sign in sign up
<<
Home , Corporate crime, Crime, Penology

Journal of Criminal and

Volume 58 | Issue 4 Article 7

1968 and Corporate Leo Davids

Follow this and additional works at: ://scholarlycommons.law.northwestern.edu/jclc Part of the Commons, Criminology Commons, and the Criminology and Criminal Commons

Recommended Citation Leo Davids, Penology and , 58 J. Crim. L. Criminology & Sci. 524 (1967)

This Article is brought to you for free and open access by Northwestern University School of Law Scholarly Commons. It has been accepted for inclusion in Journal of Criminal Law and Criminology by an authorized editor of Northwestern University School of Law Scholarly Commons. TnE JOURNAL OF CRIMINAL LAW, CRIMINOLOGY AND POLICE SCIENCE Vol. 58, No. 4 Copyright 0 1967 by Northwestern University School of Law Printedin U.S.A.

PENOLOGY AND CORPORATE CRIME

LEO DAVIDS

The author, who received his M.A. at the City College of New York in 1961, is Lecturer in Sociol- ogy at Hunter College. He has taught Criminology and at various campuses of The City University of New York, and has also published in the area of Problems. He is cur- rently preparing his doctoral dissertation at New York University. Mr. Davids' article considers crime by major in the light of the penal now available to control it. Statistical data and case-history information are joined with sociological analy- ses to support the thesis that present law is inadequate to cope with problems of commercial crime. Suggestions for a realignment of the pertinent with current realities in this field are pre- sented.

The of penology is neither an known treatises of Sutherland, Clinard, Jaspan, historical task of discovering what societal reac- and Cressey, 3 we find that they cover a number of tions to crime have been in various times and different things. It is Sutherland's classic, which places, nor the providing of systematic details of deals mainly with illegal acts by corporations administration, but rather the of against external entities (other corporations, the what happens after in terms of prevent- or the general public) that is relevant ing recurrence of the same acts.1 The main criterion here. We will only tangentially be concerned with by which we can our "sanction law", as against the by its own person- Arens and Lasswell discuss it,2 is whether nel, or with individual crimes which are of a routine tends to be safer after its application than before. business character and are folk-legitimized by the By such a test, clearly, much of our present system great principle "Everybody's doing it". These of justice in the is a disturbing and other categories will be dealt with here only as they costly failure. contribute to our consideration of corporate crime There is no need for a discussion of ordinary, in Sutherland's sense. individual crimes and the deterrent effect of the It should be clear that our approach herein is usual penalties that our prescribe; this has sociological as well as legal, so that our material been abundantly done by other writers. What is to will be channelled both by social science concep- be examined here is corporate crime in relation tions and by jurisprudential ones. Hence, we will to the societal apparatus intended to control it. not restrict ourselves, again following the lead of It will become clear that there is a pronounced Sutherland and others, to officially-designated discrepancy, a sort of cultural lag separating crimes dealt with by criminal , but shall the ongoing reality of illegal activities by orga- also look at actions penalized or prevented by civil 4 nized human associations from the and pro- and administrative action. cedures now institutionalized against those activ- ities. NATURE OF TIIE CORPORATION Before we can look at this penal lag, a number of Let us see why Wilbert E. Moore calls the cor- definitions and distinctions are in . We must poration "that singular ". 5 A cor- focus on our topic by pointing out the things that poration is the result of the creation of a new "legal we shall not be looking at, as well as making sure that the units in which we deal are specifically 'SUTHERLAND, WHITE COLLAR CanIE (1949); understood. Let us begin with the obviously- CriNARD, THE (1952); JAsPAN & BLACK, THE THIEF IN THE WHITE COLLAR (1960); appropriate concept of "white collar crime". CRESSEY, OTHER PEOPLE'S MONEY (1953). Although libraries may place together the well- 4 The procedural systems are often interchangeable. See Cressey's "Foreword" to WHrTE COLLAR CRIME, ' Cf. SUTHERILAND & CRESSEY, PRINCIPLES OF CRIMI- op. cit. supra pp. iv-ix. NoLooy 259--60 (5th ed. 1955). -MMOORE, THE CoNDucT OF THE CORPORATION vii 2 ARENS & LASSWELL, IN OF PUBLIC ORDER (1962). He and we are speaking of large business firms, (THE EMERGING FIELD OF SANCTION LAW) (1961). not of family stores or non-profit . PENOLOGI AND CORPORATE CRIME

TABLE I REPRESENTATIVE MAGNITUDE DATA or FOUR MAJOR AmERCAN CoRPoRATIoNs (as of Dec. 31, 1965)

Name

Amer. Tel. & Tel. Con. Edison Gen. Motors Gulf Oil Corp.

