Even in situations where the Australian government has acknowledged the damaging impact of its policies on unauthorized refugees, various ideological justifications or forms of denial (Cohen 2001) have been advanced to normalize the government’s deviant practices. In particular, Australian governments have repeatedly denied that detention has any punitive function despite it having always being presented as a necessary deterrent and an incentive to detainees to agree to being returned to their state of origin (McKiernan 1993). Instead, detention is defined as an administrative process designed to facilitate the processing of visa applications 339

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and, if necessary, removal. This particular construction of detention, which blames the detainee for its deleterious impacts, was reinforced by the High Court of Australia in a series of decisions in 2004 that upheld the right to arbitrarily and indefinitely detain non-citizens.6 As one High Court judge commented: It is essential to confront the contention that, because the time at which detention will end cannot be predicted, its indefinite duration (even, so it is said, for the life of the detainee) is or will become punitive. The answer to that is simple but must be made. If that is the result, it comes about because the non-citizen came to or remained in this country without permission.7 Discussing whether harsh conditions of detention could render it invalid, the Chief Justice held: (T) here is no warrant for concluding that, if the conditions of detention are sufficiently harsh, there will come a point where the detention itself can be regarded as punitive. . . . Harsh conditions of detention may violate the civil rights of an alien. . . . But the assault or negligence does not alter the nature of the detention. . . . The detention is not for a punitive purpose.8 Legal pronouncements that they are not being punished provide little consolation to refugees facing years in detention in insitutions that often provide less care and are more dangerous than Australian prisons. Moreover, detainees seeking redress for the multiple harms arising from detention face significant obstacles over and above the costs and inherent impracticalities of trying to mount civil law claims. While the Australian Human Rights Commission and Commonwealth Ombudsman have statutory powers to inspect immigration detention centres within Australia and document complaints by detainees, they cannot compel governments to adopt their recommendations. Disclosing the abuses occurring inside the detention network is complicated further by the generally remote locations of detention centers that impedes access to legal and other services; strict limitations on access by journalists and independent researchers; the contracting out of operational and security responsibilities to private operators, who in turn subcontract many of these functions; and the contracting out of medical and welfare services. The end result is that the Australian authorities have developed an extensive but largely hidden system of administrative detention that is normalized through law and institutional practice, operates according to complex lines of accountability, and which forms the basis for further abusive policing practices.

Off-shore processing and the criminalization of people smuggling The harms associated with immigration detention have been exacerbated by the return to offshore processing and establishment of detention facilities that fall outside of Australia’s legal jurisdiction. Not only are the conditions substantially worse than within the Australian centers and well below “international standards” (UNHCR 2013), as the death of Reza Barati on Manus Island illustrated, but the convoluted chains of command further reduce political accountability. The Manus Island center is officially hosted by the PNG government and formally managed by an administrator appointed by the PNG Minister for Foreign Affairs and Immigration. However, “service providers” contracted by the Australian government and answerable to an Australian Immigration Department coordinator are responsible for the daily operation of the center. At the time Barati was killed, the multinational security company G4S was responsible for operation and maintenance; the Salvation Army for welfare and support services; and International Health and Medical Services for health care.9 Internal security was largely the responsibility of G4S but the Royal PNG Constabulary (RPNGC) had general policing responsibilities for Manus Island 340

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and, in particular, the notorious paramilitary RPNGC Mobile Squad (Lasslett 2014), which was central to the attacks on detainees, and claimed it had authority to “restore order” in the event of a “riot” (Cornall 2014: 78–79). These broad administrative arrangements, combined with contractual obligations to employ local PNG staff (50 to 75 percent in the case of G4S), gave rise to an opaque system of subcontracting and local employment over which the Australian Immigration Department exercised minimal direct oversight.10 Establishing legal and political responsibility for the fatal attack was similarly complicated. The RPNGC conducted the main police investigation and eventually charged two former PNG employees of G4S and the Salvation Army with murder; notwithstanding evidence also implicating members of the riot squad and some expatriate staff (Cornall 2014). Various official inquiries were established alongside the police investigation. In PNG, Justice David Canning initiated an inquiry into human rights within the center but this was effectively closed down by the PNG and Australian governments (Gordon 2014); the Australian Immigration Department initiated its own review (Cornall 2014); and, following the refusal of the Australian government to instigate a Royal Commission, the Senate Legal and Constitutional Affairs References Committee (SLCARC) held a public inquiry, which had not reported at the time of writing.11 The Cornall report, which relied heavily on the narrative of events provided by G4S (rather than some of the contrary evidence from detainees), took a narrow, legalistic approach to criminal responsibility and did not engage in any discussion of the Australian government’s direct responsibility for detaining refugees in such a dangerous and volatile environment or the Australian Immigration Minister’s likely knowledge of the impending attack (Cornall 2014). This clearly suited the Australian government, which was content to allow the PNG criminal law process to take its course and to attribute at least part of the blame to detainees whose protests against their conditions of detention preceded the attacks against them. The events on Manus Island somewhat belied the main rationale advanced for reintroducing offshore processing in August 2012 – that it was necessary for the protection of refugees, especially given the risks they were taking to travel to Australia by boat. In June 2012, the Labor government commissioned an Expert Panel on Asylum Seekers following a series of mass drownings in the waters between Indonesia and Australia (Refugee Council of Australia 2012). Rather than focus on the ways in which Australia’s border controls were pushing refugees into increasingly hazardous methods of travel and in some cases the failure of Australian authorities to institute proper search and rescue procedures (Kevin 2012; Weber and Pickering 2011), the Expert Panel was effectively tasked with formulating a mechanism for reopening the centers on Nauru and Manus Island in a way that minimized the political embarrassment to the Labor Party which had previously opposed the move.12 The official rationale behind the policy shift – that it was a necessary humanitarian move to ensure safety at sea – was matched by an equally vociferous political offensive against people smugglers, who were held responsible for placing their passengers at risk. Since 1999, Australian governments have instituted an increasingly draconian legal regime that positioned people smuggling as a threat to national security13 and ranked it alongside homicide and the most serious violent offenses, carrying maximum penalties of 20 years and mandatory minimum sentences of five and eight years.14 Overwhelmingly, those arrested and prosecuted under these provisions were boat crew members, many of whom were juveniles, and typically recruited from impoverished Indonesian fishing communities. The small numbers of people charged with organizing offenses were themselves refugees, who made relatively ad hoc arrangements to obtain boats, often for no financial gain, in circumstances where all other options for travel appeared closed off to them (Kelly 2010; Schloenhardt and Martin 2012). Despite this experience and research by Australia’s Parliamentary Library Service that suggested otherwise (Barker 2013), the government made 341

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repeated claims that people smuggling was a form of transnational organized crime analogous to the illicit drugs trade and that, by removing the possibility of reaching Australia, off-shore detention and processing was a necessary measure to break the “people smuggling business model” by removing the prospect of residence in Australia as a “product” people smugglers can “sell.”15 Such florid political rhetoric served more to heighten a sense of risk from smuggling than illuminate what constitutes the “business model.” As Ali Al Jenabi, an Iraqi refugee convicted of people smuggling offenses, noted: They declare they are going to smash this mysterious identity by any means. I laugh out loud when I hear it. Do they think there are men in suits sitting around boardroom tables somewhere devising strategies? Has no one told them people smuggling is an amorphous rag-tag network run by word of mouth and mobile phones? There are no records or bank accounts. No spreadsheets or business plans. They pop up wherever people are trying to escape and disappear when they are no longer needed. If you want to stop people smugglers you have to do something about what causes people to flee their own countries in the first place. (De Crespigny 2013: 350) Regardless of the prosecution outcomes and whether off-shore processing operates as a deterrent in the longer term, the criminalization of people smuggling serves a number of instrumental purposes for the Australian government. First, it has facilitated the extension of Australian policing beyond Australia’s borders – for example, through the stationing of Australian Federal Police and other agencies in neighboring states such as Indonesia, or through the introduction of legislation in states such as Indonesia that criminalizes smuggling on terms set by the Australian government. Second, whether or not any arrests are made, it has been used to justify the current tow-back policy on the grounds that such serious criminality must be fought by any means necessary; and third, as in the case of Ali Al Jenabi, it is used as a justification for refusing protection visas to refugees suspected or convicted of people-smuggling offenses (De Crespigny 2013). Overall, the criminalization of smuggling contributes to the stigma attached to refugees engaging in unauthorized travel and provides a rationale for Australia’s interdiction, forced transfer and offshore detention practices. Framing such measures as a humanitarian response to the risks posed by smugglers further deflects attention from the multiple harms associated with detention and related practices, and provides legitimization for arbitrary state actions that would otherwise confront legal and social norms.

Resisting and identifying state crime Resistance is an important element of criminological frameworks for identifying and understanding state crime (Green and Ward 2004; Stanley and McCulloch 2013). This is particularly the case in situations like that in Australia, where indefinite immigration detention has been legislated by Parliament and deemed legal by the High Court. In the absence of any enforceable domestic or international legal mechanisms for remedying Australia’s multiple breaches of international human rights law, identifying and sanctioning Australia’s border-policing practices as state crime requires the commitment of organizations and networks within civil society, including the refugees targeted by Australia’s policies, to label and resist state policy as deviant. Despite the consensus on border policing between Australia’s dominant parliamentary parties, there has been significant and diverse condemnation of and opposition to the human rights abuses arising from mandatory detention and related practices from Greens and other individual Members of Parliament, international agencies such as the United Nations High Commissioner for Refugees and 342

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the United Nations Commission on Human Rights, a range of international and local human rights organizations such as Amnesty International and the Australian Human Rights Commission, refugee advocacy groups, peak professional organizations of doctors and lawyers, activist networks, academic researchers, investigative journalists, faith groups, and concerned individuals (O’Neill 2008). Opposition has taken the form of protests, political lobbying, engaged academic research and public debate. Mostly, this opposition has been tolerated by the authorities but marginalized within mainstream political discourse and much of the media. However, while mandatory detention is an established policy within mainstream politics, support for Australia’s border policing policies within the community is far from hegemonic. More sustained opposition to mandatory detention has come from refugees themselves. Since the inception of the policy, detainees across the immigration detention network have engaged in multiple forms of resistance such as petitions and open letters; collective protests within the centers, including tearing down fences and setting fire to buildings; hunger strikes, including the stitching of lips; and escapes (see Grewcock 2009, 2013, 2014).16 Much of the self-harm occurring in detention, while reflecting high levels of trauma and stress, may also be interpreted as a highly internalized form of resistance. A detainee who attempted suicide on Nauru in November 2012 wrote: I am not hopeless but this is the last stage of objection because of the worst condition and unjustice law of Australian Government. . . . I am not hopeless from life the worst conditions, bad situation of Nauru detention center and unjustice law of Australia compels me to attempt suicide [sic].17 Protests of this kind have been commonplace since the inception of mandatory detention. At the time of writing, detainees on Nauru are on hunger strike following a week of protests against the prospect of being forced to resettle in Cambodia (see Figure 23.5).

Figure 23.5 Nauru protest, 29 September 2014 Source: Refugee Action Coalition, Sydney (www.refugeeaction.org.au/?p=3515). Copy in author’s possession. Thanks to Refugee Action Coalition for their kind permission to reproduce this image.

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Official responses to refugee resistance have been far harsher than for opponents living in the community. Security within the Australian centers has increased considerably, including the construction of high-security units and electric fences. Australian Federal and State Police riot squads are empowered to intervene during protests, and measures such as the use of solitary confinement, forced transfers to other detention centers or into the local prison system can be authorized (Whyte 2014b). Detainees are routinely charged with criminal offenses arising from protests or attempts to escape. Those convicted of such an offense can be refused protection visas and face indefinite detention if otherwise found to be refugees.18 Further criminalizing refugees in this way adds to the routine condemnations of refugees seeking to exercise any form of individual agency not approved by the Australian authorities. Self-harming and hunger strikes are condemned as manipulative behavior and protests as selfdefeating. Despite such responses, the limited interest of the mainstream media and the severe constraints of life in detention, detainee protests have been an important and visible expression of opposition. Even when banished to offshore centers, detainees have found ways of contacting activists and supporters within the community by using intermediaries, mobile phones and establishing clandestine websites. Despite their often isolated locations, visitor networks operate in relation to all the mainland centers and, although the fluid nature of the detainee population makes the building of long-term links difficult, there is a core of activists and refugee advocates consistently condemning and bringing to the public’s attention the abusive nature of immigration detention with a view to pressuring the government into abandoning the policy.

Conclusion This chapter has highlighted the long-term strategic goal of successive Australian governments to prevent refugees from gaining unauthorized access to Australian territory in order to claim asylum. In particular, it has focused on the use of indefinite mandatory detention as a mechanism for controlling and deterring unauthorized non-citizens; the harmful impacts of detention on refugees who are often already experiencing significant trauma; the role of detention in legitimizing other border policing practices that place refugees at risk; and the role of civil society in condemning and potentially sanctioning such practices as state crime. Describing Australia’s border policing policies as criminogenic challenges the conventional narrative that a higher national purpose is served by removing from refugees any right to personal agency beyond waiting for formal opportunities for authorized travel and resettlement to arise. Such narratives not only deny the realities of forced migration, where opportunities to travel become available in haphazard and unplanned ways and decisions to move may mean the difference between life and death, but also legitimize practices such as arbitrary detention which developed states like Australia that hold themselves out as bastions of liberal democracy and human rights freely condemn when used by other states. In this context, condemning Australia’s mandatory detention policy as a form of state crime has implications reaching beyond Australia’s highly policed borders.

Notes 1 2 3 4 5

For an overview of the illegality of Australia’s border policing policies, see McAdam and Chong (2014). S189 Migration Act 1958. The case is ongoing. CPCF v. MIBP and Anor, HCA S169/2014. Article 31. See www.humanrights.gov.au/our-work/asylum-seekers-and-refugees/national-inquiry-children-immigrationdetention-2014. The Inquiry is due to report in late 2014.

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6 See Al Kateb v. Godwin (2004) 208 ALR 124; Behrooz v. Secretary (2004) 208 ALR 271. A more recent decision suggested that there were some limits to indefinite detention in the event that a person could not be removed but otherwise reaffirmed the lawfulness of the practice. See Plaintiff S4/2014 v. Minister [2014] HCA 34. 7 Hayne, in Al Kateb, as cited, at 180. 8 Gleeson, in Behrooz, as cited, at 277. For a further analysis of this case, see Grewcock (2012). 9 As of March 2014, Transfield was contracted to perform the functions previously contracted to G4S and the Salvation Army. An official change-over was taking place at the time of the February events. 10 See, for example, the evidence of DIBP Secretary Martin Bowles to the SLCARC Inquiry, 10 June 2014. 11 See www.aph.gov.au/Parliamentary_Business/Committees/Senate/Legal_and_Constitutional_Affairs/ Manus_Island. 12 For a more detailed analysis, see Grewcock (2014). 13 S4 Australian Security and Intelligence Organisation Act 1979; see also Jaffarie v. Director-General of Security [2014] FCAFC 102. 14 SS 233A–233C Migration Act 1958. 15 For a more detailed analysis, see Grewcock (2013). 16 Video footage of protests on Nauru in 2003 may be viewed at: www.journeyman.tv/10338/shortfilms/pacific-despair.html. 17 Posted on Nauru refugees’ website, 1 December 2012, www.naururefugees.wordpress.com/2012/12/01/ saeed-speaks-out/(accessed 10 October 2014). 18 S501(6)(aa) Migration Act 1958.

References Agier, M. (2011) Managing the Undesirables: Refugee Camps and Humanitarian Government. Cambridge: Polity Press. AHRC (Australian Human Rights Commission) (2012) Immigration Detention on Christmas Island. Available at: www.immi.gov.au/media/publications/pdf/2012/ahrc-report-christmas-island.pdf (accessed 10 October 2014). —— (2014) National Inquiry Into Children in Immigration Detention 2014: Discussion Paper. Available at: www.humanrights.gov.au/publications/national-inquiry-children-immigration-detention-2014discussion-paper (accessed 10 October 2014). Barker, C. (2013) ‘The People Smugglers’ Business Model’. Parliament of Australia Research Paper, 2, 2012-2013. Available at: www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/ pubs/rp/rp1213/13rp02 (accessed 10 October 2014). Chan, A. and Kerridge, I. (2014) ‘What is it Like to be a Doctor in Immigration Detention Centres?’ Guardian, 16 September. Available at: www.theguardian.com/commentisfree/2014/sep/16/what-is-itlike-to-be-a-doctor-in-immigration-detention-centres (accessed 10 October 2014). Cohen, S.(2001) States of Denial: Knowing About Atrocities and Suffering. Cambridge: Polity Press. Commonwealth Ombudsman (2013) Suicide and Self-harm in the Immigration Detention Network. Available at: www.ombudsman.gov.au/files/suicide_and_self-harm_in_the_immigration_detention_ network.pdf (accessed 10 October 2014). Cornall, R.(2014) Review into the Events of 16–18 February 2014 at the Manus Island Regional Processing Centre. Available at: www.immi.gov.au/about/dept-info/_files/review-robert-cornall.pdf. (accessed 10 October 2014). De Crespigny, R. (2013) The People Smuggler. Camberwell: Viking Penguin. DIBP (Department of Immigration and Border Protection) (2014) Immigration Detention and Community Statistics Summary, 31 July. Available at: www.immi.gov.au/managing-australias-borders/detention/_ pdf/immigration-detention-statistics-july2014.pdf (accessed 10 October 2014). Galtung, J. (1969) ‘Violence, Peace and Peace Research’. Journal of Peace Research, 6(3): 167–191. Gordon, M. (2014) Abbott and O’Neill Agree: No Human Rights Inquiry for Manus Island, Sydney Morning Herald, 23 March. Available at: www.smh.com.au/federal-politics/political-news/abbott-and-oneill-agreeno-human-rights-inquiry-for-manus-island-20140322-35a6e.html (accessed 10 October 2014). Green, P. and Ward, T. (2004) State Crime: Governments,Violence and Corruption.London: Pluto Press. Grewcock, M. (2009) Border Crimes: Australia’s War on Illicit Migrants. Sydney: Institute of Criminology Press. —— (2012) ‘The Great Escape: Refugees, Detention and Resistance’, in E. Stanley and J. McCulloch (eds) State Crime and Resistance. Abingdon: Routledge. 345

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—— (2013) ‘People Smuggling and State Crime’, in K. Carrington, M. Ball, E. O’Brien and J. Tauri (eds) Crime, Justice and Social Democracy. Basingstoke: Palgrave Macmillan. —— (2014) ‘Back to the Future: Australian Border Policing Under Labor, 2007–2013’. State Crime, 3(1):102–125. HREOC (Human Rights and Equal Opportunities Commission) (1998) Those Who’ve Come Across the Seas. Sydney: Author. —— (2004) A Last Resort? National Inquiry into Children in Immigration Detention. Sydney: Author. Isaacs, M. (2014) The Undesirables. Melbourne: Hardie Grant Books. Jureidini, J. (2005) Submission to Senate Legal and Constitutional References Committee Inquiry into the Administration and Operation of the Migration Act 1958, Submission 31. Kelly, J.(2010) People Smugglers: Saviours or Criminals? Sydney: Australian Lawyers for Human Rights. Kevin, T. (2012) Reluctant Rescuers. Canberra: Author. Lasslett, K.(2014) Who’s Policing Manus Island? New Matilda, 19 February. Available at: www.newmatilda. com/2014/02/19/whos-policing-manus-island (accessed 10 October 2014). Laughland, O.(2014a) Self-harm by Asylum Seekers has Surged Since Offshore Processing – Leaked Report. Guardian, 9 July. Available at: www.theguardian.com/world/2014/jul/09/self-harm-asylum-seekersdetention-surged-serco-report (accessed 10 October 2014). —— (2014b) Nauru Detention: Serious Health Risks to Children Revealed in Confidential Report. Guardian, 30 May. Available at: www.theguardian.com/world/2014/may/30/nauru-detention-serioushealth-risks-to-children-revealed-in-confidential-report (accessed 10 October 2014). Leach, M. and Mansouri, F. (2004) Lives in Limbo. Sydney: UNSW Press. Mares, S. (2014) Visit to Christmas Island Immigration Detention Facilities, March 1-8 2014. Report for AHRC. Available at: www.humanrights.gov.au/our-work/asylum-seekers-and-refugees/nationalinquiry-children-immigration-detention-2014/expert (accessed 10 October 2014). Marr, D. (2013) Doctors Reveal ‘Harmful’ Standards of Medical Care for Asylum Seekers, Guardian, 20 December. Available at: www.theguardian.com/world/2013/dec/19/revealed-doctors-outrageover-unsafe-refugee-patients; www.theguardian.com/world/interactive/2014/jan/13/christmas-islanddoctors-letter-of-concern-in-full (accessed 10 October 2014). Marr, D. and Laughland, O. (2014) Australia’s Immigration Detention Regime Sets Out to Make Asylum Seekers Suffer, Says Chief Immigration Psychiatrist’, Guardian, 5 August. Available at: www.theguardian. com/world/2014/aug/05/-sp-australias-detention-regime-sets-out-to-make-asylum-seekers-suffersays-chief-immigration-psychiatrist (accessed 10 October 2014). Marr, D. and Wilkinson, M. (2003) Dark Victory. Sydney: Allen & Unwin. McAdam, J. and Chong, F. (2014) Refugees: Why Seeking Asylum is Legal and Australia’s Policies Are Not. Sydney: UNSW Press. McKiernan, J. (1993) ‘The Political Imperative: Defend, Deter, Detain’, in M.Crock (ed.) Protection or Punishment: The Detention of Asylum Seekers in Australia. Sydney: The Federation Press. Morrison MP, S. (2014) ‘A Year of Stronger Borders’. Media Release, 18 September. O’Neill, M. (2008) Blind Conscience. Sydney: New South Books. Pickering, S. (2005) Refugees and State Crime. Sydney: The Federation Press. Refugee Council of Australia (2012) RCOA’s Analysis of the Recommendations of the Expert Panel on Asylum Seekers, August 13. Available at: www.refugeecouncil.org.au/r/rpt/2012-Expert-Panel.pdf. Sangarran, J-P. Ferguson, G. and Haire, B. (2014) ‘Ethical Challenges for Doctors Working in Immigration Detention’. MJA, 201(7): 1–3. Schloenhardt, A. and Martin, S. (2012) ‘The Prosecution and Punishment of People Smugglers in Australia 2008–2011’. Federal Law Review, 40(1): 111–140. Stanley, E. and McCulloch, J. (eds) (2013) State Crime and Resistance. Abingdon: Routledge. UNHCR (United Nations High Commissioner for Refugees) (2013) Monitoring Visit to Manus Island, 23-25 October 2013. Available at: www.unhcr.org.au/unhcr/images/2013-11-26%20Report%20of%20 UNHCR%20Visit%20to%20Manus%20Island%20PNG%2023-25%20October%202013.pdf (accessed 10 October 2014). Ward, T. (2004) ‘State Harms’, in P. Hillyard, C. Pantazis, S. Tombs and D. Gordon (eds) Beyond Criminology: Taking Harm Seriously. London: Pluto Press. Weber, L. and Pickering, S. (2011) Globalization and Borders: Death at the Global Frontier. Basingstoke: Palgrave Macmillan.

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Whitmont, D. and Cohen, J. (2013) ‘No Advantage’. Four Corners, 29 April. Available at: www.abc.net. au/4corners/stories/2013/04/29/3745276.htm (accessed 10 October 2014). Whyte, S. (2014a) Critically Ill Asylum Seeker Held on Manus for Week: Witness Accounts, Sydney Morning Herald, 20 September. Available at: www.smh.com.au/federal-politics/political-news/ critically-ill-asylum-seeker-held-on-manus-for-week-witness-accounts-20140919-10jgnx.html (accessed 10 October 2014). —— (2014b) Scott Morrison and NSW Police Sign Agreement Clarifying Responsibilities in State’s Detention Centres. Sydney Morning Herald, 9 October. Available at: www.smh.com.au/federal-politics/ political-news/scott-morrison-and-nsw-police-sign-agreement-clarifying-responsibilities-in-statesdetention-centres-20141009-113lte.html (accessed 10 October 2014). Whyte, S. and Gordon, M. (2014) Sexual Abuse, Rape Threats Alleged by Nauru Asylum Seekers, Sydney Morning Herald, 30 September. Available at: www.smh.com.au/federal-politics/political-news/sexualabuse-rape-threats-alleged-by-nauru-asylum-seekers-20140929-10nlun.html (accessed 10 October 2014).

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24 Gendered forms of state crime The case of state perpetrated violence against women Victoria E. Collins

Introduction Violence against women has been called the “most pervasive yet least recognized human rights abuse in the world” (United Nations Population Fund 2014). Reports indicate that between 35 and 70 percent of women have experienced non-partner sexual abuse and intimate partner violence at the hands of an intimate (World Health Organization 2013), over 46 million girls are child brides (Black 2001), and women represent 55 percent of all people trafficked into forced labor (Pinheiro and Ward 2008). In addition, 40 to 50 percent of women in countries in the European Union have reported experiencing unwanted sexual advances and harassment at work, including unwanted physical contact (Directorate-General for Employment, Industrial Relations, and Social Affairs 1998). Furthermore, women and girls are particularly vulnerable during times of conflict where they have been systemically targeted as a tactic of war, as demonstrated in the genocides in both Bosnia-Herzegovina and Rwanda (Mullins 2009a). Based on the statistics listed above indicating its prevalence, violence against women may be likened to a global pandemic with far-reaching consequences, including deaths, injuries, psychological harm, threats to freedom, infringement on freedom and liberty, as well as devastating health consequences (UN Women 2014). Gender-based violence is defined as “an interpersonal, organizational or politically orientated harm perpetrated against people due to their gender identity, sexual orientation, or location in the male-dominated social systems such as families, military organizations, or the labor force” (O’Toole et al. 2007: xii). Although gender-based violence is not restricted to a duality of men and women, for the purposes of this chapter my focus is on violence perpetrated against women and girls. This same focus has been the subject of considerable criminological inquiry, especially from feminist scholars, and has led to the establishment of a large body of literature, too large to address here, that calls attention to the victimization of women by men, and the larger societal inequities that institutionalize and proliferate the subordination of women and girls (ChesneyLind 2006; Hunnicutt 2009). Despite this comprehensive body of work, there has been little attention paid to the role of the state as a perpetrator of gendered-violence – especially conceptualizing such harms as state crime. After all, whether the focus is the short sentences received by the perpetrators of gender-violence crimes, or the lack of protections provided to women and children against male-perpetrated 348

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harms, the common thread that links them all is that they disproportionately impact upon women, and are perpetrated overtly by the state or within a state structure that is supposed to protect the victims from these types of harm. Therefore, my purpose here is to address this void in the literature by identifying broad patterns of state perpetrated violence against women during times of both peace and conflict. By drawing on case examples and literature from state crime, I will extend the discussion of women and gender to include state perpetrated violence. I will start by providing a brief overview of the existing literature on state perpetrated violence against women.

The established literature on state perpetrated violence against women Over the past 20 years there have been some notable works that have drawn attention to particular types of state perpetrated violence against women, some coming from scholars of state crime (Lenning and Brightman 2009; Mullins and Rothe 2007), and others from international legal scholars (Buss 2009; Meger 2010). The foci of these studies vary considerably. Much of this research addresses overt forms of state perpetrated violence, such as rape as a weapon of war (Buss 2009; Eriksson Baaz and Stern 2009; Meger 2010), forced conscription into military groups and genocidal rape (Mullins 2009b; Mullins and Rothe 2007), sanctioning violence against women as punishment such as honor violence (Ouis 2009), and the incarceration or killing of women for morality crimes (Drumbl 2004). In addition, and largely due to the emergence of feminist scholarship in the 1970s, there is a large body of research that has addressed gender relations with regard to the disparate treatment of men and women. These studies address a broad range of harmful behaviors including, but not limited to, gendered victimization patterns (Kaura and Allen 2004), lack of protections under the law (Miller 2000), the commodification of the female body (Collins 2007; Kilbourne 1999), the feminization of homelessness (Balfour 2006; Raphael 2000), the gendered consequences of imprisonment (Owen 2003; Reed and Reed 2003), and the gendered nature of immigration, borders and migration (Danner and Young 2003; Weber and Pickering 2011). This established literature on gendered violence includes examinations of individual actors as well as environmental and structural factors that influence these behaviors. However, although attention has been paid to the institutionalized, individual and systemic forms of violence perpetrated by men against women, the role of the state as being a central perpetrator of violence against women has garnered lesser attention. There are fewer works that situate gender-based violence as a form of state crime (Ballinger 2009; Cauldfield and Wonders 1993; Lenning and Brightman 2009; Mullins 2009a, 2009b; Wonders and Danner 2006), and when they do it is specific to one type of violence perpetrated in a particular location. For example, Mullins (2009a) examines the perpetration of sexual violence, both mass and singular rapes, during the Rwandan genocide. By examining the use of rape as a central tactic for the specific purposes of eliminating the Tutsi people, attention is brought to the state’s culpability in the systematic rape of between 250,000 and 500,000 women and girls. In a broader analysis of power, gender and the state, Ballinger (2009: 31) examines the role of the state in maintaining a “heteropatriarchal social order” as it relates to increased legal equality for women in the public domain and the illegal acts of violence perpetrated against women in the private sphere. By focusing on domestic violence and sexual victimization of women, Ballinger concludes that despite changes in the law that have been initiated to protect women from gendered violence, these laws serve to reinforce the traditional “constructions of femininity” that fail to improve gender relations within the private sphere. 349

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There are also mentions of specific forms of gendered violence in some of the foundational texts on the subject of state crime (Barak 1991; Green and Ward 2004; Rothe 2009). For example, Rothe (2009) describes different forms of state crime, including genocidal rape, sexual offenses that are included in the legal definition of crimes against humanity (i.e., rape, and/or sexual enslavement), and rape as a war crime. Likewise, Iadicola and Shupe (2013) briefly address state violence perpetrated against woman during both times of conflict and against women serving in state militaries. Although the issue of state perpetrated gendered violence is mentioned in the state crime literature, it is most often included as part of a broader analysis and it remains largely ignored as a central issue. One early exception was Hinch’s (1991) treatment of rape and sexual assault laws in Canada, where he concluded that the state was complicit in legal reforms during the 1980s that did not protect women from violence both inside and outside of the home. This was due to patriarchal and class-based assumptions of gender. Before proceeding, it is necessary to briefly examine the criteria I am using here for state perpetrated violence and criminality.

State perpetrated violence It has been repeatedly established that the issue of state perpetrated violence extends beyond specific types of violence to include deeply embedded forms of violence at the community and structural levels of society. As noted by O’Toole and colleagues (2007: 7), “violence toward women and the elaborate social structures that develop around such practices serve to appropriate key aspects of women’s independence and to institutionalize patriarchy.” Therefore, to adequately address state perpetrated violence against women, the embedded nature of these forms of violence should be acknowledged. Consequently, definitions that rely on domestic controls are inadequate as the use of violence by men as a tool to maintain power and privilege is widely demonstrated and has been legalized by states throughout the course of history. From foot binding in China (Gorham 2007), to domestic violence policy in the United States (Miller and Iovanni 2007), the state has both condoned and ignored violence perpetrated against women. Drawing on the definition offered by Rothe (2009: 6), I will adopt a criterion for state perpetrated violence and crime that relies on international law, defining it as “any action [or omission] that violates international public law, and/or a state’s own domestic law when these actions are committed by individual actors acting on behalf of, or in the name of the state, even when such acts are motivated by their economic, political and ideological interests.” Here, I have expanded Rothe’s (2009) definition to include state omissions to act, when it can be established that it “generates harm in violation of an explicit trust or duty between states, states and its [sic] citizens, or states and citizens of other jurisdictions” (Faust and Kauzlarich 2008: 86). In addition, ideological interests will be taken to include behaviors motivated by gender identities, roles and scripts. I now draw on several case studies to examine state perpetrated violence during times of war.

State perpetrated gendered violence during times of war/conflict The use of violence by men against women during times of conflict has a long history. From the Japanese comfort women of World War II (Stetz 2007), to the systematic use of rape in the former Yugoslavia (Barstow 2001), recent history is ripe with examples of male perpetrated violence against women during conflict. State complicity in the perpetration of such crimes has received increased scholarly attention and has also been criminalized under international law (Rothe 2009). To illustrate state culpability in these crimes, I will start by examining the specific targeting of women and girls in the former Yugoslavia followed by the consequences of the Iraqi 350

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conflict for women and girls, before examining the perpetration of sexual assaults by male soldiers against female soldiers in the US military.

The former Yugoslavia It is estimated that approximately 20,000 women and girls were raped during the 1992 to 1994 conflict that occurred in the former Yugoslavia (Wagner 2005). Rape was perpetrated by all sides of the conflict, but the majority of women who were raped were Bosnian Muslims who had been taken to Serbian detention camps (Engle 2005). These rapes were used as a tool to humiliate, as well as to inflict pain, fear and shame, so much so that women would be forced to leave their communities. Therefore, rape was perpetrated as part of a broader policy of ethnic cleansing in an effort to drive the Bosnian Muslim population from their territory, thereby freeing up the land for the ethnic Serbians. This is evident in the systematic and public nature of the sexual violence perpetrated against women and girls in the Bosnian town of Foča. In Foča, women and girls were subjected to gang rapes, rape in public spaces, multiple rapes over extended periods of time, forced fellatio and forced incest (Faucette 2012). The use of rape suggested that “Serb authorities not only approved the systematic rape of Muslim women in Foča but made a public display of rape in the detention facilities and in the town itself. One woman at Partizan [a building used as a detention facility] was raped more than 100 times in two months” (Gutman 1992). Although the perpetrators of these acts have agency and are responsible for their individual actions, they were operating within a military command structure that ordered them to commit these acts. These acts were committed for the specific purposes of destroying not only the individual victim’s power and sexual agency, but also to instill fear and powerlessness in the general population through the dehumanizing treatment of the community’s young women and girls. In Foča, humiliation and degradation were key components of the Serbian regime’s strategy of war. High-ranking commanders were instrumental to the organization of the detention facilities and the kidnapping and imprisonment of the Muslim women. Commanding officers were also active participants in the sexual violence that included engaging in repeated acts of sexual assault both as individual perpetrators and as part of a group. This included high-ranking military officers such as Dragoljub Kunarac, leader of the reconnaissance unit of the Bosnian Serb Army, and Radomir Kovac, a sub-commander in the Bosnian Serb Army’s military police. Kunarac perpetrated rape and facilitated the gang rape of young women, and Kovac engaged in rapes and detained women in his apartment in order to repeatedly rape and sexually assault them (Askin 1999). By leading through example, the message to other lower ranking officials is clear; that sexual violence is not only permitted but encouraged. Consider that in the same manner that war has been accepted as being a part of history, rape has been regarded as a “natural, foreseeable, and unavoidable consequence of war” (Campanaro 2001: 2557). Historically, rape has been used as a tool of war to terrorize the enemy, break up communities and reward victors. As noted by Brownmiller (1975: 35), “through[out] the ages, triumph over women by rape became a way to measure victory, part of a soldier’s proof of masculinity and success, a tangible reward for services rendered . . . [and] an actual reward for war.” The perpetration of sexual violence during conflict has a long history of being ignored, if not sanctioned, by the state. Women are victimized because of their gender identity, and they are also targeted for the purposes of humiliating and intimidating their family members and communities in an attempt to destroy bonds, instill fear, and to shame male members of the community as they have “failed” to protect them from harm (Iadicola and Shupe 2013). Women in Foča were targeted and victimized because of the intersection of their ethnicity and gender identity. Many of the perpetrators would subject the victims to ethnic slurs as they were raped. This clearly meets the legal criteria for genocidal rape, as the motivation for the Serb 351

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perpetrated sexual violence was the “intent to destroy, in whole or in part, a national, ethnical, racial or religious group” (Convention on the Prevention and Punishment of the Crime of Genocide 1948, Article 2). Although the International Criminal Tribunal for the Former Yugoslavia (ICTY) did not legally recognize these acts as genocidal rape (Faucette 2012), it was both of these identities that made them vulnerable to the sexual crimes perpetrated against them. Considerable attention was drawn to the sexual violence in Foča, including prosecutions and convictions of key military officials by the ICTY, and state actors were held accountable for the widespread sexual violence perpetrated during the conflict. State perpetrated gendered violence, however, has received lesser attention in other conflicts, such as the US occupation of Iraq.

The US occupation of Iraq The US-led occupation of Iraq in 2003 has been the subject of scrutiny from politicians, media and scholars alike, focusing on the legality of the occupation itself (Whyte 2007), “Operation Shock and Awe,” the absent stockpile of weapons of mass destruction, the treatment of prisoners at Abu Ghraib (Hamm 2007), the withdrawal of troops (Bush 2008), and the continued political instability that plagues the county. Comparatively, there has been little attention paid to the impact the occupation has had upon civilian populations, specifically women and girls. This is despite reports indicating that women have been victims of assassinations, targeted abductions, rapes, beatings and honor violence (United Nations Assistance Mission for Iraq 2007). I am not suggesting that there was no gendered violence prior to 2003 as Iraqi women have a long history of hardship. They have suffered the effects of the 1980 to 1988 wars with Iran, the first Gulf war (1990–1991), the 1990 to 2003 sanctions regime, and Saddam Hussein’s regime (1979–2003). This has led to a shift in the composition of the country’s population with approximately 60 percent being women, with as many as two million women being widowed (Women for Women International 2008). As a result, women and their treatment have become increasingly essential to peace and settlement within the country, and their diversity (i.e., their religion, geography, socioeconomic status, ethnicity, marital status) also helps to explain their targeting by different groups (Lee-Koo 2011). For example, US-led forces targeted women who were believed to be of intelligence value, Sunni and Shiite militia groups have targeted civilian women for killings, abductions, beatings, rapes and other forms of physical violence, and local police and security forces have aided in the rape, abduction and trafficking of civilian women (Lasky 2006). The motivations for these acts are as different as the groups perpetrating the violence, and include religious, political, cultural, misogynistic and strategic reasons that are either publicly declared or privately held. What is important to note is that all stakeholders in Iraq have engaged in gendered violence having been “enabled by the political and military failure to stabilize postinvasion Iraq” (Lee-Koo 2011: 1623). Although the explanations for these forms of gendered violence are varied, many of the states engaged in the conflict have perpetrated such crimes for the purposes of advancing state interests (Lee-Koo 2011). For example, multinational forces have detained women based solely on their connection to individuals of interest. These women have been held in US-run detention facilities without charge, where they have been either tortured for potential intelligence or held for ransom in exchange for their male associates (MADRE 2007). In addition, there were 42 female detainees held at Abu Ghraib (Taguba 2004), but despite international media outrage at the US military abuse of detainees, little attention was paid to sexual assault at the facility. This was even after reports emerged substantiating rape and sexual assault against women detainees by occupying forces (Gardham 2009). In the case of the Iraq conflict violence against women has been removed from the politics of state (i.e., the ideologies, reasons and justifications for war), and situated in the “private sphere” (Lee-Koo 2011). To acknowledge these crimes would undermine the US state’s justification 352

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and moral foundation for the invasion (i.e., to liberate and protect innocent Iraqis – women and children – from Saddam’s repressive regime). There has been little publicity about the experiences of Iraqi women detainees, as this would clearly contradict the US paternalist discourse that constructs multinational forces in Iraq as the protectors of innocent civilians. In the case of the US-led occupation of Iraq, women and girls have not only experienced elevated amounts of violence, but Western protectionist rhetoric has helped silence their stories.

Peacetime and sexual assault in the US military An examination of state perpetrated gendered violence during conflict without a brief discussion of the gender structures of the military would fall short. While acknowledging that there are variations in state military structures, soldiering has historically been and continues to be universally gendered (Goldstein 2001). In the US, for example, the understanding of what it means to be a “good soldier” has come to mean whiteness, maleness and heterosexuality, simultaneously associating soldiering with masculinity (Katzenstein and Reppy 1999). Women have been historically banned from holding combat positions (Kier 1999), segregated to specific units (Butler and Schmidtke 2010), and prevented from attending military academies (Pershing 2003). As women have fought for an expanded role across the military branches, the legacy of inequality remains and women are often viewed as being less capable soldiers than men (Kier 1999). Adding to the historical institutionalization of gender inequality in the military, there exist military cultures that promote organizational norms in support of male bonding, hyper-masculinity and traditional gender roles (Pershing 2003). The presence of women may be perceived as a threat to the historically embedded male cohesion, creating an environment that is hostile to female soldiers. As noted in the literature, these factors intersect to create an environment that is more accepting of sexual harassment and violence (Callahan 2009). This is reflected in the large number of militarily perpetrated sexual assaults that occur during times of peace, as well as by some highly publicized cases, such as the 1991 sexual assault case at the US Navy Tailhook Convention and the sexual assault scandal at the US Airforce Academy in 2003. Despite this, the policy response to such events has been individualistic, singling out the individual perpetrators rather than examining the organizational environments of these institutions of state for the cause of such happenings (Pershing 2003). During times of conflict, women and girls are not only vulnerable to state perpetrated violence but they are systematically targeted as part of larger strategies of war. This is not a new phenomenon, but rather has historically been characterized as “acceptable,” and, despite increased legal protections both at the domestic and international levels, these behaviors not only continue to be prevalent, but are also perpetrated both directly and indirectly by the state. However, state perpetrated violence is not isolated to times of conflict, as women are also vulnerable to state perpetrated violence during times of peace.

Gender relations and gendered violence during peacetime The Girl of Qatif In November 2006, the international news media began reporting the story of the rape of a 19-year-old girl that occurred in the small Saudi Arabian village of al-Awwamiya. A male “friend” in this case was driving the young victim home when two men, who blocked the vehicle they were in with their car, ambushed them both. The men kidnapped and drove them to a deserted area where seven different men raped the woman brutally and repeatedly (Setrakian 2007). Despite the shocking nature of this attack, the reason for the international news scrutiny 353

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was not the violent rape itself, but the events that occurred as a result of the woman reporting it to the police. Having courageously reported her victimization, the young woman, known as the Girl of Qatif, was charged with the crime of being alone with a man, something that is illegal in the highly segregated Saudi society, and as a result was found guilty and sentenced to receive 90 lashes (NBC News 2006). This sentence was later increased to 200 lashes and six months in jail as she was accused of “exhibiting disrespectful behavior towards the court” (CNN, November 24, 2007) for speaking with the media. In an official statement from Saudi Arabia’s Supreme Judicial Council, a spokesperson said, “the case was treated normally through the regular court procedure” (CNN, November 24, 2007). Although there was justified international outcry over this case, this is not an isolated instance of barbaric treatment of a woman by the very power structures that are supposed to protect her from harm. In Saudi Arabia women experience acute inequality and have restricted rights. Ruled by a monarch, Saudi Arabia is an Islamic state that subscribes to Sharia law with deeply set social and religious traditions (Huyette 1985). Women in Saudi Arabia are subject to guardianship, which means that women and girls need permission from a male member of their family such as their father, husband, brother or even son to engage in certain behaviors. Examples of these behaviors include travel, certain medical procedures, marriage and conducting official business. For example, having been in a car accident that killed her husband, a woman and her young daughter were rushed to the King Fahd Hospital in Baha. As the woman had no male legal guardian at the time of her admittance, the amputation of her hand that was needed due to her injuries was postponed (Human Rights Watch 2013). There are many gender inequities that are apparent in Saudi Arabia as historically a “woman’s right to participate fully in the development of the nation was forbidden” (Hamdan 2005: 47). As a result the control of women’s bodies, behavior and freedom of movement is overtly facilitated and enforced by the state through the granting of privilege to men over women’s day-to-day lives. These gender inequities are a product of larger social political happenings that are rooted in recent historical developments, one example being the Mecca siege of 1979. In this instance, a Muslim extremist Juhayman al-Otaybi, a former student of theology, led an insurgency to seize the holy mosque in Mecca. The motivation for the attack was to protest the House of Saud, the ruling royal family of Saudi Arabia, calling for the eradication of “Western influence” in Saudi society (Hamdan 2005). Interestingly, during the year leading up to the siege, there had been increased attention paid to women’s rights, with media articles authored by both men and women calling for women to have the right to drive, as well as increased access to education and work (Doumato 2000). Immediately following the siege there was stricter enforcement of the Islamic code (Wright 2001), and women were further isolated from public life. In Saudi Arabia, gender ideologies and roles have been assigned to men and women and, as a result, individual relationships, divisions of labor, social values and privilege accompany the dualistic demarcation of male versus female. The state has provided an asymmetrical power distribution that is then reinforced through institutions, economic structures, cultural dynamics and interpersonal processes. When individuals violate these established gender structures, they are then subject to violence – violence being the most extreme form of social control. This violence, as demonstrated by the case of the Girl of Qatif, is often directly administered by the state infringing basic human rights and violating bodily integrity, which acts to condone general attributes of aggression and violence that accompany male power. Despite there being international legal instruments that specifically outlaw gender discrimination (see the Convention on the Elimination of All Forms of Discrimination against Women 1979,of which Saudi Arabia is a signatory), there still remain many state behaviors that explicitly cause harm to women. Instead of offering protection to those who have suffered harm, the state further victimizes women for 354

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violating established patriarchal roles and challenging state power and control. To focus solely on Saudi Arabia, however, ignores the pervasiveness of such forms of state violence more generally perpetrated against women. Issues of inequality that are condoned and facilitated by Saudi Arabia may be extrapolated to many states, irrespective of their location in the world. Consider the problem of sexual harassment in the United States.

Sexual harassment in the US In December 2001, University of Colorado at Boulder (CU) student Lisa Simpson was drinking with a few of her friends in her off-campus apartment. Having consumed several alcoholic beverages and feeling somewhat intoxicated, one of the friends disclosed that some of her friends, who were football players, would be visiting the apartment that night. After 16 to 20 football players and recruits arrived at her apartment, Lisa decided to go to her bedroom and lie down. She quickly fell asleep, only to be woken a short time later by two recruits who were removing her clothing. Several football players and recruits then sexually assaulted Lisa. During her assault Lisa reported that another young woman was also sexually assaulted in her bedroom. The following morning Lisa was taken to hospital where she reported the assault to the authorities, and then also reported it to the University. Despite an investigation by the University, they chose not to pursue charges against the perpetrators, and in one instance continued with their recruitment of one of the perpetrators to the football team. However, local law enforcement did pursue felony charges against many of the perpetrators. As a result of her victimization, Lisa was unable to complete her classes, and subsequently stopped attending CU before obtaining her degree. Lisa then sued the University under sexual harassment laws, alleging that they were aware of a number of sexual assaults perpetrated by football recruits, as well as their use of alcohol and illicit drug abuse – a practice that could be traced back to 1995. Despite knowing this, Lisa accused the University of doing nothing to change these behaviors or to protect future victims. The case was argued up to the Tenth Circuit court, where ultimately the University appealed the court’s ruling in favor of Lisa and then settled with an out-of-court payment of US$2.5 million (Simpson v. University of Colorado Boulder 2005). Recent attention to the issue of sexual assault on college campuses in the US has led to increased pressure from the White House for universities to better address the issue. In July 2014 bipartisan legislation was introduced that proposes universities and colleges be compelled to better document sexual assault on campus and enforces financial penalties for non-compliance (Steinhauer 2014). The harms committed against Lisa Simpson appear to be less directly connected to the state and seemingly there was a greater response from the state to resolve the issue (i.e., the University was found liable in court and the District Attorney launched a criminal prosecution against some of the perpetrators). Lisa was obviously sexually assaulted; however, as she sued the University on the grounds that they violated sexual harassment and discrimination laws, my focus here is on sexual harassment and the University’s continued improper handling of sexual assault cases to the extent that it created a sexually hostile environment for female students. Furthermore, sexual harassment has been conceptualized to lay on a spectrum of gendered violence that includes exploitation, sexual and physical abuse – including sexual assault (Gutek and Koss 2007). That said, sexual harassment is a relatively recent issue of focus in the US, with the first legal definition emerging in 1980 (O’Toole et al. 2007). The problem of sexual harassment is widespread, with between 50 and 90 percent of women reporting having experienced sexual harassment in their workplace over the course of their lives (Welsh 1999). Many women report experiencing sexual harassment behaviors such as objectification, “unwelcome sexual advances, requests for sexual favors and other verbal or physical 355

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conduct of a sexual nature” which includes sexual assault (Tamminen 1994: 44). These behaviors are often initiated as a term/condition of employment, or come with consequences that interfere with a person’s work responsibilities (Williams 1998), and/or create an “intimidating, hostile or offensive working environment” (Tamminen 1994: 44). It is the latter that is applicable in Lisa’s case, as the University’s inadequate response to her victimization interfered with her ability to attend and complete school. Although sexual harassment has been addressed as a problem by the state, the focus tends to be on individual perpetrators and individual victims (Williams 1998), with the role of organizations – including the state – being largely ignored. The state has been largely complicit in perpetrating sexual harassment due to the lack of protections offered to victims and the slow development of sexual harassment legislation. Until the 1980s the state had omitted to act to protect women from workplace violence, despite owing a duty of care to its citizenry to protect them from such harms. It must also be noted that Lisa Simpson was attending a public university at the time of the assault (state-run), and filed suit against the CU in 2001, a time where there was established sexual harassment legislation, yet the University failed to act to address the problem of sexual harassment on campus. Explanations for this are situated in the broader historical development of gender relations and gender roles, as well as broader goals related to economic development (Chinkin 2003). For example, historically, women have been barred from the workforce, prevented from working in particular occupations, and paid at a lower rate than men for the same amount of work (England 2008). These behaviors were sanctioned, and in some instances enforced, by the state. This has allowed for the persistence of workplace inequities and the continued dominance of men in the labor market. Regulating harmful behaviors, such as sexual harassment, is the responsibility of the state; however, the state is a highly politicized structure comprising individuals with their own social values and organizational goals. These goals have not only historically been gendered, but they also undermine human rights obligations. As noted by Chinkin (2003: 657), “state complicity in the denial of individual workplace rights ranges from asserting the priority of economic development to exploiting the passivity and femininity of their women as a national economic resource.” Women and their work have been and continue to be undervalued, both domestically and around the world. This has led to exploitative practices that include sexual harassment and sexual violence, at the hands of individuals and institutions, which are facilitated by the state. This is also demonstrated in Lisa Simpson’s case, as a public university allowed the persistence of a sexually hostile culture toward women. This not only encouraged and rewarded heteronormative displays of sexuality, aggression and violence, but endorsed such behavior by continuing with the recruitment of individuals who had abused women to the University’s sports teams, relegating the safety of female students to being secondary to male athletics. Therefore, sexual harassment is just one way in which larger state-sanctioned gender structures manifest themselves at the interpersonal level, but, instead of examining the culpability of states and their acts and omissions that allow for these harms to occur, such behaviors have been explained away as being representative of heteronormative sexuality that revolves around male dominance and female passivity (O’Toole et al. 2007).

Conclusion By drawing on the earlier case examples of state perpetrated violence during times of conflict and peace I have focused attention on some of the ways in which the state, either directly or indirectly, perpetrates gendered violence. These case studies have served to demonstrate that 356

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larger historical, social and political constructions of gender point to the dominance of men over women as being a product of gender structures that are enforced by the state. The state regulates, controls, enforces and initiates significant characteristics of male and female behavior condoning gender inequities in their various cultural forms, such as the punishment of the Girl of Qatif for her own victimization, or the slow development of protections from sexual harassment for women in the workplace, or on college campuses in the United States. These gender inequities manifest themselves in many different forms and act to control the state’s populations, with violence being the most serious application of control. Gendered violence, therefore, is not simply a feature of micro-level interactions between individual actors, but is deeply embedded in communities, institutions and most importantly states. Direct forms of state perpetrated violence are more easily recognizable, such as sexual violence during times of war, than indirect forms of violence against women because the state can be “subtle to the point where it appears to be gender-neutral – or even protective towards women – by seemingly regulating the system to prevent further oppression” (Ballinger 2007: 474). This is clearly illustrated in the development of sexual harassment legislation in the US, where the focus is on the state acting to protect women from future harm, and not the slow enactment of the legislation, its effectiveness, or the inherently patriarchal nature of the law which dictates the contexts in which men commit violent acts toward women. The state, therefore, enacts “formal politics” that are “a dynamic factor in maintaining and strengthening the gender order: the state acts to reinforce masculine norms” (Tosh 2004: 41). By ignoring the politics and power of the state in the construction and reinforcement of larger gender structures, women will continue to experience state perpetrated violence in its various forms.

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Part VII

State-corporate crimes

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25 Blacking out the Gulf State-corporate environmental crime and the response to the 2010 BP oil spill Elizabeth A. Bradshaw

Introduction On April 20, 2010, the Deepwater Horizon oilrig owned by Transocean and leased by BP exploded in the Gulf of Mexico, killing 11 people and injuring 17. Following the explosion and subsequent fire, the rig keeled over into the Gulf on April 22, unleashing an estimated 4.9 million barrels of oil from the Macondo well, owned by BP. Oil continued to gush uncontrollably until the well could be capped on July 15, though it was not officially declared “dead” until September 19. Throughout the state-corporate response to the spill it became evident that BP, in coordination with federal officials, sought to minimize the visibility of the effects of the spill by using chemical dispersants to hide the oil, controlling the flow of information and images to the public surrounding the spill, and deliberately altering images and information about the response online. During the response, BP, Transocean and the federal government attempted to suppress and control images and information surrounding the spill. Immediately following the explosion of the Deepwater Horizon drilling rig, lawyers interrogated and coerced the surviving crew members into signing waivers and required them to take drug tests upon returning to shore. On the evening of the explosion and throughout the following day, Transocean imposed a communications blackout to prevent the spread of information about the accident. Across the Gulf of Mexico, crews on offshore rigs were prohibited from using the telephone or internet to contact friends and family. When the news finally made its way to land, the Coast Guard provided the few carefully controlled images of the Deepwater Horizon engulfed in flames to the public. This close control of information and images surrounding the spill by government and corporate officials established a trend that persisted for the duration of the response. As the oil made landfall, the federal government coordinated with BP to prevent officials, media and citizens from viewing the effects of the spill. In an effort to reduce the visibility of oil, BP applied almost two million gallons of toxic chemical dispersants with oversight from the Environmental Protection Agency and the Coast Guard. Moreover, the Coast Guard implemented a 65-foot “safety zone” around all clean-up operations, equipment and animals, making it nearly impossible for media to document the spill. Similarly, the Federal Aviation Administration also issued restrictions for media flights, prohibiting them from flying below 3000 feet over segments of the Gulf of Mexico and the Louisiana shoreline. As a result, numerous reports 363

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quickly surfaced of journalists and photographers being denied access to the Gulf by BP, the Coast Guard, local and state law enforcement and private security. In addition to suppressing images, BP intentionally altered official images of the spill to make the company appear more active than it was. Taken together, these actions constitute a coordinated state-corporate effort to conceal the environmental crimes unfolding in the Gulf of Mexico.

Problem overview Under the Oil Pollution Act 1990, in the event of a spill the private company (the “responsible party”) is accountable for plugging the well, cleaning up the oil and compensating the victims. Although the Coast Guard had the option to “federalize” the spill (which entailed leading and funding all aspects of the clean-up process and seeking reimbursement later), they instead chose to work in coordination with BP, viewing themselves as “co-combatants” in the war against Macondo (U.S. National Commission 2011: 134–135). While BP and the federal government may have been working together to contain the spill, many felt that BP was granted too much authority over the response operations. In oil spill clean-up, the Coast Guard is granted supervisory powers over oil spill response, though it is not responsible for providing the majority of the equipment or personnel (U.S. National Commission 2011: 132). Instead, nearly all of the response efforts in the Gulf were outsourced to private contractors hired by BP, making them beholden to the company’s direction (Johnson 2010). As with most aspects of the response, BP was funding operations, therefore giving the company de facto control over not only clean-up operations but also the public’s perceptions and understanding of the environmental damage.

Case study Evacuation and initial response Once the spill began, it did not take long to realize just how unprepared both the federal government and the offshore industry were to contain an uncontrollable deepwater blowout. After the blowout preventer on the Deepwater Horizon failed to sever the riser from the rig, the crew had to abandon ship. As explosions on the rig continued, the evacuation was chaotic and the traditionally rigid chain of command on the Deepwater Horizon fell apart. Not even Captain Kuchta maintained control of the evacuation, as he had abandoned ship before the crew was off the rig. The crew struggled to properly launch the lifeboats and ten people opted to take the dangerous leap 100 feet from the rig into the dark, cold ocean below. Waiting nearby to collect drilling mud from the Deepwater Horizon to use on another BP well, the Damon B. Bankston rescued the 115 surviving crew members from the waters (Juhasz 2011: 35). The first Coast Guard responders arrived by helicopter on the scene at 11:22 p.m. to begin evacuating the 16 injured crew members. By 11:30 p.m., managers took a final count of the crew members on board the Bankston, only to discover that 11 men were unaccounted for: Jason Anderson, Dale Burkeen, Donald Clark, Stephen Curtis, Roy Kemp, Gordon Jones, Karl Dale Kleppinger, Blair Manuel, Dewey Revette, Shane Roshto and Adam Weise (U.S. National Commission 2011: 17).

Treatment of survivors Once they had been rescued by the Bankston, the surviving crew members were forced to wait for 12 hours on board as they watched the rig – which for many had been their home for over eight years – burn, twist, and then topple into the ocean. 364

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Sitting there hour after hour watching the conflagration with all its cascading smaller explosions was “one of the most painful things we could have ever done,” said Randy Ezell. “To stay on location and watch the rig burn. Those guys that were on there were our family. It would be like seeing your children or your brothers or sisters perish in that manner. And that – that put some mental scarring in a lot of people’s heads that will never go away. I wish that we could, to the bare minimum, have moved away from the location or something where we didn’t just have to sit there and review that many hours. That was extremely painful.” (U.S. National Commission 2011:18–19) Finally, at 8:13 a.m. the next day the Bankston was given permission to return to shore with the surviving crew members. However, before they could return at the direction of the Coast Guard a stop was made at the Matterhorn drilling rig at 2:09 p.m. to pick up supplies (tobacco, water and coveralls) in addition to government investigators. Juhasz (2011: 48) states: Investigators from the Coast Guard and the Interior Department were waiting there to board the Bankston, but the crew was forced to wait an extra forty five minutes for the lawyers from Tidewater, the corporate parent of Transocean, to arrive. With all the investigators and lawyers finally on board, the Bankston took off for the remaining nine-and-a-half hour ride home to Fourchon, Louisiana. En route, the government investigators questioned some of the crew and had all fill out written statements. As if interrogation was not enough, when the vessel finally arrived to shore at 1:27 a.m. on Earth Day, the traumatized crew members were welcomed by security guards and portable toilets where mandatory drug tests were administered, as per standard Coast Guard procedure for all serious marine incidents resulting in damage of more than $100,000 or death. The search for the cause of the disaster was to begin with the crew members (Urbina and Gillis 2010). The crew members were then transported by private buses and escorted in through the back entrance of a hotel to finally be reunited with their families. But before they could make contact, they were pressured to sign a statement by lawyers from Transocean alleviating the company of responsibility (Shapiro 2010a). The statement was a form letter. The crew members were to fill in the date, their names and addresses, and where they were at the time the evacuation was ordered. Two sentences at the end read “I was not a witness to the incident requiring the evacuation and have no firsthand or personal knowledge regarding the incident” and “I was not injured as a result of the incident or evacuation.” The crew was asked – if they agreed – to initial those statements. (Juhasz 2011: 48) Exhausted, traumatized and wanting to be reunited with their loved ones, the crew members signed the statement. Subsequently, Transocean’s lawyers used these signed statements against crew members seeking emotional distress and other claims in court (Shapiro 2010b).

Initial images of the explosion First on the scene to begin documenting the official account of the explosion was the Coast Guard. “Within days, everyone across the country saw the same images. The photos were taken by the coast guard, provided to media outlets, and quickly seared into our collective psyche” (Juhasz 2011: 43). The isolated location of the rig helped contain the spread of images to the 365

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public, but within hours nearby rigs in the Gulf of Mexico had heard word, or could visually see the flames of the fire on the horizon. Quickly identified as a BP oil rig, the images went global. Even for people accustomed to seeing things explode on television, it was a shocking sight. Perhaps it was the isolation of the event: no cityscape, no people we could see, and, in most cases, no sound. The comparisons most commonly made were to outer space, including the explosion of the space shuttle Challenger. ( Juhasz 2011: 43) The unfolding disaster came to be defined by the carefully controlled images provided by the Coast Guard of the rig engulfed in flames. A lack of people, background and sound imbued the visual images with an additional layer of significance. Moreover, the isolated location in which the incident took place greatly shaped the subsequent response. The setting of the explosion and spill therefore allowed for greater control over the crime scene, including the ability to limit access to officials, the media and the public. Just as quickly as the evacuation had occurred, the clampdown on communication began. After the explosions, a communications blackout took effect in the early hours of April 21 and lasted for over 30 hours. The ban prohibited both phone and internet contact with others onshore and applied to all Transocean rigs in the Gulf of Mexico. According to Juhasz (2011: 47), particularly for those crew members on other rigs in the Gulf that night, the internet ban was the most difficult. Most rigs come equipped with just two satellite telephones. This, and perhaps the relative youth of the crew, explains why Facebook is their dominant mode of communication with friends and family on shore. The blackout meant no communication other than the wave of rumors coming across the television. The Gulf-wide ban was partially lifted at 7 a.m. on April 22, when phones were allowed to be used, though internet use continued to be prohibited. Despite all of the tragedy experienced by the surviving crew members of the Deepwater Horizon, they were forbidden to contact their families “until there was more definitive information” (U.S. National Commission 2011: 17). It is uncertain whether the ban on communication was issued by the Coast Guard or Transocean, but in either case, it applied to all Transocean rigs in the Gulf of Mexico and was supported by the Coast Guard. Transocean justified the ban by stating that it was trying to contain rumors while determining the missing crew members. However, others on board thought that the blackout might be an attempt by the corporations involved to control information and get their stories straight before it spread to the public (Juhasz 2011: 46). In any event, Transocean was successful in limiting images and information about the Deepwater Horizon from reaching shore.

Using chemical dispersants to conceal the oil To prevent the oil from making its way to the Gulf shoreline, an unprecedented 1.84 million gallons of toxic chemical dispersants were dumped by boats, sprayed by planes and for the first time injected directly at the wellhead. It is important to note that dispersants do not change the quantity of oil but alter its form by breaking it into smaller droplets that then sink to the bottom of the ocean, thereby limiting the visibility of oil from the surface of the water. Approved and regulated by the EPA, dispersants are used as standard protocol in oil spill response. Considered proprietary information 366

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by industry, the ingredients of dispersants are often unavailable and inaccessible to the public, making it difficult to conduct independent scientific testing. However, one report reviewed 57 known chemicals found in dispersants at the time of the Deepwater Horizon spill and concluded that five chemicals are associated with cancer; 33 chemicals are associated with skin irritation ranging from rashes to burns; 33 chemicals are linked to eye irritation; 11 chemicals are suspected of potential respiratory toxins or irritants; and ten chemicals are suspected kidney toxins (Earth Justice 2011: 3). Out of the 18 approved dispersants on the EPA’s National Product Schedule (which authorizes dispersants and other chemicals to be used in response to an oil spill), BP chose to use two of the most toxic and least effective – Corexit 9500 and 9527A – produced by Nalco (U.S. Environmental Protection Agency 2010a, 2010b). Better known for its water treatment and processing technologies, Nalco’s sale of chemical dispersants typically makes up less than 1 percent of the company’s total profit, yet the company was specifically selected by BP to mobilize one-third of the world’s total supply of dispersants to the Gulf of Mexico. One explanation for selecting Corexit over other dispersant options has to do with Nalco’s strong connections with oil industry insiders through its board of directors, including executive board members at BP and ExxonMobil (such as Rodney Frank Chase, CEO at both Nalco and BP) (DuBois 2010). Despite concerns over the toxicity of dispersants, BP and its contractors began applying dispersants to the surface on April 22, 2010, and by April 26 14,654 gallons of Corexit had been used. Dispersant use increased between April 27 and May 3, with responders applying 141,358 gallons to the surface and 168,988 gallons were applied the following week. Between May 11 and May 17, the amount of surface dispersants had reached 255,000 gallons (U.S. National Commission 2011: 144). In an attempt to break up the oil before it reached the surface, BP proposed that dispersants be applied one mile under water directly at the wellhead – something that had never been attempted before. Subsea dispersants were applied beginning on May 1 and by May 17 the cumulative total was 45,000 gallons (U.S. National Commission 2011: 7). As concerns grew about the untested use of dispersants, the EPA and the Coast Guard issued a joint directive on May 20 that mandated BP to find a less toxic alternative to Corexit within 24 hours and to begin using it within 72 hours. In response, BP promptly claimed the same day that only five of the dispersants approved by the EPA met the qualifications put forth in the memo. Moreover, as a result of proprietary information on the ingredients of chemical dispersants and scant testing on their toxicity, BP asserted that it was unable to effectively evaluate the alternatives. Since BP refused to seek out another dispersant, EPA administrator Lisa Jackson issued another directive ordering BP to reduce the amount of surface dispersants used by 75 percent, limit subsea application up to 15,000 gallons per day, and to submit a formal request in writing to the Coast Guard for exemptions (Jackson 2010). While exemption was to be allowed only in “rare cases,” the Coast Guard offered little resistance and granted nearly every request by BP to exceed the limit. According to Congressman Edward Markey, “BP carpet bombed the ocean with these chemicals, and the Coast Guard allowed them to do it” (Ball 2010). The unrestrained, unprecedented use of dispersants in the Gulf allowed BP to conceal the amount of oil unleashed by Macondo. Once broken down into tiny droplets, the oil lingered in the form of plumes that were no longer visible from the surface. While reducing the amount of oil causing damage to the shoreline, dispersants present an unknown danger to marine life in the Gulf, the severity of which scientists are only now beginning to understand.

Blockading the media As the oil began to wash ashore after May 20, suppressing images of oiled shorelines, dead whales, turtles and birds became a primary objective of the state-corporate response. It did not take 367

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long for reports to surface of journalists, citizens and government officials being denied access to the Gulf of Mexico. After trying to board a boat of BP contractors and Coast Guard officials, a CBS News crew was threatened with arrest if they did not turn around. Captured on video, one of the Coast Guard officials states that “This is BP’s rules, it’s not ours” (Edwards 2010). Furthermore, government officials were also barred from accessing the Gulf, including Senator Bill Nelson (D-FL) who attempted to bring a small group of journalists on board a Coast Guard vessel. Although the Coast Guard initially agreed, on the evening prior to the trip the Senator was contacted by the Department of Homeland Security legislative affairs office and instructed that no journalists would be permitted on board (Peters 2010). Responding to contentions that media were being restricted, USCG Lieutenant Commander Rob Wyman asserted that neither the Coast Guard nor BP had rules prohibiting access to cleanup operations. “In fact, media has been actively embedded and allowed to cover response efforts since this response began, with more than 400 embeds aboard boats and aircraft to date” (cited in Edwards 2010). Just as mainstream journalists have become embedded to cover the Iraq and Afghanistan wars, select journalists were permitted to become embedded within the Coast Guard to document the oil spill, raising questions about the impartiality of such accounts. While reports of government officials, journalists and citizens being denied access to the spill began as soon as the oil made landfall in May, on July 1 the Coast Guard officially announced a ban on civilians and media within 65 feet of clean-up equipment, workers and animals. Those who chose to breech the “safety zone” faced penalties including a Class D felony violation, a US$40,000 fine and possible jail time. However, with close oversight from BP and the Coast Guards, select applications for permission to enter the enforced zones were to be considered on a case-by-case basis (Kirkham 2010). The Federal Aviation Administration, requiring private aircraft to first obtain permission from BP’s command center, also expanded restrictions on flights over the Gulf of Mexico and Louisiana’s coastline on May 11, 2010. Moreover, media flights were instructed to stay 3000 feet above the restricted area, making it difficult to capture images of the damage below. Upon learning that a New Orleans Times-Picayune photographer would be on board, BP prohibited a scheduled flyover of the Gulf (Phillips 2010). In a letter sent by the company to Senator David Right (R-La), Southern Seaplane Inc. stated that “We are not at liberty to fly media, journalists, photographers, or scientists. . . . We strongly feel that the reason for this massive [temporary flight restriction] is that BP wants to control their exposure to the press” (Phillips 2010). Similarly, BP also coerced charter boat captains and local fisherman not to talk to the press about clean-up operations (Philips 2010). Even though BP continued to maintain that it was not blocking media access to the response, the contracts of those participating in the Vessels of Opportunity (VOO) program that went into effect on May 2, 2010 prohibited unauthorized media contact. The VOO program employed people in the fishing industry at risk of losing their jobs due to the spill in the clean-up efforts (Frohne and Dearing 2010). Included in the contract was a clause which prohibited crew members from making “news releases, marketing presentations, or any other public statements” while working on the clean-up. It also included an additional section titled “Agreement Regarding Proprietary and Confidential Information,” which states that workers cannot disclose “Data” gathered while on the job, including “plans,” “reports,” “information” and “etc.” (Frohne and Dearing 2010) For those dependent on the Gulf for survival left without an income because of the spill, speaking to the press about their experiences with the clean-up efforts could cost them what little 368

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remained of their livelihood. Frohne and Dearing (2010) conclude that “Ultimately, BP is not directly limiting media contact, but the contract added more uncertainty on top of what the fishermen are already experiencing.”

Policing the media blockade Implementing a media blockade in the Gulf of Mexico required a massive coordination of federal, state and local law enforcement in cooperation with private security contracted by BP. Writing in response to reports of sherriffs’ departments obstructing public access to the spill, the American Civil Liberties Union (ACLU) of Louisiana sent a letter to parish sheriffs on June 28, 2010 reminding them of the First Amendment rights of journalists and citizens. The letter from the ACLU documents the reporting of multiple instances of law enforcement blocking media access. For example, several reporters were instructed not to film at specific sites in Louisiana, including a beach in Grand Isle near Venice, because BP didn’t want filming there. Moreover, Jefferson Parish Deputies blocked access to Elmer’s Island Wildlife Refuge off of Grand Isle and refused to allow photographs of them blocking the road. While working a private security detail for BP, one Terrebonne Parish sheriff ’s deputy refused to allow another individual to photograph BP’s headquarters from privately owned land across the street. Although the officer admitted that it wasn’t against the rules to do so, he still attempted to intimidate the individual to stop filming and leave the premises. As the ACLU’s letter concluded, “We have reason to believe that deputies in other coastal parishes may also be working with BP to impede or prevent access to public lands and to interfere with members of the public and the media” (Esman 2010). Journalists not only faced resistance from law enforcement on the coastline, but were also questioned by law enforcement and BP security when attempting to document stories miles away from the spill. After photographing a sign on a public road near BP’s Texas City refinery plant, ProPublica photojournalist Lance Rosenfeld was followed by a BP security guard and later detained at a nearby gas station by a local police officer and a man who identified himself as from the Department of Homeland Security. Although the officers reviewed Rosenfeld’s photographs and determined them not to be a threat, they took down his name, date of birth, social security number and other personal information and then presented this information to the BP security guard before releasing him (Engelberg 2010). In addition to public law enforcement, BP also employed numerous private security firms to prevent access to beaches and clean-up operations, though it is difficult to identify how many contractors participated in the blockade. For example, a reporter from New Orleans 6WDSU was confronted by representatives from Talon Security who attempted to block him from interviewing clean-up workers on a local beach (Rawnsley 2010). As documented by Scahill (2010), Wackenhut was hired to do perimeter security for the Deepwater Horizon Unified Command jointly run by BP and multiple federal agencies, including the Coast Guard, DHS and DOD. After being denied access by Wackenhut personnel to interview Unified Command officials at the Center, Naomi Klein, who spent time in the Gulf following Hurricane Katrina documenting profiteering and privatization, commented, “The whole Gulf Coast is a corporate oil state. . . . It’s like BP broke it, so now they own the entire Gulf Coast” (Scahill 2010).

Manipulating official images and information Photoshopping official images of response On more than one occasion in mid-July 2010, BP made efforts to deliberately alter official images of the spill response using Adobe Photoshop. The alterations give the impression that 369

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BP officials were engaged in more sensational action then the original photographs document. In the first instance, a photo of the Command Center in Houston shows workers monitoring a wall of ten giant video screens displaying underwater images of the leak. The manipulations were made public when a blogger for the website “Americablog” wrote about the editing that had taken place (Aravosis 2011). A spokesperson for BP admitted that two of the screens had actually been blank in the original picture and three remote-operated vehicle images had been added with photo-editing software. Furthermore, the spokesperson commented that BP had ordered its workers to only use Photoshop for corrections such as color, cropping and removing glare. BP claimed that the photographer was “just showing off his Photoshop skills and there was no ill intent” (Hutchinson 2010). In further clarification BP spokesperson Scott Dean stated, “We told the photographer not to do that [cutting and pasting] again, and he understands,” adding that “BP has given other photographers the same instruction” (Hanna 2010). The very next day, BP was once again caught doctoring images on their official website. The second photo, entitled “View of the MC 252 site from the cockpit of a PHI S-92 helicopter 26 June 2010,” was taken from the inside of a helicopter and appears to show it flying over the Gulf in response to the Deepwater Horizon rig. However, a number of objects in the picture contradict the appearance that it is flying. “Among the problems identified included part of a control tower appearing in the top of the left of the picture, different shades of colors, its pilot holding a pre-flight checklist and its control gauges showing the helicopter’s door and ramp open and its parking brake engaged” (Hough 2010). For those familiar with the program Photoshop, these glaring mistakes gave the impression that whoever made the alterations did so deliberately to make a point, or were totally inept at their job.

Redirecting internet searches In yet another attempt to shape their public image, BP also sought to redirect the flow of internet traffic by purchasing Google AdWords for terms such as “gulf oil spill.” Funding such advertisements elevates the website link, and thus the message sponsored by BP, to the top of the list of search results. Questioning if BP’s misleading advertisement is really that bad, Burkart (2010) comments, “If buying a top-level Google AdWord is a sin, it is certainly at the bottom of a very long list. But when you click on the official BP website link and see the lovely, perfectly white beaches on the home page, it’s hard not to get mad.” It is not merely an instance of photo alteration, sponsoring or deception that indicts BP for its misdeeds during the spill. What is more significant is the deliberately orchestrated campaign between state and corporate officials to conceal from the public the environmental damage caused by BP’s oil.

