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Edward Sutherland’s original definition of white-collar crime still holds resonance: white-collar crime is ‘a crime committed by a person of high respectability and high social status in the course of his (or her) occupation’. (Note the use of the word ‘high’ on two occasions.) This relic of my old sociology days in Ponders End Polytechnic was rediscovered this week, after I was invited to say a few words about white-collar crime for the new BBC-OU Thinking Allowed series.

The problem with white-collar crime is that it is seldom black or white, and a significant minority of it is far from petty. It is all around us and it is a rather complex phenomenon. It appears to be far more tolerated in society than other forms of crime.

Sutherland’s 1947 definition could, I believe, be applied to two actions, in their different ways both criminal, that have generated some of the worst carnage in the history of the world – the 1984 Bhopal disaster in India, and the invasion of Iraq. For, however we define it, white-collar crime seems to be a particularly grubby, devious and, at times, sinister and nasty activity, which often has extremely damaging human, and far-reaching societal impacts.

White-collar crime is ‘a crime committed by a person of high respectability and high social status in the course of his (or her) occupation'.

Many white-collar criminals escape punishment, and more often than not, their misguided gains are not redeemed. Where justice does follow white-collar criminals – as in the recent US prosecution of Bernie Madoff for fraud – it seems the exception rather than the rule; mainly because the costs of prosecuting are so prohibitive, and the justification for prosecuting is often so complex and morally dense, very few legislators bother.

There is an old saying: where there is money to be made, fraud is not far behind, like bees to honey. White-collar crime is enormously costly for society. In the UK, a report from the Association of Chief Police Officers revealed that, in 2007, fraud, for example, was costing the UK a huge sum – between £14bn and £20bn each year, equivalent to a loss of £330 for every UK inhabitant every year. So in the last three years, white-collar fraudsters have done me, and you, out of approximately £2,000! And mostly got away with it!

White-collar criminals are in the main sentenced, punished and perceived by the public differently to other types of criminals. The length of criminal penalties tend to be related to the degree of physical force or violence involved in a crime – rather than to the amount of monetary loss – though this does not always mean that the punishment fits the crime, as one of my examples might reveal.

For many, too, the opportunity for fraud, bribery, insider trading, embezzlement, identity theft, illegal waste dumping, forgery, fiddling expenses (all MPs note) are activities differentially distributed in society. In the age of new technologies, more and more of us are at it, and in increasingly more sophisticated and difficult to detect ways. Who has not illegally downloaded music or a movie, for example? But there are contradictions.

Some people are more vulnerable to prosecution than others. For example, each year over 700 people, mostly women, are imprisoned for not paying their TV licence fee, while our prisons remain relatively free of tax evaders. Most are living offshore anyway. In the US, in 2007, the latest figures I could find revealed that Americans owed, in tax, the equivalent of 14 per cent of federal revenues – $345bn.

In the UK, our Serious Fraud Office (SFO) has a deplorable history of failed prosecutions. And yet, in UK society, benefit fraudsters are far more likely than income tax evaders to face justice, while individuals indulging in occupational crime are more likely to face justice than corporations acting criminally, and prosecutions for state-sponsored corporate crime are very rare indeed.

Justice is still chasing those responsible for the world’s worst industrial environmental disaster – the Bhopal gas leak in India – which killed over 7,000 people, poisoned a further 500,000 and the impacts of which are still being felt today. The Indian Government estimate that a further 15,000 people have since died, and that each month 15 more people die because of the fatal legacy of toxic contamination.

In June 2009, The Congress of the United States wrote to the Chief Executive Officer of Dow Chemical Company (Dow now own Union Carbide who ran the Bhopal site at the time of the 1984 disaster):

This coming December marks the twenty-fifth anniversary of the chemical disaster in Bhopal, India. It is with urgency that we write to urge Dow Chemical Company – which wholly owns Union Carbide – to immediately take steps towards remediation and redress. We request that Dow ensures that a representative appear in the ongoing legal cases in India regarding Bhopal, that Dow meets the demands of the survivors for medical and economic rehabilitation, and cleans up the soil and groundwater contamination in and around the factory site …

Despite repeated public requests and protests around the world, Union Carbide has refused to appear before the Bhopal District Court to face the criminal charges pending against it for the disaster. Union Carbide was served with a summons to appear in Bhopal District Court in 1992 and publicly stated it would not respond to the summons. Although Dow Chemical set aside $2.2 billion in 2002 to put towards Union Carbide's pending asbestos liabilities in the United States, it has continued to evade the liabilities it inherited from Bhopal.

So it seems the innocent victims of the worst of corporate excess imaginable can still find justice elusive.