Output units 75,866,254 tele- 4,367,020 meters in 7,278,131 vehicles 2,082,121 bbl. daily phones in service I service sold in 1965 average Employees 795,294 23,863 734,600 55,200 Total assets $32,818,689,000 $3,387,006,500 $11,478,546,590 $5,210,833,000 2 Gross revenue $11,061,783,000 $ 840,240,274, $20,733,982,295 $4,185,253,000 1965 Percentage in- 40% 28% 63% 32% crease of gross ($7,920,454,000) ($655,812,826) -($12,735,999,681) ($3,212,205,000) revenue1960 since 1 Source .Annual Report, Annual Report, Annual Report, Annual Report dated dated Feb. 16 dated Feb. 23, dated Feb. 14 March 16 '66 pp. 2, 1966 pp. 25-28 1966 pp. 26-31 1966 pp. 28, 36-37 34-35

(Percentage of Increase figures computed by author.) person", somehow independent of its founders, who individual interests. This thinking and deciding can obtained the necessary . The corporation only be dealt with and traced into effects and 7 often outlives its founders, and the British "lim- repercussions on the collective level. ited" shouts the that its obligations and those Another structural strength, as we have noted, of the men involved in it are two separate things. is the existence of a transitive- corps that, The historical-legal article by Laski shows how once informed of the authorized will of the cor- uncertain the Anglo-American law was about the poration's thinking parts (), puts these exact status of corporations until recently, and in into effect without independent questioning and other sources we also find how perplexing is the evaluation of the decision. Obviously this is so, and tracing of financial or criminal liability in dealing must be; what emerges, however, is an issue of with such collectivities.' It is nowadays recognized responsibility/ identical to that so that corporations do accomplish meaningful acts highly publicized by defense at the Nurem- that cannot be attributed to any individual man berg . but have to be laid at the organization's door. A quite different virtue-turnable-into- of the As Weber and other analysts of corporation is the great volume of in its have taught us, bureaucratized corporations pos- specialty that it can accomplish. Through extensive sess various structural advantages. Among these division of labor and careful management to co- strengths is the superior scope and power of the ordinate its various branches, the corporation is fused thinking of many people who are experienced able to produce and distribute staggering quanti- and competent to deal with a limited range of ties of goods and services. For some actual data on recurrent problems, and whose rational decisions corporate magnitude, we need but select a few are promptly and thoroughly translated into figures from the latest annual reports of our major action. This means that a , or corporations. If we settle for slightly older sta- other legitimate groups constitutive of the cor- tistics, we can use Fortune's Annual Directory of poration, can arrive at decisions which neither the largest corporations. could have been thought through as thoroughly by In 1964 the United States had 55 industrial the individuals involved, separately, nor serve their corporations with over $1 billion of annual sales. 6Laski, The Personalityof Associations originally in The rest of the world had 21 such firms. The top 29 HARv. L. Rnv. 404, reprinted as selection 21 in 500 U.S. manufacturers totaled 10,464,383 em- HENSON (Ed.), LANDMARKs or LAw 321-38 (1960). See, also, INBAU & Sowim, CRnMNAL JusTicE 486-92 (2d ed. See ETzloNI, MODERN ORGANIzATIONs 29-30, 51- 1964); and MOORE, op. cit. supra note 5 at 53-6 and 55 (1964); HunrF, SOcIAL AsPEcTs or ENTERPRISE IN 86-7. TUiE LARGE CORPORATION 100-104 (1950). LEO DA VIDS [Vol. 58 ployees, an average of some 21,000 people each. appear to develop for behavior which devi- 0 There were also 25 companies and 40 ates from accepted norms. commercial banks in the U. S. with assets exceeding Descending from the cultural to the psycho- Furthermore, hefty percentage increases $1 billion. logical level, we can find the same trends charac- in sales and profits were registered by every manu- terizing contemporary American life expressed not facturing industry except Tobacco.8 as summary comments on the value system, but One of the central consequences of the foregoing an terms of The Organization Man or the "other- magnitudes is the substantive nullity of little directed" rat-racers of so many recent critics;" disturbances or added cost in management deci- Cressey