The Cost of White Collar Crime

Many experts have come to the conclusion that the impact of white collar crime on the economy is much more costly than any other ordinary crime. It has been emphasized by sociologists that this type of crimes are particularly harmful to the society because they are committed by persons with high hierarchy, who were supposed to set a moral example and have a responsible behavior. Through white collar crime many employees can be endangered by unsafe working conditions. Many other problems such as injuries on customers by dangerous products and pollution can be caused by white collar crimes.

Following a conventional viewpoint, created by many Governmental reports and professional articles, the public does not look at white collar crime that serious.

On the other hand, most perceived crime researches, have suggested that white collar crimes are ranked as very serious violations especially when it comes to activities which end up with an injury or even death of individuals. Points of view differ depending of the philosophy that each person relates to.

Despite all the researches on this subjects, the damage to social morals and structures that has been caused by white collar crimes has not been examined yet. Morality and Law can be found in all spheres of our society. They co-exist and often work together to ensure that everyone in our society act in a certain matter and protect the welfare, safety and health of the public. Even though ethical principles are often embodied by the law, ethics and law are not co-extensive.

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Laws are created and applied by Governments, based on society’s morals, to protect and mediate the relationships between its citizens.

Essentially, regulations necessitate behaviors that citizens are expected to follow, while ethics what people ought to follow and help them find options to improve their decision selections. Regulations exist to serve and protect us, humans, the environment, animals and our planet in general. They provide us a better way of living and co-existing with each other. Laws are usually build around our general Moral Ethics and sense of Justice. However, law, is not always the same as morality. Many moral rules are not “parallel” with human legal authorities. So this gives birth to the question “What is the point of having a system of regulations if people can simply decide arbitrarily that some are justified and some are obsolete?”

Regulations, most of the times, are created to regulate activities that are publicly observed making law enforcement an easy task. Usually, laws, follow the philosophy of Justice, meaning that they treat with an ethically fair way each person. But it is a very different situation when it comes to breaking moral principles. Those breaches usually involve acts that do not break any regulation but are unethical and might include acts that are sometimes impossible to observe without invading someone’s privacy.

To address this problem, have turned to God in order to punish those who do not break the law but act in an unethical behavior even after death. Following this, in order to control an immoral but lawful behavior, people are often teaching their children from a young age the suffering that immoral and bad people get even in the afterlife. They call it Karma, Divine punishment or the wrath of the God/s. According to the Greek historian, Polybius (200 – 118 BC), who compared ancient Greek and Roman culture and beliefs, Romans, that used to follow the measures mentioned above, were less inclined to theft and other crimes because they feared the wrath of their gods. For reasons such as this one, the Roman Statesman, Marcus Tullius Cicero (106 – 43 BC), acknowledged the Roman religion as practical and useful, even though we was holding it to be false. Unfortunately for those people, the enforcement of this authority is not as apparent as the enforcement of human legal authorities.

So in order for people to obey the law and at the same time keep an ethical behavior, we have to put our hopes in each and every human’s philosophical way of thinking. Moral decisions come from a person’s ethical sense and desire to maintain self-respect. Regulations are modifications of moral values that aim to create a law-respectful society. When someone decides to drive carefully because he/she does not want to hurt someone, he/she is making a decision based on ethics. When that same person decides to drive by the speed limit because he/she is afraid to take a ticket, this person acts by the fear that he/she is going to get punished.

The line between Law and Ethics is not always that clear. Many actions that could be characterized as unethical do not break any regulations. Such examples are lying or betraying the trust of someone close to you. On the other hand, sanctions for breaking the law can be cruel and sometimes even cross the line of ethical standards. Let us take as an example death penalty. According to ethics it is wrong to kill another person, but in some situations, regulations punish the lawbreaker with death.

According to the sayings of the Swiss philosopher, Jean-Jacques Rousseau (1712 – 2 1778), at the beginning, people lived simple and uncomplicated life and covered their needs with the gifts of nature. Due to the abundance of nature and the small size of the scattered population, there was not any competition between people thus there was no need for law enforcement and punishment. However, as time passed, and population started to increase drastically, people began to create communities. People started to interact much more with each other and created divisions of labor even between families. Problems started to rise as interaction between them became more and more competitive. That was the moment that private property was invented.

