Understanding White-Collar Crime A Convenience Perspective Understanding White-Collar Crime A Convenience Perspective Petter Gottschalk Boca Raton London New York CRC Press is an imprint of the Taylor & Francis Group, an informa business CRC Press Taylor & Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487-2742 © 2017 by Taylor & Francis Group, LLC CRC Press is an imprint of Taylor & Francis Group, an Informa business No claim to original U.S. Government works Printed on acid-free paper Version Date: 20160512 International Standard Book Number-13: 978-1-4987-6887-0 (Hardback) This book contains information obtained from authentic and highly regarded sources. Reasonable efforts have been made to publish reliable data and information, but the author and publisher cannot assume responsibility for the validity of all materials or the consequences of their use. 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CCC is a not-for-profit organization that provides licenses and registration for a variety of users. For organizations that have been granted a photocopy license by the CCC, a separate system of payment has been arranged. Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging‑in‑Publication Data Names: Gottschalk, Petter, 1950- author. Title: Understanding white-collar crime : a convenience perspective / Petter Gottschalk. Description: Boca Raton, FL : CRC Press, 2017. | Includes bibliographical references and index. Identifiers: LCCN 2016013703 | ISBN 9781498768870 (alk. paper) Subjects: LCSH: White collar crimes. | Commercial crimes. | Crime--Sociological aspects. | Criminology. Classification: LCC HV6768 .G6876 2017 | DDC 364.16/8--dc23 LC record available at https://lccn.loc.gov/2016013703 Visit the Taylor & Francis Web site at http://www.taylorandfrancis.com and the CRC Press Web site at http://www.crcpress.com Contents Author .................................................................................................................ix Introduction .......................................................................................................xi Chapter 1 Convenience theory of white-collar crime ............................1 Convenience benefits and costs........................................................................1 Theorizing and theory development ..............................................................2 Social economic conflict in society ..................................................................6 Marxist criminology ..........................................................................................7 Laws and law enforcement ...............................................................................8 Reasons for punishing their own ..................................................................11 Theoretical model ............................................................................................14 Conflict theory approach ................................................................................15 References .........................................................................................................16 Chapter 2 Economical dimension in convenience theory ...................21 Economical profit in crime ..............................................................................21 Profit-driven crime and markets ....................................................................23 Rational choice by self-interest .......................................................................26 Transaction costs in criminal activities ........................................................29 References .........................................................................................................32 Chapter 3 Organizational dimension in convenience theory ............35 Organizational opportunity in crime ...........................................................35 Opportunity-driven financial crime .............................................................40 Agency relationships in crime .......................................................................44 Institutional moral collapse ............................................................................46 Institutional theory .....................................................................................46 Dysfunctional network theory ..................................................................49 Social network theory .................................................................................50 Conspiracy theory .......................................................................................51 Organized crime .........................................................................................52 Socialization theory ....................................................................................52 v vi Contents Double-bind leadership ...................................................................................53 Social disorganization .....................................................................................57 Follower obedience in organizations ............................................................60 Organizational systems failure ......................................................................61 References .........................................................................................................63 Chapter 4 Behavioral dimension in convenience theory .....................69 Deviant behavior in crime ..............................................................................69 Labeling self-identity of criminals ................................................................73 Slippery slope decline .....................................................................................75 Self-control and desire for control .................................................................77 Strain for success and status ...........................................................................78 Criminal personality disorders .....................................................................79 Study in Germany .......................................................................................82 Categories of personality disorder ...........................................................84 Crime deterrence mechanisms ......................................................................87 Neutralization techniques ..............................................................................90 Profiling risky individuals ..............................................................................95 References .........................................................................................................97 Chapter 5 Integrated approach to convenience theory ......................101 Integrating convenience dimensions ..........................................................101 Research hypotheses for convenience.........................................................106 Theorizing white-collar crime and criminals ............................................112 Limits to a general white-collar crime theory ............................................115 Contributions from convenience theory .....................................................120 Comparison to Sutherland’s theory .............................................................124 References .......................................................................................................129 Chapter 6 Empirical study of white-collar criminals .........................135 Sample of criminals in Norway ...................................................................135 Economical dimension in crime ..................................................................137 Organizational dimension in crime .............................................................141 Behavioral dimension in crime ....................................................................145 The case of Kerik neutralization ..................................................................149 References .......................................................................................................153 Chapter 7 Statements for testing convenience hypotheses ...............157 Desire in the economical dimension ...........................................................157 Opportunity in the organizational dimension ..........................................159 Willingness in the behavioral dimension ..................................................160 Research model for convenience theory .....................................................160 The case of fraudulent attorneys ...................................................................161 Contents vii The case of two sides in corruption .............................................................163 The case of Yara corruption in Libya ...........................................................167 References .......................................................................................................172 Chapter 8 Corporate social responsibility ............................................173 When employers become crime victims .....................................................173 When others become crime victims ............................................................175 Gjensidige Insurance and Hells Angels .....................................................178 Gjensidige Insurance Company ..............................................................179 Hells Angels MC Norway ........................................................................181 Hells Angels club house ...........................................................................182 Evaluation of CSR ......................................................................................183 Asset recovery in 2015 ..............................................................................185 Corruption case at Siemens ..........................................................................187 What is corporate responsibility? ................................................................188 Failure in corporate responsibility ..............................................................189 Stages of growth in corporate responsibility .............................................190 Convenience and corporate responsibility .................................................193 References .......................................................................................................194 Chapter 9 Internal white-collar crime investigations ........................197 Police versus internal investigations ...........................................................198 Reasons for private investigations ...............................................................200 Investigative knowledge needs ....................................................................202 Crime disclosure by whistleblowers ...........................................................204 Privatization of law enforcement .................................................................209 Disclosure of investigation reports .............................................................210 Competence of private investigators ............................................................211 Limits by investigation mandate .................................................................212 Empirical sample of investigation reports .................................................213 References .......................................................................................................226 Chapter 10 The case of the Betanien investigation .............................229 BDO investigation at Betanien .....................................................................230 BDO investigation report ..............................................................................231 CEO priest prosecution in court ..................................................................234 CEO priest conviction in court .....................................................................236 Religious white-collar criminals ..................................................................238 Comments from the chairman of the board ..............................................241 References .......................................................................................................242 Conclusion .......................................................................................................245 Index ................................................................................................................249 Author Petter Gottschalk is professor in the Department of Leadership and Orga­ nizational Behavior at BI Norwegian Business School in Oslo, Norway. He teaches courses on financial crime investigations and characteristics of white­collar criminals. Dr. Gottschalk received the MBA degree in Operations Research at Technical University of Berlin in Germany, and the MSc degree in Systems Simulation at Thayer School of Engineering, Dartmouth College and Massachusetts Institute of Technology in the United States. He completed the doctoral degree in Strategy Implementation in the United Kingdom at Brunel University. He has been president and chief executive officer at several companies including ABB Datacables and Norwegian Computing Center. Dr. Gottschalk has published extensively on knowledge management, information technology management, police investigations, police miscon­ duct, fraud examinations, white­collar crime, and corruption. Recently, his research has concentrated on developing convenience theory to explain white­collar crime. Dr. Gottschalk is a popular speaker at universities and conferences all over the world. In recent years, he has been teaching in New Haven, Connecticut, New York, Orlando, Trinidad and Tobago, Hungary, and many other locations. ix