has woven this theme into his study of since they can be entirely ignored when sions, .12 These writerg have shown the increases of overhead can be subdivided onto the impact of modem, and especially big, business on selling price of millions or billions of product-units. personality. The late Senator Kefauver wrote! As we shall see, the category of negligible little There is also some that long service litigation and fines for most disturbances includes in an industry creates a distinctive kind of crimes; on this scale of business, such commercial executive. As the officials of the leading cor- deterrents become invisible. porations in an industry parade through a Congressional hearing room, they often seem THE UNDERLYING PERSONAL CLIMATE to have been constructed from the same mold. There is more to the etiology of corporate offen- Sometimes this similarity is not confined to ses than internal structure and scope, however. the rather uniform way they view the in- Many portraitists of American life and value dustry's problems... On occasion it extends including Robin M. Williams, Robert C. Angell, to general physical , pattern of 13 and criminologists like M. B. Clinard or W. C. dress, and even sense of humor.. Reckless, have shown the inevitable correlation of While this thought is well expressed here, it is, dominant U. S. goals and norms with the long-term of course, not new. Many social scientists, some- currents of ethical and moral change and with the times harking back to the remarkable insights of 9 tenor of commercial-industrial activity. All of De Tocqueville, or to the biting, descrip- these things are seen as similar expressions of a tions of Thorstein Veblen, have documented single modem philosophy of life, shaped by urbani- the appearance in corporate personnel of numer- zation, high mobility, a deep-rooted pragmatism, ous character degenerations. Robert K. Merton sug- rationalization-and alienation. gested some of the problems engendered by struc- It is not our task to review such analyses here, tures which pressure individuals into ritualism or but again we find individual acts understandable in innovative solutions, and thinking along this line 4 the context of, and as manifestations of, socio- has been developed by others.1 The upshot of cultural forces and conditions to which those who these analyses is that the of people in com- plan our institutions should be alert. Clinard asCLnxARU, op. cit. supra note 9 at 76. Also see summarizes: QUINN, THE INDIVIDUAL IN A Busnrass SociETY 12 (1958) for vehement remarks on Our Machine Civiliza- It has been said that as urbanism has in- tion, in which "life is being trivialized and emptied of meaning". creased, as man's behavior has become more "The first is by WHr (1956); Other Direction is individual, competitive, and materialistic, from REismAN, GLAZER & DENNEY, THE LONELY and as his conformity to social norms has CROWD (1950). OTHER PEOPLE'S MONEY, op. cit. supra note 3, become less affected by informal group con- combines individual factors with the invaluable rational- trols, greater opportunities and inducements izations (what Sykes & Matza call techniques of neu- tralization) that are group-transmitted. See, for in- 8 FORTUNE MAGAZINE 149-68 (July 1965); 169-80 stance, 93-98. For a popular discussion, cf. GrNEY, (Aug. 1965). Private corporations which do not issue THE OPERATORS 252-75 (1960). stockholder reports, are not included, so that the total 1KEFAUVER & TILL, IN A FEw HANDs 123-24 ETzIoNi, op. cit. supra note 7, at 109-10. are less than they would be with fuller information. (1965).4 Also, 9WIIuAms, AERsucAN SOCIETY 372-96, 417-21 IMERTON, SOCIAL THEORY & SOCIAL STRUCTURE (2nd Ed. 1960); ANGELL, FREE SOCIETY AND MORAL 132, 140-46, 176-81 (Revised ed. 1957); VEBLEN is CRIsis 133-35 (1965); CrINARD, OF DEVIANT quoted at 141. We later refer to Kemper's article Repre- BEHAVIOR 168-74 (1963); REc~a.ss, CPaiN PROBLEm sentative Roles and the Legitimation of , which 1-2, 335-41 (1961). is in this tradition of structural analysis. 