Dubious Relationship Organised Crime & Corporate Crime PDF

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How do transnational. organised and corporate crimes intercept in the modern day...

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Dubious Relationship: Organised Crime & Corporate Crime 1.Collaboration (1): Individual employees and Organised Crime Groups (OCGs) 2.Collaboration (2): Private Sector Firms and OCGs. Case study: Money laundering and the financial sector 3.Collaboration (3): The Private Sector, OCGs and the Neo-Liberal State. Case Study: Putin’s Russia

Organised Crime definitions (revisited) Organised crime can be defined as serious crime planned, coordinated and conducted by people working together on a continuing basis. Their motivation is often, but not always, financial gain. Organised criminals working together for a particular criminal activity or activities are called an organised crime group. (National Crime Agency, 2014) - This definition suggests gangs are organised criminals, however, they are often much more vast and cover the globe. Corporate crime tends to be white collar crime, conducted by big corporations, such as embesslement. Organized crime is business and has many similarities to legal business however, because organized crime conducts its business in the illegal marketplace, it is subject to a series of constraints that limits and defines its organization structure, size, and mode of operation. Corporate crime definition

Usually has links to the government, so the government don’t want to catch them. Therefore

they receive little to no punishment. Forms of collaboration 1.Organised criminals corrupting corporate employees 2.Corporations collaborating with organised crime groups •Collaboration can benefit organised crime in many ways: -Facilitate their criminal activities -Launder proceeds from their criminal activities -Facilitate the commitment of a crime against the company itself.

Collaboration (1): Targeting employees •Illegal procurement/production of goods- illegal importing or creating products illegally after hours when factories are supposed to be closed. Had to inforce surveillance over these. •Trafficking illegal goods: Paying off drivers or transportation managers. Bribing security staff. Ports in Spain, France and Greece are major targets for drug traffickers. •Distribution of illegal or smuggled goods: https://www.youtube.com/watch? v=i1KtDL7KtX4&t=1158s (10:40) •Company Fraud: Construction companies purchase officers could buy services or goods at inflated prices and expect a kickback. This means that the owners could lose millions of euros (Gournev) •Privatization of security- the outsource security at a cheaper price- has led to more vulnerabilities in the private sector and are not merely corrupted but can run protection rackets themselves (Gournev) -

For example in night clubs, security may be dealing drugs or helping/ allowing drug dealers to conduct business either because they are friends or they are getting money in return for allowing them to sell.

•Easy and more direct access to private sector employees as opposed to public sector employees Collaboration (2): Corporations collaborating with organised crime groups •Previous examples deal with individual members of company collaborating with organised crime. But what of companies where the owners actively collaborate with organised crime? •Financial, Gambling and Real-Estate sectors often involve money laundering which can involve employees or the entire company

•Money Laundering: Can bribe employees not to fill out Suspicious Transaction Reports (STRs) but laundering large amounts of money is very difficult to keep out of sight of owners or managers and collusion is often needed •Launderers can also use off-shore companies, shell companies, trusts and foundations where bank complicity is difficult to prove or not needed (Gournev) •Professional services (i.e. law firms, accounting forms) can assist in money laundering •Organised crime seen as “recession-proof” and one of the few “liquid assets” available to the financial system during 2008. Drugs, arms etc tend to by wanted no matter what the financial situation. •Antonio Maria Costa of the UN Office on Drugs and Crime ascertained that criminal earnings were the only liquid investment capital some banks had from failing (Saviano, 2015) •More than satisfying desires that are illegal (Lippmann, Madsen) organised crime money can form an important failsafe to the global economy.

The cocaine trade and Wachovia Bank •Post-9/11: The PATRIOT Act: - Supposed to include measures to combat money- laundering including greater transparency, limits on interbank operations and tougher penalties. •Wachovia Bank, one of the largest banks in the United States: Investigators discover several billions from the Sinaloa cartel to Wachovia bank. Protocols ignored as $378.4 billion went in with at least $110 million from drug trafficking They also found a plane filled with cocaine, that had been paid for by Wachovia bank. Money entered through casas de cambios in Mexico in the form of travellers’ cheques wired to Wachovia Bank accounts opened in Miami •Money entered global financial circuit being used to buy stocks, real estate and airplanes for drug smuggling •Revealed by money-laundering reporting officer Martin Woods in the bank’s London head office. He is frozen out at the bank. His role was more so to be there to defend the company and be able to prove there was no suspicious activity, not to find it. •March 16 2010: Wachovia VP signs a plea bargain admitting guilt. Woods sued and settled out of court.

Wachovia Bank: Justice served? •Given a deferred prosecution: Does not break law for one year and agrees to plea obligations

and charges are dropped. •Pays a fine of $160 million for a bank with an annual turnover of $12.3 billion

Why?-The financial crisis of 2008

HSBC: “The World’s local bank” •https://www.youtube.com/watch?v=AMgqkZO45oU

The role of neo-liberalism•Gained prominence through the 1980’s •The economy (and society) organised according to the “free” market and will regulate itself. Its does not need the government to dictate the economy, the wants of the people and the markets ability to fill these needs are enough to make the economy work effectively. •Economists: Friedrich Hayek (1899-1992) and Milton Friedman (1912-2006) •Politicians: Margaret Thatcher & Ronald Reagan : “Reagonomics” •Economic rationalism: The most profit at the lowest cost •Antipathy to regulation: Usually against the State or “Big Government” •Individual freedom boiled down to money-making activity and regulation is “interference”, “excessive beauracracy”, “red tape”

Collaboration (3) The Russian “Mafiya”, the private sector and Putin •In Russia “Mafia” is synonymous with political power as opposed to purely Western focus on organised crime as such. •History has shown that organised crime is the weaker of the two partners in Russia (Rawlinson) •Corruption said to be either a fact of Communism or rapid modernisation: “Rapid modernisation became privatisation and price liberalisation: economic “shock therapy” (Rawlinson) •The experience of communism and perestroika shows organised crime as fulfilling a gap in the market •Nomenklatura: During the rapid modernisation three classes managed to enrich themselves quickly: former factory managers, Communist Party Officials and organised crime groups benefited from the selling off of state assets •Western companies freely took part in this. In 2007 Siemens found guilty of paying 12 million euros in bribed to Russian officials. Western companies have often worked with security firms linked with or even formed by criminal gangs. •Since 1992 52 journalists murdered with a third investigating corruption (Rawlinson). •“Libel tourists”, using UK gagging laws to silence foreign journalists •The State is not entirely absent from this and indeed organised crime usually finds its influence sidelined by the state and private security firms headed by the military and police Case Study: Petersburg Fuel Company (PTK) •Vladimir Barsukov (Kumarin). Purported leader of the Tambov Gang •Also a leading figure in the business world of St.Petersburg •On the board at PTK. Tried to take over control from ally of Putin, the Director Smirnov •Only then did the State “wake up” to his dealing sand arrested him for involvement in a criminal gang, swindling and money-lanundering

Battling corruption •Solutions for corruption of individual employees: -Rotating staff exposed to corruption: Can only be used at larger scale firms -“Four Eyes” principle-each decision signed off by the CEO

- Corporate Security Departments •Systemic solutions for collaboration between companies and OCGs -Obligations of auditing forms to report corrupt practices -Internal audits are seen as ineffective -Whistle-blowing seen as effective yet depends on the corporate culture. -Legalisation?

References on slides....