Conclusions and implications From the outset of the state-corporate response to the spill, Transocean, BP and the Coast Guard worked to contain images and information from reaching shore by interrogating and coercing survivors of the explosion and imposing a communications blackout for drilling rigs throughout the Gulf. As the oil gushed uncontrollably, BP and the Coast Guard worked in coordination to apply an unprecedented amount of toxic chemical dispersants in an effort to reduce the amount of oil visible from the water’s surface. When the oil from Macondo washed ashore, the federal government in cooperation with BP established a media blackout throughout the Gulf of Mexico region that was enforced by federal, state and local law enforcement alongside BP’s private security forces. One element of the blockade was the Coast Guard’s 65-foot “safety zone” around all clean-up operations which prohibited both journalists and citizens alike from viewing the effects 370

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of the spill and the state-corporate response. The Federal Aviation Administration followed suit by implementing flight restrictions over the Gulf, which prohibited media flights below 3000 feet, making it virtually impossible to document the extent of the damage from the air. Furthermore, BP made efforts to restrict private responders using their own boats in the cleanup effort through the Vessels of Opportunity program that contractually prohibited participants from making public statements or talking to the media about response operations. Enforcing the restrictions on access to clean-up operations along the Gulf of Mexico was a complicated network of law enforcement from the Department of Homeland Security, the Coast Guard and the Louisiana County Sheriff ’s officers in cooperation with BP private security from Wackenhut and Talon Security, among others. As the accounts of multiple journalists, scientists and citizens make clear, at times it was nearly impossible to determine exactly who was enforcing the blockade on the Gulf. By some reports, the Coast Guard was taking orders from BP, whose private security forces worked as co-equals alongside the Sheriff and DHS. Regardless of who was calling the shots, law enforcement and private security nonetheless enforced the rules, barring the public from viewing the devastating effects of the spill. When the effects of the spill could not be concealed by dispersants, nor hidden from public view through a media blackout, BP went so far as to deliberately alter official images of the response efforts. Twice in two days BP was caught by internet bloggers who identified, unveiled, and then mocked the amateur Photoshopping skills used to make the company appear more active in photographs of response efforts than they actually were. Moreover, BP also bought advertisements from Google AdWords that redirected web searches for information about the Gulf of Mexico spill to the company’s website. Combined with efforts to restrict access to the clean-up operations, BP’s manipulation of official images and directing the flow of internet traffic suggests a coordinated campaign to suppress and distort images and information about the effects of the spill. While working as “co-combatants” in the fight against the spill, BP and the Coast Guard worked hand in hand to hide the true environmental harm; however, because BP employed an army of privately contracted oil spill response organizations this gave them enormous control over operations. The political – economic relations in the response to the spill are best summarized by Naomi Klein: “The whole Gulf Coast is a corporate oil state. . . . It’s like BP broke it, so now they own the entire Gulf Coast” (Scahill 2010). As reports from journalists, citizens and officials reveal, BP took multiple steps to censor images and information from the public in an effort to limit their liability and downplay the severity of the disaster. Carefully crafted by BP and the federal government, the limited flow of images and information following the spill depicts only a fraction of the harm to human beings, wildlife and the environment, the true extent of which has yet to be realized. The few accounts from embedded journalists provide an insufficient record of the crimes in the Gulf of Mexico. The state-corporate blockade on the media that was enforced by federal, state, local and private law enforcement agencies effectively prevented many journalists and citizens from viewing the impacts of the spill first hand. As this case study has demonstrated, without free and independent media coverage, the crimes of the powerful escape scrutiny and evade accountability.

References Aravosis, John. (2011). “FLASHBACK: BP photoshops fake photo of oil spill crisis command center to make it look busy.” April 20. Americablog. Available at: www.americablog.com/2010/07/bp-photoshopsfake-photo-of-command.html. Ball, Jeffrey. (2010). “Congress questions oil-dispersant usage.” August 1. The Wall Street Journal. Available at: www.online.wsj.com/article/SB10001424052748703787904575403393553353172.html. 371

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Burkart, Karl. (2010). “BP redirects the flow of information with Google AdWords.” June 8. Mother Nature Network. Available at: www.mnn.com/green-tech/computers/blogs/bp-redirects-the-flow-ofinformation-with-google-adwords. DuBois, Shelley. (2010). “Who is Nalco?” June 15. CNN Money. Available at: www.money.cnn.com/ 2010/06/14/news/companies/nalco_macondo_bp_spill.fortune/index.htm. Earth Justice. (2011). The Chaos of Clean-up: Analysis of Potential Health and Environmental Impacts of Chemicals in Dispersant Products. www.earthjustice.org/sites/default/files/Oil_Dispersants_Report.pdf. Edwards, David. (2010). “After blocking CBS crew, Coast Guard denies ‘BP rules.’” The Raw Story. May 20. Available at: www.rawstory.com/rs/2010/05/20/coast-guard-bps-rules/. Engelberg, Stephen. (2010). “Photographer briefly detained by police near BP’s Texas City Refinery.” July 2. ProPublica. Available at: www.propublica.org/article/photographer-detained-briefly-by-bp-andlocal-police. Esman, Marjorie R. (2010). “Open letter concerning media and public access to BP oil spill.” June 28. American Civil Liberties Union of Louisiana. Available at: www.laaclu.org/PDF_documents/Media_ Public_Access_Oil_Spill_Letter_062810.pdf. Frohne, Lauren and Jessey Dearing. (2010). “BP oil spill contract and letter cloud media access.” May 31. News21, The University of North Carolina at Chapel Hill. Available at: www.unc.news21.com/index. php/powering-a-nation-blog/bp-oil-spill-contract-and-letter-cloud-media-access.html. Hanna, Jason. (2010). “BP acknowledges another altered photo, posts originals.” CNN. July 22. Available at: www.cnn.com/2010/US/07/22/bp.altered.photos/. Hough, Andrew. (2010). “BP admits it ‘Photoshopped’ official images as oil spill ‘cut and paste’ row escalates.” July 22. The Telegraph. Available at: www.telegraph.co.uk/earth/energy/oil/7904221/BPadmits-it-Photoshopped-official-images-as-oil-spill-cut-and-paste-row-escalates.html. Hutchinson, Peter. (2010). “BP under fire over ‘Photoshopped’ image of oil spill in command centre.” July 21. The Telegraph. Available at: www.telegraph.co.uk/earth/energy/oil/7901935/BP-under-fireover-photoshopped-image-of-oil-spill-command-centre.html. Jackson, Lisa P. (2010). “Letter from Lisa P. Jackson, EPA Administrator, to David Rainey, V.P. of Gulf of Mexico Exploration, BP Exploration and Production.” May 26. Available at: www.epa.gov/bpspill/ dispersants/Rainey-letter-052610.pdf. Johnson, Brad. (2010). “BP’s Contractor Army.” July 1. Think Progress. Available at: www.thinkprogress. org/report/bp-contractors/?mobile=nc. Juhasz, Antonia. (2011). Black Tide: The Devastating Impact of the Gulf Oil Spill. Hoboken, NJ: John Wiley & Sons. Kirkham, Chris. (2010). “Media, boaters could face criminal penalties by entering oil cleanup ‘safety zone.’” The Times-Picayune, July 1. Available at: www.nola.com/news/gulf-oil-spill/index.ssf/2010/07/ media_boaters_could_face_crimi.html. Peters, Jeremy W. (2010). “Efforts to limit the flow of spill news.” June 9, The New York Times. Available at: www.nytimes.com/2010/06/10/us/10access.html?pagewanted=all. Phillips, Matthew. 2010. “Photographers say BP restricts access to oil spill.” Newsweek, May 25. Available at: www.newsweek.com/photographers-say-bp-restricts-access-oil-spill-72849. Rawnsley, Adam. 2010. “BP hires Mercs to block oily beaches.” June 15, Wired. Available at: www.wired. com/dangerroom/2010/06/bp-hires-mercs-to-block-oily-beaches/?utm_source=twitterfeed&utm_ medium=twitter#ixzz0qvQN3iIg. Scahill, Jeremy. 2010. “BP and US government ‘Command Center’ guarded by company from Afghan Embassy hazing scandal.” May 28, The Nation. Available at: www.thenation.com/blog/bp-and-usgovernment-command-center-guarded-company-afghan-embassy-hazing-scandal. Shapiro, Joseph. (2010a). “Rig survivors felt coerced to sign waivers.” May 6, National Public Radio. Available at: www.npr.org/templates/story/story.php?storyId=126565283&ps=rs. ——. (2010b). “Blast survivors kept isolated on gulf for hours.” May 10, National Public Radio. Available at: www.npr.org/2010/05/10/126667241/blast-survivors-kept-isolated-on-gulf-for-hours. U.S. Environmental Protection Agency. (2010a). “Corexit EC9500A, NCP Product Schedule.” Available at: www.epa.gov/oem/content/ncp/products/corex950.htm. ——. (2010b). “Corexit EC9527A, NCP Product Schedule.” Available at: www.epa.gov/oem/content/ ncp/products/corex952.htm. U.S. National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. (2011). Deep Water: The Gulf Oil Disaster and the Future of Offshore Oil Drilling, Report to the President. Available at: www.oilspill commission.gov/sites/default/files/documents/DEEPWATER_ReporttothePresident_FINAL.pdf. Urbina, Ian and Justin Gillis. (2010). “Workers on oil rig recall a terrible night of blasts.” May 7, The New York Times. Available at: www.nytimes.com/2010/05/08/us/08rig.html?pagewanted=all. 372

26 Collaborative state and corporate crime Fraud, unions and elite power in Mexico Maya Barak

Beginning in 2006 and unresolved to this day, the case of the National Mine, Metal and Steel Workers Union of Mexico involves dozens of civil, criminal, and extra-legal harms, including the death of 65 miners and the injury of numerous others, police brutality, threats, bribes, forged documents, fraudulent charges and conspiracy. Perpetrated by Grupo Mexico, one of the largest mining companies worldwide, and the Mexican government, these crimes embody collaboration between the mutual interests of the state and capital. This chapter specifically recounts the contemporary social history of a rather insidious case of a series of crimes occurring at the intersection of government and business. At the same time, it also calls into question traditional understandings of state-corporate/corporate-state crime. Standard treatments or conceptions of state-corporate/corporate-state crime emphasize the cause-and-effect relationships between government and business, as well as who is responsible for initiating and who is responsible for facilitating harm. By contrast, the Mexican labor conflict examined here highlights the ways in which governments and corporations collaboratively commit harm in the interest of shared goals and ideology. As used here, collaborative state and corporate crime includes actions taken by governmental or business actors working presumably for their mutual benefit. Finally, this case study illustrates the roles played by neoliberal ideology, anti-labor socio-political culture and elites in producing many of the crimes of the powerful.

The case of the National Mine, Metal and Steel Workers Union of Mexico The catalyst: tragedy at Pasta de Conchos At 2:30 a.m. on February 19, 2006, a methane gas explosion occurred at the Pasta de Conchos coal-mine in Coahuila, Mexico, leaving 65 miners trapped more than 500 feet below ground. The disaster made nationwide news as authorities scrambled to the scene in search of survivors. Just six days later, Francisco Xavier Salazar Sáenz, then Labor Secretary of Mexico, announced that rescue efforts would be halted in the interest of protecting rescue crews from dangerously high levels of natural gas that had likely already killed any initial survivors (Grillo 2006). The mine was sealed. 373

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Mineworkers, unionized under the National Mine, Metal and Steel Workers Union of Mexico (The Miners), insisted that they had repeatedly asked Grupo Mexico to address numerous safety concerns at the Pasta de Conchos mine, but that the company failed to act (Grillo 2006). Two years and several court decisions later, the Mexican government failed to hold Grupo Mexico responsible for the mine disaster. The mine was never reopened as part of an official investigation into the cause of the disaster and the miners’ bodies were never recovered, provoking much criticism (La Jornada 2009). Included among such critics were the widows of Pasta de Conchos, who organized shortly after the explosion. The widows cried foul play: “the company does not want to reopen the mine because it would reveal the true causes behind the workers deaths . . . it would rather close the mine than accept responsibility”1 (La Jornada 2009). Eight years later, despite continued cries for investigation and yearly op eds shaming Grupo Mexico and the Mexican government for their poor response to the disaster, nothing has changed.

Section 65 strikes After witnessing the Pasta de Conchos tragedy, Section 65 of The Miners, also employed at a Grupo Mexico-owned mine, decided they could no longer continue working in the dangerous and illegal conditions at their mine in Canena, Sonora. First, Section 65 lodged formal complaints about the lack of health and safety precautions at the mine, resulting in a two-day inspection by the Mexican Labour Department (STPS). STPS investigated the claims and found a number of major health and safety problems, identifying 72 necessary corrective actions; Grupo Mexico did nothing to address the 72 problems (IMF 2008a, 2008b). Section 65 miners went on strike on July 30, 2007 (IMF 2008a, 2008b). At the request of Section 65, a second inspection organized by the Maquiladora Health and Safety Support Network (MHSSN) was performed in October 2007 by a team of independent occupational health professionals. The inspection lasted three days and consisted of interviews, medical examinations, and a four-hour walk-around visit of the mine and its ore processing plants. The results confirmed the STPS’ initial findings. Some of the more serious violations included: the deliberate dismantling of dust collectors, resulting in exposure to concentrations of dust containing ten times the legal limit of quartz silica, a mineral that has been linked to both silicosis and lung cancer; a substantial prevalence of shortness of breath, wheezing, coughing, and sputum production related to dust exposure among miners; insufficient health and safety training, explicitly violating Mexican labor law; and the failure to install proper ventilation and source pollution controls, resulting in hazardous exposure to sulfuric acid mists (MHSSN Report 2008). Furthermore, the MHSSN Report documented detailed anecdotes of 50 separate accidents occurring in the 12 months prior to the October investigation, all of which appeared to result from poorly maintained machinery and inadequate safety procedures (MHSSN Report 2008). On January 11, 2008, Section 65 workers congregated at the gates of the Cananea mine facilities to prevent mine operations from resuming, a legal action in accordance with Mexican law. The same day, the federal Conciliation and Arbitration Board (JNCA) declared the Section 65 strike illegal, granting the mine permission to reopen and fire strikers who refused to return to work (Bacon 2008). By midday, 700 armed state and federal security forces had arrived to break the strike and evict workers from the mine (IMF 2008a, 2008b). Video footage taken by miners at the scene reveals police in full riot gear preparing and then initiating the attack, which included rubber bullets and tear gas (Section 65 of the National Mine, Metal and Steel Workers Union of Mexico 2009). By the end of the attack, at least 20 miners had been injured and five were reported missing (Bacon 2008). On January 12, Section 65 went before the Sixth District Judge for labor matters to contest the JNCA ruling. In a rather bizarre and unconstitutional ruling, the judge barred the JNCA 374

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from declaring the strike illegal, but stated that Grupo Mexico could reopen the mine using union or non-union workers, despite the strike’s acknowledged legality (Bacon 2008). Over the next few years, the legality of Section 65’s ongoing strike was challenged, lost, and regained before various government courts and boards. In 2009, Grupo Mexico, resting upon a claim of force majeure – a section of Mexican labor law that allows companies to stop operations indefinitely if facilities are made inoperable by outside forces such as facility damage – was granted government permission to stop mining operations in Cananea, fire all employees without any compensation, and permanently sever its relationship with Section 65 due to the damage strikers had allegedly caused to the mine facilities (La Jornada 2009). On June 6, 2010, over 3000 federal and 500 state police entered the Cananea mine and forcibly removed strikers once more, injuring several strikers and arresting five miners. On June 7, 2011, the Department of Labor and Social Security announced that a new union, the Confederation of Mexican Workers (CTM), had signed a collective contract with Grupo Mexico for the operations of the mine at Cananea despite the contract with Section 65 still being in force. A month later in a final ruling, Section 65’s strike was deemed illegal (ITUC CSI IGB). A Supreme Court decision followed, ruling that authorities should not intervene in the internal affairs of the union (ITUC CSI IGB).

Attacks against Gómez and the National Mine, Metal and Steel Workers Union of Mexico Dangerous health and safety conditions at the Pasta de Conchos and Cananea mines, violent strike-breaking tactics and contradictory legal decisions represent a mere fraction of the harms perpetrated against The Miners. Before Section 65’s strike and even before the explosion at Pasta de Conchos, forces aimed at usurping the autonomy of The Miners had already been set in motion. In early 2006, Napoleón Gómez Urrutia, General Secretary of The Miners, received a bid to lead the Mexican Labor Congress (CT), a national assembly of representatives from unions across the country created for the promotion of labor interests. Gómez was well suited for the post, holding a Master’s degree in economics from Oxford, having spent 13 years as Director General of the Mexican National Mint, and one two-year term serving as International President of the Mint Directors Conference. Gómez also had a long history of working with unions: Gómez’s father had been General Secretary of The Miners for years, and when he died in 2001 Gómez was chosen as an interim replacement. Gómez was then elected General Secretary in 2002. Under Gómez’s leadership, The Miners created several social welfare programs for union members, including: Educated Miner, Miners’ Insurance, Miners with Homes, and Healthy Miners (Gómez 2013). Furthermore, collective contracts signed under his tenure included an average 14 percent wage increase for miners, compared to the nationwide average of just 4 percent (Gómez 2013). What is more, in 2005 Gómez and The Miners signed a solidarity agreement with United Steelworkers (Gómez 2013). Although popular with unions, many in the realms of government and business considered Gómez to be a major threat. As Leo W. Gerard, International President of United Steelworkers, once explained, “[Gómez] fought successfully for higher wages . . . engaged in international solidarity . . . and challenged the government-controlled labor federations. [The government] decided to use any means necessary to eliminate that threat” (Gómez 2013). On January 20, 2006, with elections quickly approaching, three former members of The Miners (Elias Morales Hernandez, Miguel Castilleja Mendiola and José Martin Perales Lozano) filed accusations of corruption and embezzlement against Gómez with the Attorney General of Mexico. All three of Gómez’s accusers had previously been involved in disputes with the union. 375

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Morales was expelled from the union at the May 2001 Miners Union National Convention after an internal investigation revealed that he had been passing on confidential information from union meetings to Grupo Mexico (Gomez v. Larrea 2013). Castilleja was expelled from the union in early 2002 for passing on confidential information to Grupo Mexico and soliciting union members to join a dissident union; Perales was expelled from the union six months prior for the same reasons (Gomez v. Larrea 2013). Seven years later, the three men would be named as defendants – along with a handful of others including Grupo Mexico – in a civil suit led by Gómez and The Miners and heard by the Supreme Court of British Columbia, where they would be accused of knowingly and purposefully “bringing false accusations of a serious criminal offence” to the Mexican Attorney General for the “sole purpose of injuring the Plaintiffs‘ reputation, harming the Plaintiffs and attempting to break the [union]” (Gomez v. Larrea 2013). But let us not get ahead of the events as they unfolded. On February 14, 2006, Gómez won the CT election. Two days later, then-Mexican Labor Secretary Salazar reversed the election outcome, seized union assets, and removed Gómez from his post as General Secretary. Salazar next appointed Morales General Secretary of the union and promptly replaced the union’s entire Executive Committee with a new team, none of whom were union members at the time (IMF 2008b). The following day The Miners’ union headquarters in Mexico City were assaulted by a group of several hundred men armed with “sticks, stones, knives, and firearms” (Gómez 2013: 44). The men, led by Morales, attempted to take over the union office, stealing numerous documents and union checks, as well as destroying union property before finally leaving; the police failed to investigate the attack (Gómez 2014). Then came the Pasta de Conchos explosion. Despite government investigations into Gómez’s activities as General Secretary of the union, he publicly denounced Grupo Mexico and the Mexican government, blaming the explosion on severe and wanton neglect of mine conditions. By the end of the month, the government announced that it was investigating Gómez’s alleged mishandling of the union’s Trust Fund. In March, an overwhelming majority of members of The Miners voted to reinstate Gómez as General Secretary; however, this was not permitted (IMF 2008b). Instead, a few months later the Federal Labor Board authorized elections for new union representation at all eight Grupo Mexicoowned mines. On the ballot was the National Union of Workers in the Exploration, Exploitation and Benefit of Mines (SUTEEBM), a union known for placing company interests above those of workers. In addition to giving The Miners less than 48 hours’ notice that the elections would be occurring, the elections exhibited a number of irregularities, including multiple instances of bribes and police intimidation at the different election sites (IMF 2008b). Furthermore, a number of employees were laid off just before the elections took place, including 15 miners at the San Luis Potosí mine and 900 miners at the Nacozari mine (IMF 2008b). An even greater number of employees were merely prevented from participating, including between 900 and 1200 employees at the la Caridad mine (IMF 2008b). In fact, many miners at the Nueva Rostia mine were actually locked into the mine during the elections, making it impossible for them to participate (IMF 2008b). In the midst of the election controversy, Gómez and his family were forced into selfimposed exile in Canada after receiving increasingly menacing threats directed at Gómez, his wife and his children. Eight years later, the family still resides in Canada despite repeated calls for Gómez’s extradition by the Mexican government; Gómez obtained Canadian citizenship in August 2014. To date, the majority of findings in The Miners controversy have supported Gómez’s innocence. Both an investigation by the National Banking and Securities Commission (CNBV) and an independent audit by Horwath Berney Audit S.A., located in Geneva, have confirmed that Gómez did not embezzle or misuse any Trust Fund money, and that all the money had been properly accounted for (IMF 2008b). Despite these findings, Gómez has been charged 11 times 376

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for the alleged mishandling of Trust Fund money; the most recent charges are still pending as of August 2014. Along with these charges, the Mexican government has called upon INTERPOL to issue a “Red Notice” for Gómez demanding his localization and extradition to Mexico for prosecution. INTERPOL has repeatedly rejected Mexico’s request, claiming that the suits brought by Mexico against Gómez have a “political character” (La Jornada 2014). Despite these rejections, the Mexican government is still pursuing a Red Notice. On August 12, 2014, the Mexican government claimed to have obtained a Red Notice against Gómez from INTERPOL; however, by late 2014 the notice had yet to appear on INTERPOL’s website (interpol.int; La Jornada 2014). In addition to such evidence of Gómez’s innocence, a number of facts have come to light that suggest collaboration between the Mexican government and Grupo Mexico aimed at destroying Gómez, Section 65 and the rest of The Miners. These include: the governor of Coahuila’s February 2007 admission that then-president Vincente Fox threatened to withhold 200 million pesos from the state’s budget unless Gómez was arrested, even if it required inventing charges; the Federal Public Prosecutor’s criminal investigation against two former Deputy Attorney Generals, Daniel Cabeza de Vaca-Hernández and Jacob Najera, for having concealed a CNBV report confirming Gómez’s innocence; the confirmed forgery of Juan Luis Zuniga’s signature on a document used by the then-Secretary of Labor Salazar to remove Gómez from his position as General Secretary and replace him with Morales Hernandez; several bank deposit receipts totaling US$50,000 from a subsidiary of Grupo Mexico made out to Castilleja, one of Gómez’s original accusers; and, repeated attempts to overturn federal appeals court decisions clearing Gómez of all embezzlement charges and calling for the official reinstatement of Gómez to his post as General Secretary of The Miners (Gómez v. Larrea 2013; IMF 2008b).

Crime at the intersection of government and business Untangling state-corporate/corporate-state crimes The identification of relevant motivations, opportunities and social controls that led to the harms experienced by The Miners are complex, involving a number of governmental, business and union actors as well as regulatory and criminal laws. I argue that the tools of investigation employed by traditional analyses of state-corporate/corporate-state crimes, such as state influenced or initiated corporate crime and corporate influenced or initiated state crime, are not enough to adequately explain all of the criminalizing forces that were at work, for example, in the case of The Miners. In addition, these state and corporate crimes require an analysis of the ongoing collaborative relations (i.e., neoliberalism, privatization, anti-labor) between the mutual interests of capitalist states and capital accumulation. State-corporate crime is harm that occurs at the intersection of government and business (Michalowski and Kramer 2006). More specifically, these are: illegal or socially injurious actions that result from a mutually reinforcing interaction between (1) policies and/or practices in pursuit of the goals of one or more institutions of political governance and (2) policies and/or practices in pursuit of the goals of one or more institutions of economic production and distribution. (Michalowski and Kramer 2006: 20) State-corporate crime is often divided into two types: state-initiated and state-facilitated corporate crimes. State-initiated corporate crimes refer to those crimes in which a government-employed corporation engages in organizational deviance at the behest or with the tacit approval of the government (Michalowski and Kramer 2006). Such crimes are not present in the case of The Miners. 377

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State-facilitated corporate crimes are those crimes that are made possible by government failure to restrain deviant business activities through lack of regulations and/or enforcements (Michalowski and Kramer 2006). Failure to regulate business could stem from direct collusion between business and government or adherence to shared goals. In the case of the health and safety violations at a number of Grupo Mexico mines, these are classic examples of state-facilitated corporate crime that resulted in a major explosion and subsequent death of 65 miners at the Pasta de Conchos mine. The illegal firing of striking miners, as well as the forcible exclusion of miners from participating in union elections fall into the same category. In all of these cases, the Mexican government consistently chose not to enforce existing laws, failing to restrain or punish the company. Furthermore, Mexican labor board decisions in favor of Section 65’s strike were repeatedly appealed and reversed, only to finally be ignored altogether when Grupo Mexico ran out of appeals or legal challenges. As Matthews (2006) points out, corporations, like governments, can also be responsible for facilitating or initiating crimes. He refers to such crimes as corporate-facilitated or corporateinitiated state-corporate crimes. These are defined as “illegal or socially injurious actions of the state that are knowingly facilitated [or initiated] by the voluntary actions [or requests] of a corporation through its pursuit of its shared goals of the state or its own economic or political interests” (2006: 119/132). For the purpose of simplification, I refer to such crimes as corporatestate crimes, or state crimes initiated or facilitated by corporations. For instance, state police use of excessive force – including rubber bullets and tear gas – to break up and disperse union members outside Grupo Mexico’s Cananea mine is an example of corporate-initiated state crime. In this instance, Grupo Mexico called upon the state of Coahuila to provide police officers in order break up Section 65’s strike. Whether or not Grupo Mexico explicitly asked the police to use excessive force remains debatable, but the fact that they did so makes their actions criminal.

State-influenced corporate crimes and corporate-influenced state crimes The Miners’ case explored here involves a number of state-facilitated corporate and corporateinitiated state crimes. However, the case also involves many related crimes that fall outside traditional interpretations of state-corporate crime. Instead, these crimes involve the deviant behaviors of Grupo Mexico or the Mexican government in relation to perceptions of one another’s desires and in anticipation of one another’s future actions. I refer to these as “state-influenced corporate crimes” and “corporate-influenced state crimes.” Such crimes of influence do not involve direct pressure, as with crimes of initiation, nor are they made possible due to another’s inaction, as with crimes of facilitation. Instead, they are precipitated by the assumptions which corporate and government actors make in relation to laissez-fare ideology, coupled with a desire to serve their mutual needs (interests). In some cases, such influenced crime may involve working toward commonly held goals or a shared ideology among government and business elites, but not explicit (initiated) or implicit (facilitated) cooperation. As Kauzlarich and colleagues (2010) note in their discussion of the nuances of state crime, elites often have great influence over government, creating and promoting ideologies that are in their direct and indirect self-interests, which can lead to unsolicited deviant behavior by government actors. Just as elite ideology can infiltrate government, such ideology can also infiltrate corporations and encourage deviance. This is exacerbated by the frequent backand-forth shuffling of elites between positions in government and business. The Miners’ case involves numerous corporate-influenced state crimes. For instance, overturning CT election results, removing Gómez from his post using forged documents, and replacing him and the union’s entire Executive Committee with unelected non-union representatives are all examples of crimes carried out by the government with corporate interests in mind. As an outspoken labor activist, Gómez posed a threat not only to Grupo Mexico, but also to corporate 378

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interests more generally. As noted, throughout his tenure with The Miners, Gómez implemented and strengthened a number of union-based social programs for members, consistently negotiated substantial wage and benefit increases, and signed a Strategic Solidarity Alliance with the United Steelworkers (Gómez 2013). Furthermore, he was a popular labor figure in Mexico with growing connections to the global labor movement. Had he been allowed to assume his position in the CT, he would have posed an even greater threat to corporate interests. It is not surprising, then, that several of the aggressors in The Miners’ conflict are elite actors with ties to both government and business. For instance, one of the key players in The Miners’ conflict, Germán Larrea, is one of the wealthiest men in Mexico and the fifth richest man in Latin America (Alexander2014). He has a net worth of US$16 billion (Alexander 2014). Chairman of the Board of Directors and President and Chief Executive Officer of Grupo Mexico, Larrea has a long history of corporate leadership. He was previously Vice Chairman of Grupo Mexico and has been on the Board of Directors since 1981. He is also Chairman of the Board of Directors and Chief Executive Officer of Empresarios Industriales (a holding company), Compañia Perforadora Mexico (a drilling company), Mexico Compañia Constructora (a construction company), Fondo Inmobiliario (a real estate company), and Grupo Ferroviario Mexicano (a railroad company). In addition, he currently serves on the Board of Directors of Banco Nacional de Mexico (a subsidiary of Citigroup), which is part of several other companies including Grupo Televisa (a television company). It is worth noting that Grupo Televisa, one of the largest media conglomerates in Latin America, took a strong “adversarial journalistic and editorial stance” against Gómez and The Miners, running specials and advertisements that attacked Gómez and the union (Gomez v. Larrea 2013; Gómez 2013). Francisco Salazar, the then-Labor Secretary who overturned the CT election and removed Gómez from his post as General Secretary of The Miners, has also had significant ties to business. He was Production Manager at Coyoacán Química from 1971 to 1975, Director of Vimsa from 1975 to 1979, and from 1979 to 1991 was President and General Director of Latinoamericana de Productos Químicos, a company that supplied raw chemicals to Grupo Mexico (Gómez 2013). Furthermore, when Morales, Castilleja and Martín presented their complaint against Gómez, they did so with the assistance of lawyers Antonio and Patricio O’Farrill, who were borrowed from Julio Villarreal, Chairman, CEO and President of Grupo Villacero, a massive steel company (Gómez 2013). Although these are just a handful of actors, all of the aforementioned men are incredibly well connected and influential in realms of business and government. The full extent of elite influence in The Miners’ case is unknown. What is apparent, however, is that the government, influenced by corporate interests and shared neoliberal economic ideology, produced fraudulent charges against Gómez, prompting his removal from positions of power in the CT and The Miners, and allowing the government to freeze The Miners’ financial assets, including those needed to support various union strikes against Grupo Mexico. Furthermore, government actors attempted to conceal exculpatory evidence during their investigation into Gómez and failed to close the investigation, even after two separate and independent investigations declared the charges to be unfounded and Gómez to be innocent. It is worth stressing that the government is still pursuing these charges, along with an INTERPOL Red Notice, despite the fact that such repetitive charges violate the Mexican Constitution and that both Canada and INTERPOL have repeatedly declined to cooperate.

Collaborative state and corporate crime The prospect of influenced state-corporate/corporate-state crimes necessitates two rather important questions in the context of power and crime. First, where does one draw the line between initiation, facilitation, and influence? Imagine a scenario in which state actors fail to enforce 379

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environmental protection legislation or, better yet, they deregulate, facilitating a corporation’s crimes against the environment. Were the state’s actions theirs alone, or were they influenced by pro-business political and economic ideology shared by the company responsible for an oil spill? In other words, did the state intentionally opt for non-enforcement or deregulation to please corporate interests? Imagine another scenario wherein a mining company asks a governor to send in state police to maintain the “law and order” of striking workers. The governor not only provides state police, but also instructs them to disperse the strikers by whatever means necessary, which results in excessive use of force against union members, their families, and anyone else unable to take cover. Perhaps, before the company even asks, the governor offers to send state police to the strike. In these instances, how do we distinguish between influence, initiation and facilitation? Second, does this distinction between different categories of state-corporate/corporate-state crime really matter? Is there an essential difference between crimes of initiation, facilitation and influence? The result is the same in all three instances: crime occurs at the intersection of government and business. However, they are not necessarily equivalent; one who initiates something is responsible for its inception, whereas one who facilitates merely allows said event to happen. Similarly, one who influences neither begins anything nor allows anything to occur, but simply “plants the seed” as they say, shining light on possibility. Perhaps the essential distinction between initiation, facilitation and influence is one of culpability. As such we could envision a spectrum of culpability with initiators being the most culpable, followed by facilitators and then influencers. Yet without those who supply the idea, there could be no idea, and were those who facilitate to prevent instead of allow, there could be no action. In other words, even those who merely influence or facilitate could be considered just as culpable as those who explicitly initiate. Furthermore, power at the intersection of government and business often operates in the shadows – in elite country club dining rooms, closed meetings with shareholders, and during private conversations between select individuals – making it difficult to “untangle” just who said what to whom or what exactly precipitated which events. In the case of The Miners, Grupo Mexico and other corporate interests could have directly pressured the government, for example, to pursue fraudulent charges against Gómez, to freeze union assets, and to aggressively break up Section 65’s striking workers; however, there is simply no concrete evidence that this occurred and thus it appears to have been the result of corporate influence and elite ties. Similarly, it is difficult to categorize the bribe paid by Grupo Mexico to one of Gómez’s accusers using traditional definitions of state-corporate/corporate-state crime because there is no evidence of government input or direction. On the other hand, considering then-President Vicente Fox’s demands that Gómez be charged with something, as well as the government’s vigilant pursuance of said charges despite exculpatory evidence, it is quite likely that Grupo Mexico’s bribe was at least influenced by government responses to the CT election and Section 65‘s strike. In addition, while a number of Section 65 miners, as well as Gómez and his family, received threats of violence and even death, it is virtually impossible to determine whether or not they should be labeled state-corporate or corporate-state crimes because the sources of such threats remain unconfirmed. At the same time, considering that direct and indirect government collusion did take place in relation to the union’s struggles, it is unlikely that such threats were not at least influenced by the government’s stance with regard to the conflict and a belief that law enforcement would not follow through with an investigation into these threats. Hence, The Miners’ case offers a perfect example of state-corporate/corporate-state crime that escapes simple categorization. Instead, it highlights the complicated web of connections that may exist between government and business, enabling both parties to carry out crimes of considerable damage in relation to shared interests. It is clear that throughout this conflict, numerous government and business actors, at times working alone and at times working together, collaborated 380

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in a series of crimes aimed at harming Napoleón Gómez, Section 65 and The Miners. Moreover, these collaborative actions were carried out in pursuit of shared neoliberal, anti-labor goals. Perhaps in cases such as this – cases that involve multiple harms and numerous actors – it is more useful to view the crimes produced as collaborative state and corporate crimes, defined as illegal or socially injurious actions resulting from mutually reinforcing policies, practices and/or interactions between one or more institutions of political governance and one or more institutions of economic production and distribution in pursuit of shared ideology, interests or goals. With a definition of collaborative state and corporate crime in hand, what remain to be explored are the motivations, opportunities and social controls that resulted in the harms experienced by Gómez, Section 65 and The Miners.

A socio-historical approach to motivation, opportunity and social control The victimization of Section 65, Napoleón Gómez Urrutia and his family, and the National Mine, Metal and Steel Workers Union of Mexico resulted from the confluence of motivations, opportunities and (lack of) social controls specific to the Mexican labor context. As Anguiano and Ortiz (2013) have suggested, the persecution of The Miners was merely part of a larger offensive on independent unions throughout the country. In fact, the Mexican government’s practice of using or allowing the use of repressive (and illegal) tactics to break strikes across the country has been relatively commonplace over the past century. Accordingly, to fully understand the ways in which motivation, opportunity and social control came together to facilitate the state-corporate/corporate-state crimes explored in The Miners case, one needs to briefly examine post-revolutionary Mexican labor history, as well as the Mexican political economy since the 1980s. Mexican workers’ futures appeared very bright in the after-glow of the Mexican Revolution – a labor-driven revolution. The Institutional Revolutionary Party (PRI) – a pro-labor party, at least on the surface – took power in the 1930s and, within a few years, democratically elected President Lázaro Cárdenas oversaw the creation of the Confederation of Mexican Workers (CTM), a government union, as a branch of the PRI’s labor sector, the Mexican Labor Congress (CT) (Davis and Coleman 1989). As Davis and Coleman (1989) note, however, this union between government and labor was a marriage of convenience driven by the PRI’s desire to secure votes and the unions’ desire to believe in the promises of the Cárdenas government. Throughout the 1940s and 1950s, successive administrations – all led by the PRI – used the CTM to control worker demands, increase support for PRI policies and maintain an attractive environment for private investment (Adanhounme and Lévesque 2013; Davis and Coleman 1989); the CTM remains a corporatist union to this day (Ozarow 2014). In response, some within organized labor fought for greater autonomy within official confederations while others joined independent unions that pre-dated the CTM, or created entirely new independent unions (Davis and Coleman 1989). The 1970s brought about increased government tolerance for independent unions even as these unions continued to face frequent government-backed corruption and co-optation (Middlebrook 1995). Several important policy changes at the national and international levels throughout the 1980s and 1990s have also exacerbated labor struggles in Mexico. First, in response to the global economic crisis of the late 1970s and early 1980s and with the assistance of the International Monetary Fund and the World Bank, Mexico implemented a series of Structural Adjustment Plans (SAPs) intended to boost its economic and social well-being (Ellwood 2000; Middlebrook 1995; Peters 2000). These included the privatization of nationalized industries, reductions in subsidies to farmers, the privatization of communally held land, and the promotion of Export Processing 381

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Zones (EPZs) – free trade manufacturing zones producing items for export using low- and semi-skilled labor (Anguiano and Ortiz 2013). Such EPZs are now infamous for their exploitative maquila factories, characterized by fast-paced repetitive work carried out in unsafe working conditions (Anguiano and Ortiz 2013). In 1994, the North American Free Trade Agreement (NAFTA) was signed, reducing and then eliminating both tariff and non-tariff barriers to trade; this essentially turned all of Mexico into an EPZ. In addition, NAFTA contained a number of conditions that required the Mexican government to further reduce and eliminate agricultural subsidies, as well as to make it difficult to implement and enforce some environmental and labor regulations (Ozarow 2014). Such policy changes were not merely forced upon Mexico from the outside, but were embraced by a number of high-level government officials, many of whom had obtained business and other graduate degrees from American universities and who were strong proponents of neoliberal economics (Babb 2001; Peters 2000). Ultimately, such policy changes have greatly benefited business – several of the world’s richest men, such as Carlos Slim, have made their billions in Mexico – producing a climate of deregulation and lack of enforcement of existing labor, health and safety laws. Any discussion of collaborative state and corporate crime in Mexico, especially in relation to harms against labor, requires the mention of the Mexican power elites, who frequently have ties to both business and government. As mentioned, these elites have been able to shape corporate and government behaviors through the promotion of neoliberal laissez-faire ideology over the past four decades (Anguiano and Ortiz 2013). Deregulation, weakening of labor regulations, non-enforcement of labor regulations, and even the violation of civil and criminal law in order to circumvent existing labor regulations, have become commonplace. Anguiano and Ortiz argue that such law avoidance is part of Mexican culture, noting that, “in reality, in [Mexico] there is not a tradition of respecting the law, it’s always interpreted, negotiated, discretional, applied ‘to taste.’ Particularly in the realm of labor, corporations hardly respect the law and the state does nothing but facilitate their actions” (2013:104). This may be due to the state’s role in resolving conflicts that stem from structural arrangements of the political economy, which Chambliss (1989) has argued sometimes necessitates the use of deviant or semi-deviant strategies. Thus, in the case of Mexico, adherence to neoliberal economics – either for personal or for ideological reasons – has often motivated government actors to resolve labor conflicts through deviant means. In essence, the neoliberalization of the Mexican political economy in the second half of the twentieth century has led to the creation of a culture of collaborative state and corporate deviance. This is an unabashedly anti-labor culture, replete with explicit disregard for existing labor law. It not only provides motivation for deviant behavior, but it also creates opportunities for deviant behavior and eliminates social controls that might prevent such behavior through deregulation, lack of regulation and non-enforcement. Hence, the specific harms against The Miners were the product of a deviant collaborative state and corporate subculture, grounded in neoliberal ideology and promoted by powerful elites pursuing the accumulation of capital. In addition to cultural and economic factors, individual-level factors were also at play in this case. For instance, Grupo Mexico clearly valued profits more than worker health and safety. This, coupled with the belief that the government was not going to enforce health and safety violations along with the notion that the union workers would not be powerful enough to exert control over the company, led to the numerous health and safety violations in many Grupo Mexico mines, as well as the explosion at Pasta de Conchos. It may also be argued that a lack of morality, as well as rationalization and neutralization of harm, were at play when state police officers aggressively dispersed Section 65 strikers outside the Cananea mine. Similarly, lack of morality and rationalization and neutralization of harm were also likely to play a part in the case of bribes pertaining to fraudulent charges, the prolonged investigation of fraudulent charges, the hiding of 382

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exculpatory evidence, and the Labor Secretary’s decision to overturn democratic CT elections and unlawfully remove Gómez from his position as General Secretary of The Miners. Section 65 strikers and Gómez were viewed as troublemakers by Grupo Mexico and the government alike, as well as real threats to the promotion of profits and corporate interests. Taking them down by “whatever means necessary” was easily justified. Finally, it is worth noting that despite a lack of viable internal social controls, the struggles of Gómez, Section 65 and The Miners did become top priorities for a number of non-governmental organizations nationally and internationally. As early as March 2006, the United Steelworkers (USW), a bi-national Canadian-American union, filed a complaint with the U.S. Department of Labor arguing that the removal of Gómez from his position as union leader was in violation of the NAFTA labor-side agreement (IMF 2009). Shortly thereafter and at the request of the USW, the International Metalworkers Federation (IMF), an alliance of more than 200 unions worldwide, made a formal complaint against the Mexican government to the United Nation’s International Labor Organization (IMF 2008b). In 2007, a delegation of international union representatives met with members of European and British Parliaments to present evidence against Grupo Mexico and the Mexican government. Furthermore, on April 17, 2013, Napoleón Gómez and The Miners turned to additional international social controls, filing a civil suit for defamation with the Supreme Court of British Columbia, Canada. The suit named Grupo Mexico, Germán Larrea (head of Grupo Mexico), Oscar Gonzales (Chief Executive Officer of Grupo Mexico), Gómez’s three accusers, Garcia Puebla Consultores (the public relations firm hired by Grupo Mexico to produce television and newspaper attacks against Gómez and The Miners) and Eduardo García (head of Garcia Puebla Consultores) as defendants. The plaintiffs alleged that “the Defendants conspired to and did defame the Plaintiffs by maliciously [and knowingly] bringing [forth] false accusations of a serious criminal offence,” noting that “the Defendants defamatory accusations were republished, read and viewed many times over in newspapers and on television, often paid for by the Defendants, and were republished and read in newspapers and on the internet accessible all over the world” (Gomez v. Larrea 2013). The case is still pending as of this writing. In addition, Gómez was awarded the Arthur Svensson International Prize for Trade Union Rights for “his and [The Miners’] brave and dangerous struggle for union rights, against the mining company Grupo Mexico and the Mexican authorities,” bringing additional international attention to the Grupo Mexico and the Mexican government’s wrongdoings (Arthur Svensson International Prize for Trade Union Rights 2014). Unfortunately, such national and international social controls on the part of labor organizations, the previously mentioned lack of cooperation by Canada and INTERPOL in Mexico’s attempts to extradite and prosecute Gómez, and consistent attention from several liberal news outlets such as The Nation and La Jornada, have failed to prevent the Mexican government and Grupo Mexico from continuing their unlawful attack on Napoleón Gómez and The Miners.

Conclusion As demonstrated here, traditional understandings of crime at the intersection of state and capital do not capture the full spectrum of crimes of the powerful involving government and business. First, by categorizing such crimes as state-initiated, state-facilitated, corporate-initiated or corporate-facilitated crimes, one disregards a whole host of state and corporate crimes that result from government and business confluence. Second, these categorizations overlook large-scale patterns of collaborative state and corporate crime occurring across time and space, reducing 383

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them to singular events precipitated by singular actors from either government or business rather than by patterns driven by neoliberal ideology, socio-historical and cultural contexts, and powerful elite networks that are deeply embedded within government and business alike. The Miners’ case presents itself as a useful catalyst, suggesting a reconstruction of the complexities and nuances of harms perpetrated in the name of government and business. The harms experienced by The Miners at the hands of Grupo Mexico and the Mexican government extend beyond these two organizations, involving various state and local police, high-level government officials across three administrations, the heads of several other companies and television networks, newspaper outlets, former union members, and even hired thugs. Some of these harms were explicitly carried out at the bequest of Grupo Mexico or Mexican politicians. However, the exact origins of many of these harms are undiscoverable, having resulted from closed-door meetings and private telephone calls between elite actors connected to the conflict. Yet, when examined collectively, the patterns of collaborative state and corporate crime emerge. These patterns should not be ignored or reduced to solitary events perpetrated by state-initiated/facilitated or corporate-initiated/facilitated behaviors operating alone.

Note 1 Original text from La Jornada: “la empresa no quiere reabrir la mina porque se conocerian las verdaderas causas por las que fallecieron los trabajadores, y prefiere tener paralizada y hasta cerrar esta fuente de trabajo antes que aceptar su responsabilidad.”

References Adanhounme, Armel Brice and Christian Lévesque. 2013. “Creating Spaces for Labour Internationalism: National Industrial Unions in the Southern Hemisphere and Their Strategies.” In Transnational Trade Unionism: Building Power, ed. Peter Fairbrother, Christian Lévesque and Marc-Antonin Hennebert. Abingdon: Routledge, pp. 121–140. Alexander, Dan. 2014. “Meet the Richest Billionaires in Latin America.” Forbes.com, March 19. Available at: www.forbes.com/sites/danalexander/2014/03/19/meet-the-richest-billionaires-in-latin-america/ (accessed August 26, 2014). Anguiano Orozco, Arturo and Rosario Ortiz Magallón. 2013. “Reforma Laboral en México: Precarización Generalizada del Trabajo” [Labor Reform in Mexico: The Widespread Casualization of Work]. El Cotidiano, 182: 95–104. Arthur Svesnsson International Prize for Trade Union Rights. 2014. “The Government Pension Fund of Norway Must Get Out of Grupo Mexico.” Available at: www.svenssonprize.com/archive/the-government-pension-fund-of-norway-must-get-out-of-grupo-mexico/ (accessed July 22, 2014). Babb, Sarah. 2001. Managing Mexico: Economists from Nationalism to Neoliberalism. Princeton, NJ: Princeton University Press. Bacon, David. 2008. “Right to Strike Imperiled in Cananea.” The Nation, January 25. Available at: www. thenation.com/doc/20080211/bacon (accessed April 2, 2009). Castillo García, Gustavo. 2014. “Muestra PGR Ficha Roja que Emitió Interpol para Detener a Gómez Urrutia” [PGR Shows Red Notice that Interpol Issued to Detain Gómez Urrutia]. La Joranda En Línea, August 8. Available at: www.jornada.unam.mx/ultimas/2014/08/08/muestra-pgr-ficha-rojaque-emitio-interpol-para-detener-a-gomez-urrutia-8747.html (accessed August 17, 2014). Chambliss, William J. 1989. “State-organized Crime – The American Society of Criminology, 1998 Presidential Address.” Criminology, 27(2): 183–208. Cruciotti, Tricia and Rick A. Matthews. 2006. “The Exxon Valdez Oil Spill.” In State-Corporate Crime: Wrongdoing at the Intersection of Business and Government, ed. Raymond Michalowski and Ronald C. Kramer. New Brunswick, NJ: Rutgers University Press, pp. 149–171. Davis, Charles L. and Kenneth M. Coleman. 1989. “Structural Determinants of Working-class Politicization: The Role of Independent Unions in Mexico.” In Mexican Studies /Estudios Mexicanos, Vol. 5, No. 1. Berkeley: University of California Press, pp. 89–112. 384

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Ellwood, Wayne. 2000. The No Nonsense Guide to Globalization. Niagara Falls, NY: The New Internationalist. Gómez Urrutia, Napoleón. 2013. Collapse of Dignity: The Story of a Mining Tragedy and the Fight Against Greed and Corruption in Mexico. Dallas, TX: BenBella Books, Inc. Gómez v. Larrea 2013. Supreme Court of British Columbia. Grillo, Ioan. 2006. “Search for Mexican Miners Suspended.” El Diario Digital, February 25. Available at: www.diario.com.mx/nota.php?notaid=d7302741db3c0026fb47cac0e6109ea3 (accessed April 2, 2009). International Metalworkers’ Federation. 2006a. Fact Sheet: Call for Justice in Mexico. International Metalworkers’Federation. 2006b. “IMF Pledges Support to Mexican Miners.”International Metalworkers’ Federation, June 26. Available at: www.imfmetal.org/main/index.cfm?n=47&l=2&c=14233 (accessed March 21, 2009). International Metalworkers’ Federation. 2008a. An Injury to One: The Mexican Miners’ Struggle for Union Independence. A White Paper of the International Metalworkers’ Federation. International Metalworkers’ Federation. 2008b. “IMF White Paper and Documentary on Mexico.” International Metalworkers’ Federation, April 22. Available at: www.imfmetal.org/main/index. cfm?n=47&l=2&c=17550 (accessed March 21, 2009). International Trade Union Confederation. 2012. “Mexico – Mine and Metal Workers’ Union (SNTMMSRM) Struggle Continues.” Available at: www.survey.ituc-csi.org/Mine-and-metal-workers-union. html (accessed July 16, 2014). Interpol.int. “Wanted Persons.” Available at: www.interpol.int/notice/search/wanted (accessed August 29, 2014). Kauzlarich, David, Christopher Mullins and Rick Matthews. 2010. “A Complicity Continuum of State Crime.” Contemporary Justice Review: Issues in Criminal, Social, and Restorative Justice, 6(2): 241 – 254. La Jornada Michoacán. 2009. “Establecen Mineros Bloqueos Indefinidos en LC ‘en Defensa del Derecho de Huelga’” [Miners Establish Indefinite Blocks in LC “in Defense of the Right to Strike”]. La Jornada Michoacán, April 14. Available at: www.lajornadamichoacan.com.mx/2009/04/14/index.php?section= municipios&article=013n1mun (accessed April 16, 2009). Maquiladora Health and Safety Support Network. 2008. Workplace Health and Safety Survey and Medical Screening of Miners at Grupo Mexico’s Copper Mine in Cananea, Sonora, Mexico. Berkeley, CA: Maquiladora Health and Safety Support Network. Matthews, Rick A. 2006. “Ordinary Business in Nazi Germany.” In State-corporate Crime: Wrongdoing at the Intersection of Business and Government, ed. Raymond Michalowski and Ronald C. Kramer. New Brunswick, NJ: Rutgers University Press, pp. 116 – 133. Michalowski, Raymond and Ronald C. Kramer (eds). 2006. State-corporate Crime: Wrongdoing at the Intersection of Business and Government. New Brunswick, NJ: Rutgers University Press. Middlebrook, Kevin. 1995. The Paradox of Revolution: Labor, the State, and Authoritarianism in Mexico. Baltimore, MD: Johns Hopkins University Press. Muñoz Ruis, Patricia. 2009. “Aseguran Deudos de Pasta de Conchos que Grupo México Perderá Concesión de la Mina” [Family Members of Pasta de Conchos Ensure that Grupo Mexico will Lose the Mine]. La Jornada, March 20. Available at: www.jornada.unam.mx/2009/03/20/index.php?section=sociedad& article=046n1soc (accessed April 12, 2009). Muñoz, Patricia. 2014. “Interpol Rechaza Emitir la ‘Ficha Roja’ Contra Gómez Urrutia” [Interpol Refuses to Issue a ‘Red Notice’ for Gómez Urrutia]. La Jornada En Línea, April 28. Available at: www.jornada. unam.mx/ultimas/2014/04/28/falsa-supuesta-orden-de-localizacion-y-detencion-de-gomez-urrutiaabogado-8898.html (accessed July 16, 2014). Ozarow, Daniel. 2014. “Pitching for Each Others’ Team: The North American Free Trade Agreement and Labor Transnationalism.” Labor History, 54 (2): 412 – 526. Peters, Enrique Dussel. 2000. Polarizing Mexico: The Impact of Liberalization Strategy. Boulder, CO: Lynne Rienner. Sección 65 Sindicato Nacional de Trabajadores Mineros, Metalurgicos, y Similares de la República Mexicana. 2009. “Videos – Ataque de los Granaderos” and “Granaderos Preparando Bolas para Atacar” [Attack of the Grenadiers and Grenadiers Preparing Balls to Attack]. Available at: www.sindicatomineroseccion65. com.mx/index.php?opcion=19 (accessed April 7, 2009). Velasco, Elizabeth, Matilde Pérez and Ulises Gutiérrez. 2009. “Determina la JFCA por Concluidas las Relaciones Laborales en Minera de Cananea” [JFCA Determines Labor Relations in Cananea Mining are Concluded]. La Jornada, April 15. Available at: www.jornada.unam.mx/2009/04/15/index.php?se ction=politica&article=018n1pol (accessed April 16, 2009).

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27 Mining as state-corporate crime The case of AngloGold Ashanti in Colombia Damián Zaitch and Laura Gutiérrez Gómez

Introduction From the pre-colonial legend of El Dorado to the present-day Mining Locomotive strongly promoted by the current and former governments, gold-mining has a long history in Colombia. The country has the “longest and most productive history of gold exploitation in South America” as, “up until the 20th century, 30% of the world’s gold came from Colombia, and the country was the largest gold producer in South America until 1937” (Global Business Reports, 2011: 90). Following this golden tradition, the recent history of Colombia has been characterized by a strong extractive culture, from artisanal gold-miners who manually extract gold from rivers, illegal medium-scale miners using heavy machinery or dirty technology, to big multinational corporations exploring in vast territories of the country. Overall, Colombia has recently experienced a new gold fever and, “in the international race by major [corporations] to replace their reserves, Colombia represents a true elephant hunting opportunity” (ibid: 82). Major companies such as Anglo American, Glencore, Drummond Coal, Vale, BHP Billiton or AngloGold Ashanti have offices and exploration or mining activities in Colombia. In the context of this gold-rush, both state and corporations have taken advantage of this profitable economic niche and, more often than not, legal and illegal practices that surround the business leave a trail of harm that cannot be left unaddressed when studying the crimes of the powerful. An overwhelming body of evidence and research exists describing many crimes and harms produced by the mining corporations operating in Colombia (see, e.g., Ramírez Cuéllar, 2005; Idárraga Franco et al., 2010). Some of them have been strongly resisted while being accused by courts and civil society organizations of engaging in fraud, corruption, theft, tax avoidance, contamination of land and water resources, systematic infringement of all kinds of rules, serious safety crimes, forced displacement and destruction of local communities, unlawful dispossession of land, and collaboration with paramilitary forces. This chapter will focus on the activities of the South African gold-mining multinational AngloGold Ashanti (AGA) in Colombia, as part of larger ongoing research projects conducted by the authors1 (Gutiérrez Gómez, 2013; Zaitch et al., 2014) and other researchers involved in the LAR project (Agrafioti, 2014; Ebus, 2014). Both qualitative and quantitative data were collected in 2012 and 2013 mainly in Bogota and the departments of Tolima, Cauca, Antioquia and 386

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Bolivar. Besides conducting around 50 open semi-structured interviews with key informants (including state officials, AGA’s managers, environmental activists, NGO representatives, experts, community and political leaders, trade unionists, artisanal miners, and victims affected by mining activities), several observations and informal conversations took place during visits to mining sites, environmental protests and multi-sectorial events. Of significance was the analysis of relevant (primary) documents, including cadastral and geological information, statistics, open and classified reports from AGA, NGOs and several state agencies, legislation, policy plans, news articles, and documentaries. Ranked as the third-largest gold-mining company in the world, AGA reports having 21 mining operations and five exploration projects in 12 countries (mainly Africa and the Americas), and around 20 so-called Greenfield explorations (gold discovery). With headquarters in Johannesburg, AGA was formed in 2004 by the merger of AngloGold (South Africa) and the Ashanti Goldfield Corporation (Ghana). Only 31 percent of the shareholders are from South Africa, while 44 percent are from the United States and 8 percent from the United Kingdom (AGA, 2012). In 2011, AGA entered Greenpeace’s “Hall of Shame” after winning the Public Eye Award granted to the corporation with the most “dismal record in terms of social/environmental responsibility” (Public Eye Awards, 2011) for its activities in Ghana. Despite not yet extracting gold in Colombia, the company has mining titles and pending solicitations in 20 of the 32 Colombian departments. Officially, AGA recognizes six exploration projects, the three most advanced ones being Gramalote and Quebradona in Antioquia (51 percent owned in partnership with the Canadian B2Gold) and 100 percent owned La Colosa in Tolima (AGA, 2012). The La Colosa Project, heavily resisted by the local population, is potentially the largest gold-mining project in Colombia. The gold projects in Colombia are, according to former CEO Mark Cutifani, “the world’s most prospective new gold district . . . Colombia is investor friendly with strong government institutions, evolving mining legislation and strong interest from majors” (BNamericas, September 12, 2012). Indeed, by the year 2000 there was a need to create a new mining frontier that would attract multinational mining corporations. The introduction of the 2001 Mining Code provided the required legal framework to outlaw and criminalize “illegal,” artisanal or communal miners who suddenly lost any right to carry out mining activities without a title. During Uribe’s two presidential terms (2002–2010), and under his umbrella Plan “Colombia: A Mining Country”, the mining frontier became increasingly conquered by foreign investors through the vast amount of mining titles granted with no prior consultation in populated or environmentally valuable areas such as páramos. This process of “accumulation by dispossession” (Harvey, 2003), was actively encouraged by tax exemptions, and was strongly enforced by a radical process of securitization, either by deploying the armed forces to protect mining operations, or by tolerating paramilitary violence against those opposing mining companies. Santos’ administration (2010 to present), maintained the extractive model as the key locomotive of capital accumulation, at the same time trying to strengthen and re-evaluate the tasks and responsibilities of the institutions in charge of monitoring and administering the activity. Nevertheless, tax exemptions, low environmental requirements, weak monitoring bodies, lenient legislation, various forms of collusion and low levels of governability remain, as we further give an account of the central features of state-corporate interaction around gold-mining in Colombia. Focusing on AGA’s activities in Colombia, the aim of this chapter is to describe and explain the interconnections between the multinational and governmental bodies, actors and policies, as they engage in, or promote, various forms of criminal, unethical or harmful behavior. We will start by presenting some theoretical ideas that may help us to frame these interactions between state and corporate crime. The third section will present the case studied, focusing on the crimes 387

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and the harms around corporate gold-mining in Colombia. In light of this particular case study and alternative critical conceptions, we conclude by re-examining Kramer and Michalowski’s model of state-corporate crime.

Accumulation by dispossession through corporate harm An obvious theoretical reference when we have to think about the relation between AGA and the Colombian state is the concept of state-corporate crime, defined by Kramer and Michalowski (2006: 20) as: illegal or socially injurious actions that result from a mutually reinforcing interaction between 1) policies and/or practices in pursuit of the goals of one or more institutions of political governance and 2) policies and/or practices in pursuit of the goals of one or more institutions of economic production and distribution. After some years spent working on their theory, Kramer and Michalowski presented an integrated, model of state-corporate crime, suggesting that “criminal or deviant behavior at the organizational level results from 1) the coincidence of pressure for goal attainment, 2) availability and perceived attractiveness of illegitimate means and 3) an absence of effective social control” (2006: 24). The model used three levels of analysis in which these three catalysts for action are analyzed making use of wider criminological theories (Green and Ward, 2004: 24) such as differential association (Sutherland, 1947), organizational, and rational-choice theory. However important the development of the subfield of state-corporate crime was, the integrated model itself has been criticized by some. For instance, Mullins and Rothe (2007) have pointed out the fact that this model does not allow for a rich and deep analysis of certain social layers that make up state-corporate crime. For instance, they point out that, when dealing with state-corporate crime, there is a need to study the international and national levels as interacting yet distinct layers of analysis: “the institutional elements and context of a state, its cultural, economic, political, and historical environment, is distinct from and often exhibits forces in contradiction with those elements at the international level” (2007: 138). In turn, the forces at this level can influence and shape interactions at the national level, which means that these influences cannot be analyzed as a unified whole. Furthermore, Lasslett has pointed out that the state-corporate crime theory stands as a frame of ready-made theory, which may be applied to a great variety of events or cases, just by identifying in them the elements suggested by the model (Lasslett, 2010: 212). This pitfall can result in a tendency to “fetishize the data of sense-perception, while the power of thought to illuminate less evident social realities is inverted and instead employed to generate general categories that are designed to locate the root ‘causes’ of crime” (ibid.). This approach and its restrictive ways can easily obscure other social interactions, mechanisms and processes that, though not evident in the light of current state-corporate crime theory, are at its core. The model, as such, has very little explanatory power, since causality between the different levels of analysis is not properly explored (Kuprejevs, 2012: 29). Thus, the sub-genre is basically made up of several narratives of events, which are framed within the integrated model (Kramer and Michalowski, 2006), but other than exemplifying how the cases fit the general model, this body of literature offers little insight into state-corporate crime mechanisms and driving forces. Although problematic, this pitfall should not be regarded as a fatal flaw. Instead, it should be seen as a work in progress situation, and more exploratory research should be encouraged in order to discern mechanisms and patterns that can foster the drafting of new models and perspectives that will help explain state-corporate crime. 388

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It is important to question whether the term crime is appropriate to study these cases, as various forms of unethical or (very) harmful practices at the intersection of state and corporations do not constitute law-breaking. In fact, most critical literature on the crimes of the powerful (see, e.g., Sutherland, 1983; Pearce, 1976; Barak, 1991; Friedrichs, 2010) suggests that these crimes entail very harmful individual or collective behavior that is not primarily dealt with by criminal courts, but more often by administrative and civil law regulations. Transgressions committed by highly respected entrepreneurs are often not considered and treated as real crimes, do not meet the same level of condemnation by the general public as the crimes of the powerless, and, when they do, complex mechanisms are set in place to scapegoat any “rotten apples.” Drawing from harm theory and green criminological conceptualizations (Hillyard et al., 2004; White, 2011), it will probably be more accurate to talk about state-corporate harm, as only a small proportion of the harmful behavior and practices concerned have been effectively criminalized. Harm stemming from state-corporate interaction produces all kinds of human and non-human victims, often infringing basic human rights and seriously damaging the ecosystem. Furthermore, using a harm perspective to justify the study of the state-corporate interaction within criminology also supports the idea that the discipline should not be “undermined by having its subject matter defined by political and legal elites” (Muncie et al., 2010: 15) deciding what is labeled as a crime and what is not. In order to provide a more detailed and deep evaluation of the mechanisms, actors and processes that allow for state-corporate harm to unfold, it is necessary to go beyond the description of the manifestation itself in trying to understand the macro structures (political economy, state nature, etc.) and global processes that frame and drive such manifestation. Global processes may be studied not only as part of general, abstract, all-encompassing buzzwords such as capitalism or globalization, but as a series of specific happenings that fuel these contemporary dynamics (Tsing, 2005). Issues like the effects of state-corporate interaction in mining operations may thus be studied at the moment in which global flows touch ground in specific contexts and, by means of interactions between objects, environments, institutions and people as they materialize in local realities (Tsing, 2005: 1). A useful concept and global process behind state-corporate interaction around mining in Colombia is that of “accumulation by dispossession” (Harvey, 2003). This concept, coined by Marxist geographer David Harvey (2003), further develops what Marx termed “original” or “primitive accumulation”. Primitive accumulation was the name given to a series of mainly precapitalist processes such as the commodification and privatization of land and the forceful expulsion of peasant populations; the conversion of various forms of property rights (common, collective, state, etc.) into exclusive property rights; the suppression of rights to the commons; the commodification of labour power and the suppression of alternative (indigenous) forms of production and consumption; and colonial, neo-colonial and imperial processes of appropriation of assets. (Harvey, 2003: 145) Harvey noted that these processes still take place in present-day societies, arguing that accumulation by dispossession is the process by which a state – usually backed up by international financial institutions (IFI) and other powerful states – strips the public of its commons, in an attempt to tackle over-accumulation of capital surplus (Gutiérrez Gómez, 2013: 6). Harvey used the definition originally suggested by Marx, and complemented it with other processes relevant for contemporary societies, such as the destruction of the environment as a commodity exploited for profit (Jonas and Bridge, 2003: 959). Accumulation by dispossession in twenty-first-century societies implies 389

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the removal of common goods, such as the environment, from the public sphere, by selling them to over-accumulated private capitals, which are found, more often than not, in the Global North. Some of the harmful policies and practices around mineral resource exploitation may also be regarded as “crimes of globalization” (Friedrichs and Schwartz, 2007; Friedrichs, 2010; Rothe and Friedrichs, 2014), which Friedrichs regards as a subcategory of the general concept of whitecollar crime. Crimes of globalization “are those demonstrably harmful policies and practices of institutions and entities that are specifically the product of the forces of globalization, and that by their very nature occur within a global context” (Rothe and Friedrichs, 2014: 26), mainly pointing to the policies and actions of international financial institutions (World Bank, IMF, etc.) and their interactions with both states and corporations as they conduct business. Although this notion of crimes of globalization will not be further pursued or applied in our case study, it seems it can expand and make the state-corporate crime model less static, while providing solid explanations in the realm of political economy. The following section will describe some of the interactions between AGA and the Colombian state around the gold-mining business in Colombia. The main idea behind this task is to explore this particular form of state-corporate harm from a perspective that studies statecorporate interactions as part of the wider global process of accumulation by dispossession. This approach should allow for a deeper, more thorough understanding of the mechanisms, actors and affected parties behind state-corporate harm.

Exploring state corporate harm: the case of AngloGold Ashanti in Colombia Around 1985, several industrialized countries started looking outside their own territories for sources of raw material and natural resources, given that these were becoming either scarce or increasingly regulated by the authorities within their own borders (Bebbington et al., 2008: 897). Reminiscent of colonial times, Latin America has been revived ever since as a rich source of natural resources, and a renewed mining boom has fed these southern economies with the exploitation of gold, coal, zinc, nickel, coltan, copper and the like. As explained before, the Colombian case is particularly illustrative since, for the past decade, there have been several governmental efforts to attract multinational corporations, such as AGA, who were willing to participate in gold-mining. In order to describe state-corporate interaction, assess the harms and crimes stemming thereof, and to understand the structures that frame the scenario, we need to analyze different sets of interactions at international, national and local levels, though all belong to the same global-to-local continuum.

International level The foundations of state-corporate interaction are often laid at international level, and they are key in the study of state-corporate harm (Mullins and Rothe, 2007: 138). At this stage harm may not be particularly manifest and state-corporate interaction may not necessarily be happening yet – at least not directly. Nevertheless, the premises guiding international relations and the goals of foreign policy can shed light on the main forces that drive state-corporate interaction at national and local levels. When studying the relationship between the Colombian state and AGA, it becomes clear that one particular force at the global level has had a deep impact in shaping their interaction, mainly the implementation of neoliberal economic policies in both the Global North and South. At the beginning of the 1970s, some of the strongest economies such as the US and UK found themselves in dire need of a strategy to tackle a crisis of capital over-accumulation. Crises of 390

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over-accumulated capital come about when there are no new profitable assets in the market. This lack of attractive outings results in capital sitting idle, which eventually leads to a crisis of surplus over-accumulation (Harvey, 2003: 157). The neoliberal answer to the problem of idle capital was to implement a series of political and economic reforms to open markets, liberalize trade, protect private property rights and foster entrepreneurial freedom, in order to promote the release of new, attractive assets to the market. The new offers for investment would thus create an opportunity for idle capital to be put to use, thereby solving the over-accumulation crisis (Holden et al., 2011). Backed up by international financial institutions (IFI) such as the World Bank and the International Monetary Fund (IMF), the US and UK began a rally in the Global South, promoting the idea that foreign direct investment (FDI) was the key to development (Harvey, 2003: 158). A liberalization of those markets would most certainly free up new profitable assets that idle capital from the developed nations would be able to seize and exploit, thereby solving the crisis (Holden et al., 2011). Mining was one of the sectors that were clearly influenced by this process. Between 1985 and 2001, more than 90 countries radically modified (or implemented for the first time) their mining codes, in order for them to achieve the goal of attracting foreign direct investment (Bridge, 2004: 406). Propelled by these policy changes, but also due to the fact that in developed countries the rules were becoming increasingly stringent and restrictive in terms of environmental requirements (Bebbington et al., 2008: 897), mining experienced an astonishing growth in developing countries. The neoliberal changes affecting mining policy took some time to reach policy makers in Colombia. It was not until the beginning of the twenty-first century that Act 685 of 2001 was adopted (2001 Mining Code), whereby the activity became regulated. What is important to note is how this code was implemented as the basis on which state-corporate interaction is built, and how, as a result of such interaction, the process of accumulation by dispossession unfolded in local realities. Even though the practice of mining had been traditionally embedded in Colombian culture for centuries, it was not planned, structured or regulated. As such, it was a good opportunity for the Colombian state to tame this wild business by placing it within a legal framework (i.e., the 2001 Mining Code) that would make it an attractive destination for foreign capital investment. Once a set of rules, regulations, titles, taxation schemes, legal requirements and profit projections were set up, it was much more attractive for international mining corporations to expand toward the Colombian mining business. However, at the same time, an ancestral activity that was practiced by small miners and numerous families was suddenly subjected to a series of rules and regulations that did not accommodate the traditional ways of mining. The activity became subject to the acquisition of a mining title, which is basically the purchase of a right to mine in a determined area, “and so it appeared, a new asset ready to be marketed abroad: the mining title you can buy, trade, speculate on, devaluate and revaluate in the international market” (Gutiérrez Gómez, 2013: 22). However, that also meant doom for many small miners and families whose livelihood depended on the activity, due to the fact that it was significantly difficult for them to comply with these cumbersome requirements (Ronderos, 2011). Those who were unable to do so within three years of the adoption of the act had to either stop their activities, or become illegal miners (Art. 165, Mining Code, 2001). Another example of the commodification and dispossession of resources may be identified in the requirement to obtain permissions to use natural resources, like trees or water. During the exploration and exploitation phases of mining activities, the miners are required to apply for concessions and permits in order to make use of local natural resources. Assigning a price to and negotiating terms for the provision of commons, like trees and water, is a clear example of the way in which public goods are legally structured, commodified and expropriated to be offered in the international market. 391

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A policy and legal framework such as the 2001 Mining Code, which clearly sets out to attract multinational corporations from abroad by granting them the resources that were once public commons, is thus the basis upon which state-corporate interaction unfolds. Even though there is no discussion of the direct interaction between AGA and the Colombian state at this level, the international setting constitutes a very important layer of the analysis, where we can trace deeper causes for what later manifests as state-corporate harm (Mullins and Rothe, 2007: 138).

National level The wave of mining title granting that unfolded from 2002 to 2010 is referred to as the “mining titles bazaar” [feria de títulos mineros] or the “mining titles piñata” [piñata de títulos mineros]. These terms describe the incredible boom experienced in the mining sector, where the participants (corporations, laymen, speculators and other businessmen) quickly got their hands on as many titles as they could in a hectic sea of concession applications. Figure 27.1 shows the amount of granted mining titles from 2000 to 2010. The influence of the new Mining Code was clear: before its implementation in the year 2000, the amount of granted mining titles was 105, and immediately after its implementation in 2002 the number increased to 1388. The inevitable consequence of this title spree was the collapse of the Colombian mining cadaster, and the national geology service Ingeominas, after the situation spiraled out of control around 2010. The institutional capacity that was in place at the time was unable to support the weight of this volume of requests, and it was then necessary for the Ministry of Mines and Energy to suspend all requests for mining titles at the beginning of 2011 (Ministerio de Minas y Energía, 2011). AngloGold Ashanti was swift to take part in the mining titles bazaar, and soon it became clear not only that it had managed to request a good portion of the mining titles in the country, but also that it had “hit the jackpot” several times. In a typical case of revolving doors, it was found that many of those officers who worked with the Geology Service, mapping out the metallurgic reserves of the country, were hired by AGA in its initial title raid to gain control over the richest

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areas in the country (Gutiérrez Gómez, 2013). Revolving doors scenarios happen when people with privileged access to state-owned information leave their positions and later enter the private sphere, where they use said privileged information in favor of the new employers. The cases of revolving doors in AGA were substantiated by an investigation carried out by the General Comptroller’s Office in 2012, where it was found that: AGA’s revolving door is important . . . given that it is not favorable for the mining and hydrocarbons sector to have public servants, who possess privileged information regarding the present and the future [of the mining business], working to benefit the private sector; this practice clearly influences the latter’s income. (Contraloría General de la República, 2012: 10) In this way, it is possible to say that, through practices such as the use of revolving doors in favor of multinational corporations like AGA, the process of accumulation by dispossession unfolds smoothly at the national level. Having personnel equipped with privileged information regarding the “gold jackpots” in the country, it becomes increasingly easy to tap into those resources before everybody else – including small miners who may have been working those areas before the corporation – because they not only have knowledge of where those places are, but also the ability to quickly apply for all the legal requirements that would give them access to the site. This advantage takes a huge toll on smaller competitors because, even when they do know where the profitable mining sites are, they do not usually have the economic capacity or the knowledge required to be able to apply for mining titles promptly (Ronderos, 2011). Given that one of the characteristics introduced by the 2001 Mining Code is the principle of “first come first served” (Article 16 of the Act) in the granting of titles, this is definitely a major point in favor of multinational players like AGA in the process of accumulating titles. Another example of how accumulation by dispossession may be taking place through statecorporate interaction is the phenomenon of title fragmentation (Gutiérrez Gómez, 2013: 44). This legal maneuver consists in fragmenting the plot of land so that there are several requests for small mining titles instead of one big one. The problem with this practice is that the 2001 Code provides that ground rent is directly related to the size of the area covered by the mining title (i.e., if the area covered comprises less than 2000 hectares, ground rent due per year is equivalent to one minimum wage; if it is between 2000 and 5000, two minimum wages; and between 5000 and 10,000, it is equivalent to three minimum wages) (Article 230). The idea behind this Article was that small miners, with a small economic interest area, pay little, and large mining companies such as AGA, who have bigger economic interest areas, pay more. In February 2012, geologist Julio Fierro carried out an investigation into this issue, mapping the mining titles and pending solicitudes of AGA. By piecing together data he obtained from the former national geology service Ingeominas and the mining cadaster, he found the following information: AGA had 208 titles of different sizes: 152 titles (73 percent of the total amount of them) with an area between 0 and 2000 hectares; 29 titles (14 percent of the total amount) with an area ranging between 2000 and 5000 hectares; 21 titles (10 percent of the total amount) with an area ranging between 5000 and 10,000 hectares; and six titles (3 percent of the total amount) with an area exceeding 10,000 hectares (Fierro Morales, 2012). Surprisingly, from the 152 mining titles paying the lowest amount of ground rent, 52 percent (82 titles), were next to each other. It follows from this that the corporation did not apply for a mining title that actually covered all of its economic interest area. Instead, it fragmented the plot and applied for adjacent, smaller mining titles in order to avoid paying high ground rent to the state. 393

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A journalistic investigation carried out by the financial magazine Dinero revealed that Ingeominas had received US$25,000 million from AGA’s ground rent payments. However, had AGA not fragmented the mining titles, the amount due would have been at least seven times higher (Dinero, 2012). Although the practice of title fragmentation is not against the code, it may be said that it goes against the spirit of the law. The 2001 Mining Code provides for a stratification in the payment of ground rent precisely because it is aware that bigger miners contribute more than smaller ones. To disregard said stratification by means of “legal gymnastics” is, although not illegal, definitely harmful and morally reproachable. These examples show how the state’s eagerness to attract foreign direct investment has put multinational corporations in a position of power that they are not afraid to use. The two examples of questionable practices given earlier result in harmful outcomes for different parties. We find here two groups suffering from these practices: the Colombian population in general who miss rent profits, and small and medium-sized miners who are at a serious disadvantage when applying for titles, because of the undue advantage that AGA gets from the use of revolving doors. In this interaction, state and corporation are very closely related and the line that separates them is blurred through this form of collusion. Actors flip-flop from the public/state sector to the private one, carrying all the advantages that such a practice entails, at the expense of other players in the gold-mining business. In the next level of analysis, the local level, it is possible to go deeper into the study of statecorporate relations, and the harm produced thereof, in AGA’s gold-mining project La Colosa.