19671 PENOLOGY AND CORPORATE CRIME plex organizations struggling in a competitive, This empirical fact, however, is overshadowed profit-making situation are neither accidental nor by some theoretical considerations. Imprisoning unpredictable, but emanate naturally from the particular individuals whose malfeasance involved functional situation and should be taken into the participation of the collectivity in which they account by decision makers, whether in manage- formed but a small part appears very inequitable ment or government."5 and therefore discourages the imposition of punish- ment by and imbued with Anglo- SuBsTANTrvE Aces AND PENALTIES American concepts of fair play.' 9 Then, too, the malfeasants who may be found guilty and punished We now turn to specific business crimes that we are promptly can use in exploring legal lag, with the penalties replaced by others who will, sooner or whose sufficiency we will contest. Following Suth- later (depending upon how long "the heat" lasts), erland, the major areas of corporate offense are: carry on "business as usual". restraint of ; infringement of patents, trade- Unless there is a definite change either in the marks, or copyrights; advertising misrepresenta- structure of the organization or in the relevant conditions under which it must operate, even the tion; unfair labor practices; and financial manipula- of a considerable number of execu- tions. By inspection, these cover victimization of tives is highly unlikely to stop permanently other firms, of creative individuals or competitors, those acts which caused the furor. We remain, of the general public, a company's own employees, therefore, with the type of legal sanction that is or stockholders.16 Obviously, Sutherland has found frequent and meaningful in speaking of corporate considerable evidence of wrongful behavior vis-&- penology: vis every general category interacting with the fines and damage awards. In general, and that is the way we use the terms herein, "" corporation considered as an integral entity. ,implies the outcome of criminal litigation with a Since capital is ruled out in the type of crime under consideration here (excepting finding of "guilty"; "" implies a restitutive or compensatory payment between private parties that dissolution is sometimes authorized against combination in restraint of trade-which is the as the consequence of a non-stigmatizing civil exact functional equivalent of execution for indi- action. To dispose of the weaker deterrent first, we viduals), the only penalties to consider are impris- cannot say much about damage awards, which onment, (civil) damages, or (criminal) fines. Al- depend in each case on the magnitude of the though an examination of the United States Code discovered by the . Only when the actual loss will show maximum terms of three or five years has been determined can punitive damages be assignable for certain business crimes, I would assessed. Of importance here is-the statutory provi- argue that the imprisonment provisions of these sion for treble damages, which is intended-despite are mainly irrelevant for our purposes. the absence of an official finding that culpable The scarcity of well-paid and well-connected has occurred and that penalty should gentlemen in is sufficiently known not to be imposed-to discourage future of the same require much documentation here;17 suffice it to kind. For example, treble damages may be exacted say that large corporations will never allow an for anti-trust violations or patent infringement. 0 executive of theirs to go to jail without the most But instead of exposing themselves to such suits strenuous efforts by well-organized teams of the by a or finding of "guilty", companies regu- best available , whether house counsel or larly plea , which is no evidence firms retained for the emergency. Very few corpor- ate decision-makers, in fact, go to jail even when carceration for business crimes is expected to increase, the company is found guilty.8 according to Whiting, Criminal Antitrust Liability of CorporateRepresentatives, 51 Ky. L. J. 434, 474 (1963). '5Compare this to the conclusion reached by Goff- 19 Cf. MooRE, op. cit. supra-note 5 at 86-7, 144-6, on man in his Asyxums 124 (1961). Moral Dilemmas built into the situation. Also, ARENs 16WMTE COLAR CanRE, op. cit. supra note 3, at &LAsswELL, op. cit. supra note 2 at 121-2. xv, 22. 20 See Standing to Sue for Treble Damages under Sec- 17Ibid. 8; REeLxEss, op. cit. supranote 9, at 34-6. tion 4 of the Clayton Act, an editorial note (with the 1 See Increasing Community Control over Corporate F. T. c. symposium in) 64 COL. L. R. 570; the 18 pages Crime--A Problem in the Law of Sanctions, 71 YAx show how difficult it is to exercise one's right to restitu- LAw JOUMNAL 280-306, 290-93 (1961). We refer to this tion. Also, cf. CoRPus Julus SEc. under Criminal Law, key article repeatedly herein. Note that the use of in- etc. LEO DAVIDS [Vol. 58

