Corporate Crimes And Corporate Governance To Combat Them

collective law-breakings And Corporate G overnance To invade ThemCorporate aversions refer to criminal pr typifyices by individualistics that have the military issueive authority to have a reciprocation for a smoke or smart set. These apprize include presidents, managers ,directors and chairman , sales wad and agent or anyone wi contract a company that has the authority to act on behalf of the firmCorporate wickednesss often seen to request a very different set of dealings between offenders and victims, as thither be slight obvious direct harm or blood on the streets (Clarke, 1990). It appears less personal as fast victims are often employers, the brass, the customary health or the environment and in many scales, such(prenominal) as whereSafety laws are broken, causing the death or combat suffering of employees, there is no direct jailight-emitting diode to harm. There are also different images of the structural dimensions of victimization. To near, all citize ns are victims of this kind of wickedness, ir declareive of age, come apart or gender, whereas to others the offenses of the soaked and powerful prey on the poor and powerless. Yet at the same duration, victims of some financial frauds may fail to attract sympathy as they are assumed to be wealthy and to have pull up stakesingly parted with their money (Shichor et al., 2000).Corporate crimes scopes and definitionsAs far as scope of the crime is concern this has to be noticed that Many victims are unaware of any harm and cannot detect it themselves as happens, for example, with some study frauds, defilement, food adulteration and descriptions of consumer goods. Victimization is often indirect and impersonal, affecting entities such as the government although there are indirect cause on individuals tax payers, for example, have to pay to a greater extent and receive fewer benefits due to tax evasion. Individual victims may lose very little insofar the mislabeled kale may be large as in cases in which a posit employee takes one penny break through of thousands of accounts or a firm sells goods which weigh less than indicated.1This term ovalbumin collar crime was coined by Edward Sutherland in his pioneering 1949 study, White Collar Crime. It describes non-violent crimes committed by corporations or individuals in the course of their business organisation activity.Examples of criminal conduct in most jurisdiction includes antitrust violations ,fraud , deadening to the environment in violation of environmental legislation, exploitation of labour in violation of labour laws ,and failure to maintain a fiduciary responsibility toward share subscribeers.In criminology, collective crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals that may be identified with a corporation or other business entity.Corporate Crime is criminal activity on behalf of a business organization. During muchof American history the primary legal stance relating to activity of business was decidedly laissez-faire (leave it alone to do as it will). Under the wreak of capitalist philosophy American Courts adopted the view that governments should not interfere with businesses by attempting to regulate it. For a long period of history victims of defective and dangerous ingatherings could not sue corporations for damages because the guiding rationale was caveat emperor (let the buyer beware), and unhealthy and dangerous work conditions in mines, mills and factories were excused chthonic the freedom of contract clause of the constitution2.Although attitudes in the 20th century changed considerably, crimes of frauds, concealment, and misrepresentation continued to vilify all sorts of groups and individuals in society. Crimes such as these are actions committed during the course of fulfilling the name of somatic profits and growth. Today as corporations have been run aground to be involved in environmental and health and sanctuary law violations. In the United Kingdom, following several fatal disasters on the rail network and at sea, the term is now also commonly used in reference to corporeal manslaughter. In this home would also be included the culpability of conjunction Carbide in the 1985 accident in Bhopal, India and the current behaviour of the pharmaceutical industry which puts profits ahead of the needs of HIV and other patients worldwide. Yet a trinity category of merged crime is express-corporate crime. In a globalized world where States negotiate and conclude agreements with corporations and other world(prenominal) parties or bodies, opportunities will arise for unjust enrichment and theme laws will be broken.The Enron ScandalThe first major scandal of the first decade of 21st century is that Enron Corporation, which has been called one of the most intricate pieces of financial foxiness in history and for investors in its stock and its employees. The Enron sandal did tremendous damage to the company created a crisis of investors confidence the links of which has been seen since the great depression.Enron was a $100 billion corporate empire that had to a greater extent then 200,000 employees in 40 countries and controlled approximately one quarter of all trading in natural gas and electricity in the United Status. The company poured one million millions of dollars into political campaign and lobbyists arguing of further deregulation of energy markets. The Enron hierarchy judge the never-ending innovation and growth from its executive to feed this monster enterprise. In response executives created imaginary markets, musical composition partnerships and phantom growth that en opend them to report profits that did not exist and to hide debts hat did. Executives were accomplished at cooking the financial books in many ingenious ways, which kept Enrons stock prices rising and thus their deliver compensation. Because much of the competition received by Enrons executives was stock based, they had major incentives to make the company