Company offenders, can we control them? : a look at the Commercial Affairs Division : a thesis presented in partial fulfilment of the requirements for the degree of Master of Business Studies in Accounting and Finance at Massey University

In July 1984, the Securities Commission published their Report which reviewed the effectiveness of the resources that were available for corporate fraud investigations. The Government's response to the public's concern regarding corporate crime was to allocate additional resources to the Commercial Affairs Division of the Department of Justice, and confirm that the investigation, detection and prosecution of criminal offences by companies should continue to be "the shared responsibility" of the Police, and the Commercial Affairs Division. The injection of the additional resources to combat corporate crime is in danger of being viewed as a "political sop" by the public, if these resources are not effectively deployed. This study attempts to address this question by reviewing the structure and operational capability of the Commercial Affairs Division, with particular regard to its effectiveness to provide measures to monitor and regulate company offenders. A secondary aim was to ascertain what the concept of shared responsibility means to the investigative officers, and how it operates in practice. It was also envisaged that the study could establish a base for further research by providing the mechanism for a "before" and "after" comparison. A detailed descriptive analysis of the role, function, structure and legal authority of the Commercial Affairs Division was undertaken. Two questionnaires were developed. The first was directed at the investigative officers to provide information on the operational capability of the Division to combat corporate crime. The second questionnaire was directed at the controlling officer of each of the district offices to ascertain the effectiveness of the Division in terms of the number of complaints, follow-up investigations, and prosecutions. The concept of shared responsibility was dealt with by a three-pronged approach. The originators of the term were interviewed to establish what they meant by this concept and how it "should" operate. The official head of the Commercial Affairs Division was then interviewed in respect of how the concept was "thought" to operate, and finally the investigative officers themselves were surveyed as part of the questionnaire, to find out how it "did" operate. The results of the questionnaire survey revealed that the operating capability of the. investigative officers was seriously inhibited by internal problems such as lack of staff, lack of training, and a lack of resources generally. As a result of the magnitude of these inhibiting factors it was difficult to establish a clear cut finding beyond this. As you would expect, the above problems also seriously undermined the effectiveness of the Division in terms of completed investigations and prosecutions. The study found that the perceptions held by the originator's and the official head, on how the concept of shared responsibility should operate bears very little resemblance to reality. It was concluded that at the present time the Commercial Affairs Division has serious internal problems that were hindering the effective monitoring and regulating of company offenders

Is the White Collar Offender Privileged?

Much public commentary has asserted or implied that the American criminal-justice system unjustly privileges individuals who commit crimes in corporations and financial markets. This Article demonstrates that this claim is not accurate—at least not in the ways commonly believed. Law and practice of sentencing, evidence, and criminal procedure cannot persuasively be described as privileging the white collar offender. Substantive criminal law makes charges in white collar cases easier to bring and harder to defend against than in other cases. Enforcement institutions, and the political economy in which they exist, include features that both shelter corporate offenders and heighten their exposure to criminal liability. Corporate actors enjoy a large advantage in legal-defense resources relative to others. That advantage, however, does not pay off quite as one might expect. A fully developed claim of privilege can be sustained only by showing that basic American arrangements of criminal law and policing have been misguided. This argument would fault the justice system for failing to treat illegal behavior within firms as requiring omnipresent policing, looser definitions of criminality, the harshest of punishments, and rethinking of the right to counsel. Those who believe corporate offenders are privileged should confront the difficulties that argument entails. And they should be aware of the complications that follow from overreliance on punishment to deal with intractable problems of ex ante regulatory control

The Attorney-Client Privilege Protection Act: The Prospect of Congressional Intervention into the Department of Justice\u27s Corporate Charging Policy

This Note analyzes the Privilege Protection Act, focusing on how it might change corporate white-collar prosecutions. Part I of this Note explores the mechanics of the corporate privilege, the development of the DOJ\u27s waiver policy, and the structure of the Privilege Protection Act. Part II addresses the conflicting views on whether the Privilege Protection Act will bolster corporate attorney-client privilege, provide for the effective and efficient prosecution of white-collar crime, and promote ethical prosecutorial practices. Finally, Part III argues that the Privilege Protection Act is a misguided attempt to correct a greater systemic problem with the corporate attorney-client privilege and the nature of corporate cooperation. If Congress is to act, it should recognize the essential role privilege waiver plays in prosecuting white-collar crime, and should move to limit the deleterious ramifications to corporations of routine privilege waivers. Thus, the doctrine of selective waiver would be a preferable remedy: it would protect the confidentiality of privileged documents that the corporation discloses to the government, and would provide an effective means to balance the corporation\u27s interest in cooperating with the government and avoiding unwarranted civil liability