TABLE II REPRESENTATIVE MAXIMUM PENALTIES FOR BUSINESS CRIMES IN FEDERAL LAW i Fines up to: Title & Section of Offense U.S. Code

Conspiracy or combination in restraint of trade ...... $50,000.00 15, sec. 1 Restricting or monopolizing import trade ...... j $ 5,000.00 15, sec. 8 Rebates or discounts to destroy competition ...... S 5,000.00 15, sec. 13a Refusing information or falsifying records against F. T. C ...... $ 5,000.00 15, sec. 50 False advertisement ...... $10,000.00 15, sec. 54 (for profit) ...... S 1,000.00 17, sec. 104 Food adulteration or misbranding first offense ...... $ 1,000.00 21, sec. 333 repeated offense ...... $10,000.00 21, sec. 333 Violating licensing restrictions for drug mfrs ...... $510,000.00 21, sec. 515 Purposely impeding the NLRB ...... S 5,000.00 29, sec. 162 Collusion between union leaders and management ...... $10,000.00 29, sec. 186 Mismanagement or concealing information on workers' benefit 1 funds ...... I 1,000.00 29, sec. 308 supporting damage actions on the basis of the circumstances in evaluating the figures of Table II. questionable practices. Therefore, the injured With the aid of top-quality house counsel, nation- parties can rarely prevail against the powerful ally-respected law firms, and invaluable personal lawyers of the offending corporation. We conclude contact with leading members of the federal our consideration of damages as deterrents to and , corporations can make it so commercial by observing that the difficult for the Justice Department to exact even principle is substantively rational, but its effect is those tokens of victory, that the Government will undermined by the unpredictability of the eventual decide to settle the case and seek more fruitful use cost of an unethical policy.st of its scarce legal resources elsewhere. We now turn to look at the fines that may be Let us see how General Motors views the situa- imposed for various white-collar crimes, being tion. In the Annual Report for 1965--cited above especially interested in the amounts specified as in Table I-we find a paragraph reading as follows: maximum penalties. Table II provides a convenient overview of this. Contingent Liabilities: If we now compare the figures in Table I with There are various claims against the corpora- those in Table II, leaving aside difficulties of tion and its consolidated subsidiaries in re- formal , the latitude of judicial , the spect to sundry taxes, suits, patent infringe- inventiveness and agility of defense counsel, and ments and other matters incident to the other mitigating factors, we are struck by the com- ordinary course of business, together with plete insignificance of the available maximum pen- other contingencies. While there is no way of alties to companies of the first rank. The top determining the eventual liability for these penalty is the $50,000 one-a maximum set in 1955, claims and contingencies, the amount included but such a raise does not make much difference. in liabilities and reserves in the financial - With every passing year, the large corporations- ments of the Corporation and its consoli- those whose can have the most wide- dated subsidies are, in the opinion of the spread effects on the economy and which set the management (and General Counsel with re- pattern for lesser firms22-are more and more liber- spect to certain suits), adequate to cover all ated from the Lilliputian restraints of law by their settlements that may be made.U flourishing growth. Here, therefore, is a clear-cut case of Ogburn's We cannot forget the real impact of procedural cultural lag manifested in the law. Unless there is 21 Cf. YALE LAw JOURNAL, supra note 18 at 290, 2.96. a radical adaptation of the sanctions for business 2 On price leadership see KEFAUVER, op. cit. supra note 13 at 118-21. 