Local level La Colosa is a gold-mining project owned entirely by AGA, located in the Tolima department between the settlements of El Diamante, La Luisa and La Paloma. The deposit was found in 2006, with an initial gold estimate of 12.9 million ounces – an estimate that has been going up in past years, to reach an estimated 24 million ounces. The project is in its exploration stage, and the exploitation/production stage is expected to start in 2019 (Mining Technology, 2012). Several problematic issues have surrounded this gold-mining project. The first controversial matter surfaced at a very early stage: the perimeter where the project was located was protected under Act 2 of 1959, which gave it the status of reserved forest area (Gutiérrez Gómez, 2013: 52). Although an environmental license was not required at the exploration stage according to the 2001 Code, projects located in reserved forest areas, like La Colosa, did have to apply for a legal subtraction of the perimeter before any activity took place in it. AngloGold Ashanti, however, did not apply for legal subtraction of its plot before it began the exploration stage. When interviewed about the incident, a high-level executive from AGA explained that Act 2 of 1959 was enacted to promote the forest industry, and 60 percent of the country used to be protected by this law. The idea was that within a few years the state would carry out a series of studies in order to determine which specific areas were in fact worth keeping within the forest protected areas, and the rest of the territory would be subtracted. He claimed that this process never really took place, and 50 percent of the country is still covered under the Act, which does not necessarily mean that 50 percent of the country is in fact considered of interest for the forest industry. The territory where La Colosa is located, he argued, is “merely a pasture area [potrero] where there has been extensive cattle ranching, with a little string of forest on the top of the mountain. That’s all” (AGA executive, interview). The discourse presented by the AGA executive suggests that the company did not regard La Colosa as an area of genuine forest interest, even though Act 2 of 1959 protected it as such. Furthermore, the corporate executive suggested that the company had been unduly harmed by the 394

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scandal that surrounded the incident, referring to the fact that various media channels covered the blunder emotively. In reply to AGA’s defense, a geologist who worked for the Ministry of Environment argued that a reserved forest area is a state decision to legally protect a given perimeter, and, as such, it should be respected regardless of whether the company considers that the area looks like a valuable forest area or plain pasture. It is not up to them, argued the respondent, to decide whether the legal requirements are appropriate (geologist, interview). The regional environmental authority Cortolima, a financially and administratively independent state entity, was the one in charge of protecting and managing the natural resources of the region where the project was located. When AngloGold Ashanti first entered Cortolima’s jurisdiction, the latter did not find the project problematic. However, after the first visit to the premises, the entity’s officers realized that La Colosa could be in a protected area. An officer from Cortolima reports that, after the corporation approached the regional authority for the first time to request permissions to use water and trees in the area, they realized that AGA was developing a mining project in a reserved forest area (mid-level officer Cortolima, interview). According to the officer, after confirming this fact, the officers from Cortolima immediately notified the Ministry of Environment about it. The Ministry replied that ultimately it was Cortolima’s decision, but suggested AGA suspend its exploration activities in the area until they had subtracted the perimeter from the reserved forest area. At the same time, the multinational started proceedings to apply for the subtraction, yet Cortolima regarded the evidence presented as insufficient to remove the perimeter from the protected forest area. The regional authority’s opinion was fully supported by a letter from the Office of the Delegate Prosecutor for Environmental and Agricultural Matters to the Ministry of Environment. The letter requested the denial of the subtraction, and was followed by a 27-page report substantiating the request, presenting all the evidence and reasons why the perimeter should not be removed from the protected forest area (Procuradora Delegada para Asuntos Ambientales y Agrarios, 2008). Despite all the efforts to demonstrate that the area where La Colosa was being developed was a valuable environmental space that should not be defaced by an open-pit gold-mine, partial and temporary subtraction of the area was ultimately granted (Resolution 814, May 4, 2009). Two exofficers of the Ministry of Environment and of the Office of the Public Prosecutor, among others, claimed that the Ministry’s decision to allow subtraction of the area was a product of President Álvaro Uribe Vélez himself exercising strong pressure on the decision makers (Gutiérrez Gómez, 2013: 53). This was not the only political pressure that surrounded the activities of AGA in La Colosa. According to several respondents, other irregularities involved the modification of 22 environmental laws to carry out the project, the removal of the requirement of environmental licensing for mining projects in explorative phase, or the granting of exclusive rights to the company to carry out the technical studies in relation to their projects (Gómez Gutiérrez, 2013: 55). A researcher from the Colombian economic think-tank Fedesarrollo noted the situation in La Colosa is worrying in that it reflects how, if the state does not step in, all the resources will soon be in the hands of multinational corporations (researcher Fedesarrollo, interview).

Re-examining the state-corporate crime model The different crimes and harms caused by the interaction between state and corporation in the case of AGA activities in Colombia cannot be solely studied as specific, isolated events to be accommodated within the so-called Integrated Model of State-Corporate Crime (Kramer and Michalowski, 2006). In order to explain and understand the logic of corporate gold-mining in Colombia, a less prescriptive approach is required that studies the harmful interactions and frictions (Tsing, 2005) at the global, national and local levels. 395

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Having done this in the case of AGA in Colombia, it was possible to identify different layers of state-corporate harm, how they are built and how they manifest themselves. An isolated analysis of the case of La Colosa would certainly have revealed several harmful effects of state-corporate interaction, but we need to focus on deeper and more global processes that fuel and explain state-corporate harm in the gold-mining business in Colombia. In the context of capital “accumulation by dispossession” (Harvey, 2003), state and corporate agendas and goals have largely intersected in Colombia during the past 15 years. This analysis of state-corporate interaction is designed to shape and sharpen the theories and definitions that have so far been used to address the problem, hopefully to make them more accurate, concrete and plausible. Keeping that in mind, it is imperative that in these efforts to build theory, researchers avoid the artificial application of typologies, hard-and-fast rules, and sturdy definitions that, even though they make reality more concrete and easier to study as a scientific subject, significantly distort the nature of the process. Wider global trends, national political and juridical structures, and global economic forces should be explored if one is to uncover the main forces that drive statecorporate harm in general, and the harms around the exploitation of natural resources in particular.

Note 1 The projects are: (a) Lands and Rights in Troubled Waters. Land-use change, socio-environmental harm and human rights violations in Colombia and Brazil (LAR Project 2010–2015, Utrecht University, www. landsandrights.blog.com); (b) Crimes of the Powerful. State, organized and corporate crime interaction in Latin America 1990–2010 (LASCOC Project 2014–2019, Utrecht University).

References AGA (2012). AngloGold Ashanti Integrated Report 2012. Johannesburg: AGA. Agrafioti, A. (2014). Colombia’s Criminalization of Social Resistance against Megaprojects. Utrecht: Utrecht University. Available at: www.landsandrights.blog.com (accessed September 15, 2014). Barak, G. (ed.) (1991). Crimes by the Capitalist State: An Introduction to State Criminality. Albany: State University of New York Press. Bebbington, A., Hinjosa, L., Humphreys Bebbington, D., Burneo, M. and Warnaars, X. (2008). Contention and Ambiguity: Mining and the Possibilities of Development. Development and Change, 39(6): 887–914. Becker, H. (1963). Outsiders: Studies in the Sociology of Deviance. New York: Free Press. BNamericas (2012, 12). AngloGold Ashanti sets Colombia Project Pipeline as Key Priority. September 12. Available at: www.bnamericas.com (accessed September 10, 2014). Bridge, G. (2004). Mapping the Bonanza: Geographies of Mining Investment in an Era of Neoliberal Reform. The Professional Geographer, 56(3): 406–421. Chambliss, W. (1975). Toward a Political Economy of Crime. Theory and Society, 2(1): 149–170. Coleman, R., Sim, J., Tombs, S. and Whyte, D. (2009). State, Power, Crime. London: Sage. Contraloría General de la República (2011). Estado de los Recursos Naturales y del Ambiente 2010–2011. Bogotá. Contraloría General de la República (2012). Auditoría Renta Minera y Renta de Hidrocarburos. Bogotá. Dinero (2012). Las Maniobras del Rey Midas, Dinero, January 3. Retrieved 22 July 2012, from www.dinero. com (accessed July 22, 2012). Ebus, B. (2014). Digging Deeper in El Dorado. Neutralizing the Gap between CSR and Practice: Mining TNCs in Colombia. Utrecht: Utrecht University. Available at: www.landsandrights.blog.com (accessed September 15, 2014). Fierro Morales, J. (2012). Razón Pública – Economía y Sociedad – Fraccionamiento de títulos mineros: detrimento patrimonial y dudas sobre la minería “responsable,” May 2. Available at: www.razonpublica. com (accessed July 20, 2012). Friedrichs, D. (2010). Trusted Criminals: White Collar Crime in Contemporary Society. Belmont, CA: Wadsworth. Friedrichs, D. and Schwartz, M. (2007). On Social Harm and aTwenty-first Century Criminology. Crime, Law and Social Change, 48: 1–7. 396

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Global Business Reports (2011). Mining in Colombia. Exploring the Last Andean Frontier. Engineering and Mining Journal, December (12): 80–118. Green, P. and Ward, T. (2004). State Crime: Governments,Violence and Corruption. London: Pluto Press. Gutiérrez Gómez, L. (2013). Accumulation by Dispossession Through State-Corporate Harm: The Case of AngloGold Ashanti in Colombia. Oisterwijk: Wolf Legal Publishers. Harvey, D. (2003). The New Imperialism. New York: Oxford University Press. Hillyard, P., Pantazis, C., Tombs, S. and Gordon, D. (eds) (2004). Beyond Criminology: Taking Harm Seriously. London: Pluto Press. Holden, W., Nadeau, K. and Jakobsen, R. (2011). Exemplifying accumulation by dispossession: Mining and indigenous people in the Philippines. Geografiska Annaler, 93(2): 141–161. Idárraga Franco, A., Muñoz Casallas, D. A. and Vélez Galeano, H. (2010). Conflictos socio-ambientales por la extracción minera en Colombia: Casos de la inversión británica. Bogotá: Censat Agua Viva – Amigos de la Tierra Colombia. Jonas, A. and Bridge, G. (2003). Governing Nature: The Re-regulation of Resources, Land-use Planning, and Nature Conservation. Social Science Quarterly, 84 (4): 958–962. Kramer, R.C. and Michalowski, R.J. (2006). State-Corporate Crime: Wrongdoing at the Intersection of Business and Government. London: Rutgers University Press. Kuprejevs, T. (2012). A Critique of the Concept of State-corporate Crime. Cambridge: University of Cambridge. Lasslett, K. (2010). Scientific Method and the Crimes of the Powerful. Critical Criminology, 211–228. Mining Technology (2012). La Colosa Gold Project, Colombia.Available at: www.mining-technology.com/ projects/la-colosa/ (accessed November 12, 2013). Ministerio de Minas y Energía (2011). Resolución 18009 de 1 de Febrero de 2011. Bogotá. Mullins, C. and Rothe, D. (2007). The Forgotten Ones: The Darfuri Genocide. Critical Criminology, 15: 135–158. Muncie, J., Talbot, D. and Walters, R. (2010). Interrogating Crime. In Muncie, J., Talbot, D. and Walters, R. (eds) Crime: Local and Global. Cullompton: Willan Publishing (pp. 1–36). Pearce, F. (1976). Crimes of the Powerful. London: Pluto Press. Procuradora Delegada para Asuntos Ambientales y Agrarios: Serrano Evers, Claudia Cristina (2008). Informe Procuraduría General de la Nación: carta enviada a Directora de Ecosistemas Ministerio Medio Ambiente,Vivienda y Desarrollo Territorial. Bogotá: Procuraduría General de la Nación. Public Eye Awards (2011). AngloGold Ashanti, Public Eye Awards. Available at: www.publiceye.ch/en/ hall-of-shame/anglogold-ashanti/ (accessed August 16, 2012). Ramírez Cuéllar, F. (2005). The Profits of Extermination. How U.S. Corporate Power is Destroying Colombia. Monroe: Common Courgae Press. Ronderos, M.T. (2011). La Fiebre Minera se Apoderó de Colombia. Revista Semana. Rothe, D. and Friedrichs, D. (2014) Crimes of Globalization. London: Routledge. Sayer, A. (1984). Method in Social Science: A Realist Approach (2nd edn). Abingdon: Routledge. Sutherland, E.H. (1947). Principles of Criminology (4th edn). Chicago, IL: University of Chicago Press. Sutherland, E. (1983). White Collar Crime: The Uncut Version. New Haven, CT: Yale University Press. Tsing, A. (2005). Friction: An Ethnography of Global Connections. Princeton, NJ: Princeton University Press. White, R. (2011). Transnational Environmental Crime: Toward an Eco-global Criminology. Abingdon: Routledge. Zaitch, D., Boekhout van Solinge, T. and Müller, G. (2014). Harms, Crimes, and Natural Resource Exploitation. A Green Criminological and Human Rights Perspective on Land-use Change. In Bavink, M., Pellegrini, L. and Mostert, E. (eds) Conflicts over Natural Resources in the Global South. Conceptual Approaches. London: CRC Press (pp. 91–108).

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Part VIII

State-routinized crimes

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28 Organized crime in a transitional economy The resurgence of the criminal underworld in contemporary China Peng Wang

Introduction Organized crime has long been a significant threat to Chinese society. In the first half of the twentieth century, Shanghai became the crime capital of East Asia, and the Shanghai Green Gang was the most powerful criminal organization during the period of the Republic of China under Chiang Kai-shek (1911–1949). The gang not only established itself as the kingpin of the underworld by creating social order and controlling various types of illicit businesses (e.g. heroin trafficking, gambling and prostitution), but it also built mutually beneficial relations with the Chiang Kai-shek government and expanded its sphere of influence to legal businesses, including banking, shipping, and food supplies (Chen 2005; Martin 1996). In the early 1950s, the Green Gang was completely destroyed by a series of nationwide campaigns organized by Chairman Mao, including banning opium, prohibiting gambling, and closing down brothels (P. Wang 2013b). In order to differentiate socialist China from Western capitalist countries, the Chinese Communist Party attempted to establish a new China without corruption and organized crime. This socialist dream, however, was shattered when postMao China saw the return of the criminal underworld to Chinese society. Organized crime has since become a serious problem, encroaching on the economy and infiltrating the political system (Xia 2006). Although the academic community has begun to pay increased attention to Chinese organized crime, this topic is still under-researched owing to cultural and language barriers and political constraints (Zhang and Chin 2008). Chinese organized crime poses an overwhelming threat to both local and international communities, so it is vital to acquire a deeper understanding of the problem before attempting to rectify it. The aim of this chapter is therefore to examine the reasons underlying the resurgence of organized crime in contemporary China. The chapter also critiques China’s existing anti-crime policies and offers recommendations for future research and policy development.

Marginalized population and organized crime Where there is an expanding marginalized population, there will certainly be plenty of people who regard organized illegality as a ladder of social ascent (Bell 1953; Xia 2009). The term ‘marginalized people’ in this chapter refers to the distinct population that is economically excluded 401

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from the mainstream market (especially the labor market). This body consists of ‘a vast floating population disclosed from the countryside, and the unemployed and destitute among urban residents’ (Xia 2009: 97). During Mao’s time, from the 1950s to the 1970s, there was no floating population in China, as peasants were not allowed to leave their areas and industrial workers were forced to live in cities (Lo and Jiang 2006). The production team system was created in the countryside to control the daily activities of peasants. It infringed ‘the right of peasants either to sell or otherwise utilise their own labour’ (Smyth 1998: 237). Meanwhile, the work unit (danwei) system was created to encourage industrial workers to stay in the same group throughout their working lives (Bian 1994). China’s economic reforms in the early 1980s began in the rural areas. New agricultural policies led to two positive outcomes: first, the household responsibility system stimulated the peasants’ enthusiasm to produce; second, people from poorer or less developed areas were allowed to move to richer areas to earn more money (Lin 1988). These new policies gave rise to the emergence of a floating population. China’s transition to a market economy has been accompanied by the migration of numerous peasant workers to urban areas. According to a report, Trends of Floating Population in China, 1982–20131 offered by the Department of Floating Population Service and Management, National Population and Family Planning Commission (NPFPC), there were over 236 million floating migrants in 2012. However, the integration of these rural migrants into the labor market suffers from both economic and social discrimination (Feng et al. 2002; S. Liu et al. 2011). In most cities, local workers enjoy the privilege of access to certain types of jobs in the government and skilled sectors, while migrant workers are constrained in their job choices (Lo and Jiang 2006; Xia 2009). According to Lo and Jiang (2006), rural migrants have to choose physically demanding occupations which may be divided into three categories: (1) temporary workers, providing labor for construction sites and factories; (2) casual laborers, such as housemaids and porters; (3) self-employed workers, such as fruit or vegetable sellers and cobblers. These rural migrants have to face considerable uncertainty and inequality in respect of employment, income, social welfare, public protection, and access to education for their children (Shi 2008). In addition to rural migrants, laid-off workers in cities constitute another part of the marginalized population. Between 1996 and 2004, in an attempt to improve efficiency and profitability, the Chinese government instituted far-reaching economic reforms in urban areas. These reforms caused around 50 million employees to lose their jobs in state-owned enterprises, collective enterprises, and government and public service units (Chiu and Hung 2004; Li and Putterman 2008). An unexpected side-effect of China’s economic reform was therefore the formation of a new urban underclass, consisting of a large number of these laid-off workers together with underprivileged laborers who had migrated from the countryside (Solinger 2006). Poverty and inequality generate feelings of ‘envy and injustice’ which are major causes of crime, especially property crime (Stiles et al. 2000). In other words, confronting social problems such as massive unemployment, economic inequality, relative deprivation and impoverishment, marginalized groups have to adopt drastic measures in order to survive: they are forced to sell or employ the only resource they possess: their bodies (Xia 2008). For female migrants, the rapidly growing entertainment/sex industry offers an option for unskilled female workers (M. Liu 2012). According to a report ‘Swept Away’: Abuses against Sex Workers in China2 published by Human Rights Watch, the estimated number of sex workers amounts to between four and six million. Young male migrants may choose to form street gangs or ‘self-protection’ organizations, employing violence and the threat of violence to get what they want: money, power and respect. As Xia (2009: 106) argues, ‘organized violence or crime becomes a route to respect and the first step toward accumulating primitive capital’. 402

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Prohibition and organized crime The term ‘prohibition’ is defined by Thornton (1991: 3) as ‘a government decree against the exchange of a good or service’. The difficulty is that the legal prohibition of the production and distribution of certain goods and services creates a power vacuum that can then be filled by organized crime groups (Skaperdas 2001). Similarly, Schelling (1971) argues that the reason organized crime thrives is that it is able to provide goods and services the public demands. If the demand for certain goods and services remains high, meeting that demand would remain profitable and it would be extremely difficult for governments to curb illegal markets by means of repressive action (A.C. Spapens et al. 2008; Varese 2001). Drugs, gambling and prostitution, all banned by the Chinese government, are therefore important businesses for gangs and mafia groups and have led to the emergence of large illicit markets. Gambling forms a good example of this. Social gambling is very popular throughout China, but all forms of gambling – except for two state-authorized lotteries – were outlawed in postMao China (Cheng 2011; Loo et al. 2008). The criminal law deals directly with third parties profiting from gambling businesses. As Article 303 of China’s Criminal Law states, Whoever, for the purpose of profit, assembles a crowd to engage in gambling, establishes a place for gambling or makes gambling his profession shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance, and concurrently be sentenced to a fine. A Judicial Interpretation3 issued in 2005 emphasized that ‘the purpose of reaping profits’ is the key feature in determining whether an activity is subject to criminal law. The interpretation also emphasizes that creating online gambling websites or functioning as an intermediary agency for online gambling sites will be regarded as ‘opening gambling houses’ and will be punished according to criminal law. As a result of the prohibition, China has seen a rapid growth of the illegal gambling market in the past three decades. Xinhua News Agency, the state press agency of the People’s Republic of China, reveals that the turnover of China’s two officially sanctioned lotteries reached 309 billion renminbi (RMB) in 2013, while the revenue for illegal gambling markets is estimated to be ten times higher (Xinhua 2009, 2014). Prohibition creates new profit opportunities for criminals. The existing literature suggests that illegal gambling has become the primary source of revenue for organized crime groups in China. Based on a comprehensive analysis of open sources, Varese (2011) in Mafias on the Move offers a valuable table summarizing the information on 74 influential criminal syndicates which were destroyed by central and local governments from 1992 to 2009. His analysis reveals that approximately 35 percent of criminal groups regarded gambling as one of their main sources of revenue. Similarly, the most recent crime crackdown organized by Chongqing – a major city in Southwest China – shows that over half of the criminal syndicates that were protected by the city’s police chief Wen Qiang4 were involved in the gambling business, and their operations were both local and international (P. Wang 2013a). Drawing on a comprehensive review of both English- and Chinese-language sources, Wang and Antonopoulos (2015) suggest that Chinese illegal gambling organizations manage to obtain huge profits by either supplying gambling services or penetrating the legal betting and gaming sector. According to the authors, these enterprising entities may be categorized into three subgroups: (1) locally based gambling dens, which refers to traditional gambling houses established in local communities; (2) trans-regional gambling groups, which refers to a growing number of mainland Chinese businesspeople or gang bosses who work closely with Macau casinos to buy 403

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chips at discount rates and then sell them to mainland Chinese gamblers as well as settle any consequent debts; and (3) online gambling networks, which refers to groups of people who make use of the internet and sophisticated financial arrangements to offer online gambling services. The prohibition of gambling in mainland China also leads to a lack of legally enforceable contracts and access to the court system for illegal gambling enterprises (Varese 2010). This means that illegal organizations have to resort to alternative protection and enforcement mechanisms. This in turn creates new opportunities for criminals who can function as extra-legal protectors or quasi law enforcers, settling various disputes and enforcing loan repayment. In addition, prohibition stimulates criminal enterprises to bribe government officials, especially police officers, in order to obtain protection for their illegal businesses (Broadhurst 2013).

Weak law enforcement and organized crime Criminals choose to form quasi-government institutions that provide what formal institutions are designed – but fail – to supply. Modern government is designed to protect private property rights, create an effective legal system and facilitate economic transactions (Dixit 2004; Rapaczynski 1996). But governments, especially those in a transitional stage, sometimes lack the ability to achieve these goals (Joireman 2011). If the state fails, alternative institutions, including organized crime groups, will emerge to fill the gap. For example, in The Sicilian Mafia, Gambetta (1993) argues that the rise of mafia families in Sicily is due to a combination of factors: on the one hand, in the nineteenth century, Sicily saw an increasing number of property holders who required protection from the government; on the other hand, southern Italy was unable to meet that demand as it had failed to establish an adequate enforcement mechanism. The huge gap between supply and demand gave rise to the emergence of independent groups (e.g., mafia groups) which earned profits by offering public services. Furthermore, the thorough examination of long-standing mafia groups in other countries also concluded that the mafia will emerge as an extra-legal government when the state cannot provide sufficient and efficient protection for private property owners (Chu 2000; Hill 2003; Skarbek 2014; Tzvetkova 2008; Varese 2001, 2011). In contemporary China, businesses that do not trust state-sponsored institutions tend to purchase extra-legal protection and quasi law enforcement services offered by gangsters (P. Wang 2011). Despite government attempts to establish an efficient and well-structured legal framework, China’s judicial system remains weak and corrupt. Ling Li, an expert in Chinese law, argues that judicial corruption in China is rampant and it is ‘an institutionalized activity systemically inherent in the particular decision-making mechanism guided by the Chinese Communist Party’s instrumental rule-by-law ideal’ (L. Li 2012: 848). Chinese people tend to employ guanxi – a Chinese version of personal connections, networks or social capital – to bribe judges (L. Li 2011; Zhan 2012). Guanxi practice is frequently used by practitioners as an alternative operating mechanism to facilitate corrupt transactions by breaking down legal, moral and cognitive barriers. Drawing on fieldwork data from two Chinese cities, P. Wang (2014: 1) states that ‘guanxi distorts China’s legal system by facilitating the buying and selling of public offices and promoting the formation of corrupt networks between locally-based criminals and government officials’. In addition, China’s weak legal system is closely associated with poorly defined property rights, incompetent judges and prosecutors, and a lack of judicial independence and transparency (P. Wang 2011; Y. Wang 2013). When the state fails to provide fair, efficient and sufficient protection, Chinese people tend to obtain extra-legal protection from gangsters. As P. Wang (2014) observes, individuals and entrepreneurs frequently employed gangsters’ services to protect property rights, facilitate transactions, enforce debt repayment and deal with government extortion. The lack of effective legal 404

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protection creates opportunities for both criminals and non-criminals. On the one hand, gang bosses who have already established their reputation in the criminal underworld tend to shift their businesses from traditional areas such as gambling and prostitution to the provision of extra-legal protection (Wang 2014). On the other hand, a large number of laid-off or unemployed workers form ‘underground police organizations’ to deal with urgent, difficult or risky problems (Xinhua 2010). This becomes an important way for marginalized people to survive in cities.

Police corruption and organized crime Organized criminals in mainland China are eager to socialize with government officials, especially police officers, in order to secure protection for their illicit businesses (Antonopoulos 2013; Shieh 2005; Zhang and Chin 2008). The term ‘red-black collusion’ refers to the infiltration of organized crime groups (‘black’) into the public sector (‘red’), or the corruption of the latter by the former in order to obtain illegal protection (Xia 2004). A number of methods have been used by organized crime groups in China to bribe police officers, including offering money and expensive gifts, providing free sex services, and assisting police officers to gain promotion (P. Wang 2012). Moreover, gangland bosses are keen to become members of people’s congresses or people’s political consultative conferences because this provides them with legitimate covers, helping them establish wide and close networks with government officials and legitimate businesses (P. Wang 2013a). The typical route to membership involves buying off senior government officials (Xia 2004). Police officers – especially lower ranking staff – who want to earn corrupt benefits normally choose to associate with gang bosses or illegal entrepreneurs (P. Wang 2014). A new trend of the red-black collusion observed by Qiu Geping, one of China’s leading criminologists, is that some corrupt police officers have transformed themselves from extra-legal protectors into gang bosses who directly control the production and distribution of illicit goods and services (Qiu 2008). A review of recent cases relating to organized crime and police corruption, however, suggests that the ‘evolution’ of police chiefs into gang bosses is not common and the safest way for these officers to make money on the side is to provide illegal services for gangsters. Once a corrupt network between gangsters and police officers is established, corrupt police officers are expected to offer a list of unlawful services to these gangsters, including protection against legal punishment, protection of criminal businesses and protection against market competition (Chin and Godson 2006). As P. Wang (2013b) argues, illegal protection offered by corrupt police officials enables gangsters to remain safe during police crackdowns and achieve superior performance in gangs’ market competition. The scale of corruption has intensified since the 1990s, along with the resurgence of organized crime, but to what extent organized crime groups form mutually beneficial networks with government officials cannot be easily measured, and crime statistics about the prevalence of red-black collusion are not available (Broadhurst 2011, 2013). But the existing research is helpful in understanding this social and legal phenomenon. In order to explore organized crime and the evolution of the political–criminal nexus5 in China, Chin and Godson (2006) conducted a thorough analysis of published materials as well as fieldwork data collected from three Chinese provinces: Hainan, Guangdong and Fujian. They concluded that organized crime was still a local problem in China and government officials who were involved in the red-black collusion were low- and mid-level police officers, prosecutors and judges because high-ranking public officials and party members who wished to obtain illicit benefits tended to associate with legitimate businesspeople. Since the late 2000s, organized crime groups have increased their infiltration of the political system. The Chongqing crime crackdown from 2009 to 2011 resulted in the reshuffle of at least 405

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3000 police officers in order to cut their links with local gangsters. It also led to the arrest of 77 government officials, including more than 20 senior police officers, for their involvement in providing protection for locally based gangs, including Wen Qiang, director of the Chongqing Public Security Bureau, and Peng Changjian, deputy director of the Municipal Public Security Bureau (P. Wang 2014). The Liu Han case also revealed the importance of the red-black collusion for illicit Chinese entrepreneurs seeking business success. Liu Han, a Sichuan mining tycoon and provincial gangster, was sentenced to death by a local court for leading a mafia-style organization and organizing a murder (Xinhua 2014). It is reported that Liu had links with the eldest son of retired security tsar Zhou Yongkang (Beech 2014). The Liu Han case and the Chongqing crime crackdown together suggest that organized crime is not a local problem and some high-ranking administrators and party officials have been corrupted by gang bosses or illegal entrepreneurs.

Discussion: Why does China fail to curb organized crime? Since the beginning of economic reform, China has seen the reappearance of criminal groups, including dark forces6 (e’shili) and organizations with the ‘character of black society’7 (heishehui xingzhi zuzhi) (Trevaskes 2010; P. Wang 2013b; Xia 2006). In order to formulate a collective response to the increasing waves of crime, the Chinese authorities launched four rounds of nationwide ‘strike-hard’ anti-crime campaigns in 1983, 1996, 2001 and 2010. Strike hard (yanda) is an extreme form of punishment based on ‘severity and swiftness’, which seeks to achieve the objective of maintaining public order and social stability (Tanner 2005). According to Trevaskes (2007: 24), ‘“severity” applied as a sentencing rationale involves meting out comparatively harsh punishment within the scope of the law; “swiftness” is the speeding up of criminal procedure to deal with targeted criminals in a timely manner, often within two weeks of their arrest’. Since the 1996 Strike Hard Campaign, particular attention has been paid to dark forces and organizations with the ‘character of black society’ as Chinese authorities regarded and continue to regard organized crime as a principal enemy of the people. Alongside national strike-hard campaigns, the Ministry of Public Security has implemented a series of specialized campaigns against ‘gambling, prostitution, drug trafficking, the trafficking of women and children, theft and the smuggling of antiquities, illegal border crossing, counterfeit currency, tax evasion, organised and gang crime, and robberies committed on public roads’ (P. Wang 2013b: 8). The most recent nationwide specialized drive against organized crime, undertaken between February 2006 and September 2009, resulted in the destruction of 13,000 criminal organizations and the prosecution of 15,135 suspects (Qiu 2010; P. Wang 2013b). In addition, local governments have adopted campaign-style policing against locally-based gangs by implementing ‘smashing black’ (dahei) crackdown campaigns (Broadhurst 2013). Despite national strike-hard campaigns and specialized drives against organized crime, the effect of campaign-style policing is unclear. In the short term, this style of policing seems effective, but it does not work over the long term (Liang 2005). For example, take the 1983 Strike Hard Campaign. This campaign resulted in the arrest of 1.772 million criminals and the crackdown on tens of thousands of criminal groups, but this massive and ruthless campaign only managed to reverse the crime trend in 1984 and the crime rate resumed its momentum over the following years (Xia 2006). For strike-hard campaigns initiated in the 1990s and the new millennium, the effect of the campaigns on the crime rate was even weaker (Liang 2005). Moreover, ‘routinized’ campaigns have provided ‘invisible protection’ to long-standing criminal syndicates because they have noted the times of the year that anti-crime campaigns tend to be launched and have known how to hide during the crackdown periods (Tanner 2005). 406

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Campaign-style policing succeeded against simple street crime and basic violent crime; however, it failed to curb organized crime groups, especially influential, well-organized and wellfinanced criminal syndicates that are able to control a sizable portion of businesses in a particular area or a sizable portion of one type of business (P. Wang 2013b). The reason for this, as noted by Trevaskes (2010: 143), is that organized crime ‘[is] hidden, complex and relatively sophisticated’. Most criminal syndicates in the new century choose to create legitimate covers or business fronts for their illicit businesses, and their organizations are structured as private firms (P. Wang 2013a; Xia 2008). These strategies have the effect of protecting these criminal syndicates from police investigation. Furthermore, many influential gang bosses have special legal fronts, such as membership of people’s congresses or people’s political consultative conferences. This provides gang bosses or illicit entrepreneurs with a safe haven, since law enforcement agencies will find it difficult to differentiate between ‘the enemy’ and ‘the people’. These intensive national and local crime crackdowns have led to a further unexpected outcome: the widespread establishment of the political–criminal nexus. Most criminal syndicates have noted that gangs that do not form friendly relationships with government officials were more likely to be eradicated during the anti-crime campaigns. Although both national and local anti-crime campaigns have targeted corrupt government officials who provide extra-legal protection to gangsters, the investigation of red-black collusion is extremely difficult. This is because corrupt transactions between government officials and gang bosses are coordinated through the guanxi/interpersonal network which offers an efficient, safe and secret mechanism for these illicit exchanges (Zhan 2012).

Implications The implementation of anti-crime campaigns in China has always been a political strategy for both central and local governments to show their political power and maintain political legitimacy. Take the Chongqing crime crackdown, for example. A ‘smashing black’ crime crackdown helped Bo Xilai,8 Chongqing’s former party chief, to establish his authority throughout the city, and enabled Bo to earn national recognition. During the campaign period (2009–2011), the ‘successful’ crime crackdown made Bo a hero of the country’s ‘new left’, offering him a springboard for promotion to national government. But this ‘smashing black’ campaign was condemned by legal scholars because it used torture and falsified evidence against political enemies, legitimate businesspeople and gang bosses (Broadhurst and Wang 2014). It is obvious that the four main national ‘strike-black’ campaigns as well as a series of specialized crackdown operations can neither completely defeat nor effectively prevent organized crime. This is because ‘attacking crime does not eliminate crime’ (Trevaskes 2007: 39), and the resurgence of organized crime is closely associated with an increase in social problems, such as the widening gap between rich and poor, the emergence of a huge marginalized population, the failure of legal institutions to provide sufficient and efficient protection, the prohibition of certain goods and services, and widespread corruption in the public sector. The methods for tackling these issues need both a short-term and a long-term perspective. In the short term, the Chinese government should end the campaign-style policing which it has preferred to use up until now and transfer its attention to regulating the market via legislation. Regulating the market according to the rule of law reduces the infiltration of organized crime into China’s legal institutions and economic sectors. Unfortunately, the Chinese government has yet to fully realize the destructive effect of the campaign-style policing of organized crime on the country’s safety and stability. Since the late 2000s, the government has implemented a new policy, ‘Balancing Leniency and Severity’. 407

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This policy urges the courts to use lighter penalties for the vast majority of crimes while meting out harsh punishments for extremely serious crimes, especially crimes committed by dark forces and organizations with the ‘character of black society’ (Trevaskes 2007). This new policy re-emphasized the importance to the Chinese government of an anti-crime campaign as a means of dealing with organized crime, a problem the government believes is one of the most dangerous enemies of the socialist market economy. It may be argued that devoting a large number (sometimes millions) of law enforcers and enormous economic and social resources to these ‘smashing black’ (dahei) anti-gang campaigns means that the government has less energy to prevent other types of crime that may be even more harmful to society. But this most recent policy reveals the continuation of campaign-style policing in curbing organized crime. For the long term, decriminalizing and regulating illegal markets (e.g., gambling and prostitution) is a useful strategy to reduce crime, especially organized crime. Take gambling, for example. The legalization of gambling will also reduce related crimes, such as fraud, violent debt collection and loan sharks. But the regulation of the gambling market will bring substantial challenges for the government. As T. Spapens (2012) suggests, decriminalization will expand the market because of the emergence of a large number of new customers who did not want, or dare, to buy it when it was illegal. He further points out that, on the one hand, criminal groups would take advantage of legalization to enter this newly established legal gambling market if the government lacks the ability to screen applicants for licenses; on the other hand, criminal groups will establish underground gambling dens to offer special services to problem gamblers, such as extended gambling hours, and also service customers who gamble using their illegal income and who therefore cannot use regular gambling outlets. Furthermore, decriminalizing the illegal market will encourage businesspeople, whether legal or illegal, to bribe the authorities to obtain gambling licenses. Despite these and other potential challenges, it is worthwhile for the Chinese government to regulate illegal markets in order to reduce organized crime. There is no fast-acting recipe for coping with China’s rampant organized crime. The current urgency for the Chinese government is not only to narrow the gap between rich and poor by speeding up the reform of the income distribution system, but also to provide the floating population with equal job opportunities, public health services and education. Another important issue for China is to establish an efficient legal system. In achieving this, the most important task is preventing the legal system from collapsing under the demand of personal connections. The negative influence of personal connections is huge in China because people cannot see how the government operates; all they see is the network of powerful individuals who control all state resources. And individuals can be bribed. China’s current political and legal framework encourages individuals to get things done through personal connections rather than attempt to use the legal system, and this creates favourable conditions for the development of the criminal underworld. Organized crime in mainland China will only disappear if the government finally manages to eradicate this fundamental contradiction.

Notes 1 For the full report, please see: www.moh.gov.cn/ldrks/s7847/201309/12e8cf0459de42c981c59e827b8 7a27c.shtml. 2 The full report may be downloaded from www.hrw.org/node/115260. 3 The full title is ‘The Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate Concerning Certain Issues Related to the Specific Application of Law in Handling Criminal Cases Involving Gambling’ (2005). 4 Wen Qiang served as deputy head of the Chongqing Public Security Bureau from 1992 to 2008 and as director of the Chongqing Justice Bureau from July 2008 to August 2009. 408

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5 The political–criminal nexus refers to a nexus between gangsters and government officials from the criminal justice system. 6 ‘Dark forces’ refers to loosely organized gangs and largely unsophisticated groups, such as street gangs. 7 ‘Organizations with the “character of black society”’ refers to more mature criminal syndicates that were protected by government officials. 8 Bo Xilai was removed from Chongqing party chief in 2012. He was accused of abusing power, taking bribes and violating party discipline.

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29 Institutionalized abuse of police power How public policing condones and legitimizes police corruption in North America Marilyn Corsianos

Introduction Public policing, as an institution, operates to symbolize security and public safety in a civil society. The hegemonizing of the policing system in its current form, and the increasing popularity of quantitative police research focused on measuring “what works” in policing and determining “best practices” as supported by government funding bodies, demonstrate the limitations of such approaches to “law and order” as well as the need to promote critical police studies within the academy. Critical police studies widens the analytical lens gaining insight into the organizational structure of policing systems, its goals, and perhaps most importantly, its institutionalized abuses of police power. Critical police studies help explain, for example, why liberal democratic nation-states like Canada and the United States tolerate all types of corruption and why the general public supports authoritarian policing. Finally, critical police studies examine the changing nature of “policing” against socio-economic and political transformations. This chapter examines how public policing as an institution creates opportunities for crimes for its officers, and how it often operates to justify police abuse of powers. The lack of accountability mechanisms along with tenets of the police culture will be evaluated to provide insight into the organization as a vehicle that makes police abuses of power possible. In addition, the chapter will examine police organizational goals in relation to how the state constructs and responds to particular incidents of police corruption and how, when the public becomes aware of illegal police behavior, organizational goals of policing can be compromised. In the process, forms of police corruption that are not recognized as such and/or are overwhelmingly ignored by police organizations will be identified, since corruption within policing, when recognized, is often associated with only a few acts of abuse of powers.

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Historical overview Defining “police corruption” Definitions of police corruption have varied. Indeed, some forms of police behavior are universally condemned while others remain contested. In addition, some types of police misconduct are violations of law while others violate internal departmental policies. Goldstein (1977: 188) defines police corruption as “the misuse of authority by a police officer in a manner designed to produce personal gain for the officer or others.” Similarly, Lawrence Sherman (1974: 30) defines police corruption as “an illegal use of organizational power for personal gain.” However, as Klockars notes (1983: 336), “Some things we might well describe as police corruption may involve organizational but not personal gain.” Barker and Carter (1986), on the other hand, define corruption as behaviors that are forbidden by some law, rule, regulation or ethical standard. Police corruption involves the misuse of the officer’s position/power and it is done because of some actual or expected material reward or gain. For Barker and Carter, the gain can be money, goods, services and/or discount. However, for Corsianos (2012), the definition of police corruption must be broadened both in terms of the types of police behavior that are recognized as abuses, and in terms of the gains for police misconduct. More specifically, police corruption must include the practice of selective law enforcement and excessive use of force against marginalized populations, racial profiling and gender bias in policing, and the gains for officers can be materialistic, but may also include psychological, social and/or emotional gains which include vindication, recognition, sense of entitlement over others and/or commendations. Therefore, police corruption/misconduct is the abuse of police powers for personal and/or organizational gain, and the gain may be financial, social, psychological and/or emotional. Corruption by police officers, when recognized internally, is often associated with only a few acts of police abuse of powers, and it continues to be largely gender-specific given the disproportionate number of male officers involved in police misconduct (Corsianos, 2012). The types of corruption that are more widely accepted include: extortion, larceny, receiving payment in turn for ignoring violations of law, or for referring clients to attorneys, bail bondsmen, automobile service stations and other businesses; using excessive force against particular suspects to get information about crimes; providing additional police services to those who either pay through discounts and gifts, or who have shown support for the police in different ways (e.g., through advertising, displaying police memorabilia, etc.); planting evidence; and, falsifying personnel records (Barker, 2006; Withrow, 2006; Walker, 1997, 2005; Crank and Caldero, 2000; Geller and Toch, 1996; Skolnick and Fyfe, 1993; Inciardi, 1987; Stoddard, 1979; Sherman, 1974; Barker and Roebuck, 1973; Maas, 1973). However, forms of corruption that are largely ignored internally, or not even recognized as abuses, include: officers using race as a key factor in police decisions to stop and interrogate citizens (often referred to as racial profiling, race-based policing or race-biased policing), unjustified shootings, excessive use of force and selective law enforcement applied differently to groups of people, and police ignoring violations of law (e.g., as seen in white-collar crimes, domestic violence, sexual assaults, etc.). And, despite initial reactions from the public that may include anger, disapproval and disappointment at these behaviors, they too accept this kind of corruption because of the “dangers” they associate with policing these populations (Corsianos, 2012).

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Police organizational survival despite publicized instances of police corruption Since the creation of formal policing systems in the US, reports of police corruption have been common. As Kappeler and colleagues (1998: 28) note, “Since the creation of the first law enforcement agencies, police have engaged in misconduct. . . . To study the history of police is to study police deviance, corruption and misconduct.” But, over the years, with the increased “legitimacy” of policing as an institution, members of the middle and upper class have overall come to accept policing in its current form as necessary despite negative public reactions of known corruption cases that may include anger and disapproval. Indeed, any public institution is committed to organizational survival. The local police as a publicly sustained entity of local government requires them to engage in “image maintenance” (Manning, 1997), particularly cultivating and refining the image of the police as a necessity to social order. This is done by actively constructing “society” as a “dangerous place” filled with “crime” and “criminals”. In the process, “society” becomes the experience of living in a world where the possibilities of “risk” are numerous, and the possibilities of experiencing criminal victimization likely. As a result, the use of crime statistics is a common strategy used by police management to secure the image of society as dangerous and risky. When their internally generated statistics show an increase in crime rates, police administrators have used them as “evidence” of the need for policing in an increasingly “dangerous” world. Alternatively, when the statistics show a decrease in crime rates, members of upper management have used them as “evidence” of how budget cuts in police resources have produced fewer arrests rather than a drop in actual crime, and thus the need for more police officers (Corsianos, 2012). As McLaughlin (2007) notes, the police have a vested interest in amplifying the significance of problems and their response strategies. Police administrators use a variety of strategies to “dramatize the appearance of police control” (Manning, 1977). For example, it is not uncommon to remind the public that the police are the “thin blue line” standing between order and chaos; and particular “crime waves” and “moral panics” constructed by the police and/or the media serve to maintain public consensus for authoritarian policing (Belknap, 2007; Barak, 2003; Sumner, 1981; Hall et al., 1978). As a consequence, “knowledge of insecurities” is created in the public imagination that strengthens the need for police organizations despite publicized cases of police corruption. This knowledge of insecurities is carefully constructed in ways that perpetuate a narrow image of “crime” and “criminals”; that is, specifically behavior that is largely related to street-level illegal activity (e.g., assaults on strangers, robbery, street prostitution, the sale and/or use of illegal drugs, etc.) and assumed to be the result of poor people, visible minorities, younger people and males. This carefully constructed “knowledge of insecurities” is inseparable from race, class and gender politics, and it enables the public to “know” who are the “problem people” and the “dangerous behaviors.” In addition, both the rhetoric and public displays post-9/11 of militarized police forces have gained ideological currency among police administrators, as evidenced in Ferguson, Missouri, following the police killing of an unarmed 18-year-old, Michael Brown, on August 9, 2014, or across North American cities wherever Occupy Wall Street protests occurred in the fall of 2011. In the case of the protests that followed the killing of Brown, police responded in marinecamouflage uniforms and military-grade body armor, equipped with short-barreled assault rifles and armored vehicles. During these times, the police are indistinguishable from soldiers in a war zone and their actions often contribute to a selective distancing and vilifying of marginalized communities, to the alleged need for militarized policing, and to the “knowledge of insecurities.” Finally, the “knowledge of insecurities” is intertwined with masculinist crime-control ideologies that focus on aggressive crime control, catching “the bad guys” and punishing those 414

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individuals who pose “real” threats to society. These become important for police organizations to maintain the public’s commitment to the quest for security despite publicized instances of police corruption. But, at the same time, the level/degree of negative public reaction toward particular cases informs the police in how they carefully construct what has happened, how it happened, and how they will work to “ensure” that it doesn’t happen again. Publicized cases of police criminality are largely understood through police organizational explanations and/or justifications.

Methodological issues in research on police Public insight into police corruption is realized via the mainstream media, as well as through formal inquiries (e.g., Knapp Commission, 1972; Mollen Commission, 1994); citizen action groups (e.g., Human Rights Watch); litigation cases involving police misconduct; and academic research. But many academic studies on police abuses depend solely upon quantitative measures that have inherent limitations. Studies have included examinations of citizen complaints filed with police, internal officer discipline data, police incident data (e.g., Early Intervention Systems) that can indicate officers’ use of force, including the discharge of a firearm, as well as system audits (e.g., auditing the receipt and storage of police evidence, or tapes of interviews with suspects) (Barker, 1978; Williams and Hester, 2003; White, 2002; Crawford and Burns, 1998; Garner et al., 1996, 2002, 2004; Garner and Maxwell, 2000; Matulia, 1982). But each of these quantitative studies has inherent limitations. For example, a study that measures police corruption by looking at the number of citizen complaints generated in a year will only capture part of the problem, since not all complaints are reported. These types of data, contrary to the views of positivists, do not “speak for themselves”; they must, as Curran and Renzetti (2001) note, be “interpreted.” Qualitative studies, on the other hand, consisting of interviews with officers about police corruption, have been infrequent given the difficulty in gaining access to study such a sensitive topic. But, these studies can produce rich, in-depth data that cannot be achieved by solely depending on quantitative approaches. For instance, Corsianos (2012) provided a unique insight into the police culture through the use of interviews with former police officers. However, the extent of police corruption in the different types of police misconduct that officers participate in, the details of the corrupts acts, as well as the frequency of these acts, cannot be authoritatively known given the current police culture, as well as policing as an “institution” where the primary goal is ultimately organizational survival. On the other hand, its existence as a common occurrence cannot be denied given the possibilities for misconduct that are made possible and the common reluctance of police organizations to condemn these actions and to recognize the different types of abuse of powers. For Tiffen (2004: 1175), “Police corruption to greatly varying degrees seems to be a feature of most large societies. Its sources lie in the nature of police work. The scope for secrecy and relatively unaccountable power is always conducive to corruption.”

Theoretical overview and research The “bad apple” theory Police organizations are proactive players in constructing corrupt officers as “anomalies.” A frequent statement issued by police administrators after the media report an incident of police corruption typically involves one that refers to the officer(s) as “bad/rotten apple(s).” Members of police management will often point out that abuses do not reflect the majority, but, rather, 415

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are the result of a particular “bad officer” or a few “bad officers”; that is, “bad/rotten apples.” For example, police administrators referred to the River Cops involved in the drug corruption scandal in Miami, Florida in the late 1980s as “rotten apples” (Delattre, 1989). Similarly, the Mollen Commission’s investigation of drug corruption in the New York City Police concluded that “The corrupt acts were the result of small groups of rotten apples and not systematic corruption within the department” (Mollen Commission, 1994). In addition, following the Los Angeles Rampart Area scandal in the 1990s, the LAPD announced that the corruption was the result of “rotten apples” working in the Rampart CRASH; a now defunct specialized gang unit (Los Angeles Police Department, 2000). “Police departments tend to use the rotten apple theory . . . to minimize the public backlash against policing after every exposed act of corruption” (O’Connor, 2005: 2). This allows the police department to look no further than the guilty “individual” officers (O’Connor, 2005). Police administrators use a series of control strategies to appease the public in finding the “rotten apples” responsible for the misconduct (Fitzgerald, 1989), and their attempts to discover police criminality are largely fragmented and focused on an individualistic approach to dealing with police criminality (Dean et al., 2010). For Barker (2006: 59), [S]ome police executives still use the term “rotten apples” to deny or mask problems in their departments. They want the public to believe that a publicly identified “corrupt,” or for that matter a “racist” or “brutal” cop is an aberration not a department problem. When they are gone, the problem will go away. However, the “bad apples” argument is typically used only in instances where the incident has been leaked to the media and the police cannot hide the evidence against the officer (e.g., an officer’s illegal conduct is captured on audio or videotape, cell phone recording or picture), and/ or the victim is perceived to be a “legitimate” victim (i.e., will be perceived as credible by the wider public). The continued emphasis by police agencies on “bad apples” is not surprising given the goal of organizational survival and how popular cultural constructions of the police guide organizational responses to publicized cases of police corruption. Dominant images of the police continue to include the police as “crime fighter” and “enforcer of laws” (Corsianos, 2009; Martin and Jurik, 2007; Stenson, 1993; Neugebauer, 1996, 1999; Ericson, 1981, 1982). As mentioned earlier, a public that views society as “dangerous” and is committed to organizational efforts to achieving security accepts these hegemonic images as necessary. At the same time, police organizations cannot entertain the possibility of problems with the police occupational culture, or policing as an “institution,” as these would put the organization as a whole in jeopardy. The police as “partners” in the pursuit of “security” cannot also be part of a system that enables and condones dangerous behavior among its officers. Thus, as asserted by Walker (2005), the rotten apple theory has powerful emotional and political appeal. “It personalizes misconduct and gives it a human face” (ibid.: 14). In addition, it also allows the public to “see” that this is the act of a particular person(s); that is, the one or a few “rogue officers” while maintaining confidence in the majority.

Police culture and hegemonic masculinity The police culture overwhelmingly represents hegemonic masculinist ideologies. Key tenets of the police culture include a sense of “brotherhood” and a deep-rooted belief that “straight” male officers are “the standard” in policing, an “us versus them” mentality, secrecy, an emphasis on narrow definitions of physical strength (i.e., upper-body physical strength), and the centrality of 416

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crime control tactics and ideologies that include the use of aggressive law enforcement, use of force, a sense of entitlement over citizens, and the police as “crime experts,” “authority figures,” as well as the “thin blue line” between chaos and order. Therefore, despite individual officers’ perceptions of particular police corruption cases, as a collective they work to defend or condone officers’ questionable behavior and in the process preserve self and organizational identities. In other words, the police as “crime fighters” and “heroes” who catch the “bad guys” and foster security serve dominant masculinist ideologies and validate the current policing system. These hegemonic constructions enable officers to downplay or overlook officers’ misconduct, or condone the behavior often contrary to mainstream media representations and/or initial public reactions (Corsianos, 2012). The occupational culture creates a system of beliefs that shapes officers’ interpretations and understandings of police corruption. At the same time, it enables officers to protect the dominant hegemonic images that embody masculinist characteristics and tolerate police misconduct. By focusing on the public and/or media representations of the police following a publicized incident of police misconduct, officers dismiss the experiences of possible victims who often represent marginalized populations and, in turn, protect privileged police positions. In the case of the Michael Brown killing, the Ferguson Police Department moved quickly to respond to the overwhelmingly adverse news coverage of both the department and its officers, by depicting Brown as a “criminal” and therefore encouraging the public to be skeptical of the mainstream news’ portrayal of him as a victim. For instance, almost a week after the police shooting, the FPD released videotape and photographs that showed Brown stealing cigars from a convenience store and shoving a clerk shortly before he was shot. The shooting as well as the release of the video sparked protests in the city for a couple of weeks, in part due to the belief among many residents that Brown was surrendering when he was killed, and, in part due to the underlying racial tensions between the economically marginal African-American community of Ferguson, which makes up 68 percent of the population, and the police, which is highly over-represented by white officers (there are 52 sworn officers of whom three are black). In general, people representing marginalized groups who are victimized by police (or by others) are often dismissed or overlooked by officers as a whole even when they have experienced emotional or psychological harm, physical injury, or been killed. Criminal laws define certain behaviors as illegal and hence criminal. However, criminal behavior which those officers are expected to police and ultimately apply their discretionary powers in terms of which laws to enforce and when challenge a particular historically constructed social system. The policing of “criminal” behavior represents an inquiry into power relationships and cultural controls (Corsianos, 2009; Kappeler et al., 1998). Police organizations are structured to largely apply selective law enforcement to the less privileged (Ericson, 1982), and to protect privileged positions including police interests by maintaining a positive police image to the public (Manning, 1997; Corsianos, 2003). Masculine traits are constructed as desirable, positive and necessary for the tasks of “law enforcement” agents (Corsianos, 2012). Officers’ perceptions of “criminals” (i.e., what constitutes criminality), appropriate responses to suspects (e.g., the continued emphasis on use of force versus effective communication), and assumptions of suspects’ guilt are used to overlook or dismiss abuses. Police work is presented as incorporating egalitarian ideals, but, in actuality, police culture reflects and maintains structures of dominance (Shearing, 1981; Manning, 1997; Corsianos, 2004). For instance, the status of “criminal” is often associated with “being poor,” and the poor are commonly held personally responsible for their economic situations. There is an assumption made by the middle-upper classes that economic failure on the part of an individual reflects some sort of personal shortcoming and/or laziness (Wilson, 1996). In addition, local officers interact 417

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disproportionately with poorer people given the nature of current policing systems, laws, and the preoccupation with street-level and/or blue-collar crimes. Therefore, “aggressive police tactics” in dealing with the poor are accepted as common sense and seen as necessary. As Corsianos (2003) notes, officers have shared stories about “teaching someone a lesson” by applying physical force as a form of punishment. Too often, officers, like many in the wider population, bear an oversimplified image of society as consisting of “good” people and “bad” people; and there is little or no room to consider the social and structural inequalities that limit people’s “choices” or in evaluating the kinds of behaviors that become accepted as “criminal” and, in turn, are disproportionately policed. More specifically, the intersectionality of crime, class, ethnicity and gender is not recognized (Barak et al., 2001). Therefore, when particular police corruption cases become public knowledge, officers will condone the behavior. This may be seen through the common expressions utilized among officers, such as “the public don’t understand”; “we’re the good guys”; “he (i.e., the victim) was deserving of what happened to him”; “the law sometimes works against us in favor of criminals” (Corsianos, 2012). These suggest a sense of shared understanding and interpretation of events, but, at the same time, they affirm a disregard for the possibility of a victim who has experienced direct harm by the police. A collective police identity is secured and the police as the self-identified “authority figures” in the “war on crime” separate themselves from the public as seen in common expressions such as “we’re the blue wall” and “it’s us versus them”(Corsianos, 2012). Internally, the police culture sustains a system of beliefs that provides officers with a means for interpreting and understanding “police corruption,” and ultimately protecting identity constructions of the police. The police culture allows officers to focus attention on the “ignorance” of the public at large. Police work may be seen as “dirty” (Dick, 2005) due, for instance, to the moral ambiguities produced, and the categories of people that officers disproportionately police and/ or apply excessive force to (i.e. the poor, and racial and ethnic minorities) (Kappeler et al., 1998; Neugebauer, 1996, 1999). But, despite elements of the profession which undermine the organizational goals and may be considered “dirty,” crime control remains one key tenet of the police function that is highly valued as both a means and an end. Crime-control ideologies maintain the heroic positive self-image in officers while rendering other, less desirable and/or controversial aspects of the job as “less important” (Corsianos, 2012). The moral ambiguities within policing are commonplace and include officers’ assumptions of “guilt” in the persons they arrest. Under the law, a person is “innocent until proven guilty,” but, as Klockars (1988) notes, there are commonly held contradictory assumptions of guilt on the part of officers. In addition, the moral ambiguities are manifested in officers’ decisions to use illegal means, including excessive use of force, to enforce laws. The moral dilemmas here are the justifications for illegal behavior on the part of the police. This is often referred to as the “noblecause” corruption (Heffernan, 1985; Pollock, 2007) or the “Dirty Harry” problem (Klockars, 1988) named from the 1971 Warner Brothers film Dirty Harry. In the film, the assumed “good cop” acts illegally and immorally in order to bring “the bad guys” to justice. This, however, denies the contradiction in the use of “dirty means” being in the “same moral class of wrongs” as those employed to fight crime. At the same time, given the emphasis on achieving the “ends” as a police organization, failure on the part of an officer to produce results may compromise his or her reputation as an “effective” officer which is overwhelmingly linked to aggressive crimecontrol activities (e.g., number of arrests). As a result, “dirty means” may be used to avoid shame, and/or feelings of inadequacy or incompetence (Klockars, 1988). Indeed, policing, not unlike other masculinist occupations, produces “guilty knowledge.” “Although all professions publicly protest their virtue, social value, and personal sacrifice, private talk is often of occupational tricks and shortcuts, of the dubious maneuvers that make the socially 418

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required performance possible or provide private satisfactions that conflict with public expectation” (Tiffen, 2004: 1175–1776). This includes internal police justifications for the use of illegal means to arrest perceived criminals. Moreover, as Dick (2005) notes, officers are able to “reframe” police abuses by absolving their actions in a broader, legally defined social order thereby neutralizing public accusations. She asserts that when a society requires a group to hold ambiguous roles, the persons in that group have the potential to wield uncontrolled and dangerous power. However, hegemonic, masculinist ideologies empower officers to accept the knowledge that, at times, they must operate “above the law” or that the laws, at times, work against them in favor of “criminals.” This allows officers to prioritize particular police functions regardless of the means. For Sherman (1980), the police culture values violence as a necessary means and allows police to misuse their violence license to accomplish particular “ends.” The misuse of violence is justified with a manufactured need to fight violence (Barak, 2003). Despite the popular police “crime fighter” identity, ethnographic researchers verify that the exact function of policing is difficult to define, and, for the most part, is unrelated to “fighting crime and criminals” and making arrests (McLaughlin, 2007; Martin and Jurik, 2007; Corsianos, 2009). As Manning notes (1997: 158–159), typical policing “is boring, tiresome, sometime dirty, sometimes technically demanding but it is rarely dangerous.” But police organizations dramatize the atypical instances such as shootings, hot pursuits and dramatic arrests of “wanted criminals,” and thus the “need” for officers who embody masculine characteristics. Therefore, police solidarity and conformity to the overall police culture are intimately connected to the collective police identity. Common expressions utilized among police officers such as “the brotherhood of policing,” “the blue wall,” “us versus them,” “bite the bullet” and “don’t rock the boat” serve to keep the traditional police culture intact despite some increased diversity among officers over the years (Corsianos, 2001). Thus, officers who may consider coming forward to report a corrupt act and/or demand an investigation into police misconduct are deterred. However, interestingly, gender remains the strongest indicator of police abuse of powers. Even though all officers experience pressure to conform to the dominant police culture, women officers as a whole generate less citizen complaints, are less likely to use excessive force including deadly force, cost the department less in settlements from lawsuits filed by civilians, and are less likely to be involved in other forms of police corruption (Garcia, 2003; Lonsway, 2000; Lersch, 1998; Martin, 1998). Several studies have shown that the presence of female officers on patrol frequently decrease the number of citizen complaints and reduce overall police violence (Steffensmeier, 1979; Van Wormer, 1981). It has also been reported that female officers in female-male patrol teams are more effective in calming potentially violent situations (Grennan, 1987; Martin and Jurik, 2007; Corsianos, 2009); and female officers are less likely to use excessive force (McElvain and Kposowa, 2004; Abernathy and Cox, 1994; The Bureau of Justice Assistance, 2001), and be involved in deadly force incidents (Horvath, 1987). In addition, Corsianos (2012) found that while most male officers worked with male police partners to commit illegal acts for personal gain, the women officers acted on their own because of mistrust toward male partners and/or perceptions of not being fully accepted by their peers due to their gender status.

The police organization: police corruption as institutionalized and systemic As discussed earlier, the “rotten apple” metaphor is often used by police agencies to explain an incident of police corruption. What remains absent is any meaningful discussion of the role of police culture but also police as an organization in the creation of corruption risks. For 419

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example, various academics (e.g., Corsianos, 2012; Zimbardo, 2007; Punch, 2003; Kraska and Paulsen, 1997) argue that police criminality is systemic. Punch (2003) uses the metaphor “rotten orchards,” whereas Zimbardo (2007) prefers using the “bad barrel makers” comparison. For Punch (2003: 172), police corruption is protected by various tenets of the system. “Systems” refers both to the formal system – the police organization, the criminal justice system and the broader socio-political context – and to the informal system of deals, inducements, collusion and understandings among deviant officers as to how the corruption is to be organized, conducted and rationalized. For Walker (2005: 15), “The organizational process is inseparable from the on-the-street product.” For instance, the structure of policing roles, and the inadequate accountability mechanisms, contribute to the possibilities for police misconduct. When looking at policing roles specifically, officers are given a great deal of discretionary power in their day-to-day decision-making and are subject to limited patrol supervision. This provides officers with the power and freedom to bend or break the laws without being discovered (Barker, 1983). Ethnographic works have found that patrol officers, once they leave the station, have a great deal of discretion in what rules to enforce and where (Barker, 1983; Manning, 1997), and, in addition to the limited supervisory oversight of patrol officers, organizational rules and regulations are ambiguous and negotiable (McLaughlin, 2007). In addition, many laws and procedures are themselves inconsistent, if not contradictory. Therefore, policing involves a high level of discretion in the application of rules (Davis, 1969; Goldstein, 1964; LaFave, 1965) and, as McNamara notes, “police work does not consist of a standardized product or service” (1967: 185). It has been argued that “the source of police discretion lies with the legal powers they are given, the nature of the criminal law they have to enforce, the context within which police work takes place and limitations on resources” (McLaughlin and Muncie, 2001: 96). Despite state laws and city ordinances that direct officers to enforce all laws all the time, and despite some department policies of full enforcement, law enforcement decisions are frequently made by individual police officers (except when there are specific policies relating to particular crimes such as mandatory arrest policies in domestic violence where officers’ discretion becomes more limited). These discretionary powers create opportunities for corruption and provide “access” for officers. According to Prenzler (2009: 21): Detective squads are notorious for process corruption because their work is focused on the detailed investigation and prosecution of crimes. Officers in specialist licensing or vice squads are more likely to engage in organized graft. Traffic officers often have limited opportunities for regular or serious graft, but are presented with numerous low-level misconduct opportunities, especially in terms of cash payments or harassment of citizens. Officers in drug squads and armed holdup squads frequently engage in the most lucrative forms of corruption through exposure to large quantities of cash and valuables. Taken together, all of these elements (e.g., police culture, organization, the criminal law, discretion, undercover operations) characteristic of all police departments more or less and to varying degrees across North America serve to institutionalize abuse and corruption as normative rather than aberrant behavior.

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Internal power dynamics and the “legitimation” of abuse/corruption In addition, the hierarchical, paramilitaristic police organizational structure as a whole creates particular internal power relations that make it difficult for officers to come forward to report a corrupt act and/or demand an investigation. These power relations function to convince officers that they don’t have a choice but to condone the corrupt activities of others in order to avoid being marginalized and ostracized from peers and management, and suffer social, psychological and/or financial consequences. For example, the American soldier who was the “whistle-blower” in the Abu-Graib prison crimes in Iraq, committed by US military police personnel, ended up being ostracized by peers and was subjected to death threats. Officers in upper-level administrative positions have the socio-political power to ensure conformity among their officers. In addition, particular language is strategically used to legitimize their position of control (Corsianos, 2001). For instance, it is not uncommon for upper police administrators to use everyday rhetoric which, at the manifest level, would suggest partnership among officers relating to one another within a supportive police culture and hence suggest “friendly advice,” while at the latent function they affirm respect and obedience to the chain of command and to the traditional, crime control and masculinist police operations. The organization also encourages police corruption as a result of the economic constraints experienced by officers. The police are largely identified as “blue collar workers” (Travis and Langworthy, 2008). Officers’ frustration with unsatisfactory salaries can be further exacerbated when paid-detail opportunities through the organization are cut, or when there are fewer or no opportunities to work overtime or make court appearances while off-duty as a result of budget cuts. In addition, the organization’s pyramid structure ensures limited opportunities for advancement that compromises one’s ability to increase one’s salary. Thus, officers’ dependence on the job to support themselves, and often family, translates into an overall acceptance of police corruption regardless of personal interpretations of particular cases. Undoubtedly, there is a financial and emotional investment in conforming; one’s job is better protected and one avoids being marginalized and ostracized by peers. This interdependence may also contribute to a greater willingness to view police corruption as inevitable given the “types” of people with whom police often interact, or may view it as necessary (i.e., for financial gain). Thus, officers may at times use their discretionary powers to take advantage of criminal opportunities that arise and/or create their own “opportunities” given the limited supervisory oversight, as mentioned earlier. However, as also noted earlier, these actions are gendered, and women officers are significantly less likely to engage in police corruption (Corsianos, 2012).

Inadequate accountability mechanisms The intrinsic nature of corruption risks has also been made possible by the inadequate accountability mechanisms within police organizations. For instance, citizens report a number of challenges when filing complaints against officers. Criticisms include difficulties in filing the complaint, not being taken seriously, complaints not being investigated, and no follow-up calls to update complainants. Given the disregard for citizen complaints particularly by people representing marginalized groups (Neugebauer, 1996, 1999; Black, 1990; Gordon, 1987), police agencies enable and/or empower officers to both consider and condone abuses of power in various geographic locales or against particular groups of people. In addition, Internal Affairs (IA) has historically been criticized for its lack of objectivity in policing its officers and for its tendency to try to conceal acts of police misconduct from the

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public in order to protect officers and/or prevent negative publicity about the organization (Kappeler et al., 1998). In addition, if acts of corruption are identified, IA moves quickly to deal with the guilty officers and bring closure rather than work to identify the extent of the corruption. In the pursuit to maintain organizational survival, public knowledge of extensive abuses is not desirable for any police agency. Protecting the organization’s reputation is key. The level of action by IA to internal abuses may depend on a number of factors including suspected officers’ connections to higher ranking officers and/or officers working in IA; officers’ rank, years of service and overall reputation within the organization; whether the incident has been leaked to the media; evidence of the corrupt act beyond someone’s verbal and written complaint (e.g., video and/or audio recording, cell phone picture, etc.); and whether victims of police corruption are perceived to be “legitimate” (Corsianos, 2012). Given the lack of credibility that has been associated with IA units over the years, some have pushed for the creation of outside civilian oversight agencies to monitor police behavior (Walker, 2005; Champion, 2001; Caldero and Crank, 2011; Prenzler, 2009). There are two types of external oversight agencies that generally deal with citizen complaints against officers: the one-time blue-ribbon commissions and permanent external oversight agencies. Blue-ribbon commissions are formed in response to perceived police problems, and often consist of a panel of experts appointed by chief executives at the local, state and national levels. Their task is to investigate the problem and prepare a report with policy recommendations. An example of a blue-ribbon panel was the Christopher Commission (1991) that was formed following the Rodney King beating in Los Angeles. However, blue-ribbon commissions have been largely ineffective because they cannot implement their own recommendations and ensure some level of reform (Walker, 2005), and because their recommendations are based on known, individual cases, rather than acknowledging police corruption as a systemic problem. The power of permanent, external citizen oversight agencies has also been limited. Some have not had the authority to conduct independent investigations apart from the police (Walker, 2001; Terrill, 1990), whereas others have had the authority but lacked resources and personnel (New York Civil Liberties Union, 1993). In addition, some agencies either lacked political support and/ or were met with opposition from the local police union (Police Advisory Commission, 1997). Internally, there have not been any reliable systematic monitoring mechanisms for police behavior that could be used to identify police abuses or possible problem officers. Over the past ten to fifteen years, there have been a growing number of agencies implementing “Early Intervention” (EI) computerized databases used to identify patterns in police behavior (Walker, 2005; Walker and Alpert, 2004; Hickman et al., 2004). EI systems received its first important endorsement from the U.S. Civil Rights Commission (1981) in its report “Guarding the Guardians?” and consists of three basic tenets: identification of problem officers, formal intervention, and remediation which can include retraining, reassignment, referral for duty evaluation, and even dismissal. Identification and selection of officers in need of formal intervention may be based on a number of performance indicators. As Walker and Alpert (2004: 23) note, Identification is based on an analysis of performance indicators that are entered into a computerized data base. These indicators include use of force reports, deadly force incidents, citizen complaints, resisting arrest charges, officer involvement in civil litigation, sick leave use, and any other indicators that a department deems appropriate. But, despite the promise of increasing police accountability, EI systems have inherent problems. For one, there is no consensus regarding the “thresholds” for identifying officers for intervention (e.g., the number of citizen complaints, or use of force incidents required for an officer to 422

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be indicated by the system), and second, what the ratio should be between problem indicators and desired activity levels (e.g., number of arrests). Also, given police associations’ resistance to EI systems, the formal intervention phase is a confidential process often between the individual officer and his or her supervisor. Therefore, no record of the substance of the intervention is placed in the officers’ personnel file, and upper management cannot then verify whether the intervener acted appropriately.

Conclusion Public policing as an institution creates corruption risks and generates societal insecurities and the “need” for policing in its present form. The nature of these current policing systems and their police identities include the possibilities of organizational acquiescence to the various forms of police misconduct, and justify particular abuses of police power as aberrations or exceptions but not as normative police behavior. Furthermore, this kind of institutional legitimation not only provides opportunities for police illegalities, but it also encourages such behavior. Finally, as a means of maintaining organizational survival, meaningful and effective accountability mechanisms are compromised as officers learn to re-enact dominant identity constructions that excuse police corruption.

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30 The appearances and realities of corruption in Greece The cases of MAYO and Siemens AG Effi Lambropoulou

Introduction Within the context of the recent economic crisis in Greece, the country and its citizens are presented not only as bankrupt but also as corrupt by various media of the developed world. Both the appearances and the realities of these depictions were enabled in December 2009 when the then Prime Minister, George Papandreou, in an interview with the BBC, said that ‘systemic corruption’ and ‘clientelism’ had created a lacking sense of the rule of law in the country and accentuated issues such as tax evasion (BBC News 2009). In this way, Mr Papandreou’s generalising about ‘systemic corruption’ helped to further locate Greece’s international image in a negative light, while his remarks served him politically as he became the archangel of anti-corruption and transparency. Less than a month later, in an interview given to representatives of 25 foreign newspapers in Davos, Switzerland (29 January 2010), as he was negotiating for the support of the EU and the IMF in providing ‘relief ’ for the country’s huge public deficit, Mr Papandreou emphasised that ‘corruption is not in Greeks’ DNA’ (ANA 2010). Nevertheless, he was still implying that the economic situation in Greece was the result of the corruption of the Greek citizens, but also that the corruption could be fixed and the Greek citizens healed. Mr Papandreou’s statement also demonstrates a shift in accountability from figures of political power to the people, and a preemptive warning that if the negotiations and subsequently the measures fail, then it is not his sole responsibility. It is worth noting that ‘corruption’ rhetoric has emerged as an issue of public discussion in Greece, to become, only after 2004, the issue coinciding with the increasing discussion at the international level of the impact of the Transparency International (TI) releases. It is also worth noting that in the European Values Surveys of 1999/2000 and 2008, over 90 per cent of Greeks considered ‘corruption bribery’ in the group of highly disapproved behaviours (EVS-Greece 1999, v231; EVS-Greece 2008, v239), over 83 per cent confirmed that citizens must always abide by the law, and over 87 per cent criticised behaviours such as ‘cheating on taxes’ and ‘not paying fair shares’. This chapter explores the realities and appearances of corruption. After providing a brief overview of anti-corruption legislation and law enforcement, followed by a discussion of clientelism and the emergence of the privatisation of mass media in Greece, it moves on to a 427

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detailed distillation of a political slush fund case known as MAYO, followed by a case of illegal financial dealings between Siemens AG and the Greek government.

