Executives are charged with criminal offenses, politicians rush to propose new legislation, and the country tends to forget the root causes of corruption, and the public policies that make such corruption possible, until new cases inevitably emerge.
To be sure, new cases emerge rather frequently. No sooner do the Enron executives of the world enter the appeals process than new indictments are being readied for the latest round of corporate scofflaws. Just two days ago, for instance, it was reported that one of America’s foremost corporations, the chip maker Intel, is being investigated for unethical pricing methods in an effort to eliminate competition and to thereby sustain its share value (Landed, 2008: 27). Another major American multinational corporation, General Electric, is being forced to defend allegations of tax fraud by its subsidiaries in Latin America (Johnston, 2008: 27). The clear implications are threefold: (1) corporate corruption seems a systemic feature of the American capitalistic system; (2) heavily publicized efforts to create legislation and programs to prevent or minimize cases of corporate corruption seem riddled with flaws and loopholes; and, (3) the people whom suffer the most are the majority of the American public.
In order to provide a clearer picture of the problems associated with corporate corruption, I would like to discuss the fundamental causes of corporate corruption, the types and consequences of corporate corruption, some illustrative cases, and some of the proposed remedies.
Causes of Corporate Corruption
As a preliminary matter, it is essential to note that corporate corruption is not a single, precise type of abuse; quite the contrary, cases of corporate corruption take many forms and manifest themselves in the abuse of different types of public trust and the violation of different types of legislative frameworks. There are, for instance, cases of corporate corruption which result from fraudulent or misleading accounting practices, from the improper use of inside or proprietary information in violation of relevant securities laws, from the use of offshore entities and jurisdictions in order to evade taxation and thus inflate balance sheets and share values, and fraudulent or misleading representations about products in development or research data. In short, the notion of corporate corruption must be viewed as an umbrella designation within which many different types of abuse may and do occur.
What causes these different types of corporate corruption If policy makers are to design and implement effective types of protective legislation then it is imperative to understand the root causes or the motivations which lead those in charge of corporations to engage in abusive and corrupt practices.
In a commentary delivered by a leading scholar to the Financial Times, it was stated thusly:
What led American executives to think they could get away with hiding billions of dollars in corporate losses or invent staggering amounts of non-existent revenues Greed, arrogance, dishonesty and other human frailties are obvious answers. But they are not the most interesting. After all, hubris and corruption among the powerful are as old as the Bible. The 1990s excesses are another popular explanation. The economic bonanza and the ease with which new capital was raised even for the most unjustified ventures contributed to the recent wave of corporate frauds, as did the extravagant compensation schemes that became fashionable (Naim, 2002: n.p.)
Such assertions, that greed causes corporate corruption for example, are misleading. They are misleading because greed is simply a generally category of human behavior; the truest causes are those which inspire the greed