23Verbatim from Notes to Finamial Statements 32. PENOLOGY AND CORPORATE CRIME crimes to current reality, those sanctions will not which ensure fair play to the individual, with his be able to perform the that Congress intended limited resources, very necessary when the defend- when it passed the historic Sherman and Clayton ant commands more legal talent and financial Acts to prevent large-scale economic injury to the resources than the prosecution office.n Once again, public. Just so with the control of other offenses. historic-minded thinking which tries to handle the corporation as if it were an ordinary person is ETIOLOGICAL CONSIDERATIONS completely disaligned from the contemporary situa- From a theoretical point of view, Kemper 24 tion. provides a link between Jaspan's Thief, who en- Someone might argue, however, that the era riches himself at the expense of his employer, and of "robber barons" and "muckraking" is long gone. the white collar criminal we are discussing.24 Under These things cannot be much of a problem cur- the concept of "Parallel deviance", Kemper explains rently with today's enlightened business manage- that employees find legitimation for the small ment! The Nader scandal and strong rumblings 29 they intend to commit in the large ones from F. D., A. Commissioner Goddard are strong (contra Government or public) that their superiors evidence that Sutherland's work is far from ob- constantly commit.25Although there be a floating solete, and that we certainly have not solved these mythology among the workers to rationalize their problems. depredations (which are commonly listed as "shrinkage"), 8 it is to be expected that public PREVENTION AN CONTROL revelation of large-scale wrongdoing above them What remains is to consider some of the ways by will erase any feelings of , or restraints on which this lag might be cut down, without sub- amount, that they might still harbor from Sunday stantive inequities due to emotionalism and right- school days. eous zeal. Given that the penalties must be revised, There is a large area in the of crime the procedures updated 0 , and perhaps the very and punishment, moreover, which does not apply substance of the legal codes thought through and to corporate crime. As jurisprudential theorists restated3 , in what directions should we head? have indicated, a criminal conviction even for There are, as an analysis of the authors we have minor offenses means that the individual has been consulted shows, four principal strategies to control identified by society as deficient in feelings of white collar crime. First is the internal, private-law justice and fair play that presumably every method, which involves better "housekeeping" by citizen possesses. The formal condemnation of management in each firm; second, the individual- 'society, the moral opprobrium of conviction, may istic, psycho-moral approach, seeking to reduce deter far more than the $25 exacted as penalty? deviance at the personnel level; third, the struc- It is perhaps this painful societal repudiation that tural and preventive, involving social Anglo-American law provides so many safeguards to avoid collective crime; and fourth, the deterrent against-in its for each and punitive, showing how the penalties could be and in the many procedural limitations made to really hurt. hindering the prosecution-rather than the fine itself. 2 SUTHERLAND, WrTE CoLLAR CRnss 43-4, 227, this, however, is inapplicable when we deal 232. AR.ENS & LAsswEL, op. cit. supra note 2, at 122, All of 202-3. See, also, HELLER, THnE SixT A mNDIENT 10, with a corporation, as various writers point out. 21-3, 142 (1951) on the relativity of procedural Neither is there a specific, visible defendant to to historical circumstances. 29 On the by G.M. "to ruin" Ralph Nader, stand shamefacedly before the awesome judge who see The Spies Who Were Caught Cold, TIME 79 (Apr. 1, is issuing a on his character and fitness to 1966). On charges against drug manufacturers (who live in society, nor are the procedural safeguards are old according to KEFAuVER, op. cit. supra 24 note 13 at 8-75), see F.D.A. Head Bids Drug Makers Aemper, Representative Roles and the Legitimation Act 1, 24 in N. Y.Times (Apr. 7, 1966). A condensed of De-tiance, 13 SoC. PROBLEMS 288-98 (1966). text of his speech to the industry, at its Annual Meet- 21Ibid. 295-97. ing, is on p. 24, as above, and makes interesting reading. 26GIBEY, op. cit. supra,note 12 at 3-4; _MooRE, op. '30As HELLER contends, op. cit. supra note 28, at cit. supra note 5 at 160-61. 150-1. 2 Whiting, op. cit. supra 18, at 447; also Hart, The 31As the American Law Institute and American Aims of the Criminal Law in 23 LAw & Co.-mxs. Association are doing with their model acts, to which PROBL. 401 (1958), 405. See his discussion of why U. S. we shall refer shortly. Also see, for instance, ,ModelLaw law is not prepared to cope with corporate crime, on Trademark, Trade Names and Unfair Compe- 422-23. tition, International Chamber of Commerce (1960). LEO DAVIDS [Vol. 58

