Examples include failing to install or properly operate pollution control equipment as required by environmental laws, defrauding the government on a military supply contract, exposing workers to unsafe workplaces in violation of occupational safety and health laws, selling dangerous or defective products in violation of consumer protection laws, and conspiring with competitor firms to charge higher prices to customers than would be possible under true competition in the marketplace.
Although misconduct in pursuit of business purposes has been committed throughout commercial history, in the United States it first became a matter of wide public concern in the late nineteenth century, during the peak era of American industrialization. The aggressive and often corrupt business practices of the so-called Robber Barons created virtual monopolies (trusts) in such industries as oil and sugar, whereas railroads engaged in price discrimination that favored large companies over small producers. These trusts and behaviors spurred popular opposition that led ultimately to the creation of the first independent federal regulatory agency in 1887-the Interstate Commerce Commission to regulate railroads' rates-and to the passage of the first major corporate crime law in the United States in 1890: the federal Sherman Antitrust Act, which outlawed monopolies and conspiracies that limited competition.
Other early federal legislation included the Pure Food and Drug Act and the Meat Inspection Act, both passed by Congress in 1906. These laws were spurred by scandals in the medicinal drug and food industries and by such exposés as Upton Sinclair's best-selling novel The Jungle (1906), which described the unsanitary conditions of production in the Chicago meatpacking industry.
The law of corporate crimes has expanded dramatically in the decades since, typically following either growing recognition of standard business practices that harmed the public interest, or what the media labeled as corporate crime waves of illegal activity by numerous business firms. An example of the first situation is the creation in the early 1970s of the federal Environmental Protection Agency and of new federal laws outlawing air and water pollution in response to growing public concern over industrial pollution. An example of the second is the spur to action caused by such major financial frauds as those discovered at the Enron and Worldcom companies in the early years of the twenty-first century. This pattern of widespread fraud led Congress in 2002 to pass the Sarbanes-Oxley law, legislation that created new standards of top-management responsibility for honest financial accounting and that increased penalties for defrauding investors in shares of corporate stock.
The Study of Corporate Lawbreaking
The systematic examination of lawbreaking by corporations did not develop until the middle of the twentieth century. Although Edward A. Ross, writing in The Atlantic Monthly magazine, had drawn attention in 1907 to what he labeled criminaloids operating in American business, it was not until the 1949 publication of Edwin Sutherland's pioneering book White Collar Crime that the world had its first comprehensive study of corporate offending. The book examined the violations of law by several dozen of the largest American corporations and discovered high rates of offending, typically answered by lenient government penalties. Coming early in an era dominated in the United States by the conservative, anti-Communist culture of the Cold War, the book prompted many in positions of power to call Sutherland's research an unjustified attack on business, and some labeled him a radical. Not surprisingly, his ambitious lead was followed by only a handful of smaller-scale research studies during the 1950s and 1960s. However, the social conflict and political turmoil of the 1960s and early 1970s provided fertile ground for such research, and the study of corporate lawbreaking took firmer root. In particular, the divisive Vietnam War and the Watergate-era crimes of the Nixon administration and 1972 presidential campaign, including illegal campaign contributions by corporations, focused public concern on abuses of power in both business and government. One consequence of this new political climate was the first federal funding for research on white collar crime and its regulation. The research arm of the U.S. Department of Justice funded three major research programs in the 1970s, at Yale University and at the universities of Wisconsin and Minnesota. Although the latter project dealt with employee theft from businesses rather than with corporate lawbreaking, the Yale and Wisconsin researchers took up key questions of the misconduct of businesses and of government policies for controlling it.
The Wisconsin research produced the first and only comprehensive updating of Sutherland's study, analyses of the violations of federal law by several hundred of the nation's largest industrial corporations that were published in two volumes: Illegal Corporate Behavior (1979) and Corporate Crime (1980).
Although research in this area has now established its legitimacy in both academic and government circles, it proceeds at a slower pace and at lower levels of government funding than do studies of street crime. While several reasons account for this difference, a principal one is the relatively constant high public and political concern over the dangers posed by such crimes as robbery, burglary, and murder, even when rates of such crimes decline substantially as they did in the 1990s. In contrast, public and political concern over corporate crimes rises and falls with media attention to periodic “crime waves,” such as with the recent series of financial frauds in both American and foreign companies.