look as good as possible to investors by reporting high profits.Indian ScenarioThere are a number of corporate crimes that have come into light now days. One of the major havoc that is created in present times is because of mysterious disappearance of corporations. Of the 5,651 companies listed on Bombay Stock exchange, 2750 have vanished. It means that one out of two companies that come to the stock exchange to raise crores of rupees from investors loot and run away. Even big names like Home Trade came up with huge nationality stunts precisely subsequently raising money, vanished into the thin air. About 11 million investors have invested Rs. 10,000 crore in these 2750 companies.We have Securities Exchange Board of India, Reserve rim of India and Department of Companies Affairs to monitor the stoc k exchange transactions only none has documented the whereabouts of these 2750 extraordinary companies suspended from the stock exchange. Many of the come onrs and merchant bankers who are responsible for these are roaming scotfreeCourt in companion Commissioner, Assessment-ll, Banglore Ors. v. Velliappa Textiles Ltd Anr3. took the view that since an artificial person like a company could not be physically punished to a term of imprisonment, such a department, which makes it mandatory to impose minimum term of imprisonment, cannot apply to the case of artificial person. However, Supreme Court in 2005 in Standard Charted Bank v. Directorate Of Enforcement4in mass decision of 32 expressly overruled the Velliapa Textiles case5on this issue. K.J Balkrishanan J. in majority opinion held We hold that there is no immunity to the companies from prosecution merely because the prosecution is in respect of offences for which punishment irrefut adequate is mandatory imprisonment. We overrule the views expressed by the majority in Velliappa Textiles on this pointThere is a severe need to fight this evil of corporate crime As has been belatedly recognized in many jurisdictions, corporate crime causes far greater damage than violent street crimes. It therefore deserves more than wariness from the law enforcement community. According to the FBIs 2001 report, the United States reportedly lost USD17.2 billion from robbery, burglary, theft and motor-vehicle theft plot of land the Enron fiasco alone cost investors, pensioners and employees more than three times that amount. The UnitedKingdom estimates that in 2004, 78 million (USD139 million) was lost to healthcare fraud, a reduction from 171 million (USD305 million) in 1999. In 2004, Transparency supranationalisticistic estimated that at least USD400 billion was lost per year worldwide due to bribery in government procurement alone. However due to the scarcity of consolidated and structured statistics on corpor ate crime, it is impossible to desexualize the overall cost of corporate crime to national economies worldwide.WHERE DOES CORPORATE CRIME LIESIn the Administration forward motion Act (AIA) of 1979 the U.S. Congress defined whitecollar crime as an illegal act or series of illegal acts committed by non-physical means and by concealment or guile, to obtain money or post or to obtain business or personal advantage.6But still the sworn hang by this fact that the term corporate crime is used where the offence is committed by a corporation, usually to benefit the corporation while the term white collar crime is used where the offence is committed against a corporation, usually by its have executives or employees and the corporation is the victim.As it is stated above that corporate crimes are some or how different from white-collar crimes but still in an arena Corporate crime overlaps with organized crimes and state corporate crimes along with white-collar crime White-collar crime Bec ause the majority of individuals who may act as or represent the interests of the corporation are employees or professionals of a higher(prenominal) social class Organized crime Because criminals can set up corporations either for the purposes of crime or as vehicles for laundering the proceeds of crime. Organized crime has become a branch ofbig business and is simply the illegal sector of capital. It has been estimated that, by the middle of the 1990s, the gross criminal product of organized crime made it the twentieth richest organization in the world richer than 150 sovereign states (Castells 1998 169). The worlds gross criminal product hasbeen estimated at 20 percent of world trade. (de Brie 2000) and State-corporate crime Because, in many contexts, the opportunity to commit crime emerges from the relationship between the corporation and the state.Corporate crime encompasses embezzlement (also known as criminal kick downstairs of trust in some countries), fraud, corruption, in sider trading, unfair competition, healthcare fraud, computer crime, forgery and tax evasion. The central instalment of these crimes being cheating and dishonesty However, it also goes beyond these traditional boundaries.7Corporate environmental crimesThe term corporate environmental crime, which may be defined as any environmental crime that has been committed by any corporate body .the importance of the inquiry was to hear from a range of corporate bodies and their representatives on the present environmental criminal justice system, while at the same time recognising that an environmental condemn for a corporate body is at present limited to fine .the reason for commiting corporate environmental crimes are also varied.The crime may occur because the business concerned is ignorant of its environmental obligations. It may also occur all too often as a result of negligent behaviour ,for example ,where business are poorly managed ,staff are inadequately trained or equipment and inf rastructure has not been maintained to the required standard ,allowing a pollution incident to occur. But perhaps the most dispirit cause is when corporate environmental crime is the result of a deliberate and intentional illegal act ,a decision