Jaspan and Moore give practical suggestions enue, or any other criterion of size would be ex- from the standpoint of good management tech- acted, or one could establish a series of penalty niques, and their ideas are relevant if corporations brackets in a manner analogous to the progressive set out to clean their own houses.Y2 The scope of .35 The civil suit for damages, which this essay, understandably, does not permit more under present rules is laden with uncertainties and than a summary indication of the various ap- difficulties, could be superseded by the Govern- proaches; details can be found through the citation ment's being empowered, upon proof of the alleged of the sources in our footnotes. These authors malfeasance to collect all of the ill-gotten gains correctly observe that private sanctions must be that the offending company had achieved through added to legal ones, since the latter do not succeed the crime, with the particular injured parties alone. Although there is nothing startlingly new in recovering single damages out of the fund thus their recommendations, this method may well, in established in government hands. The residue after practice, achieve the most substantial results. all claims had been settled would not remain with Clinard and Kemper view the problem as rooted the malefactors, as it generally does today, but in value dysfunctions, and discuss ways of increas- would be absorbed after a reasonable wait by the ing consensus and norm perception by developing public treasury, thus rightfully contributing in codes of , etc.P Quinn and Kefauver de- some measure to the welfare of those who had been manded Government action, with some interesting wronged."6 Much greater use of dissolution thoughts on publicity, checks and balances, and (i.e., corporate ) for recidivists offenses.3 structural devices to prevent corporate is also suggested by the American Law Institute.Y7 This approach certainly requires professional sci- So far as the culpability of corporate excutives (from sociologists, economists and entific attention for the wrongdoings of their subordinates is con- political scientists) to produce realistic programs cerned-which has elicited a number of thoughtful from these admirable but hazy proposals. articles in recent yearsS--the suggestion is made In the area of effective punishment, however, we that the law should impose a responsibility of have a number of incisive and sound proposals. Fines, to start with the simplest remedy, should be supervision on top management (as is done by be fixed not by absolute sum but proportionally, so child welfare statutes, etc.) so that they would that a certain percentage of capital, annual rev- held liable not directly for the acts of their subor- dinates but for the of remaining in 2 JAsPAN & BLcn, THE THIEF IN THE WHIrE CONDUCT OF TUE ignorance about their activities should these prove COLLAR 233-54 (1960); MOORE, 39 CORPORATION 53-6 (1962). to have been unlawful. Again, there is a clear need 3 SocIoLoGY oF DEVIAr BEHAVIoR, 598-600; Representative Roles, op. cit. supra note 10 at 297-98. 35 YA. L. J., op. cit. sura note 18 at 295; Model Kemper's analysis of deviance being unconsciously Business Corporation Act, prepared by the Committee legitimated (for the workers) by executives leads on Corporate Laws A., B. A., Philadelphia: Joint Com- naturally to his suggestions regarding honest disclosure mittee on Continual Legal of the American and the rectification of differential reward. Clinard, in Law Institute and American Bar Association, sec. 128 an older criminological tradition, seeks to make right (Penalties Imposed Upon Corporations), 115. Other and wrong more explicit by professional association penalties may be devised along the same line; one that self-policing and public education against acquiescence I have not seen is to prohibit advertising by the offender in criminogenic thinking. This is what is predominantly during a specified period. In a competitive situation, implied in Gibney's book. this will be felt as a very severe penalty and is easily 3 THE INDIvIDUAL IN A BUsnEss SOcIETY, op. Cit. checked on. supra note 10 at 63-65, 74-78. Kefauver's proposals are 36 YALE L. J., supra note 18 at 298-301. less emotional; op. cit. supra note 13 at 196-98, 207-17 37 Both in the Model Business Corporation Act, ibid., for his discussion of regulatory powers, better person- sec. 87-98 on Involuntary Dissolution, pp. 83-90 and nel, and data for Federal "Watchdog" agencies, and an in the Model , Proposed Official Draft, Phila- informed electorate. He admits weaknesses in this delphia: American Law Institute (July 30, 1962), sec. approach, 209; the dysfunctions of bureaucracy also 6.04, 94-95. This, like some other crippling penalties, affect those intended to control other, bad bureauc- could be imposed in a competitive situation, but with racies. The effectiveness of government is public utilities-where the danger exists of leaving the strongly challenged in the F. T. c. Anniversary Issue of public bereft of service-the law would have to direct the CoLum IA LAw lzvIEw, Vol. 64 (March 1964): its wrath at the guilty individual officers (unless an- Rowe, The F. T. C.'s Administration of the Anti-Price other company could take over the franchise immedi- Law, 415-38; and Blair, Planning for ately). Competition 524-42. They complain that the actual 38WHITING, op. cit. supra note 18; FORTE in 40 IND. consequences of P. T. c. action have been opposite to L. J. 313 (1965); 10 ST. Louis U. L. J. 10 (1965). Cf. the pro-competition intentions of Congress, since busi- Model Penal Code, sec. 2.07, 35-8. ness concentration and monopoly have not been halted. 39 YAlE L. J., supra note 18 at 304-06. PENOLOGY AND CORPORATE CRIME for legislators to investigate these suggestions and industries under heavy fire from private and put into practice those of them which can function- public critics, and the deleterious consequences ally succeed, but do no one an injustice. of irresponsibility in such areas of business, ob- In summation, we have shown a lack of con- viously, may extend far beyond monetary injury. gruence between two institutional spheres-big It has become clear that not only are the amounts business and commercial/criminal law-that are of currently authorized penalties hopelessly in- supposed to maintain an effective functional adequate to punish infractions by large corpora- relationship, with continuing importance for tions, but that the realities of corporate life and criminology and . Just in recent operations today demand a basic re-thinking in months we have again found the drug and auto the areas of and legal responsibility.