Legislation and law enforcement concerning corruption During the past 20 years Greece has employed a robust anti-corruption legislation concerning the public as well as the private sector. It has also ratified all the relevant conventions of the European Union (EU), the Council of Europe, the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN), integrating them gradually into the national legislation. In addition, successive laws have been issued for transparency in party financing, and against political corruption. On its own initiative Greece also established several institutions for the prevention and control of corruption in the public services. Examples include: the Police Division [i.e. Service] of Internal Affairs (DEY) in April 1999 with further authority to investigate charges of bribery and extortion of all civil servants; the General Inspector of Public Administration (GIPA) in December 2002; and an extension of the Ombudsman’s responsibilities in January 2003. Inexplicably, the more the country improves its normative and administrative instruments to prevent corruption and promote transparency, the lower its score in the Corruption Perceptions Index (CPI). In particular, Greece’s score in the CPI went down from 5.05 to 5.01 in the period from 1988 to 1996 and plummeted in following years down to 3.8 in 2009. During the economic crisis, the score fell further to 3.4 in 2011 (80th place out of 183 countries), with a slight increase in 2012 to 3.6 (94th place of 174 countries), and in 2013 up to 4.0 (80th place out of 177 countries), the latter far less than the level of 1996 and last place as an EU country (TI-CPI 1996–1998, 2003–2013). The often-used argument by the national experts about the low scores concerns the ‘nonenforcement’ and/or the ‘inefficient’ implementation of measures and improvements. These scores are not based on empirical research and hard data (e.g. case records, disciplinary decisions), but rather on observed legislative problems. Meanwhile, Justice Statistics reveal that the number of ‘crimes against duties and service’ has been for a long time very low; they represent 0.01 to 0.02 per cent of the total recorded offences after 1980 (NSSG 1980–2012: Table B1) and 0.09 to 0.12 per cent of the convicted after 1998 (NSSG 1980–2012: Table B4). Similar are the findings of the various control bodies against corruption. During the period 2004 to 2012 only 0.3 to 0.2 per cent of the 10,323 cases which have been submitted to the General Inspector of Public Administration referred to corruption (2012/11: 28, 39; 2013/12: 26–27). The Ombudsman and the Inspectors-Controllers Body for Public Administration (SEEDD) have made few general references to ‘corruption’ that were actually maladministration cases (Ombudsman 2010/2011: 91; SEEDD 1998–2005: 4, 8; 2009: 4, 9, 11–13; 2010: 23–24; 2011: 8–9; 2012: 10–11). And, according to the Police Division of Internal Affairs’ Reports (DEY 2012: 31–36), from 1999 until 2012 only a small part of police personnel and civil servants were subject to criminal prosecution for corruption, such as bribery [max. 13.4 per cent] and breach of duty [2.1–27 per cent/abs. 38] (DEY 2004: 26, Fig. 2; 2010: 29–31, Tables 7, 8; 2012: 27–28, Tables 7, 8). Finally, the issuing of Law 4152 [ C] in May 2013 is the recent culmination of the Greek government’s efforts against corruption. The law introduced a National Coordinator on Anti-corruption along with a supporting Committee and an Advisory Body. The National Coordinator is directly accountable to the Prime Minister and is head of 12 competent control services and independent authorities involved. Greece’s very low score on the CPI index, despite its attempts to facilitate transparency, to establish numerous control bodies, its high disapproval ratings by citizens, and the endless 428

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criticism from the media, is not easy to initially explain on first sight. Some studies, however, note that moral disapproval of corruption does not necessarily associate with willingness to make a complaint about it (Killias 1998), or that the followed behaviour [everyday behaviour] does not necessarily coincide with the legitimising of corruption (Karstedt 2003: 389–390, 397–408). This is true, but it is also true that CPI is judged increasingly in terms of economic development (Pelagidis 2014). Corruption is treated primarily as a problem of political and economic liberalisation and is used in considering a nation-state’s mark in the index of economic freedom. One of the main data sources for the construction of CPI is the Sustainable Governance Index (SGI) of Bertelsmann Stiftung. The SGI instrument contains a range of indicators of executive capacity and executive accountability rated by national experts, in order to present those countries that show the best governance performance and those countries that show deficiencies. Thus, in 2011 the score of Greece in governance was 4.54 (ranking 31st out of 31 countries). Two years later, in 2014, in the middle of the crisis, the SGI increased slightly to 4.91 (38th out of 41 countries), and executive accountability increased from 4.93 to 5.5 (Bertelsmann Stiftung 2014: 17). The improved score affects the CPI and explains the recent improved ranking of Greece. The improvement seems to have occurred due to the extended liberalisation measures of the market under the tutelage of the foreign lenders during the economic crisis.

The functions of corruption Clientelism, corruption and social stability Predominantly, Greek analysts associate corruption with economic and political development, which, in turn, is associated with political patronage and clientelism. Both have been the main topics of the experts’ discourse since the 1980s, with some variations, and this concept is still dominant. Most studies analyse political corruption, while very few have empirically examined corruption, using data from the CPI, BPI and Global Corruption Reports of TI, or the polls of TI-Hellas. In political science, clientelism means that the politician [patron] provides various resources or privileges to the voter [client], bypassing the formal mechanisms and regulations for their provision; the client on his or her part provides political support to the patron. In the international literature, there are several definitions of political clientelism (Hopkin 2006: 2). Hopkin distinguishes between ‘old’ and ‘new’ clientelism. The former is regarded as operating mainly in developing countries and involves patron–client proximity and exclusively selective benefits (2006: 8). In contrast, new clientelism entails less proximity in patron–client relations and is characteristic of more advanced economic settings. Although the ‘old’ type of clientelist relations is regarded as a reason for the increase in social inequality and discrimination against people who are not part of intense clientelist networks, the ‘new’ type absorbs social inequalities producing conflicts and strain, and balances the state of confusion and uncertainty through rent seeking. According to several Greek authors, new clientelism corresponds better to contemporary Greece (Lyrintzis 2005: 248). It is not regarded as an inherent characteristic in the sense of value or culture but the product of historical events, political organisation and functions of the state mechanism during its development, in which a rational and general mechanism of redistributing social wealth, welfare benefits and social protection was missing (Mouzelis 1987; Tsoukalas 1987; Mavrogordatos 1988). These views express an instrumental function of clientelism and corruption that eventually operate in favour of social stability in Greece. In contemporary society the new form also refers to organised interests (e.g. trade unions, high-income voters), which provide political support (e.g. through the media, financing or other means) to certain politicians or 429

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parties for certain privileges and benefits, and is associated with the expansion of the role of the state in the economy and society (Hopkin 2006: 8–10). The Greek social system with its subsystems has been researched by several native specialists, including sociologists, political scientists and media analysts, on the basis of differences and not on similarities with other developed countries in Western Europe, even though clientelist relationships exist to some degree and in various forms in all modern societies (Piattoni 2001). Contemporary developments have rarely been taken into account. Most studies begin with the peculiarities under which the modern Greek state was formed after liberation from the Ottoman occupation – a starting point that shapes the outcome of the examination. According to some of these studies, the main difference is that parliamentarianism was established in Greece before industrialisation, contrary to other European countries. During the industrialisation era, Greece, along with the rest of the Balkan countries, was under Ottoman rule. The ‘premature’ institution of parliamentarianism in the country without the respective development of productive forces led, among other things, to the formation of a strong state and a weak civil society (Sotiropoulos 1993). Corruption turned out to be one of the negative effects of this system. By using corruption as a reference point we see different things than had we used, for example, social justice. Moreover, the observations of various forms of ‘illegal practices’ acquire different meanings than they would if someone looks at them as manifestations of changes in power or in market relations, a values crisis or globalisation. Consequently, a different diagnosis implies a different treatment. Apart from clientelism, other experts attribute the high level of corruption in Greece to the ‘weak civil society’ due to low social capital (Jones et al. 2008). They consider Greece’s social capital to be low because of the low level of trust in the relations between citizens and the state (Science and Society 2006). Low levels of trust indicate that they are reinforced by the persistence of clientelist relations, which are regarded as a form of ‘negative’ social capital. And yet, social capital in Greece is neither defined nor measured sufficiently (cf. the exemplary study by Poupos 2010), because social capital in general has not been measured in any common way (Paldam and Svendsen 2000). This is due to the heterogeneity of the very definition of social capital. Therefore, consensus concerning measurement has not yet been reached. The Greek researchers do not exactly broach this issue as noted before because they look for differences from and not for similarities with the developed countries of the West. From alternative analyses we see that a complex scheme of interrelated ideas is reproduced in the discourse of specialists, such as ‘clientelism’, patronage, weak civil society, low social capital and a low level of trust, resulting in corruption and the reverse. Accordingly, to them, clientelism absorbs social inequalities and operates as a redistribution mechanism because the resources are not accessible by all. Contrary to clientelism, elite integrity has not attracted any special attention from the Greek social scientists. The same applies to contemporary bibliographies of corruption, where elite integrity and accountability are not mentioned. For example, elite integrity in relation to corruption has been measured by Wayne Sandholtz and Rein Taagepera (2005), as suggested by Welzel et al. (2003), and approved by the World Values Survey. Elite integrity focuses primarily on how well the political elite – individuals as well as parties – have been able to establish and preserve integrity towards the business and financial elite. It is supposed to indicate not only legal but also normatively ethical behaviour. Elite integrity is regarded as an expression of the ‘rule of law’, distinguishing effective democracy from formal democracy (Welzel 2003). According to the existing views in the Greek literature, the ruling elite of the country has not been an organic link to the Greek people, but a group having various interfaces with and dependencies on Western capital and foreign forces (Kondylis 2011). This is why Greek capital has always been ‘bigger’ than the internal capital accumulation.1 430

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Private media, corruption and predatory profits A good example of the connections between economic elites and governments is played out in the deregulation and privatisation of media involving the local MAYO case discussed in the following section. More broadly, the deregulation of the state broadcasting monopoly in the late 1980s led to an expanded commercialisation of the whole media sector which resulted in more channels, advertising, domestic productions and programme imports (Papathanassopoulos 2001). Since the mid-1990s, there have been various efforts by the governments to regulate the private media sector but without much success, followed by other attempts to control media consolidation (Lambropoulou 2012). Many TV licences continue to operate with periodic renewals. We shall see the reasons for this later. As in many countries, businesspeople who involve themselves in other entrepreneurial areas, including oil and petroleum products, shipping, banking, constructions, real estate, hotels and leisure, have also intruded on the broadcasting landscape and print media, only to dominate it after some time. The deregulation of broadcasting has extended the relations that existed between the government and the fourth estate, especially in the domains of radio and television (Hallin and Papathanassopoulos 2002). Furthermore, media ownership is the means and, at the same time, the guarantee for profits in other business areas, particularly in the region of public works. Public procurement and contracting is a key economic activity with high profits. Goods and services are sold many times above their commercial value, and practices on the edge of the law or even illegal practices are familiar to those involved (Rose-Ackerman 2007; TI-BPI 2002, Table 3). Private entrepreneurs in Greece were accustomed to receiving intensive support for various economic activities by the state budget in forms of subsidies, grants and aids. There are several reasons that are not possible to be analysed here. The state’s support of the private economy (e.g. ‘state-sponsored capital’) resulted in many pitfalls, such as uncontrollable public deficits (Agapitos and Mavraganis 1995) and a rapidly rising public debt, as well as over-regulation and a bloated public administration. The private interests use the state again more than the market as a field to maintain their business through the influence of public opinion. Naturally, we should not bypass the dependency of political communication on the media and in particular on television all over the world. According to a Greek study on views and discourse about corruption completed in 2009, the columnists who were interviewed stressed that politicians are caught between the prevalent image promoted by the media and the alleged demands of their electorate (Lambropoulou et al. 2007). Therefore, mutual ‘facilitations’ are regarded as characteristic of the game. Since private Greek broadcasting began operating without licences in order to force the government to deregulate, politicians in turn, according to the ‘politics of the day’, used the reorganisation of broadcasting as means to pressure for their demands. Thus, clientelism and commercialisation, which increased competition, are not necessarily incompatible, because clientelism is a social make-up of market societies. In Greece, the commercialisation of television has not so much eliminated the game of particular political pressures associated with clientelism, as changed its form (Hallin and Papathanassopoulos 2002).

MAYO, Siemens AG and the realities of corruption The case studies analysed here – MAYO and Siemens AG – are examined for the purpose of representing how the effects of politics, mass media and the economy interact to construct the ‘realities of corruption’ in Greece. 431

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MAYO: a ‘local’ case of corruption The MAYO case refers to ‘hidden’ accounts amounting to US$1.6 million held by the conservative party New Democracy, one of the biggest political parties in Greece, and its leader, in the beginning of the 1990s. During the period 1985 to 1993 when Costantinos Mitsotakis was initially leader of the party, this money was transferred to the treasury of the conservative party by MAYO, a Liberian offshore company, through the invoice account of a London bank. The money was deposited into five separate bank accounts at a branch of the National Bank of Greece. The party and its leader used these accounts to finance a programme under another (code) name. According to press information and later justifications of Mr Mitsotakis, friends of the party from all over the world transferred the money in order to assist its successive election campaign[s] during the period 1989 to 1991. As stated by Mr Mitsotakis, a corporation undertook the finding of financiers and supporters for the party, who would donate to party funds through safe ways such as the above offshore company. Parties in Greece are financed by the state budget according to their proportionate representation, dues-payments of their members, donations of their friends, and bank loans – the most important source of revenue for the two major Greek political parties. Private donors can offer only certain amounts (Law 3023/2002, Art. 8; cf. 2429/1996, Art. 8[1, 2]; 1443/1984, Art. 4 [1]). Political finance legislation includes bans and limits on certain kinds of revenues and expenditures, transparency of MPs and candidates, political parties’ funding, political funds by disclosure, and reporting as well as enforcement of rules and sanctions for violations (Repousis 2014: 113–114). However, there are considerable problems concerning transparency of accounts and activities of entities related, directly or indirectly, to political parties regarding the timely publication of private donations to political parties, coalitions and candidates above a certain threshold in relation to financing election campaigns (see GRECO 2013: 7–8 [27, 28]). Coming back to the case, the revelations started after a high circulation newspaper editor, John Alafouzos, broke off relations with Mr Mitsotakis because of the latter’s claims that the editor was responsible for the collapse of the New Democracy government in 1993, since the newspaper did not support the party. The editor disclosed that he had initially deposited US$600,000 for the conservative party before the elections of 1989 at the request of the then leader and Prime Minister Costantinos Mitsotakis, as well as two further respectable sums into a bank account in London. In fact, during this period, the country was engulfed in media privatisation and Mr Alafouzos, who was also a ship owner, was operating a private radio and TV channel with a short-term licence. The government of Mr Mitsotakis, which was the subject of harsh criticism by the broadcasting network of Mr Alafouzos, rejected its subsequent licence renewal application (1991). The profit from the operation of the broadcast was expected in those years to be high. The Prime Minister, in a televised interview, had openly accused Mr Alafouzos of smuggling oil. In 1992, the prosecutor referred Mr Alafouzos and five of his associates to the court for smuggling fuel in two of his ships, for which he was acquitted in 1995. On 8 October 1993, a few days before the national elections, Mr Alafouzos sought his revenge, saying publicly that he had funded the party of New Democracy, while the full amount of money was not accounted for in the party’s treasury. Two days later, New Democracy lost the elections. In 1994, a parliamentary committee for preliminary investigations was constituted, but the Social Democratic Party (PASOK) government, under Prime Minister Costas Simitis, closed the case. After seven years, in October 2001, the Minister of Public Works Mr Laliotis, also from PASOK, upon his leaving office reintroduced the case because of Mr Mitsotakis’ New Democracy attack on the delay of the new airport construction.

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The Minister’s reaction came in the wake of a report by a firm of international chartered accountants, which said that the Greek state had gained 100 billion drachmas [€293 million] through the renegotiation and the new contract drawn up with the consortium constructing the airport, signed by the PASOK government in 1995 under Mr Laliotis’ office. In this context, the Minister also linked the ex-PM with an account belonging to the offshore firm MAYO, which he said should be investigated. He implied accusations of embezzlement and misappropriation of party funds, as well as money laundering. In October 2001, the First Instance Prosecutor began preliminary investigations. In the same month, the Greek Parliament’s Institutions and Transparency Committee (2002) (re-)opened the case. In December 2001, the ex-PM, Mr Mitsotakis, in an interview on a private TV channel, acknowledged the existence of the account, the relation of his party with the offshore company and the receipt of the specific accounts, eventually trying to avoid further questions about his deposition to the First Instance Prosecutor a few days before. Up until that time, his party had denied all knowledge of the overseas accounts and the company. In July 2002, due to the lack of evidence of criminal law violations, the prosecutor shelved the case. In December 2002, both politicians filed a lawsuit against each other for damaging their reputations as a result of slander. However, since the five-year statute of limitations for criminal cases had expired, the plaintiffs could not bring a charge against each other for slander within the jurisdiction of penal justice. Therefore their counterclaim charges remained in the civil courts. In March 2003, the Court of First Instance decided on heavy fines for both; however, the amounts favoured the ex-PM [€59,000: €294,000]. In July through September 2003 they appealed to the High Court, and finally, in June 2005, their fines were reduced to €22,000 and €100,000 respectively.

Siemens AG: two global cases of corruption The Siemens AG case in Greece refers to illicit deals between Siemens and Greek government officials during the 2004 Summer Olympic Games in Athens regarding security systems, as well as purchases made in the 1990s by the dominant telecommunications organisation in Greece (OTE) (Telloglou 2009; Stasinopoulou 2010: 13–19). Exposure of the dealings first came to light after the listing of Siemens on the New York Stock Exchange in March 2001, and by the confiscation of three bank accounts in Switzerland which were run as trust accounts for Siemens AG in June 2000. In July 2003, the Financial Times reported that the Milan, Italy Public Prosecutor’s Office was investigating payments by Siemens to managers of the Italian electric utility company Enel, so that Siemens could win two power plant projects (USA v. Siemens AG 2008a: 10 [44], 13 [54]). From 2003 to 2006, apart from those cases in Italy (OCCRP 2013), one case after the other in Nigeria, Russia, Libya, Liechtenstein and elsewhere were revealed (USA v. Siemens AG 2008a: 15–16 [66]). The US investigation produced evidence showing that Siemens had violated laws in almost all its divisions. In November 2006, the Munich Public Prosecutor’s Office conducted raids of Siemens’ offices; thereafter the company started cooperating in an independent and comprehensive assessment of its compliance and control systems (USA v. Siemens AG 2008b: 18). Siemens was found to have illegally sponsored the two major Greek administrations: New Democracy and PASOK (Eleftherotypia 2008a). The two most notorious cases of Siemens’ Greek slush funds are presented on the following pages.

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The OTE case In April 2005, the Greek authorities began to investigate the C4I case, a security system that was supposed to be used during the Olympics but which failed to work. During this investigation, the authorities discovered a December 1997 contractual agreement between Siemens and OTE in which the former would digitise the latter’s network for €464.5 million. According to the case records, there was an illicit agreement between Siemens and OTE, coded as 8002, which forced OTE to make Siemens its sole supplier from 1998 to 2002. Both of the Greek administrations (PASOK 1998–2004, New Democracy 2004–2009) were aware of the agreement (Eleftherotypia 2009). For years, Siemens had maintained a robust bribery tradition to secure contracts with OTE officials. According to Reiner Peter Niedl, Commercial Sales Manager for Southern Europe, the Middle East and Africa, including Greece’s telecoms unit of Siemens AG from 1995 to 1998, Siemens wanted to do work with Greece for two reasons: first, they had long-standing scheduled agreements; and second, although the prices in the telecommunications sector were halved every three to four years, Greece had been ignoring market demands and did not ask to renegotiate prices. This disinterest also helped to channel money into slush funds (Telloglou 2009: 72–77). In the indictments, prosecutors noted that OTE had at least €57.4 million in damages due to the way the agreement was contracted and carried out. Siemens’ total profits were €885 million. Moreover, Niedl admitted that he had signed a contract which stipulated that 8 per cent of the telecommunications industry profits would go to the representatives of Siemens Hellas, and part of this profit would benefit its Dubai-based Fiberlite as a method of attracting new customers and expanding into new markets. In April 2005, the Swiss authorities opened an investigation into Prodromos Mavridis, Head of the telecommunications’ department of Siemens Greece, for a series of ‘extensive money laundering’ operations (Telloglou 2009: 114–116). Mavridis was found by the Money Laundering Reporting Office Switzerland [MROS] to be in possession of deposits totalling €23 million. The concentrated money was secured in four accounts of an offshore company registered in Panama to Reinhard Siekaczek (op.cit.) who was Head of Optical Network and Roaming at the ICN up until 2004. In 2001, Siekaczek and Michael Kutschenreuter, financial head of telecoms unit (CFO) until 2005, succeeded Niedl in the operation of contracting and bribing. Mavridis contended that this was money from Siemens paid for his delivery services. In April 2006, Mr Mavridis ‘suddenly’ resigned after 18 years of work, without any public explanation, after receiving a €300,000 payoff from the company. During these months the company refused to admit in public that this money was theirs in order to put the blame and all accusations upon Mavridis. On 4 September 2006, Siemens finally confessed that the money belonged to them. After this confession, more problems arose. The Swiss prosecutor, Linchard Oxner, discovered a Siekaczek bank account in the Union Bank of Switzerland (UBS) which had amassed the astronomical amount of €120 million in less than two years. The prosecutor already had enough evidence to deduce that the employees of Siemens had created a repository for illegal money (Telloglou 2009: 128–129, 137–138). According to Siekaczek’s (who had acknowledged having set up slush funds for the company) testimony, CEO Michalis Christoforakos of Siemens Hellas from 1996 to 2007 had visited the Siemens central offices once a year and secured the two per cent for procurements of the telecommunication revenues of the previous year. Further, he confirmed that the procurements were offered to foster political relationships by paying graft to both ruling political parties in Greece. 434

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The C4I case After the Siemens-OTE investigation in Greece, focus returned to the C4I case. In the 2004 Olympics, the coordination of traffic, public order and security, civil protection and running the Games were supposed to be supported by the sophisticated and very expensive communications system C4I (Command, Control, Coordination, Communications and Integration). One should recall that the 2004 Olympics placed the Greek nation, and the police force in particular, under considerable strain because the event was taking place post 9/11 and in the aftermath of the 11 March 2004 Madrid train bombings. The outcomes of the Games would be decisive for the country’s image and the police’s standing (see also Samatas 2014: 66; Parliament’s Investigation Committee 2011: 411). The C4I system was funded exclusively from the national coffers at a cost of €250 million. The government contracted with the US-based Corporation SAIC (Science Applications International Corporation) to provide a security infrastructure. SAIC headed an international consortium including Siemens, Nokia, AMS, E Team, and three Greek companies. Siemens was the main supplier and subcontractor of this lucrative security system, which, however, was only partly operating during the Olympics due to SAIC’s incompetency (cf. SAIC 2008: 7–10, 14–19; Note 7: F19, Note 15: F32, Note 19: F36–F38). Before the competitive contract was awarded to SAIC, as Siekaczek testified, Michalis Christoforakos had told him that in order for the consortium to gain the contract they would have to bribe four Ministries for a total of €10 million (Eleftherotypia 2010a). When Greece received the system, just one month before the Olympics, and it failed to work properly – not only during the Olympic Games, but afterwards as well – the government had two alternatives: either to reject purchasing C4I outright or to fix the system, renegotiate the agreement provisions, and then purchase it. In addition, the government had also examined the possibility of its winning a dispute resolution (arbitration) against SAIC (Telloglou 2009: 182). Yet, a visit by the Greek Prime Minister Kostas Karamanlis (head of the New Democracy party) to Washington, DC on 19 to 22 May 2005 made things definite. American officials told him that he had no other choice but to purchase the system (op.cit.). Finally, four years after the 2004 Olympics, the government officially accepted the system in December 2008 (UPI 2008). Thus, a system which before its delivery had cost the Greek public a great deal of money and yet was not working properly would be reconsidered in SAICs’ favour. Siemens, as the basic subcontractor of the consortium, would gain €183 million in profits. The damage to the Greek public treasury was enormous. According to Siekaczek’s testimony to Greek judicial investigators Mr Athanasiou and Mr Zagorianos, the C4I agreement was no more than a containment mechanism for fiduciary accumulation (see Telloglou 2009: 192, fn. 21).2 This statement from Siekaczek’s testimony clarified the inner operation of the bribery system.3 Siekaczek and his accomplices used these agreements to draw down capital for the containers in Switzerland and Liechtenstein. Sometimes, the Greek beneficiaries of these bribes were paid with money that had been raised in agreements and cashed in other countries, yet at other times it was the reverse: Greece was used to draw down money for other bribes worldwide.

Investigations and convictions On 17 December 2007, Siemens announced that Michalis Christoforakos was no longer working for the company. Throughout the pending case, PASOK and New Democracy proved very unwilling to support the investigations because both were involved (Eleftherotypia 2008b). Nevertheless, an inquiry commission was launched in 2008, and, after overcoming many obstacles, the Greek Prosecutor, Panagiotis Athanasiou, travelled to Germany to receive the official court 435

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documents and investigate Greece’s role in the scandal. One of the most striking items of intelligence he discovered was the transfer of €1.376 million from Siekaczek’s to Christoforakos’ account in 2004. In March 2004, there were elections in Greece that PASOK lost and that brought New Democracy into power. This is the period when Mr Christoforakos supposedly funded the two rival political parties, PASOK and New Democracy.4 While great revelations were taking place, the Greek state ordered Parliament to close for summer more than one month earlier than usual on 8 May 2009 to avoid any prosecutions of the involved MPs by the Parliament (Parliamentary Order, Art. 86[3]). Concurrently, politicians from both parties were called to testify in the court. In an effort to conceal their responsibility, each party put the blame on the other for participating in the bribe system, without regard for the impact of their behaviour upon public opinion (Kathimerini 2009). In the same month, during the investigation, Christoforakos disappeared from Greece and a few days later Christos Karavelas, former enterprise director of Siemens Hellas, fled to Germany in order to avoid prosecution, and then he also disappeared. The following month, Christoforakos was arrested in Germany. He immediately invoked his German citizenship acquired from during the time his father had lived in the country after the Second World War. His lawyers argued that the allegations were for activities that took place before 2003 so he could not be prosecuted under German law, which has a five-year statute of limitations. The attorneys also pleaded that Christoforakos should be allowed to take refuge in Germany. A year before his escape, in spring 2008, Karavelas succeeded in withdrawing €14.5 million from his accounts, €5 million of which he transferred to Uruguay via Panama so that he could buy a property (Telloglou 2009: 209). On 1 June 2009, the judicial investigator, Nikos Zagorianos, ordered the arrest of Mr Karavelas’ wife and three children in order to force his return to Greece for trial, but without success. Karavelas and his accomplices were accused of being accessories to money laundering, which they ardently denied. After this incident, Mr Zagorianos was brought to justice with the charges of breach of duty and abuse of power concerning his handling of the case, namely that he didn’t prevent the escape of Christoforakos and Karavelas by ordering them not to leave the country. Finally, the judge and former investigator of the Siemens case were acquitted by the Ordinance of the Council of Appeals from both accusations. As of the time of writing, Mr Karavelas is still missing. On 11 August 2009, the Munich prosecutor jailed Mr Christoforakos for a year, stating that he had paid money to the treasurers of the two major parties in order to win contracts for Siemens. Christoforakos came to a resolution with Siemens and agreed to pay €1.2 million, thus securing asylum from Siemens and adjudication from German justice for the accusations of bribery and deception (Eleftherotypia 2010b). Christoforakos has not appeared in public since. In May 2009, Mr Mavridis, head of the telecommunications department of Siemens Hellas, was jailed in Greece for five months and his bail was set at €150,000. The judicial development of his case in Greece remains until now publicly unknown. In April 2012, the Greek government reached an out-of-court settlement with Siemens for corruption charges. According to a company statement, Siemens agreed ‘to spend a maximum of €90 million on various anti-corruption and transparency initiatives, as well as university and research programs and to provide €100 million of financial support to Siemens A.G. to ensure its continued presence in Greece’ (Siemens 2012: 2), which in 2012 employed more than 600 persons. Following parliamentary approval, Siemens would again be allowed to bid on Greek public procurement tenders (CorpWatch 2012). The settlement came after months of negotiations started in 2010/2011. ‘It marked a significant climb-down by the Greek side, which claimed last year that damages suffered by the Greek state amounted to at least €2bn’ (Financial Times 2012). Whether Siemens has fulfilled any of its obligations is unknown. Rare publications report the 436

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contrary; for example, while one commitment made by the German company was to ensure the positions of 600 employees, as previously mentioned, during the past four years it has fired 264 employees with long-time service (Avgi 2012: 13). In February 2014, the Greek public prosecutor investigating the 8002 OTE contract issued an arrest warrant for Christoforakos and Karavelas. With the issuing of the warrant the investigation phase of the OTE case has been closed until Mr Christoforakos may be brought to Greek justice. In the same month, Mr Tassos Mandelis was convicted to three years’ imprisonment. He was director of OTE from 1985 to 1988, and he also served as Minister of Transport and Communications for the PASOK government from 1997 to 2000. During his tenure in the government, Mandelis advocated abolishing the state company that provided technical solutions to OTE in favour of Siemens. He admitted that he had received donations to the tune of 450,000 DM/€225,000 from Siemens for the PASOK party. Mandelis’ three-year sentence was suspended. The C4I case is still under investigation and pending.

Conclusions The contemporary global economy of ever-expanding capital accumulation is based on the efficiencies of production, competition and commodification. The competitive nature of ‘freemarket’ capital accumulation presupposes the sanctity of private property and individualism. Individualism is the social outlook that stresses ‘the moral worth of the individual’. The market demands individualism and instrumental cooperation, not communicative relationships and solidarity. The doctrine of economic individualism holds that each individual should be allowed autonomy in making his or her own economic decisions as opposed to those decisions being made by the state, or the community, for him or her. The efforts of the person to work for his or her own benefit are what a market economy allegedly requires to be successful. As the Siemens case reveals, corruption, greed and the pursuit of profits may be viewed as converging at the apex of individualism. Mediated discussions of corruption with their attendant publicity may often be useful or functional with respect to political conflict and the establishment of new elites. In the case of MAYO, the merging of interests among private media, the private sector generally and politicos that operates on the basis of mutual favours exemplifies this functionality. It also shows that corruption charges against select members of the elite, mostly by other elite members, follow when power is transferred from one political group to another. This is what makes the otherwise hidden conflicts between different groups within the elites visible. In addition, the appearances of corruption and the charges of the same are attempts to demonstrate a change of power and supremacy, but rarely result in actual prosecution and sentencing. Such charges are supposed to ameliorate the gap of trust between the public and politicians and to self-regulate the political decision-making process among various organised private power groups and the agents and representatives of the state apparatus. The irony is that, on the one hand, they try to cover up the gap of trust, while on the other, the moralised discourse on corruption destabilises the trust and liability of the political system, as any ensuing legislation depends to a great extent on the power allocations of organisations, institutions and political parties alike, as well as on the contradictory relations of power between them. The present analysis has not contested that there are cases of grand corruption and forms of ‘petty’ corruption, which are particularly maintained over time in certain geopolitical landscapes, such as in the European South. This analysis, however, does contest the presentation of Greece as Europe’s ‘par excellence example of cavernous corruption [and] economic extravagance’ and a ‘lazy’ work ethic (e.g. Focus 2010; cf. Provoles 2010, 2012), because this characterisation obfuscates 437

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‘an ideologically driven intentional campaign of erasing and remaking the world’ in the mould of neoliberalism (Knight 2013: 148, 155). In other words, corruption discourse serves a latent function of local political control as it fulfils the desires of neoliberalism and privatisation. Globally, the actions taken against corruption and the ranking of Transparency International often operate as tools of scandalising those countries most vulnerable to denunciation. Rather than serving the interests of social control and reducing corruption, these actions are used primarily to facilitate the legitimation of important international financial institutions (Rothe 2010).

Notes 1 European Parliament, Parliamentary questions, 27 June 2011, E-006139/2011, Question for written answer to the Commission, Rule 117, Andreas Mölzer (NI), Subject: Greek Prime Minister speculating against his own country (www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+WQ+E2011-006139+0+DOC+XML+V0//EN); and the four lines Answer given by Mr Rehn on behalf of the Commission, Parliamentary questions, 15 September 2011, E-006139/2011, OJ C 128 E, 03/05/2012 (www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2011-006139&language=EN). 2 Munich, 8 October 2008, p.18. 3 A related excerpt from Frontline’s interview with Siekaczek by Gregory Roth and Laurie Kawakami/ NYT on 18 December 2008 is available at NYT multimedia. 4 Christoforakos’ statement to German prosecutor Mrs Hildegard Bäumler-Hösl, 2, 6, 10, 15 July 2009, according to Telloglou (2009: 155, fn.13). * References with asterisk are in the Greek language and their titles are translated into English.

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GIPA/General Inspector of Public Administration (2012, 2013) Annual Report(s) 2011, 2012, Athens. Available at: www.gedd.gr/.* GRECO/Group of States against corruption RC-III (2013) 13E (26 August 2013) Interim Report, Third Evaluation Round, Interim Compliance Report on Greece, ‘Incriminations (ETS 173 and 191, GPC 2)’, ‘Transparency of Party Funding’, Adopted by GRECO at its 60th Plenary Meeting (Strasbourg, 17–21 June), CoE: Strasbourg. Available at: www.coe.int/t/dghl/monitoring/greco/evaluations/round3/ GrecoRC3(2013)13_Interim_Greece_EN.pdf. Hallin, D.C. and Papathanassopoulos, St. (2002) ‘Political clientelism and the media: Southern Europe and Latin America in comparative perspective’. Media, Culture and Society, 24: 169–189. Hopkin, J. (2006) Conceptualizing Political Clientelism: Political Exchange and Democratic Theory. APSA Annual Meeting, Philadelphia, PA, 31 August to 3 September. Available at: www.personal.lse.ac.uk/hopkin/ apsahopkin2006.pdf. Jones, N., Malesios, Ch., Iosifides, Th. and Sophoulis, C.M. (2008) ‘Social capital in Greece: Measurement and comparative perspectives’. South European Society and Politics, 13: 175–193. Karstedt, S. (2003) ‘Macht, Ungleichheit und Korruption: Strukturelle und kulturelle Determinanten im internationalen Vergleich’, in D. Oberwittler and S. Karstedt (eds), Soziologie der Kriminalität, KZfSS Sonderheft 43. Wiesbaden: Springer VS, pp. 384–412. Kathimerini (2009) ‘New Democracy and PASOK blaming each other’, by Konstantinos Zoulas, 18 August. Available at: www.kathimerini.gr/366941/article/epikairothta/politikh/allhlokathgories-nd-kaipasok.* Killias, M. (1998) ‘Korruption: Vive la Repression! – Oder was sonst? Zur Blindheit der Kriminalpolitik für Ursachen und Nuancen’, in H.-D. Schwind, E. Kube and H.-H. Kühne (eds), Festschrift für Hans Joachim Schneider zum 70. Geburtstag. Berlin, New York: de Gruyter, pp. 239–254. Knight, D.M. (2013) ‘The Greek economic crisis as trope’. Focaal – Journal of Global and Historical Anthropology, 65: 147–159. Kondylis, P. (2011) The Causes of the Decline of Modern Greece. Athens: Themelio.* Lambropoulou, E. (2012) ‘Corruption discourse as a wild card: Politics and media in Greece and the “modern” triumphalism of anti-corruption’, in D. Tänzler, K. Maras and A. Giannakopoulos (eds), Social Construction of Corruption in Europe. Farnham, Surrey: Ashgate, pp. 265–296. Lambropoulou, E., Ageli, S., Papamanolis, N. and Bakali, E. (2007) The Construction of Corruption in Greece. A Normative or Cultural Issue? Discussion Paper Series No. 6. Available at: www.uni-konstanz.de/crime andculture/papers.htm. Lyrintzis, Ch. (2005) ‘The changing party system: Stable democracy, contested ‘modernization’’. West European Politics, 28: 242–259. Mavrogordatos, G. (1988) Between Pityokamptes and Prokroustes: Corporate Interests in Contemporary Greece. Athens: Odysseas.* Mouzelis, N.P. (1987) Politics in the Semi-periphery: Early Parliamentarism and Late Industrialization in the Balkans and Latin America. Athens: Themelio (in Greek from the original in English, New York: St Martin’s Press, 1986). New York Times (18 December 2008) ‘At Siemens, a paymaster for bribery’, 18 December. Available at: www. nytimes.com/video/multimedia/1194836014690/at-siemens-a-paymaster-for-bribery.html. NSSG/National Statistical Service of Greece, Justice Statistics 1980–2012. Athens: National Printing Office (1980–1996), since 1997 only online. Available at: www.statistics.gr/portal/page/portal/ESYE.* OCCRP/Organized Crime and Corruption Reporting Project (2013) ‘Switzerland: Siemens fined millions for Swiss bribes’, 15 November. Available at: www.reportingproject.net/occrp/index.php/en/ccwatch/ cc-watch-briefs/2215-switzerland-siemens-fined-millions-for-swiss-bribes. Ombudsman (2011) Annual Report 2010, March. Athens: National Printing Office. All reports available at: www.synigoros.gr/?i=stp.el.annreports.* Paldam, M. and Svendsen, G.T. (2000) ‘An essay on social capital: Looking for the fire behind the smoke’. European Journal of Political Economy, 16: 339–366. Papathanassopoulos, St. (2001) ‘Media commercialization and journalism in Greece’. European Journal of Communication, 16: 505–521. Parliament’s Institutions and Transparency Committee (2002) Report, Period I’– Session B’, 16 October 2001 to 20 June 2002* (no longer available online). Parliament’s Investigation Committee (2011) Proceedings, 24 January. Chapter 7 axiologisi, Available at: www.protothema.gr/politics/article/?aid=101972.* Pelagidis, Th. (2014) ‘Policies against corruption’, in M. Massourakis and Ch.V. Ghortsos (eds), Competitiveness and Development. Athens: EET/Hellenic Bank Union, pp. 575–588.* 439

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Piattoni, S. (2001) Clientelism, Interests, and Democratic Representation: The European Experience in Historical and Comparative Perspective. Cambridge: Cambridge University Press. Poupos, I.M. (2010) Social Capital in Greece. Athens: Centre of Planning and Economic Research/KEPE.* Provoles: News from the Greek Diaspora in Germany (2010) ‘The German Press Council examines the antiGreek articles in FOCUS magazine after the German-Hellenic Business Association’s letter of protest’, 29 March. Available at: www.provoles.de/eidiseis/omogenia/5159----------focus.html.* Repousis, S. (2014) ‘Politicians, political parties’ funding in Greece and anti-money laundering regulatory framework’. Journal of Money Laundering Control, 17: 110–120. Rose-Ackerman, S. (1999) Corruption and Government: Causes, Consequences, and Reform. Cambridge: Cambridge University Press. Rose-Ackerman, S. (2007) International Handbook on the Economics of Corruption. Farnham, Surrey: Edward Elgar. Rothe, D.L. (2010) ‘Facilitating corruption and human rights violations: The role of international financial institutions’. Crime, Law and Social Change, 53–55: 457–476. SAIC Inc. (2008) Form 10-K/A, Amended Annual Report for the Period Ending 01/31/08, 3 September. Available at: files.shareholder.com/downloads/SAIC/666997692x0x216367/44BB0512-D4E7-44B3A5E9-7A0215EC25F3/10K_SAIC.pdf. Samatas, M. (2014) ‘The SAIC-Siemens “super-panopticon” in the Athens 2004 Olympics, as a case of McVeillance: The surveillance industrial complex’s unscrupulous global business’, in K. Ball and L. Snider (eds), The Surveillance-Industrial Complex: A Political Economy of Surveillance. Abingdon and New York: Routledge, pp. 61–77. Sandholtz, W. and Taagepera, E. (2005) ‘Corruption, culture, and communism’. International Review of Sociology, 15: 109–131. Science and Society (2006) ‘Social Capital’, 16.* SEEDD/Inspectors-Controllers Body for Public Administration (1998–2005, 2006–2009, 2010, 2011, 2012) Annual Reports. Ministry of Administrative Reform and E-government (ed.), Athens: National Printing Office (all reports available at: www.seedd.gr/).* Siemens AG (2012) Legal Proceedings Q4 FY, 8 November. Munich. Available at: http://www.siemens.com/ press/pool/de/events/2012/corporate/2012-Q4/2012-Q4-legal-proceedings-e.pdf. Sotiropoulos, D.A. (1993) ‘A colossus with feet of clay: The state in post-authoritarian Greece’, in H. Psomiades and S. Thomadakis (eds), Greece, the New Europe and the Changing International Order. New York: Pella, pp. 349–365. Stasinopoulou, E. (2010) The Siemens Scandal in Greece: A Product of Political and Social Corruption Arising from a Protectorate Country, unpublished MSc Dissertation, 26 August. London: London School of Economics. Telloglou, T. (2009) The Network: The Siemens File. Athens: SKAI.* TI (Transparency International) – BPI/Bribe Payers Index (2002) Report – Bribery in Business Sector. Available at: www.archive.transparency.org/policy_research/surveys_indices/bpi. TI – CPI/Corruption Perception Index (1996–1998, 2003–2013) Available at: www.transparency.org. Tsoukalas, K. (1987) State, Society, Labour in Post-war Greece. Athens: Themelio.* UPI/United Press International (2008) ‘Greece accepts SAIC C4I system’, 29 December. Available at: www. upi.com/Business_News/Security-Industry/2008/12/29/Greece-accepts-SAIC-C4I-system/UPI70661230565028/. US Department of Justice (15 December 2008) Press Release No. 08-1105,‘Siemens AG and three subsidiaries plead guilty to Foreign Corrupt Practices Act violations and agree to Pay $450 million in combined criminal fines’, 15 December. Available at: www.justice.gov/opa/pr/2008/December/08-crm-1105.html. USA v. Siemens AG (2008a) No. 1: 08-cr-00367, Dkt. Entry No. 1, 12 December. Available at: www. justice.gov/criminal/fraud/fcpa/cases/siemens/12-12-08siemensakt-info.pdf. USA v. Siemens AG (2008b) No. 1:08-cr-00367, Dkt. Entry No. 15, 15 December. Available at: www. justice.gov/opa/documents/siemens-ag-stmt-offense.pdf. Welzel, C. (2003) ‘Effective democracy, mass culture, and the quality of elites’. International Journal of Comparative Sociology, 43: 269–298. Welzel, C., Inglehart, R. and Klingemann, H. (2003) ‘The theory of human development: A cross-cultural analysis’. European Journal of Political Research, 42: 341–379.

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Part IX

Failing to control the crimes of the powerful

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31 Postconviction and powerful offenders The white-collar offender as professional-ex Ben Hunter and Stephen Farrall

Our consultants, both male and female, have experience of prison life from ‘behind the door’. They are graduates of the prison system, ex-offenders who are able to offer words of wisdom based on real experience. (Prison Consultants, 2014)

The above text appears in the ‘about’ section of PrisonConsultants.co.uk. The organisation aims to assist those who have been (or may be) sentenced to prison by providing advice and counselling to offenders and their families to help them cope with various aspects of prison life, including dos and don’ts and the threats prisoners face. This service is yours for a fee of course. As the above extract suggests, Prison Consultants feel qualified to provide this service because their consultants are ex-prisoners themselves (and in some cases ex-prison staff). In this they are just one example of a number of such consultancies operating in both the US and the UK.1 Uniting these organisations is that their consultants have experienced prison in some capacity, sometimes as prison staff but more usually as prisoners. Consultancies such as these are an example of offenders making use of deviant identities as an occupational strategy even as they demonstrate their own change. Traditionally, attention has been focused on these ‘professional-ex’ roles (Brown, 1991) among non-white-collar offenders and the advantages such roles provide for those enacting them in terms of their efforts to desist from crime. Professional-ex roles are frequently enacted by ex-offenders as a way of making a life in the wake of conviction and punishment. The presence of organisations such as Etika Prison Consultants prompts a consideration of how such professional-ex roles may operate for white-collar offenders. It is this consideration that we undertake here, using autobiographical accounts published by white-collar offenders. We begin by outlining professional-ex roles more generally and highlighting the benefits for offenders as they take on such roles. These benefits are frequently framed in terms of facilitating efforts to stop offending. Adopting professional-ex roles can therefore be a powerful part of the process of desisting from crime. This chapter then introduces the two white-collar offenders whose experiences inform the analysis of white-collar offenders’ professional-ex roles, noting the advantages of drawing upon published autobiographical accounts. The analysis suggests that while there is some similarity between white-collar offender professional-ex roles and professional-exes more generally, white-collar offenders may derive very specific and limited benefits from professional-ex roles. 443

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Perhaps the most important aspect of professional-ex roles for white-collar offenders is that they signal that change has taken place.

Professional ex-roles An important part of moving away from offending and establishing oneself as a ‘reformed citizen’ is convincing others that you have done so. A growing body of work suggests that desistance from crime is not simply about changing one’s behaviour; it is about being seen to have changed (see e.g. Meisenhelder, 1982; Bushway and Apel, 2012; Farrall et al., 2014). Demonstrating change may be important for eliciting symbolic acceptance from others that change has taken place (Meisenhelder, 1982). This is part of the reason that those who are attempting to desist do not just avoid certain activities, they avoid certain places and people as well (Farrall et al., 2014). The goal of the effort to distance oneself from certain locales and the people in them is to make explicit the contrast between the previous criminal identity and the new reformed character. One of the most explicit ways this contrast may be achieved is by subverting a deviant role and using it to ‘do good’. Thus, for example, the drug user becomes not simply an ex-drug user but a drugs counsellor. In helping others to stop using drugs they encourage them to follow in their footsteps and learn from their experiences, their new role simultaneously asking the world the rhetorical question: (Could I perform this role if I were still taking drugs?’) The roles we hold make an important contribution to our self-identity and consequently, when a role is left behind there are significant implications for how we identify ourselves (Ebaugh, 1984; Goffman, 1969). Leaving behind a particular role awards those who make this ‘ex’ status (e.g. exteacher, ex-doctor, ex-prisoner; see Ebaugh, 1988; Drahota and Eitzen, 1998; Shaffir and Kleinknecht, 2005). Roles frequently have their own conventions and social expectations that must by necessity be taken into account once the role is left behind. Exiting a role creates something of an identity vacuum and the self must take account of the absence of this previously taken-for-granted aspect, adjusting to fit the demands of a new role while simultaneously leaving behind patterns and behaviours associated with the old one (Ebaugh, 1984, 1988; Ford, 1996; Shaffir and Kleinecht, 2005). Roles also have a social component to them inasmuch as they are enacted in front of or with respect to others. This ‘transition ex’ includes how others react to the role holder and sometimes these reactions may outlive engagement with the role (Ebaugh, 1984, 1988; Brown, 1991). As a result, efforts to leave a role and the associated identity behind can be made more difficult by a constant preoccupation from others with whom the individual was mixing. Conversely, where exes are trying to leave particular roles behind, responses from others that confirm or deny that the transition has been successful are likely to be of particular importance in underscoring an individual’s own change (Meisenhelder, 1982; Ebaugh, 1984: 175). When one is an ex, disclosing the ex-status is unlikely to be problematic if that status is socially desirable (or, at least, not undesirable). Those who formerly held deviant roles, however, may decide to conceal a deviant past by avoiding disclosure of former transgressions. Ex-offenders, for example, may be at pains to hide their criminal past for fear of the reaction against them and the consequences of this past for their attempts to ‘go straight’ (Harding, 2003; Hunter, 2011). Such a strategy is accompanied by its own difficulties, however. Decisions to lie when filling out job applications, for example, are likely to be counter-productive if discovered. Sometimes however, role exit may not be accompanied by a complete rejection of the former role and individuals who have previously been engaged in deviant roles may draw upon them, even as they attempt to lead a non-deviant life. Such individuals become ‘professional-exes’, acknowledging their deviant past and even touting it as a valuable experience that may help in one’s occupation (Brown, 1991: 227; Maruna, 2001). Professional-ex roles are commonly associated with therapeutic 444

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settings (e.g. Brown, 1991; Klingemann, 1999; White, 2000). Those who have previously been addicted to drugs or alcohol, for example, may work to become counsellors upon completion of their own treatment. A comparable example would be organisations set up and run by ex-offenders whose goal it is to aid those trying to resettle in the wake of a prison sentence. In these settings, instead of concealing or abandoning their former role, the professional-ex draws upon it and references it as they try to succeed in their new one (Brown, 1991). Citing a previously deviant identity affords the professional-ex an authority to carry out a new role that they may feel non-exes lack (Brown, 1991). Simultaneously, identifying with a previous deviant role allows the professional-ex to continue to draw upon sources of support while also leaving the deviant role in the past (Howard, 2008). Perhaps one of the most important benefits of a professional-ex role, however, is that the adoption of a professional-ex role helps individuals with their own attempts to leave a deviant identity behind (Maruna, 2001; Howard, 2008). Becoming a professional-ex satisfies a desire to undertake generative pursuits, which are those that will benefit future generations (e.g. Erikson, 1965: 240). Professional-ex roles may be construed as generative because they allow the professional-ex to feel they are helping others avoid the ex’s own mistakes. For Maruna (2001) the generative pursuits encapsulated in professional-ex roles offer several ‘advantages’ for the ex-offender: fulfilment, exoneration, legitimacy and therapy. First, a sense of fulfilment is gained through professional-ex activities, the new role providing meaning and purpose to the professional-ex’s life. Furthermore, a professional-ex ‘script’ gives the former deviant a ready-made way of encapsulating their own change for others. The ‘wounded healer’ who works to help others avoid the mistakes they made is an easily recognisable and socially acceptable role (White, 2000). Second, as the professional-ex works they ‘give something back’ to a society they ‘hurt’ through their deviance. In doing so they gain exoneration (LeBel (2007) reports that feelings of remorse were a strong predictor of ex-prisoners taking on helper roles), possibly alleviating feelings of shame and guilt felt at past transgressions (Brown, 1991). Third, the activities associated with professional-ex statuses are unlikely to be viewed by others as compatible with continued deviance on the part of the ex, thereby lending evidence to the legitimacy of the change the ex-offender has undergone. Taking on a professional-ex role therefore shows that change has taken place. Finally, to carry out their activities, professional-exes must work with legitimate others. For example, being a drug counsellor involves working with other drug counsellors. Frequently these others will help professional-exes reaffirm a commitment to their own change because they provide an informal code of conduct for the professional-ex that may guide their behaviour further, increasing their chance of avoiding deviant behaviour (Brown, 1991). Doing so allows professional-exes to further the therapy they themselves have been given (Maruna, 2001). In dedicating themselves to providing help to others, professional-exes thereby reaffirm their own commitment to change because their new role is irreconcilable with continued deviance (Brown, 1991; LeBel, 2007; although Sharp and Hope (2001) argue that professional-ex activities and continued deviance are not mutually exclusive). Perhaps above all a professional-ex role allows a virtue to be made out of what has previously been a stigma. This is important for the construction of a life narrative in which a law-abiding life comes naturally out of a deviant past, with deviance a prerequisite for a law-abiding life (Lofland, 1969; Brown, 1991; Maruna, 2001; LeBel, 2007). Professional-ex statuses are therefore useful in helping offenders construct a narrative that places a deviant past in context with the rest of their life (see Maruna and Roy (2007) and Vaughan (2007) for more on this sort of narrative restructuring), thereby making it meaningful. As the above suggests, professional-ex statuses afford those who hold them a particular strategy of information disclosure regarding a deviant past (see Goffman, 1963; Harding, 2003). Citing a previously deviant status as a professional-ex not only permits the 445

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individual to fully disclose their deviant past, but also in some cases actually requires them to do so in order to afford them credibility (as they perceive it) in their new occupation. An undesirable past thus becomes necessary for them to act effectively in their new role.

Studying professional ex-roles As the earlier examples highlight, professional-ex statuses have tended to be associated with street offending and particularly drug and alcohol addiction. Next we consider how professional-ex roles might operate for white-collar offenders. The analysis investigates the types of professionalex roles adopted by white-collar offenders, how such roles are formed and how the professional-ex roles which white-collar offenders adopt might differ from the way in which these roles have been conceived more generally. To inform an understanding of how professional-ex roles may operate for white-collar offenders we have drawn upon published autobiographical accounts written by two offenders who took on such roles. Such a method is not an unusual means of studying offenders’ experiences (e.g. Cohen and Taylor, 1972; Morgan, 1999; Oleson, 2003) and published autobiographical data are a particularly useful way of studying white-collar offenders’ experiences, since they represent a group who may be difficult to gain access to (Shover and Hunter, 2010). Other advantages of autobiographical data include the length of time the writers have to reflect on the significant events of their lives and the significant periods of time they can cover, placing the importance of events within the context of their whole life. Criticisms that accounts may not be ‘true’ are scarcely more valid than with interview data (Maruna, 1997) and neglect the importance of attending to a subjectively experienced past (e.g. Sheridan, 1993; Smith and Watson, 2002). See Hunter (2009) for a further consideration of the advantages of drawing upon autobiographical data (also Shover and Hunter, 2010). The first offender whose account we draw upon is Barry Minkow (2005), who deceived investors by providing an inaccurate picture of his company’s worth and served seven and a half years of a 25-year prison sentence, leaving prison in 1994. In addition to becoming a pastor, Minkow gave fraud detection advice to the FBI and established the Fraud Discovery Institute in 2001, investigating possible fraud using the ‘skills’ he had developed while committing his offences.2 Referring to his ability to conduct fraud investigations, he said: The FBI and SEC have their ways of getting answers. And we ex-cons have ours. . . . When you have spent seven and a half years in prison looking at guilty people, you get kind of a knack for reading people’s expressions. (Minkow, 2005: 16) The second offender is Charles Colson (1979, 2005) who served seven months in prison for his role in Watergate. Colson converted to Christianity and following his prison sentence founded the Prison Fellowship in 1976. The Fellowship is a Christian organisation that aims to give support to prisoners, and Colson founded the organisation on the belief that he was sent a vision by God to do so (Colson, 1979: 40–41) and that part of the purpose of his going to prison was to enable him to form the Prison Fellowship (Colson, 1979: 151–152). Colson used his role as an ex-prisoner to give himself credibility with prisoners, the organisation wanted to train as ‘disciples’ who would then teach other prisoners about God. In describing himself and his role he said: If you were to design a prototypical prison-ministry leader, someone who could relate to inmates and evangelize them, you might design someone just like me. . . . I’ve been in prison. (Colson, 2005: 323) 446

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Minkow’s and Colson’s cases make an interesting comparison because they represent two different ways of employing a professional-ex role. Minkow drew upon an ex-offender role as a fraud investigator; Colson drew upon his ex-prisoner identity when establishing the Prison Fellowship.

Adopting professional-ex roles The origin of Colson’s and Minkow’s professional-ex roles lay within each man’s desire to achieve specific goals and focused upon how their lives would proceed following prison. Upon his release from prison Minkow wanted to make amends for the harm he felt he had caused: What possible good could I do that would ever make up for the evil I was responsible for causing? This was not the first time I had considered the question. I used to walk the track in prison and contemplate what possible good I could do upon my release to help people. My motives in this were not always pure. Like many, I cared about what other people thought of me. . . . But how could I possibly help anyone? (Minkow, 2005: 142, emphasis in original) Colson’s concerns were similarly future oriented: [T]he most shattering thing about prison was the thought that I would never again do anything significant with my life . . . I could never fulfil my dreams. (Colson, 2005: 22) Colson leaves the details about his dreams unspecified, but his broader concern was that nothing was possible. From these vaguely expressed beginnings Colson and Minkow came to take up their professional-ex roles in different ways. For Colson it was the continued reflection on his experience in prison: [I]t gradually became clear to me that I had been in prison for a purpose. I had encountered people who had no hope, who had no one to care for them. . . . They needed a champion. It took a year and a half of wrestling through the decision, but in the summer of 1976 [my wife] and I realized that caring for prisoners was my calling. So out of my prison experience, paradoxically, came a challenge, which has turned out to be more fulfilling than anything I could have ever imagined. (Colson, 2005: 30) Although Minkow had given several talks to FBI agents and also produced a short film to provide guidance for those attempting to detect fraud, he had considered this to be the extent of his contributions to fraud prevention. In an epiphany-like moment (Denzin, 1989) his decision to work to uncover fraud followed directly from a conversation with a Certified Public Accountant who had used his advice to detect fraud: [The conversation] changed my thinking. Instead of just teaching about why people perpetrate white-collar crime, why didn’t I figure out a way to identify financial crimes in progress, shut them down, and bring them to justice to prevent people from becoming victimised? Maybe there was a way to identify points of similarity between my fraud at ZZZZ Best [his company] and fraud being perpetrated by others. (Minkow, 2005: 158) 447

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Both men demonstrate that becoming a professional-ex was the ‘answer’ to the questions they had about their own lives when they left prison (see earlier). In keeping with other professionalexes, Colson’s and Minkow’s roles drew upon their past but with a view to the future (Brown, 1991; Maruna, 2001). This ‘making of meaning’ also extended to considering the past and the way in which the professional-ex role fitted with both Colson’s and Minkow’s personal biographies so as to be consistent with their experiences. For example, Colson’s reflection on his experiences led him to conclude, “Prison turned out to be one of the best things that ever happened to me” (Colson, 2005: 23). In this way then, meaning can be made of past experiences and they can be considered in a positive light. For Colson, there was the feeling that his prison experiences were not completely (or even predominantly) about ‘him’, but about what God had intended for his life and what his ‘purpose’ was to be: In the depths of my heart I had become convinced that I had gone to prison for a larger purpose than just getting my own life turned around. (Colson, 1979: 151–152) This necessarily brief overview of how each man came to take on the professional-ex role indicates that in some ways the reasons white-collar offenders may adopt professional-ex statuses are much the same as other offenders. They permit a recasting and restructuring of a deviant past such as to make it necessary and provide a coherent biography for the professional-ex (Maruna and Roy, 2007). They also helped give offenders direction in their lives after punishment by suggesting a way in which they could fulfil their goals. In other ways, however, there were important differences in how Minkow and Colson realised their professional-ex roles. It is to these differences that we now turn.

White-collar offenders as professional-exes As noted earlier, professional-ex roles frequently lend certain benefits to those managing a deviant identity by providing offenders with fulfilment, exoneration, legitimacy and ‘therapy’ (Maruna, 2001). Although Minkow and Colson used their professional-ex roles in a similar manner, neither draws all four ‘benefits’ from their role. Instead, Colson drew fulfilment and therapy from his professional-ex role while Minkow drew exoneration and legitimacy. The purpose of highlighting this difference is to indicate that white-collar offenders may frequently take very specific things from their engagement as professional-exes. In this way, professional-ex roles act upon particular areas of offenders’ lives.

Minkow: exoneration and legitimacy Minkow’s role as a professional-ex did not give him the fulfilment it may give other professionalexes. He was able to come and go from his professional-ex role, having a ‘false start’ when he rejected fraud prevention work for the ‘bigger’ role of becoming a pastor (Minkow, 2005: 171). Nor did Minkow bolster his own change (i.e. receive ‘therapy’) through his fraud detection activities. This too was gained through his pastor role, through which he ministered to others, with his own change part of this ministry. Instead, Minkow appears to have gained exoneration and legitimacy from his professional-ex role. Minkow’s exoneration would come by detecting fraud equal to the amount he had committed. In this way he attempted to redeem himself and ‘make good’ on his offending. 448

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Maybe proactively stopping millions of dollars in fraud, far more than I had ever perpetrated as the CEO of ZZZZ Best, would be the ‘does good’ part of my story. (Minkow, 2005: 158) In this way Minkow quantified the good he could do by measuring the amount of fraud he prevented to that he perpetrated. By his estimation he would eventually go on to prevent more fraud than this. He then continued as a fraud investigator, the next ‘step’ in his redemption strategy to prevent ‘far more’ (Minkow, 2005: 245) fraud than he had initially committed. Minkow also gained legitimacy from his fraud detection activities. His investigations provided him with a means of demonstrating that he had made the change from con man to reformed citizen. Part of this was demonstrating that he was well equipped to perform the role of fraud investigator. Discussing his fraud prevention work in an interview, Minkow refers to the ‘skills’ he employed: I used what I did to do evil and kind of flip it on its back and use those talents to help the very community I once hurt. And that’s what I want to do. (CNN, 2005) As well known as a ‘wounded healer’ script may be, perhaps almost as recognisable is the ‘poacher turned gamekeeper’ role Minkow established for himself, with the ‘tools of evil’ now being used for ‘good’. Minkow was particularly aware of the importance of his professional-ex role as a source of the legitimacy of his change from someone who was deceitful. The fragility of his position was centered on the consequences of getting a fraud investigation wrong and falsely accusing someone of fraud. This scenario would undo all the good work he had previously conducted, by marking him as deceitful and incapable of change (Minkow, 2005: 277–278). The concept of legitimacy is closely tied to notions of certification of an offenders’ change, whereby the shift from a deviant to a legitimate identity is recognised by others (Meisenhelder, 1982). An important part of Minkow’s work as a fraud investigator was that it enabled him to gain the trust of people ‘in order to get the second chance I so desperately needed’ (Minkow, 2005: 151). Positive encounters while enacting the ex-role highlighted for him that his change was being recognised. Minkow was ‘certified’ during a conversation with a Securities and Exchange Commission (SEC) official who considered Minkow reliable: The [American] Fraud Association may not have believed that I had changed; the reporters may not believe I had changed but a single SEC attorney in Los Angeles did, a law enforcement official of all people. I relished the moment. (Minkow, 2005: 319) Engagement in professional-ex roles and the certification this can elicit demonstrate the emotional nature of having change recognised. Adding emotional and symbolic relevance to the certification was that it came from an SEC official; someone who would previously have been on the ‘other side’. This acceptance showed Minkow that others could trust him. This did not necessarily indicate the end of the certification process, but it provided validation for Minkow that not everyone viewed him as a ‘con man’. The importance for Minkow of acceptance, particularly by law enforcement officials, is also evident from his account of his first anti-fraud talk for the FBI (Minkow, 2005: 156). This talk led to further offers for speaking engagements, these encounters underlining for Minkow that he was becoming trusted and allaying the fears he had upon leaving 449

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prison (Minkow, 2005: 151). In addition, the encouragement he received emphasised for him that he was achieving his goal to do good.

Colson: fulfilment and therapy Colson’s account suggests that he gained neither exoneration nor legitimacy from his professional-ex role. His conversion to Christianity had already seen him exonerated by God (e.g. Colson, 1979: 339–340), and the prayer group he had joined helped him demonstrate that his change was authentic. Instead, Colson’s ex-prisoner status was one from which he drew fulfilment and therapy. Fulfilment came from knowing he was following a directive from God, imbuing his life with meaning and purpose. The ‘therapy’ he received – helping to reinforce his own change – was more subtle and tied into the success of the Prison Fellowship. The success of the Fellowship helped underscore for Colson that his change was a viable one and that God was in support of the organisation, reinforcing the efficacy of his new way of living. Any fulfilment at successfully doing something significant and so alleviating ‘the thought that I would never again do anything significant with my life’ came about through prisoners’ successful progression through the Prison Fellowship program (see above, Colson, 2005: 22). The knowledge that the Fellowship was a success was a reaffirmation of his faith in God. The ministry and Colson’s faith were therefore intertwined. For Colson this was his therapy, because it confirmed his beliefs as a Christian, thereby reinforcing his own change. Positive experiences emphasised for him not only the efficacy of his ability to make a significant contribution to people’s lives, but also supported his belief that God’s will was at work in helping the Prison Fellowship. At a prison ministry dinner, Colson reflected on what had been achieved by considering the people present, both trainers and disciples: Here were men who represented opposite poles culturally, politically, socially. . . . Yet on this night they prayed together, wept together and embraced – joined together by the power of the Holy Spirit in a fraternity that transcends all others. (Colson, 1979: 173) This and other experiences, such as one of the programme’s prison disciples getting married and the acceptance of previously sceptical prison governors of the efficacy of the Prison Fellowship (Colson, 1979: 278–279), provided affirmation not only of the efficacy of his work, but also that Colson was pursuing the right course of action. As a result, for Colson there was a reinforcement of his faith, with these positive examples tangible evidence of God’s being fulfilled. This in turn emphasised the importance of wider processes that supported Colson’s change.

Deviant identities in practice There are further differences in the way the professional-ex role was realised by Colson and Minkow. These differences have their origin in the particular aspects of their deviant past that Colson and Minkow drew upon, each emphasising their previous deviant role in a manner that had the most salience for their future. Colson emphasised his role as an ex-prisoner, while Minkow drew upon his ex-offender status. These differences indicate that the origin of how particular professional-ex roles are enacted lies in individual desires and with respect to particular deviant pasts. For Colson to fulfil his directive from God he needed to work to convince prisoners of the presence of God and of the efficacy of change. Minkow’s best hope for redemption was through 450

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preventing fraud, which led to him working against other offenders. Each man therefore utilised his past in ways specific to his own concerns. Colson’s use of his previous deviant identity is largely in keeping with Brown’s characterisation of the professional-ex role and he is thus reminiscent of the drug therapists who were formerly drug users identified by Brown. Colson embraced his ‘deviant history and identity as an invaluable therapeutic resource’ (Brown, 1991: 223). This is particularly the case towards the start of his ‘career’ as a professional-ex, where he received the therapy from his role as already outlined. Further, Colson’s use of his previous deviant identity was a means to an end. His identity as an ex-prisoner was used to gain the trust of other prisoners in order to effectively communicate with them and promote the Prison Fellowship. The basis of Colson’s ex-role was therefore that it was predicated on an experience he shared with other prisoners and the similarity between him and them. They were ‘like him’ (Colson, 1979: 60). Colson was sympathetic to prisoners and other-centred in his use of the professional-ex role, working alongside those he identified with and using himself as a model of change for other prisoners. In addition, he was in what may be termed desistance focused, aiming to bring about change in the beliefs of those prisoners he worked with, guiding them away from offending. Minkow represents a very different way of conceptualising a professional-ex role to Colson and indeed to Brown’s conceptualisation of professional-ex roles. His use of his deviant identity was an end in itself, as detecting fraud was the only way he could achieve redemption. In contrast to Colson, Minkow’s use of his professional-ex role was more adversarial with respect to offenders, as he worked to uncover fraud using the specialist knowledge he perceived he held. Minkow was not concerned with the desistance of those offenders whom he encountered and so he did not promote himself as a model for change in the way that Colson did. His professionalex activities were predicated upon specialist knowledge that his past gave him, putting him in fundamental opposition to other offenders. Perhaps because Minkow’s role was employed for one purpose only – to gain redemption – he was not as heavily engaged in it as Colson’s or Brown’s (1991) professional-exes were. In his employment as a pastor he was part of a separate world where his professional-ex status had little or no viability. This lack of commitment to his professional-ex role may be one reason why Minkow’s professional-ex status did not reinforce his efforts to desist from offending by providing the therapy that Colson enjoyed and that may help other professional-exes (Maruna, 2001). Minkow was convicted of conspiracy (2011) and embezzlement (2014) and sentenced to prison for each (Fortune, 2014). His lack of investment in the role may mean it did not act to mediate his behaviour. Where Minkow perhaps finds common ground with other professional-exes is that in drawing upon his past he simultaneously sought to distance himself from it. In working to convince others as to the reality of his change, the legitimacy his ex role gave him allowed Minkow to distance himself from those he was investigating. In presenting himself as having changed from being a ‘con man’ he was he able to present other offenders as the sort of people he ‘used to be’. Minkow’s example demonstrates that professional-ex identities may be constructed out of very different circumstances to the way they have been conceived of traditionally, while still allowing ex-offenders to reconstruct their past and make their personal biography meaningful in terms of their present.

Conclusion Traditionally, the adoption of a professional-ex role has been characterised as running parallel to other aspects of change in a life and to desistance from crime (Maruna, 2001). Adoption of a professional-ex role is simultaneously a precursor to change and also an example of shifts in 451

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the ex-deviant’s thinking about their past and future behaviour (Brown, 1991; LeBel, 2007). A gradual transition in a sense of self with respect to the deviant past therefore accompanies and is responsible for the utilisation of a deviant past (Maruna, 2001). This provides an explanation for why professional-ex roles have so frequently been associated with desistance from crime (Brown, 1991) and with supporting offenders’ change: the therapy cited by Maruna (2001). In Brown’s model for offenders more generally, part of becoming a professional-ex means to ‘begin to turn the moral corner on their deviance’ (1991: 222). That is, seeing deviant activities as ‘wrong’ and ‘symptoms of a much larger disease complex’ (Brown, 1991: 223). Through engagement in therapeutic practices as part of their own rehabilitation, offenders come to identify a ‘replacement self ’ (Giordano et al., 2002) they can use to guide efforts to change. Once a particular replacement self has been identified, it may be difficult to identify another and perhaps this is why professionalexes have been noted as feeling almost compelled into the professional-ex role (Brown, 1991: 223), and also why Minkow’s and Colson’s adoption of professional-ex roles is recounted as responding to questions each of them had. Minkow and Colson’s experiences provide a way of conceptualising how professional-ex roles might work for white-collar offenders. Their professional-ex roles were examples of the change in identity that each reported and not a precursor to them. They did not initially feel driven to take up their professional-ex roles and a further example of this is demonstrated by the observation that both took time to come to their professional-ex roles following a ‘search’ for what they should do with their lives. Minkow in particular took several years to set up the Fraud Discovery Institute, although his work with the FBI began shortly after he left prison. Professional-ex roles have been cited as holding certain advantages for the individuals who hold them for aiding their own change and sending a message to the rest of the world that change has taken place. The distinction between other professional-exes and Colson and Minkow is in the nature of the advantages drawn from the role, with each gaining specific boons. The professional-ex concept still has efficacy when considered in terms of white-collar offenders, although the analysis here makes more explicit the link between the ex’s past and their current role. Although Colson and Minkow took different and rather specific things from their roles, they share common ground in that both used appropriate aspects of their past to help their lives move forward as they desired. Although it may be argued that Minkow and Colson represent rather atypical white-collar offenders (not least because each published books about their experiences), these above observations have enough concordance with existing literature to suggest that professional-ex roles may be useful for offenders regardless of their offence or background, provided of course that there is some sort of ‘marketability’ in the particular ex-role pursued. If their experiences were so wildly different that they represented a complete rethink regarding the role of professional-ex statuses in life after punishment, then there might be more need for caution. Instead, they represent subtle distinctions and departures from existing observations that flesh out the professional-ex concept while also providing an understanding of how white-collar offenders live their lives following conviction. We also make special comment here on the power of professional-ex roles to demonstrate change. Such has been noted earlier of course through the concept of legitimacy, but whitecollar offenders in particular may benefit from a professional-ex role giving legitimacy to their change. This is because they may have further to go than other offenders to demonstrate the shift in identity that is a result of successfully desisting from crime. Two of the more enduring associations with desistance from crime are the forming of romantic relationships and employment, these representing something of a ‘respectability package’ for offenders (Giordano et al., 2002). The potential social control elements of this package are well documented (e.g. Laub and 452

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Sampson, 2003; Farrall et al., 2014), but what is less well recognised is that the desistance potential of marriage and employment may lie partly in that engagement with either or both demonstrates an offender’s reformed character, representing as it does a departure from previous behaviour. The point we make here is that white-collar offenders may have further to go to demonstrate change. The respectability package is unlikely to be an option signalling change in their life because they are more likely to be married and employed at the time of their offending (e.g. Benson and Kerley, 2001). Therefore, nothing about continuing a relationship or getting another job suggests that change has taken place.3 Professional-ex statuses satisfy this concern. They are often time consuming to engage with (Bushway and Apel (2012), remind us that the more effort required to ‘signal’ a change the more likely it is to be believed) and, as noted, come with a readily recognisable script that others may recognise as identifying change. As important as this is for all offenders, it may be doubly so for those trying to resettle after a white-collar crime.

Notes 1 Others include TherealPrisonConsultant.com, Etika LLC and wallstreetprisonconsultants.com. 2 It is worth noting that Minkow was subsequently convicted of further white-collar offences in 2011 and 2014 (conspiracy and embezzlement respectively). There is no evidence that his professional-ex role was set up with the intention of facilitating further fraud; however, his case is a warning to those who would make professional-ex statuses synonymous with a cessation of offending. Sharp and Hope sound a similar warning (2001). 3 Although that does not mean they are not helpful to white-collar offenders.

References Benson, M.L. and Kerley, K.R. (2001). ‘Life course theory and white-collar crime’, in H.N. Pontell and D. Shichor (eds), Contemporary Issues in Crime and Criminal Justice. Upper Saddle River, NJ: Prentice-Hall, pp.121–136. Brown, J.D. (1991). ‘The professional-ex’. Sociological Quarterly, 32(2): 219–230. Bushway, S.D. and Apel, R. (2012). ‘A signaling perspective on employment based reentry programming’. Criminology and Public Policy, 11(1): 21–50. CNN (2005). CNN Live Saturday: Interview with Barry Minkow, 5 March. Available at: www.transcripts.cnn. com/TRANSCRIPTS/0503/05/cst.02.html (accessed 12 August 2014). Cohen, S. and Taylor, L. (1972). Psychological Survival. Harmondsworth: Penguin. Colson, C. (1979). Life Sentence. London: Hodder & Stoughton. Colson, C. (2005). The Good Life. Illinois: Tyndale House. Denzin, N.K. (1989). Interpretive Interactionism. London: Sage. Drahota, J.A.T. and Eitzen, E.S. (1998). ‘The role exit of professional athletes’. Sociology of Sport Journal, 15(3): 263–278. Ebaugh, H.R.F. (1984). ‘Leaving the convent’, in J.A. Kotarba and A. Fontana (eds), The Existential Self in Society. Chicago, IL: Chicago University Press, pp.156–176. Ebaugh, H.R.F. (1988). Becoming an Ex. Chicago, IL: Chicago University Press. Erikson, K. (1965). Childhood and Society. London: Hogarth. Farrall, S., Hunter, B., Sharpe, G. and Calverley, A. (2014). Criminal Careers in Transition. Oxford: University Press. Ford, G.G. (1996). ‘An existential model for promoting life change’. Journal of Substance Abuse Treatment, 13(2): 151–158. Fortune (2014). Barry Minkow, fraudster, nonpareil, gets five more years, 15 May. Available at: www.fortune. com/2014/05/06/barry-minkow-con-man-nonpareil-gets-five-more-years/ (accessed 12 August 2014). Giordano, P.C., Cernkovich, S.A. and Rudolph, J.L. (2002). ‘Gender, crime and desistance’. American Journal of Sociology, 107(4): 990–1064. Goffman, E. (1963). Stigma. Harmondsworth: Penguin Books. Goffman, E. (1969). The Presentation of Self in Everyday Life. Harmondsworth: Penguin Books. 453

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Harding, D.J. (2003). ‘Jean Valjean’s dilemma’. Deviant Behaviour, 24(6): 571–595. Howard, J. (2008). ‘Negotiating an exit’. Social Psychology Quarterly, 71(2): 177–192. Hunter, B. (2009). ‘White-collar offenders after the fall from grace’, in R. Lippens and D. Crewe (eds), Criminology and Existentialism. London: Routledge, pp.145–168. Hunter, B. (2011). ‘I can’t make my own future’, in S. Farrall, M. Hough, S. Maruna and R. Sparks (eds), Escape Routes. Abingdon: Routledge, pp.221–239. Klingemann, H.K.H. (1999). ‘Addiction careers and careers in addiction’. Substance Use and Misuse, 34(11): 1505–1526. Laub, J.H. and Sampson, R.J. (2003). Shared Beginnings, Divergent Lives. London: Harvard University Press. LeBel, T.P. (2007). ‘An examination of the impact of formerly incarcerated persons helping others’. Journal of Offender Rehabilitation, 46(1): 1–24. Lofland, J. (1969). Deviance and Identity. Englewood Cliffs, NJ: Prentice Hall. Maruna, S. (1997). ‘Going straight’, in A. Lieblich and R. Josselson (eds), The Narrative Study of Lives Vol. 5. London: Sage, pp. 59–93. Maruna, S. (2001). Making Good: How Ex-Convicts Reform and Rebuild Their Lives. Washington, DC: American Psychological Association Books. Maruna, S. (2012). ‘Elements of successful desistance signalling’. Criminology and Public Policy, 11(1): 73–86. Maruna, S. and Roy, K. (2007). ‘Amputation or reconstruction?’ Journal of Contemporary Criminal Justice, 23(1): 104–124. Meisenhelder, T. (1982). ‘Becoming normal’. Deviant Behaviour, 3(2): 137–153. Minkow, B. (2005). Cleaning Up: One Man’s Redemptive Journey Through the Seductive World of Corporate Crime. Nashville: Nelson Current. Morgan, S. (1999). ‘Prison lives’. The Howard Journal of Criminal Justice, 38(3): 328–340. Oleson, J.C. (2003). ‘The celebrity of infamy’. Crime, Law and Social Change, 40 (4): 391–408. Prison Consultants, (2014). About Prison Consultants and What We Can Do for You. Available at: www. prisonconsultants.co.uk/about-us/ (accessed 3 September 2014). Shaffir, W. and Kleinknecht, S. (2005). ‘Death at the polls’. Journal of Contemporary Ethnography, 34(6): 707–738. Sharp, S.F. and Hope, T.L. (2001). ‘The professional-ex revisited’. Journal of Contemporary Ethnography, 30(6): 678–703. Sheridan, D. (1993). ‘Writing to the archive’. Sociology, 27(1): 27–40. Shover, N. and Hunter, B. (2010). ‘Blue-collar, white-collar’, in W. Bernasco (ed.), Criminals on Crime. Cullompton: Willan, pp.205–227. Smith, S. and Watson, J. (2002). Reading Autobiography. Minneapolis: University of Minnesota Press. Vaughan, B. (2007). ‘The internal narrative of desistance’. British Journal of Criminology, 47(3): 390–404. White, W.L. (2000). ‘The history of recovered people as wounded healers II’. Alcoholism Treatment Quarterly, 18(2): 1–25.