taken in the full knowledge that the act is illegal and will result in environmental crime.In our paper our main concern would be corporate environmental crimes in which we will mainly concern about the worlds worst industrial disaster and a heinous corporate crime the leakage methyl isocyanides (MIC) and other poisonous gases from coalescence Carbides Bhopal, India, pesticide grind on December 3rd, 1984.which killed 8000 people in first three days and poisoned more than 500000 people and at least 120000 people remain chronically ill and also 30 people die each month from long term effect of gases even today8The question would be arisen in your mind that why we choose Bhopal disaster as specific topic for our research and view.There are several reasons behind this it is only matter of time before the world is shocked and sickened by another Bhopal type industrial diasater .this is because the global economic forces that led union carbide to build and operate its ill fated factory in Bhopal have not departed away they have only become stronger. The fact tha after 20 years of the Bhopal disaster ,survivors are forced to drink poisoned water ,contaminated by stockpiles of abandoned chemicals ,clearly reflects the apathy towards communities and the environment.The lessons of Bhopal are still waiting to be learened. In fact, a 1000 Bhopals are happening in slow motion across india destroying the environmental and poisoning people with impunity. Environmental disasters , both chronic and immediate , induced by irresponsible corporate practices are becoming more frequent. Transnational corporations have learned to downplay damage ,and focus attention and liability on the local company to elude full criminal and civi l liability.Bhopal corporate environmental crimeBeing the most worst industrial disaster itself fulfil the need to concern about it.the brutality of the incident can be fairly stated by a comment given up by a Bhopal resident that Mothers didnt know their children had died ,children didnt know their mothers had died and men didnt know their whole families has died 9simply after the unpleasant incident people said that We were choking and our eyes were burning. We could barely see the road through the fog, and sirens were blaring.We didnt know which way to run. Everybody was very confused10.before the occurrence Opposition legislators raised the issue in the State Assembly and the clamour sur turning these incidents culminated in a 1983 motion that urged the state government to force the company to relocate the plant to a less-populated area. Starting in 1982, a local journalist named Rajkumar Keswani had frantically time-tested to warn people of the dangers posed by the facility. In September of 1982, he wrote an article entitled enrapture Save this City. Other articles, written later, bore grimly prophetic titles such as Bhopal Sitting on Top of a Volcano and If You Do Not Understand This You Will Be Wiped Out. Just louver months before the tragedy, he wrote his final article Bhopal on the Brink of a Disaster.Yet when the Independent speaks of rape, the withstander of disgrace and Jon Snow of a crime against human beingsity, they are not talking about THAT NIGHT but of what has happened since to those who survived it. Today, 25 years after the disaster, Bhopal remains a humanitarian disaster. Their breathless bodies no longer able to push handcarts and lift heavy loads, thousands have fallen into destitution and their families have learned the lessons of the abyss, binding cloths round their middles to give an illusion of fullness, giving children unable to sleep from hunger water to fill their empty bellies.11In the midst of this clamour, in May 1982, northward Carbide sent a team of U.S. experts to inspect the Bhopal plant as part of its periodic safety audits. This report, which was forwarded to sodality Carbides management in the United States, speaks unequivocally of a potency for the release of toxic materials and a consequent runaway reaction due to equipment failure, operating paradoxs, or keep problems. In fact, the report goes on to state rather specifically Deficiencies in safety valve and instrument care programs. Filter cleaning operations are performed without slip blinding process. Leaking valves could create serious exposure during this process. In its report, the safety audit team noted a total of 61 hazards, 30 of them major and 11 in the dangerous phosgene/MIC units. It had warned of a higher potential for a serious incident or more serious consequences if an accident should occur. Though the report was available to senior U.S. officials of the company, nothing was done12. In fact, accord to Carbides kn owledgeable documents, a major cost-cutting effort (including a reduction of 335 men) was undertaken in 1983, saving the company $1.25 million that yearDOWs liability under corporate crimesLiabilty which is related to the 1984 Bhopal disaster was originally filed in 1987, and reinstated in 1991. both(prenominal) Warren Anderson, the former CEO of Union Carbide, and the Union Carbide Corporation itself face criminal charges in India of unlawful homicide (or manslaughter). Both Anderson and Carbide have repeatedly ignored summons to appear in India for trial, and are officially considered absconders (fugitives from justice) by the Indian Government. While Anderson, if extradited and convicted, would face ten years in prison, Carbide faces a fine which has no speed limit.Along with above mentioned liability DOW also owes environmental liability because keen to distance itself from disaster Union Carbide fled India leaving behind tons of toxic wastes strewn in and around the factory site. According to former workers of the Union Carbide factory in Bhopal, while the factory was in operation, massive amounts of chemicals including pesticides, solvents, catalysts and wastes were routinely dumped in and around the factory grounds. These include deadly substances such as aldicarb, carbaryl, mercury, and