Of course, one reason for prevarication and lack of action is that more benign treatment is possible because it is difficult to assign blame, and because prosecuting corporations can be damaging to innocent employees and shareholders, who play no part in events that could result in prosecution.

In the UK, those institutions established to protect us from white-collar crime, however mundane, have rather blemished track records. The SFO’s authority was further undermined when Tony Blair controversially decided to terminate its investigations into BAE, thus ensuring that any allegations about corporate bribery and corruption between BAE and Saudi princes could not be substantiated in law. You might want to consider this, while assessing whether you think Tony Blair is a fit and proper person when it comes to the Presidency of the European Union; he does have what might be called ‘white-collar baggage’. Even the Premier League in football seems to have more rigorous ‘fit and proper person’ tests, though even these can be circumscribed.

I was thinking about Sutherland’s definition and Tony Blair’s rumoured bid for the European Presidency afresh today, when I read about how protestors in the Medway area had defaced British Legion Poppy Appeal posters.

The poster shows Ms Wright, from Mansfield, Nottinghamshire, who became one of the public faces of the Poppy Appeal after her husband, Damian, died in a roadside explosion in Afghanistan in 2007, aged 23. Of course, the nation is divided on whether Britain should be conducting a war in Afghanistan, and in this instance the message ‘prosecute Blair’ might have been better employed in reference to the invasion of Iraq – an invasion which, lacking any UN Security Council mandate, had no strict legal justification. It was not an invasion of self-defence, no matter how hard Blair tried to fudge the weapons of mass destruction issue. No weapons of mass destruction have ever been found, and the subsequent deaths, of between 100,000 and a million people (so far), is a very high price to pay for regime change. Six years after the invasion, the scars still plague the Iraqi people.

On October 26th, Foreign Secretary David Milliband, backing Blair for EU President, said the EU needed a President who was ‘a big hitter who could stop the traffic’. Blair’s role in the invasion of Iraq certainly exhibited big hitting and it did stop the traffic in many places. The bombs still destroy lives and stop the traffic across Iraq. Over 700 people were killed this week in the Green Zone in Baghdad. The traffic was not so much stopped as blown to smithereens.

Within the UK, there are, as yet, no means for bringing charges against Blair, even if a strong case could be made on legal grounds for the Iraq invasion. Yes, Blair will be called to testify at the public inquiry into the war, which begins on November 24th this year, but he will not face any retribution. In 2006, the Law Lords decided that international crimes of aggression had not been enshrined in our domestic laws

The higher your social status...the more likely you are to get away with it

But Blair would run the risk of arrest in those countries that have now incorporated international crimes of aggression under their domestic laws. So far within the EU, two countries, Latvia and Estonia, have done so. Given the cloud that still surrounds the reasons for going to war in Iraq, it might be rather risky to elect a person as President of the European Union, who could be vulnerable to prosecution within member states. Perhaps Blair should stick to being Middle East envoy, where he has made little progress, and where, after all, there is far more important work to do.

So, thinking aloud about white-collar crime can take you on a long and difficult journey, from Bhopal to Iraq, and you might conclude, like me, that not only does the punishment seldom fit the crime, but that the higher your social status, no matter how heinous the act, the more likely you are to get away with it. I mean look at Blair’s only definite ally for President among European leaders, Italy’s Silvio Berlusconi…no don’t tempt me.

Find out more

• Thinking Allowed
• OpenLearn: The meaning of crime – free learning material from The Open University

About the author

Richard Skellington edits Society Matters for the Faculty of Social Sciences at the Open University. He’s an administrator who manages the Environment, Development and International Studies programme.

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As Christmas approaches Dick Skellington heralds the first panto season since the banking crisis.

I say, I say, I say. Latest news, the Isle of Dogs Building Society has collapsed. They've called in the retrievers. Have you heard this one? A masked man holds a bank cashier up with a gun. He says: 'I don't want any money - I just want you to start lending to each other’.

Boo-boom!

Sorry, it’s the way I tell ‘em. Let’s start again.

Les Dennis in pantomime.
[image © copyright BBC]

What have Captain Hook, the Wicked Fairy, Cinderella’s stepmother, the Evil Baron, King Rat, the Evil Wizard, the Giant, the Sheriff of Nottingham, and the Wicked Queen got in common? This Christmas, whatever your panto and wherever it is in the land, the villain is more likely to be portrayed as a banker. Let’s hear it for the Lehman Brothers as the Ugly Sisters. Just think of poor little Goldilocks lost in the Bear Market being pursued by three nasty brokers! And think of poor Puss trying to pay those prices in Boots! Don’t forget to boo and hiss!