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32 Business ethics as a means of controlling abusive corporate behavior Jay P. Kennedy

Introduction Illegal corporate acts and deviant (i.e., harmful or distasteful, yet not illegal) corporate behavior have long been serious societal concerns (MacDougall, 1933). Much of the illegal and deviant corporate behavior that exists within society has been attributed to the drive to maximize the financial bottom line, the desire to increase returns to shareholders, and the need to achieve legitimate corporate goals (Clinard, 1983). In other words, the foundation of illicit corporate crime is organizational behavior which focuses upon goal attainment, with a corresponding lack of attention to ethical business practices that could curb abusive practices. While the growth of shareholder wealth and the maximization of corporate profitability are legitimate and necessary goals of any corporation, most would agree that corporations should not pursue these goals with unbridled enthusiasm. The agents of corporations should act within certain ethical bounds when pursuing the legitimate goals of a capitalistic for-profit corporation (Clinard, 1983; Johnson, 2012). These bounds are commonly referred to as business ethics, and it has been argued that with a strong individual, organizational, and societal focus upon ethical business practices abusive corporate behavior can be controlled (Treviño and Brown, 2005). In particular, it has been argued that if corporate decisionmakers can be trained to identify and appropriately respond to potentially unethical situations, they will be better enabled to make ethically positive business decisions (Shaw and Barry, 2007). This chapter begins with a discussion of the history of business ethics, highlighting its origins as a philosophical approach to behavior that should occur within the corporate environment. The chapter then moves on to discuss business ethics from a behavioral approach, touching upon its ability to influence business decision-making through formal and informal means. It concludes with a brief discussion of the potential for abusive corporate behavior to be curtailed through the use of effective business ethics programs.

History What is business ethics? Business ethics is broadly defined as “the study of what is right and wrong, or good and bad, human conduct in a business context” (Shaw and Barry, 2007), and applies to individuals rather 455

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than to the business itself. Business ethics are similar to any other body of ethics in that they are intended to serve as both a formal and informal means of control. They are dissimilar to some fields such as law, medicine, or psychology in that businesspeople do not have a set code of ethics by which everyone participating in the field swears to abide. Although ideas about business ethics vary from corporate culture to corporate culture, and from person to person, they all ultimately lead to the issue of properly answering ethical arguments that present themselves from time to time (George, 1988; Joyner and Payne, 2002; Sinclair, 1993). These arguments are pertinent to business operations, such as the decision to choose an ethical option over an unethical option, or a decision among alternative courses of action, each with its own ethical considerations. Businesses have ethical responsibilities that are far greater than simply ensuring the financial health of the corporation and producing increasingly positive returns for shareholders (Carroll, 2012). In particular, many feel that businesses have a responsibility to a wide range of stakeholders (e.g., consumers, employees, citizens in communities where their products are manufactured or sold, etc.) by virtue of the fact that they have such great power and such a vast influence in society (Johnson-Cramer, 2012). Just as parents have responsibilities to their families and children, corporations have responsibilities to those individuals and groups involved in their corporate lives because of their role as provider of the everyday goods and services upon which society relies (Solomon, 1994). However, as Price (2010) summarizes, there are some who feel that a corporation’s focus on anything but the maximization of shareholder wealth and the growth of the bottom line are anticapitalistic and ultimately harm shareholders. Yet, Price cites many examples of corporations taking proactive stances meant to increase their socially responsible behavior ultimately benefitting many more stakeholders through socially responsible action. While there is a difference between abstaining from advancing a business model built upon corporate social responsibility and engaging in unethical and abusive corporate behavior, business executives who operate their firms according to ethical principles are often at the forefront of socially responsible business behavior. Today, business ethics is at the center of rich philosophical debate, an academic arena full of empirical research, and a field of study for those in universities and businesses around the world. Much of the focus of current scholarship and educational ethics programs relates to business ethics as a means to direct corporate decision-making and influence individual and group behavior. Nearly every aspect of the business enterprise has an ethical subfield, including finance and accounting, the practice of management of corporations, how corporations deal with customers and suppliers, and the influence of corporate decisions on the environment and the citizens of the world. Each area of business ethics emphasizes the importance of ethical decision-making upon business outcomes and socially responsible behavior. In essence, irrespective of the specific area of focus, business ethics aims to control the development of deviant and abusive behavior by those who control the business.

The development of the field of business ethics The idea that ethical principles (i.e., that there is a right way to engage in business dealings) exist within the world of business has been around since trade and commerce became commonplace in human society. However, for most of its history business ethics was confined to philosophical debates about what business people should and should not do. Discussions of business ethics were more judgmental in nature, with debates centering upon what acts should be allowed within capitalistic trade, what acts should be deemed inappropriate, and under what circumstances such proscriptions should be lifted. Essentially, traditional debates about ethics were tailored to fit discussions of appropriate conduct within the business environment (Paeth, 2012). It was not until the 1970s that business ethics emerged from being at the center of debates and philosophical 456

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discussion into an academic discipline taught to business students as a way to influence their future behavior (Schwartz, 2012). The field of business ethics developed out of the broader field of ethics and philosophy as thinkers pondered the duties and responsibilities of businesspeople within society (Ray, 2010). Because corporations are inanimate objects, ethics scholars were reluctant to give them agency regardless of the legal notion of corporate personhood and regardless of the rights given to corporations by the law. Ethical duties and responsibilities are, to ethics scholars, human qualities attributable to human beings alone, and it has been argued that a business cannot have ethical responsibilities because only human beings can have such responsibilities (Friedman, 1970). It is human beings, not inanimate corporations, who act freely, voluntarily, and with knowledge, and in so doing they take on certain responsibilities to society, one of which is to conduct themselves according to ethical principles (McGann, 1971). As it was clear to early business ethics scholars that businesspeople are the only ones who could be invested with ethical responsibilities, the early stages of business ethics discussions centered upon what acts should be considered unethical and which ethical principles were most important to follow. Discussions of business ethics, both in earlier years and today, are made difficult by the reality that in many cases there is no clear ethical choice to be made, and one’s conscience must be called upon in situations where ethical principles seem contradictory or inapplicable to the situation at hand (Ray, 2010). The teaching of business ethics in business school, therefore, became an attempt to guide the development of ethical business principles within business students by addressing the need to think ethically about challenging corporate scenarios. The effectiveness of business ethics education within the university environment is heavily debated, and studies of its impact have found mixed results (Allen et al., 2005; Boyd, 1981; Hoffman and Moore, 1982; Luthar and Karri, 2005; Merritt, 1991; Ritter, 2006; Weber, 1990; Weeks et al., 2005; Yu and Zhang, 2006). For example, Ritter (2006) found that even though people who have been exposed to ethical training use a different type of thinking to assess unethical situations, they may not have a higher awareness of when they are facing a potentially unethical situation. However, Luthar and Karri (2005) and Boyd (1981) found that exposure to ethics has a significant impact upon student perceptions of the significance of the connection between ethical practices and business outcomes. Weber (1990) may have explained this disparity. He found that business ethics courses and classes on corporate social responsibility have a significant short-term impact upon students’ decision-making abilities, but this impact fades quickly after the completion of the course. Weber advocated for the reinforcement of these ethical values over the career of the businessperson, rather than relying on the impact of a single course in business ethics. A few of the empirical studies that have looked at the role of business schools in instilling ethical values within future business professionals (Sleeper et al., 2006; Stewart et al., 1996) have examined students’ attitudes toward the teaching of ethics, and have found that students are strongly in favor of including ethics as part of business school curricula. In particular, Stewart et al. (1996) found that business students saw ethical responsibility as essential to the success of the business. The use of ethics training by businesses seeking to promote ethical organizational behavior has been found to be an effective way to increase the ethical behavior of employees (Warren et al., 2014). As the work by Warren et al. highlights, corporations must take an active role in the ethics education process as well as the promotion of an ethical culture within the business, as a lax internal ethical culture may lead businesspeople to adopt lax ethical standards for themselves. For example, Weeks and colleagues (2005) found that persons who were repeatedly exposed to unethical situations in the workplace that were not properly addressed and corrected became desensitized to future ethical violations. In addition, they found that individuals’ personal ethical 457

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orientations did not change over time; people were just more willing to accept the behavior of others without feeling that the issue was regarded highly enough by superiors to warrant blowing the whistle. If businesspeople can become desensitized to unaddressed ethical violations over time, then it stands to reason that the reverse may also be true – that over time they can become more sensitive to ethical violations that are properly addressed. Business ethics courses, corporate ethics training programs, and ethical simulation training programs all seek to move the philosophical discussion of business ethics into a world of practical application. The discussion of business ethics has evolved from one centering on the inherent rightness and wrongness of a particular action (although much of this debate still continues, particularly given the growth of technology in society), to one determined to influence individual decision-making (see, e.g., Calluzzo and Cante, 2004; Jin et al., 2007; Marshall, 1999). The current view of business ethics is one that embraces the learn-ability of ethics, where individuals can assess their current state of ethical decision-making, learn and digest information about how to address ethically challenging situations, and learn from past experiences in a way that leads to growth in one’s ability to make ethically positive decisions (Johnson, 2012).

Formal controls Decision-making within the business environment is not always a choice between black and white, ethical or unethical. Rarely does the unethical alternative stick its head out and announce itself as such. Many times during the course of normal corporate operations a decision-maker will have several options to choose from during any given decision-making incident, with each option carrying some varying degree of ethicality. Furthermore, the ethically positive choice may not be immediately apparent at the time a decision is made or the unethical outcomes associated with an action may be hidden from the decision-maker’s view. Because of the ambiguity that surrounds many ethical decisions within business there are few formal laws, rules, or regulations prohibiting specific types of unethical business conduct. Clear exceptions to this rule of thumb are laws against antitrust activity, industrial espionage, and environmental pollution, to name just a few. A lack of laws, rules, and regulations dealing with unethical behavior means that fewer avenues for formal control exist to govern ethical conduct in the business environment relative to conduct in other environments, such as one’s behavior in a crowded sports arena. In the latter case, police and security personnel enforce rules and laws enacted by the state, locality, and sports venue. Codes of conduct within the sports arena are clearly posted at entrances and there is a visible presence of formal control (uniformed law enforcement and security personnel) at the venue for all to see. While there are means of formal control within the business environment, they are not as prevalent or present as formal control within other social settings. In many cases, elements of formal control within the business environment are unobtrusive and hidden until necessary. While their presence is acknowledged and known in many ways, they remain visibly absent, yet their influence on decision-making and ethical conduct may be significant. In the business environment, laws, rules, and regulations pertaining to ethical conduct are enacted and enforced by three main entities: governments (state and federal), industry and non-governmental agencies, and corporations themselves.

Governmental controls The majority of formal governmental controls related to unethical and abusive behavior are laws prohibiting various acts meant to restrain trade or give an individual or business an unfair advantage in the marketplace, while causing some material disadvantage to competitor businesses (e.g., antitrust laws, financial regulations, anti-monopoly statutes). Since the late 1800s the federal government has 458

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attempted to control the abusive behavior of corporations through the law and applicable criminal, civil, and administrative punishments. Through their punishments, many of these laws aim to deter abusive and unethical behavior on the part of corporate agents or individuals making decisions on behalf of corporations. Many corporate laws and regulations also make it clear that the term “person” is meant to include corporations, as they acknowledge that corporations have a status of legal personhood in this country, and that deviant corporations can create harm within society. While violations of corporate laws, rules, and regulations can lead to criminal and civil penalties for corporations, the result of which is typically a hefty fine, for corporate agents violations may lead to outcomes that are more serious, even though extreme penalties are rarely applied. In addition to attempting to elicit ethical business behavior through the threat of harsh penalties, the federal government also attempts to influence the development of effective internal compliance and corporate ethics programs. For example, the United States Sentencing Commission allows for a reduction in culpability for corporate defendants found guilty of certain offenses if the corporation has, at the time of the offense, an active and effective ethics and compliance program (USSG §8C2.5f). Furthermore, corporations have a vested interest in ensuring effective ethics and compliance monitoring of employees, as they may also receive leniency for self-reporting violations before federal regulators discover the offense (USSG §8C2.5g).

Industry and non-governmental regulations Corporations are subject to federal, state, and local laws, while at times being subject to additional industry regulations monitored and enforced by non-governmental bodies. Industry regulatory bodies serve as a means of formal control in addition to governmental regulations, as they set standards of conduct for individuals and businesses operating within a particular segment of the economy. One of the best examples of this type of formal control may be found in the Public Corporation Accounting Oversight Board (PCAOB), a relatively new industry regulatory body established by the Sarbanes-Oxley Act of 2002. The PCAOB is charged with the monitoring and oversight of the independent auditors of publicly traded corporations that trade shares on US stock exchanges, and has taken a systematic, industry-specific approach to identifying potential rule violators (Hermanson et al., 2007). When violations of accounting rules and regulations are detected by the PCAOB, it has the authority to sanction individuals and firms, including the ability to ban the violator from auditing publicly traded corporations. The presence of a non-governmental organization with the ability to enforce federal laws and regulations is a situation that contributed to disputes about the constitutionality of the PCAOB (King, 2010); the PCAOB was ultimately found by the Supreme Court to be constitutional (Free Enterprise Fund vs. Public Company Accounting Oversight Board, 2010). Another area that has received recent attention for high-profile abusive practices has been the financial and securities sectors. In these areas, the Financial Industry Regulatory Authority (FINRA) serves as the main non-governmental regulator of unethical, abusive, and prohibited behavior. Like the PCAOB, the FINRA can pass severe cases of abusive behavior on to the Department of Justice to be prosecuted, while retaining the ability to sanction rule violators with fines and other administrative remedies. The FINRA is also similar to the PCAOB in that it monitors corporations and individuals within a particular industry, rather than attempting to monitor all corporations or individuals. Through the enforcement of federal laws and industry rules and regulations, many of which the FINRA has a hand in drafting, the FINRA is able to exercise formal oversight of the practice of stock trading. Formal controls within the business environment may also be found in international organizations that set standards for businesses operating within particular industries or engaging in 459

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particular operations. For example, the International Standards Organization (ISO) is one of the most well-known bodies devoted to ensuring ethical standards of production and manufacturing. The ISO does not have the ability to fine a company for failing to follow its standards, yet it does have the ability to deny certification to non-compliant corporations. While the loss of certification may not mean much in comparison to the threat of heavy civil fines or jail terms for corporate executives, the lack of ISO certification can have a significant impact upon organizational productivity, and may restrict the company’s pool of potential customers (Terziovski et al., 2003). ISO sanctions, while not criminal or civil, have an administrative component that likely figures heavily in corporate decision-making and strategy.

Corporate policies Corporations have a vested interest in controlling an employee’s abusive and unethical behavior. This interest extends beyond the C-level (e.g., CEO, CFO, COO, etc.) and incorporates all employees of the company, irrespective of their level of authority. If an employee has the ability to make an autonomous decision or to be part of a group making a decision where unethical ends could result, the company has an interest in the employee’s decision-making (Stead et al., 2013). When business managers are invested in the development of corporate ethics programs, they tend to focus upon the control aspects of the program (Weaver et al., 1999). Formal control over employee behavior is exercised in a number of ways within corporations, most notably through ethical codes of conduct (Schminke and Priesemuth, 2012). Corporate codes of ethics have gained increasing popularity in recent years following many high-profile ethical scandals, yet the most effective codes of ethics are those that are revised frequently, have penalties for violations, are discussed with employees and other corporate stakeholders, and allow employees the means to report ethical violations (Singh, 2011). The passage of the Sarbanes-Oxley Act of 2002 required publicly traded corporations that trade their share on US stock exchanges to establish a corporate code of ethics. While many corporations took it upon themselves to implement corporate codes in the years before SarbanesOxley, the law gave them a new reason to focus upon the establishment of ethics systems to support these codes (Martin and Combs, 2011). Specifically, Sarbanes-Oxley significantly increased incentives for corporate whistleblowers, and placed an emphasis on the maintenance of an effective internal system to report unethical behavior. In essence, the federal government sought to place pressure on corporations to formally police themselves so that violations could be prevented or detected early enough to prevent large-scale harm.

Informal controls Because unethical situations within the business environment are not always clearly identifiable at the point when decisions are made, it is difficult to write laws and regulations that capture all, or a majority, of the potentially unethical or abusive practices that may occur. Therefore, informal controls may be the most effective means of preventing abusive and unethical corporate decisionmaking, as they can be flexible to changing situations, relationships, and perspectives.

Business school education Ethics education within business school, whether it be at undergraduate or graduate level, is intended to help students develop ethical boundaries that limit one’s conduct by exposing students to commonly encountered ethical issues, and inculcating norms and best practices used 460

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to identify and address ethically challenging situations. The goal is not to give students a book of answers, but rather to develop the skills necessary to identify when they are facing an ethical dilemma, the ability to seek out potential answers, and the confidence to implement the most appropriate and ethical choice. In short, business ethics courses seek to develop a sustained means of ethical decision-making in students by positively influencing their ethical orientation. The term “ethical orientation” refers to the combination of an individual’s morals, their life experiences, personality, and the ethical boundaries learned through business education (Allmon et al., 2000). This ethical orientation is evident when businesspeople make choices about potentially unethical business situations which they encounter. Ethical orientation is formed, in part, as a result of life experiences and socialization (Bodkin and Stevenson, 2007; Borkowski and Urgas, 1998: Burton and Hegarty, 1999; Cagle and Baucus, 2006; Luthar and Karri, 2005; Ritter, 2006). Gender role differences, social class, experience with ethically challenging situations, and ethics education all play a prevalent part in a person’s socialization and upbringing; these impact upon future life experiences, including the formation of ethical boundaries. Consequently, one’s ethical orientation may come into conflict with what one is asked to do in a workplace setting (Mason and Mudrack, 1996). In addition, one’s ethical orientation may lead one to violate workplace norms and standards when deviance or unethical behavior is the norm. Business school is important to the establishment of common ethical standards across all business students, regardless of their life experiences, and research indicates that both students and business school faculty are beginning to pay more attention to the ethical development of students (Christensen et al., 2007). By attempting to establish the ethical ground rules of the business environment, business schools are attempting to bring all students to an equal level of ethical conduct that will steer them clear of ethical violations in the future (Gandz and Hayes, 1988; Glenn, 1992; Sims and Sims, 1991). However, some have argued against the teaching of business ethics in business school. McDonald and Donleavy (1995) summed up several of these arguments by highlighting the potential for business ethics courses to be merely a palliative response to business scandals. In addition, they state that some regard business ethics as non-empirical and unscientific with no place in the curriculum of business schools. Finally, McDonald and Donleavy argue that the teaching of business ethics will be viewed as hypocrisy if and when students leave the academic setting and enter the business world only to commit corporate crimes. In other words, the teaching of business ethics would turn into a “how-to” course. Opposition aside, business ethics courses have the very real potential to positively influence ethical business conduct by providing students with the proper tools to address ethical dilemmas. For example, to help business students and businesspeople make the right ethical choices, Weber (2012) outlined the seven steps necessary to complete an ethical decision-making process. According to Weber, decision-makers must: (1) identify the ethical dimensions embedded in the problem; (2) collect relevant information; (3) evaluate the information according to ethical guidelines; (4) consider possible alternatives; (5) make a decision; (6) implement the decision; and (7) review the action and modify things if necessary. Weber also maintains that one of the strengths of this seven-step process is transparency, as it forces the decision-maker to evaluate their own thoughts and desired course of action, while allowing outsiders to have an influence on the decision-making process.

Peer influence Workplace peers can have a profound impact upon an individual’s attitudes and behaviors while on the job. In particular, the extent to which employees share perceptions of the unethical nature of certain types of conduct can have an influence on their decision to refrain from engaging in 461

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the unethical conduct (Bateman et al., 2013). In addition, employees tend to be more attracted to leaders whom they perceive to have highly ethical decision-making processes and who engage in more ethical behavior (Jordan et al., 2013). While businesspeople do not necessarily shun their peers who have made unethical choices, they do expect them to do what they can to fix their mistakes (Gromet and Okimoto, 2014). In essence, workplace peers can serve as handlers (Tillyer and Eck, 2011) of potential ethics violators by pulling the levers that are most likely to induce ethically positive conduct. Employees in the workplace can also influence their peers’ behavior by modeling ethical behavior, serving as a reference for ethically positive action, and helping to create an environment supportive of ethical conduct and decision-making (Deshpande and Joseph, 2009; Westerman et al., 2007). When peers are exhibiting ethically positive conduct, it is more likely that an ethical culture will permeate the business, which will influence the ethical decisions made by other employees. However, employees who are detached from their peers or who tend to be loners within the business are not likely to feel the same degree of ethical influence as employees who are invested in workplace peers.

Corporate factors Profitability is one of the most important goals of any corporation, and it is one factor commonly associated with unethical and abusive corporate practices. In particular, corporate crimes have been associated with the drive to increase financial performance by taking advantage of opportunities to rig competitive bidding processes (Geis, 1970), keep competitors out of the market, and avoiding increased costs of operations by skirting environmental laws (Walters and Martin, 2014). But research on the connection between ethically positive corporate conduct and positive financial performance suggests that when companies make positive ethical and social choices they realize greater financial performance as well (Orlitzky, 2012). The concept of a triple bottom line emphasizes the need for corporations to look beyond the financial bottom line toward a more comprehensive focus upon issues important to the larger global community (Orlitzky and Erakovic, 2012). When profits become just one part of the equation used to determine corporate success, managers and executives begin to understand how financial performance is linked to other areas of corporate performance. Increasing the importance of the role of social and ethical issues in the performance metrics used to evaluate corporations is likely to lead to changes in the way corporations evaluate their managers. While drastic changes in the performance metrics should not be expected, an increased focus on how ethically positive conduct influences corporate financial performance should lead to a greater use of ethical decision-making processes by corporate managers and executives.

Conclusion Abusive and unethical corporate behavior is the result of unethical decision-making processes exercised by corporate actors. Business ethics, whether formalized in laws, rules, or regulations, or informally enforced through peers and corporate polices, has the potential to prevent abusive corporate behavior by influencing the decision-making process. Business ethics is no panacea and its effectiveness will vary by individual decision-maker, yet it offers a means for government regulators, non-governmental agencies, corporations, business schools, and businesspeople to materially affect abusive behavior within the marketplace. By serving as a guidepost for conduct that ought to occur during the normal course of business, ethical principles have the ability to ensure that everyone knows the rules and is held accountable to them. Finally, the greatest potential impact 462

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of business ethics with regard to the prevention of abusive and unethical corporate behavior is its influence on decision-making when ethical ambiguity exists. Following an ethical decisionmaking process like Weber’s (2012) discussed earlier will help businesspeople to make decisions that have the most positive impact possible.

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33 Ag-gag laws and farming crimes against animals Doris Lin

To cover up its crimes against animals, agribusiness is trying to shut down undercover investigations through the passage of “ag-gag laws” that criminalize the making or distribution of undercover photos and videos. While factory farm cruelty often goes unnoticed and unprosecuted, the industry’s fears are not unwarranted. In 2008, an undercover investigation of a factory farm led to the first felony animal cruelty charges against factory farm employees for cruelty to birds. The investigation was conducted by People for the Ethical Treatment of Animals (PETA), using undercover video to expose workers who punched, threw, and stomped on the turkeys in their care. The PETA video was one of a growing number of undercover exposés of factory farm cruelty, although much of what laypeople would consider being “cruel” is legal under federal and state animal protection laws. Like other oppressions that are ingrained in our society, animal oppression is systemic and is protected by those in power. Animal cruelty laws at all levels of government work to protect factory farms and animal agriculture more than they protect animals.

What is factory farming? In the United States, approximately 10 billion land animals1 are raised and killed each year for food, and 55 billion are killed worldwide (Farm Animal Rights Movement 2014). These figures do not include animals killed by hunters, aquatic animals (such as fish, crabs, lobsters, and shrimp) or animals who are incidentally killed (such as wildlife killed by farmers via pesticides, traps or displacement). The vast majority of the animals farmed in the US are raised in factory farms. The industry prefers the term “concentrated animal feeding operation,” or “CAFO.” Some consider the family farm to be the opposite of a CAFO, but a CAFO is not defined by whether it is owned by a corporation. While individual states have different definitions of CAFOs for regulatory purposes, the US Environmental Protection Agency (EPA) has its own definition. According to the EPA, an animal feeding operation (AFO) is one that confines animals for at least 45 days during a 12-month period and there is no grass or other vegetation in the confinement area during the normal growing season. A CAFO is an AFO that has a certain number of animals and/or pollutes surface water, or is a “significant contributor of pollutants” (EPA 2014). 466

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The purpose of factory farming is not cruelty but efficiency. In order to feed a growing human population and meet a growing demand for animal products, scientists have developed more efficient methods to produce meat, eggs, and milk. A confined animal needs less room, less food, and less water. An unconfined animal needs calories to run around, and an animal who eats grass gains weight more slowly than one eating processed livestock feed made from grains. While the EPA definition of a CAFO is silent on the size of the confinement area, extreme confinement is one of the main animal welfare concerns. Calves raised for veal are often chained by the neck and kept in veal crates, individual cages that are barely larger than the animal’s body. Most egg-laying hens raised in the United States are kept in battery cages that are typically 18 inches deep by 20 inches wide, with up to 11 birds in one cage. (Lin 2014). Each bird has an area smaller than half of a standard 8.5 x 11-inch sheet of paper. Breeding sows are kept in gestation crates (during pregnancy) and farrowing crates (while nursing their young) that are so small that the sows are effectively immobilized. This confinement cycle continues throughout their peak reproductive years (ASPCA 2014). The industry claims that the sows must be restrained so that they do not accidentally crush their piglets, even though uncaged sows do not crush their piglets. Ninety-seven percent of the cows raised for beef in the US are raised in feedlots – crowded outdoor pens, where the animals walk around in their own muddy filth and disease spreads easily. At dairy farms, females are kept in a cycle of pregnancy and birth in order to maximize their milk production. The calves are taken from their mothers who bellow and cry for their babies, and the excess calves are slaughtered as veal. Cows are slaughtered when they grow older and their milk production drops. Eight billion chickens are raised for meat each year in the US, mostly in crowded barns with thousands of birds in a single building. The stench of ammonia from their waste is hazardous to the animals as well as to the human workers. When the hens grow older and produce fewer eggs, they are slaughtered. At hatcheries that supply egg farms, male chicks are killed – often ground up alive or suffocated in plastic bags – because they are useless for egg production and are the wrong breed for meat. Pigs are often kept in group housing, in small indoor pens where the pigs sway back and forth, and chew the metal bars out of stress and boredom. Slamming piglets onto a concrete floor is a common way to dispose of unwanted runts. Many factory-farmed animals are also given growth hormones, antibiotics to prevent disease, and subtherapeutic doses of antibiotics which, for reasons unknown, cause the animals to gain weight faster. Cows and pigs have their tails cut off to prevent them from being bitten; baby chicks have their beaks cut off to prevent them from pecking each other; and piglets are castrated to prevent aggression, unintended breeding, and “boar taint” – an off flavor in the meat of intact male pigs (Diana 2012). All of these procedures are done without anesthesia. Factory farming is a volume business, and the animals are just commodities. A multitude of undercover videos have exposed legal and illegal animal cruelty at factory farms in recent years: •

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PETA’s 2008 undercover investigation of Aviagen revealed workers throwing turkeys, and led to the first felony indictments of factory farm workers of animal cruelty to birds (PETA 2009; Associated Press 2012). All three who were indicted pled guilty to misdemeanor animal cruelty charges. Scott Alvin White was sentenced to a year in jail and Edward Eric Gwinn was sentenced to six months’ home confinement (PETA 2009). Walter Lee Hambrick received a suspended sentence and probation (West Virginia v. Hambrick 2010a, West Virginia v. Hambrick 2010b). Mercy for Animals has conducted three undercover investigations of Butterball facilities in 2011, 2012, and 2014, documenting baby turkeys being sucked into a machine that grinds them up alive; workers kicking and stomping on turkeys; and birds being slammed into transport crates. The 2011 investigation led to rare animal cruelty convictions of five workers 467

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(Mercy for Animals 2014). A veterinarian from the North Carolina Department of Agriculture tipped off Butterball about the impending raid by law enforcement, and pled guilty to obstruction of justice (ibid.). When it was discovered that the veterinarian had tipped off Butterball, the State Agriculture Commissioner defended her, claiming she called Butterball because she was concerned about the animals (WRAL 2012a). In 2013, Compassion Over Killing filmed workers at Quanah Cattle Co. in Colorado violently dragging, kicking, and throwing newborn calves who had just been taken from their mothers. Three employees pled guilty to animal cruelty charges (Compassion Over Killing 2014). The Weld County Sheriff charged the investigator, Taylor Radig, with animal cruelty, claiming that the “failure to report the alleged animal abuses” amounted to animal cruelty (Potter 2013c; Cook 2013). Charges against Radig were eventually dropped (Potter 2014).

These examples led to criminal charges filed against the farm workers, but more common repercussions are workers being fired, stores and restaurants dropping the farm or supplier, or none at all. Undercover videos reveal just a small sample of the horrors that happen on factory farms every day to billions of animals.

Why should animals be entitled to moral consideration? Many who criticize the legal and moral crimes against poor, working-class people don’t think twice about the exploitation of animals. Many would even say that animals are not entitled to any kinds of rights or moral consideration. While critics often argue that rights holding should be based on duties, intelligence, or species, animal rights advocates believe that rights holding should be based on sentience. Sentience is the ability to suffer – to feel pain. Seventeenth-century French philosopher René Descartes believed that animals, like machines, had no feelings and reacted to pain with instinct, without thought or suffering. Descartes argued this position to defend vivisection during his time, and while vivisection continues today, few would say that animals do not feel pain. For those who need scientific proof, in 2012, an international panel of neuroscientists at the First Annual Francis Crick Memorial Conference signed the Cambridge Declaration on Consciousness, stating that non-human animals have consciousness. The Declaration states in part, “[T]he weight of evidence indicates that humans are not unique in possessing the neurological substrates that generate consciousness. Nonhuman animals, including all mammals and birds, and many other creatures, including octopuses, also possess these neurological substrates” (Low 2012). Sentience is the best criteria for rights holding because those who can suffer should be protected from suffering unduly. Duties are inappropriate criteria for rights holding because people who have no duties to others, such as infants or those with severe disabilities, still have a right to be free of exploitation. Furthermore, some would argue that animals do have a duty not to harm human beings or our property because animals who fail to carry out that duty are punished severely – dogs who bite people are often killed, along with deer who eat a farmer’s crops, or mice who venture into our homes. Intelligence is not an appropriate criterion for rights holding because there is no reason for more intelligent people to have more rights than less intelligent people. We don’t have intelligence tests to determine which people may be eaten by others. There is also the problem of the definition of “intelligence.” If intelligence were determined by the ability to navigate across continents without tools, or the ability to use echolocation, humans would fail miserably. 468

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Both duties and intelligence thus appear to be smokescreens for the real criteria that most people use for determining rights: species. Our society and its laws recognize rights based almost purely on species, but doing so is speciesist. Like racism and sexism, speciesism is the disparate treatment of individuals based on their species. It is also speciesist for people to treat dogs and cats better than cows and pigs. Animal rights advocates reject speciesism because it leads to the exploitation and oppression of sentient beings for no reason other than their species. Animal rights is the principle that animals should be able to live free of human use and exploitation, and veganism is the practice of avoiding animal exploitation as much as possible. However, even if people don’t believe that animals have the right to be completely free of exploitation, many recognize that animals are sentient, and believe that the animals shouldn’t suffer too much. The belief that people have a right to use animals but that suffering should be minimized is the animal welfare position. A 2010 survey found that over 75 percent of those surveyed somewhat disagreed or strongly disagreed with the statement, “Low meat prices are more important than the well-being of farm animals” (Prickett et al. 2010).

Factory farming crimes Factory farming is a moral crime against animals, but unfortunately farmed animals have few legal protections. For animal rights advocates, any use or exploitation of animals is a moral crime. Giving them bigger cages does not cure the crime of exploiting them in the first place, which is why animal rights advocates choose veganism. However, one does not need to be vegan to know that factory farms are extremely cruel to animals. People are often shocked to learn what goes on at factory farms, which is why undercover videos are so effective. The conditions are so horrible that many are prone to believe that animal advocates must be exaggerating. Legal protections for farmed animals are practically non-existent. No federal law addresses how farmed animals are raised, and the two federal humane laws for farmed animals do not apply to chickens, which make up the vast majority of animals raised for food: •

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The federal Animal Welfare Act (“AWA”), 7 U.S.C. §2131, does not apply to farmed animals at all. The AWA empowers the USDA to establish minimum requirements for veterinary care, housing, food, and water for animals in certain industries, such as research labs, puppy mills, and circuses; but explicitly exempts animals raised for food. The federal Humane Slaughter Act, 7 U.S.C. §1901, addresses only how the animals are slaughtered, but does not regulate how the animals are raised. Like the Animal Welfare Act, the Humane Slaughter Act does not provide detailed standards, but instead authorizes the USDA to establish regulations. The USDA has decided that the Humane Slaughter Act does not apply to birds, which make up the vast majority of animals slaughtered for food in the US. For cows, pigs, sheep, and other animals, the slaughter is humane if the animal is rendered unconscious “by a single blow or gunshot or an electrical, chemical or other means that is rapid and effective, before being shackled, hoisted, thrown, cast, or cut.” The 28 Hour Law, 49 U.S.C. §80502, was passed in 1873, and has been called “the nation’s first federal humane law” (Animal Law Coalition 2007). The law requires that animals being transported must be unloaded into pens and given a five-hour break for feeding, water, and rest every 28 hours. The law has numerous exceptions. Like the Humane Slaughter Act, the 28 Hour Law does not regulate how the animals are raised, and has been interpreted by the USDA to exempt chickens from its protection. 469

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Most state animal cruelty laws exempt animals raised for food and common factory farm practices. At least two states, Iowa (Iowa Code Ann. §717B.1) and Utah (Utah Code Ann. §76-9301. (1)(b)(ii)(C)), exempt farmed animals completely from their animal cruelty statutes. In some states, farmed animals are not excluded from anti-cruelty laws, but normal agricultural activities are excluded. Pennsylvania exempts activities that are part of a “normal agricultural operation” (18 Pa.C.S.A. §5511), and Texas exempts activities that are “generally accepted and otherwise lawful . . . animal husbandry or agriculture practice involving livestock animals” (TX Penal Code Sec. 42.09(f)(2)). The distinction is an important one. A calf in Iowa is not protected by the state’s animal cruelty statute, regardless of how cruel or unusual the abuse. A calf in Pennsylvania would be subjected to normal agricultural practices like being chained in a veal crate, but it would be a crime to punch, kick, or torture the animal outside of normal farming practices. A few states, like Minnesota, have no exemptions for livestock or farming practices (Minn. Stat. §343.20), although, in reality, it is clear that ordinary farming practices are not prosecuted as animal cruelty. In 2013, an undercover video by Mercy for Animals revealed piglets being slammed onto a concrete floor, castration and tail docking without anesthesia, and confinement in gestation crates at Pipestone System’s Rosewood Farm in Minnesota, but the county attorney reviewed the video and found no grounds for animal cruelty charges (Hudson 2013).

Government and animal agriculture Philosopher Noam Chomsky once wrote, “It . . . illustrates the moral calculus of contemporary Anglo-American state capitalism: the fate of our grandchildren counts as nothing when compared with the imperative of higher profits tomorrow” (Chomsky 2014). Chomsky was writing about the US government’s policies that protect corporate profits while ignoring climate change, and the statement applies here as well. US food policies favor meat and dairy industry profits over public health, animal welfare, and the environment. Animal agriculture is a powerful industry that has high-paid lobbyists who influence legislation and policy, and are much too cozy with the agencies that are supposed to regulate them, often to the detriment of the American public. The USDA’s mission is to “provide leadership on food, agriculture, natural resources, rural development, nutrition, and related issues based on sound public policy, the best available science, and efficient management” (USDA 2014). Unfortunately, the interests of agriculture often conflict with those of the public. Just a few examples of the policies and laws that favor agribusiness over animals, the environment, and the public include the following: •

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USDA’s MyPlate: The US Department of Agriculture’s (“USDA”) MyPlate features a blue circle labeled “Dairy,” and recommends three cups of milk per day for adults (USDA 2014). However, the Harvard School of Public Health and Harvard Medical School (“Harvard”) developed its own “Healthy Eating Plate” that places a glass of water next to the plate. HSPH finds that dairy is “not essential for adults” and recommends limiting dairy products to one to two servings per day. In explaining the differences between their recommendations and those of the USDA, Harvard Medical School states on its website, “The Healthy Eating Plate was created by experts at Harvard School of Public Health and Harvard Medical School. It is based exclusively on the best available science and was not subjected to political and commercial pressures from food industry lobbyists” (Harvard Medical School 2011a). Not only is milk not essential for adults; Harvard states that “high intakes are associated with increased risk of prostate cancer and possibly ovarian cancer” (Harvard Medical School 2011b).2

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Dietary Guidelines: The problem is not just lobbyists, but also a mixing of industry and government. The federal Dietary Guidelines are published every five years by the Secretary of the USDA and the Secretary of the Department of Health and Human Services (U.S. Department of Health and Human Services 2014). The Dietary Guidelines Advisory Committee (“Committee”) is charged with reviewing the scientific and medical literature and making recommendations for the next Dietary Guidelines (U.S. Department of Health and Human Services 2014), but there are serious concerns about the Committee’s impartiality. A study published in the Food and Drug Law Journal found that nine out of 13 members of the 2010 Committee had industry ties. Members of the 2000 Committee “had past or present ties to: two meat associations, four dairy associations and five dairy companies, one egg association, one sugar association, one grain association, five other food companies, six other industry-sponsored associations, two pharmaceutical associations, and 28 pharmaceutical companies” (Herman 2010, pp. 295–296, citations omitted). Subsidies: The USDA recommends eating more fruits and vegetables, but categorizes fruits and vegetables as “specialty crops” that qualify for indirect government support (such as crop insurance, disaster assistance, and research and promotion programs) but are ineligible for direct subsidies (Simon 2013, p.79; National Agricultural Law Center 2014). Instead, the biggest government handouts go to the meat and dairy industries, which receive US$38.4 billion annually, nearly two-thirds of all agricultural subsidies. Less than 2 percent goes toward fruits and vegetables (Simon 2013, p. 79); the rest goes toward nuts, legumes, sugar, starch, oil, alcohol, and grains (Physicians Committee for Responsible Medicine 2014). National School Lunch Program: The USDA’s National School Lunch Program provides free and low-cost lunches to 31 million children on every school day (National School Lunch Program 2013). Participating schools must provide lunches that meet the Dietary Guidelines, the same Dietary Guidelines that are influenced by industry professionals, and then get reimbursed by USDA. The fact that these meat and dairy-heavy handouts make it difficult for schools to plan meals that are low in fat is apparently not the USDA’s concern. Each year, the USDA directly buys US$800 million of surplus agricultural products that are distributed to schools for school lunches, and makes special purchases. In 2001, when the beef industry complained about their declining sales to Agriculture Secretary Ann Veneman, the USDA “responded two months later with a $30 million ‘bonus buy’ of frozen beef roasts and ground beef for schools” (Yeoman 2003). In a more recent example, members of Congress who had Chobani Greek yogurt plants in their districts pressured USDA to rush to approve Greek yogurt for school lunches. The approval process is notoriously slow and can take years, but with lobbyists, US senators and representatives pushing it along, Greek yogurt was approved within eight months. It took a decade for tofu to be approved (Warren 2013). Livestock grazing: Pursuant to federal laws passed by Congress, US taxpayers are subsidizing the grazing of privately owned livestock on public lands. Under the Taylor Grazing Act of 1934, 43 U.S.C. § 315, the federal Bureau of Land Management (“BLM”) grants grazing permits to private ranchers to graze their livestock on federally owned lands. The grazing fees are set according to a formula in the Public Rangelands Improvement Act of 1978, 43 U.S.C. §1901 (BLM 2014). A 2005 General Accounting Office report found that in fiscal year 2014 the BLM and Forest Service spent approximately US$132.5 million on direct, indirect, and range improvement activities for grazing programs, but collected only US$17.5 million in grazing fees (Hudak 2007, pp.347–48). Agricultural runoff: Even the Environmental Protection Agency sometimes looks the other way when it comes to factory farms, despite their own studies showing that agricultural 471

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runoff is the leading cause of impaired water quality. Factory farms produce between 500 million and 1 billion tons of manure – three times the amount produced by humans. In 2012, the agency withdrew a proposed rule that would have required more factory farms to have pollution discharge permits. In 2013, the EPA abandoned plans to issue new regulations on feedlot discharges (New York Times 2013). Methane: Neither is the White House immune to the charms of lobbyists; in March 2014, the Obama administration announced their strategy to cut methane emissions, but steps to reduce methane in the dairy industry will be voluntary. The plan was developed in partnership with the dairy industry, the UDSA, EPA, and Department of Energy (White House 2014). Methane comprises only 9 percent of the country’s greenhouse gas emissions, but it is 20 times more potent than carbon dioxide. Methane is released into the atmosphere by landfills, cattle, and oil and natural gas production. The EPA states on their website, “Globally, livestock are the largest source of methane from human-related activities – and in the U.S., the third largest source” (EPA 2006). The Natural Resources Defense Council notes that whether the problem is manure lagoons or methane gas, factory farms “have largely escaped pollution regulations; loopholes in the law and weak enforcement share the blame” (Natural Resources Defense Council 2013).

One may wonder why the fruit and vegetable farmers do not have a similarly powerful lobby. David Simon (2013), author of Meatonomics, answered this question in an August 28, 2014 Facebook message: First, in the past four decades, the meat and dairy producers have had to respond to an avalanche of public concerns about health, environmental and ethical problems with their products. Fruit and vegetable growers have not been faced with similar criticism and thus have not had to develop the same kind of defensive infrastructure for legislative and administrative influence. Second, the amounts of money involved in meat and dairy sales are larger than in fruit and vegetables sales, and this drives more spending in influence.3 The questionable ties between government and industry also exist at the state and local levels. As discussed earlier, state animal cruelty laws exempt livestock and common factory farm practices, no matter how cruel. State and local prosecutors, like the prosecutor in the Minnesota pig farm example, decline to enforce animal cruelty laws against factory farms, even when the law, as written, protects animals. Unlike the USDA’s mission that includes nutrition and natural resources, state agricultural departments are more blatant about their promotion of agribusiness. For instance, the mission statement of the Kansas Department of Agriculture says nothing about nutrition or conserving natural resources (Kansas Department of Agriculture 2014a). The same agency also professes their “total support” of agriculture on their website: The Kansas Department of Agriculture is the state agency devoted to the total support of agriculture in Kansas. The department works for the entire Kansas agriculture sector, including farmers, ranchers, food establishments and agribusinesses. The department is dedicated to providing support and assistance to make Kansas businesses successful and encouraging more farms, ranches and other agriculture business to expand in or relocate to Kansas. (Kansas Department of Agriculture 2014b)4 The same state agencies are often charged with inspecting farms but their focus is on human health, not animal welfare. If disease spreads among the animals on a farm, the agencies are 472

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concerned with lost profits and whether the products are safe for human consumption, not the welfare of the animals. In one extreme example already identified, a veterinarian for the North Carolina Department of Agriculture tipped off Butterball about an impending law enforcement raid after a Mercy for Animals undercover investigation revealed workers kicking and stomping on turkeys in 2011. Dr. Sarah Mason initially denied calling the veterinarian at Butterball (Galli 2012) who told investigators that she had tipped him off (WRAL 2012a). Mason then changed her story and claimed that she called because she was concerned about the animals, and not to tip off Butterball. The state’s agriculture commissioner, Steve Troxler, called Mason’s actions “pretty reasonable” (WRAL 2012a). Mason pled guilty to misdemeanor obstruction of justice and resisting, delaying or obstructing officers, and received a suspended sentence (WRAL 2012b). While criminal activity by government officials is unusual, the agencies’ and prosecutors’ legal actions in support of agribusiness are disturbing enough. These are not agencies that can be trusted to advocate for public health or animal welfare.

Ag-gag laws The latest twist in a long line of laws and policies that protect agribusiness are “ag-gag” laws that criminalize undercover investigations of animal agriculture facilities. The term “ag-gag” was coined by Mark Bittman in 2011 to describe the bills being introduced in an increasing number of states as a reaction to undercover investigations of factory farms (Lin 2012a). Instead of addressing the cruel conditions on factory farms, these state governments would rather criminalize those who expose the cruelty. Ag-gag laws are dangerous because they threaten animal welfare, food safety, environmental protection, labor issues, free speech, and freedom of the press. The laws apply equally to journalists, animal activists, whistleblowers, and employees. By criminalizing undercover investigations, ag-gag laws make it difficult to expose any kind of wrongdoing, including animal cruelty, environmental violations, labor violations, safety violations, or other illegal activity. The laws also violate free speech and freedom of the press when they unconstitutionally restrict what may be photographed and recorded. A failed ag-gag bill in Minnesota would have violated free speech rights and freedom of the press by criminalizing the broadcast of undercover videos. An early version of a bill in Florida would have prohibited any unauthorized photo or video of a farm, even from a public street, which would be a clear free speech violation (Lin 2012a). Will Potter, journalist and author of “Green Is The New Red: An Insider’s Account of a Social Movement Under Siege,” points out: There’s a long history of investigative journalism in this country based on exactly the type of research and whistleblowing that these laws criminalize. What if Upton Sinclair’s The Jungle were released today, accompanied by a YouTube video? He would undoubtedly be prosecuted under ag-gag. (Potter 2013b) Regarding a lawsuit filed by the Animal Legal Defense Fund and other public interest groups challenging one ag-gag law, Professor Erwin Chemerinsky, Dean at the University of California, Irvine School of Law, stated: The Idaho law is deeply distressing because it is aimed entirely at protecting an industry, especially in its worst practices that endanger people, at the expense of freedom of speech. 473

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It even would criminalize a whistle-blower who took a picture or video of wrongdoing in the workplace . . . I am confident that this law will be struck down under Ninth Circuit and Supreme Court precedents. (Animal Legal Defense Fund 2014)5 Ag-gag laws criminalize undercover investigations by prohibiting one or more of three types of behavior: trespass, recording of videos, and failure to submit a video to law enforcement. The problem with laws that criminalize entry or employment based on false pretenses or trespass at an agricultural facility is that there are already laws against trespass. Singling out animal activists and undercover reporters for additional charges and penalties criminalizes undercover investigations. Prohibiting the recording of photos and videos similarly criminalizes undercover investigations, and also stops employees recording illegal or unsafe conditions in their workplace. Requiring animal activists and employees to turn over recordings of animal cruelty within 24 or 48 hours may seem innocuous or even helpful, but in reality it puts a halt to the investigation because the employee will be fired or at least prevented from making further recordings. Undercover investigations usually take place over the course of several weeks or months. Documenting a pattern of behavior takes more than 24 or 48 hours. The first two people charged with ag-gag-type violations in the United States both had their charges dropped. In February 2013, Amy Meyer went to the Dale Smith Meatpacking Company in Draper City, Utah. The state had adopted its ag-gag law the year before, making it a crime to take photos or videos of agricultural facilities while trespassing. While Meyer stood on the public easement, she noticed a live cow who could not stand, and a worker was attempting to move the cow with a piece of machinery. Meyer shot a video of the cow, and was charged under the state’s ag-gag law, even though she had not been trespassing (Potter 2013a). Within 24 hours of Will Potter reporting online about Meyer’s charges, prosecutors dropped all charges against Meyer (Potter 2013a). The second person charged with an ag-gag-type offense was an undercover investigator for Compassion Over Killing, after she exposed animal cruelty at Quanah Cattle Co. in Colorado in November 2013. Colorado had no ag-gag law then or now, but prosecutors still charged Taylor Radig with animal cruelty for failing to turn the video over to the authorities sooner. Radig was also accused of participating in the abuse herself, but all charges were dropped (Potter 2013c). Although the state had no ag-gag law, the prosecutor charged Radig as if the state had a law requiring people to promptly turn over videos of animal abuse. The nation’s first three ag-gag laws – Kansas, Montana, and North Dakota – are over 20 years old (Lin 2012b). As of August 2014, eight states have ag-gag laws: •

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Kansas (Kan. Stat. Ann. 47-1825): Kansas was the first state to pass an ag-gag law in the United States. The Farm Animal and Field Crop and Research Facilities Protection Act was passed in 1990, and made it a crime to “enter an animal facility to take pictures by photograph, video camera or by any other means” without the owner’s consent and with the intention to damage the enterprise. Montana (Mont. Code Ann. 81-30-101): The Farm Animal and Research Facilities Protection Act was passed in 1991, and makes it a crime to enter an animal facility to take pictures or video “with the intent to commit criminal defamation” without the consent of the owner. Defamation is a false and malicious statement that injures a person’s character, fame, or reputation. Because the purpose of undercover investigations is to expose the truth and not to make false statements, this law should not be used against animal advocates, at least in theory.

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North Dakota (N.D. Cent. Code §12.1-21.1): The Animal Facility Damage Act was passed in 1991 and prohibits entering an animal facility and using or attempting to use video or audio recording equipment without the owner’s consent. Unlike the Kansas and Montana laws, the North Dakota law does not have an intent requirement, and is therefore broader than the other two statutes. Iowa (Iowa Code §717A.3A): In 2012, Iowa was the first state to pass an ag-gag law in over 20 years. The crime of “agriculture production facility fraud” makes it illegal to gain entry at an agricultural facility by false pretenses, or makes a false representation to gain employment at an agricultural facility with the intent to commit an act not authorized by the owner. The Iowa law does not explicitly mention audio recording, photography, or videography. Utah (Utah Code Ann. §76-6-111): Utah passed their ag-gag law in 2012, and created the crime of “agricultural operation interference.” The law makes it illegal to obtain access or employment under false pretenses or trespass at an agricultural operation and record images or sound without the owner’s consent. The Utah law is currently the subject of a lawsuit filed by several plaintiffs, including the Animal Legal Defense Fund, People for the Ethical Treatment of Animals, journalist Will Potter, and Amy Meyer, the first person charged with an ag-gag offense in the United States. South Carolina (S.C. Code Ann §47-21-10): In 2012, South Carolina criminalized unlawful damage, unlawful entry, concealed presence, or trespass at an animal facility with the intent to disrupt or damage the enterprise. Like the Iowa law, the South Carolina law does not explicitly mention any type of sound or video recording. Missouri (Mo. Rev. Stat. §578.013): Missouri requires farm employees to turn over all recordings of suspected animal abuse or neglect to a law enforcement agency within 24 hours of the recording. Passed in 2012, the law prohibits editing the recording prior to submission. Idaho (Idaho Code §18-7042): Idaho’s ag-gag law was passed in February 2014, and is currently the subject of a lawsuit filed by several nonprofit organizations, including the Animal Legal Defense Fund, People for the Ethical Treatment of Animals, the American Civil Liberties Union of Idaho, and the Center of Food Safety (Animal Legal Defense Fund 2014). The Idaho statute creates the crime of interference with agricultural production, which is obtaining employment or entry into an agricultural production facility through force or misrepresentation, or the making of an audio or video recording of an agricultural production facility without the owner’s permission.

Solutions to factory farming? In seeking to avoid factory farm cruelty, some consumers are looking to grass-fed beef, cage-free eggs, organic chicken, and other supposedly humane animal products. However, there are environmental as well as animal welfare problems with humane animal products. There is an inherent inefficiency of animal agriculture because it takes 15 pounds of feed to make a pound of beef, six pounds of feed to make a pound of pork, and five pounds of feed to make a pound of chicken (Weise 2009). Instead of giving processed feed made from corn and soy to animals, we could feed people directly. But even with these inefficiencies, factory farming is the most efficient way to raise and slaughter 10 billion animals a year in the United States. Confining the animals so that they don’t expend energy moving around is efficient. Feeding the animals processed feed is efficient because they reach slaughter weight faster than if they ate grass. Giving them room to roam is not possible; there simply is not enough room. Only 3 percent of the country’s cattle raised for beef is grass-fed, and we already have too many cows grazing on public lands, displacing wild horses and other wildlife, and causing predators to be killed. 475

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Humane farming cannot be the answer because it would be even worse for the environment than factory farming and there is not enough land. From an animal welfare perspective, animals raised on “humane” farms still suffer and die. Male chicks are killed at the hatchery because they will not grow up to lay eggs. Calves are still taken from their mothers and turned into veal. Chickens in cage-free facilities are often kept in crowded barns. Animals are slaughtered as soon as they reach slaughter weight or when their milk or egg production drops. If one believes that animals are sentient and have rights, one must choose veganism. Regardless of how much room the animals have, or whether anesthesia is used when they are debeaked or castrated, using them for our own purposes violates their rights. Even if one does not support animal rights, ag-gag laws are objectionable because they allow an industry to operate in secrecy and punish those who expose wrongdoing. As undercover investigations expose animal cruelty, the government that is supposed to enforce animal cruelty laws, protect the environment, and make sound nutritional recommendations based on science instead works hand in hand with the industry, protecting corporate profits with policies and legislation that allow factory farms to operate with impunity. Ag-gag laws are just the latest in a long line of laws and policies that puts profits above people, animals, and the environment. Disclaimer: This chapter is not legal advice and is not a substitute for legal advice. For legal advice, please consult an attorney.

Notes 1 While human beings are members of the animal kingdom, the meaning of the word “animal” in common usage does not include human beings. In keeping with the common usage, the word “animal” does not include human beings unless otherwise noted. 2 Thanks to Harvard Health Publications and Harvard Medical School for their kind permission to reproduce this text in this chapter. 3 Thanks to David Simon for his kind permission to reproduce his quote in this chapter. 4 Thanks to the Kansas Department of Agriculture for their kind permission to reproduce this text in this chapter. 5 Thanks to Edwin Chereminsky and the Animal League Defense Fund for their kind permission to reproduce this text in this chapter.

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Physicians Committee for Responsible Medicine (2014) Agriculture and Health Policies in Conflict. Available at: www.pcrm.org/health/reports/agriculture-and-health-policies-intro (accessed August 27, 2014). Potter, W. (2013a) First “Ag-Gag” Prosecution: Utah Woman Filmed a Slaughterhouse from a Public Street, April 29. Available at: www.greenisthenewred.com/blog/first-ag-gag-arrest-utah-amy-meyer/6948/ (accessed August 30, 2014). Potter, W. (2013b) Ag-Gag Lawsuit Challenges Corporate Attempts to Criminalize Free Speech and Journalism, July 21. Available at: www.greenisthenewred.com/blog/utah-ag-gag-lawsuit-filed/7197/ (accessed August 30, 2014). Potter, W. (2013c) BREAKING: Undercover Investigator Charged With Animal Cruelty for Videotaping Farm Abuse, November 22. Available at: www.greenisthenewred.com/blog/colorado-cok-investigationtaylor-radig/7403/ (accessed August 26, 2014). Potter, W. (2014) BREAKING: Charges Dropped Against Investigator Who Filmed Animal Cruelty, January 11. Available at: www.greenisthenewred.com/blog/taylor-radig-charges-dropped/7492/ (accessed August 26, 2014). Prickett, R.W., Norwood, F., Bailey and Lusk, J.L. (2010) Consumer Preferences for Farm Animal Welfare: Results from a Telephone Survey of US Households. Animal Welfare, 19-355-357. Available at: www. asp.okstate.edu/baileynorwood/misc1/Mexico/Prickett.pdf (accessed August 20, 2014). Simon, D. (2013) Meatonomics. San Francisco, CA; Conari Press. USDA (2014) How Much Food from the Dairy Group Is Needed Daily? Available at: www.choosemyplate. gov/food-groups/dairy-amount.html (accessed August 27, 2014). Warren, J. (2013) Chobani Yogurt May Land Sweet School Deal with $11 Billion Federal Lunch Program, New York Daily News, July 21. Available at: www.nydailynews.com/news/national/chobani-yogurtland-spot-11b-federal-lunches-article-1.1404907 (accessed August 31, 2014). Weise, E. (2009) Eating Can Be Energy-efficient, Too, April 21. Available at: www.usatoday30.usatoday. com/news/nation/environment/2009-04-21-carbon-diet_N.htm (accessed August 30, 2014). West Virginia v. Hambrick (2010a) Sentencing Order, Criminal Action No. 09-F-20(R), Circuit Court of Breenbrier County, WV, March 15. West Virginia v. Hambrick (2010b) Sentencing Order, Criminal Action No. 09-F-48, Circuit Court of Monroe County, WV, May 3. White House (2014) FACT SHEET: Climate Action Plan – Strategy to Cut Methane Emissions, March 28. Available at: www.whitehouse.gov/the-press-office/2014/03/28/fact-sheet-climate-action-plan-strategycut-methane-emissions (accessed August 30, 2014). WRAL (2012a) Ag Commissioner Supports Vet Accused of Tipping off Butterball, January 19. Available at: www.wral.com/business/story/10621488/ (accessed August 26, 2014). WRAL (2012b) State Official Pleads Guilty in Butterball Farm Raid Leak’, February 15, updated February 16. Available at: www.wral.com/business/story/10733774/ (accessed August 30, 2014). Yeoman, B. (January/February 2003) Unhappy Meals, Mother Jones, January/February. Available at: www.motherjones.com/politics/2003/01/unhappy-meals (accessed August 30, 2014).

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34 Genocide and controlling the crimes of the powerful Augustine Brannigan

Introduction: the idea of cosmopolitan justice Consensus over the definition and measurement of elite crime has arrived slowly in criminology compared to the prolific theoretical and methodological literature on street crime. The associated correctional and criminal justice literature on garden-variety offenses has pointed the way to avenues of crime reduction. By contrast, the suppression of elite crime has proven extremely difficult not only for national justice but also for international justice. There has been some progress in the articulation of an effective rule of law in such areas as war crimes, crimes against humanity and genocide. More specifically, there has been a growing confidence about how to define such crimes according to sound standards of jurisprudence in the ad hoc International Tribunals for the Former Yugoslavia (1993) and Rwanda (1994), and the subsequent International Criminal Court (2002). In this chapter, we analyze how successive generations of jurists have pursued Immanuel Kant’s 1795 vision of a “cosmopolitan justice.” This was conceived of as a system of law that would transcend national justice aimed at ordinary offenders, and alternatively would hold political and military elites personally accountable for criminal acts committed by states against their neighbors and by political elites against their own citizens (Höffe 2006). In what follows, I will describe the leading twentieth-century efforts to hold warmongers accountable for their crimes. This requires an examination of the legal outcomes of the First and Second World Wars. Initially, these were concerned with crimes within war, but were subsequently extended to other forms of atrocity, including genocide, and the crime of starting war. Second, we evaluate the effectiveness of the legal regimes created after the Second World War, and their performance during the Cold War. Finally we access the current state of the contemporary legal remedies designed to control crimes of the powerful, and the extent to which the international order has achieved cosmopolitan justice. Our story starts with the Great War (1914–1918) and outlines the halting shift from a regime of international relations characterized by sovereign immunity to a situation in which sovereigns became increasingly accountable for criminal misconduct.

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From sovereign immunity to criminal accountability The year 2014 is the centenary of the start of the Great War in Europe, one of the most brutal, pointless and ill-conceived military confrontations in modern times. Unlike the American Civil War (1861–1865) which was fought over the abolition of slavery, the Great War originated over a complicated diplomacy of face-saving, competing national aspirations for geo-political dominance in Europe and military brinksmanship. War was triggered by the assassination of AustriaHungary’s Archduke Ferdinand and his wife Sophia by Serbian militants in Sarajevo on June 28, 1914. The political ultimatum demanded by Austria-Hungary raised international tensions because it was simply impossible for Serbia to meet its terms. The Austro-Hungarians assumed that the leaders of Serbia were behind the assassination, and that Serbia was capable of apprehending and prosecuting the assassins without delay. Germany guaranteed the security of allies in Austria-Hungary in prosecuting their case against the Serbs. Germany gambled that the Russian assistance to its allies in Serbia could not be mobilized before the end of what was expected to be a brief military encounter. Arguing that its diplomatic demands had not been satisfied, AustriaHungary declared war on Serbia on July 28. On August 1, Germany declared war on Russia, and on August 3 on Russia’s ally France. Why France? France had been anxious to recover territory in Alsace and Lorraine lost to the newly united German state following military defeat in 1871. Renewed conflict could reclaim the lost provinces. When Germany invaded a neutral Belgium to occupy France on August 4, this triggered a British declaration of war against Germany. On August 17, Russia invaded East Prussia, and Austria-Hungary struck back at Galicia (Russian Poland) on August 23. In October, Turkey joined the Germany and Austria-Hungary alliance. This was one of the most phenomenal failures of diplomacy in modern European history. The focus of the war shifted to the Western front by early autumn when the Russians proved no match for the Axis powers in the East. A gridlock of endless miles of trenches appeared, swept with ongoing machine-gun and sniper fire. The largest howitzers and field artillery ever manufactured stripped every sign of agriculture and forest from the open landscape and turned medieval towns and villages into piles of rubble. The battlefields at Ypres, Vimy Ridge and Passchendaele were strewn with decaying and half-buried corpses. The countryside was turned into fields of shell craters filled with mud and human remains. Rats frequently overran trenches. In addition to murderous pounding by artillery shells and bullets, the troops faced poisonous gas attacks. As the stalemate mounted, nations poured increasingly more young men into the conflict. Eventually, the Allies began to prevail. On November 3, 1918, the German navy mutinied at Kiel and seized the city. The Kaiser abdicated his rule on November 9, and Germany became a republic overnight. An armistice was negotiated to end hostilities on November 11. What was the toll of the fighting and what was actually achieved? By the end of the war, the Allies had mobilized over 42 million personnel, and suffered over 52 percent casualties. These included over 5 million killed, nearly 13 million wounded and 4 million missing or taken prisoner. The Axis powers mobilized 22.85 million, and suffered casualties of 67 percent, including 3.4 million killed, 8.4 million wounded, and 3.6 million missing or taken prisoner (PBS 2014; Trueman 2014). Losses in specific nations were incomprehensible. The Russian army (12 million men) suffered 76 percent casualties, France (8.4 million men) 73 percent casualties, Austria (7.8 million) 90 percent, and Germany (11 million) 67 percent. What was achieved? The battles were fought mostly in France and Belgium, not in Germany. Germany was not occupied. It was not defeated as such. It signed an armistice to end hostilities (as did Austria and Turkey). Germany’s Weimar government was subsequently forced into a humiliating peace treaty at Versailles (1919) that set the stage for the mobilization of the subsequent Nazi dictatorship in Germany, and the renewal of hostilities in 1939. The peace arrangements in 1919 portended the first day of the Second World War. 480

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Allied authorities had planned during the war to indict the German Kaiser for his role in plunging the world into such a bloody and pointless catastrophe, and to charge German generals with war crimes. The day before the armistice, the Kaiser fled Germany for sanctuary in the Netherlands. Attempts to extract him to face criminal prosecution in an Allied country were rejected by the Netherlands on the basis of the age-old principle of sovereign immunity. What was that? When a previous generation of European warlords concluded the Thirty Year War in the Peace of Westphalia in 1648 they did so on the premise that the parties to the conflict were to be regarded as nations with distinct geographic boundaries, and were governed as autonomous states whose sovereigns were immune from international accountability for behavior within their own boundaries. Sovereigns could be tried by their own subjects in national courts, and could be summarily executed by a conquering sovereign. But the idea that a legitimate sovereign could be criminally indicted before the community of nations for making war against his or her neighbors, or for murdering his or her own subjects was not established in international law until the Nuremberg trials after the Second World War. And even that process was controversial. In the end, the Kaiser had to answer to no one for his role in initiating the First World War and the millions of lives that it had destroyed and injured.

The rule of law at Nuremberg The Nuremberg trials spanned the period from 1945 to 1949. The main trial, the International Military Tribunal, focused on the prosecution of senior German military leaders, senior ministers in the Nazi government and party leaders for, among other things, orchestrating the Second World War through the subjugation of Poland (1939) and most of Western Europe except England (1940). Six million European Jews were murdered during this period. In total there were over 25 million civilian casualties in Allied countries. Hitler, Himmler and Goebbels – leading Nazis – committed suicide before they could be apprehended. There were 11 further trials which dealt with a range of horrific misconduct under Nazi rule: forced medical experiments on and torture of concentration camp inmates, the recruitment of slave labor into munitions industries, trial of the officers of the mobile killing units, the einsatzgruppen, who conducted mass shootings of civilian Jews, Poles and POWs in Poland, Russia, the Baltic states and Ukraine under the cover of war, and the prosecution of senior industrialists and government officials who promoted aggressive war, orchestrated the theft of Jewish wealth, and the forced resettlement of the regime’s enemies. What may be surprising to many students of the war was that the charge of genocide was not available at Nuremberg, although the courts heard a great deal of evidence of the mass atrocities against European Jews. Genocide combines the Greek ‘geno’ (group or people) with the Latin ‘cide’ (murder), and was coined in 1943 by Polish lawyer, Raphael Lemkin, to express the extraordinarily evil of murder perpetuated against an entire human group. It appeared first in print in Axis Rule in Occupied Europe (1944). The legal instrument that defined the crime by international convention was negotiated after the war at the UN in 1948. Consequently, the Holocaust as such was not a focus of indictments for the Nuremberg prosecution in 1945. Even when endorsed by the UN, recognition of genocide was subject to adoption by member states at their discretion. For example, the US did not certify the convention until President Reagan signed the Proxmire Act in 1988. This delay was explained in part by the fact that the American Civil Rights Congress had petitioned the UN to have the lynching and murder of, and the segregation laws against US blacks, as well as cases of wrongful conviction, examined by the world body in a document entitled We Charge Genocide (1951). It remains a compelling read up until this day. The second important point in this context was the use of indictments for two new crimes. The Nuremberg court was the first to recognize the crime of “aggressive war” or “crimes against 481

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peace.” These were hostilities distinguished from war originating in self-defense that had always been deemed lawful. The second new crime was the commission of “crimes against humanity.” We shall deal with this later. The immediate problem of indicting sovereigns or persons acting under their delegated authority with a charge of planning and undertaking an aggressive war was that these activities had not been the basis of any prior, sound, international convention. Despite the principle of sovereign immunity, sovereigns can willingly surrender some of their autonomy to others for a mutual benefit through international agreement. Had they done so? The Nuremberg prosecution invoked Germany’s obligations under a treaty called the Pact of Paris or the Kellogg– Briand Pact. Under the pact, nations had agreed to denounce war as an instrument of national policy (Article 1). Where nations had controversies, disputes or conflicts with one another, they committed themselves to resolving them through diplomacy, and by avoiding hostilities (Article II). The pact was initiated jointly by France and the US in Paris, and was signed by 15 leading nations in 1928. Other nations were invited subsequently to sign the treaty (Article III), and 48 did so. On its face the agreement was symbolic. Any signatory who did resort to war “should be denied the benefits furnished by this Treaty,” which suggested that while abrogation of the treaty would not be appropriate, it was not necessarily criminal. The pact did not identify specific penalties for breaches of the agreement (such as capital punishment and life imprisonment for individuals as imposed at Nuremberg); nor did it identify a court competent to mediate such breaches (criminal, civil, national or otherwise). In addition, the adoption of the pact did not obligate any signatory to take steps to rectify non-compliance. The three core articles in the English version totaled a scant 270 words (Yale: Avalon Project 1928). When Japan invaded Manchuria in 1931, no penalty resulted – likewise, when Italy attacked Ethiopia in 1935. The pact never achieved traction due both to its vagueness and to an absence of international commitment to it. Moghalu (2008: 34) argues persuasively that its use in 1945 was ex post facto law, in effect, holding people responsible for conduct that was not illegal at the time of its occurrence. While this may have been true in retrospect, the judiciary at Nuremberg, composed of judges from the winning countries, accepted it as positive law, suggesting a degree of “victor’s justice” in their outlook. The charges of “crimes against humanity” arose from even more vague circumstances. The preamble to the 1907 Hague Convention on the rules of war referred to how the principles adopted by civilized nations during war were constrained by “the laws of humanity” – without specifying what these were. At the Treaty of Versailles in 1919 the British and French described the wholesale murder of Armenians by Turkish officials in 1915 during the Great War in language reflecting the Hague Convention as “crimes against the laws of humanity.” Many states, including the US, objected, suggesting that these were moral outrages but did not constitute positive law. Nonetheless, Britain attempted in the years after the war to prosecute Turkish soldiers and officials for their role in the massacres of Armenians and mistreatment of British POWs, and confined the suspects to jails in Malta in 1920. The trials ended when Turkish forces seized members of the British occupying army in Turkey, and negotiated a “prisoner exchange” for the suspected war criminals (Power 2002: 14–16). In 1945 the Nuremberg Charter defined “crimes against humanity” to include murder, extermination, enslavement, deportation and other inhumane acts directed against civilians before or during war. Afterwards, the UN endorsed the Nuremberg Charter (Bassiouni 2011). Crimes against humanity were formally incorporated into the later ad hoc tribunals in 1992 and 1994 and the International Criminal Court in 2002. But initially the basis for indictments for such vague crimes was more philosophical than legal. In summary, over a period of a century a significant incursion was made into the principle of sovereign immunity, by asserting the responsibility of sovereigns for offenses that had traditionally been beyond the reach of the law. Taking vague concepts, such as the laws of humanity on the one hand, and symbolic treaties, such as the Pact of Paris on the other, and incorporating them into 482

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post-war legal proceedings in 1919 and 1945, accomplished this. In both cases, the laws acquired traction since the courts created to prosecute them dealt from a position of military superiority. This changed the landscape of international accountability for atrocities. The Kaiser’s successors could no longer plead sovereign immunity or nullem crimen sine lege. But the methods used to achieve this would become something of an Achilles’ heel, as later developments would reveal. In the aftermath of the Second World War, and in the optimistic atmosphere associated with the creation of the United Nations, the world was in a receptive mood to consider the general crime at the heart of the Holocaust for which Lemkin had invented the term “genocide.”

The Genocide Convention of 1948: its contents and discontents As a young man, Raphael Lemkin was perplexed by the ability of the Turkish government in 1915 to strip the minority, native Armenians of all their civil rights, their property and, ultimately, of their lives, without penalty or accountability. In his 1933 Madrid paper he described the atrocities in terms of acts of barbarity (violence) and acts of vandalism (destruction of the cultural heritage). He advocated the creation of a multilateral convention that would prevent extermination of human groups as an international crime, and also provide a way of making the perpetrators accountable. He watched in horror as the Nazis unleashed a similar tragedy throughout Europe, directed primarily against the Jews. When the United Nations was created in 1945, he worked tirelessly to promote the adoption of a convention that would recognize, punish and prevent genocide. In 1946 the General Assembly of the United Nations adopted Resolution 96 (1) that recognized the crime of genocide, which it asserted had always existed and was already criminal. It identified in particular the need to punish “the denial of the right to exist of entire human groups . . . whether the crime is committed on religious, racial, political or any other groups.” Diplomats subsequently negotiated an international agreement that was adopted in 1948, The Convention on the Prevention and Punishment of the Crime of Genocide. In Article 1 the convention confirmed that genocide was a crime under international law, and that it could occur in peacetime as well as in war. In addition, parties to the convention agreed not only to punish it, but also to prevent it. The actus reus of genocide specified the ways in which genocidal conduct could occur (Article 2). In the present Convention, genocide means any of the following acts committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group, as such: (a) Killing members of the group; (b) Causing serious bodily or mental harm to members of the group; (c) Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part; (d) Imposing measures intended to prevent births within the group; (e) Forcibly transferring children of the group to another group. The convention also specified that, in addition to genocide, four other crimes could be punished: conspiracy to commit genocide, direct and public incitement to commit genocide, attempted genocide and complicity in genocide (Article 3). In Article 4, the convention identified who was accountable, and named “constitutionally responsible rulers, public officials or private individuals.” If war crimes, the conduct of aggressive war and crimes against humanity had become international criminal law after Nuremberg, finally the crime of genocide rounded out the last important step in moving beyond sovereign immunity to criminal accountability through the convention. 483

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Two of the peculiar elements of the convention merit comment. First, the convention protects four specific categories of humanity: those who belong to “a national, ethnical, racial or religious group.” The 1946 UN resolution had referred to “religious, racial, political or any other group,” The 1948 convention did not mention “political or any other group.” As a consequence, persons could be exterminated because of class, gender, political orientation, ideology, age, etc. For example, the Holodomor (extermination by hunger) or “man-made famine” in Ukraine that Stalin undertook to annihilate the political opposition of Kulak peasants who opposed collectivization of agriculture in 1932/1933 would be beyond the scope of the convention because the Kulaks were a prosperous, agricultural class, not a nation. It may be argued with merit that such cases could be prosecuted as crimes against humanity. A major difference is that there is no legal duty to prevent crimes against humanity as there is for genocide, and no defined court with jurisdiction. The second peculiarity concerns the mens rea or guilty mind requirement. The convention requires that genocide be committed “with intent to destroy . . . as such” one of the four identified groups – in whole or in part. This is described as the dolus specialis. It means that a perpetrator consciously targets one of the protected groups, but that he or she is selecting them specifically because they are members of that group. If group A tried to eliminate group B because of its political beliefs, or because of armed competition for the same resources, and not because of “ethnicality,” this would not be covered by genocide. Again, it might amount to a crime against humanity, but the legal framework is significantly different. In addition, this peculiarity of the convention, the dolus specialis, increases the burden of proof on the prosecutor, and actually narrows the scope of the law.