According to Rousseau, those who had property in their possession needed a way to protect their belongings from others who did not have any. Facing this problem, governments introduced laws and ethics was established as a type of social contract. Governments are looking for ways to persuade companies to report an illegal activity. A favored law enforcement tool, is to encourage companies in disclosing corporate violations or frauds voluntarily. Reports have shown that governmental authorities are willing to exercise prosecutorial discretion in favor of companies that comply with voluntary disclosure programmes and advise the current Government of their own wrongdoing. Those programmes are covering the health care, defense, environmental and antitrust areas and appear to be beneficial for both the Government and the disclosing company.

Voluntary disclosure provides a tempting incentive, to most of the companies that discover a potential crime or violation. This incentive is the possibility of avoiding a criminal prosecution. White collar crimes are committed by individuals and not legal entities. Those individuals, in most of the situations, are people with power facing their choices using teleological philosophy acting egoistically, defying the consequences that affect their employees and even an entire society. In order to disclose voluntarily and comply with the demands of the current Government, those individuals have to change their thinking and philosophy.

Voluntary Disclosure might be good in an ethical perspective, considering that legal justice must be served, but is it good for the body corporate? Companies that comply with those programmes, face collateral damages that range from a huge impact on employee productivity to virtually certain civil liability. Voluntary Disclosures entail both benefits and risks for the company. As mentioned above, the main benefit that voluntary disclosure programmes have to offer is the avoidance of criminal prosecution. But even when this goal is not achieved, those disclosures may result in other significant benefits to the disclosing company.

Beginning with the first benefit, even companies that are at the stage of criminal prosecution, can derive some benefits in sentencing by having disclosed voluntarily their violations. Defendants that voluntarily disclosure, and accept full responsibility of their actions and cooperate with the current Government tend to receive a reduction on the applicable fine upon conviction. Individuals that comply effectively with the programme, may also receive reductions in their culpability. Secondly, by voluntary disclosure companies might result in measurable monetary benefits.

Time has shown that if corporations provide investigators all the available information that they have considering the violation, they avoid doubling or even tripling their financial damage. Most of the voluntary disclosure cases end up with negotiations between the disclosing corporation and the Civil Division rather than going to a trial. One of the most significant benefits for disclosing companies is the fact that by cooperating with the current Government they avoid being suspended or banned. As mentioned above, white collar crimes are committed by individuals and not by legal entities. Looking at this subject from the perspective of Social Responsibility and Business Ethics, Governments understand that the employees of a company should not be punished for the mistakes of those individuals especially when a violation is disclosed and not found.

Significant risks also come with the decision of making a voluntary disclosure. Prosecutors investigate extensively whether the conditions of the company’s cooperation have been met. If prosecutors witness any refusal on the demands of the investigators verifying a disclosure, they can accuse the company with charges such as cooperation failure thus eliminating the possibility of a decreased prosecution. But it has been observed that even in circumstances that criminal prosecution is avoided, Government attorneys question the cooperation of the disclosing corporation.

In continuance, any company that considers to disclose voluntarily must take into consideration the full extension of the collateral civil consequences. History has shown that disclosures of health care, environmental and antitrust criminal violations usually result in civil penalties even in situations where prosecution is avoided. However this provision does not apply in every situation. By disclosing voluntarily companies are facing the danger of getting exposed by putative plaintiffs to a variety of civil actions. For example, employees that have contributed in the wrongdoing of a company and get disciplined or even fired tend to sue for defamation or wrongful dismissal. In addition to that, voluntary disclosures, almost eliminate the discloser’s ability to claim certain privileges relative to third parties.

Finally, voluntary disclosure may cause conflicts between a company’s shareholders and its officers and directors. Shareholders of disclosing companies usually seek legal protection on behalf of the company, accusing the directors and officers of being responsible for breaking the company’s Ethical Governance and the violations of the law. Voluntary disclosure can be seen as the right thing to do in most of the cases. By disclosing, individuals take full responsibility of their actions keeping safe their employees. This way those individuals act by thinking through utilitarianism, taking into consideration the greatest good for the greatest number of people. The actual wrongdoers are not the only ones that can report an illegal activity. Employees can also report those activities in order to avoid any great damage that is going to come to the company, its employees and even the entire society. This is also a utilitarianism way of thinking. But is it ethical to report the wrongdoings of someone else? Opinions differ for each and every person as every one of us have our own sense of moral ethics.

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The Cost of White Collar Crime. (2022, Feb 08). Retrieved from

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