This Christmas it will be the banker who will be lurking menacingly behind the principal boy who will be played by a vulnerable single parent recently evicted for falling behind with her mortgage.

So when Dick Whittington pops onto stage left with Tommy the Cat at his feet, Dick is more likely to ask the audience:

What’s the difference between a merchant banker and a pigeon?
A pigeon can still make a deposit on a BMW.

And then, not to be outdone, up purrs Tommy with this one to the Gods:

What’s the difference between an investment banker and a large pizza?
A large pizza can feed a family of four.

Boo-boom!

How we’ll all cheer when master villain King Rat gets utterly custard pied by Tommy the cat and Dick gets a tracker mortgage with a Bank of England interest rate and returns home to marry Alice and live happily ever after in a nice semi in Sidcup.

For this year it’s the bankers who will be getting the slap and stick. So let’s hear the cheering throughout the land. Rejoice. Whatever the panto you can cajole your kids into heckling: ‘come on you bankers pass the interest rate cuts on to me mum and dad!’. This year’s panto season promises to be a hoot. I mean who would want to trade places with the head banker at the Royal Bank of Scotland (RBS)? I can just imagine the chorus singing ‘I’m a Banker, Get Me Out of Here!’.

No really. There is nothing more likely to get us chuckling in the Gods than the bankers getting their comeuppance. The suffering proletariat have had it so bad. We need a little bit of festive humour to roll back the impact of the credit crunch with its rising mortgage debt, repossessions soaring 70 per cent compared to the same quarter last year, the lowest pound since 1992, and with unemployment expected to top 3 million before the next panto season.

To the nation this parsimony sums up the public image of an already discredited menagerie of fat cats. Since the bail-outs the banks have done little to improve their stock by helping those whose money – what’s left of it – keeps them in offshore accounts and Christmas parties.

Politicians too can expect a panto drubbing after allowing banks to profit enormously in a deregulated culture for so many years, and lending poor Red Riding Hood a 130 per cent mortgage. It is not for nothing the phrase 'Houses of Parliament' is an anagram of 'shameful operations'!

At the King’s Head in London, Dick Whittington’s nemesis King Rat is a banker and property developer intent on bringing the economy of the paradise island of Gran Canaria to its knees. The audience will wince as the shameless speculator greedily buys up property, lends money to local businesses and causes havoc when he calls in the loans and buys the island’s central bank. On the way he evicts the show’s Dame from her bar and sells off the premises as luxury flats. Now where have we heard that one before?

It is hardly surprising this festive season will witness pantomimes all over the country revising their storylines and casting the evil villain as a banker, updating daily as the credit crunch unfolds. Since ancient Greek and Roman times panto script writers have had a keen eye for contemporary events. Pantomimes have always told morality tales. And who can blame the script writers with the banks so reluctant to pass on any good news as they use Government bail outs to restructure their own finances with little thought for the rest of us. Never has A Christmas Carol been more relevant. Scrooge is so 2008.

Here’s Dick again:

Talked to my bank manager the other day and he said he was going to concentrate on the big issues from now on.
He sold me one outside KFC yesterday.

The Gods groan in disapproval.

But Tommy the Cat soon wins them over with a real Christmas cracker!

What’s the capital of Iceland?

Shouts Tommy!

About £3.50.

But should your panto fail to cheer this Christmas remember the old saying.

What’s the definition of optimism?
A banker who irons 5 shirts on a Sunday.

About the author

Richard Skellington edits Society Matters for the Faculty of Social Sciences at the Open University. He’s an administrator who manages the Environment, Development and International Studies programme.

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If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin - Charles Darwin

As Governments worldwide commit billions upon billions of currency to save the banks and our national and international financial systems, spare a thought today for the humble poor. Last week Prime Minister Gordon Brown committed £500 billion to save our struggling banking sector from its own greed and avarice. Of course you could argue that if the international financial system collapses, the poor will be poorer, and there will be far more of them, but it is strange how governments - when pushed by uncontrollable forces which threaten their future - are spurred into desperate action.

Our world leaders have shown far greater alacrity in resolving the banking crisis than they did during the Making Poverty History campaign this time last year. Will the poor, as the Bible remarked, "always be with us" (John 12:8)?

In a world where food costs are spiralling their prospects appear bleak. Earlier this year, before the implosion of the world’s financial systems, the OECD reported that many developed countries had already cut back on their foreign aid budgets. When the going gets tough in the West the developing world is often is the victim. In times like these the words of 2006 Nobel Prize winner Muhammad Yunus ring true:

‘poverty has been created by the economic and social system that we have designed for the world. It is the institutions that we have built and feel so proud of, which created poverty for them.’

