The Effects Of Bill C-74 On White Collar Crime

Bill C-74, the omnibus budget implementation bill, contains provisions that propose to amend the Criminal Code to add a new system of remediation that can be triggered prior to a trial for corporations accused of offences such as bribery of public officials, frauds on government, municipal corruption, prohibited insider trading or false prospectus. The bill includes provisions that deal with how white-collar crime that takes place in the jurisdiction of Canadian courts is prosecuted and proposes a system of remediation that can ensure that corporate offenders avoid conviction if they co-operate with the Crown and the courts.

Opposition MPs in the House of Commons have likened the proposed changes to being “soft” on white-collar crime as it allows corporations to “avoid jail time,” but lawyers in the field dispute that assertion. Lawyers say the proposed changes could promote good corporate citizenship and bring Canada into line with other jurisdictions. The proposals in the bill, which is still before the House of Commons, would apply to any organization or corporation — except for public bodies, trade unions and municipalities — that is being prosecuted in Canada under the Criminal Code or the Corruption of Foreign Public Officials Act.

Danielle Royal, partner with Stikeman Elliott LLP in Toronto says the bill could help in situations where the corporate misfeasance was years ago and current shareholders are being punished for something that happened before their time. Brian Weingarten, a sole practitioner in Toronto, says this process accelerates restitution to victims in cases where it’s applicable. He says the major difference is that this ensures that trial and conviction can be avoided, which may be advantageous to companies, not only saving the resources of a trial but avoiding triggering other anti-corruption legislation.

Falling stock prices, jail time and public embarrassment of powerful leaders are a common occurrence in world news today. Corporations funding political campaigns and shareholder involvement at state and federal level have been on a steady increase over time to try and minimize the amount of damage large white collar crime scandals can cause to a business entity. Bill C-74 is another example of the powerful creating rules and regulations to benefit their own agenda. This trend is described by the conflict perspective proposed by Karl Marx, noticing the influence of power distribution on social change. Large corporations are taking advantage of political opportunities for personal gain with campaign funding and other various supports. Bill C-74 removes the ability of dominant corporations to receive jail time, and lose reputations making rewards greater than risks, allowing justifications of white collar crime to become more probable. Using theories like rational choice, routine activities and differential association will provide useful insight on why this bill will increase white collar crime rates. In this paper, I argue that passing bill C-74 will increase the prevalence of white collar crime because it removes the deterrence of committing crime, encourages others to adopt criminal practice, and creates a norm of using deviance to achieve success, that will be taught to future generations.

Prior to any significant decision being made corporations weigh out the costs and benefits of the choice they are about to make. Important choices like investing, expanding and other major decisions that impact the whole company are well thought out and calculated. When a company is faced with a choice for example to spend money on clean disposal of products or receive criminal charges for illegally dumping toxins, they are analyzing the costs and the benefits of each choice. Laws are in place for the purpose of creating this consequence for wrongful acts. These consequences must be carried out for the corporation and other onlookers to learn and not commit crime, for their own benefit and the benefit of the communities in which they operate. Bill C-74 will remove the consequences put in place to deter corporations from choosing the often cheaper yet less safe option.

Hooker Chemical Company was faced with such a decision and chose wrong, disposing toxic chemicals into a river then selling that land to the cities school board creating a medical emergency for the city’s population. This ended up causing many deaths and birth defects in newborns (Valentine 2019). This instance is an example of a corporations analyzing personal and situation factors, components of rational choice theory, and determining that the costs of getting caught do not outweigh the benefits of their wrong doings for their business.