several chlorinated chemicals and organic poisons. In 1977, Carbide constructed Solar Evaporation Ponds (SEPs) over 14 hectares 400 meters north of its factory. Toxic effluents and toxic wastes were routinely dumped there. Two tube wells take in the vicinity of the SEPs were abandoned because of the noxious smell and taste of the water.Environmental criminal liability of DOW and Union CarbideA preliminary study of soil and groundwater pollution inside the plant, conducted in 1989 by Carbide, found the great unwashed to be worried about. Some water samples produced a 100% death rate among fish placed in them. Nevertheless Carbide issued no warning. An internal m emo refers to the need for secrecy, suggesting that the information should be kept for our own understanding. Not only did it fail to warn people living nearby, it vociferously denied that there was a problem and, incredibly, wrote to the Gas Relief Minister criticizing those who were trying to make people aware of the danger, suggesting that they were mischievous agitators. Carbide in the US meanwhile tried to portray Bhopal activists and their supporters ascommunists who aimed to restructure US society into something unrecognizable and probably unworkable.Carbide and Dow later relied on a report from a government organization called NEERI13which in 1997 published a report which found that water outside the factory was not contaminated. Consultant Arthur D Little had beenappointed in 1989 by Union Carbide US to work privately with NEERI. ADL believed itself to be working with UCC in Danbury, but all reference to UCC was to be deleted. ADL was to pretend to be working with UCIL alon e. But a memo of 1993 shows the US Carbide executives in the driving seat. ADL at long last reported back to Carbide suggesting that NEERI had failed to find contamination because its sampling methods were flawed. In particular ADL suggested it was imprudent to claim that local water was safe for drinking and warned that groundwater contamination could happen far more swiftly and seriously than envisaged. ADL was unreadable at one point as to whether NEERI was claiming that labourers were or were not exposed to contaminated groundwater. ADLs suggested changes ran to 17 pages, but none of them were incorporated in NEERIs published report, which is what Dow and Carbide still quote, knowing it to be worthless.Carbides own documents reveal that they knew for decades that their giving medication practices in Bhopal were leading to massive contamination of the soil and groundwater, and that their sole concern was how to evade responsibility and bulk large it up.At last we would like to conclude about their liabilities by sayingthat the disaster was caused because Union Carbide had under-invested in an inherently insecure facility located in a crowded neighborhood, used admittedly unproven designs, stored deadly MIC in reckless quantities, dismantled safety systems and cut down on safety staff and rearing in an effort to cut costs14The severity is not hidden now so further we would like to suggest 10 Bhopal principles on corporate liability15We have chosen to call them the Bhopal formulas because this disaster, more than any other, highlights the current failure of governments to protect public welfare and the failure of corporations to observe staple standards e.g. the turning away of liability by parent corporations, and the avoidance of responsibility for compensation and environmental cleanup. And further question would is there any need for this kind of principles than we say yes why not because At the Johannesburg Earth Summit, Government looked at what has and has not been done to implement the Rio commitments. The Bhopal case shows that it is important to hold corporations liable and to provide compensation for victims of pollution and other environmental damage, that responsibility for liability and cleanup should be enforceable not only against the local corporate entity, but also against the multinational parent.The Ten Bhopal linguistic rules on Corporate AccountabilityImplement Rio Principle 13. States shall as a matter of priority enter into negotiations for a legal international instrument, and adopt national laws to operationalise and implement Principle 13 of the Rio Declaration, to address liability and Compensation for the victims of pollution and other environmental damage. wear Corporate Liability. Corporations must be held strictly liable without requirement of fault for any and all damage arising from any of their activities that cause Environmental or property damage or personal injury, including site remediatio n. enkindle companies as well as subsidiaries and affiliated local corporations must be held liable for compensation and restitution. Corporations must bear cradle to grave responsibility for manufactured products. States must implement individual liability for directors and officers for actions or omissions of the corporation, including for those of subsidiaries.Ensure Corporate Liability for Damage beyond National Jurisdictions. States shall ensure that corporations are liable for injury to persons and damage to property, biological diversity and the environment beyond the limits of national jurisdiction, and to the global commons such as atmosphere and oceans. Liability must include responsibility for environmental cleanup and restoration.Protect Human rights. stinting activity shall not infringe upon basic human and social rights. States have the responsibility to safeguard the basic human and social rights of citizens, in particular the right to life the right to safe and heal thy working conditions the right to a safe and healthy environment the right to medical treatment and to compensation for injury and damage the right to information and the right of glide path to justice by individuals and by groups promoting these rights. Corporations must respect and uphold these rights. States must ensure effective compliance by all corporations