“White Collar” Crimes

In addition to serving as a précis of the subject of ‘white collar’ crime, this chapter does three things. First, it deals with white collar crime’s longstanding definitional problem, rejecting several standard approaches and arguing that the category is most usefully understood according to the conceptual legal problem these offenses generate. White collar crimes, much more than other offenses, are committed in social settings in which undesirable behaviors are embedded within socially welcome conduct. Thus they are difficult to set apart and extract through clearly specified ex ante rules of law. Second, the chapter illustrates this definitional claim, and discusses its limitations, through a brief description of this field’s large and highly active enforcement landscape, primarily in the United States. Third, the chapter relates the definitional claim to persistent public debate about white collar crime and explains why equilibrium in that discussion is not likely given ambivalence toward the criminal justice system’s treatment of socially advantaged persons

Criminal Procedure Within the Firm

It seems improbable that the theoretical and doctrinal framework of criminal procedure, developed mostly through a binary model of the individual and the state, would fit without modification in the tripartite model of the state, the firm, and the individual that characterizes the investigation and sanctioning of criminal conduct within legal entities. This intuition—which has been underexplored in spite of heated public debate about the state’s practices in this area—proves correct. I develop some components of a framework for understanding procedure for individual cases of criminal wrongdoing within firms and generating insights to guide reform. The process of pursuing individual cases within firms (as opposed to firm cases against firms) is distinctive for at least three reasons: in terms of causation and incentives, the presence of an organization materially alters the incidence of individual misconduct ex ante and the efficiency and efficacy of investigating and prosecuting that conduct ex post; the nature of the applicable substantive criminal violations (white collar crimes) causes such cases to ripen into criminal cases more slowly than those outside business firms; and lawyers have multiple roles in such cases not only ex post but also ex ante. I evaluate two current practices in light of these structural differences: state use of the fruits of employer coercion of employees’ waivers of the right to silence; and state negotiation with firms over the scope of firms’ indemnification of their agents for litigation costs. I conclude that some reforms of current practices in these areas would be beneficial but that calls for abolition of those practices are misguided

Unregulated Corporate Internal Investigations: Achieving Fairness for Corporate Constituents

This article focuses on the relationship between corporations and their employee constituents in the context of corporate internal investigations, an unregulated multi-million dollar business. The classic approach provided in the 1981 Supreme Court opinion, Upjohn v. United States, is contrasted with the reality of modern-day internal investigations that may exploit individuals to achieve a corporate benefit with the government. Attorney-client privilege becomes an issue as corporate constituents perceive that corporate counsel is representing their interests, when in fact these internal investigators are obtaining information for the corporation to barter with the government. Legal precedent and ethics rules provide little relief to these corporate employees. This Article suggests that courts need to move beyond the Upjohn decision and recognize this new landscape. It advocates for corporate fair dealing and provides a multi-faceted approach to achieve this aim. Ultimately this Article considers how best to level the playing field between corporations and their employees in matters related to the corporate internal investigation

Corporate Confessions

In corporate crime investigations, when prosecutors pursue charges against both employees and corporations, confessions raise several novel questions without clear answers in constitutional criminal procedure. First, corporations confess. The firm, a target of a criminal investigation, may itself admit to crimes by employees as part of a settlement agreement with prosecutors. While useful to study in their impact and form, as a constitutional matter such confessions can not be coerced, the Supreme Court has adopted a collective entity rule that corporate persons may not invoke Fifth Amendment privilege. Second,before itself confessing, the firm may encourage employees to provide statements to law enforcement, placing some in the precarious position of deciding whether to speak and inculpate themselves or invoke Fifth Amendment privilege and be disciplined or fired. The question then arises whether the Fifth Amendment protects such employees. This Article develops how the Fifth Amendment, as interpreted by the Supreme Court in its line of penalty cases, offers scant protection absent substantial formal cooperation between prosecutors and the employer. Instead, cooperation with internal investigators and law enforcement will be structured by employment contracts and a firm\u27s interest in avoiding conflicts of interest and formation of unintended attorney-client relationships between employees and corporate counsel. Thus, not only may the corporation confess, but the environment in which employee confessions occur is largely defined by interests of the corporation

Reasons for Gaps in Crime Reporting: The Case of White-Collar Criminals Investigated by Private Fraud Examiners in Norway

A private investigation is an examination of facts, sequence of events, causes for deviance, and responsibilities for negative incidents. Recent years have seen an increasing use of private internal investigations in terms of the assessment of financial irregularities. The form of inquiry aims to uncover vulnerabilities to unrestricted opportunities, failing internal controls, abuse of position, and any financial misconduct such as corruption, fraud, embezzlement, theft, manipulation, tax evasion and other forms of economic crime. When fraud examiners discover evidence of white-collar crime, they almost always leave it to their clients to decide whether or not to report crime to the police. We examine the gaps in white-collar crime reporting after fraud examination and reasons behind such decisions. In Norway, these gaps could be as high as 96% percent, as calculated in this article. Reasons for non-reporting include concerns over law enforcement interference with business and consequences of law enforcement, lack of trust in the police, and different perceptions of the seriousness of crime. We apply the theoretical approach pioneered by Sykes and Matza (1957) and demonstrate how techniques of neutralization apply to private fraud examiners’ reasoning for non-reporting of suspected or detected white-collar crime. We also offer some possible policy-based solutions to reduce the identified gaps in reporting