The example of Hooker Chemical Company is one of many that can be explained by the theory of rational choice. Rational choice theory is when people calculate the expected consequences of their options and choose the one they believe serves them best (Hechter and Kanazawa 1997). Eliminating the possibility of imprisonment removes fear of punishment, increasing the potential gains from white collar crime in the cost benefit analysis (Schmideberg 1968). The laws and consequences for corporations breaking them are already arguably not strict enough to deter corporate giants from manipulation the judicial system in their favors with their large influence and resources, however making the system even more open to self-regulation will only increase the amount of white collar crime in our society. Bill C-74 removes some deterrence of committing a crime, creating an environment where the costs do not outweigh the benefits, increasing the prevalence of white collar crime, so cases like the crisis in Niagara Falls with the Hooker Chemical Company can increasing occur.

Removing the deterrence of committing crime will increase its prevalence, however that’s not the only affect Bill C-74 has. Passing the bill creates a lack of a capable guardian; a key element of routine activities theory developed by Laurence Cohen and Marcus Felson. The theory states that the likelihood of crime occurring depends on the interaction of 3 things, a fitting target, a lack of capable guardian and a motivated criminal (Tillyer and Eck 2011). For any corporation, society by default becomes the suitable target, and the motivation for increasing profits is constant as well. Allowing the disability of corporations to receive criminal charges by law removes the significant guardianship over crime, increasing its prevalence. Corporations who were once successfully deterred from crime due to these imposed consequences will now have no deterrence towards crime at all.

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Enron transitioned from a company chasing the American dream to spiraling out of control. Enron’s demise was due to the lack of suitable guardian, among other things. No government body was able to investigate Enron thoroughly enough to stop their fatal fall before it was too late. This caused society like most times to be the suitable target losing millions of hard earned assets. Their top executives were not deterred by the threat of criminal charges, but others are. White collar crime goes undetected easier than any other type of crime (Valentine 2019). Without the threat of criminal prosecution, and the low probability of being caught only to pay a fine well within the budget of these corporate giants, there is little to discourage these companies from using illegal methods to achieve their goals. Bill C-74 will encourage others who weren't willing to be deviant due to consequences before, to be deviant now.

With the passing of Bill C-74, white collar crime will inevitably become more prevalent within our society. Due to the lack of capable guardian as previously mentioned, white collar crime will crime will go increasingly undiscovered and insignificantly punished, creating a consensus that criminal methods are the most effective way to make a business successful. As generations flow one to the next white collar crime motivations and techniques will be taught to the future of the business world.

The teaching of criminal activities is a major component of differential association theory proposed by Edwin Sutherland and Donald Cressey. They believe the basis of this theory is that criminal behavior is learned just like any other conventional behavior within social groups (Valentine 2019). Deviants pass on the favorable definitions towards criminality to the generations after them to adopt. Once the habits of criminal behavior to achieve success are formed, reversing them is extremely hard.

The Italian or Russian mafia for example that has been teaching their next in lines how to run business is not even considering to begin teaching an honest, legal way to earn profits. This is due to the fact they have enormous power, profits and success dealing with their business affairs in the way that they do and there is no reason to go back to honest non-violent, legal methods because all they would do is lose money, their prime motivation for keeping the business in the first place. The comparison here is that corporations and the mafia are not structurally that different. Corporations follow the same framework; they have the same bosses in charge of business that dictate the practices the corporation employs and teaches the future bosses how to be just as successful to keep their legacy alive. Allowing corporations to be seemingly above the law, protected from significant punishment and without deterrence from criminal activity allows deviance to become the norm of corporate business practice over time, being taught from generation to generation.

In the Law Times article, it is mentioned that there are two reasons why this bill is a good idea. Reason one being that it addresses the unfairness when you have a large company with one rogue senior officer who has bribed somebody and the whole company takes a hit (Smith 2018). This point is valid however in a large company, structurally they are checks and balances in place for these reasons. One person cannot simply make a choice affecting the whole company without compliance from other parties. Smaller corporations may have this issue, but they also have a much smaller societal reach, while large corporations can affect the lives of millions of people. Almost all of Enron’s executive officers were involved in their fraudulent activities as well as endless amounts of staff, and an entire accounting firm. Companies need to be held accountable for the choices they make. They cannot be allowed to hide from their crimes behind the corporation.

