Habitual Criminals in High Places


Randall G. Shelden


Most of us are aware of the “golden rule” of “do unto others” that we learned in childhood.  There’s another variation, not usually taught to children, but a rule that even children, in their natural inquisitiveness, would easily grasp: “those who have the gold make the rules.”  A corollary to this is that those who have the gold can break the rules without much punishment.

            In this context, having the “gold” means having power and resources. What is “power”? Michael Parenti gives as good a definition as any.  By “power” he means “the ability to get what one wants, either by having one=s interests prevail in conflicts with others or by preventing others from raising their demands.  Power presumes the ability to manipulate the social environment to one=s advantage.  Power belongs to those who possess the resources that enable them to shape the political agenda and control the actions and beliefs of others, resources such as jobs, organization, technology, publicity, media, social legitimacy, expertise, essential goods and services, organized force, and - the ingredient that often determines the availability of these things – money” (Democracy for the Few, 7th ed.).

            Power can be achieved either by force or by being able to get someone “to think and believe in accordance with your interests,” the latter of which is more long-lasting. Those who have this power are able to influence legislation to their own advantage and/or the disadvantage of others.  Another example of power, as indicated in the above definition, is that certain individuals with “pull” can avoid detection of criminal acts (or prevent acts from being defined as “criminal”) or, if caught, can avoid or at least minimize punishment.

An inmate at a women’s prison once said that “money talks, bullshit walks.”  This statement illustrates a strong feeling among many inmates (and non-inmates too) that if you have money and power you may never go to prison no matter what kind of offense you commit.

In his book appropriately titled The Rich Get Richer and the Poor Get Prison, Jeffery Reiman argues that “the criminal justice system effectively weeds out the well-to-do, so that at the end of the road in prison, the vast majority of those we find there come from the lower classes.” He further asserts that this “weeding out” process “starts before the agents of law enforcement go into action... our very definition of crime excludes a wide variety of actions at least as dangerous as those included and often worse... Even before we mobilize our troops in the war on crime, we have already guaranteed that large numbers of upper-class individuals will never come within their sights...At each step, from arresting to sentencing, the likeli­hood of being ignored or released or lightly treated by the system is greater the better off one is economically.”

There is a conventional view of “crime” that is portrayed on television and in movies.  For the most part, the typical crime is a murder (this, along with sex, seems to sell the most, especially when they go hand in hand for the same case), followed closely by gang violence, drug dealing (illegal drug dealing that is, not the drug dealing done by giant corporations like tobacco and prescription drug companies), street muggings and the like.  Of course, the face put on such crimes is almost always black or brown and poor.

The costs of these “normal crimes” come to around $18 billion, according to estimates from the Bureau of Justice Statistics (for the crimes of rape, robbery, assault, theft, burglary and motor vehicle theft).  If we include homicide, drunk driving, and child abuse the losses rise to around $105 billion (this includes productivity losses and medical expenses).  Long-term losses from these crimes come to an estimated $450 billion yearly. As for corporate and white collar crime, the losses are much higher.  From several different sources, the estimated costs come to more than $1.5 trillion per year, which only includes monetary losses.  Not counted in such estimates are the pain and suffering that arise when someone sees their life savings disappear, as was the case for Enron and related crimes.  Also not included is the estimated 100,000 or more deaths attributed to corporate crimes, plus the associated pain and suffering.  It would probably be safe to add at least another $500 billion yearly.