Statement of , Management and Circulation required ment in the two paragraphs show the affant's full knowledge by the Act of October 23, 1962; Section 4369, Title 39, United and belief as to the circumstances and conditions under which States Code. stockholders and security holders who do not appear upon the 1. Date of Filing: October 1, 1967. books of the company as trustees, hold stock and securities in a 2. Title of Publication:Journal of Criminal Law, Criminology capacity other than that of a bona fide owner. Names and ad- & Police Science. dresses of individuals who are stockholders of a corporation which 3. Frequency of Iss: Quarterly. itself is a stockholder or holder of bonds, mortgages or other 4. Location of known Office of Publication:428 E. Preston St., securities of the publishing corporation have been included in Baltimore, Bid. 21202. Paragraphs 7 and 8 when the interests of such individuals are 5. Location of the Headquarters or General Business Offices of equivalent to 1 percent or more of the total amount of the stock Publisher: 428 E. Preston St., Baltimore, Md. 21202. or securities of the publishing corporation. (a)* (b)t 6. Publisher: The Williams & Wilkins Company, 428 E. Preston (Net Press St., Baltimore, Md. 21202. 10. A. Total No. Copies Printed Editor: Fred E. Inbau, Northwestern University, Chi- IRun) ...... 5988 4985 cago, Ill. 60611. B. Paid Circulation 7. Owners: (If owned by a corporation, its name and address 1.To term subscribers by mail, carrier must be stated and also immediately thereunder the names and delivery or by other means ...... 3410 3501 addresses of stockholders owning or holding 1 percent or more 2. Sales through agents, news dealers or of total amount of stock. If not owned by a corporation, the names otherwise ...... -- and addresses of the individual owners must be given. If owned C. Free Distribution (including samples), by a or other unincorporated firm, its name and by mail, carrier delivery or by other address, as wel as that of each individual, must be given.) North- means ...... 90 79 western University School of Law, 3857E. Chicago Ave., Chicago, D. Total No. of copies distributed ...... 3500 35S0 Ill. 60611. No stockholders. 8. Known bondholders, mortgagees and other security holders owning or holding I percent or more of total amount of bonds, mort- *Average no. of copies for each issue during gages or other securities are: None. preceding 12 9. Paragraphs 7 and 8 include, in cases where the stockholder months. or security holder appears upon the books of the company as t Single issue nearest to filing date. trustee or in any other relation, the name of the person I certify that the statements made by me above are correct and or corporation for whom such trustee is acting, also the state- complete. Mary G. Maclsaac, Publisher.