The 12-step path to white-collar crime

October 13, 2009,

Adelphia Communications, Barings Bank, Enron, HealthSouth, HIH Insurance, Hollinger International, Tyco International, WorldCom/MCI, Xerox... the white collar crime list goes on. But, did the executives at these companies start out as criminals or did they head down the slippery slope to criminality one misplaced step at a time? According to research to be published in the International Journal of Business Governance and Ethics, there are twelve steps to white-collar crime.

Ruth McKay of the Sprott School of Business, at Carleton University, Carey Stevens of Carey Stevens and Associates, in Ottawa, and Jae Fratzl of Artworks Counselling and Psychotherapy, in Ontario, Canada, worked together to examine the psychopathology of the white-collar criminal acting as a corporate leader.

They have looked at the impact of a leader's behavior on other employees and how organizational culture develops during that leader's reign to help them explain how morally upstanding people can become embroiled in and addicted to white-collar criminality that can bring down an entire corporation. Their analysis suggests that this descent involves a 12-step process that takes a company and many of the individuals working in it from operating entirely legally to a situation in which unethical behavior is ignored and wrong-doing is promoted.

"Illegal activities at a corporation may appear to be the act of one person, such as with the collapse of the 233-year-old Barings Bank," McKay explains. That downfall was the result of Nick Leeson's actions, but Barings Bank executives knew through audits that Leeson had a as he was both trading and settling deals. The auditors, Coopers and Lybrand, were also blamed by the bank liquidators for negligence related to Leeson's trading activities.

In the case of Enron, three top players were culpable, but problems were much more widespread within the organization with internal lawyers having helped misrepresent deals in Enron's accounting and external individuals who shredded documents or worked in illegal transactions to promulgate the crime.

The researchers have broken down the process of white-collar crime into 12 steps, with steps one to four explaining how the "players" first encounter and support each other and begin to spot the opportunity for illegal activity.

These first four steps are: The perpetrator is hired into a position of power. Second step, personality and life circumstances affect the perpetrator in such a way that they recognise their power. In the third step "drivers" who turn a blind eye or condone certain activities come into view. The fourth step sees passive participants recognizing an opportunity.

In steps 5 to 8 the truth of escalating illegal activity is hidden.

In step 5 reluctant participants are drawn into the web of deceit by the "leader". In step 6 distrust of the other people involved emerges. In step 7, the perpetrator recognizes they have their accomplices in a vulnerable position and begin to exploit that position. In step 8 bullying tactics become increasingly common as illegal goals are aimed for.

In steps 9 through 12 the perpetrator's actions are challenged and publicised revealing the white-collar crime.

In step 9, the crime continues, but the perpetrators, trapped in their insatiable addiction, become more blaze, taking bigger risks, and seeking more lucrative exploits.

In step 10, an undeniable paradox becomes apparent, as the participants' values and their behavior are now obviously in conflict.

In step 11, a whistleblower steps up to the mark and the leader loses control.

Finally in step 12, blame is laid at the feet of the perpetrator at which point they either deny everything or admit their guilt and seek forgiveness by laying bare their activities.

More information: "A 12-step process of white-collar crime" in Int. J. Business Governance and Ethics, 2010, 5, 14-25

Source: Inderscience Publishers (news : web)

Explore further: Middle class relaxing with marijuana

Related Stories

Middle class relaxing with marijuana

May 14, 2008

A variety of middle-class people are making a conscious but careful choice to use marijuana to enhance their leisure activities, a University of Alberta study shows.

Pedometers motivate people with diabetes to walk more

November 19, 2007

The use of a pedometer and a Web site that tracked physical activity levels proved to be powerful motivators for people with diabetes who participated in a recent walking study conducted by researchers from the University ...

Workers Get Paid More When They Work For Powerful CEOs

May 19, 2006

For workers at publicly held companies, it literally pays to have a very powerful boss. A new study found that entrenched CEOs – those who have more control rights in their company than all other shareholders combined -- ...

Recommended for you

Preventing chemical weapons as sciences converge

November 15, 2018

Alarming examples of the dangers from chemical weapons have been seen recently in the use of industrial chemicals and the nerve agent sarin against civilians in Syria, and in the targeted assassination operations using VX ...

1 comment

Adjust slider to filter visible comments by rank

Display comments: newest first

not rated yet Oct 14, 2009
Oh great, now every wannabe has the secret.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.