of these rights and provide for legal execution of instrument and enforcement.Provide for Public Participation and the Right to Know. States shall require companies routinely to disclose to the public all information concerning releases to the environment from their respective facilities as well as product composition. Commercial confidentiality must not surpass the interest of the public to know the dangers and liabilities associated with corporate outputs, whether in the form of pollution by-products or the product itself. at once a product enters the public domain there should be no restrictions on public access to information relevant to environment and health on the basis of commercial secrecy. Corporate responsibility and right shall be promoted through environmental management accounting and environmental reporting which gives a clear, comprehensive and public report of environmental and social impacts of corporate activities.Adhere to the Highest Standards. States shall ensure that corporations adhere to the highest standards for protecting basic human and social rights including health and the environment. Consistent with Rio Declaration Principle 14, States shall not permit multinational corporations to deliberately apply lower standards of operation and safety in places where health and environmental bulwark regimes, or their implementation, are weaker. vitiate Excessive Corporate Influence over Governance. States shall co-operateto combat bribery in all its forms, promote frank political financing mechanisms and eliminate corporate influence on public policy through alternative ca mpaign contributions, and/or non-transparent corporate-led lobby practices.Protect Food Sovereignty over Corporations. States shall ensure that individual States and their people maintain sovereignty over their own food supply, including through laws and measures to prevent genetic pollution of unpolished biological diversity by genetically engineered organisms and to prevent the patenting of genetic resources by corporations.Implement the Precautionary Principle and Require Environmental Impact Assessments. States shall fully implement the Precautionary Principle in national and international law. Accordingly, States shall require corporations to take preventative action before environmental damage or heath effects are incurred, when there is a threat of serious or irreversible harm to the environment or health from an activity, a practice or a product. Governments shall require companies to undertake environmental impact assessments with public participation for activities that m ay cause significant adverse environmental impacts.Promote Clean and Sustainable Development. States shall promote clean and sustainable development, and shall establish national legislation to phase out the use, discharge and emission of hazardous substances and greenhouse gases, and other sources of pollution, to use their resources in a sustainable manner, and to conserve their biological diversity.HOW TO HANDLE AND admit CORPORATE CRIMESThere are many ways for law enforcement authorities to combat corporate crime. Firstly, prevention. This can be achieved by encouraging awareness of the moral compass within corporations and among their employees and the promotion of self-regulation. This should be complemented by an effective corporate oversight regime through internal compliance programmes as well as regulation by the Companies Commission and Securities Commissions or its equivalent. For the latter purpose, it will be necessary to put in place effective laws and regulations in a timely manner. In turn, these laws will also have to be actively enforced by well-trained law enforcement agencies and prosecutors if they are to be a realistic deterrent. In this compliments it is noted that although sustained enforcement against corporate crime is required as a strong deterrent and to maintain public confidence in the financial markets, enforcement should be seen as a measure to augment internal vigilance and not as a substitute for it. Thus corporations must also play their fibre as responsible corporate citizens in the national and global communities. With regard to the investigation and prosecution of corporate crimes with a transnational flavour, be it through the multinational nature of the corporation or the elements of the crime, the importance of international cooperation to gather evidence and recover the ill-gotten gains cannot be overstated.States should therefore put in place a comprehensive domestic legal framework that includes laws to criminali ze the relevant criminal acts and impose corporate and individual liability for them. Another crucial element will be effective whistleblower and witness protection laws. A network of bilateral and regional treaties on mutual assistance in criminal matters and extradition in concert with bilateral treaties on asset sharing is also indispensable. These instruments would complement the stand-alone framework provided under the UN design against Transnational Organized Crime and the UN Convention against Corruption. In this regard, countries in the ASEAN region are also able to utilize the Treaty on Mutual Legal Assistance in Criminal Matters which was concluded in November 2004 among the ten like-minded ASEAN Member States and is currently in force among Brunei, Lao PDR, Malaysia, Singapore and Vietnam.Suggestions from our sideAmendment to section 62 of the Indian penal code by adding the following lines In every case in which the offence is only punishable with imprisonment or impris onment and fine and the offender is the company or other body corporate or an association of individuals, it shall be competent to the court to sentence such offender to fine only.In many of the acts relating to economic offences, imprisonment is mandatory. Where the convicted person is corporation, this provision becomes unworkable and it is preferred to provide that in such cases, it shall be competent to