Vast Majority of Corporate Crimes Not Prosecuted and Not Punished

The vast majority of corporate crime is not referred for prosecution.

The vast majority of corporations referred for prosecution are not punished.

And substantially all punished corporations are sanctioned in ways that raise fundamental questions.

That’s the somber assessment of over forty years of corporate crime in a paper titled – Prosecution and Punishment of Corporate Criminality by Mihailis E. Diamantis of the University of Iowa College of Law and William S. Laufer of the University of Pennsylvania, Wharton School.

“Corporate prosecutions and convictions are rare events under state and federal criminal law,” Diamantis and Laufer write. “This is reflected in the ‘dark figure’ of corporate crime or the difference between estimates of wrongdoing in corporations and official data. From millions of corporations and millions of reports of wrongdoing come a very modest number of referrals of corporations for prosecution and, ultimately, very few convictions. Lack of access to federal and state corporate crime data, admittedly, frustrates efforts to offer more precise estimates of the dark figure.”

“To compound gaps in our understanding of corporate victimization and the extent of the government’s response to corporate wrongdoing, there is no empirical or theoretical subfield of corporate victimology. The study of corporate victimology would likely reveal unrecognized or under-recognized layers of victimization across a wide spectrum of stakeholders – reset our perception of corporate culpability in relation to possible prosecutions, and correct the misperception that corporate wrongs are somehow less-than-serious wrongs.”

“In the absence of a corporate victimology, there is a far greater likelihood that criminal justice priorities, resources, and expenditures will be mismeasured. More important, the exercise of prosecutorial and sentencing discretion may be affected by what is not known about the harm coming from the corporate wrong.”

But it’s not all doom and gloom.

“The present shortcomings and challenges with the prosecution and punishment of corporate criminality – from the ‘compliance game’ to ignorance about what effective compliance looks like – are not baked into the logic of this corner of criminal law,” Diamantis and Laufer write. “Games between and among stakeholders may be addressed. Effective compliance is possible. And the other problems may have remedies lurking just beyond reach.”

“We may not be able to see the path that leads beyond the present roadblocks because our paradigms for thinking have become stale. We tend to address and readdress the same familiar problems using variations on some very familiar themes. The law’s central understanding of what effective compliance means still comes from the highly generalized definition in the Organizational Sentencing Guidelines, now over a quarter century old. The dominant frameworks for evaluating corporate criminal policy are the ancient purposes of retribution and deterrence.”

“New technologies and fresh perspectives are in sight and hold the promise of challenging well-worn dialectics. Big data and artificial intelligence are powerful tools that could transform not only how compliance works, but what it means.”

“Enthusiasm in individual criminal justice for constructive approaches to punishment—from character theory to restorative justice – could offer creative new approaches for addressing corporate misconduct. Even if these and related developments do not hold all the answers, they should infuse the continued debate over corporate prosecution and punishment with some inspiration.”

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