The suppression of genocide after 1948 in Frankfurt and Jerusalem Raul Hilberg (2007), one of the Holocaust’s most important historians, suggests that concentration camp survivors wrote the cry of “never again” on signs after the camp was liberated in the spring of 1945. It conveys a commitment to prevent the repetition of the unspeakable mistreatment of Jews by the Nazis. “Never again!” has been repeated by a number of US presidents, although, as pointed out by Power (2002: xxi), none of them ever lifted a finger to suppress genocidal activities anywhere. The fact is that the slogan was about all the attention genocide received in the decades after the UN convention was established – 1948 – and when the first tribunal was created – 1992, which was 44 years later. At the end of the Second World War, numerous former Nazis were extradited to Eastern Europe to face trials for wartime atrocities. For example, Rudolf Hoess was extradited to Poland where he was tried and executed for his role as commandant of the Auschwitz camp from 1940 to 1943. However, there were charges throughout the 1950s that many former camp guards remained free in West Germany, and that they had escaped accountability for their role in mass murder in Poland. The Auschwitz trial was the most dramatic and high-profile Nazi trial to be convened in the Federal Republic of Germany after Nuremberg. Where Nuremberg was created, prosecuted and adjudicated by the victors, this trial was convened under German law, and prosecuted and judged by Germans. In Frankfurt, 22 persons were indicted under domestic criminal law with the crimes that occurred in Nazi-occupied Poland. They represented a cross-section of the camp’s administrative units and ranged in rank from major to private, and included a single kapo (inmate guard). The case was brought to the attention of the Hessian Attorney General, Fritz Bauer. He secured the jurisdiction of the Frankfurt court, and indicted the suspects with murder. The crimes consisted of selecting persons on the railway ramp at Auschwitz for immediate death by gassing, or for forced labor designed to bring about death through exhaustion and starvation. Other crimes 484

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dealt with the murder of hospital inmates by lethal injections of phenol into the heart. There were also periodic purges of units of workers within the camps and individual executions for attempting to escape and for disobedience, and killings arising from “intensive interrogation.” For Fritz Bauer, the purpose of the trial was pedagogical: to educate Germans about their own history (Pendas 2006: 52). It would expose the deep reach of Nazism into German society, and would contribute to the discrediting of Nazi ideology in that society. Bauer attempted to put the entire genocidal complex at Auschwitz on trial, and to demonstrate how the Holocaust was the outcome of widespread complicity of people from all walks of German life. Because the international convention against genocide was ex post facto law, the defendants were tried under the 1871 German homicide law that applied in Poland after the German conquest. That law limited liability for first-degree murder (“mord”) to those who were primary perpetrators and who acted with base motives in taking the lives of others. Accomplices, while guilty, were considered to have significantly lower levels of culpability, particularly in terms of penalty. As a result, the routine activities of forcibly deporting millions of people from their homelands, classifying them on the railway sidings for work or immediate death, and the subsequent act of gassing millions of them, were viewed as regrettable but minor crimes (“totschlag”) akin to manslaughter. The real crimes of Auschwitz were equated with individually culpable acts of subjective barbarity, overshadowing state-initiated acts of mass murder. The extermination system was, in the words of Rebecca Wittmann, “beyond justice” and escaped what Devon Pendas described as “the limits of law.” Six accused were convicted of first-degree murder (“mord”), but the majority was convicted of being an accessory to “mord” and received an average penalty of 6.3 years. Ironically, the “totschlag” convictions were implicated in the extermination of millions, while the “mord” convictions were based on a handful of cases. Throughout the trials, the defendants acknowledged that crimes had occurred at Auschwitz, but denied their own guilt since they had played a secondary role. The defendants exhibited no sense of remorse, and displayed a sullen indifference to their culpability. If Bauer had expected the trials to produce a moral epiphany in West German society, nothing could have been more counter-productive. According to Wittmann (2005: 271), the public gained a skewed understanding of Auschwitz. The sentences meted out to the defendants distorted the realities of the program of extermination [and] shifted the focus in the courtroom away from Nazi genocide towards individual acts of cruelty, suggesting that . . . the Nazi orders had been acceptable. The trial failed to register the historical enormity of the events that transpired in Auschwitz. The only deplorable thing that occurred was that some bad apples descended into depravity by resorting to cruelty and torture. Aside from that, murder “by the book” was not noteworthy. That was not the sentiment conveyed in Jerusalem by the Eichmann trial. Eichmann had been smuggled out of Germany to Argentina with the assistance of church organizations, and lived there under a pseudonym. He was apprehended in 1960 by Israeli agents in Buenos Aires and secretly transported to Israel, where he was tried in 1961 on 16 counts under Israeli law and executed in 1962. The legal situation for Israel was awkward, since the events of interest pre-dated the creation of the State of Israel, and the crimes did not occur in the territory occupied by Israel. However, Israel had an unassailable interest in asserting jurisdiction in the case, since its citizens represented the majority of the survivors of the European death camps, and Eichmann represented a prime subject of interest in injuring them. There was enormous international interest in the trial, since Eichmann had been so intimately associated with the development of “the Final Solution.” Eichmann’s office had organized the transportation of European Jews to factories in Poland created to erase their physical presence in Europe. 485

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Gideon Hausner, the Israeli Attorney General, initially planned to indict Eichmann for actions with which he was directly associated. He was subsequently persuaded to employ the trial as a vehicle to describe the whole story of the Nazi crimes against the European Jews. The trial became famous following Hannah Arendt’s news reports in The New Yorker. She described “the man behind the glass” as more of a buffoon than a monster, and coined the term “banality of evil” to suggest that the perpetrators of the Holocaust were not people of deep conviction or commitment, but “desk murderers” who were “thoughtless” drones who acted without reflection in accordance with bureaucratic rules and regulations. This view has been challenged by more recent research. Lipstadt (2011) notes that Eichmann personally negotiated the deportation of 440,000 Hungarian Jews in Budapest in the summer of 1944 to Auschwitz, even after being advised by Himmler to postpone further deportations in order to negotiate favorable conditions with the Allies. Cesarani (2006: 15) argues that Arendt’s notion of the banality of evil “straitjacketed research into Nazi Germany” for two decades by obfuscating the zeal with which Nazis like Eichmann pursued genocide. The execution of Eichmann was a milestone in the halting shift from impunity to accountability in elite crimes, and like Frankfurt’s Auschwitz trial, occurred without assistance from the UN genocide convention. History shows that no UN genocide trials occurred between 1948 and 1992, but does that mean that there were no further genocides?

The forgotten genocides Chalk and Jonassohn (1990) review a number of cases of atrocities that ought to have attracted the attention of the UN member states as potential cases of genocide during the period we are examining. We review five cases. The first case involved the retaliation of the Indonesian army against members of the Indonesian Communist Party (PKI) following a failed coup in 1965. The army initiated the killings against unarmed PKI cadres and party members, and subsequently recruited civilian groups to follow suit. It is estimated that the numbers killed throughout the archipelago totaled a staggering 500,000 and another 500,000 arrested within a six-month period. There was no US or UN intervention. The killings were portrayed in a recent documentary, The Act of Killing, in which members of one of the ad hoc murder squads re-enacted how they kidnaped, tortured and murdered suspects – without any sense of remorse, guilt or misgivings. In Burundi, in 1972, the Tutsi army exterminated an estimated 200,000 Hutus, claiming that it was responding to a coup designed to overthrow the Tutsi-led government. The army targeted well-educated Hutus, persons of some wealth, and those employed in the civil service, wiping out fully half of the Hutu teachers, and other professionals in a period of months. “The U.S. government never publicly rebuked the Burundi government” (Chalk and Jonassohn 1990: 391). Only Belgian Premier, Gaston Eyskens, condemned the massacres as “veritable genocide.” However, no one was ever called to account, and the UN failed to act (Lemarchand 1994). The third case was the massacre of citizens in Bangladesh in 1971. “Between one million and three million were killed” by the Pakistani army before the latter were defeated by the Indian Army (Chalk and Jonassohn 1990: 396). Two million people were made homeless, and 10 million became refugees. This case was described recently in Bass’s book, The Blood Telegram: Nixon, Kissinger and a Forgotten Genocide (2013). Arthur Blood was head of the US diplomatic mission in Dacca when the Bengalis elected their first representative government in what was then East Pakistan. Fears that they might secede brought out West Pakistani military reprisals in force. Arthur Blood brought the unprovoked violence to the attention of then US President Nixon and Secretary of State Kissinger, imploring for US intervention. Since West Pakistan was strategic in opening diplomatic ties to the PRC, Nixon refused to speak out. The entire diplomatic mission in Dacca committed career suicide by condemning its own government for failing to acknowledge the genocide. 486

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Chalk and Jonassohn’s fourth case was the Cambodian genocide of 1975 to 1979 in which 1.7 million people were murdered by the Khmer Rouge after Pol Pot’s occupation of Phnom Penh. Most of the targets of the massacres were Cambodian nationals. A hybrid national–UN tribunal was created at the Extraordinary Chambers for the Courts of Cambodia 30 years after the defeat of the Khmer Rouge. The last case was the invasion of East Timor in 1975 by Indonesia. The Indonesians supported a small pro-Indonesian political party that opposed the main parties seeking political independence from Portugal. The Indonesians conducted a campaign of murder and terror against the indigenous people, including massacres of citizens and carpet-bombing of villages and towns to exterminate the armed opposition to the invasion. There was a policy of starvation pursued to neutralize opposition to the forced annexation of the country. Kierman (2007: 578) estimates that these policies were responsible for the death of over one-fifth of the population. In addition, the Indonesians sponsored a transmigration program to replace the indigenous people with immigrants from Java and Bali. In 1999 the rebels declared independence, and the nation’s autonomy was recognized in 2002. The UN repeatedly passed motions to criticize the illegal Indonesian occupation of the country, but these actions were always blunted by Indonesia’s ally in the Security Council, the US. What all these cases have in common are the wholesale massacres of civilians by national or colonial armies and militias. None of these cases attracted a speedy judicial remedy as provided for in the UN Convention. The Cambodia case was pursued after a delay of three decades (and not always for genocide). Unlike the Frankfurt and Jerusalem trials which dealt with events that pre-dated the convention, these cases occurred post-1948. They also occurred during the Cold War, a fact that led the US to shelter allies in Indonesia and Pakistan, and ignore events elsewhere of no geo-political significance (Burundi, Cambodia). This is the Achilles’ Heel alluded to earlier – geo-political considerations may have expedited justice at Nuremberg, but in the longer run, genocide courts required more autonomy.

The ad hoc tribunals for the former Yugoslavia and Rwanda The first tribunals to apply the 1948 convention were created to deal with the genocides in the former Yugoslavia and Rwanda. The tribunals were an attempt to repair the damage to the UN’s credibility, and the political failure of the major Western players – the US, France, Britain and Belgium – to honor their obligations under the convention. According to Carla Del Ponte, “it was a diplomatic mea culpa, an act of contrition by the world’s major powers to amend for their gross failure to prevent or halt the massacres” (2008: 69; see also Cruvellier 2010). In the 45 years following its adoption, the convention was never invoked. In some cases the victims were not within the protected categories, but in other cases they were. There may be another problem suggested in the controversy over Darfur. In Darfur: The Ambiguous Genocide, Prunier (2005) labels the conflict as the “first genocide of the twenty-first century,” a view shared with Totten and Markusen (2006), and Hagan and Rymond-Richmond (2009). For Mamdani (2007, 2009), and de Waal (2004), the labeling of genocide is inappropriate because the events developed in the context of political insurrection that witnessed atrocities on all sides. Nonetheless, the UN did take action in 1992 and 1994 in creating the first ad hoc tribunals for the former Yugoslavia (in The Hague) and Rwanda (in Arusha, Tanzania). Have the new ad hoc tribunals succeeded where the Auschwitz trials failed? After all, the new courts have had the advantage of legal doctrines that explicitly recognized liability which the 1881 German homicide law lacked. They also enjoyed the moral and financial support of the Security Council of the UN. In 2004, the UN Assistant Secretary-General for Legal Affairs 487

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shocked his colleagues when he publicly expressed doubts about the ICTR and ICTY; Ralph Zacklin (2004: 545), who helped create the tribunals, wrote in the most disparaging terms about them: “the ad hoc tribunals have been too costly, too inefficient and too ineffective. As mechanisms for dealing with justice in post-conflict societies, they exemplify an approach that is no longer politically or financially viable.” Wittmann and Pendas said the fault lay with the law. By contrast, Zacklin claimed it was the institutional success of the tribunals that had appropriated a world to them disconnected from the realities of finance, and distantly removed from the victims in whose name the proceedings were convened. The accomplishments, in terms of convictions, were modest, their progress was glacial, and their contribution to the restoration of social peace was largely non-existent. What has changed since 2004? Adam Smith (2009) presents a sobering report of the tribunals that reinforces Zacklin’s misgivings. We deal first with finances. The courts have been monumentally expensive. The yearly ICTY budget from 1993 to 2007 expanded a thousand-fold, from $276,000 to $276 million . . . from 1993 to 2007 the ICTY cost $1.2 billion, and is on pace to cost as much as $2 billion by the time it completes its mandate in 2010. Judicial productivity, however, has seemingly not matched the expense. The average cost per conviction at the tribunal has been estimated at nearly $30 million, more than fourteen times the average cost per capital conviction in the United States. . . .The Rwandan tribunal is somewhat less costly, though it is projected to also have spent more than $1.4 billion by the time it finishes operations in 2010. The tribunals made up about 15 percent of the entire UN budget (Smith 2009: 182–183). At the ICTY there were 190 judgments completed as of early 2014, including 20 acquittals. The ICTR reported 59 cases completed, including 12 acquittals. There were 16 cases under appeal at the ICTR and five cases at the ICTY representing 18 individuals. Despite procedures to wind down the tribunals in 2012, neither has been able to clear its caseload completely. The enormous cost overruns at the ad hoc tribunals motivated the UN to pursue “hybrid” jurisdiction in subsequent cases of genocide. The hybrid courts in Sierra Leone, Cambodia, East Timor and Lebanon were created in part as a result of cost escalation at the ad hoc courts. How have they faired in comparison? In the case of the Special Court for Sierra Leone, Smith (2009: 183) reports that “the original budget was very ambitious and called for only $54 million over 3 years; since the special court’s opening in 2002, that amount has more than tripled,” and the three-year mandate has morphed into eight. That was for ten cases, but the most important case – Charles Taylor – was moved for security reasons to The Hague, duplicating much of what was already invested in Freetown. The costs for the Khmer Rouge genocide trials at the Extraordinary Chambers in the Courts of Cambodia were reported by Rebecca Gidley (2010: 14): “in terms of its finances, the budget for the court from 2005 to 2010 is US $142.6 million.” Gidley comments that this is a lot less than either the ICTR or the ICTY, but she fails to mention that there were only six accused in the docket. In addition, the International Justice Tribune (RNW 2010) points out that “for 2011, the total budget of $46.8 million is unfunded” – which suggests that the projected costs are nearly US$189,000,000 if one includes 2011– or about US$38,000,000 per case. The hybrid courts do not appear to be less costly than the ad hoc courts on a per accused basis. In Arusha, prior to the ICTR, it would be difficult to find a store that sold computer supplies, let alone facilities to hold witnesses under protective custody. The entire substructure of the actual physical plant, and the superstructure of judges’ chambers, offices for prosecutors and defense counsel and their investigators, translators, courtrooms, visitors’ galleries, law libraries, security offices, lunch rooms, archival and computer resources – not to mention plumbers and electricians – all had to be created where nothing had existed beforehand. No one entirely 488

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foresaw this cost. The disconnects between the proceedings in Arusha and the audience in Kigali, or between the proceedings in The Hague and the audiences in Sarajevo and Belgrade, were not anticipated by anyone. And no one anticipated the cronyism, corruption and incompetence of the persons appointed by the UN to run these organizations, particularly in Arusha and Kigali. Nonetheless, the courts were created, and made some progress towards the Kantian ideal of cosmopolitan justice. The ICTY apprehended Milošević, Karadžić and Mladić, leaders of the forces that led to genocide and war crimes in Bosnia. The ICTR apprehended Jean Kambanda, the Prime Minister of the genocidal Rwandan government, and Théoneste Bagosora, the chief of staff who oversaw the start of the Rwandan genocide. And the joint appeal tribunals laid down a body of jurisprudence that has helped clarify the law of genocide, crimes against humanity and war crimes. In this respect, the international world order is a far more accountable environment compared to the situation in 1918 when the Kaiser could hide behind sovereign immunity. However, these courts were ad hoc enterprises with limited jurisdiction. They have been superseded by a permanent criminal court, the International Criminal Court. This is the most recent chapter in the legal attempt to hold sovereigns responsible for international humanitarian crimes. We turn now to that institution to assess its effectiveness.

Conclusion: the International Criminal Court The Rome Statute created the ICC that was supported by120 nations at a UN diplomatic conference in 1998. Seven states opposed the Rome Statute, and 21 abstained. It came into being in 2002, by which time over 60 countries had ratified the treaty. The new court is situated in The Hague. As of 2014, there were 21 cases in various stages of progress, derived from eight “situations,” all from Africa (Uganda, Darfur, Central African Republic, Democratic Republic of the Congo, Kenya, Côte d’Ivoire, Mali and Libya). The cost of the court is managed by the Assembly of States Parties (ASP) and, like the ad hoc courts, has been steep – about half a billion euros from 2002 to 2009, or about €100,000,000 annually in recent years (Mettraux 2009) (about US$160,000,000). The ASP consists of states which are party to the treaty, and who support the court financially. As of early 2014, the court had convicted two individuals in the DRC situation (Thomas Lubanga Dylio for conscripting child soldiers; Germain Katanga as an accessory to crimes against humanity and war crimes), and acquitted a third (Mathieu Chui for crimes against humanity and war crimes). The court faces several key stumbling-blocks. The primary one is that none of the superpowers has joined the convention, including the US, the Russian Federation, India and the People’s Republic of China. The second major stumbling-block for the court is the inability of the contracting parties to reach a consensus on the definition of aggression, the crime that was the centerpiece of the Nuremberg prosecutions. This is critical in light of Russia’s intervention in Georgia in 2012, and the annexation of Crimea in 2014, and the US/British invasion of Iraq in 2003, and NATO operations in Kosovo in 1999. The third major stumbling-block has been the preoccupation with situations in Africa. Since the court does not sit in Africa, its operations have been criticized as neo-colonial, and the non-participation of the leading powers mentioned earlier means that we will not find nationals from those states facing justice at the ICC. These problems may be overcome with time, but they are far from ideal. What may reasonably be concluded from this short overview of the attempts to control the crimes of the powerful through the law of genocide? If we take the longer view, there has been a remarkable diminution of the impunity with which sovereigns can evade criminal accountability in international law. This fact is offset by another: just as the world has evolved a mechanism to achieve cosmopolitan justice through the creation of the International Criminal Court, the major 489

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superpowers have absented themselves from its jurisdiction by failing to support the convention on which it is based. This raises several points. First, legal change of the sort underpinning the creation of the ICC is extremely slow to materialize. This is because justice and politics are so densely intertwined, and parties with power can choose the conditions of submission under which to advance their self-interests. This power dynamic is at the heart of the UN and the Security Council because the superpowers control the political veto over any international sanctions that could challenge their hegemony. Another impediment to the development of an effective system of restraint is the bias in the focus on developing nations in Africa which have little power either to introduce security on their own terms, or resist the neo-colonial incursions made by the ICC which fill the legal vacuum. Costs are another impediment to restraining the misconduct of the powerful. Every case of every warlord in Africa will require tens of millions of dollars to resolve, and will test the tolerance of the middle powers who actually fund the new court. Last word. The best hope for a system that provides a significant check on the excesses of sovereigns is a renegotiation of the scope of sovereignty. Nuremberg provided a check on sovereign immunity, but globalization may offer keys for future development in which the power of sovereigns is re-conceptualized as a balance of political autonomy combined with a responsibility to the community of nations and to the governed. Since this is not likely to be a priority of the current superpowers, the initiative devolves to the middle powers – Germany, Canada, Nigeria, Brazil, Japan and so on – to negotiate the demise of the obsession with power in favor of the endorsement of the value of freedom. That will take time, but globalization may force the issue.

References Arendt, Hannah (1963). Eichmann in Jerusalem: A Report on the Banality of Evil. New York: Viking. Bass, Gary J. (2013) The Blood Telegram: Nixon, Kissinger and a Forgotten Genocide. New York: Knopf. Bassiouni, M. Cherif (2011). Crimes Against Humanity: Historical Evolution and Contemporary Application. Cambridge: Cambridge University Press. Brannigan, Augustine (2013). Beyond the Banality of Evil: Criminology and Genocide. Oxford: Clarendon Press. Cesarani, David (2006). Becoming Eichmann: The Life, Times and Trial of a ‘Desk Murderer’. New York: Capo Press. Chalk, Frank and Kurt Jonassohn (eds) (1990). The History and Sociology of Genocide: Analyses and Case Studies. New Haven, CT: Yale University Press. Civil Rights Congress (1951). “We Charge Genocide.” Available at: www.blackpast.org/we-chargegenocide-historic-petition-united-nations-relief-crime-united-states-government-against (accessed March 28, 2014). Cruvellier, Thierry (2010). Court of Remorse: Inside the International Criminal Tribunal for Rwanda. Madison, WI: University of Wisconsin Press. De Waal, Alex (2004). “Tragedy in Darfur: On Understanding and Ending the Horror.” Boston Review, October/November. Available at: www.bostonreview.net/BR29.5/dewaal.php. Del Ponte, Carla (2008). Madame Prosecutor: Confrontations with Humanity’s Worst Criminals and the Culture of Impunity (in collaboration with Chuck Sudetic). New York: Other Press. Gidley, Rebecca (2010). The Extraordinary Chambers in the Courts of Cambodia and the Responsibility to Protect. St. Lucia, Qld, Australia: Asia-Pacific Centre for the Responsibility to Protect. Hagan, John and Wenona Rymond-Richmond (2009). Darfur and the Crime of Genocide. New York: Cambridge University Press. Hilberg, Raul (2007). “Is there a new Anti-Semitism? A Conversation with Raul Hilberg.” Logos: A Journal of Modern Society and Culture, 6(1–2), online. Höffe, Otfried (2006). Kant’s Cosmopolitan Theory of Law and Peace, translated by Alexandra Newton. Cambridge: Cambridge University Press. Kierman, Ben (2007). Blood and Soil: A World History of Genocide and Extermination. New Haven, CT: Yale University Press. Lemarchand, R. (1994). Burundi: Ethnic Conflict and Genocide. New York: Cambridge University Press.

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Lemarchand, R. (ed.) (2011). Forgotten Genocides: Oblivion, Denial and Memory. Philadelphia, PA: University of Pennsylvania Press. Lemkin, Raphael (1933). “Acts Constituting a General (Transnational) Danger Considered as Offences Against the Law of Nations,” 5th Conference for the Unification of Penal Law in Madrid, 14–20 October. Available at: www.preventgenocide.org. Lemkin, Raphael (1944). Axis Rule in Occupied Europe: Laws of Occupation, Analysis of Government, Proposals for Redress. Washington, DC: Carnegie Endowment. Lipstadt, Deborah E. (2011). The Eichmann Trial. New York: Schocken. Mamdani, Mahmood (2007). “The Politics of Naming: Genocide, Civil War and Insurgency.” London Review of Books, 29(5), March 8. Available at: www.lrb/co/uk/v29/n05/print/mamd01_.html (accessed March 15, 2007). Mamdani, Mahmood (2009). Saviors and Survivors: Darfur, Politics and the War on Terror. New York: Pantheon. Mettraux, Guénaël (2009). The Law of Command Responsibility. Oxford: Oxford University Press. Moghalu, Kingsley (2008). Global Justice: The Politics of War Crimes Trials. Stanford, CA: Stanford University Press. PBS (2014). “WWI Casualty and Death Tables.” Available at: www.pbs.org/greatwar/casdeath_pop.html (accessed March 15, 2014). Pendas, Devin O. (2006). The Frankfurt Auschwitz Trial, 1963–1965: Genocide, History, and the Limits of Law. Cambridge: Cambridge University Press. Power, Samantha (2002). ‘A Problem from Hell’: America and the Age of Genocide. New York: HarperCollins. Prunier, Gérard (2005). Darfur: The Ambiguous Genocide. Ithaca, NY: Cornell University Press. RNW (2010). “Donors Urged to Contribute to Genocide Court,” May 26. Netherlands: Radio Netherlands Worldwide. Available at: www.rnw.nl/international-justice/print/104961 (accessed July 5, 2012). Schabas, William (2010). The International Criminal Court: A Commentary on the Rome Statute. Oxford: Oxford University Press. Smith, Adam M. (2009). After Genocide: Bringing the Devil to Justice. Buffalo, NY: Prometheus Books. The Act of Killing (2013). A Film by Joshua Oppenheimer, Drafthouse Films. Totten, Samuel and Eric Markusen (2006). Genocide in Darfur: Investigating the Atrocities in the Sudan. New York and London: Routledge. Trueman, Chris (2014). “First World War Casualties.” History Learning Site. Available at: www.historylearningsite.co.uk/FWWcasualties.htm (accessed on March 10 2014). UN (1946). UN Resolution on Genocide, General Assembly. Available at: www.armenian-genocide.org/ Affirmation.227/current_category.6/affirmation_detail.html. UN (1948). Prevention and Punishment of the Crime of Genocide. Available at: www.un-documents.net/ a3r260.htm. Wittmann, Rebecca (2005). Beyond Justice: The Auschwitz Trial. Cambridge, MA: Harvard University Press. Yale (the Avalon Project). (1928). Kellogg-Briand Papers. Available at: www.avalon.law.yale.edu/20th_ century/kbhear.asp. Zacklin, Ralph (2004). “The Failings of the International Ad Hoc Tribunals.” Journal of International Criminal Justice, 2: 541–545.

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35 Controlling state crime and alternative reactions Jeffrey Ian Ross

Introduction Since its original conceptualization by scholars such as Chambliss (1989), and with modifications by a handful of researchers (e.g., Barak, 1991a; Ross, 2000a, 2000b; Green and Ward, 2004; Rothe, 2009a, 2009b), a significant amount of research has been produced in the field of state crime.1 Both activists and researchers know that the state can be challenged and changed, and there are numerous ways to control state crimes. The state is subject to scrutiny, change and reform not only from inside its agencies but also from outside. And on rare occasions, due to numerous factors, the government and its respective bureaucracies changes its harmful policies and practices because of different kinds of pressure (Ross, 1995/2000; 2000a, 2010). But controlling state crimes is not easy. Indeed, there is a range of reactions to state crime, from public apathy (Cohen, 2001), to efforts to prevent, challenge, redress, and/or to the abolishment/dismantling of the state (Martin, 1995/2000). Each response uses different resources (i.e., actors, expertise, and experience), and these may be used (successfully or unsuccessfully) under different conditions. In an attempt to better contextualize the notion of control of the state, this chapter outlines the traditional types of internal and external control mechanisms. It then examines alternative reactions to these controls and the state’s responses to those controls, which include victim, activist and opposition group resistance, apathy, state/organizational resistance to control, and state/ organizational public relations efforts.

State implementation of internal control mechanisms In a perfect world, state bureaucracies administer the affairs of the country in a fair, just, and impartial fashion. In order to maintain their legitimacy, many states and their agencies have internal control mechanisms, typically at the executive level, which monitor subordinate branches/ divisions and act appropriately to ensure that not only is the agency achieving its objectives but also that there are no abuses.2 In advanced industrialized countries, this process is typically the responsibility of ombudsmen, inspector generals, and/or integrity officers. Although there is a role for constraints on state crime, controls are more desirable. Constraints “are not expected 492

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to control or block criminogenic behaviors engaged in by states or organizations. Instead they serve as potential temporary barriers before or during an act” (Rothe and Kauzlarich, 2010: 184). Controls are not simply reactions to state crimes, but attempts to minimize the frequency of occurrence and to prevent similar actions from occurring in the future. This approach accepts the fact that states (or selected actors) have the potential and/or will abuse their power. Numerous domestic processes have been created and sometimes used to control state crime. A whole range of state criminogenic agencies have been accused of and have actually engaged in these actions, and as a result, different mechanisms for their control have been articulated, implemented, and analyzed (Ross, 1995/2000, 2000b, 1998, 2010; Rothe, 2009a: ch. 9; Kauzlarich and Rothe, 2010). These state organizations include, among others, the police (Menzies, 1995/2000), national security/intelligence agencies (Gill, 1995/2000), the military (Ross, 1995/2000), and educational institutions (Cabrera, 1995/2000). Not only have state agencies been addressed in the domestic realm, but so too have particular illegal state actions against groups and/or constituencies including but not limited to labor (Tunnell, 1995/2000), indigenous peoples (Cunneen, 2008, 2013), and refugees (Pickering, 2005). Complementary studies have looked at control mechanisms in particular countries (e.g., Grabosky, 1989; Ross, 2000a, 2000b; Doig, 2011). The agency under investigation may conduct an inquiry, or the review may be done by an external mechanism. This is why, for example, in many police departments, in order to minimize perceptions and/or the reality of corruption (or more specifically cover-ups), the investigations are typically performed by law enforcement agencies external to the one under examination. Because of the analysis, and resultant recommendations, the bureaucracy may variously fire and/or hire new personnel, may retrain existing workers, and/or may choose to disband the agency. Internal control mechanisms may work in concert or in opposition with external control processes.

Implementation of external control mechanisms Numerous external control mechanisms, both those that exist outside of the bureaucracy and those working outside the states, have been articulated and used to deal with state crime, including domestic and international processes (Ross, 1995/2000, 2000b; Rothe, 2009: ch. 8). Those operating inside the state include criminal law, interest groups, opposition political parties, etc. External legal mechanisms include international law, international humanitarian law, international human rights law, and laws of air, sea, and space. Redress of state crimes is also controlled through international bodies such the United Nations, the International Court of Justice (Yarnold, 1995/2000), and the International Criminal Court (Mullins et al., 2004; Rothe and Mullins, 2006). External controls can also be attempted through regional mechanisms like the European Court of Human Rights (Schoultz, 2014). External control may also be sought through transitional justice mechanisms, such as international criminal tribunals (e.g., former Yugoslavia, Rwanda, etc.) (Michalowski, 2013), domestic trials, truth commissions, reparations, and lustration efforts (Stanley, 2009). Mechanisms that transcend both domestic and external areas include news and social media attention. Control mechanisms, however, are fallible. These processes are frequently criticized (e.g., Molina, 1995/2000; Rothe and Mullins, 2006, 2008, 2009; Ross and Rothe, 2008; Rothe and Kauzlarich, 2010; Ross and Grabosky, 2014). Frequently, they fail to achieve their objectives. In terms of international law, for example, Molina argues: “rather than hold states criminally responsible for international criminal acts, the trend in international law since World War II has been the opposite: to hold individuals internationally accountable for wrongful acts, even if state 493

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governments are thought to be culpable” (Molina, 1995/2000:350). Rothe and Mullins argue that controls are supposed to “completely block” acts of state crimes, and they are “inevitable after” state crimes have occurred. “In other words, a criminal action would not occur due to controls, and if it did, there would be ex post facto legal repercussions” (Rothe and Kauzlarich, 2010: 169). Moreover, initiatives to control states may lead to additional state crimes. Ross and Rothe (2008) suggest that controlling state crime may lead to unanticipated reactions such as censure, scapegoating of opposition entities, obfuscation, retaliation, defiance/resistance, plausible deniability, improving the agency’s ability to hide and/or explain away crimes, relying on selfrighteousness, redirection/misdirection, and fear mongering. Building upon this argument, Ross and Grabosky (2014) argue that well-meaning states who want to intervene against state crime, that engage in moral suasion/negation, economic/trade sanctions, humanitarian intervention, and armed intervention can lead to increased pain, suffering, and death of victims of state crime.

Alternative reactions Resistance by victims, activists, and oppositional groups Victims, activists, and oppositional groups may focus their efforts on resisting state crime (e.g., Pickering, 2002, 2005; Tombs and Whyte, 2003a, 2003b; Stanley, 2009; Lasslett, 2012).3 According to Stanley and McCulloch (2012: 4), Resistance ranges from the small, silent and personal through to the multitudinous, spectacular, and momentous. . . . It may be violent or non-violent, passive or active, hidden or open, verbal or physical, spontaneous or strategic, local or global, and frequently a combination of some or all. This may include a range of responses, from social protest, to defiance, to using the news media to inform the public regarding negative state activities. There is a relatively long history of scholars in the state crime tradition writing about resistance to state crime. One of the first researchers to write about resistance to state crimes was Barak (1991b: 278). He notes, [R]esisting all forms of state criminality in the world today is no simple enterprise because it calls for challenging existing and prevailing ideologies of militarism and paramilitarism. The struggle for world peace and social justice – and the reduction in all forms of crime by the state – also necessitates a decreasing role in the state political police apparatuses as well as an expanding role in multilateral co-operation among all nation-states. A quarter of a century ago, he also believed that the end of the Cold War might lead the United States to change its aggressive foreign policy. Barak cites public disapproval of American foreign policy actions (e.g., Nicaragua) during the late 1980s as hopeful developments. He advocates for countries to sign on to what he calls the third generation of rights, which “attempt[s] to maximize the realization of human rights for all peoples of the world [more] than the first and second generation of rights did” (p. 279). Barak adds, “the third generation of rights calls for international cooperation. These rights are evolving out of the condition of global interdependence confronting humanity today” (p. 280). 494

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Friedrichs (2009) writes that “a prospective criminology of crimes of the state” should look to find historical examples of resistance to state crime that have worked and take into consideration new developments that may have a bearing on using similar strategies (p. 6). He adds that this process should also single out situations where state crime may happen, and the respective political actors that may be able to engage in resistance. These efforts should also identify “optimal strategies to reach these entities in ways that make a measurable impact on the prevention of crimes of states” (p. 6). Friedrichs further maintains that criminological scholarship which analyzes resistance to state crime should start “with a clear conception of the forms of resistance being addressed, as well as the forms not being addressed” (p. 9). Most of the research on resistance to state crime consists of well-researched and argued case studies of resistance (e.g., White, 2009; Morrison, 2009; Kramer, 2009; Iadicola, 2009; Rothe, 2009b). Many of these writers, like Stanley and McCulloch (2012), argue, “resistance is underdeveloped and unanalyzed as a fundamental aspect of state crime scholarship” (p. 1). They add, “criminologists have generally failed to consciously consider a number of key questions related to resistance, such as: how are state crimes contested, prevented, challenged or stopped?” In addition, Stanley and McCulloch suggest, “state crime scholarship, by highlighting the power and impunity of the state, without adequate attention to the ongoing history of resistance, paradoxically may consolidate state power by creating a sense of powerlessness, undermining people’s confidence to act” (p. 2). Perhaps, but then again, it may not. Stanley and McCulloch (2012) isolate four dimensions of resistance: opposition, intention, communication, and transformation. These are logical subcomponents of resistance. Stanley and McCulloch do not suggest that there may be other kinds of subcomponents or that these may be attributed to different kinds of reactions. Lasslett (2012) admits that resistance strategies “generate a particular balance of forces which . . . may be favourable or unfavourable to state crime research and the control of state criminality” (p. 130). He warns against simple observations and/or conclusions. Those engaging in resistance must understand that the strategies of resistance, the state, and selected power groupings within the state are constantly changing as both sides to a conflict and/or power struggle alter their approach to meet different circumstances (Lasslett, 2012: 131). McCulloch and Stanley (2013: 227–228) suggest that everyone can choose their own path of resistance, and ever resistant act they undertake will connect them to other actions and other resisters. For those of us who live in liberal democracies, the costs of resistance may not be as high as for those in repressive regimes. Needless to say, although an important contribution to the literature, there are four major difficulties with the work on resistance as applied to state crime research. First, most scholarship on this topic does not adequately define resistance. Friedrichs, for example, states: “Independent of such specificity, the term ‘resistance’ is subject to much confusion and misunderstanding” (2009: 9). By extension, the scholarship in this area fails to adequately distinguish between resistance and control, and does not articulate the linkage between resistance and the more important goals of control or even stopping state crime. This body of work also does not integrate well the vast literature on social protest (e.g., Gamson, 1968, 1975). Second, some researchers who examine resistance either mischaracterize and/or ignore control of state crime. Friedrichs writes, “the notion of ‘controlling state crime’ has an obvious affinity with ‘resisting state crime,’ but the former term incorporates ‘state-driven’ initiatives, while the latter generally does not. . . . The potential role of social movements, for example, was acknowledged 495

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in this context, but deemphasized” (2013: 20). This is not completely true as there is no ordering mechanism. On the other hand, the introductory chapter to Controlling State Crime (1995/2000), and the book’s content, outlines both state and non-state created, managed, and directed control mechanisms. The book acknowledges entities external to the state organizations that victims and their allies can use, and those that external actors can form and/or engage in. Third, the literature on resistance to state crime has generally ignored work in cognate scholarship, including research on dissent (Franks, 1989) and social movements (e.g., Gamson, 1968). According to Turk (1982: 100), dissent is characteristically a higher-class form of resistance, especially insofar as it is an articulate elaboration of a reasoned political philosophy. Grumbling, diffuse complaints, or emotional rhetoric with little if any empirical grounding or logical coherence are more likely to characterize the “dissent” of those lower-class persons who do speak out against the given order. Indeed, there are several theories of resistance that researchers of state crime have ignored. Three of them include counter-movements, counter-hegemony, and infra-politics (Mittelman, 2000). Counter-movements are most closely associated with the work of Polanyi (2001), whose work focuses on whom, why, and what people are resisting. Counter-hegemony, derived from the work of Gramsci (1971/2012), looks at how people resist. And Scott (1990) analyzes when and how powerless people resist.4 Research examining these processes depends on intensive case studies to build their arguments and narrow interpretations. Polanyi explores the issue at the international level and suggests that failed international economic policies lead to protest movements. This kind of reaction is typically conducted in a collective and organized fashion that tries to change government structures in place. Since the articulation of this perspective, it is understood that there may be submerged networks that do not have formal organizational structures (Mittelman, 2000). Hibbard explains that “counterhegemony is declared, collective, organized, and revolutionary resistance to unfettered capitalism. Infrapolitics are undeclared, singular or collective, unorganized, and reformist or revolutionary forms of resistance to the invisible hand of greed” (Hibbard, 2003, p. 3). Fourth, resistance does not always result in control. Resistance, like control, may lead to unintended consequences such as increased state crimes (Ross and Rothe, 2008; Ross and Grabosky, 2014). Again, this approach ignores the voluminous literature on social protest, which suggests that protesters can engage in these actions for multiple reasons, including the emotional and social benefits (e.g., fraternity) that such participation presents for its practitioners. Although Stanley and McCulloch pose the question “What constitutes effective resistance?” they do not answer this question succinctly. They state: Despite the desirability of collective action and the aim of changing state behavior, it is too narrow a frame to consider effective resistance only as collective actions or in terms of that which impacts discernibly on the state. . . . What might be deemed effective resistance thus varies and depends very much upon the immediate political struggles and social contexts. (White, 2010: 50) Indeed, effective resistance is difficult to measure. They add, “what can be defined as effective resistance remains ambiguous and that ‘outcomes’ may change or be seen differently over time” (p. 9). In sum, although the work on resistance has covered numerous state crimes, much of this research sees resistance as an end in and of itself. The research on control, on the other hand, has attempted to approach this subject in a more comprehensive and systematic fashion. 496

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Apathy Often, when confronted by state crime, a wide constituency responds in an apathetic manner.5 This includes people who fail to inform themselves about political matters and/or who choose not to act on their political beliefs through some kind of political participation (Ricci, 1984: 154). For one reason or another, these individuals may be alienated, isolated, marginalized, and unattached (Rosenberg, 1951). Alternatively, states, both powerful and weak, may decide that it is not within their best interests to respond to state crime both within their borders and outside. Apathy must not be confused with legitimation, a situation where “people [not only] accept the power structure in which they live, but also that it is right for them to do so” (Turk, 1982: 30). There are several different types of legitimacy (ibid.: 30–35), and significant numbers of the general public are more than willing to believe and/or trust that their government is acting in their collective best interests by using actions that others consider questionable if not state crimes (e.g., torture, illegal invasions/occupations, assassinations by drones, etc.). According to Ross, “participating involves a series of cost–benefit calculations made by individuals of affected communities, some of whom rationalize that they stand more to lose . . . than gain in criticizing” the state (2000a: 119). In particular, because of a number of reasons, they may not have time to protest social injustices that occur in their lives or in their communities, or in those of others. Apathy may also be the result of conformity, “a learned belief in the infallibility of authority, ignorance about how to effect change in democratic systems, inequality, or a feeling that [if the issue does not directly] affect me personally, why get involved” (Lamb, 1975). One of the most relevant treatments of apathy in the state crime literature is Cohen’s States of Denial: Knowing about Atrocities and Suffering (2001). According to Cohen, when confronted with information about state crimes (in particular human rights violations and genocide), a range of actors, including the general public, cultures, states, perpetrators, witnesses, and victims, may react with apathy. Cohen states that denial “refers to the maintenance of social worlds in which an undesirable situation (event, condition, and phenomenon) is unrecognized, ignored or made to seem normal” (p. 51). Cohen examines numerous contexts of denial and offers explanations for this phenomenon, including those derived from the psychological, sociological, and theological literature. He concludes that over time, abusers start to disassociate themselves from their actions, and the public either has difficulty fathoming the abuse and/or suffers from compassion fatigue. Cohen is critical of a variety of academics, from those who critique the state through the postmodern lens focusing on ironies, to those who work on behalf of the state that engages in abuse, to those who strongly advocate that there are two sides to every story or other forms of moral relativism. Cohen is not necessarily pessimistic. He does see some sectors, like the news media and various social movements, as being well placed to respond to state abuses. He also advocates fraternity as mindset to counter denial.

State/organizational resistance to control Most states have significant resources to deal with victims, critics, and opposition members of state crimes. This may be accomplished via a continuum of actions, from ignoring the claims of resisters to engaging in public relations activities, to taking meaningful steps to resolve the problem and prevent it from occurring again. To begin with, states can and do make changes to lessen the frequency and intensity of state crimes, but in the case of advanced industrialized democracies, this often occurs long after the abuse, usually following careful analysis (sometimes overwhelming research findings), and frequently when 497

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there is a change in leadership (Ross, 2000a). There is a whole social science of evaluation research which attempts to make sure that government policies are well thought out, implemented properly, and achieve their stated goals. Alternatively, states may ignore the claims of victims and critics. Whether the news media or victims bring this information forward, the state (both politicians and the bureaucracy) may decide to ignore these claims (Cohen, 2001). Although state employees may sympathize with the plight of victims, they also know that by acknowledging the abuse, they may be subjected to significant sanctions (i.e., loss of job, prestige, demotion, working conditions) from their superiors (Chomsky, 1998) and/or co-workers. This is perhaps why there are so few whistleblowers, and the shortage and effectiveness of laws that support this kind of activity. In short, few state employees are willing to speak up about state abuses. Moreover, states can engage in satisficing activities. For example, they can go through the motions by enacting superficial changes in policies and practices that they know will have minimal impact on reducing the frequency and intensity of state crime. For example, shortly after the abuses of Iraq prison Abu Ghraib came to public attention, the US government indicated that it would close and demolish the prison. Although prisoners were transferred and the prison padlocked shut, the structure remained. Moreover, this did not end arbitrary detentions and forced confessions of terrorism suspects in Iraq. Furthermore, when states are confronted with information about their crimes, they may engage in a variety of public relations activities, including deflecting responsibility towards others. Jamieson and McEvoy (2005), for example, discuss the “range of strategies employed by states to obfuscate their responsibility in state crime through othering, both perpetrators and victims” (p. 504). In this instance, “othering” is a way to interpret people, places, and things as different and/or other than the person/organized accused of an unpalatable action. In terms of othering perpetrators, Jamieson and McEvoy suggest that this is done by perfidy (defining others as being disloyal), the existence of special forces established to deal with hostile elements, collusion by vigilantes, and allowing private entities like mercenaries to commit abuses. Othering may also include appeals to nationalism, religions, and sexual assault (Rothe, 2009, pp. 148–154). With respect to othering the victims, the state does this by doing its dirty work or carrying out illegal operations against its own citizens in foreign countries, using the services of foreign countries and suggesting that the victims are people “to whom normal rules do not apply” (p. 517). States and their respective agencies may engage in information control (Turk, 1982: 129–137). This may include censorship and a reduction in the legal methods (e.g., whistleblower legislation) for exposing state irregularities.

State/organizational public relations efforts The state may engage in suppression and/or repression, including silencing its opposition by harassing, arresting, and/or incarcerating them (Turk, 1982). It may also use numerous rhetorical devices to delegitimize critics’ actions and their arguments. In advanced industrialized democracies, this approach may backfire and be interpreted as too heavy-handed an approach. According to Turk, “among the standard forms of suppression are censorship and confiscation, disruption of resistance or conventional oppositional activities, and the punishment of receivers as well as transmitters and originators of prohibited communications” (1982: 132). There are more crafty approaches that states may take in order to permanently or temporarily diffuse resistance or efforts at control. This is usually through some form of public relations. Based on Turk (1982: 132), “public relations ploys though not insignificant, constitute a much

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less crucial dimension of information control than efforts to chill or stifle other than approved discourse, or try to influence directly policy decisions by higher authorities.” States may stereotype activists and oppositions (Turk, 1982). He states (1982: 71): [A]t the extreme, the process of stereotyping eventuates in dehumanization: The enemy is judged to be so inhumanly evil or contemptible that anything may be done to “it” without subjectively compromising one’s own humanity and sense of morality. Turk adds, “the negative stereotyping of one’s enemies is matched by the positive stereotyping of oneself and one’s allies” (p. 71). In some respects, the creation of laws may also be seen as a public relations exercise. Governments may pass new laws restricting their abuse but if resources for implementation are not forthcoming, then the law is virtually useless. According to Turk (1982: 37), [T]o authorities, a legal system is desirable as long as they believe that it facilitates their acquisition and exercise of power, while protecting and justifying the good life which power enables them to enjoy. To subjects, the desirability of a legal system depends mainly upon its perceived effectiveness in restraining the authorities from at least the grosser forms of exploitation, thus giving the relatively powerless some hope of a tolerable and perhaps better life. Finally, states may not need to win the compliance of their citizenry to enact policy decisions. As Turk (1982: 78) notes, [T]he transformation of power into authority is accomplished by conditioning the great majority of people to accept power relationships as real, inevitable, unavoidable, and perhaps even right. The longer a polity endures, the more accustomed people become to thinking and living in ways supportive of the status quo.

Conclusion The previous discussion has attempted to outline controls on state crimes and alternative reactions to this kind of state behavior. Any analysis of the controls on state crime must take into consideration the alternative and competing kinds of reactions to this kind of crime on political behavior. Controlling state crime remains the crown jewel in any explanation of state crime. If not, we are left with a series of case studies on the commission of state crime and resistance from it. Ultimately, stopping state crime may mean the abolishment of the state. Martin (1995/2000), in an eloquent essay written two decades ago, argues this very point. Until we as a society are prepared to move in this direction, society will have to be content with simply understanding the process by which the state engages in crimes and the multiplicity of reactions after it does so.

Notes 1 For those unfamiliar with the concept, state crime basically consists of deviant, abusive, harmful, illegal, wrongful and criminal actions that states engage in against their citizens and those of other countries. This includes, but is not limited to, corruption, human rights violations, genocide, crimes against humanity, war crimes, etc. 2 Rothe (2009: ch. 10) makes a distinction between controls and constraints. Under constraints, she includes non-governmental and intergovernmental agencies, news media, citizen tribunals, international

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financial institutions, international reactions from states and citizens’ social movements. Similarly, Gill (1995/2000), in the context of intelligence agencies, presents controls and oversight. 3 In particular, both a special issue of the journal Social Justice (2009b, Vol. 36, No. 3), edited by Dawn L. Rothe, and a relatively recently published book State Crime and Resistance (Stanley and McCulloch, 2012) have exclusively concentrated on the subject of resistance to state crime. 4 Turk calls this “evasion,” and states, “evasion has been a characteristically lower-class form of calculated resistance, for those experienced in powerlessness learn to avoid rather than to seek confrontations” (1982: 103). 5 For an extended application of this concept as it relates to police use of excessive force, see, e.g., Ross (2000a: ch. 5).

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Menzies, K. (1995/2000). State Crime by the Police and its Control, in Ross, J.I. (ed.) Controlling State Crime: An Introduction (2nd edn). Brunswick, NJ: Transaction Publishers, pp. 141–162. Michalowski, R. (2013). The Master’s Tools: Can Supranational Law Confront Crimes of the Powerful States?, in Stanley, E. and McCulloch, J. (eds) State Crime and Resistance. New York: Routledge, pp. 210–224. Mittelman, J.H. (2000). The Globalization Syndrome: The Transformation and Resistance. Princeton, NJ: Princeton University Press. Molina, L. F. (2000). “Can States Commit Crimes? The Limits of Formal International Law,” in Ross, J. I. (Ed.) Controlling State Crime. (pp. 349–388). (2nd Ed.) New Brunswick, NJ: Transaction Publishers (2nd Ed.) Morrison, W. (2009). Atrocity and the Power of the Image. Social Justice, 36(3), 61–77. Mullins, C.D., Kauzlarich, D. and Rothe, D.L. (2004). The International Criminal Court and the Control of State Crime: Problems and Prospects. Critical Criminology: An International Journal, 12(1), 285–308. Pickering, S. (2002). Women, Policing and Resistance in Northern Ireland. Belfast: Beyond the Pale. Pickering, S. (2005). Crimes of the State: The Persecution and Protection of Refugees. Critical Criminology, 13(1), 141–163. Polanyi, K. (2001). The Great Transformation: The Political and Economic Origins of Our Time. Boston, MA: Beacon. Ricci, D. (1984). The Tragedy of Political Science. New Haven, CT: Yale University Press. Rosenberg, M. (1951). The Meaning of Politics in Mass Society. Public Opinion Quarterly, 15(1), 5–15. Ross, J.I. (ed.) (1995/2000). Controlling State Crime: An Introduction (2nd edn). Brunswick, NJ: Transaction Publishers. Ross, J.I. (1998). Situating the Academic Study of Controlling State Crime. Crime, Law and Social Change, 29(4), 331–340. Ross, J.I. (2000a). Making News of Police Violence: A Comparative Study of Toronto and New York City. Westport, CT: Praeger. Ross, J.I. (ed.) (2000b). Varieties of State Crime and its Control. Monsey, NY: Criminal Justice Press. Ross, J.I. (2000c). Controlling State Crime in the United Kingdom, in Ross, J.I. (ed.) Varieties of State Crime and its Control. Monsey, NY: Criminal Justice Press, pp. 11–30. Ross, J.I. (2003). (Mis) representing Corrections: The Role of our Cultural Industries, in Ross, J.I. and Richards, S.C. (eds) Convict Criminology. Belmont, CA: Wadsworth Publishing, pp. 37–58. Ross, J.I. (2010). Reinventing Controlling State Crime and Varieties of State Crime and Its Control: What I Would Have Done Differently, in Rothe, D.L. and Mullins, C.W. (eds) State Crime: Current Perspectives. New Brunswick, NJ: Rutgers University Press, pp. 189–197. Ross, J.I. and Grabosky, P. (2014). Controlling State Crime and the Possibility of Creating More Victims, in Rothe, D.L. and Kauzlarich, D. (eds) Towards a Victimology of State Crime. New York: Routledge, pp. 225–237. Ross, J.I. and Rothe, D.L. (2008). Ironies of Controlling State Crime. International Journal of Law, Crime and Justice, 36(1), 196–210. Rothe, D.L. (2009a). State Criminality: The Crime of All Crimes. Lanham, MD: Lexington/Roman & Littlefield. Rothe, D.L. (2009b). Exploring Post-resistance to State Criminality: Realpolitik versus Ideology. Social Justice, 36(3), 111–121. Rothe, D.L. and Kauzlarich, D. (2010). State Crime Theory and Control, in Barlow, H. Decker, S. (eds) Criminology and Public Policy. Philadelphia, PA: Temple University Press, pp. 166–187. Rothe, D.L. and Mullins, C. (2006). The International Criminal Court: Symbolic Gestures and the Generation of Global Social Control. Lanham, MD: Lexington Books. Rothe, D.L. and Mullins, C. (2008). Genocide, War Crimes and Crimes against Humanity in Central Africa: A Criminological Explanation, in Smeulers, A. and Haveman, R. (eds) Supranational Criminology: Towards a Criminology of International Crimes. Antwerp: Intersentia, pp. 135–155. Rothe, D.L. and Mullins, C. (2009). Toward a Criminology for International Criminal Law: An Integrated Theory of International Criminal Violations. International Journal of Comparative and Applied Criminal Justice, 3(1), 97–118. Schoultz, I. (2014). European Court of Human Rights: Accountability to Whom?, in Rothe, D.L. and Kauzlarich, D. (eds) Towards a Victimology of State Crime. New York: Routledge, pp. 173–190. Scott, J. (1990). Domination and the Arts of Resistance: Hidden Transcripts. New Haven, CT:Yale University Press. Stanley, E. (2009). Torture, Truth and Justice: The Case of Timor-Leste. London: Routledge. Stanley, E. and McCulloch, J. (eds) (2012). State Crime and Resistance. New York: Routledge. Tombs, S. and Whyte, D. (eds). (2003a). Unmasking the Crimes of the Powerful. New York: Peter Lang. 501

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Tombs, S. and Whyte, D. (2003b). Unmasking the Crimes of the Powerful: Establishing Some Rof Engagement, in Tombs, S. and Whyte, D. (eds) Unmasking the Crimes of the Powerful. New York: Peter Lang, pp. 261–272 Tunnell, K. (1995/2000). Crimes of the Capitalist State Against Labor, in Ross, J.I. (ed.) Controlling State Crime: An Introduction (2nd edn). New Brunswick, NJ: Transaction Publishers, pp. 317–348. Turk, A. (1982). Political Criminality: The Defiance and Defense of Authority. Beverley Hills, CA: Sage. White, R. (2009). Environmental Victims and Resistance to State Crime through Transnational Activism. Social Justice, 36(3), 46–60. Yarnold, B.M. (1995/2000). A New Role for the International Court of Justice: Adjudicator of International and State Transnational Crimes, in Ross, J.I. (ed.) Controlling State Crime: An Introduction (2nd edn). New Brunswick, NJ: Transaction Publishers, pp. 317–348.

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36 Hacking the state Hackers, technology, control, resistance, and the state Kevin F. Steinmetz and Jurg Gerber

Introduction There is a specter looming over the public mind – a sinister entity constructed from images augmented through the funhouse mirrors of news media and political rhetoric: the hacker. For many, hackers are seen as troublemaking computer wizards with a penchant for mischief and occasionally mayhem (Coleman and Golub 2008; Hollinger 1991; Skibell 2002; Yar 2013). These perceptions have been described as mostly socially constructed in nature (Halbert 1997; Holt 2009; Skibell 2002; Thomas 2005; Wall 2007; Yar 2013). While the term “hacker” has many connotations within and outside the hacker community beyond criminality, the media almost always refer to persons who commit computer-related crime – particularly those over networks – as “hacking” (Holt 2009; Turgeman-Goldschmidt 2011). Media and political constructions of hacking blur fact and fiction to cast hackers as the “archetypal ‘cybercriminal’” (Wall 2007: 46). As a result, hackers are viewed as an immense threat to technological infrastructure, as well as personal privacy and financial well-being. Some view hackers as a potential force of political change, particularly in light of recent events surrounding the hacker group Anonymous (Olson 2012) and WikiLeaks, an online whistleblowing organization caught in multiple controversies involving hackers (Leigh and Harding 2011; Steinmetz 2012). These persons see the threatening capacity of the hacking community as akin to social dynamite (Spitzer 1975). While such a perspective fails to capture the totality of hacking culture, some segments of the hacker community do involve an overt political edge. Underpinning many actions of hackers more generally – including those centered on activism and resistance – are a configuration of beliefs and perspectives resting upon certain political and philosophical foundations. One such foundation is a kind of technological liberalism. When the hacker community critiques or resists the state and its various institutions, technological liberalism is often the undercurrent. In light of the capacities for destruction and change (which do not summarize the totality of the hacker community but some of its more transgressive expressions), the state has come to view hackers as a threat to itself, its institutions, and its infrastructure. President Obama (2012) has even invoked the term “hacker” while describing the threats that network infrastructure attacks pose to the US as a nation. Regardless of this capacity, the hacking community (generally) has 503

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also been found to not reject the idea of statehood out of hand. The problem, rather, are states which exert too much control and operate in a manner which is perceived as harmful and/or inefficient (Steinmetz and Gerber 2014a). As such, hackers offer a potential threat to the state but this capacity seems reformative rather than revolutionary. Considering the cacophony of public/political worry and fascination expressed at the perceived cataclysmic potential of hackers, state crime researchers may find it fruitful to understand how a group caught in the nexus of resistance and state power views the state, crimes of the state, and potential avenues for social change. Such an analysis would cast light on the tensions between the hacking community and state interests as well as allow for a critical dissection of the foundations from which such tensions emerge. This chapter is dedicated to addressing these areas in turn and serves to contribute to a body of state crime literature which focuses on resistance to state crimes (Friedrichs 2009; White 2009). First, a discussion of the various philosophical and political perspectives underpinning much of the views in the hacker community is provided. Then, attention is given to those actions – based on the previous philosophical and political context – which are likely viewed by hackers to constitute state crimes. Proposed hacker solutions to these problems/crimes are then examined. Insights and examples of hacker perceptions of state crime as well as related solutions are drawn from numerous sources, including prior research of the authors,1 relevant academic literature, and current events.

The hacker philosophy and the state Certain perspectives within the hacking subculture are underpinned by two key positions: a technological ontology and liberalism. Regarding the former, there tends to be a type of computational thinking that occurs among members of the hacker community. Warnick (2004) explains such thinking as filtered through the ontological metaphor of the world is a computer. Drawing from the work of Lakoff and Johnson (1980), Warnick (2004) argues that such a view means that hackers tend to view the world, including its various institutions, as operating best when conditions ideal for computational performance are met: openness, inter- and intra-connectivity, freedom (as in freedom to distribute computational resources as necessary), and efficiency. Springing from this ontology is a sense of technological utopianism, the view that many problems confronting society can be resolved through technological/engineering fixes. In particular, technology may be used to bypass or circumvent problems as well as protect oneself from the deleterious effects of social issues through technology, particularly those involving privacy (Coleman and Golub 2008). Beyond this technological ontology is a strong tradition of liberal thought in the hacker community. As Coleman and Golub (2008: 256) state: Although it is often overlooked, it does not take much to understand the centrality of liberal ideas to hackers. Even a quick gloss of the language that hackers frequently invoke to describe themselves or formulate ethical claims – freedom, free speech, privacy, the individual, meritocracy – discloses liberal imprints and concerns. The authors then continue by describing how liberalism manifests in three areas of hacker culture: crypto-freedom, free and open source software (F/OSS), and the hacker underground (Coleman and Golub 2008). While these domains may differ in their expressions of liberalism, they are given commonality through it as well. Taken together, the technological ontology and spirit of liberalism described here form a kind of technological liberalism useful for understanding a great deal of thought and action within 504

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the hacker community. Of particular importance for the current analysis is that technological liberalism has been described as underpinning hacker (and related technologists) perspectives on the relationship between technology, the individual, and state power as demonstrated through two different but related areas of political thought. First, technological liberalism may be seen in the writings of crypto anarchists, a group which arose from the public key cryptography movement – a push in the 1980s by groups of technologists to make encryption easier and more accessible – which was essentially guided by the belief that individuals can use encryption to protect themselves and their privacy, particularly against intrusions by the state (Frissell 2001; Hughes 2001; Levy 2001; May 2001b). Cypherpunk Hughes (2001: 82) describes the perceived liberal potential of technology held by crypto anarchists: “People have been defending their own privacy for centuries with whispers, darkness, envelopes, closed doors, secret handshakes, and couriers. The technologies of the past did not allow for strong privacy, but electronic technologies do.” Both technological utopianism (demonstrated through a belief in cryptography as a solution to solve privacy and control issues) and liberalism (through a rejection of the state and concerns over individual privacy) are present. A second, related area of political thought underpinned by technological liberalism is what Jordan and Taylor (2004) describe as technolibertarianism, the perspective that the social/political/economic spheres of the internet are capable of self-regulation and do not need state control. For example, John Perry Barlow (2001: 28), a key figure in technolibertarianism, wrote the following in reaction to the creation of the Telecommunications Act of 1996: “On behalf of the future, I ask you of the past [governments] to leave us alone. You are not welcome among us. You have no sovereignty where we gather.” In this statement, Barlow rejects the state as a source of social control over the internet. In its dismissal of state sovereignty, the invocation of “liberty,” and its declaration of independence from tyrannies, the influence of liberalism is clear. Even the title of Barlow’s (2001) piece heralds back to the language of Jefferson: “A Declaration of the Independence of Cyberspace.” Technological liberalism is thus a clear influence on hacker thought, as evidenced in descriptions of crypto anarchy and technolibertarianism. Such thought provides the foundation for many hacker perspectives toward the state. This analysis articulates those actions that are perceived as state crimes from the perspective of technological liberalism.

Defining state crime Before describing hacker perspectives of state crime, it is important to examine the precise view of state crime advanced in this analysis. Over the years, criminology has refined its understanding of state crime with multiple approaches now considered acceptable. A general definition may be summarized as “harmful behaviors committed by states upon its citizens . . . citizens of another state . . . or upon another state” (Kauzlarich et al. 2003 pp. 241–242). Many definitions – in some form or fashion – have involved domestic or international legal codes or the violation of human rights (Rothe and Friedrichs 2006). Beyond law, however, almost all definitions of crime/ deviance (state or otherwise) are unified in that they consider crime as some sort of code or norm violation – either subjective or objective to varying degrees. In adhering to the spirit of the idea that crime is some sort of code violation, state behaviors may be seen as criminal if they are in violation of an alternative moral/philosophical code held by the citizenry or a subgroup within the population, similar to Green and Ward’s (2000) deviance-based understanding of state crime. Instead of entirely relying upon citizens’ perceptions alone, however, this perspective of state crime relies upon connecting these perceptions to more cogent philosophical and/or moral frameworks. If we can accept the legitimacy of such 505

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codes, then isolating state behaviors which may be perceived as detrimental from that populations’ perspective is possible. Of course, such an understanding may be seen as problematic due to the effects of forces – such as hegemony and nationalism – which can obfuscate the nature of criminal behavior. Only those actions which were perceived by a group to be sufficiently egregious as to cut through such ideological smoke-and-mirrors would thus be seen as state crime. Fortunately, in examining only the hacker community, there are numerous actions performed by the state that are generally reviled, regardless of the aforementioned forces. Only examining the hacker community also avoids the problem identified by Kauzlarich and colleagues (2003) that a citizenry-based/ deviance-based understanding of state crime privileges some members of the population over others, since only one population is under examination. While there is variation within the hacker community, there may be enough homogeneity to warrant consideration of the group as a more unified whole, particularly when it comes to state crimes. This definition of state crime also depends on the identification of a clear moral/philosophical code. In the case of hackers, one such framework has been identified: technological liberalism. If we take the previous framework of technological liberalism (manifesting through articulations like crypto anarchy, and technolibertarianism) as one which upholds certain inalienable rights, liberties, and freedoms as sacred, then the compromise of these values – particularly by states – constitutes violations that are seen as detrimental. Should these violations become perceived as excessive, they may be considered harmful enough to be state crimes deserving of corrective measures or resistance. In this sense, technological liberalism provides the moral code of which the state is in violation. Considering the emphasis placed on the individual and their technological ontology in hacker culture, many of the values deserving of protection are centered on information rights (e.g., privacy and data protections) and autonomy (e.g., avoiding excessive forms of state control).

Actions of the state perceived as crimes from a hacker perspective There are a number of state behaviors which are viewed as harmful from a hacker perspective, in particular behaviors seen as overly controlling or incompetent/inadequate (Nikitina 2012; Steinmetz and Gerber 2014a). In this sense, state actions which work – through various mechanisms of coercion, incompetence, dysfunction, or inadequacy – to create harmful outcomes for liberal values (such as privacy, autonomy, freedom, etc.) qualify as state crimes from a hacker perspective. In this chapter, seven categories of state criminal activity are presented: surveillance, failures to protect data, prosecution of vulnerability reporting, state secrecy, censorship, over-criminalization of technology-related activities, and state-corporate collusion.

Surveillance Surveillance here is used as a broad term to capture a number of state behaviors hackers find detrimental, including monitoring, data retention, and database centralization. An example of all three – which also constitutes perhaps one of the largest state crimes from a technological liberalist position – concerns the massive telecommunications surveillance infrastructure erected by the National Security Agency (NSA) referred to as the Planning Tool for Resource Integration, Synchronization, and Management (PRISM) revealed by former NSA employee-turnedwhistleblower, Edward Snowden (for more on PRISM and Snowden, see Rothe and Linnemann, Chapter 37, this volume). PRISM has involved the monitoring of various telecommunications networks which required numerous public and private databases to be linked together. This program has 506

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been seen as a major intrusion on privacy rights despite NSA assurances to the contrary. In addition, PRISM has been said to engender a chilling effect upon free speech through telecommunications. The anger felt by the hacker community was demonstrated through the administrators of DEF CON, the largest hacker convention in the world, asking “the U.S. federal government to stay away this year for the first time in its 21-year history” (Finkle 2013). Indeed, the anger was palpable throughout DEF CON 21 – where the lead author was in attendance conducting observational research – with numerous speakers decrying the NSA and US government for their surveillance.

Failure to protect personal data While surveillance itself qualifies as a state crime from a hacker perspective because of its deleterious effects on privacy and individual autonomy, failure to properly protect gathered personal information is also seen as harmful state behavior. For the state, this involves protecting its records in addition to implementing laws which force others, particularly businesses, to put in place appropriate data protections. In the case of the latter, failure to act to protect individual privacy may be seen as an example of an egregious state offense – a state crime of omission (Kauzlarich et al. 2003). Expressing concern about the vulnerability to individual privacy credit records, Squealing Sheep (2006: 29), in 2600: The Hacker Quarterly, stated that “[t]here is not one lawmaker truly lobbying for the protection of the citizens, the very same citizens electing the lawmakers to office.” Here, the state is viewed to have an obligation to protect privacy (along with other liberal values) and the failure to do so is seen as an offense. In this instance, state control is actually favored as long as such control protects personal privacy (such an argument is wholly consistent with liberalism, which often views the state as necessary insofar as it protects personal liberties).

Prosecution of vulnerability reporters Hackers view the prosecution of individuals who isolate and report security vulnerabilities to be detrimental state behavior as well. A recent case involves an Australian teenager who reported a security vulnerability that exposed the information of thousands of transit users. The teenager reported the bug to the service and, after two weeks of the transit system failing to address the issue, he went to the press. Cory Doctorow (2014), a prominent figure among hackers and other technologists, described the offensive character of the arrest: [A]nyone who keeps sensitive information on hand has a duty to take bug reports about vulnerabilities seriously, and to act on them quickly. Killing (or arresting) the messenger is absolutely unforgiveable . . . because it creates a chilling effect on all future bug-reporters. The arrest was considered offensive because rather than address the vulnerability (i.e., protect personal information) blame was shifted to the “bug-reporter” which is said to have a “chilling effect on all future bug-reporters.”

State secrecy While invasions of individual privacy are viewed as harmful behavior by the state, state secrecy is also viewed as problematic, particularly over-classification. While hackers generally understand that national security does require some secrecy, the abuse of such secrecy is seen as a problem with detrimental outcomes, such as the obfuscation of war crimes, diplomatic snafus, and 507

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government corruption, as revealed through organizations like WikiLeaks (Steinmetz 2012). In particular, this perspective is derived from the belief that “information wants to be free” which, as hacker guru Richard Stallman (2002: 43) states, means “free” in the sense of “free speech” and not “free beer.” In this sense, democracy is seen as operating like a computer which functions best when information is allowed to travel freely between components, consistent with liberalism and Warnick’s (2004) description of hacker ontological perspectives. Government secrecy is then viewed as detrimental because of its restrictions on information flow – restrictions which inflate state power and control.

Censorship A state crime which similarly violates the technological liberalist belief that “information wants to be free” is censorship. A key example of such censorship is the Great Firewall of China (GFC). The GFC is an “[Internet] filtering system which is widely considered to be one of the most sophisticated in the world” and blocks various keywords “related to matters such as groups that the Chinese Government has banned, political ideologies that they consider unacceptable and historical events that the regime does not wish to have discussed” (Clayton et al. 2006: 20). The hacker community identifies the Chinese as one of the major practitioners of internet censorship (Tokachu 2006). Of course, the US has also been condemned for actions such as a crackdown on websites which were implicated in online piracy and counterfeiting (Dragorn 2010; Gustin 2010). Such censorship erodes the liberal values of free speech and individual autonomy since the state acts to curtail expression.

Over-criminalization of technology-related activities Another behavior which qualifies as state crime from a hacker perspective is the over-regulation/ criminalization and subsequent prosecution of technology-related activities (beyond bugreporting as previously described). Many activities in which the hacker community engages are increasingly criminalized by developments in intellectual property laws (including the notorious Digital Millennium Copyright Act) and those which regulate behaviors concerning technological infrastructures (such as the Computer Fraud and Abuse Act). Many prosecutions for offenses under these laws have been viewed as involving charges and monetary damages far exceeding actual harms committed. For example, the Recording Industry Association of America (RIAA) used copyright law against approximately 18,000 people before winding down the campaign in December 2008 (Kravets 2010). Under copyright law, individuals were being sued (and often settled out of court) for damages in the thousands and, occasionally, hundreds of thousands of dollars – seen as grossly disproportionate to the actual losses experienced by the recording industry (Lessig 2004). Such damage claims are even seen as disproportionate when brought drastically down to totals under US$10,000 in out-of-court settlements. While the RIAA is generally abhorred for abusing such legislation, the legislation itself is seen as problematic for allowing such penalties to be exacted. A recent case of alleged over-prosecution involves Aaron Swartz, an internet activist who faced a million-dollar fine and 35 years in prison for downloading troves of academic articles from JSTOR (Wu 2013). He subsequently committed suicide. Many in the hacker community mourned his loss and lamented how such penalties could be enacted for crimes which did not seem to create much harm. In essence, such legislation is viewed as out of touch with the realities of technology and disproportionate to the actual harms committed. In this sense, such laws created by the state are viewed as creating various social harms rather than ameliorating them. 508

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State–corporate collusion A final state crime described in this analysis includes state–corporate collusion – essentially extending hacker perspectives on state crime to state-corporate crime, a well-founded area of criminological research (Kramer et al. 2002). Generally, hackers deplore governments supporting the interests of corporations at the expense of individual liberties. The editor of 2600: The Hacker Quarterly, Emmanuel Goldstein (2002: 5) (pseudonym of Eric Corley), describes this perspective as follows: What’s been happening in our various governmental bodies is shameful. . . . Our rights as individuals are either being wiped away to benefit some corporate interest or being severely compromised in the name of September 11 . . . a repugnant development, one which must be fought. Here, Goldstein is decrying the erosion of civil liberties by “corporate interests.” While typically hackers value free-market enterprise (Hughes 2001; Barlow 2001) – consistent with liberalism – they also seem to despise overly powerful and controlling economic interests. When the government helps secure corporate power, this is viewed as detrimental state behavior, particularly as it only helps governments and corporations to violate individual rights. In this sense, state– corporate colluding is a state crime from a hacker perspective (much like it is from a criminological one; see Barak 2012).

Summary Seven state behaviors have been described here to represent state crimes from a hacker perspective. These include: (1) surveillance/privacy intrusions, (2) failure to protect personal data, (3) the prosecution of bug/security vulnerability reporters, (4) state secrecy, particularly overclassification, (5) censorship, (6) over-criminalization and prosecution of technology-related activities, and (7) state–corporate collusion. Consistent with a strong ethos of technological liberalism permeating the different sectors of the hacker community (Coleman and Golub 2008; Warnick 2004), these crimes largely concern perceived encroachments upon individual rights by the state. In addition, many of these are united, perhaps unsurprisingly, in their focus on information rights, such as privacy, free speech, and government transparency. The solutions given by hackers are also equally data-centric (described in greater detail later). In accepting the idea that state crime can be a violation of a population’s or sub-population’s moral code, the actions or inactions described previously further qualify as state crime as they meet the criteria by Kauzlarich and colleagues (2003). First, these actions generate “harm to individuals, groups, and property” (Kauzlarich et al. 2003: 244). Throughout these crimes, various harms to individual freedoms and liberties are enumerated – which qualify as harms from the framework of liberalism. Second, these harms are the result of state actions or failures to act. The state intrudes upon privacy, keeps secrets, fails to protect data, etc. Third, the actions or inactions by the state correspond to “an assigned or implied trust/duty” (Kauzlarich et al. 2003: 245). From the framework of liberalism, the state is responsible for securing the rights and liberties of individuals and any encroachment upon these values is a violation of state duty. Fourth, such actions are done by state agents, institutions, or organizations. Finally, these crimes are conducted for the interests of the state or on behalf of elites (such as various media and technology industry owners). Some are argued to be conducted on the basis of national security, such as the erection of massive surveillance assemblages. Some are done to secure intellectual property rights for media 509

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industries, such as the over-criminalization of technology-related deviance. In short, these activities described meet all criteria to qualify as state crime from a hacker perspective.

Solutions to state crime/the role of hackers Ever the pragmatists, hackers do not merely regard certain state behaviors as harmful but also devise solutions to these problems – effectively supplying mechanisms of resistance against state crime (Friedrichs 2009). For solutions, two types of approaches are recognized: liberal and radical (Steinmetz and Gerber 2014a). The distinction between the two is based on the description given by Howard Zinn: A liberal thinks that the system is basically good, but that it has a few flaws. . . . Radicals think that the whole system is so corrupt that it will swallow you up and spit you out . . . you need to create powerful social movements . . . that will put pressure on the system. (Tant 2004) From this perspective, then, liberals believe in the ultimate integrity of the system but that it just needs to be adjusted from within for optimal performance. A radical believes that the system itself is problematic and should be adjusted through resistance. Of course, the fact that such radical approaches are articulated here does not undermine the spirit of liberalism permeating hacker culture. The resistance is meant to secure and protect liberal values (i.e., free speech and privacy). Such resistance is said to be important because, as one hacker argued in an interview, the government is believed to be the biggest violator of privacy: The biggest hacker of all those. . . . It’s the U.S. federal government. I mean, if you really think about it . . . and hacking can easily be defined as, “accessing information that is not yours,” right? And considering that, you know, every text message and probably every phone call that we make. . . . Cell phone call is routed through some government system where it’s analyzed, it makes you really think, “who is the biggest breacher [sic] of personal data of them all?” The following are descriptions of the two different approaches at work within the hacker/technologist community.

