Defining Multinational Corporate Crime Down

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What do multinational corporations like Energy Transfer Partners, Exxon Mobil, McDonald’s Corporation, PepsiCo, Monsanto, and a few dozen other global giants have in common?

Year-in-and-year-out, these companies   have appeared on the world’s “most wanted” lists of corporate criminals compiled by human rights activists.

They share something else as well.  These lists are rarely publicized, let alone discussed, by major U.S. media outlets. Are media conglomerates contributing to a whitewashing of corporations’ criminal behavior by failing to probe their questionable activities in any systematic way?

The same question can be addressed to scholars as well.  Domestic and multinational corporate crime (MCC) accounts for no more than three percent of the total studies of U.S. criminal activity, including “street” or index crimes.

Given the devastating impact of MCC, this dearth of scholarship helps to keep these crimes invisible while they all but stare us in the face.

For example, a December 6, 2016 cover story in the Sunday Business section of The New York Times highlighted how global bankers who flout their own policies and pledges to save the rain forests are financing projects to the tune of hundreds of billions of dollars in multinational corporate loans.  Such loans displace indigenous communities, facilitate deforestation, destroy ecosystems, and contribute to climate change.

The persistence  of these crimes, along with others  that involve  multinational corporate complicity in international crimes or in violations of human rights, in the provision of unlivable working conditions, in the looting of the commons, or in the destruction of the environment,  represents the proverbial tip of the multinational corporate wave of criminality.

Why have they been largely ignored?  In 1993, the late sociologist and Democratic Senator Daniel Moynihan introduced the concept of “defining deviancy down,” referring to the ways in which the United States framed particular legal violations out of existence.[1] At the time, this phrase, along with the rising popularity of “zero tolerance” policies, conjured up earlier sociopolitical expressions like “permissive society,” “soft on crime,” and “moral decay.”

These terms implied threats to social disorder and reinforced a political and economic agenda based on the restoration of “law and order.” Since the turn of the 21st century, however, the primary benefactors of defining deviancy down have been the criminally unpunished multinational corporate offenders, who pose a far greater threat to our global well-being and sustainability than those other offenders whose felonious violations have typically been defined upward.

How does this political economy of crime and crime control work?

First, there are countless ways in which those crimes of multinational corporations are part and parcel of, and not at odds with, preserving law and order in both developing capitalist states and the global political economy.

In recurring instances of multinational corporate crime involving such activities as the rigging of interbank interest rates, the avoidance of taxes, the super-exploitation of laborers, or the pollution of land, air, and water, the accumulated, expanded and reproduced capital or profits routinely outweigh any actual concern for real harm or threats to the economy, polity, climate change, and so on.

The failure to expose these crimes and criminals, and the relative absence of felony penalties is reinforced by the state’s political-legal interpretation where differential definitions of crime are beneficial to the interests of corporate offenders and detrimental to interests of non-corporate offenders.

That in turn reinforces a misplaced emphasis on the latter rather than the former crimes.

At the end of the day, these applications of  mixed definitions of harms and sanctions in routine life—the “law in action” as well as the “law in inaction”—decide what are crimes, regardless of what the law on the books may claim.

Finally, because the criminal pursuits of multinational corporate violators are the rare exceptions to the regular rules of noncriminal enforcements, and because over time defining multinational corporate criminality downward appears as a relative constant, I am not using the concept of defining MCC down as a rationale for increased criminal punishment.

Similarly, in their aggregate, the control or investigation of these criminals as well as the struggle to prevent multinational corporate harms and injuries do not necessarily conform to the approach of those who advocate for better enforcement of existing laws or new tougher criminal sanctions as the panaceas for reducing multinational corporate victimizations.

For example, subject to interpretation and implementation, the U.S. Congress enacted in 2016 the Global Magnitsky Human Rights Accountability Act (S.284), providing the executive branch of government with the authority to sanction corporate offenders without the burden of having to administer, enforce, and adjudicate the domestic or international criminal law.

Most importantly, there are alternative social measures to criminal sanctions. These include:  exempting securities trading, insurance operations, and real estate transactions from the Federal Deposit Insurance Corporation; establishing independent auditing and rating systems of multinational corporations; and breaking up and/or turning too-big-to-fail banks into public utilities.

Each of these alternatives may be more effective than the criminal law in thwarting the abuses and harms of multinational corporate crime.[2] They could be applied, for example, to pending litigations against banking behemoths who were engaged in trading collateralized mortgage obligation securities, which precipitated the Wall Street financial crisis of 2008 and the global recession that still persists.[3]

Since the victory of Donald Trump, U.S. prosecutors and European banks such as Deutsche Bank and Credit Suisse have been eager to settle outstanding toxic mortgage securities fraud lawsuits before the new president takes office. In anticipation of a more sympathetic Trump Administration, deals were cut at the end of 2016 where these two banks paid a combined $13 billion in fines for violations related to actions that allegedly precipitated the financial crisis.  That amounted to approximately half the figure these legal parties had been counting on to avoid prosecution.

Apparently, the Feds considered half a loaf better than no loaf at all.

Meanwhile, Barclays, the British banking giant, has decided to take its chances under the administration of Mr. Trump, and has refused to settle its securities fraud case with the U.S. Department of Justice (DOJ).[4]   The DOJ is still investigating two other big European banks—Royal Bank of Scotland and UBS—but so far neither Mr. Trump nor his aides have indicated how they might process legacy financial-crisis fallout, post-Obama.

Gregg Barak

Gregg Barak

 Gregg Barak is a 2017 Fulbright Scholar to Porto Alegre, Brazil and Professor of Criminology and Criminal Justice at Eastern Michigan University. He is the author of several books on crime and justice and the recipient of the National White Collar Crime Center’s Outstanding Publication Award for his 2012 book, Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding. His latest book, Unchecked Corporate Power: Why the Crimes of Multinational Corporations are Routinized Away and What We Can Do About It, will be published in London and New York on March 3  by Taylor & Francis Group. He welcomes readers’ comments.


[1] Moynihan, Daniel. 1993. “Defining Deviance Down.” The American Scholar 62 (1): 17-30

[2] Barak, 2017. Unchecked Corporate Power: Why the Crimes of Multinational Corporations are Routinized Away and What We Can Do About It. New York: Routledge.

[3] Barak, Gregg. 2012. Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding. Lanham, MD: Rowman & Littlefield

[4] Thomas, Landon and Ewing, Jack. “Flurry of Settlements Over Toxic Mortgages May Save Banks Billions.” The New York Times.





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