Headline stories in recent months illustrate the extent of damage wrought by those with the most power in society. The most recent example was the conviction of former Tyco CEO Dennis Kozlowski who, along with one of his subordinates, was convicted of milking more than $600 million from their company.  Other recent examples include Adelphia founder John Rigas and his con, who were convicted last year on federal charges of bank and securities fraud. In an unusual move, they were sentenced to prison for 20 and 15 years respectively.  Former Health South Corporation CEO Richard Scrushy was just acquitted by a jury after being tried on 36 counts of conspiracy, false reporting, fraud and money laundering while engaging in earnings overstatements of around $2.7 billion.  The Securities and Exchange Commission has sued Qwest Communications CEO Joseph Nacchio and six former executives of fraud on investors.  Then there’s WorldCom CEO Bernard Ebbers, who was convicted earlier this year of accounting fraud amounting to around $11 billion.  Other recent cases include Krispy Kreme (hiding evidence of decreasing sales and profits), Bristol-Myers Squibb (fraudulent manipulation of sales and income – they agreed to pay a $300 million fine).  Finally, there’s Enron, who’s CEO Jeffrey Skilling and chief accounting officer Richard Causey are scheduled to go on trial in January, 2006 for billions of dollars of fraudulent activities, costing thousands of jobs and financial ruin for thousands of investors.

These cases are merely the proverbial “tip of the iceberg” since such fraud has been perpetrated on American taxpayers and consumers for more than a century.  An excellent discussion of corporate criminality is provided in Joel Bakan’s book The Corporation (also a documentary on DVD).  In one part of the book he asked an expert on psychopathic behavior to apply the normal diagnostic checklist of traits associated with these individuals.  All of the traits fit corporations perfectly.  These traits include irresponsibility, grandiosity, lack of empathy, asocial tendencies, refusal to accept responsibility for their own actions, unable to feel remorse, relating to others in a superficial manner.  However, largely because of continuous corporate propaganda (they call it “public relations”) such behavioral traits are used almost solely to describe ordinary criminals.

Returning to the issue of power, we can summarize the importance of this in these words: The imposition of a negative label (criminal, etc.) is an exercise in power.  Those with the most power are best able to resist such labeling, while those with the least are most susceptible to being so labeled.  Corporations have the power to resist such labeling.  Notice that even though the courts have interpreted corporations as “persons” (starting with a case back in the late 1800s); no corporation ever goes to prison or gets what would amount to the “death penalty.”  Only their representatives get charged with crimes – even this is unusual.

To give the reader an idea about corporate criminality and its habitual nature take a close look at General Electric. In a recent text called Class, Race, Gender, and Crime, criminologists Gregg Barak, Jeanne Flavin and Paul Leighton compared the case of William Rummel who was labeled as a “habitual criminal” to the habitual criminality of General Electric. (A complete summary of GE’s criminality is presented in Bakan’s book.) Rummel was first convicted in 1964 of fraud by using a credit card to purchase $80 worth of goods; he was sentenced to prison for three years; five years later he was sentenced to four years in prison for passing a forged check worth $28.36; his third felony was in 1973 when he was convicted of obtaining about $120 for accepting payment to fix an air conditioner that he never returned to repair.  For this third felony he received a mandatory life sentence under Texas’ habitual offender law. 

General Electric, in contrast, has a record of fraud dating back to the 1950s, starting with price-fixing in the heavy electrical equipment scandal bilking consumers of billions of dollars (they were fined $437,000, which was tax deductible).  In the 1970s they were convicted of making illegal campaign contributions to Richard Nixon, plus discrimination against women and minorities (a $32 million settlement was the result). In the 1980s they were back in court again for making a $1.25 million bribe to a Puerto Rican officials to obtain a power plant, which was followed by a guilty plea to 108 counts of felony fraud involving defense contracts; they paid a $3.5 million fine to settle cases brought by four whistleblowers; they came a 317 count indictment for fraud in a $21 million computer contract.  During the 1990s GE’s reign of crime continued with a fraud case involving $254 million.  Throughout the 1980s, by the way, GE got all sorts of tax breaks (paid no taxes in 1981 and 1983), and even received a tax rebate of $283 million while they eliminated 50,000 jobs by closing 73 plants.  

This is just one company, for as several studies have documented, virtually every one of the top 100 US corporations has been involved in such crimes habitually during the past 50 or more years.  Meanwhile, more than 2 million citizens are behind bars, with the majority having been convicted of crimes no more serious than those committed by William Rummel.  The sentences handed down to some of the above-mentioned corporate criminals are the exception rather than the rule.