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Commentary

Corporate Crime Acts Like a Thief in the Night

November 04, 2003|Lee Drutman | Lee Drutman is communications director of Citizen Works, a public interest organization founded by Ralph Nader.

The FBI last week released its annual "Crime in the United States" report, a useful but grizzly compendium of all the murders and thefts and rapes across the country and their costs. The report is designed to empower law enforcement professionals and the public by helping them better understand and respond to criminal trends.

Conspicuously absent from this report, however, was an assessment of corporate crime. The report contains no statistics on the accounting and securities frauds that have rocked the economy in the last two years. It does not list details on the litany of food safety violations, product safety violations, workplace safety violations, environmental pollution and countless other crimes that kill, injure and sicken millions of Americans each year.

The reason is simple but troubling. Under federal law, the FBI must collect data on eight crime indexes: murder and manslaughter; forcible rape; robbery; aggravated assault; burglary; larceny-theft; motor vehicle theft; and arson. It also is required to produce a report on hate crimes.

But because the FBI lacks a congressional mandate to collect data on corporate crime, the American public lacks good information on what has become a pressing national problem -- a corporate crime wave. The dangerous consequence is that the absence of data ignores the problem of suite crime while stirring up fear about street crime.

Where the costs of corporate crime have been estimated, however, the numbers are staggering. Most credible estimates confirm that, in the aggregate, white-collar and corporate crimes cost the U.S. hundreds of billions of dollars annually -- far more than conventional categories of crime such as burglary and robbery.

Using conservative numbers issued by the U.S. Chamber of Commerce, for instance, criminologist Jeffrey Reiman, a professor at American University, estimated that the total cost of white-collar crime in 1997 was $338 billion. The actual cost is probably much greater. For instance, the General Accounting Office, the investigative arm of Congress, estimates that health-care fraud alone costs up to $100 billion each year. Another estimate suggests that the annual cost of antitrust or trade violations is at least $250 billion. By comparison, the FBI estimated that in 2002, the nation's total loss from robbery, burglary, larceny-theft, motor vehicle theft and arson was almost $18 billion. That's less than a third of the estimated $60 billion Enron alone cost investors, pensioners and employees.

But corporate crime isn't just about the money. It's also about people's lives. The national murder rate has hovered around 16,000 a year in recent years. (In 2002, the FBI reported 16,204 murders.) But a respected group of occupational health and safety investigators, led by J. Paul Leigh, a UC Davis School of Medicine professor, has estimated that in 1992 alone there were 66,971 deaths resulting from job-related injuries and occupational diseases. These numbers do not include the thousands of annual deaths caused by cancers linked to corporate pollution, deaths from defective products, tainted foods and other corporate-related causes.

In the wake of the recent tsunami of corporate crime, fraud and abuse, the absence of an annual corporate crime report seems especially conspicuous. There is now a growing consensus that corporate crime is a mammoth problem threatening the stability of our economy and the security of millions of Americans. How mammoth, exactly? There's no way to know, because the government doesn't keep track.

Were the FBI to monitor the extent of corporate crime and its cost, law enforcement officials would be better able to analyze patterns and better direct resources. If we are truly serious as a nation about cracking down on the epidemic of corporate crime, we should begin by collecting and disseminating comprehensive information about the problem.

Ignoring it is not going to make it go away.

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