The second reason, was that this bill would promote honesty from other businesses and good corporate citizenship (Smith 2018). In a perfect world good corporate citizenship would come with less regulation, however why does that only apply to corporations? Why not remove criminal charges from all small businesses and people, would this not promote good societal behavior? In this paper examples of Enron and Hooker Chemical Company were used as supporting evidence for theories explaining the increase in prevalence of white collar crime due to Bill C-74; however, they can also be used as examples of times when corporations were given plenty of opportunities to be honest with good corporate citizenship. Hooker Chemical Company had endless chances to tell the truth about the contaminated land, and Enron executives denied all involvements in the collapse of their own company. Jeffrey Skilling, Enron’s CEO has still not admitted to knowing anything even after he has been charged and sentenced.

The article’s reasoning assumes that corporations are the victims in these cases when really, they are the ones causing physical, financial and emotional harm to our society. Corporations that are involved in criminal activity must be held accountable for their actions and their choices.

In this paper, the arguments focus on the increase in prevalence of white collar crime. However ultimately, the discussion necessary to have is, how will this increase impact our society? Power is a social construct provided to the government by public support and further declines in faith of the system are detrimental to social structure (Valentine 2019). Within populations, crime originates from common structures of dominant/subordinate relationships. Allowing the more dominant groups more freedom within legislation creates an increasingly more toxic divide (Williams and Drake 1980). Society relies on the criminal justice system to protect their interests and distribute fair consequences to wrong doers. Constant revisions of regulations forwarding the welfares of large corporations has led to an overall decline in trust (Rudolph, Chanley, and Rahn 2000). In the past, when society as a whole becomes desperate and with nothing to lose, chaos, and social unrest are not far behind.

In conclusion, this paper argues that passing bill C-74 will increase the prevalence of white collar crime because it removes the deterrence of committing crime, encourages others to adopt criminal practice, and creates a norm of using deviance to achieve success, that will be taught to future generations. These are all relatively short term consequences. The more broader discussion of societal affects predicts a more serious effect than just an increase in white collar crime. As the government allows corporate intervention into their political campaigns, they are just fueling our societies anger towards the dominance these corporations have over our lives, and the untouchability of their executives with selfish goals and principles. Like most reform, nothing begins significant change until the people themselves riot and risk everything for the greater good. It is a shame large corporations are not able to do the same and put the fairness of the people that keep their stock in the green before their own selfish interests.

References

1. Chanley, Virginia A., Thomas J. Rudolph and Wendy M. Rahn. 2000. 'The Origins and Consequences of Public Trust in Government: A Time Series Analysis.' Public Opinion Quarterly 64(3):239-256
2. Hechter, M., & Kanazawa, S. 1997. “Sociological Rational Choice”. Annual Review of Sociology, 23, 191-214.
3. Schmideberg, Melitta.1968. “Re-evaluating the Concepts of Rehabilitation and Punishment.” International Journal of Offender Therapy and Comparative Criminology 12(1):25-28
4. Smith, Dale. 2018. “Bill Aims to Change Way White-Collar Crime Punished.”
5. Law Times. Retrieved October 3, 2019 (https://www.lawtimesnews.com/practice-areas/crossborder/bill-aims-to-change-way-white-collar-crime-punished/263082).
6. Tillyer, M. S., & Eck, J. E. 2011. Getting a handle on crime: A further extension of routine activities theory. Security Journal, 24(2), 179-193.
7. Williams, Kirk R. and Susan Drake. 1980. 'Social Structure, Crime and Criminalization: An Empirical Examination of the Conflict Perspective.' The Sociological Quarterly 21(4):563-575
8. Valentine, Grant. 2019. “Typologies, Theories and Motivations.” SOC208 Crime and Organizations. September 25.
9. Valentine, Grant. 2019. “Introduction to White Collar Crime.” SOC208 Crime and Organizations. October 2.