STOCK MARKET WATCH -- Monday, 3 December 2012

[Demeter]

20. Why It is Essential That Criminal Bankers are Prosecuted

By Rowan Bosworth-Davies, author of Fraud in the City: Too Good To Be True, (Penguin 1988), a former head of investigations at regulator FIMBRA (Financial Intermediaries, Managers and Brokers Regulatory Association) and a former Scotland Yard Fraud Squad detective. He blogs at Rowan Bosworth Davies blogspot and tweets at @RowanBosworth Cross posted from Ian Fraser’s blog

http://www.nakedcapitalism.com/2012/10/why-it-is-essential-that-criminal-bankers-are-prosecuted.html#6QCHuyHMzl8bBvOj.99

...There is a growing groundswell of informed opinion among modern commentators and even some politicians that financial regulators should be far more willing to bring criminal charges against those financial practitioners whose actions should be construed as more than just negligent or incompetent.

I have never understood why ‘white collar’ criminals should be treated any differently from any other criminals, but the fact remains that they are treated differently, and it has been so for many years. The phenomenon was first recorded in a book entitled White Collar Crime by the American criminologist Edwin Sutherland, published in 1949. He pointed out that

“There is a consistent bias involved in the administration of criminal justice under laws which apply to business and the professions and which therefore involve only the upper socio-economic group…”

In White Collar Crime, Sutherland argued that the behaviour of ‘respectable’ people, from the upper socio-economic class, frequently exhibits all the essential attributes of crime, but that it is rarely dealt with as such. This situation had arisen, he said, from the tendency for systems of criminal justice in Western societies to favour certain economically and politically powerful groups and to disfavour others — notably the poor and unskilled who comprise the bulk of the visibly criminal population. He added:-

“Probably much more important however, is the cultural homogeneity of legislators, judges and administrators with businessmen. Legislators admire and respect businessmen and cannot conceive of them as ‘criminals’; businessmen do not conform to the popular stereotype of the ‘criminal..”

Another American sociologist William Chambliss put it as follows:-

“One of the reasons we fail to understand business crime is because we put crime into a category that is separate from normal business. Much crime does not fit into a separate category. It is primarily a business activity..”

In his research, Sutherland discovered that the ‘white collar’ criminal has no real fear of regulators ,and that actions by the regulators were considered to be an unfortunate interlude, but had little ability to exclude malefactors from continuing to trade. Sutherland found that the actions of regulators were seen as a bureaucratic part of a governmental process, and not considered to possess a status which would diminish the perpetrator in the eyes of his social peers. He said:-

“white collar criminals customarily feel and express contempt for law, government and regulators in a way similar to that in which professional thieves express contempt for policemen and judges. Businessmen characteristically believe that the least amount of government is the most desirable state.”

...In what is the most systematic discussion of 19th-century business crime to date, George Robb (1992) notes the reluctance of the legal and criminal justice systems to intervene in the social differentiation of the treatment of white collar criminals. He states;

“From the mid-19th century through the early decades of the 20th, the law put few obstacles in the paths of white collar criminals, trusting instead that the free market would regulate itself and that good business would drive out bad. The liberal outlook was taken up by the law courts which neglected business frauds and treated white collar criminals with comparative leniency. Throughout much of this period, cultural perceptions of ‘criminality’ remained focused on the ‘dangerous classes’ while elite misconduct was seen as a relatively minor social ill.”

He highlighted the fact that the harshest sentences for ‘white collar’ offences were invariably reserved for embezzling clerks rather than leading businessmen. He argued that another factor caused such leniency:-

“Another reason frequently given for the lenient sentencing of most white-collar criminals was that the shame and social disgrace attendant on criminal conviction were punishment enough for middle-class persons. Exclusion from polite society was viewed as a more serious penalty than imprisonment … For white collar criminals, prison was seen as ancillary to their personal sense of shame and loss of social status”

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