Two months ago the World Bank warned that the world’s poor were far greater in numbers than they first estimated. The Bank shifted the poverty line from a dollar a day to a dollar twenty five cents. It is amazing what adding a ‘quarter’ does to the projections: a mere 25 cents plunges a further 500,000 million people in the developing world into poverty. Thus it was that the World Bank’s new estimate of its poor rose in August from 985 million people to 1.4 billion people. This new estimate does not take into account the recent increases in food and fuel prices.

Oxfam, commenting on the World Bank figures, warned that a further 100 million people in the developing world could be forced into poverty by the increase in food prices. They also warned, in respect to the lack of progress on African poverty, that the pledges made by world leaders at the Gleneagles summit in 2005 to double aid to the continent by 2010 were unlikely to be met. The new estimates also take no account of the impact of the world financial crisis in the coming months on the vulnerable developing world where debt repayment to the West is a huge concern.

In early October, when Dick Fuld the chief executive of Lehman Brothers - the investment bank whose collapse did so much to trigger the crisis in world financial systems - was quizzed by Congressional leaders, he did not spare a thought for those billion people living in the world today on around a dollar a day. No. He talked about his compensation package. Defending accusations of a $500 million dollar pay off he contested its size: "The $500m number is not accurate, although it is still a large number," he told an angry Congress hearing. Wait a minute, 500 million dollars! That is one dollar for every human being in the developing world who have now been added to the poverty index.

The World Bank’s grim forecast revealed world poverty to be more persistent than at first thought. There is, however, some positive news.

Given the increase in world population, the rate of world poverty has fallen substantially from 50% to 25% over the past 25 years. But the number of people in poverty has increased. In Africa, between 1981 and 2005, the number of people in poverty rose from 200 million to 380 million, with the average poor person living on around 70 cents a day.

Unlike other regions of the world, the rate of African poverty has remained the same, around 50% of the continent’s population remained in poverty in 2005, compared to 1981. In Asia, however, the rate of poverty has fallen since 1981, from 60% to 40%. Asia is home to 595 million people living in poverty; 455 million of its poor live in India.

In China, poverty has fallen dramatically, from 835 million in 1981 to 207 million people in 2005. Its rate of poverty fell massively from 85%to 15%. The World Bank estimate that China alone almost accounted for all the reduction in world poverty since 1981.

World poverty, excluding China, dropped from 4 out of 10 people to 3 out of 10 people during the same period. According to the World Bank the world is still on track to halve the 1990 poverty rate by 2015. But at the current rate of progress, about a billion people will still live below $1.25 a day in 2015, and some areas, such as Sub Saharan Africa, will be acutely affected. [The World Bank’s new poverty line of $1.25 per day in 2005 is equivalent to its $1 per day poverty line introduced in 1981 after adjustment for inflation.]

Elsewhere, especially in those middle income countries where the World Bank uses a poverty line of $2 a day the poverty rate has indeed fallen. Latin America, the Middle East and North Africa have improved but not enough to bring down their total number of poor. The $2 a day poverty rate has increased in Eastern Europe and Central Asia though these areas showed some small signs of progress since the late 1990s.

We live in a world in which ten children die every minute from malnutrition, where 10.7 million children never live to see their fifth birthday, and where 4 out of 10 human beings have no access to basic sanitation. These are all avoidable statistics.

Meeting the United Nations’ millennium goal to halve the proportion of people in the world without access to clean water would cost $4 billion dollars a year for the next decade. Four billion dollars is roughly what Europe’s population spends each month on bottled water.

As the world struggles to understand why the financial systems have failed so abjectly, it is worth remembering the words of Dean Hirsch. On September 28, 2008, the President of World Vision International reminded the West that there was a possibility of them failing to fulfil the Millennium goals set in 2000 to help the world’s poorest people. He declared:

‘Our collective challenge – governments, the private sector, humanitarian organizations, civil society groups and others – is to remedy a gross violation of the most basic rights – to clean water, adequate food, basic health care – that currently leads to millions of children and women dying annually from easily preventable causes. This is a moral imperative. Every child who dies in extreme poverty represents an unacceptable loss of human potential.’

Some may, of course, choose to write to Dick Fuld, to advise him what he could do with his compensation package.

This blog is part of Blog Action Day 2008: Poverty

About the author

Richard Skellington edits Society Matters for the Faculty of Social Sciences at the Open University. He’s an administrator who manages the Environment, Development and International Studies programme.

Subscribe to Richard Skellington's posts