White-Collar Crime

White-Collar Crime

White-Collar Crime consists of occupational crime and corporate crime. Occupational crime refers to offences committed against legitimate institutions (businesses or government) by those with "respectable" social status. It includes the embezzlement of corporate funds, tax evasion, computer crime and expense-account fraud. Corporate crime refers to offences committed by legitimate institutions to further their own interests and includes conspiring to fix the prices of goods or services, the dumping of pollutants, the payment of kickbacks by manufacturers to retailers, misleading advertising, selling unsafe drugs, etc.

In Canada, most occupational crime is prohibited under the Canadian Criminal Code, which is enforced by municipal or provincial police, a complicated procedure because the suspects are often employees of the institutions from which they are stealing, and the employers either do not discover the theft quickly or prefer to avoid publicity by not reporting the loss. The culprit may be fired or asked to make restitution. Corporate crimes are prohibited by a wide variety of federal, provincial and municipal laws. Enforcement is the responsibility of government inspectors who generally have fewer powers than police to detain suspects and search for evidence. Contrary to common belief, corporate crimes cause far more financial harm, and many more personal injuries (some leading to death) than do traditional crimes such as theft, robbery and assault.

The Combines Investigation Act (s36.37), renamed the Competition Act as of 19 June 1986, prohibits advertising special sales when prices have not been reduced, making false claims about what a product can accomplish, and selling used cars as new ones and a myriad of other acts. According to the federal Ministry of Consumer and Corporate Affairs, these are common crimes, and the ministry receives more complaints than it can investigate, so it chooses only the most serious and significant for prosecution. Compared to other Western countries, fines are low and enforcement infrequent. Many charges are laid annually under the false advertising provisions of the Act, but fines are small, usually less than $400 per charge. Excluding these sections, there have been 89 other prosecutions under the Combines Investigation Act from 1952 to 1975. Of these, 8 were acquitted and 2 were dismissed at a preliminary hearing. Twenty-two defendants (individuals and corporations) were served only with Order of Prohibition (a device whereby judges tell guilty parties not to repeat the offence) whereas 57 defendants were convicted and fined amounts ranging from $300 to $50 000 (averaging $7500 per case). Illegal combines can net the offending companies several million dollars per year in profits, so such fines are unlikely to be effective deterrents.

Other laws directed at corporate crime include the Food and Drugs Act (preventing the sale of contaminated food and drugs); Hazardous Products Act (preventing the sale of dangerous items); Weights and Measures Act (preventing dishonest scales); Environmental Protection Acts, both federal and provincial; laws to protect the investor against unscrupulous promoters and brokers; and laws to ensure that workers are not exploited, eg, by being forced to work 18-hour days in unventilated facilities. However, these laws are not always stringently enforced; in general, authorities use persuasion first, and criminal sanctions as a last resort; when cases do go to court, they take longer, are more likely to be appealed by the defendant and to lead to an acquittal or withdrawal by the Crown, and are less likely to lead to imprisonment than comparable Criminal Code cases; both judges and laymen are uncertain whether individuals and corporations convicted for acts against consumers, employees, rivals or the environment are truly criminals.

Laws against occupational crime do not include most kinds of computer crime, such as breaking computer codes and copying confidential records. However, the Copyright Act is at present being amended so that it will cover computer software.

Legal reform is needed to enforce laws against corporate crime. In 1986 the maximum fine for conspiracy offences was increased to $10 million (an important if symbolic step, since judges traditionally do not assess fines anywhere near the maximum allowable amount for corporate crimes); and banks and crown corporations engaging in commercial activities are now subject to the competition laws. Together with the 1976 amendments extending the laws to prohibit price fixing by professionals, setting heavier sanctions for misleading advertising and prohibiting deceptive selling practices, such as bait and switch and pyramid sales, the laws on competition have been thoroughly revised. It remains to be seen whether or not this will lessen its frequency or modify the harm corporate crime does. Attempts to strengthen environmental protection or minimum wage laws have frequently been defeated by corporate threats to close up shop, eliminating badly needed jobs; and the public, not realizing the damage caused by corporate crime, has been slow to demand reform.