Liberal Liberal solutions to addressing problems in governance are often sought through advocacy and proposed legislative changes. 2600 author Pat D. (2011: 54) proposes a liberal solution when she/he states: The last and final thing you can do to protect your anonymity and privacy in the digital age is to stay informed and lobby the lawmakers. Let them know that you are not happy with the changes they are trying to make in regards to your online privacy. In essence, the solution to the problem is to use mechanisms built into the system (lawmakers) to push for changes. Similarly, the Electronic Frontier Foundation (EFF) is an advocacy group strongly affiliated with the hacking community and technolibertarianism which lobbies for legislative change. Major issues tackled by the organization include government transparency, surveillance, and other privacy issues. Importantly, this group focuses on pushing for legislative 510

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changes to stop governments engaging in the types of behaviors previously described as state crimes from a hacker perspective. One such proposed change included a bill known as Aaron’s Law, after Aaron Swartz (Jaycox et al. 2013). This bill was aimed at reducing some of the ambiguous language and redundancies which allowed the Computer Fraud and Abuse Act to be inappropriately used against technologists, security researchers, activists, and hackers.

Radical Other techniques exist for combating the state crimes which qualify as radical. These techniques themselves generally fall into two categories: circumvention and disruptive electronic protests. Circumvention involves any technique which attempts to thwart or bypass government attempts to enact control, such as through surveillance or obstruction. Crypto anarchy arose as a reaction against increasing government control of information and technology during the 1980s and 1990s (Levy 2001; May 2001b). Cypherpunks believe that the wide use of cryptography presented a tremendous vehicle to secure individual liberties. As May (2001a: 75) summarizes, “The implications for personal liberty are of course profound.” Cryptographic circumvention of state surveillance is viewed as a solution to protect privacy, freedom of speech, and the right to free market exchanges. An example of cryptography to avoid surveillance is through the use of “dark nets” which are “closed networks used for file-sharing” (McGuire 2010: 511). Such networks use cryptography to transmit data between only those computers which have been permitted access to the network. Typical means to monitor network traffic, such as packet sniffing, are relatively useless against dark nets because the person conducting surveillance would either need access to the encryption key or would need to crack the encryption, an endeavor which – depending on the sophistication of the encryption – often requires access to immense computational power. Beyond circumventive techniques, state crime can also be resisted through the use of disruptive protest techniques. A notable example of the use of such techniques involves the Electronic Disturbance Theater (EDT) in what activists called “electronic civil disobedience” (Meikle 2002: 141). The practice is now commonly referred to as “hacktivism,” though the concept was an invention of journalists rather than the activists (Meikle 2002). The EDT engaged in a denial of service attack – which involves a flood of network traffic surging into a server to bring it to a crawl or a halt – in support of the struggle of the Mexican Zapatistas against the Mexican government (Meikle 2002). The attack was meant to simulate physical peaceful protest tactics like “sit-ins” through multiple digital “bodies” occupying a server until traffic was obstructed. Currently, similar tactics like the distributed denial of service attack are adopted by hacker groups like Anonymous as forms of protest (Olson 2012). Other types of protest tactics include website defacements and data leaks. Such disruption techniques have emerged as a popular form of protest in an increasingly networked global society (Jordan and Taylor 2004) – showing dissatisfaction with the status quo by disrupting telecommunications networks upon which most, including states, have come to rely.

Summary To address state crime, both liberal and radical approaches are advocated by many in the hacker community – a two-pronged approach. Laws and various other policy changes through governmental mechanisms are advanced. This approach is described in the context of hacker cultures in Western democracies, as not enough is known about other international hacker communities to make an accurate assessment. With influence of liberalism in Western hacking, however, liberal solutions which seek to protect individual rights and autonomy through legitimate channels are logically consistent. In the absence of systemic change, however, many hackers also argue for 511

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radical approaches to prevent or avoid state crime. These include circumventing state control efforts, such as through cryptography, or directly challenging and disrupting the operation of the state. In its efforts to uphold individual control and autonomy, even these radical approaches are consistent with technological liberalism.

Conclusion The project advanced here is one which seeks to incorporate alternative perspectives into the state crime literature. The endeavor here was to create an understanding of state crime as perceived by a sub-population within the citizenry that often finds itself in direct or indirect conflict with the state: hackers. The moral and philosophical articulations of the hacker community were examined and described here as technological liberalism. Using this framework, different types of state actions (or inactions) were described which may be considered state crime according to hackers. Types of solutions that emerge from technological liberalism were also described. The utility of such an approach to understanding state crime is that it can help explain the tension between states, oppositional groups, and/or dominated populations. In this case, hackers find themselves subjected to increasing levels of state control and public concern. As state and corporate interests become increasingly wed globally and the subsequent technological infrastructure continues to expand, hackers simultaneously work as some of the greatest architects of technological change as well as some of the great threats to such networks of dependency. In their attempts to curtail those behaviors which are seen as threatening to state and corporate interests – in addition to threats outside the hacker community – states engage in a number of behaviors which create new problems beyond the intended effects. For example, surveillance assemblages are meant to increase security but they also impact upon individual privacy and autonomy. These side effects are viewed as particularly egregious because they often conflict with the beliefs about proper state action held by the hacker community and they often create tensions between hackers and the state. Going forward, states would be well served to re-evaluate their policies and laws surrounding technology and information. As suggested here, state actions directed toward one goal may engender great collateral damage in other regards. Such collateral damage could create new problems and animosities toward states and state actors. Beyond states, such analyses are useful because we can see how state actions harm different groups in different ways. Hackers may view state harms in ways not traditionally considered by scholars, as state crime research tends to focus on issues such as state-terror regimes (Ward 2005), war crimes/crimes against humanity (Mullins and Rothe 2008), and war generally (Kauzlarich 2007; Kramer and Michalowski 2005). These are terrible crimes which are costly to human life and limb. That said, there are many other state crimes which may slip through the cracks – though many are now garnering attention, such as through examinations of the treatment of government whistleblowers (Rothe and Steinmetz 2013).

Note 1 The conclusions drawn from the following two sections concerning state crimes and solutions are largely pulled from existing literature as well as three previous studies conducted by the authors: Steinmetz and Gerber (2014a), a currently unpublished manuscript (Steinmetz and Gerber, 2014b), and the first author’s dissertation.

References Barak, G. (2012) Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding. Lanham, MA: Rowman & Littlefield. 512

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Barbrook, R. and Cameron, A. (2001) California ideology, in P. Ludlow (ed.) Crypto Anarchy, Cyberstates, and Pirate Utopias. Cambridge, MA: MIT Press. Barlow, J.P. (2001) A declaration of the independence of cyberspace. In P. Ludlow (ed.) Crypto Anarchy, Cyberstates, and Pirate Utopias. Cambridge, MA: MIT Press. Clayton, R., Murdoch, S.J. and Watson, R.N.M. (2006) Ignoring the Great Firewall of China. Lecture Notes in Computer Science, 4258: 20–35. Coleman, G. (2012) Phreakers, hackers, and trolls and the politics of transgression and spectacle, in M. Mandiberg (ed.) The Social Media Reader. New York: State University of New York Press. Coleman, G.E. (2013) Coding Freedom: The Ethics and Aesthetics of Hacking. Princeton, NJ: Princeton University Press. Coleman, G.E. and Golub, A. (2008) Hacker practice: Moral genres and the cultural articulation of liberalism. Anthropological Theory, 8: 255–277. Doctorow, C. (2014) Victorian transport department calls cops on 16 year old for reporting bug that exposed customers’ personal data [blog post]. Boing Boing, January 10. Available at: www.boingboing. net/2014/01/10/victorian-transport-department.html. Dragorn. (2010) Transmissions. 2600: The Hacker Quarterly, 27(4): 52–53. Finkle, J. (2013) Hackers convention ask government to stay away over Snowden. Reuters, July 11. Available at: www.reuters.com/article/2013/07/11/us-hackers-feds-idUSBRE96A08120130711. Friedrichs, D.O. (2009) On resisting state crimes: Conceptual and contextual issues. Social Justice, 36: 4–27. Frissell, D. (2001) Re: Denning’s crypto anarchy, in P. Ludlow (ed.) Crypto Anarchy, Cyberstates, and Pirate Utopias. Cambridge, MA: MIT Press. Goldstein, E. (2002) Time to care. 2600: The Hacker Quarterly, 19(1): 5–6. Green, P. and Ward, T. (2000) State crime, human rights, and the limits of criminology. Social Justice, 27: 101–115. Gustin, S. (2010) U.S. shutters 82 sites in crackdown on downloads, counterfeit goods. Wired Magazine, November 29. Available at: www.wired.com/threatlevel/2010/11/us-website-takedowns/. Halbert, D. (1997) Discourses of danger and the computer hacker. The Information Society, 13: 361–374. Hollinger, R. (1991) Hackers: Computer heroes or electronic highwaymen? Computers and Society, 21: 6–17. Holt, T.J. (2009) Lone hacks or group cracks: Examining the social organization of computer hackers, in F. Schmalleger and M. Pittaro (eds) Crimes of the Internet. Upper Saddle River, NJ: Pearson Education. Hughes, P. (2001) A cypherpunk’s manifesto, in P. Ludlow (ed.) Crypto Anarchy, Cyberstates, and Pirate Utopias. Cambridge, MA: MIT Press. Jaycox, M.M., Opsahl, K. and Timm, T. (2013) Aaron’s Law introduced: Now is the time to reform the CFAA. EFF.org, June 20. Available at: www.eff.org/deeplinks/2013/06/aarons-law-introduced-nowtime-reform-cfaa. Jordan, T. and Taylor, P. (2004) Hacktivism and Cyberwars: Rebels with a Cause. New York: Routledge. Kauzlarich, D. (2007) Seeing war as criminal: Peace activist views and critical criminology. Contemporary Justice Review, 10: 67–85. Kauzlarich, D., Mullins, C.W. and Matthews, R.A. (2003) A complicity continuum of state crime. Contemporary Justice Review, 6: 241–254. Kramer, R.C. and Michalowski, R.J. (2005) War, aggression and state crime: A criminological analysis of the invasion and occupation of Iraq. British Journal of Criminology, 45: 446–469. Kramer, R.C., Michalowski, R.J. and Kauzlarich, D. (2002) The origins and development of the concept and theory of state-corporate crime. Crime and Delinquency, 48: 263–282. Kravets, D. (2010) Copyright lawsuits plummet in aftermath of RIAA campaign. Wired Magazine, May 18. Available at: www.wired.com/threatlevel/2010/05/riaa-bump/. Lakoff, G. and Johnson, M. (1980) Metaphors We Live By. Chicago, IL: University of Chicago Press. Leigh, D. and Harding, L. (2011) WikiLeaks: Inside Julian Assange’s War on Secrecy. New York: Public Affairs. Lessig, L. (2004) Free Culture: The Nature and Future of Creativity. New York: Penguin. Levy, S. (2001) Crypto: How the Code Rebels Beat the Government Saving Privacy in the Digital Age. New York: Penguin Press Science. May, T.C. (2001a) Crypto anarchy and virtual communities, in P. Ludlow (ed.) Crypto Anarchy, Cyberstates, and Pirate Utopias. Cambridge, MA: MIT Press. May, T.C. (2001b) The Crypto Anarchist Manifesto, in P. Ludlow (ed.) Crypto Anarchy, Cyberstates, and Pirate Utopias. Cambridge, MA: MIT Press. McGuire, M. (2010) Online surveillance and personal liberty, in Y. Jewkes and M. Yar (eds) The Handbook of Internet Crime. Portland, OR: Willan Publishing. 513

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Meikle, G. (2002) Future Active: Media Activism and the Internet. New York: Routledge. Mullins, C.W. and Rothe, D.L. (2008) Gold, diamonds and blood: International state-corporate crime in the democratic republic of the Congo. Contemporary Justice Review, 11: 81–99. Nikitina, S. (2012) Hackers as tricksters of the digital age: Creativity in hacker culture. The Journal of Popular Culture, 45: 133–152. Obama, B. (2012) Taking the cyberattack threat seriously. The Wall Street Journal, July 19. Olson, P. (2012) We are Anonymous: Inside the Hacker World of LulzSec, Anonymous, and the Global Cyber Insurgency. New York: Little, Brown & Company. Pat D. (2011) Anonymity and the Internet in Canada. 2600: The Hacker Quarterly, 28(4): 54. Rothe, D.L. and Friedrichs, D.O. (2006) The state of the criminology of crimes of the state. Social Justice, 33: 147–161. Rothe, D.L. and Steinmetz, K.F. (2013) The case of Bradley Manning: State victimization, realpolitik and WikiLeaks. Contemporary Justice Review, 16: 280–292. Skibell, R. (2002) The myth of the computer hacker. Information, Communication and Society, 5(3): 336–356. Spitzer, S. (1975) Toward a Marxian theory of deviance. Social Problems, 22: 638–651. Squealing Sheep. (2006) The price of convenience: Our identities. 2600: The Hacker Quarterly, 23(1): 23–25. Stallman, R. (2002) Free Software Free Society: Selected Essays of Richard M. Stallman. Boston, MA: Free Software Foundation. Steinmetz, K.F. (2012) WikiLeaks and realpolitik. Journal of Theoretical and Philosophical Criminology, 4: 14–52. Steinmetz, K.F. and Gerber, J. (2014a) “The greatest crime syndicate since the Gambinos”: A hacker critique of government, law, and law enforcement. Deviant Behavior, 35: 243– 261. Steinmetz, K.F. and Gerber, J. (2014b) Hacker perspectives on surveillance and privacy. Conference Proceedings, International Crime, Media and Popular Culture Studies Conference. Tant, E. (2004) An ocean of resistance: An interview with Howard Zinn. Zmagazine, 1 June. Available at: www.zcommunications.org/an-ocean-of-resistance-by-ed-tant#. Taylor, P.A. (1999) Hackers: Crime in the Digital Sublime. New York: Routledge. Thomas, J. (2005) The moral ambiguity of social control in cyberspace: A retro-assessment of the “golden age” of hacking. New Media and Society, 7: 599–624. Tokachu. (2006) The not-so-great firewall of China. 2600: The Hacker Quarterly, 23(4): 58–60. Turgeman-Goldschmidt, O. (2011) Identity construction among hackers. In K. Jaishankar (ed.) Cyber Criminology: Exploring Internet Crimes and Criminal Behavior. Boca Raton, FL: CRC Press. Wall, D.S. (2007) Cybercrime, media and insecurity: The shaping of public perceptions of cybercrime. International Review of Law Computers and Technology, 22: 45–63. Ward, T. (2005) State crime in the heart of darkness. British Journal of Criminology, 45: 434– 445. Warnick, B. (2004) Technological metaphors and moral education: The hacker ethic and the computational experience. Studies in Philosophy and Education, 23: 265–281. White, R. (2009) Environmental victims and resistance to state crime through transnational activism. Social Justice, 36: 46–60. Wu, T. (2013) Fixing the worst law in technology. The New Yorker, March 18. Available at: www.newyorker. com/online/blogs/newsdesk/2013/03/fixing-the-worst-law-in-technology-aaron-swartz-and-thecomputer-fraud-and-abuse-act.html. Yar, M. (2013) Cybercrime and Society, 2nd edn. Thousand Oaks, CA: Sage.

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37 (Liberal) democracy means surveillance On security, control and the surveillance techno-fetish1 Dawn L. Rothe and Travis Linnemann

Introduction A comfortable, smooth, reasonable, democratic unfreedom prevails in advanced industrial civilization, a token of technical progress. —Herbert Marcuse, One Dimensional Man (1964: 13)

Between June 5 and June 13, 2013 the headlines of the Guardian newspaper read, “NSA collecting phone records of millions of Verizon customers daily,” “NSA Prism program taps in to user data of Apple, Google and others,” “UK gathering secret intelligence via covert NSA operation,” “Boundless Informant: the NSA’s secret tool to track global surveillance data,” “NSA surveillance: anger mounts in Congress at ‘spying on Americans’.” In the United States, these stories appeared as front-page headlines and the topic of news panelists’ discussions on major networks such as MSNBC and Fox. The framing of these newly realized programs took different shapes, depending on the particular network’s corporate master. For instance, while on the right hand, conservative news groups justified the projects with the unverified and unverifiable assertion that this sort of electronic “Surveillance helped thwart more than 50 terror plots” (Fox News 2013; Sullivan 2013), on the left, news groups reported, “Progressives’ fears stoked in Obama era surveillance,” suggesting a degree of disbelief among his liberal supporters that a Democratic president would engage in such sweeping and intrusive tactics (Resnikoff 2013). More than a year later, Edward Snowden, the former CIA and NSA contract employee responsible for revealing the programs, remains at the center of the controversy. Again, the framing of Snowden was rather predictable, ranging from that of outraged conservatives who labeled him a traitor, to the rather impotent shock, dismay, and horror of liberals at the realization of intelligence programs that aimed at foreign and domestic threats, everyday citizens, and government offices of United States allies. Writing in the Guardian, radical philosopher Slavoj Žižek argues that disclosures made by Chelsea Manning, Wikileaks, and Snowden more importantly revealed the hypocrisy or in his words the “shameless cynicism” of the United States security state and the hegemons of the “existing global order” (Žižek 2013). Recalling Marx’s claim that the German ancien regime only imagined 515

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that it believed in itself and demanded that the world should do the same thing, Žižek suggests that confronting the lies that the state expects the public to believe – in this case, that it was not spying on them – is perhaps best evidence of the democratic illusion. What these disclosures have done then is forced the state and public to openly confront that which is well known but denied. While these revelations shocked the consciousness of the US citizenry, we should be clear that this sort of unchecked, intrusive surveillance is in no way new, outrageous, or even unique, as reflected in our opening quote by Marcuse. For some evidence to support this claim, we need look no further than the May 20, 1966 issue of LIFE Magazine. In the issue, the lead article, “The Big Snoop,” heralds “electronic snooping, insidious invasion of privacy-in business, in the home, by law enforcers, by the underworld, by anyone who’s out to get you!” Contradicting Senator Edward V. Long’s assertions that “Federal agents [recently] embarked on a nationwide campaign of wiretapping, snooping, and harassment of American citizens,” the anonymous eponymous piece argued that, in reality, the government has been electronically spying on its citizens for years. The Internal Revenue Service, for example, has admitted bugging public and private phones and even rooms where IRS auditors called businessmen for questioning, on the theory they might reveal something when IRS men left the room. (The Big Snoop 1966) Not only does LIFE support our argument that both widespread government surveillance and the attendant outcry are perennial and thus quite normal, the article also hints at the illusory balance between security and liberty, by suggesting that some types of electronic intrusion should be accepted and are enabled by and indeed “helpful” to police power and the rule of law. As such, in the context of more than 50 years of anxious “revelations” over state surveillance, these most recent disclosures simply represent the latest iteration in processes that have always been part and parcel of state power, social control, and capitalist order building (see, e.g., Torpey 2000). For certain, the programs in question were only developed for the domination of populations on the business end of United States neo-colonial imperial power and only became a concern of the public when they emerged at “home” (see Graham 2011). Employing the Marxian concept of commodity fetishism, we argue here that the tendency to focus upon technological advancement and frame a given surveillance logic, technology, or program as more expansive, potent, or insidious than normalized “everyday” surveillance (Staples 2013) fundamentally obscures the relationship between the state and its subjects. The intermittent outrage over government intrusion, we contend, more aptly reflects an enduring capitalist techno-fetish, which is a deeply engrained part of consumer culture (see Parenti 2007). Insatiable consumers of all manner of superfluous gadgets, United States citizens are perhaps the consummate techno-fetishists (see Hornborg 2013). That is, consumers obsessed with technology, social media self-representation (see Yar 2012), and the convenience these objects are said to provide (see Robins and Webster 1999). Of course, the revolution of goods and this sort of fetishism is necessary for any capitalist economy to function. Indeed, if everyday consumers were to flatly reject the latest GPS-enabled smart phone, tablet computer, or wearable biometric device, panic would rock tech markets and surge like shockwaves through global economies. Thus, in thinking through the latest angst-driven campaign against “new” state intrusion,2 it is useful to recall how willing citizens are to fetishize technology and cast the “old” aside for the “new,” as such being complicit in the exercise of state power, social control, and surveillance. On this, we engage Žižek’s understanding of the fetishistic disavowal, a cultural-cognitive process which permits the public to say, “I know, but I don’t want to know that I know, so I don’t 516

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know” (Žižek 2009a: 53). This is not to suggest simple mystification or even willful ignorance, but rather a useful diversion which allows the public to avoid confronting more difficult realities. In our case, a focus upon “new” surveillance projects operates as fetish objects that permit the public to accept and endure all of the “dirty compromises” of United States life (Žižek 2009b: 299–300). Once fetishized, surveillance technologies, not unlike drone strikes, become the object of outrage, permitting the underlying violence of state power to carry on, in essence, unchallenged. To fetishize “new” surveillance then is to overlook and become complicit in quotidian forms of state violence, coercion, and terror (see Taussig 1989). As such, while some are eager to proclaim that the Orwellian “future is here” (Parenti 2003), our aim is to place the contemporary concern for “new” surveillance in some historical context so that we might better recognize the normalized and banal ways the state sees its spaces and subjects, in order to reproduce disparate social relations (see Scott, 1998).

Some moments in the history of the American security state Beginning a speech in response to the Snowden affair, President Obama stated, the dawn of our Republic, a small, secret surveillance committee borne out of the “The Sons of Liberty” was established in Boston. The group’s members included Paul Revere, and at night they would patrol the streets, reporting back any signs that the British were preparing raids against America’s early Patriots. (Obama 2014) In the effort to justify contemporary practices, Obama made the point that state surveillance of everyday citizens is nothing new. Indeed, the cursory review of United States history, which we outline later, suggests as much. If surveillance has changed, it is mostly in relation to technological advancement. Yet we should not uncritically adopt the category “new” and instead work to situate our subject within a continuum of the technologies of state power. According to David Morton, one of the earliest examples of electronic eavesdropping occurred during the Civil War when both the North and South tapped into each other’s telegraph lines (Morton 2006a). Engineers designed the first magnetic recorder, the telegraphone, to record directly from telephone lines because earlier methods of wiretapping could not keep up with the speed of the telephone (Morton 2006b). During Woodrow Wilson’s administration, the Bureau of Investigations (later becoming the Federal Bureau of Investigations) began the expansion of domestic counter-espionage work. In 1917, for instance, Wilson’s Attorney General, Thomas Watt Gregory, enlisted a Chicago advertising executive, A.M. Briggs, to organize a liaison group of volunteers tabbed the American Protective League (APL). The APL quickly became a quasi-official investigative arm of the United States Department of Justice tasked with investigating German immigrants, infiltrating labor unions, and monitoring anti-war dissent (ACLU 2013). The APL is a good example of private capital and the state’s reliance on surveillance to control and monitor the workplace. Here we can see that state surveillance undertaken under the guise of homeland security not only sought to protect private business interests, but also the broader system of capital accumulation and wagelabor, described by Christian Fuchs as economic surveillance (Fuchs 2012). At around the same time, the New York Police Department’s Bureau of Criminal Alien Investigation was actively engaged in the infiltration and surveillance of various groups – communists, socialists, anarchists, fascists, labor agitators, women’s and civil rights activists – deemed enemies of the state (Roberts 2014). Again, the NYPD’s political surveillance program (Fuchs 517

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2012) details the ways in which the state has used whatever technological means it had at its disposal – photographs, wiretaps – in order to protect and reproduce existing social and political arrangements (Fuchs 2012). In 1928, the decision in Olmstead v.United States provided the police with the authority to secretly wiretap citizens, in some cases without judicial oversight (Parenti 2003). A few years later, the Federal Communications Act (1934) further reified the legality of wiretapping and established the Federal Communications Commission (FCC) to assist the state in regulating electronic communication, as well as its own eavesdropping (Doyle 2012). The central issue at this time was the initiation of boundaries for court admissibility of evidence gained through wiretapping, but oddly not the state’s intrusion. In 1945, the Armed Forces Security Agency (AFSA), a department later absorbed by the NSA, began Project SHAMROCK. Remarkably prescient of contemporary NSA programs, SHAMROCK entailed, among other things, the mass collection of international telegrams received through ITT World International, RCA Global, and Western Union (Gellman 2013). As is PRISM today, SHAMROCK was justified by AFSA’s claims that the broad-based surveillance of United States citizens was necessary to protect the public from exceptional threat, in this case that of the Soviet Union. Presidents Johnson and Nixon followed suit with projects such as Chaos and Minaret which continued to spy on United States citizens under the guise of Cold War anti-espionage efforts. Stitching together the post-9/11 security state mainly from government job listings, investigative journalists Dana Priest and William Arkin uncovered a hidden architecture of thousands of mostly independent facilities and contractors and nearly a million personnel, doing the work of state security (Priest and Arkin 2011). In 2013, the CIA and NSA (the two agencies we typically associate with this work) claimed nearly US$30 billion in budget allocations, to say nothing of the clandestine, “black” agencies and operations of which we do not or cannot know. Nowadays, a diverse group of state and non-state agencies collect all manner of data – phone records, emails, finger prints, surveillance camera footage, online shopping habits, bank records, GPS locations, internet searches, face recognition, automatic license plate readers, body-imaging technology – which is then stitched into an assemblage by an equally atomized and amorphous security state. For instance, consider the recently created Future Attribute Screening Technology (FAST) program. Managed and funded by the Department of Homeland Security’s Science and Technology Directorate, “FAST is designed to allow the agency to capture biological and behavioral information . . . to monitor and collect data including video images, audio recordings, cardiovascular signals, pheromones, electrodermal activity, and respiratory measurements” (Epic 2011). With the help of regional Fusion Centers, data produced and collected by FAST and similar projects is accumulated, much like stockpiles of everyday consumer goods and archived indefinitely with the hopes of one day transforming it into actionable intelligence (Isikoff 2012). Of course, the post 9/11 era is a boon for the private sector, with Elsevier (formerly Choice Point), Epsilon, Experian, and Axicom being four of the biggest players in the electronic surveillance and data-mining game. For instance, Axicom is said to have collected detailed records on more than 190 million people in 126 million US households and more than 500 million consumers worldwide (The Week 2012). As bioethicist Peter Singer warns, “if you are an American adult, the odds are that [Axicom] knows things like your age, race, sex, weight, height, marital status, education level, politics, buying habits, household health worries, vacation dreams – and on and on” (Singer 2012: 1). Indeed, according to Singer, Axicom knows more about you than do the FBI and IRS or even Facebook and Google (Singer 2012). With the ascendancy of unmanned aerial vehicles (UAVs), it would seem that for the average citizen there is no place to hide. 518

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As is argued by Tyler Wall and Torin Monahan (2011), UAVs provide a scopic verticality and superiority – the “drone stare” – allowing state agencies to perpetually monitor everyday interactions and wage a borderless and boundless “manhunt” for criminals and anything else deemed a threat (see also Wall 2013). Yet, as unusual and frightening as the thought of a “drone stare” may be, like the earliest forms of magnetic recording, drones take their place in the pantheon of technologies that structure contemporary surveillance systems (Wall and Monahan 2011: 240). That is, unmanned surveillance drones are not as much revolutionary as they are an improvement over earlier manned surveillance flights. Again, the focus should be upon the state’s underlying power to observe and monitor its subjects and less on the given technology it employs. Given this historical trajectory, it would seem that recent disclosures would be met with little more than complacency or annoyance by the balance of the United States public, yet, as we know, this is not the case.

The banality of surveillance and exception Even though critics from both the right and the left have framed these government surveillance programs as spectacular departures from supposed free and democratic forms of governance, it is important to again position them in relation to routinized forms of state surveillance such as closed circuit television (CCTV). Activists and academics have done much to question and contest the ways in which surveillance technologies such as closed circuit television (CCTV) might influence, if not reshape the affective, discursive, and material texture of lived space, very much in keeping with what Gilles Deleuze (1992), in response to the Foucauldian panoptic, called “societies of control.” Nonetheless, CCTV has long been a normalized part of urban life (Goold et al. 2013). Across major cities video surveillance cameras trained on ATM machines, school buses, businesses, and everyday street scenes were soon knitted together into an assemblage accessible if not altogether administered by the police (Haggerty and Erickson 2000; Parenti 2003). As one commentator put it, not only did surveillance cameras fold seamlessly into everyday geographies, it did not take long before they were an accepted symbol of security “preferred” by an insecure public. Not unlike consumer goods integrated into the bustle of everyday life or those cast aside for a newer, shinier model, CCTV is no longer viewed as novel, unique, or even intrusive. And herein lies the question: At what point will widespread data-mining and predictive pre-crime projects become normal if not preferred by an anxious public? Of course, the answer to this question is: Now. For instance, around the time when the Snowden story broke, Bill Maher, the host of HBO’s late night political talk show Real Time with Bill Maher, an Obama supporter and a dedicated advocate of many left-leaning causes, had this to say about the recent NSA revelations: You know, the fact that a city can be just demolished in one second kind of tips the scale for me. So, I’m not saying to look into your emails is the right thing, I’m just saying, I’m not going to pretend it’s because I’m brave; it’s because I’m scared. (Maher 2013) Accepting the state’s practice of “looking into emails” because he is scared, Maher demonstrates the sort of disavowal that Žižek describes. By choosing one evil because the other is far worse, the point of debate becomes the method of intrusion, not the act of intrusion itself. Once some intrusion is reified as a necessary social good, the argument then moves to the ultimate liberal fallacy, the balance of security and liberty (see Monahan 2006). While critics have done much to challenge the dehumanizing, in-fact killing power of state surveillance assemblages, the question 519

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of balance fails to significantly challenge the logics of domination and coercion, which have always underlined state surveillance (see Neocleous 2008). By forgetting the coercive power of the state and its interest in fabricating a distinct sort of social order, critical scholarship has largely engaged in the fetishism we are speaking of here. As we have argued, civil libertarian objections to “new” surveillance programs have been as consistent and predictable as technological advancements themselves. Portraying the surveillance of today as “overreaching” due to a time of exception or emergency, state of risk, risk management, or that we merely need a balance between “security” and individual rights further legitimates the state system by suggesting that some form of surveillance is acceptable – we do not accept this claim. This is perhaps best supported by another debate over government intrusion which occurred in recent history. Spurred on by the revelations of the Watergate scandal and the investigative efforts of journalist Seymour Hersh, the United States Senate Select Committee to Study Governmental Operations with Respect to Intelligence Activities was formed in 1975 to investigate the legality of the CIA, NSA, and FBI’s domestic intelligence activities. Chaired by Idaho Senator Frank Church, the so-called Church Committee introduced the United States’ public to the size and scope of the state’s domestic surveillance programs (U.S. Senate 2014; AARC 2014). Although the Church Committee did help publicize the issue of domestic spying, its suggested reforms also spawned the much-maligned Foreign Intelligence Surveillance Act (FISA) (Hart 2008: 16). It was, of course, FISA which the George W. Bush administration used as legal cover to justify the “warrantless wiretapping” program, exposed by The New York Times in late 2005 (Risen and Lichtblau 2005). Ironically, two years after the Bush NSA programs were revealed, the successor to the Church Committee, the United States Senate Select Committee on Intelligence, held public hearings on the legality of these “new” surveillance programs. Importantly, at one of the hearings United States Senator Christopher Dodd ended a rather lengthy spate of testimony with the following assertions: We have seen segments of our Government, in their attitudes and action, adopt tactics unworthy of a democracy, and occasionally reminiscent of totalitarian regimes. We have seen a consistent pattern in which programs initiated with limited goals, such as preventing criminal violence or identifying foreign spies, were expanded to what witnesses characterized as “vacuum cleaners”, sweeping in information about lawful activities of American citizens. The tendency of intelligence activities to expand beyond their initial scope is a theme which runs through every aspect of our investigative findings. Intelligence collection programs naturally generate ever-increasing demands for new data. And once intelligence has been collected, there are strong pressures to use it against the target. (Congressional Record 2007: 34596) While these statements are relevant to today’s concern over state surveillance, it is quite ironic if not maddening that Dodd is directly quoting Frank Church’s testimony from some 30 years prior. That an elected official could uncritically invoke a quote from the deliberations of the committee that produced FISA, in a subsequent hearing challenging FISA, perfectly illustrates the misplaced concern over “new” surveillance. Here, without history, only concerned with the latest intrusion, we fail to recognize that the “American” styles of liberal democracy and state surveillance are inseparable. To find an acceptable level of surveillance, or, in Dodd’s words, to “strike the right balance between security and liberty,” is more than a tired cliché, it is the fundamental fallacy which permits the state’s security projects to march on relatively unopposed. As such, it is perhaps no surprise that Edward Snowden himself recently articulated the mistaken hope of striking the right balance between security and liberty. In late 2013, Snowden granted the first formal interview since his disclosures to Washington Post staff writer Barton 520

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Gellman. From a hotel room in Moscow, the (temporarily) exiled Snowden ran down his rationale for blowing the whistle on NSA’s clandestine work. He explained, I am not trying to bring down the NSA, I am working to improve the NSA . . . I am still working for the NSA right now. They elected me [as whistleblower]. . . .The system failed comprehensively, and each level of oversight, each level of responsibility that should have addressed this, abdicated their responsibility. (Gellman 2013) Snowden’s view that he is “still working for the NSA” is quite telling. Clearly, he sees widespread electronic surveillance – as long as it is aimed at enemies and governed by the rule of law – as an acceptable and necessary social good. This is in many ways in keeping with those on the academic left, particularly those lodged under the edifice of “surveillance studies” who, with some resignation, simply describe governmental intrusion as part of the ebb and flow in late modern life (Goold et al. 2010: 4). While many of the so-called critical left frame surveillance as an unqualified social good, others have not been so quick to assume the myth of balance. For instance, as Mark Neocleous points out, when directly confronting the violence that always accompanies and underpins the state’s security work, the myth of “balance” becomes a much more troubling if not fruitless endeavor. He writes, Much of the Left has got itself into great difficulties in trying to work out what to say about such violence and damage, and has tended to address liberal problems such as how to ‘balance’ liberty and security. (Neocleous 2007: 341) Not only does Snowden capitulate to surveillance governed by the rule of law, he apparently sees no problem at all with the widespread data-mining practices of companies like Twitter, because they ostensibly “don’t put warheads on foreheads” (see Gellman 2013). That Snowden completely absolves the private sector’s complicity in the rise of surveillance returns us to the point we made at the outset of this chapter: not only has the commodification and fetishism of technocratic surveillance wares enabled the rise of the security state, but, in fact, it reproduces and advances the coercive violence of state power. As such, the target of radical critique of the security state must also include the everyday consumption patterns of consumers, and also the tendency to fetishize the very technologies making up the assemblage in lieu of sustained critique of the state, its exercise of power, and social control.

Concluding thoughts We suggest that it is not only programs such as PRISM and the like that must be a target for radical critique, but also the public’s disavowal of its complicity in more banal and normalized forms of surveillance. Perhaps this begins with deliberation, or rejection of the most banal everyday activities. Not only would this mean rejecting the latest electronic gadget, but a broad-based slowing down, withdrawing, indeed “unplugging” from our social mediated lives is implied. Unsurprisingly, many of these points were made by leaders of the Frankfurt School such as Herbert Marcuse, who in his luminary 1964 work One Dimensional Man wrote, [T]he capabilities of contemporary society are immeasurably greater than ever before – which means that the scope of society’s domination over the individual is immeasurably 521

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greater than ever before. Our society distinguishes itself by conquering the centrifugal social forces with Technology rather than Terror. (Marcuse 1964: 7) Security is traded and consumed, just like any other commodity. Of course, more active, informed, and deliberate consumption will recognize how various projects do the work of the security state and line the pockets of the powerful. However, this largely misses our point. This chapter was written on computers, connected electronically to news outlets, libraries, and academic journals. For certain, to live an active, engaged life outside the field of electronic communication is a difficult task. Thus, it seems to us that the alternative is to not to lose sight of the relationship between the state and its subjects – to not obfuscate the materiality of violence and domination. For us, this begins by keeping surveillance, however farreaching it becomes or “new” it appears, in context, by not granting it powers it does not possess. The state surveillance at work in banal street scenes is no different from that employed in spectacular manhunts. In fact, we might argue that the United States was born in subversive acts of (counter) surveillance. Recalling the opening lines of President Obama’s speech on the Snowden affair suggests as much: At the dawn of our Republic, a small, secret surveillance committee borne out of the “The Sons of Liberty” was established in Boston. The group’s members included Paul Revere, and at night they would patrol the streets, reporting back any signs that the British were preparing raids against America’s early Patriots. Throughout American history, intelligence has helped secure our country and our freedoms. (Obama 2014) This point comes across loud and clear. The freedoms of United States-style democracy were won and have been secured since, at least in part, by the watchman’s vigilant eye. To reject state surveillance, is also to reject the social conditions – order – of life under late capitalist, liberal democracy. Therefore it seems to us that the question is not striking the right balance between security and liberty, but to begin to imagine a state and social order that would not ask its subjects to choose one or the other.

Notes 1 Inspired by Crimethinc’s “Democracy Means” street art series. Available at: www. cloudfront.crime thinc.com/images/democracymeans/democracy-posters.pdf. 2 In 1988 Gary T. Marx described new surveillance as the evolving “use of technical means to extract or create personal data . . . taken from individuals or contexts” (p. 228).

References AARC (2014) Church Committee Reports. Aarclibrary.org. Available at: www.aarclibrary.org/publib/ contents/church/contents_church_reports.htm (accessed August 27, 2014). ACLU (2013) World War I: Targeting Anti-war Dissent and German-Americans. Trackedinamerica.org. Available at: www.trackedinamerica.org/timeline/ww1/intro/ (accessed August 27, 2014). Agamben, G. (2014) The Security State and a Theory of Destituent Power. Available at: www. philosophersforchange.org/2014/02/25/the-security-state-and-a-theory-of-destituent-power (accessed August 29, 2014). Congressional Record (2007) Congressional Record-Senate, Vol. 153, Pt. 26, December 17, 34596.

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Delueze, G. (1992) Postscript on the Societies of Control. October, 59 (winter). Cambridge, MA, MIT Press, pp. 3–7. Doyle, C. (2012) Privacy: An Overview of the Electronic Communications Privacy Act. Congressional Review Service. EPIC (2011) Future Attribute Screening Technology (FAST) Project FOIA Request. Epic.org. Available at: www. epic.org/privacy/fastproject/ (accessed August 27, 2014). Fox News (2013) NSA Chief Defends Surveillance, Says Helped Prevent Terror Plots More Than 50 Times Since 9/11. FoxNews.com. Available at: www.foxnews.com/politics/2013/06/18/nsa-chief-defendssurveillance-says-helped-prevent-terror-more-than-50-times/ (accessed August 27, 2014). Fuchs, C. (2012) Political Economy and Surveillance Theory. Critical Sociology, 39(5): 671–687. Gellman, B. (2013, December 23) Edward Snowden, After Months of NSA Revelations, Says his Mission’s Accomplished. The Washington Post, December 23. Available at: www.washingtonpost.com/world/ national-security/edward-snowden-after-months-of-nsa-revelations-says-his-missions-accomplished/ 2013/12/23/49fc36de-6c1c-11e3-a523-fe73f0ff6b8d_story.html (accessed August 27, 2014). Goold, B., Loader, I. and Thumala, A. (2010) Consuming Security? Tools for a Sociology of Security Consumption. Theoretical Criminology, 14(1): 3–30. Goold, B., Loader, I. and Thumala, A. (2013) The Banality of Security: The Curious Case of Surveillance Cameras. British Journal of Criminology, azt044. Graham, S. (2011) Cities Under Siege: The New Military Urbanism. New York: Verso. Haggerty, K. D. and Ericson, R.V. (2000) The Surveillant Assemblage. The British Journal of Sociology, 51(4): 605–622. Hart, G. (2008) Liberty and Security. In R. Miller (ed.) US National Security, Intelligence and Democracy: From the Church Committee to the War on Terror. New York: Routledge. Hornborg, A. (2013) Technology as Fetish: Marx, Latour, and the Cultural Foundations of Capitalism. Theory, Culture and Society, 0263276413488960. Isikoff, M. (2012) Homeland Security “Fusion” Centers Spy on Citizens, Produce “Shoddy” Work, Report Says. NBCNews.com. Available at: www. investigations.nbcnews.com/_news/2012/10/02/14187433homeland-security-fusion-centers-spy-on-citizens-produce-shoddy-work-report-says (accessed August 27, 2014). Maher, B. (2013) Panel Discussion. Real Time with Bill Maher, Home Box Office, June 7. Los Angeles. Marcuse, H. (1964) One Dimensional Man. Boston, MA: Beacon Press Marx, G.T. (1988) Undercover: Police Surveillance in America. Berkeley: University of California Press. Monahan, T. (2006) Questioning Surveillance and Security. In T. Monahan (ed.) Surveillance and Security: Technological Politics and Power in Everyday Life. New York: Routledge Morton, D. (2006a) The History of Recording Technology: Recordings and the “Surveillance Society”. Recording-history.org. Available at: www.recording-history.org/HTML/surveillance1.php (accessed August 27, 2014). Morton, D. (2006b) The History of Recording Technology: The Beginnings. Recording-history.org. Available at: www.recording-history.org/HTML/surveillance2.php (accessed August 27, 2014). Neocleous, M. (2007) Security, Commodity, Fetishism. Critique, 35(3): 339–355. Neocleous, M. (2008) Critique of Security. Montreal, Canada: McGill-Queen’s University Press, p. 73. Obama, B. (2014) Remarks by the President on Review of Signals Intelligence, January 17. Available at: www.whitehouse.gov/the-press-office/2014/01/17/remarks-president-review-signals-intelligence. Parenti, C. (2003) The Soft Cage: Surveillance in America. New York: Basic Books. Parenti, C. (2007) Planet America: The Revolution in Military Affairs Fantasy and Fetish. In A. Dawson and M.J. Schueller (eds) Exceptional State: Contemporary US Culture and the New Imperialism. Durham, NC: Duke University Press. Priest, D. and Arkin, W.M. (2011) Top Secret America: The Rise of the New American Security State. New York: Little Brown & Company. Resnikoff, N. (2013) Progressives’ Fears Stoked in Obama Era Surveillance. MSNBC.com. Available at: www.msnbc.com/all-in/progressives-fears-stoked-in-obama-era-surve (accessed August 27, 2014). Risen, J. and Lichtblau, E. (2005) Bush Let U.S. Spy on Callers Without Courts. The New York Times, December 16. Available at: www.nytimes.com/2005/12/16/politics/16program.html?pagewanted=all (accessed August 27, 2014). Roberts, S. (2014) Keeping Tabs, Just in Case. The New York Times, April 6. P. MB9. Robins, K. and Webster, F. (1999) Times of the Technoculture: From the Information Society to the Virtual Life. New York: Routledge.

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Scott, J. C. (1998) Seeing Like a State: How Certain Schemes to Improve the Human Condition have Failed. New Haven, CT: Yale University Press. Shane, S. (2013) New Leaked Document Outlines U.S. Spending on Intelligence Agencies. The New York Times, August 29. Available at: www.nytimes.com/2013/08/30/us/politics/leaked-document-outlinesus-spending-on-intelligence.html?_r=0 (accessed August 27, 2014). Singer, N. (2012) You for Sale: Mapping, and Sharing, the Consumer Genome. The New York Times, June 16. Available at: www.nytimes.com/2012/06/17/technology/acxiom-the-quiet-giant-of-consumer-database-marketing.html?pagewanted=all&_r=0 (accessed August 27, 2014). Staples, W. (2013) Everyday Surveillance: Vigilance and Visibility in Postmodern Life. Langham, MD: Roman & Littlefield. Sullivan, S. (2013) NSA Head: Surveillance Helped Thwart More Than 50 Terror Plots. Washington Post, June 18. Available at: www.washingtonpost.com/blogs/post-politics/wp/2013/06/18/nsa-head-surveillance-helped-thwart-more-than-50-terror-attempts/ (accessed August 27, 2014). Taussig, M. (1989) Terror as Usual: Walter Benjamin’s Theory of History as a State of Siege. Social Text, 3–20. Tech Web (2013) U.S. Spy Agencies Spend $37 Billion on Data. Techweb.com, August 30. Available at: www.techweb.com/news/240160687/u-s-spy-agencies-spend-37-billion-on-data.html. The Big Snoop (1966) LIFE, May 20. New York. The Week (2012) Axicom Corp: The “Faceless Organization that Knows Everything About You.” Available at: www.theweek.com/article/index/229508/axicom-corp-the-faceless-organization-that-knowseverything-about-you (accessed August 27, 2014). Torpey, J. (2000) The Invention of the Passport: Surveillance, Citizenship and the State. Cambridge: Cambridge University Press. United States Senate (2014) Church Committee Created. Senate.gov. Available at: www.senate.gov/ artandhistory/history/minute/Church_Committee_Created.htm (accessed August 27, 2014). Wall, T. (2013) Unmanning the Police Manhunt: Vertical Security as Pacification. Socialist Studies/Études socialistes, 9(2), 32–56. Wall, T. and Monahan, T. (2011) Surveillance and Violence from Afar: The Politics of Drones and Liminal Security-scapes. Theoretical Criminology, 15(3): 239–254. Yar, M. (2012) Crime, Media and the Will-to-representation: Reconsidering Relationships in the New Media Age. Crime, Media, Culture, 1741659012443227. Žižek, S. (2009a) Violence: Six Sideways Reflections. New York: Profile Books. Žižek, S. (2009b) In Defense of Lost Causes. New York: Verso. Žižek, S. (2013) Edward Snowden, Chelsea Manning and Julian Assange: Our New Heroes. Guardian, September 3. Available at: www.theguardian.com/commentisfree/2013/sep/03/snowden-manningassange-new-heroes (accessed August 27, 2014).

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38 Limiting financial capital and regulatory control as non-penal alternatives to Wall Street looting and high-risk securities frauds Gregg Barak

Introduction The popular idiom, “Behind every great fortune lies a great crime,” is attributed to the nineteenth-century French novelist and playwright Honoré de Balzac. One of the English translations from the words that Balzac actually wrote in his 1835 novel Le Père Goriot reads: “The secret of great fortunes for which you are at a loss to account are crimes that have never been found out, because they were properly executed” (Answers.google.com). If, by chance, some of the crimes of Wall Street were “properly executed,” many more of these crimes were not. Either way, not one of the top Wall Street bankers who were collectively responsible for the biggest financial crime epidemic in United States history has ever been charged, let alone prosecuted for or convicted of violating any criminal laws against securities fraud. On the other side of the enforcement ledger, more than a few of those financial crimes of the past were legalized through decriminalization and deregulation, such as the repeal of the 1933 Glass-Steagall Act in 1999, while other forms, such as credit default swaps, have not been outlawed as obvious conflicts of interests. Historically, these enforcement contradictions circulate around the marketing of licit and illicit securities trades. Finally, these securities fraud enforcement dilemmas cannot be detached from the co-dependency of capital accumulation and the development of the capitalist state (Harvey 2014). For the foreseeable future, my argument has been that the controlling crimes of financial capitalism or crimes of capitalist control will remain more or less as they have been – primarily beyond incrimination (Barak 2012). Under the prevailing forms of the global political economy I further subscribe to the position that criminal sanctions will not be employed in earnest as a strategy for stopping high-risk financial crimes by a neoliberal capitalist state. Nevertheless, I do not want to remove securities fraud from the criminal law or state-penal lexicon, if only for its moral or symbolic value rather than its deterrence value. As a way of (1) addressing the fundamental contradictions of capital accumulation, (2) reducing the speculative risks associated with the next securities-based crisis, and (3) engaging in an alternative approach to the criminalization of high-stakes financial instruments, I contend that

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there are a slew of viable economic and social policies worth pursuing in the name of reducing the financial crimes of the powerful and enabling more stable, balanced, and sustainable growth between nation-states. Accordingly, I am interested in long-term “revolutionary” efforts that, on the one hand, resist the pathways to unsustainable capital expansion, and, on the other hand, support the breaking up and/or turning those too big to fail (or jail) mega-banks of the global economy into public utilities. I am also interested in those other attempts aimed at structural changes in the distribution as well as the accumulation of capital as a strategy for addressing the growing monetary inequalities and asymmetries of political and economic power that have further enabled most crimes of the powerful since the early 1980s. Conversely, I am not interested in short-term “reformist” efforts, such as harsher or stricter criminal enforcement, enhanced self-regulation, or upgraded ethical conduct as the appropriate means for restraining high-risk financial crimes in particular. This chapter is about not controlling high-risks securities frauds. First, I describe the contradictory forces of free-market capitalism and the failures of securities law to prevent Wall Street frauds. Next, I discuss the inefficacies as well as the non-controls of state-legal interventions into these securities frauds. Finally, I encapsulate my argument and identify a number of related policy proposals and/or political ambitions that are anti-neoliberalism to the core, and reflective of an alternative paradigm that I view as absolute necessary for changing the prevailing power relations of free-market capitalism and for curbing the crimes of the powerful. As Steve Tombs and David Whyte (2013, p. 213) argue: If the key point of regulation is to retain some stability for regimes of capital accumulation under conditions of unequal power, then the key question for those who wish to influence the regulatory process is how particular regulatory interventions have the potential to make adjustments to those power imbalances. More broadly, without a fundamental shift in global power relations and without a paradigm shift in economic thought and legal intervention from the present model based on a duality of “internal” versus “external” controls of financial markets to a new model based on a genuine understanding that capitalism and the capitalist state have always been inseparable institutions (Kroszner and Schiller 2011), then the economic crimes of the most powerful financial entities will remain as they have always been: beyond incrimination.

On the contradictory forces of free-market capitalism and the failures of the current securities laws to prevent wall street finanicial frauds State-legal criminalization of security fraud hangs in the balance of the contradictory forces of free-market capitalism. For example, when similarly dominant interests and behaviors of the political economy are both illegal and highly profitable, as were numerous financial transactions in the run-up to the Wall Street meltdown, then the capitalist state finds itself in the contradictory position of trying at the same time both to chastise and to excuse these criminal violations. During the recent financial implosion, these contradictions were reconciled through the selective enforcement of civil and regulatory law rather than criminal law, where, for example, in a preadjudicated civil case JP Morgan Chase was fined US$13 billion to settle state and federal claims of securities fraud. Similarly, five other major US banks agreed to pay some US$25 billion to

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settle claims surrounding their fraudulent and illegal mortgage practices rather than face criminal or civil litigation. Cognitively, the omission of the application of criminal law happens through the cultural and social denial of the intentionality of the financial institutions responsible for the crisis and the corresponding lack of moral accountability for those powerful people in charge of those institutions. In the US, these denials are also reinforced by a capitulation of the mass media as well as by the academic fields of law, economics, and crime. For example, whether one is examining the Wall Street fiasco through the lens of criminology, economics, or jurisprudence, the traditional orientations in each of these disciplines have been ideologically disengaged from the political and socio-legal realities of the capitalist state. In the case of mainstream criminology, David Matza underscored more than 45 years ago that among “their most notable accomplishments, the criminological positivists succeeded in what would seem the impossible. They separated the study of crime from the workings and the theory of the state” (Matza 1969, p. 143). Matza was careful to point out that this separation was not necessarily a conscious or a deliberate action. Rather, he contended that these scholars’ or scientists’ partial blindness was due to the fact that these fields structured their studies “in such a way as to obscure obvious connections or to take the connections for granted and leave the matter at that” (Matza 1969, p. 143). As both an iconoclast among sociological positivists and an integrationist among legal scholars, Donald Black’s holistic method toward the study of legal behavior stands apart from most mainstream theorists of the law. In particular, Black discusses and identifies four styles of law or governmental social control: (1) penal, (2) compensatory, (3) therapeutic, and (4) conciliatory. All but the therapeutic mode, which aspires toward achieving normality for the deviant violator, is applicable to Wall Street looting. Penal control in its purest form involves the state taking the initiative against the offender. The question becomes the guilt or innocence of a criminal defendant. By contrast, in the case of compensatory control, the victim takes the initiative without the assistance of the state. As the plaintiff, his complaint “alleges that someone is his debtor, with an unfulfilled obligation. He demands payment” (Black 2010, p. 4). Both of these legal forms of governmental control are adversarial. They have contestants – complainants and defendants – winners and losers. In the case of criminal-penal control, the conflicts are between self-determination versus punishment. In the case of compensatory-civil control, the conflicts are between self-determination versus payment. Both the therapeutic and conciliatory styles of law are remedial. They involve methods of social repair and maintenance, or of providing assistance to people in trouble. In “these styles of social control the question is what is necessary to ameliorate a bad situation” (Black 2010, p. 4). In the case of conciliation, the goal is about re-establishing social harmony. In the pure case, “the parties to a dispute initiate a meeting and seek to restore their relationship to its former condition. They may include a mediator or other third party in their discussion, together working out a compromise or other mutually acceptable resolution” (Black 2010, p. 5). Finally, Black carefully emphasized that “social control may deviate from these styles in their pure form, combining one with another in various ways” (ibid.). In the case of Wall Street looting and federal regulatory colluding, there were multiple expressions or overlapping exercises in both compensation and conciliation (Barak 2012). Predictably, according to Black’s theory of the law in action, at the very height of the Wall Street pyramid of securities fraudsters, the “high rollers” were not subject to any criminal or penal control. Further down the financial “food” chain, a relatively small number or handful of inside traders or hedge fund dealers were subjected to criminal arrests, indictments, and convictions. Even further down the network of financial illegalities, a few thousand petty mortgage fraudsters were criminally prosecuted and sanctioned.

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On the inefficacy of state-legal control of future securities frauds Concerning what is currently being done to prevent Wall Street securities frauds and for the purposes of curtailing these financial menaces and otherwise assisting the stabilization of the productivity of financial markets, policy makers, politicos and enforcers have availed themselves of myriad economic and legal strategies. At the start of the recent financial crisis in early 2009, the realpolitik of capital hegemony had actually considered the idea of disbanding the megaeconomic institutions of global banking, with Lawrence Summers, Director of the White House’s National Economic Council for President Obama from 2009 to 2010, arguing for the breakup and Timothy Geithner, US Secretary of the Treasury from 2009 to 2013, arguing against the breakup (Barak 2012). Typically, when financial crises occur, capitalist societies tend to civilly mediate rather than criminally prosecute in their efforts to control securities financial fraud. In the not too distant past, circa 1933 to 1998, as a strategy of preventing high-risk trading and speculation that contributed to the Wall Street Crash of 1929, the United States had simply precluded the mixing of commercial and investment banking transactions; to do so was a criminal felony. Short of legally dissolving the mega-financial institutions, we also know that neither the common civil regulations nor the uncommon criminal sanctions have ever historically leveraged enough control or a big enough wallop to make a substantial difference in the conduct of Wall Street. When it comes to enforcing the vast majority of laws governing capitalist markets and the financial services industry today, the numerous investigations by the Securities and Exchange Commission each year overwhelmingly result in steering these illegal transactions away from criminal law and toward civil law (Eaglesham 2013). With respect to the transgressions involving the banking cartels of Wall Street, roughly 98 percent of these cases are settled civilly with the respondents having neither to admit nor deny illegal wrongdoing (Overdahl and Buckberg 2012), paying some kind of token fine representing a fraction of their ill-gotten gains, and promising to clean up their future business dealings. Not only do these settlements – representing between 650 and 700 per year (ibid.) – not deter banking fraud, they also notably prohibit the filing of class action lawsuits by millions of financial victims. Finally, because these settlements do not require the submission of consent degrees that would reveal the facts upon which the agreements were reached, it is basically impossible for US district judges to determine whether the proposed judgments are fair, reasonable, or adequate, and, most importantly, whether or not these settlements are in the public interest (Calathes and Yeager 2013). From numerous vantage points, the state-social control panoply of legal powers has rarely, if ever, measured up to the political and economic powers wielded by those financially respectable criminals in their struggles to “self-regulate” their monetary transactions vis-à-vis the dominant ideology of “free” markets. Since the passage of the Wall Street Financial Reform and Consumer Protection Act of 2010, otherwise known as Dodd-Frank, for example, legislators and lobbyists – even before these rules had had a chance to settle in or be implemented – were working nonstop on behalf of Wall Street to exchange, alter, overturn, and block the formation of the vast majority of the new rules to regulate financial transactions involving consumers, investors, and shareholders (Barak 2012). The political irony is that this material and ideological resistance to the regulatory reforms of Dodd-Frank not only effectively preserves a private banking system that is dependent on the nation-state for its very viability, but it also reinforces the same kinds of crony capitalism that contributed to the financial meltdown of 2008. These bourgeois legal–social relations have been characterized by an array of negotiated bailouts, exemptions, and waivers worked out between the investment oligarchy of Wall Street and the Federal Reserve System, the U.S. Department of 528

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Justice, and the Securities and Exchange Commission to avoid, at any and all costs, the criminal culpability for between US$13 and US$20 trillion dollars in lost wealth, not to mention the liability for the tens of millions of people worldwide who lost their homes and/or jobs. The important point to grasp is that the legislation of Dodd-Frank as well as most economic analyses of the financial meltdown leave these and other contradictions of finance capitalism and the capitalist state unacknowledged and unaddressed (Barak 2012). The absence of law or social control as an explanation for a variety of crimes has a long tradition in both criminological and socio-legal circles (Andenaes 1966). This absence is also part and parcel of the underlying rationale for an alternative or new regulatory paradigm. At the same time, for more than a century psychologists and sociologists have used the concept of social control to explain the conduct of people in organizations, neighborhoods, public spaces, face-to-face encounters, and, for our purposes, trusting financial relationships. In terms of the latter, this has meant that “there has to be trust in rules” and “trust that others one hardly knows will uphold the rules” (Schiller 2011). Accordingly, market exchanges have always had to disconnect their financial transactions from personal relationships by formalizing these transactions into legal rules and regulations. Unfortunately, these legal transactions of social control have rarely been severed from the structural needs of a changing political economy. Ubiquitous social control may also be found whenever and wherever “people hold each other to standards, explicitly or implicitly, consciously or not; on the street, in prisons, at home, at a party,” or in the high speed digitized universe of Wall Street trading. In the world of criminality both high and low social control “divides people into those who are respectable and those who are not; it disgraces some, but protects the reputations of others” (Black 2010, p. 105). Within the legal dynamics of social control, criminality and respectability are defined at one and the same time as polar opposites. Black contends further that social respectability also helps to explain the behavior of the law: “to be subject to law is, in general, more unrespectable than to be subject to other kinds of social control. To be subject to criminal law is especially unrespectable” (ibid., p. 111). As one of Black’s legal principles maintains, when all else is constant, the amount of criminal law varies inversely with the respectability of the offender’s socio-economic standing. These characteristics of the law’s behavior and of social control beg another kind of and yet related question: “How far will agents of law enforcement and academia or policy wonks go to whitewash the financial crimes of Wall Street in order to protect the fraud minimalist reputations of some of the most successful banking criminals in the world?” In the summer of 2011, for example, there was the rather alarming and prominent whistleblowing Congressional testimony of SEC attorney Darcy Flynn about how the state’s top financial police had illegally demolished more than a decade’s-worth of intelligence gathered on some of Wall Street’s most conspicuous offenders, including both insider trading and securities fraud investigations involving such heavies as Goldman Sachs, Lehman Brothers, AIG, Deutsche Bank, and many others. In a nutshell, shortly after the financial implosion, the SEC conveniently eliminated the records of some 9000 investigations of wrongdoing or “Matters Under Inquiry” dating from 1993 to 2008. There were also a cozy number of cases involving high-profile firms that were never graduated into full-blown criminal investigations because of what has been referred to as an “obstruction of justice” by misbehaving attorneys caught up in the revolving personnel doors of government regulation and Wall Street. The problem of controlling securities fraud goes far beyond the revolving doors that are not really conflicts of interests per se. As Matt Taibbi formerly of Rolling Stone wrote at the time of Flynn’s testimony before Congress, the “SEC could have placed federal agents on every corner of lower Manhattan throughout the past decade, and it might not have put a dent in the massive wave of corruption and fraud that left the economy in flames three years ago” (Taibbi 2011). The 529

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same could also be said about the widespread use of systems of automated, real-time monitoring of trades and trading patterns that have been around since the 1990s. Nevertheless, maybe it is time to empower forensic accountants and law enforcement as well as regulatory officials so that they may both “routinely use ‘panoptic’ surveillance” methods and “digitally mine the online activities of CEOs” (Snider 2013, p. 155). After all, banking firms are already “tapping a cottage industry of software companies that use complex algorithms to monitor traders’ calls and emails – looking for catch phrases as well as changes in tone – to try to detect signs that traders may be colluding or placing unauthorized bets” (Colchester 2013). Moreover, I am quite confident that if the software does not already exist in the National Security Agency’s arsenal of surveillance, then the NSA or one of its contracting companies could usefully spend millions of taxpayer dollars to lure away some of those Wall Street Quants who are paid seven-figure incomes annually for their ongoing development of highly complex algorithms that lay those billion-dollar golden eggs. On the other hand, the government could try using traditional wiretapping and on-tape conversations to prove securities frauds, as it did in successfully bringing down the Galleon Group hedge fund for “insider trading” and criminally convicting billionaires Rah Rajaratnam and Rajat Gupta. Then again, the use of wiretaps in prosecutions of financial crime is still contested territory. That is to say, both Rajaratnam and Gupta are presently free from their prison sentences while they appeal their guilty verdicts, asking the courts to set aside their convictions, arguing that the wiretaps violated their fourth amendment Constitutional “right to privacy.”

On the non-control of high-risk securities fraud Throughout US history, the illegal use of public money by economic and political elites for personal gain has come mostly without penal sanctions of any kind. Such fraudulent use of public money in the US may be traced back to the Panic of 1792 and to the rampant speculation of William Duer, the Assistant US Secretary of the Treasury as well as other prominent bankers and merchants, whose risk-taking behavior ultimately resulted in the expansion of credit by the newly formed Bank of the United States. At the time, this type of “crony capitalism” revolved around the use of federal funds that enriched politicians and close friends of Alexander Hamilton’s inner circles. Although both Duer, also one of the co-founders of the Bank of New York, and Alexander Macomb, one of New York’s richest businessmen and prominent citizens, ended up broke and in a debtor’s prison, most of Hamilton’s other associates would make fortunes from their insider speculation as the Treasury Secretary and the other members of the Sinking Fund Commission, including Vice-President John Adams, Secretary of State Thomas Jefferson, Attorney General Edmund Randolph, and Chief Justice John Jay came up with a plan to bail out those banks facing insolvency. In the process, the Sinking Fund Commission stabilized the securities markets, prevented the panic from becoming a recession, and set an early precedent for the central government bailing out the financial markets (Sylla et al. 2009). The treatment of most of the financial speculators and inside traders as “beyond incrimination” at the end of the eighteenth century is consistent with the history of large-scale fraud and looting throughout nineteenth- and twentieth-century America. In fact, the non-criminal reactions to securities fraud and financial looting represent a constant, dependable, and unswerving pattern of non-enforcement of the criminal sanction for society’s most powerful wrongdoers of the public trust (Barak 2012). A history of this type of fraud and looting in the US would, for example, include: (1) the insider trading and “cooking of the books” perpetrated by the bank executives, directors, and branch managers of the Second Bank of the United States (1816-1836); (2) the 1867 collapse of Credit Mobilier while its owners absconded with US$23 million in loan 530

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proceeds; (3) the 1912/1913 Pujo Committee investigations by the U.S. Congress of the “money trusts” and their influence and manipulation of the New York Stock Exchange involving connected Wall Street bankers led by J.P. Morgan; and (4) the 1932 to 1934 U.S. Senate Banking and Currency Committee’s Pecora Commission’s investigation of speculation and the marketing of hundreds of millions of dollars of worthless stock by such Wall Street banks as Chase National Bank, J.P. Morgan, and Kuhn Loeb & Company, leading up to the 1929 stock market crash (Goldmann 2010). Similarly, the illicit Wall Street banking realities at the turn of the twenty-first century were well established early in the twentieth century and foreshadowed in 1947 when 17 leading Wall Street investment banks were sued by the federal government, charged with “effectively colluding in violation of antitrust laws” (Cohan 2012). The Department of Justice in its complaint alleged that these firms, among other things, had created “an integrated, overall conspiracy and combination” that began in 1915 and was in continuous operation thereafter, by which they developed a system “to eliminate competition and monopolize ‘the cream of the business’ of investment banking” (quoted in Cohan 2012). The US argued further that these Wall Street investment banks, including Morgan Stanley as the lead defendant and Goldman Sachs, had created a cartel that set the prices charged for underwriting securities. The cartel also set the prices for providing mergers-and-acquisitions advice, while “boxing out weaker competitors from breaking into the top tier of the business and getting their fair share of the fees” (Cohan 2012). Finally, the government argued that the big firms had placed their partners on their clients’ board of directors, as a means of knowing what was coming down the pike internally and as a means of keeping competitors at bay externally. As journalist, former Wall Street banker, and bestselling author of House of Cards, The Last Tycoons, and Money and Power, William D. Cohan, contends, the government was “spot on” in its 1947 case: “The investment-banking business was then a cartel where the biggest and most powerful firms controlled the market and then set the prices for their services, leaving customers with few viable choices for much needed capital, advice or trading counterparties” (Cohan 2012). The very same arguments may be made, only more so today, as the capital worth of the leading firms (e.g., Goldman Sachs Group, Inc., Morgan Stanley, JP Morgan Chase & Co., Citigroup Inc., and Bank of America Corp.) is even more concentrated. For example, at the beginning of 2012, the top three banks held 44 percent of market share, the top 20 banks held 92 percent of market share, and some 8000 other banks held the remaining 8 percent of market share (Ritholtz 2011). Two years later there were fewer than 7000 banks, most of them the victims not of failures but of mass consolidation and the expansion of the behemoth banks, such as Bank of America. For comparative purposes, there were around 18,000 different federally insured banks operating in the US in 1985. Today, there are the fewest number of banking options since the government began tracking these statistics back in 1934 (Moran 2013).

Bottom line: high-risk securites frauds are not crimes Since the financial meltdown of 2008, people are quick to point out that the Wall Street of today is not your father’s Wall Street from a generation ago, let alone your grandfather’s Wall Street from the 1930s. In a world of fully digitized trading where super-sized Wall Street firms are enabled by the latest algorithmically based software programs, these insiders can make millions in microseconds from high-volume trades. Moreover, the players of the new Wall Street are in the business of constantly developing innovative instruments and securing advantages over their investors and other competitive traders. Whether or not these state-of-the art securities transactions are noncriminal or criminal, civilly legal or illegal, they should at least be subject to interpretation, to 531

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adjudication, and to differing rules of law. In the case of the recent financial implosion, however, neither the instruments old or new have been subject to criminal or even civil adjudication, not to mention judicial review on the merits rather than on the settlements. Instead, the bottom line at the end of the day is that the US banking oligarchy with its capitalist state allies decides what does or does not constitute a “crime” in the world of securities-based market transactions. To recapitulate, by the end of 2014, some six years after the Wall Street debacle, no senior executives from any of the major financial institutions had been criminally charged, prosecuted, or imprisoned for any type of securities fraud. This is in stark contrast to the Savings and Loans scandals of the 1980s when special governmental task forces referred some 1100 cases to prosecutors, resulting in more than 800 bank officials going to prison. Comparatively, some critics have argued that there has been a lack of collective governmental resolve to criminally pursue these offenses. Other critics have argued that a collective governmental resolve not to hold these offenders criminally accountable has succeeded. Both of these claims are sustained by an examination of the available evidence. The non-prosecution of securities fraud is precisely what the economic elites of Wall Street and the political elites from the Bush II and Obama administrations as well as from the majorities of both the U.S. Senate and House of Representatives had desired since the collapse of Wall Street. The outcome of zero criminal prosecutions is neither by accident nor conspiracy but mostly by consensus or collusion. Even before the economic crisis, a concerted effort not to prosecute “bigtime” financial fraud had begun in 2003; a reaction to the “overzealous” prosecution of several corporate fraudsters in the USA in the early years of the new millennium. The movement not to criminalize picked up momentum in in 2005/2006 when the U.S. Supreme Court overturned the criminal fraud conviction of Arthur Anderson for helping to cook the accounting records of Enron (Barak 2012). From that point on, instead of strategies to “better” control these financial crimes, strategies were developed to control the damage done to the faith of Wall Street investors in the financial system. The outcomes of this non-penal strategy of not controlling financial fraud resulted in: (1) conciliatory efforts by the government, mainly between the Security and Exchange Commission and the Department of Justice, to restore these institutionalized practices rather than to change them, and (2) compensatory efforts by private investors, individual or corporate, to seek damages for their losses. In terms of those conciliatory efforts, these have been quite successful in reinforcing the “business as usual” relations of Wall Street. It is these structural market relations, unfortunately, that are at the center of the financial securities crisis confronting both the USA and the world today. In terms of the compensatory efforts, these have included dozens of successful cases against every major Wall Street investment firm for securities fraud, amounting to hundreds of billions of dollars in corporate fines and payments. Either way, however, these financially respectable crimes of Wall Street remain outside the purview of criminal prosecution.

A paradigm shift and a 20-point “manifesto” for financial change At the end of Alan Greenspan’s The Map and the Territory: Risk, Human Nature, and the Future of Forecasting (2013), the longest serving Chairman of the Federal Reserve Board (1987–2006) reveals that he no longer ascribes to the “free market” assumptions that he once did. Unfortunately, he has nothing to replace those assumptions with, including those of the old Keynesianism that he once upon a time bought into. Greenspan also had these pearls of wisdom to share about the banking crisis of 2008 and the Great Recession that followed: “I have come to a point of despair where, if we continue to make banks wards of the state through TBTF policies, I see no alternative to forcing banks to slim down to below a certain size threshold where, if they fail, they 532

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will no longer pose a threat to the stability of American finance” (Greenspan 2013, p. 298). Of course, as everyone knows, the same Wall Street banks that brought about the financial implosion are much bigger institutions today than they were then. What most people do not know, however, including those US legislators on both sides of the political isle who knowingly voted for the Financial Services Modernization Act of 1999 that eliminated the separation between commercial and investment banks established by Glass-Steagall, was that it also permitted the newly merged banking concerns to delve into any and all economic activities that are “complimentary to a financial activity.” As a consequence, banks like Morgan Stanley, JP Morgan Chase, and Goldman Sachs now “own oil tankers, run airports and control huge quantities of coal, natural gas, heating oil, electric power and precious metals” (Taibbi 2014, p. 34). These banks are also buying, if not selling, entire industries. For example, they are: buying oil that’s still in the ground, the tankers that move it across the sea, the refineries that turn it into fuel, and the pipelines that bring it to your home. Then, just for kicks, they’re also betting on the timing and efficiency of these same industrial processes in the financial markets – buying and selling oil stocks on the stock exchange, oil futures on the futures markets, swaps on the swaps markets. (Ibid.) Naturally, allowing a handful of banks to control the supply of crucial physical commodities and to trade in the financial products that may be related to those markets, such as aluminum in the case of Goldman Sachs, is not only a furtherance of the financial services industry’s dominance of the political economy and concentration of wealth, but also an open invitation to commit mass manipulation and fraud. Finally, such concentrations of wealth reinforce the manufacturing of speculation and the neoliberal polices of privatization, austerity, and securitization – all of which exacerbates economic inequality and class stagnation for the disappearing “middle” and working classes, the asymmetries in social and political power, and the probability that the crimes of the powerful will be less controllable in the future than they are now. Consequently, what are called for are alternative policies to the ones of neoliberalism and economic fundamentalism that contribute to unenlightened self-interest, under-regulated financial markets, and unfettered victimization on behalf of unsustainable capital accumulation. The alternative policies suggested later are reflective of a “new” paradigm based on a restructuring of financial markets as well as the relationships between governments and the people. This alternative economic–legal–social paradigm encourages finance capital to move away from speculative investments that exist primarily to enrich the wealthy and expand capital, and toward large-scale investments in pubic goods and services, infrastructure, and greener economies, for the purposes of enriching sustainable ecosystems and expanding the public commons. This emerging paradigm is grounded in changing the existing system of ownership, democratizing wealth, and building community-sustaining economies from the ground up, inclusive of co-ops and of old and new forms of employee stock ownership plans, which currently involve some 10.5 million people in virtually every sector of the US economy. As Gar Alperovitz argues: new forms of ownership are important not only on their own, but also in that they begin to offer handholds on a new longer-term vision, a set of ideas about democratization that – if they were to become widespread, embraced, refined, and widely understood – form the basis, potentially, of bringing people together, both to challenge the dominant hegemonic ideology and to build a democratized economic basis for a new vision and new system. (Alperovitz 2013, p. 41) 533

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Furthermore, this utopian paradigm of the possible understands that the material expansion of finance capital for the sole intent of maximizing finance capital rather than for the purposes of expanding sustainable material economies is counterproductive to our global well-being for numerous reasons, not the least of which is that the former tends to harm our earthly environments as it expands the growing deprivations and inequalities across the globe. Similarly, an alternative “regulatory regime” tackles or encourages a prohibition against hospitable environments for speculation, for unsustainable debt, and for economic bubbles, or for what Susan Will has referred to as the Ponzi Cultures of advanced capitalism. As Will argues, legitimate and quasilegitimate Ponzi schemes that are already embedded in the prevailing markets such as the rise of the US debt-to-GDP ratios of households, financial firms, and corporations, or the recent dot. com and housing bubbles, and the use and abuse of private and public pension funds or equity withdrawals more generally, threaten whole economies. These need to be resisted because they inspire questionable behavior and desensitize individuals to the dangers of illegal Ponzi schemes as they obscure a financial system that exists, in significant part, because of other structural and institutional Ponzi schemes (Will 2013). Nearly all of the policy changes of the “manifesto” advocated here have either some kind of contemporary political backing or have been implemented in one form or another somewhere around the developed world: • • • • • • • • • •

•

•

• • •

534

Break up and/or turn the too-big-to-fail banks into public utilities. Ban the speculative use of credit default swaps. Exempt securities trading, insurance operations, and real estate transactions from the Federal Deposit Insurance Corporation. Standardize derivatives and trade them openly on public exchanges. Institute a financial transaction tax to discourage excessive trading and risk. Tax earned, unearned, and carried interest income at the same rates. Establish independent auditing and rating systems of corporate financial affairs. Develop high-tech tagging systems able to monitor and track algorithmic trades. Make companies and individuals admit wrongdoing as a condition of settling all civil charges or be forced to fight the charges in court. Initiate the empowerment of the Financial Stability Oversight Council under Dodd-Frank to rein in the problem of excessive risk taking by the “shadow banking” industry or by those non-banking financial institutions like AIG. Institute tougher restrictions and require more long-term debt, vis-à-vis the Volcker Rule, on speculative trading throughout the banking industry, especially those which include securities and derivatives trading as a part of their “casino banking” activities, to further prevent banks from engaging in proprietary trading or making risky bets with their own money. Amend the Volcker Rule adopted on December 10, 2013, which now positively makes it more difficult for banks to buy and sell securities on behalf of clients, to trade with their own cash, and restricts them from investing in risky hedge and private equity funds, but it also needs to require bank executives not only to guarantee that their firms are in compliance with the Rule, but to hold them liable for such assurances. Resurrect a modernized version of Glass-Steagall and/or build stronger firewalls around insured deposits involving commercial banking. Integrate financial market incentives with climate change adjustments. Support environmental defense organizations like the Business Alliance for Local Living Economies or the American Sustainable Business Council.

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• • • • •

Form state-owned banks and create Benefit or not-for-profit “B” corporations. Pass a comprehensive infrastructure-human development fund and Americans job act, appropriating US$1 trillion over the next decade. Pass a forgive student loan debt and/or payback schedule based on income and/or ability to pay. Establish a livable wage for all working people. Establish a single-payer health care system in which the government rather than private insurers pay for all health care costs.

Of course, none of these institutional and structural changes will come easily or without challenges and resistance, especially in light of the expected pushback from the very powerful that benefit from the prevailing political economy.

References Alperovitz, Gar. 2013. What Then Must We Do? Straight Talk about the Next American Revolution. White River Junction, VT: Chelsea Green Publishing, p. 41. Andenaes, J. 1966. “The General Preventive Effects of Punishment.” University of Pennsylvania Law Review, 114(May): 949–983. Answers.google.com/answers/threadview?id=296588. Barak, G. 2012. Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding. Lanham, MD: Rowman & Littlefield. Black, D. 2010 (1976). How Law Behaves: An Interview with Donald Black, reprinted in The Behavior of Law. Special Education. Bingley, UK: Emerald Group Publishing, p. 105. Calathes, W. and Yeager, M. 2013. “Sweetheart Settlements, the Financial Crisis, and Impunity: A Case Study of SEC v. Citigroup Global Markets, Inc.” Paper presented at the Annual Meetings of the American Society of Criminology, November 22. Chambliss, W. 1967. “Types of Deviance and the Effectiveness of Legal Sanctions.” Wisconsin Law Review (summer): 703–719. Cohan, W. 2012. “How Wall Street Turned a Crisis into a Cartel.” Bloomberg. Available at: www.bloomberg. com/news/2012-01-09/cohan-how-wall-street-turned-a-crisis-into-a-cartel.html (accessed January 9, 2012). Colchester, M. 2013. “Banks Scan Trader Talk for Trouble.” The Wall Street Journal, December 6: C1–2. Eaglesham, J. 2013. “SEC Trims Its Caseload After Crisis.” The Wall Street Journal, December 18: C1–2. Goldmann, P. 2010. Fraud in the Markets: Why It Happens and How to Fight It. Hoboken, NJ: John Wiley & Sons. Greenspan, A. 2013. The Map and the Territory: Risk, Human Nature, and the Future of Forecasting. New York: The Penguin Press, p. 298. Harvey, D. 2014. Seventeen Contradictions and the End of Capitalism. Oxford: Oxford University Press. Kroszner, R. and Shiller, R. (eds) 2011. Reforming U.S. Financial Markets: Reflections Before and Beyond DoddFrank. Cambridge, MA: MIT Press. Matza, D. 1969. Becoming Deviant. Englewood Cliffs, NJ: Prentice-Hall, p. 144. Moran, C. 2013. “Number of U.S. Banks Hits Record Low.” Consumerist, December 3. Available at: www. consumerist.com/2013/12/03/number-of-u-s-banks-hits-record-low/. Overdahl, J.A. and Buckberg, E. 2012. NERA Economic Consulting, SEC Settlements Trends: 2H11 update 5. Available at: www.nera.com/nera-files/PUB SEC Trends 2H11 0612.pdf. Ritholtz, B. The Big Picture, December 25, 2011. Available at: www.ritholtz.com/blog/2011/12/thebanking-oligopoly/. Schiller, R. 2011. “Democratizing and Humanizing Finance.” In Reforming U.S. Financial Markets: Reflections Before and Beyond Dodd-Frank, edited by Randall Kroszner and Robert Schiller. Cambridge, MA: MIT Press, p. 14. Snider, L. 2013. “The Technological Advantages of Stock Market Traders.” In How They Got Away with It: White Collar Criminals and the Financial Meltdown, edited by Susan Will, Stephen Handelman and David Brotherton. New York: Columbia University Press, p. 155. Sylla, R., Wright, R. and Cowen, D. 2009. “Alexander Hamilton, Central Banker: Crisis Management During the U.S. Financial Panic of 1792.” Business History Review, 83(spring): 61–88. 535

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Taibbi, M. 2011. “Is the SEC Covering Up Wall Street Crimes?” Rolling Stone, August 17. Available at: www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817?print=true (accessed August 27, 2011). Taibbi, M. 2014. “The Vampire Squid Strikes Again.” Rolling Stone, February 27: 34. Tombs, S. and Whyte, D. 2013. “Reappraising Regulation: The Politics of ‘Regulatory Retreat’ in the United Kingdom.” In How They Got Away with It: White Collar Criminals and the Financial Meltdown, edited by Susan Will, Stephen Handelman and David Brotherton. New York: Columbia University Press, p. 219. U.S. Government Accounting Office, 2009. Will, S. 2013. “America’s Ponzi Culture.” In How They Got Away with It: White Collar Criminals and the Financial Meltdown, edited by Susan Will, Stephen Handelman and David Brotherton. New York: Columbia University Press, p. 60.

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Author Index

Abacha, Sani 99, 100 Adams, John 530 Agnew, Robert 11, 40, 41–2, 162 Akerlof, G. 273 Al Jenabi, Ali 342 al-Otayabi, Juhayman 354 Alafouzos, John 432 Allen, Will 204 Alperovitz, Gar 533 Alpert, G.P. 422 Anane, Mike 256–7 Andrejevic, M. 193 Angelides, Phil 286 Antonopolos, G.A. 403 Arendt, Hannah 486 Aristotle 69 Arkin, William 518 Armstrong, J. 242–3 Athanasiou, Pangiotis 435–6 Aufranc, Alcides López 312 Aulette, Judy 21 Badie, François Pierre 313, 314 Bagdikian, B. 83 Bagosora, Théoneste 489 Bair, Sheila 271 Bajaj, V. 126 Ballinger, A. 349 Bancoult, Oliver 116 Barak, Gregg 1–35, 150, 285, 290, 494, 525–36 Barak, Maya 21–2, 373–85 Barati, Reza 339, 340–1 Barber, B. 202 Barker, T. 413, 416 Barlow, John Perry 505 Barlow, M. 228, 229–30 Barre, Said 109 Barron, Charles 128, 205 Bass, Gary J. 486 Bassiouni, M. 144, 145 Bauer, Fritz 484–5 Beaver, K.M. 161 Beccaria, Cesare 149, 158, 161

Beim, David 15 Benjamin, Walter 323 Bentham, Jeremy 149, 161 Bentresque, Robert Louis 310, 313 Berger, R.J. 167 Berlin, I. 70 Bernard, A.R. 311, 312–13 Bernstein, Jake 15 Bittman, Mark 473 Black, Donald 527, 529 Black, William 11, 172–3 Block, Alan 3, 4, 23 Blood, Arthur 486 Bloom, D.J. 200 Bo Xilai 407 Bouazizi, Mohammed 46 Boyd, D.P. 457 Brabeck-Letmathe, Peter 226 Bradshaw, Elizabeth A. 12, 21, 235–46, 363–72 Braithwaite, J. 162 Brannigan, Augustine 5, 29–30, 479–91 Breuer, Larry 182 Brickey, K.F. 163 Briggs, A.M. 517 Brisman, Avi 12, 223–34, 228 Brittain, J. 323 Brown, Michael 414, 417 Brownmiller, S. 351 Buist, Carrie L. 6–7, 73–85 Burkart, Karl 370 Burns, Ronald 10, 157–71 Butler, S. 126 Cain, Maureen 46 Calavita, K. 267, 296 Cárdenas, Lázaro 381 Carter, D.L. 413 Cartwright, Matt 240 Castilleja Mendiola, Miguel 375, 376, 379 Cesarini, David 486 Chalk, Frank 486–7 Chambliss, William J. 3, 4, 18, 23, 44, 382 537

Author Index

Chemerinsky, Erwin 473–4 Cheney, Dick 22, 239 Chiang Kai-shek 401 Chin, K. 405 Chinkin, C. 356 Chiu, Mathieu 489 Chomsky, Noam 470 Christoforasakos, Michalis 434, 435, 436, 437 Cioffi, Ralph 280, 284 Clinard, Marshall 158 Cohan, William D. 531 Cohen, S. 497 Cole, R. 265 Coleman, G.E. 504 Collard, Melanie 19–20, 305–19 Collins, Victoria E. 20, 348–60 Colson, Charles 446–7, 448, 450–1, 452 Combs, C.C. 147 Corley, Eric 509 Corsianos, Marilyn 25, 412–26 Cressey, D.R. 57, 158 Cullen, F.T. 163 Cutifani, Mark 387 Dalio, Ray 17 Dauvergne, P. 201 Davis, K.C. 287 de Andreis, Alfredo Correa 323 de Balzac, Honoré 525 de Naurois, Patrice 313, 314 Dean, Scott 370 Dearing, Jessey 369 Del Ponte, Carla 487 Deleuze, Gilles 519 Descartes, René 468 Deutsch, Claudia H. 229 Dick, P. 419 Dike, Kenneth 91, 100 Dimock, PA 239, 240 Doctorow, Cory 507 Dodd, Christopher 520 Dodge, Mary 18, 289–301 Donleavy, G.D. 461 Douglas, Oronto 97, 99 Doyon, Jacquelynn 12–13, 235–46, 247–61 Dudley, David 15 Duer, William 530 DuPuis, M. 202 Duque, Ivan Roberto 326 Dylio, Thomas Lubanga 489 Eaton, Cyrus 174, 175 Eichmann, Adolf 485–6 Ejiogu, Kingsley 9, 144–53 Enciso, Isaís García 310 Engels, Friedrich 158 Ermann, M.D. 54–5 538

Eyskens, Gaston 486 Ezeonu, Ifeanyi 8, 89–104 Farrall, Stephen 28–9, 443–54 Fastow, Andrew 176, 177 Ferrero, William 39 Ferri, Enrico 39 Fierro, Julio 393 Flynn, Darcy 529 Fox, Josh 242 Fox, Vincente 377, 380 Frank, N.K. 160 Friedman, Milton 93, 94, 98 Friedman, S. 199 Friedrichs, David O. 6, 39–49, 90, 94–5, 101, 159, 160, 295, 298, 390, 495–6 Friedrichs, Jessica 46, 90, 94–5, 101 Frohne, Lauren 369 Fuchs, Christian 517 Fukuyama, Francis 26, 27 Gallagher, A. 140–1 Galleon Group 530 Gallo, J.N. 161 Gambetta, D. 404 Ganzini, L. 293 Garciá, Rafael 322 Gaston, E.L. 148 Geis, G. 158 Geithner, Timothy 528 Gellman, Barton 520–1 Gerard, Leo W. 375 Gerber, Jurg 30–1, 503 Ghazi-Tehrani, A.K. 168 Gibbons, Don C. 45 Gidley, Rebecca 488 Goldstein, Emmanuel 509 Goldstein, H. 413 Goleman, D. 198 Golub, A. 504 Goméz Urrutia, Napoleón 375–7, 378–9, 380–1, 383 Goss, Rick 252 Gottfredson, Michael 41 Gottschalk, P. 292 Grabell, M. 127 Grabosky, P. 494 Gramm, Phil 286 Gramsci, A. 496 Green, Gary S. 6, 50–61, 158 Green, Penny 19 Green, S.P. 281, 297, 298 Greenfield, Victoria 42 Greenhouse, S. 126 Greenspan, Alan 532–3 Gregory, Thomas Watt 517 Grewcock, Michael 20, 331–47

Author Index

Griles, J. Stephen 160 Gross, Bill 17 Grumbles, Ben 239 Gupta, Rajat 530 Guthman, J. 202 Gutiérrez-Gómez, Laura 22, 386–97 Gwinn, Edward Eric 467 Hagan, J. 41–2, 281 Haldane, Andrew 13 Hambrick, Walter Lee 467 Hamilton, Alexander 530 Hansen, Hans Krause 11, 186–96 Hanson-Young, Sarah 339 Hartung, Frank 158 Harvey, David 2, 389–90 Hausner, Gideon 486 Hauter, W. 228, 229–30 Hawken, Paul 99 Hayek, Friedrich 93, 94, 98 Hegel, G.W.F. 69, 71 Henry, Stuart 42 Herbert, C. 57 Hersch, Seymour 520 Hibbard, N. 496 Hilberg, Raul 484 Hills, S.L. 51, 53–4, 56–7, 58 Hillyard, Paddy 95 Hinch, R. 350 Hirschi, Travis 41, 162 Hobbes, Thomas 144 Hodge, Douglas 17 Hoenig, Thomas 13–14 Hoess, Rudolf 484 Holder, Eric 182 Holtfreter, K. 161 Hoogenboom, B. 193 Hopkin, J. 429 Hughes, P. 505 Hunter, Ben 28–9, 443–54 Hure, Cándido 312 Iadicola, P. 350 Ingram, H. 295 Jackson, Lisa 367 Jamieson, R. 498 Jay, John 530 Jefferson, Thomas 530 Jiang, G. 402 Joh, E. 191 Johnson, D.L. 282 Johnston, Michael 23 Jonassohn, Kurt 486–7 Jonathan, Goodluck 101 Jordan, T. 505 Juhasz, Antonia 365, 366

Kamalanathan, Rajan 126 Kambanda, Jean 489 Kant, Immanuel 63, 479 Kappeler, V.E. 414 Karadžić, Radovan 489 Karamanlis, Kostas 435 Karavelas, Christos 436, 437 Karri, R. 457 Katanga, Germain 489 Kauzlarich, David 378, 506, 509 Kennedy, Jay P. 29, 455–65 Kerry, John 147 Keynes, John Maynard 93 Kierman, Ben 487 Klein, Lloyd 9, 11, 121–31, 197–207 Klein, Naomi 13, 369, 371 Klockars, C. 413, 418 Kojève, A. 69 Kovac, Radomir 351 Kramer, Ronald C. 21, 22, 50, 51, 53–4, 56–7, 58, 83, 158, 377, 388, 395–6 Kumarac, Dragoljub 351 Kutschenreuter, Michael 434 Lambropoulou, Effi 25, 427–40 Lang, Steve 9, 11, 121–31, 197–207 Langton, L. 162 Lanier, Mark 42 Larrea, Germán 379, 383 Lasslett, K. 388, 495 Lay, Kenneth 176, 177, 179 Lee, M.T. 54–5 Leighton, Paul 6–7, 73–85 Lemkin, Raphael 481, 483 Levi, M. 298 Levin, Carl 282 Li, Liang 404 Lin, Doris 29, 466–78 Linnemann, Travis 31–2, 515–24 Lipstadt, Deborah E. 486 Lister, J. 201 Lo, T.W. 402 Locke, John 64, 144 Loeber, Rolf 40–1 Lombroso, Cesare 6, 39 Long, Edward V. 516 Lubbers, E. 190 Luthar, H.K. 457 Lynch, M.J. 160, 165 Macey, Jonathan 285 MacManus, Thomas 20, 320–30 Macomb, Alexander 530 Madoff, Bernard 286, 289, 291, 292, 294 Maher, Bill 519 Majfud, J. 198 Mamdani, Mahmood 487 539

Author Index

Mandelis, Tassos 437 Maniates, M. 202 Manning, Chelsea 515 Manning, P.K. 419 Mao Tse-Tung 306, 307, 401, 402 Marcuse, Herbert 515, 521–2 Markey, Edward 367 Marshall, Alfred 65 Martin, B. 499 Martins, G. 147 Maruna, S. 445, 452 Marx, Karl 158 Matthews, Rick A. 378 Matza, David 6, 62–3, 162, 527 Mavridis, Prodromos 434, 436 May, T.C. 511 Mazzei, D.H. 305 McCarthy, Gina 240 McClanahan, Bill 12, 223–34 McCulloch, J. 494, 495, 496 McDonald, G.M. 461 McDonald, R. 286–7 McEvoy, K. 498 McGurrin, D. 295, 298 McLaughlin, E. 414 McNamara, J. 420 Mendelsohn, Benjamin 292 Merton, R.K. 161, 162 Meyer, Amy 474, 475 Michalowski, Raymond 21, 22, 42, 83, 158, 377, 388, 395–6 Milivojevic, Sanja 9, 132–43 Milken, Michael 27–8 Mill, John Stuart 67–9, 71 Mills, C. Wright 43, 201 Mills, M. 292 Milošević, Slobodan 489 Minkow, Barry 446, 447, 448–50, 450–1, 452 Minsky, Hyman 274 Mitsotakis, Constantinos 432, 433 Mladić, Ratko 489 Moghalu, Kingsley 482 Mohammed, Khalid Shaik 26 Molano, Alfredo 323 Molina, L.F. 493–4 Mom, Manrique Miguel 312 Monahan, Torin 519 Moore, E. 292 Morales Hernandez, Elias 375, 376, 377, 379 Morales, Eva 227 Moreno, Luís Alberto Restrepo 325 Morgan, Sarah 468, 473 Morrison, W. Douglas 39 Morton, David 517 Mullins, C.W. 349, 388, 494 Murdoch, Richard 73 Murphy, Sara 228 540

Nader, Ralph 51 Nelson, Bill 368 Neocleous, Mark 521 Niedl, Reiner Peter 434 Nixon, Richard 82, 93 Noguera, Jorge 323 Norquist, Grover 94 Nougués, Jean 314 Nova, Scott 127 O’Brien, J. 280 O’Toole, L.L. 350 Obasanjo, Olusegun 100–1 Okanta, Ike 97, 99 Ortiz Magallón, Rosario 382 Oxner, Linchard 434 Palley, Thomas 274–5 Paoli, Letizia 42 Papandreou, George 427 Passas, Nikos 8–9, 105–20 Paternoster, R. 161 Paterson, David 242 Payne. L.A. 326 Pearce, Frank 44 Peck, J. 200 Pendas, Devon 485 Perales Lozano, José Martin 375, 376, 379 Périès, G.G. 305, 308, 313 Péron, General 308–9 Perri, F.S. 290–1 Perrow, C. 57 Petras, J. 323 Piketty, Thomas 3 Pinochet, Augusto 93 Pinzon, Juan Carlos 326 Piquero, N.L. 161, 162 Plato 63, 69 Pol Pot 486 Polanyi, K. 93, 496 Pollan, M. 204 Pontell, H. 267, 296 Potter, Will 473, 474, 475 Powell, Donald 270 Prenzler, T. 420 Price, T. 456 Priest, Dana 518 Prins, Nomi 286 Proal, Louis 6, 39 Prunier, Gérard 487 Punch, M. 420 Qiu Geping 405 Quinney, R. 23, 42, 74 Radig, Taylor 468, 474 Rajaratnam, Rah 530

Author Index

Rakoff, Jed S. 282–3, 284, 285, 286 Ranalletti, M. 305 Randolph, Edmund 530 Reagan, Ronald 93, 94 Reich, R. 202 Reinhart, C. 275 Right, David 368 Ritter, B.A. 457 Robin, M.M. 305 Rockefeller, John D. 13 Roemer, P. 273 Rogoff, K. 275 Romero, Álvaro Garcia 322 Rosas, Jorge 310, 311, 312, 314 Rosenfeld, Lance 369 Rosoff, S. 297 Ross, E.A. 158 Ross, Jeffrey Ian 30, 492–501 Rothe, Dawn L. 19, 31–2, 350, 388, 494, 515–24 Rousseau, Jean Jacques 144 Rudd, Kevin 333 Ruggiero, Vincenzo 6, 62–72, 148, 151 Ruiz, Armando Valenzuela 326 Salazar Sáenz, Francisco Xavier 373, 379 Sandholtz, Wayne 430 Saro-Wiwa, Ken 98, 99, 100 Savelsberg, J. 42, 149 Schelling, T.C. 403 Schlademan, Dan 127 Schlosser, E. 203 Schneider, A. 295 Schoepfer, A. 162 Scholte, J.A. 193 Schram, D.D. 293 Schwartz, Aaron 508, 511 Schwarzmantel, J. 148 Schwendinger, H. 42 Schwendinger, J. 42 Scott, J. 496 Scott, Lee 199 Segarra, Carmen 15 Segrave, Marie 9, 132–43 Shapiro, J. 242 Shapiro, Susan 278, 279–80 Sherman, Lawrence 413, 419 Shichor, David 18, 278–88 Shou, Huisheng 6, 50–61 Shupe, A. 350 Siekaczek, Reinhard 434, 435, 436 Silva, Mike 15 Simitis, Costas 432 Simon, David 472 Simons, James 17 Simpson, Lisa 355, 356 Simpson, S.S. 161 Sinclair, Upton 51, 164

Singer, Peter 518 Skilling, Jeffrey 176, 177, 179 Smith, Adam 65–7, 71, 92, 93, 94, 129, 488 Smith, Frank 178 Snowden, Edward 506, 515, 517, 520–1, 522 South, Nigel 12, 223–34, 228 Spapens, T. 408 Speth, James Gustave 96 Stallman, Richard 508 Stanley, E. 494, 495, 496 Steele, Skylar 18, 289–301 Stein, H.F. 56 Steinmetz, Kevin F. 30–1, 503 Stewart, K. 457 Stiglitz, Joseph 16 Stretesky, P.B. 165 Sullivan, Brandon A. 11, 172–85 Sullivan, Dennis 101 Summers, Lawrence 251, 528 Sutherland, Edwin H. 43, 44, 54, 58, 62, 73, 74, 80, 83, 94, 158, 162, 292 Sykes, G. 6, 62–3, 162 Taagepera, Rein 430 Taibbi, Matt 529 Tannin, Matthew 280, 284 Tappan, Paul 43, 44 Taussig, M. 324 Taylor, Charles 488 Taylor, P. 505 Thatcher, Margaret 93, 94 Thornton, Mark 403 Thyne, Geoffrey 240 Tibiletti, Carlos 312 Tickell, A. 200 Tifft, Larry 101 Tillman, Robert 17–18, 265–77 Tombs, Steve 95, 526 Trevaskes, S. 406, 407 Trinquier, Roger 306 Troxler, Steve 473 Turk, A. 496, 498–9 Twyman-Ghoshal, Anamika 8–9, 105–20 Uldam, Julie 11, 186–96 Uribe, Alvaro 321, 322, 323, 387, 395 Uribe, Mario 322 Varese, F. 403 Vargas, Fernando 326 Volcker, Paul 280 von Hentig, Hans 292 Walker, S.G. 416, 420, 422 Wall, Tyler 519 Walsh, M.E. 293 Walters, B. 213 541

Author Index

Walters, Reece 95 Wang, Peng 25, 401–11 Ward, Tony 19, 20, 320–30 Warner, B. 242 Warnick, B. 508 Warren, D.E. 457 Weber, J. 457, 461, 463 Weber, Max 63 Weeks, W.A. 457–8 Welker, M. 190 Welsh, Brandon C. 40–1 Werbach, Adam 200 White, L. 265 White, Rob 12, 211–22 White, Scott Alvin 467

542

Whyte, David 4, 44, 526 Will, Susan 534 Wittman, Rebecca 485 Wolfe, Alan 23 Xenophon 65 Xia, M. 402 Zacklin, Ralph 488 Zagorianos, Nikos 436 Zaitch, Damián 22, 386–97 Zimbardo, P.G. 420 Zinn, Howard 510 Žižek, Slavoj 515–16, 516–17, 519 Zucman, Gabriel 3

Subject Index

Note: page numbers in italic type refer to Figures; those in bold type refer to Tables. 1st Centennial 273–4 2001 Mining Code, Colombia 387, 391–2, 393, 394 2004 Olympic Games, Athens 433, 434, 435 2012 Olympic Games, London 188 28 Hour Law 469 ABACUS 200-AC1 financial instrument 281 abortions 55 absolute liberty 67–9 Abu Ghraib detention center, Iraq 352, 421, 498 accumulation by dispossession 389–90, 393 ACDEGAM (Asociación de Ganaderos y Campesinos del Magdalena Medio) 326 ACLU (American Civil Liberties Union) 369 acquisition, development and construction (ADC) loans, and bank failures 267, 269, 272, 272 see also commercial real estate (CRE) loans, and bank failures Africa: and electronic waste 249, 250, 251–7; and the transatlantic slave trade 90–1, 100 AFSA (Armed Forces Security Agency) 518 ag-gag laws 466, 473–5, 476 “agency” relationship in financial institutions 280 aggressive war, crime of 481 agnotology 81 agriculture: ag-gag laws 466, 473–5, 476; agricultural pollution 466, 471–2; farming crimes against animals 59, 466–75; industrialisation of 215; subsidies 471; and sustainable food production 202–5 al Barakaat 109 al Shabaab 105, 112 Alberta tar sands, Canada 217 Algeria, French war in 305, 306–8, 311, 315 American Civil Liberties Union of Idaho 475 American Civil Liberties Union (ACLU) 369 American Protective League (APL) 517 AngloGold Ashanti (AGA), Colombia 386–96 Animal Legal Defense Fund 473–4, 475 Animal Welfare Act 469 animals, farming crimes against 59, 466–8, 469–70; ag-gag laws 466, 473–5, 476; government

policies 470–3; moral consideration of animals 468–9; solutions to 475–6 anomie 108, 161, 162 see also global anomie theory (GAT) Anonymous 503, 511 apathy, and state crimes 497 APL (American Protective League) 517 Apple iPhone production 125 Arab Spring 46 Argentina 17; French influence on military 305, 309–15; use of torture in the Dirty War (1976-1983) 305, 315 Armed Forces Security Agency (AFSA) 518 Armenians, genocide against 482, 483 Arthur Andersen 175, 177, 180, 532 Arthur Svensson International Prize for Trade Union Rights 383 Asociación de Ganaderos y Campesinos del Magdalena Medio (ACDEGAM) 326 Assembly of States Parties (ASP) 489 asylum seekers 140; and Australian border policing 139, 331–44 see also human trafficking AUC (Autodefensas Unidas de Colombia) 321–2, 323 Aurelius Capital 17 Auschwitz camp 484–5 Australia: border policing 139, 331–44; environmental crimes 218 Australian Human Rights Commission 340, 343 Australian Labor Party 332, 333, 341 Austria-Hungary 480 authority 69–70 Autodefensas Unidas de Colombia (AUC) 321–2, 323 automobile industry, vehicle safety 10 Aviagen 467 Axciom 518 Bacrim (banda criminales emergentes) 322 “bad apple” theory in police corruption 415–16 Bangladesh: genocide 486; working conditions in manufacturing industries 89, 125–7, 130 543

Subject Index

bank failures: 1980s banking crisis 265, 266–8; 2008 financial crisis 265, 266, 268–75; and criminogenic markets 265–6, 271–5, 272 Bank of America 283, 299 Bank of New York 530 Bank of the United States 530 banks see financial crimes Basel Convention on the Control of Transboundary Movements of Hazardous Waste 249–50, 252, 253, 255, 258 Bear Stearns 280, 284 Bechtel 226–7 Belgium, and the Great War 480 Berlin Conference, 1885 91 Bhopal chemical accident, Pakistan 89 big brand sustainability 201 big data 193, 194 BIOT (British Indian Ocean Territory) see Chagossians, forced eviction of blowouts 238 blue-ribbon commissions, into policing 422 Bolivia, water access issues 226–7 Bosnian Muslim women, and gendered violence 350–2 Boston Marathon bombings 83–4 bottled water 228–9 BP: Corporate Social Responsibility (CSR) and corporate surveillance (CS) 186, 187, 188–9, 190; Deepwater Horizon accident, Gulf of Mexico 99, 183, 186, 224, 226, 363–71 Brazil 217 Breaking Bad (AMC) 7 Brent Spar oil platform 186 see also Shell bribery: and corporate-financial crimes 178; and the petty powerful 46 see also corruption Bridgewater Associates 17 British Indian Ocean Territory (BIOT) see Chagossians, forced eviction of brokered deposits 270, 272, 272 bug-reporters, treatment of 507 Bureau of Internal Revenue 159 Bureau of Mines 160 Burundi, genocide 486 Bush (George W.) administration 26, 136, 160, 181, 239, 520, 532 business cycles 274 business ethics 167, 455, 462–3; education 457, 460–1; formal controls 458–60; history of 455–8; informal controls 460–2 see also Corporate Social Responsibility (CSR) business schools, and business ethics education 457, 460–1 Butterball 467–8, 473 C41 case, Siemens AG 435 Cabot Oil and Gas Exploration 239 CAFO (concentrated animal feeding operation) 466–7 544

CAJAR (Jose Alvear Restrepo Lawyers’ Collective) 326–7 California, fracking 243 Cambodia, genocide 487, 488 Cambridge Declaration on Consciousness 468 Canada: Alberta tar sands 217; rape and sexual assault laws 350 Canadian Goldthorpe 190 capital over-accumulation 390–1 capitalism: and climate change 213–16, 219–20; contradictory forces in 526–7 Carter administration 278 cathode ray tubes (CRTs) 247–8, 250 CCMC (Chemicals Control and Management Center), Ghana 257 CCTV (closed circuit television) 519 CEDAW (Convention on the Elimination of All Forms of Discrimination against Women) 1979 114, 138, 354 CELDF (Community Environmental Legal Defense Fund) 242 censorship 508 Center of Food Safety 475 Central Intelligence Agency see CIA (Central Intelligence Agency) Centre for Popular Research (CINEP) 326–8 Chagossians, forced eviction of 105, 113–18 Chemicals Control and Management Center (CCMC), Ghana 257 chemicals, toxic: in the Deepwater Horizon accident 366–7; in fracking 236–7, 238, 244 see also electronic waste Chicago Edison 174 children, in Australian detention centres 334, 335, 337, 338, 339; legal protection of unborn children 55 Chile 93, 94 China: corporate crime 168; internet censorship 508; organized crime in 401–8; trade with United States 122–3; and Walmart 124–5, 128–9, 130 Christianity 63 Christmas Island detention centre 333, 334, 338, 339 Christopher Commission 422 Church Committee (United States Senate Select Committee to Study Governmental Operations with Respect to Intelligence Activities) 520 Church of Latter Day Saints 293 CIA (Central Intelligence Agency) 518, 520; and Chile 93–4; use of water-boarding 26 CINEP (Centre for Popular Research) 326–8 circumvention 511 Citigroup 282–3, 285, 299 citizen consumers 201–2 civil law, and organizational violence 54 civil liberties: and state-corporate crimes 509; and surveillance 520

Subject Index

civil rights, Colombia 325–8 civil society: and corporate resistance 186, 187, 188–90; Greece 430 civil suits, and corporate crime 165–6 Class, State, and Crime (Quinney) 23 Clean Water Act 1972 235, 239, 244 clientelism 429–30 climate change crimes 11, 12, 211–13; alternatives to 220–1; and global capitalism 213–16; and neoliberalism 219–20; and state-corporate crime 216–18 Clinton administration 160 closed circuit television (CCTV) 519 coal bed methane reserves (CMR) 238 Coalition in Defense of Life and Water 226–7 Coast Guard, and the Deepwater Horizon oil spill 363, 364, 365–6, 367, 368, 370–1 coding processes 75 Colombia, para-state crime 320–8 colonialism, and mundane crimes 45 Colorado, and fracking 243 Comcast 83 Comité Nacional de Victimas de la Guerilla (VIDA) 326 commercial real estate (CRE) loans, and bank failures 265, 266, 267, 269, 270–1, 272, 272, 273 commodification: of nature 215, 215; of water 223, 226–7, 229 commodity fetishism 516 Community Associations of Rural Vigilance/ Surveillance/Asociaciones Comunitarias de Vigilancia Rural (CONVIVOR) 321 community banks see bank failures community development, corporate sponsorship of 190 Community Environmental Legal Defense Fund (CELDF) 242 Compassion Over Killing 468, 474 compensatory style of social control 527 Comprehensive Control Act 166 Computer Fraud and Abuse Act 508, 511 computer-related crime see hacking concentrated animal feeding operation (CAFO) 466–7 Conciliation and Arbitration Board (JNCA), Mexico 374–5 conciliatory style of social control 527 Confederation of Mexican Workers (CTM) 375, 381 conflicts of interest: in financial organizations 280; and regulation 182–3 conformity, and state crimes 497 constraints 492–3 Consumer Product Safety Commission 160, 164 consumer sovereignty 201, 202 consumerism 198 consumers: and commodity fetishism 516; and electronic waste 248–9, 257–8

content analysis 75 control fraud 11, 172–3, 174, 175, 176, 177, 180 see also corporate-financial crimes; Enron scandal; Insull scandal Control Management 242 controls, on state crimes 492, 499; and apathy 497; external controls 493–4; internal controls 492–3; resistance, by victims, activists and oppositional groups 494–6; state public relations efforts 498–9; state resistance to 497–8 Convention for the Protection of Human Rights and Fundamental Freedoms 116 Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (SUA), 1988 111 Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) 1979 114, 138, 354 Convention on the Prevention and Punishment of the Crime of Genocide (Genocide Convention) 1948 483–4 Convention on the Rights of the Child 1989 114 CONVIVOR (Community Associations of Rural Vigilance/Surveillance/Asociaciones Comunitarias de Vigilancia Rural) 321 copyright law 508 corporate citizenship 183 corporate counter-mobilization strategies 187–90 corporate crimes 44, 157–8, 167–9; enforcement of 157, 158, 159–60, 162–9; history of 158–60; overview of 9–11; research and methodological issues 162–7; theoretical overview of 160–2; White Collar series (USA Network) 6–7, 73–5, 76–9, 80–4 see also business ethics; corporatefinancial crimes; “white-collar” crime corporate culture 161 corporate environmentalism, Walmart’s sustainability initiative 197–206 Corporate Fraud Task Force 294 corporate lobbying 178 corporate negligence 51, 53–4 Corporate Social Responsibility (CSR) 186, 187, 188, 190, 194, 456, 457; and the Nigerian petrochemical extraction industry 97–8; theorizing the role of 191–3 see also business ethics corporate surveillance (CS) 186–7, 188–90, 194; theorizing the role of 191–3 corporate violence, downsizing as 56 corporate-financial crimes 172–3; control context of 179–80; Enron case study 172, 173, 175–8, 179, 180–1, 183; implications of 181–3; Insull case study 172, 173–5, 177, 178, 179, 180–1; organizational context of 180–1; societal context of 177–9 see also corporate crimes; financial crimes Corporation Securities of Chicago (Corp) 174, 175, 180 545

Subject Index

corporations, definition of 9–10 corruption 23; China 404–6; and corporatefinancial crimes 178; in Greece 427–38; and the petty powerful 46; United States 26–7 see also police corruption Corruption Perceptions Index (CPI) 428–9 Cortolina, Colombia 395 counter-hegemony 496 counter-movements 496 CPI (Corruption Perceptions Index) 428–9 CRE (commercial real estate) loans, and bank failures 265, 266, 267, 269, 270–1, 272, 272, 273 Credit Mobilier 530–1 credit rating agencies 183 crime: definitions of 39–42, 47, 105–6; general theory of crime 41 Crime Control Act 1990 166 crimes against humanity 482 crimes against peace 481–2 Crimes By the Capitalist State: An Introduction to State Criminality (Barak, ed.) 19 crimes of the powerful 4–5, 32–3; culture and ideology overview 5–7; definition of 44; emergence as an area of study 3–4; failure to control 2, 25–32; justification of 6–71; mundane crimes 45–6 see also corporate crimes; environmental crimes; financial crimes; globalization, crimes of; state crimes; statecorporate crimes; state-routinized crimes (SRCs) Crimes of the Powerful (Pearce) 44 Crimes of the Powerful: A Reader (Whyte, ed.) 4, 44 Criminal Anthropology (Lombroso) 6, 39 criminal behavior, and organizational violence 53–5 criminal purpose organizations 53 criminal sanctions, lack of in financial crimes 285–6, 531–2 criminogenic markets, and bank failures 265–6, 271–5, 272 criminology: critical criminology 41–2, 149, 151–2; and global crime control 149–52; left realist criminology 151; mainstream definitions of crime 40–2, 47; and “white-collar” crime 1 critical criminology 41–2, 149, 151–2 CRTs (cathode ray tubes) 247–8, 250 crypto anarchy 505, 506, 511 CS (corporate surveillance) 186–7, 188–90, 194; theorizing the role of 191–3 CSR see Corporate Social Responsibility (CSR) CTM (Confederation of Mexican Workers) 375, 381 Cultural Olympiad 188 cultural sponsorship, and Corporate Social Responsibility (CSR) 188 culture and ideology overview 5–7 cyberspace: and transnational crime 144–5, 152 see also hacking; internet 546

dairy production 470, 471 Dale Smith Meatpacking Company 474 DAS (Departamento de Administración de Seguridad), Colombia 322–3 data-mining 518 debt-restructuring instruments 17 Deepwater Horizon accident, Gulf of Mexico 99, 183, 186, 224, 226, 363–71 deforestation 217 denial of service attacks 511 denial, and state crimes 497 Departamento de Administración de Seguridad (DAS), Colombia 322–3 Department of Homeland Security, Science and Technology Directorate 518 deregulation 278, 286 deviant knowledge 95 Diego Garcia see Chagossians, forced eviction of diesel fuel, use in fracking 238 dietary guidelines 471 Digital Millennium Copyright Act 508 directors’ and officers’ liability insurance (D&O) 284–5 dispersants, and the Deepwater Horizon accident 366–7 disruptive electronic protests 511 dolus specialis 484 domestic violence 56 downsizing 56 drones 518–19 drought 227–8 EA (Exclusive Analysis) 189–90 Early Intervention (EI) computerized systems 422 Earth Day 198 earthquakes, and fracking 240–1 East India Company 67 East Timor, genocide 487, 488 ECHR (European Court of Human Rights) 26; and the forced eviction of the Chagossians 116, 117 ecocide 211–13; and state-corporate crime 216–18 École Supériure de Guerre, France 310, 311, 312–13 ecological citizenship 212 ecological modernization theory 199–200 economic surveillance 517 Edelman Public Relations 204 EDT (Electronic Disturbance Theater) 511 EFF (Electronic Frontier Foundation) 510–11 electronic civil disobedience 511 Electronic Disturbance Theater (EDT) 511 Electronic Frontier Foundation (EFF) 510–11 electronic waste 247–9, 257–9; and Africa 251–7; and Ghana 254–7; and Nigeria 252–4; regulation of 249–51, 254, 257, 258 elite integrity, Greece 430 Elsevier 518 Encana 239

Subject Index

encryption 505, 511 Energy Policy Act 2005 235, 238–9, 242 enforcement, and corporate crime 157, 158, 159–60, 162–9 Enlightenment 144 Enron scandal 163, 166, 172, 173, 175–8, 179, 180–1, 183, 279, 289, 293, 532 environmental crimes 4; GE 82; Nigerian petroleum extraction industry 90, 97, 98–9; overview of 11–13 see also climate change crimes; electronic waste; water crises Environmental Defense Fund 200 environmental issues: ecological modernization theory 199–200; and Walmart’s sustainability initiative 197–206 environmental pollution: and the Nigerian petrochemical extraction industry 97, 98–9; water pollution 223, 224–6, 235, 237–40, 243–4, 253–4 Environmental Protection Agency (EPA) 84, 160, 164, 165; and agricultural pollution 466, 471–2; and the Deepwater Horizon oil spill 363, 367; and fracking 238–41, 243 Epsilon 518 EPZs (Export Processing Zones), Mexico 381–2 equality 63 Escuela Superior de Guerra, Argentina 306, 311, 312, 313–15 ethics see business ethics Ethiopia 112 euphoric economies 274 European Court of Human Rights (ECHR) 26; and the forced eviction of the Chagossians 116, 117 European Union, and human trafficking 134 European Values Surveys 427 ex-offenders see professional-ex roles Exclusive Analysis (EA) 189–90 Experian 518 Export Processing Zones (EPZs), Mexico 381–2 Extraordinary Chambers for the Courts of Cambodia 486, 488 Exxon Valdex oil spill 228 factory farming 466–8; ag-gag laws 466, 473–5, 476; crimes in 469–70; government regulation and legislation 470–3; solutions to 475–6 see also animals, crimes against FARC (Fuerzas Armadas Revolucionarias de Colombia – Ejército del Pueblo/Revolutionary Armed Force of Colombia – Popular Army) 320, 323–4, 326 FAST (Future Attribute Screening Technology) program 518 fatality rates: and the Great War 480; oil and gas sector workers 241 FBI (Federal Bureau of Investigation) 159, 520 FCC (Federal Communications Commission) 518

FDI (foreign direct investment) 391 FDIC (Federal Deposit Insurance Corporation) 15, 269–70, 271–2, 272, 278, 534 FDICI (Federal Deposit Insurance Corporation Improvement Act 1991) 267–8 Fed (US Federal Reserve) 14–15 Federal Aviation Administration, and the Deepwater Horizon oil spill 363, 368, 371 Federal Bureau of Investigation (FBI) 159, 520 Federal Clean Air and Water Acts, 2006 22 Federal Communications Act 1934 518 Federal Communications Commission (FCC) 518 Federal Deposit Insurance Corporation (FDIC) 15, 269–70, 271–2, 272, 278, 534 Federal Deposit Insurance Corporation Improvement Act 1991 (FDICI) 267–8 Federal Environmental Protection Agency Act 1988, Nigeria 254 Federal Power Act 1935 175 Federal Reserve Bank of New York (NY Fed) 14, 15 Federal Sentencing Guidelines 166 Federal Trade Commission 159 FERA: Public Law 111-21 (Fraud Enforcement and Recovery Act, 2009) 14 Ferguson, Missouri 414, 417 fetishistic disavowal 516–17 financial crimes 2, 44; cost of frauds 290; misrepresentation and fraudulent manipulation 278–87; non-penal alternatives to prevention of 525–35; overview of 13–18; sentencing of 290–1, 291, 296; in Smith’s theory 66–7; US commercial banking industry 265–75; victims of 289–99 see also corporate-financial crimes financial crisis 2008 182, 183, 290, 295, 528, 532; and bank failures 265, 266–8; and the Securities and Exchange Commission (SEC) 279–87 Financial Industry Regulatory Authority (FINRA) 459 Financial Institutions Reform, Recovery and Enforcement Act 1989 (FIRREA) 166, 267 Financial Services Modernization Act 1999 533 Financial Stability Oversight Council 534 FINRA (Financial Industry Regulatory Authority) 459 FIRREA (Financial Institutions Reform, Recovery and Enforcement Act 1989) 166, 267 First World War 479, 480–1 FISA (Foreign Intelligence Surveillance Act) 520 fiscal – military nexus 22, 23 fishing: illegal, unreported, unregulated (IUU) fishing, Somalia 110, 111–12, 117 FLN (Front de Libération Nationale), Algeria 307, 308, 311 Foča 351–2 Food and Drug Administration 159, 164 Food and Water Watch 241 547

Subject Index

food justice movement 203–5 Food Safety Inspection Service 159 food, sustainable 202–5 forced evictions, of the Chagossians 105, 113–18 forced labour 135, 138 see also human trafficking Ford Motor Company, Pinto automobile negligent homicide case 51, 54–5, 166, 295 Foreign Corrupt Practices Act 166 foreign direct investment (FDI) 391 Foreign Intelligence Surveillance Act (FISA) 520 former Yugoslavia: gendered violence in 350–2; ICTY (International Criminal Tribunal for the former Yugoslavia) 479, 487–9 fossil fuel disinvestment 13 Fox TV Studios 73 FracFocus 236–7, 244 fracking 11, 12, 22, 229, 235–7, 243–4; occupational hazards of 241; opposition to 242–3; and seismic events 240–1; water use and pollution 237–40 France: doctrine of revolutionary war 305, 306–8, 310; and the Great War 480; influence on Argentinian military 309–15; war in Algeria 305, 306–8, 311, 315; war in Indochina 305, 306–7, 315 fraud: and bank failures 265–6, 271–5, 272 see also financial crimes Fraud Discovery Institute 446, 452 Fraud Enforcement and Recovery Act, 2009 (FERA: Public Law 111-21) 14 Freedom Industries 224, 225 Front de Libération Nationale (FLN), Algeria 307, 308, 311 fruit production 471, 472 Fuerzas Armadas Revolucionarias de Colombia – Ejército del Pueblo/Revolutionary Armed Force of Colombia – Popular Army (FARC) 320, 323–4, 326 Future Attribute Screening Technology (FAST) program 518 Future of Criminology, The (Loeber and Welsh) 40–1 G4S 340, 341 Galleon Group 530 gambling, in China 403–4, 408 garment industry, industrial accidents 89 Gasland (Fox) 242 GAT (global anomie theory) 105, 106–9, 107, 117 GE: corporate crimes 81–3; media ownership 74 gender: and human trafficking 138; and police misconduct 413, 419 gendered violence against women 348–9, 356–7; overview of the literature on 349–50; during peacetime 353–6; during war/conflict 350–3 general theory of crime 41 genocidal rape 351–2 genocide 479; ad hoc tribunals for former Yugoslavia and Rwanda 479, 487–9; and 548

the First World War 479, 480–1; forgotten genocides 486–7; Genocide Convention of 1948 483–4; and the International Criminal Court (ICC) 489–90; and the Second World War 479, 481–3, 484–6 Genocide Convention (Convention on the Prevention and Punishment of the Crime of Genocide) 1948 483–4 Germany: and the Great War 480–1; and Walmart 128 GFC (Great Firewall of China) 508 Ghana, electronic waste 247, 254–7 Girl of Qatif, the 353–5 Glass-Steagall Act 1933 278, 525, 533, 534 global anomie theory (GAT) 105, 106–9, 107, 117 global crime 46, 149–52 global dysnomie 106, 108–9, 117–18; and the forced eviction of the Chagossians 113–17; GAT analytical framework 105, 106–9, 107; and Somali maritime piracy 109–13 global warming see climate change crimes globalization 144, 152; crimes of 4, 46–7, 89–90, 94–5, 390; and global dysnomie 106–8, 107, 117–18; and human rights 144, 145, 148–9, 150, 152; Nigerian petroleum extraction industry 90–2, 96–101; overview of 7–9; and terrorism 145–7 GM, vehicle safety 10 gold mining, AngloGold Ashanti, Colombia 386–96 Goldman Sachs 280–1, 531, 533 governance: and global dysnomia 108–9, 117–18; Sustainable Governance Index (SGI) 429 government organizations, criminal acts by 55 see also state crimes governmentality 192 Great Depression 92–3, 159 Great Firewall of China (GFC) 508 Great War (First World War) 479, 480–1 green consumerism 197, 198–9 Greenpeace 186, 256–7 grey intelligence 193–4 Ground Water Protection Council 236 Growing Power, Inc. 204 Grupo Mexico 373–8, 380, 382–3, 384 Grush-Saunby memorandum 54–5 guangxi, China 404 hacking 503–4, 512; perceptions of state crimes 506–9; relationship with the state 504–5; solutions to state crimes 510–12 hacktivism 511 Hague Convention 1907 482 Halliburton 22, 225 Halliburton Loophole 235, 239, 241, 243, 244 harm, risk of 55–6 Harmful Wastes Decree, Nigeria 254

Subject Index

hedge funds 17 hegemonic masculinity, in police culture 416–19 hegemony 219 Holocaust 481, 484–6 homo erectus 63–4 Hong Kong 24 horrendous crimes 105–6 House of Cards (Netflix) 7 human rights: Colombia 325–8; and globalization 144, 145, 148–9, 150, 152; and the Nigerian petrochemical extraction industry 99–101 human trafficking 132–41 Humane Slaughter Act 469 Hutus 486 hydraulic fracturing see fracking ICC (International Criminal Court) 114, 212, 479, 489–90, 493 ICCPR (International Covenant on Civil and Political Rights) 1966 137 ICTR (International Criminal Tribunal for Rwanda) 479, 487–9 ICTY (International Criminal Tribunal for the former Yugoslavia) 479, 487–9 ICU (Islamic Court Union) 112 Idaho, ag-gag laws 475 identity, and roles 444 idiotes 71 illegal migration, and Australian border policing 139, 331–44 illiquid partnerships see hedge funds ILO (International Labor Organization) 127, 138, 383 images, control and manipulation of in the Deepwater Horizon accident 365–6, 367–70 IMF (International Metalworkers Federation) 383 IMF (International Monetary Fund) 46, 109, 226, 381, 391 Imperial Foods 21 inclinations 62–3 India, and Walmart 128 individualism 63 Indochina, French war in 305, 306–7, 315 Indonesia 217; genocide 486, 487 induced seismic events 240 industrial accidents 89–90; Triangle Shirtwaist Factory fire, 1912 125 Industrial Revolutionary Party (PRI), Mexico 381 industrial violence see organizational violence IndyMac bank 268 influence market corruption (IMC) 23 Information Technology Industry Council (ITI) 251–2 infra-politics 496 injection wells 240–1 see also fracking Insull scandal 172, 173–5, 177, 178, 179, 180–1 Insull Utility Investments (IUI) 174, 175, 180

insurance: directors’ and officers’ liability insurance (D&O) 284–5; insurance fraud 66 Integrated Model of State-Corporate Crime 395–6 Integrity Bank 270 intelligence-gathering: big data 193, 194; grey intelligence 193–4 see also corporate surveillance (CS); risk assessment intentionality, and organizational violence 57–8 Intergovernmental Panel on Climate Change 211–12, 213 Internal Affairs (IA), police forces 421–2 Internal Revenue Service 159 International Convention on the Elimination of All Forms of Racial Discrimination 1965 114 International Court of Justice 493 International Covenant on Civil and Political Rights (ICCPR) 1966 137 International Covenant on Economic, Social and Cultural Rights 1966 114 International Crime against Peace 212 International Criminal Court (ICC) 114, 212, 479, 489–90, 493 International Criminal Tribunal for Rwanda (ICTR) 479, 487–9 International Criminal Tribunal for the former Yugoslavia (ICTY) 479, 487–9 International Health and Medical Services 340 International Labor Organization (ILO) 127, 138, 383 International Metalworkers Federation (IMF) 383 International Military Tribunal, Nuremberg 481–3 International Monetary Fund (IMF) 46, 109, 381, 391; and water access issue 226 International Standards Organization (ISO) 460 internet: censorship of 508; control over 505; and the Deepwater Horizon accident 370, 371 see also hacking INTERPOL 377, 379, 383 interrogation 307–8 see also torture Interstate Commerce Commission 159 Interstate Oil and Gas Commission 236 Iowa: ag-gag laws 475; animal welfare legislation 470 Iran-Contra Affair 18 Iraq: Abu Ghraib detention center 352, 421, 498; gendered violence against women 352–3 ISIS (Islamic State in Iraq and Syria) 147 Islamic Court Union (ICU) 112 ISO (International Standards Organization) 460 ITI (Information Technology Industry Council) 251–2 Janus Capital Group Inc. 17 JNCA (Conciliation and Arbitration Board), Mexico 374–5 Jose Alvear Restrepo Lawyers’ Collective (CAJAR) 326–7 549

Subject Index

JP Morgan 175, 180, 526 Jungle, The (Sinclair) 51, 164 justification, of crimes of the powerful 6–71 Kansas Department of Agriculture 472 Kansas, ag-gag laws 474 Kellogg-Briand Pact (Pact of Paris) 482 Khmer Rouge 486 La Colosa mining project, Colombia 394–5, 396 La Violenza, Colombia 320 labour market, international 133 see also human trafficking land use ordinances, and fracking 242 law enforcement: China 404–8 see also police Law Enforcement Support Office (LESO) 24 Lebanon 488 Lectures on Jurisprudence (Smith) 66–7 left realist criminology 151 legislation: and business ethics 458–9 legitimacy, and state crimes 497 Lehman Brothers 180 LESO (Law Enforcement Support Office) 24 Liberal National Party Coalition, Australia 332, 333 liberal solutions to state crimes 510–11 liberalism 63, 504 see also technological liberalism liberty: absolute 67–9; negative and positive 70–1; relative 65–7 Libor interest rate manipulation 15 LIFE magazine 516 life-cycle analysis of products 200, 201 Lincoln Savings and Loan 268, 273 looting, by bank insiders 273, 279 Macedonia 26 mainstream criminology 40–2, 47, 151 manufacturing industries: in developing countries 121–30; in nineteenth-century England 2 Manus Island detention centre, PNG 331–2, 333, 334, 338, 339, 340–1 Maquiladora Health and Safety Support Network (MHSSN) 374 Marcha Patriótica (MP) 326 marginal utility theory 65 marginalized populations: China 401–2; police victimization of 417–18 Marine Protection Areas (MPAs), British Indian Ocean territory (BIOT) 116–17 mark-to-market accounting 176, 179 market economics 92–4 Mars Apparel 126 Marxist theory 160 MAS (Muerte a Secuestradores/Death to Kidnappers) 321 masculinity: hegemonic masculinity, in police culture 416–19 mass media 298 550

Mauritius 113, 115, 116–17 MAYO 431, 432–3, 437 MCMH pollution, Elk River, West Virginia 224, 225 Meat Inspection Act 1906 164 meat production 471 media: and the Deepwater Horizon accident 368–70, 371; ownership 74, 83 mens rea 484 mental violence, and organizational violence 56 Mercy for Animals 467–8, 470, 473 Merrill-Lynch 180, 283 methane emissions, form agriculture 472 Mexican Labour Department (STPS) 374 Mexico: denial of service attacks 511; National Mine, Metal and Steel Workers Union of Mexico 373–84 MHSSN (Maquiladora Health and Safety Support Network) 374 Middle West Utilities 174 migration 134, 139–40; illegal migration, and Australian border policing 139, 331–44 see also human trafficking Minerals Management Service (MMS) 183 mining: AngloGold Ashanti, Colombia 386–96; National Mine, Metal and Steel Workers Union of Mexico 373–84 Mining Enforcement and Safety Administration 160 Minnesota: animal welfare legislation 470 Missing Wealth of Nations, The (Zucman) 3 Missouri: ag-gag laws 475 MMS (Minerals Management Service) 183 MNL 17 Money Laundering Reporting Office Switzerland (MROS) 434 Mont Pelerin Society 93 Montana, ag-gag laws 474 MORENA (Movimiento de Restauración Nacional) 326 Morgan Stanley 531 mortgage fraud 82 motive, and organizational violence 58 Movimiento de Restauración Nacional (MORENA) 326 Movimiento Tercera Fuerza 326 MP (Marcha Patriótica) 326 MROS (Money Laundering Reporting Office Switzerland) 434 Muerte a Secuestradores/Death to Kidnappers (MAS) 321 multinational corporations (MNCs): tax evasion/ avoidance 3 mundane crimes 45–6 NAFTA (North America Free Trade Agreement) 382 National Crime Victimization Survey (NCVS) 292

Subject Index

National Environmental Action Plan (NEAP), Ghana 257 National Highway Traffic Safety Administration (NHTSA) 10, 54–5 National Incident Based Reporting Scheme (NIBRS) 291–2 national indebtedness 3 National Institute for Occupational Safety and Health (NIOSH) 241 National Mine, Metal and Steel Workers Union of Mexico 373–84 National School Lunch Program 471 National Security Agency (NSA) 506–7, 515, 518, 519, 520, 530, 621 National Union of Workers in the Exploration, Exploitation and Benefit of Mines (SUTEEBM) 376 National White Collar Crime Center (NW3C) 292 Natural Gas Policy Act 1978 179 nature: commodification of 215, 215; stewardship of 212–13 see also environmental crimes; environmental issues Nauru detention centre 331–2, 333, 334, 338, 339, 341, 343, 343 NBC Universal 74 NCVS (National Crime Victimization Survey) 292 NEAP (National Environmental Action Plan), Ghana 257 needs 64 negative liberty 70–1 “neither admit nor deny” clauses 282, 283–5 neoliberalism 93–4, 94–5, 98, 391; alternative policies to 533–5; and climate change crimes 219–20; Colombia 391; and environmentalism 200–1; and global dysnomie 106–8, 107, 117– 18; Mexico 382; and water crises 223, 226–7 Nestlé 226 neutralization theory 6, 62–3, 162 New Democracy party, Greece 432, 433, 437 New York Police Department, Bureau of Criminal Alien Investigation 517–18 New York, and fracking 242, 243 NGOs, Colombia 326–8 NHTSA (National Highway Traffic Safety Administration) 10, 54–5 Nigeria: and electronic waste 247, 252–4; petroleum extraction industry 90–2, 96–101 Nigerian National Petroleum Corporation (NNPC) 92 NIOSH (National Institute for Occupational Safety and Health) 241 NNPC (Nigerian National Petroleum Corporation) 92 non-human animals see animals, farming crimes against non-physical violence, and organizational violence 56

North America Free Trade Agreement (NAFTA) 382 North American alliance (clothing industry) 127–8 North Dakota, ag-gag laws 475 NSA (National Security Agency) 506–7, 515, 518, 519, 520, 530, 621 Nuremberg Charter 482 Nuremberg trials 481–3 NW3C (National White Collar Crime Center) 292 NY Fed (Federal Reserve Bank of New York) 14, 15 Obama administration 26, 136, 160, 532; and hacking 503; and surveillance 515, 517, 522 occupational crime 44 occupational hazards, and fracking 241 Occupational Safety and Health Administration (OSHA) 84, 160, 241 Occupy Wall Street 24, 414 Office of Thrift Supervision (OTS) 269–70 oil industry see Nigerian petroleum extraction industry Oil Pollution Act 1990 364 oil spillages: Deepwater Horizon accident, Gulf of Mexico 99, 183, 186, 224, 226, 363–71; Nigeria 98–9 Olmstead v. United States 518 On Liberty (Mill) 67–9 Operation Sovereign Borders, Australia 333–4 Operation Stolen Dreams 290, 294–5 organic food 203, 204 organizational agents 56–7 organizational crime 41 organizational violence 50–2; definition of 50, 59–60; dimensions of 52–9 organizations, definition of 53 organized crime 22–3, 146; China 401–8 Organizing Crime (Block and Chambliss) 3, 4, 23 organs, removal of 135, 138 see also human trafficking OSHA (Occupational Safety and Health Administration) 84, 160, 241 OTE case, Siemens AG 434 othering 498 OTS (Office of Thrift Supervision) 269–70 Pacific Investment Management Company (Pimco) 17 PACs (political action committees) 178 Pact of Paris (Kellogg-Briand Pact) 482 Palermo Protocol (Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children) 132, 134–5, 136–7, 138, 140, 141 paramilitary organizations, Colombia 320–8 parapolitics, Colombia 322–3 “Pareto logic” 64 551

Subject Index

Parker County, Texas 239–40 PASOK (Social Democratic party), Greece 432, 433, 436, 437 Pasta de Conchos mine accident, Mexico 373–4, 376, 378 Patriot Act 270 Paulson & Co. 281 Pavillion, Wyoming 239, 240 PCAOB (Public Corporation Accounting Oversight Board) 459 Peace Community of San José de Apartadó, Colombia 324–5, 328 Peace of Westphalia 481 Pecora Commission 531 peer influence, on business ethics 461–2 penal style of social control 527 Pennsylvania: animal welfare legislation 470; and fracking 242 People for the Ethical Treatment of Animals (PETA) 466, 467, 475 people smugglers, and Australia 3410342 People’s Climate March 13 perceived obsolescence 248–9 Peros Banhos see Chagossians, forced eviction of personal data, failure to protect 507 personal gain, and organizational violence 58 personal liability, for financial crimes 286–7 personality, and corporate crime 161 PETA (People for the Ethical Treatment of Animals) 466, 467, 475 petty powerful 45–6 Pfizer 81 phthalates 256 physical violence, and organizational violence 56 Pieds-Noirs 307, 308 Pimco (Pacific Investment Management Company) 17 Pipestone Systems 470 Planning Tool for Resource Integration, Synchronization, and Management (PRISM) 506–7, 515, 521 PMCs (private military contractors) 145, 147, 148 Poland 26 police: abuse of power 42; hegemonic masculinity 416–19; investigations into 493; militarization of 23, 24 police corruption 419–23; “bad apple” theory 415–16; China 405–6; cultural aspects 416–19; definition of 413–15; methodological issues in research 415; North America 412–23 political action committees (PACs) 178 political clientelism 429–30 Political Crime (Proal) 6, 39 pollution see environmental pollution Ponzi schemes 28, 274, 286, 289, 290, 291, 293, 294, 534 positive liberty 70–1 552

poverty: and the Nigerian petrochemical extraction industry 96–8; and police victimization 417–18 power 42–3 PRI (Industrial Revolutionary Party), Mexico 381 price fixing 82 primitive accumulation 389 PRISM (Planning Tool for Resource Integration, Synchronization, and Management) 506–7, 515, 521 Prison Consultants 443 Prison Fellowship 446, 450, 451 private equity funds 17 private military contractors (PMCs) 145, 147, 148 private policing/security/intelligence gathering 165, 187–8, 190, 191–3 privatization of water supplies 223, 226–7, 229 professional-ex roles 443–6, 451–2; “white-collar” criminals 443–4, 446–51, 452 prohibition, of organized crime in China 403–4 Project SHAMROCK 518 prosecution 2; of financial fraud 285–96, 294–5; lack of in financial crimes 285–6, 531–2 Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children (Palermo Protocol) 132, 134–5, 136–7, 138, 140, 141 Proxmire Act 1988 481 psychology, and corporate crime 161 Public Corporation Accounting Oversight Board (PCAOB) 459 Public Rangelands Improvement Act 1978 471 public relations, and state crimes 498–9 Public Utilities Holding Company Act 1935 175 Pujo Committee, 1912/1913 531 Puntland, Somalia 110, 112 Pure Food and Drug Act 1906 164 Quanah Cattle Co. 468, 474 race to the bottom 123 race-biased policing 413 Racketeering Influence and Corrupt Organizations Act 1970 166 radical solutions to state crimes 511 Rana Plaza factory, Bangladesh 89, 125–6 Range Resources 239–40 rape: Canadian laws on 350; as a weapon of war 349, 350–3 RCRA (Resource Conservation Recovery Act) 250 Reclaim Shakespeare Company 188 Recording Industry Association of America (RIAA) 508 “red-black” collusion, China 405–6, 407 Refugee Convention 1951 334 regulation 178; and business ethics 458–9; and conflicts of interest 182–3; energy distribution 179; US banking industry 267–8, 269–71,

Subject Index

274–5 (see also Securities and Exchange Commission (SEC)) relative liberty 65–7 remittances, from the Somali Diaspora 109 Renaissance Technologies 17 reporting of financial fraud 294 reputational damage 285 resistance: to Australian border policing 342–4, 343; to state crimes 494–6 Resource Conservation Recovery Act (RCRA) 250 Responsible Electronics Recycling Act 250–1, 252 retail revolution 122–4 see also Walmart Revenue Tax Act 1862 159 “revolving door” 286; Colombia 391–2 RIAA (Recording Industry Association of America) 508 risk assessment, and corporate surveillance 189–90, 191–2 risk of harm: forseeable 57; and organizational violence 55–6, 57 risk-based policing 192–3 Roe v. Wade case 55 roles, and identity 444 Rome Statute of the International Criminal Court 2002 114 Royal PNG Constabulary (RPNGC) 340–1 Russia: and the Great War 480; and Ukraine 147; and Walmart 128 Rwanda, ICTR (International Criminal Tribunal for Rwanda) 479, 487–9 Safe Drinking Water Act 235, 238, 239, 243, 244 safety crime see organizational violence Salomon see Chagossians, forced eviction of Salvation Army 340, 341 SAPs (Structural Adjustment Plans), Mexico 381–2 Sarbanes-Oxley Act 2002 166, 176, 181, 183, 459, 460 Saudi Arabia, gendered violence against women 353–5 savings and loan industry, 1980s failures in 265, 266–8, 278–9, 289, 532 see also bank failures SCF (social construction framework) analysis of victims of financial crimes 295–8, 296, 298 Science Applications International Corporation (SIAC) 435 Seamy Side of Democracy, The (Wolfe) 23 Sears 126 SEC see Securities and Exchange Commission (SEC) Second Bank of the United States 530 Second World War 479, 481–3, 484–6 Secret Service 159 Section 65 strikes, Mexico 374–5 see also National Mine, Metal and Steel Workers Union of Mexico Securities Act 1933 175, 181, 278

Securities and Exchange Commission (SEC) 159, 164, 166, 175, 179, 181, 182–3, 278, 286–7, 449, 528, 529, 532; “neither admit nor deny” clauses 282, 283–5; and the 2008 financial crisis 279–87; enforcement policies 280–3; lack of criminal sanctions 285–96; regulatory policies 280 Securities Exchange Act 1934 175, 181, 278 securities fraud see financial crimes seismic activity, and fracking 240–1 self-harm, in Australian immigration detention centres 343 self-regulation 165, 271 sentencing, and financial crimes 290–1, 291, 296 Serbia: and the Great War 480 see also former Yugoslavia sex workers, China 402 sexual exploitation see human trafficking sexual harassment, United States 355–6 Seychelles 113, 115 SGI (Sustainable Governance Index) 429 shadow states, in Colombia 323–4 Shanghai Green Gang 401 Shell: Corporate Social Responsibility (CSR) and corporate surveillance (CS) 186, 187, 188, 189, 190, 191; Shell Petroleum Development Corporation of Nigeria 90, 91, 92, 97, 100 (see also Nigerian petroleum extraction industry) Shell Out Sounds 188 Sherman Antitrust Act 1890 159 SIAC (Science Applications International Corporation) 435 Sicily, mafia families 404 Siemens AG 431, 433–7 Sierra Leone 488 Silver State Bank 271 Sinking Fund Commission 530 slavery 137; transatlantic slave trade 90–1, 100 see also human trafficking Slavery Convention 1926 137 Smuggling Protocol 136 social capital, Greece 430 social construction framework (SCF) analysis of victims of financial crimes 295–8, 296, 298 social control 144, 145, 147, 527, 529 Social Democratic party (PASOK), Greece 432, 433, 436, 437 sociology, and corporate crime 161–2 Soma mine accident, Turkey 89 Somalia, maritime piracy 105, 109–13, 117 Somaliland 112 South Carolina, ag-gag laws 475 South Korea, and Walmart 128 Southern Industrial Banking Corporation 293 sovereign immunity 481, 482 sovereignty 144, 145, 147, 192 Special Court for Sierra Leone 488 553

Subject Index

special purpose entities (SPEs) 176 speciesism 469 sponsorship, and Corporate Social Responsibility (CSR) 188, 190 Squealing Sheep 507 SRCs see state-routinized crimes (SRCs) Sri Lanka 333–4 State Crime: Governments,Violence and Corruption (Green and Ward) 19 state crimes 148, 149–50; and Australian border policing 331–44; control of 492–9; corporateinfluenced state crimes 378–9; definition of 19, 505–6; and gendered violence 348–57; and hackers 503–5, 506–12; overview of 18–20; resistance to 494–6 see also state-corporate crimes; state-routinized crimes (SRCs) State Criminality: The Crime of All Crimes (Rothe) 19 state harm, and Australian border policing 139, 331–44 state secrecy 507–8 state surveillance 506–7, 512, 515–22 state terror 147 state-corporate crimes 44; accumulation by dispossession 389–90, 393; BP Deepwater Horizon oil spill 99, 183, 186, 224, 226, 363–71; and climate change/ecocide 216–18; collaborative crimes 379–81; corporate-influenced state crimes 378–9; and corporate-state crimes 377–8; definition of 21; and hacking 509; National Mine, Metal and Steel Workers Union of Mexico 373–84; overview of 21–2; state-influenced corporate crimes 378–9; West Fertilizer Company, Texas 83–4 state-corporate harm 389 state-finance nexus 2, 15–16, 22, 23 state-routinized crimes (SRCs): corruption in Greece 427–38; organized crime in China 401–8; overview of 22–5; police corruption in North America 412–23 stereotyping, of opponents 499 stewardship, of the natural environment 212–13 stock manipulation 176, 180–1 STPS (Mexican Labour Department) 374 street crimes 289, 290 Structural Adjustment Plans (SAPs), Mexico 381–2 SUA (Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation), 1988 111 subprime mortgage crisis 182, 279, 280–1, 295 subsidies, agricultural 471 Suez 226, 227 suite violence see organizational violence Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions and Practices Similar to Slavery 137 surveillance: corporate surveillance (CS) 186–7, 188–94; financial surveillance 530; state surveillance 506–7, 512, 515–22 554

sustainability 198; and Walmart’s sustainability initiative 197, 198–206 sustainable food 202–5 Sustainable Governance Index (SGI) 429 SUTEEBM (National Union of Workers in the Exploration, Exploitation and Benefit of Mines) 376 Tar Sands Network 189 TARP (Troubled Asset Relief Program) 14, 16, 269, 281–2 tax evasion/avoidance 3 Taylor Grazing Act 1934 471 Tazreen Fashions factory fire, 2012 125 “techniques of neutralization” 6, 62–3, 162, 217 see also corporate surveillance (CS) techno-fetishism 516 technolibertarianism 505, 506 technological liberalism 503, 504–5, 506 technological ontology 504 technology, and corporate crime 167 Telecommunication Act 1996 505 terrorism 145, 151, 152; and virtuality 145–7 therapeutic style of social control 527 Thirty Year War 481 This American Life 15 This Changes Everything: Capitalism vs. the Climate (Klein) 13 title fragmentation, Colombia 393 tolerance 54–65 torture 304; use by Argentina 305, 315; use by France 306, 308, 315; use by United States 26 Towards a Unified Criminology (Agnew) 40, 41–2 toxic capitalism see organizational violence Toxic Substances Control Act (TSCA) 250 toxic waste dumping, Somalia 110, 111–12, 117 Toyota, vehicle safety 10 Trafficking in Persons Report (TIP Report), US 136–7, 138, 139 transitional justice 493 see also ICTR, ICTY transnational corporations (TNCs), and climate change 213–16 transnational crime 145, 146 see also human rights abuses; terrorism transnational organised crime 133 see also human trafficking Transocean Ltd. see Deepwater Horizon accident, Gulf of Mexico Treaty of Versailles 480, 482 Triangle Shirtwaist Factory fire, 1912 125 triple bottom line 214, 462 Troubled Asset Relief Program (TARP) 14, 16, 269, 281–2 trusteeship, of the natural environment 212–13 TSCA (Toxic Substances Control Act) 250 Turkey, genocide against the Armenians 482, 483 Tutsis 486

Subject Index

UAVs (unmanned aerial vehicles) 518–19 UBPRs (Uniform Bank Performance Reports) 271–2, 272 UBS Warburg Bank 286 UCR (Uniform Crime Report) 291–2 UK: and the forced eviction of the Chagossians 105, 113–18; and the Great War 480 Ukraine 147 unborn children, legal protection of 55 uncivil movements 326 UNCLOS (United Nations Convention on the Law of the Sea), 1982 110, 111 Uniform Bank Performance Reports (UBPRs) 271–2, 272 Uniform Crime Report (UCR) 291–2 unionization, and Walmart 127–9, 130 United Nations 493 United Nations Commission on Human Rights 343 United Nations Convention against Corruption, 2003 111 United Nations Convention against Transnational Organized Crime 2000 111, 134, 135, 136, 140 United Nations Convention for the Suppression of the Financing of Terrorism, 1999 111 United Nations Convention on the Law of the Sea (UNCLOS), 1982 110, 111 United Nations High Commissioner for Refugees 342 United States: corruption 26–7; drought 227–8; electronic waste 248–9, 250–1; and the forced eviction of the Chagossians 105, 113–18; gendered violence against women in Iraq 352–3; gendered violence against women in the military 353; history of the security state 517–19, 522; sexual harassment 355–6; small businesses 53; and Somalia 112; tax offenses 3; trade with China 122–3; war on terror 26 United States Civil Rights Commission 422 United States Federal Reserve (Fed) 14–15 United States Senate Banking and Currency Committee, Pecora Commission 531 United States Senate Committee on Intelligence 520 United States Senate Select Committee to Study Governmental Operations with Respect to Intelligence Activities (Church Committee) 520 United States Sentencing Commission 55, 57–8, 459 United Steelworkers Union (USW) 383 Universal Declaration of Human Rights, 1948 114 unmanned aerial vehicles (UAVs) 518–19 USDA (US Department of Agriculture) 470–1 USW (United Steelworkers Union) 383

Utah: ag-gag laws 475; animal welfare legislation 470 utility 64 veganism 476 vegetable production 471, 472 Vessels of Opportunity (VOO) program 368, 371 victims of financial crimes 289–91, 291, 298–9; blaming of 293; identification of 292–4; reporting and prosecution of crimes 294–5; social construction framework analysis 295–8, 296, 298; victimology 291–2 VIDA (Comité Nacional de Victimas de la Guerilla) 326 Viet Minh 307, 308 violence: nature of 51 see also organizational violence Vitesse Semiconductor Corporation 284 Volcker Rule 534 VOO (Vessels of Opportunity) program 368, 371 vulnerability reporters, treatment of 507 Wall Street: moral environment of 81, 281 see also financial crimes Wall Street crash, 1929 92–3, 159, 178 Wall Street Financial Reform and Consumer Protection Act, 2010 (Dodd-Frank) 14, 528, 534 Walmart 121–2, 129–30; and the “China Syndrome” 124–5; and Bangladesh 125–7; sustainability initiative 197–206; and unionization 127–9 war on terror 26 war, use of rape in 349, 350–3 water 223–4, 227–30; access to water, in the Global South 226–7; and fracking 235, 237–40, 243–4 water pollution 223, 224–6, 235, 237–40, 243–4; and electronic waste 253–4 water-boarding 26 wealth, in Smith’s theory 66 welfare states, abolition of 108 West Fertilizer Company, Texas 83–4 West Virginia American Water 224, 225 Westernbank 273 whistleblowers 164, 421 see also Snowden, Edward White Collar series (USA Network) 6–7, 73–5, 76–9, 80–4 “white-collar” crime 41, 54, 94, 149–50, 157, 158, 162; “professional-ex” roles of ex-offenders 443–4, 446–51, 452; and criminology 1; data sources 27; definition of 43–4, 80; victims of 289–99; White Collar series (USA Network) 6–7, 73–5, 76–9, 80–4 see also corporate crime Who are the Criminals? (Hagan) 41–2 WikiLeaks 503, 508, 515 Wilson administration 517 wiretapping see surveillance 555

Subject Index

women: and gendered violence 348–57; and human trafficking 138 Worker Rights Consortium 127 working conditions, in developing countries’ manufacturing industries 121–2, 123–8, 129–30 World Bank 46, 109, 381, 391; and water access issues 226, 227

556

World Commission on Environment and Development 1987 198 World Values Survey 430 WorldCom scandal 175, 181, 279, 289, 296 Yugoslavia, former: gendered violence in 350–2; ICTY (International Criminal Tribunal for the former Yugoslavia) 479, 487–9