The continuum of conflicts of interest: from corruption to clubbing and the underlying risks at victimisation.
Abstract
This paper explores the continuum of conflicts of interest between private companies and public authorities. Recently,many initiatives have been taken in the domain of one variety of conflicts of interest, being the illegal act of corruption. We investigated the changing political-economic power relations and more specifically the growing impact of the market on political decision making. This led us to the hypothesis that corruption is no longer the most straightforward mechanism for private companies to have an impact on political decision making and that the changed political-economic relation promotes other legal mechanisms of conflicts of interest. This hypothesis that could be labelled as a critical criminology perspective is illustrated with three mechanisms that are not illegal but run the risk of becoming as harmful as corruption can be: lobbying and networking in the interest of one’s own business and revolving doors. These legal mechanisms become risk factors because they pass unnoticed and without disagreement. If the hypothesis that legal mechanisms are more attractive today for western companies accurately reflects reality, it is maybe a task of criminologists to extend their analysis to include these legal mechanisms of conflict of interest and their potential risks associated with victimisation.
1. Introduction
In recent years,many legal instruments have been developed and policy decisions have been taken in the field of public corruption. There are various reasons for this such as the fear of organised crime, the fearof terrorism, the economic losses, the bad reputation of the market and the loss of trust in the government (Beare, 1997, 66 ff; Williams and Beare, 1999, 113). Initiatives of the European Council, the UN and the OECD have caused a chain of corruption and anti-corruption initiatives at the national level.
The question about the importance of corruption is under discussionwhen studying recent political-economic changes and more specifically the blurring of boundaries between public and private power and the growing impact of private companies on thepolitical decision making process. A market that gets more chances to pull up a chair at the decision making table maybehas less need to be corrupt in the sense of bribing a politician or a civil servant.
The main idea of this article is that corruption is a criminal phenomenon with the possibility of a high victimisation rate. For that reason, the political attention for corruption is reasonable. In the last decades, the relation between the public and the private level has changed from a top-down relation into a fragmentation and a privatisation of public power. The hypothesis is that the illegal act of corruption in the context of the western market is becoming less important than other legal mechanisms of conflict of interest, being for example the old boys network, lobbying, revolving doors,etc.. In other words corruption is part of a continuum of conflicts of interest, varying from legal to illegal activities but all with a high risk factor of victimisation.
If this hypothesis corresponds to reality, the question raises if the focus of criminologists is not too narrow and if it is not an obligation to study also legal injurious activities besides the criminal law environment. This consideration from a critical criminological point of view reminds us of an old criminological discussion that was held in the field of conflict criminology. Authors such as Quinney argued that “the law represents an institutionalised tool of those in power which functions to provide them with superior moral as well as coercive power in conflict” (Quinney, cited in Sumner, 1994). This question on the limitation of the study domain has logically been central to the debate on white collar crime since this is the domain of those in power. This issue has become less topical over the last decades until recently a new concept was introduced, namely state-corporate crime. This plain concept of Kramer and Michalowski brought back the older discussionson definition and limitation of the study domain.
However, this discussion is not restricted to academic circles;a government or an administration that disregards its duty of serving the public creates an environment “where rules don’t prohibit its own self-enrichment or that of the ruling class. The final concern is the well being of citizens and the equal “(Lambsdorff, 2007).
The remainder of this article is organised as follows: the first chapter motivates why the attention for corruption is probably out of balance when compared to other mechanisms of conflict of interest. This imbalance was one of the reasons why some criminologists have taken injurious effects as basic assumption for their criminological research (see e.g. Braithwaite, 1984; Croall, 2001). This feeling of uneasiness about the limitation of criminological research brought the researchers Kramer and Michalowki to the concept ’state-corporate crime’. A short explanation of the origin and meaning of state-corporate crime demonstrates the importance of this change in thinking about corporate crime. This can be illustrated by the domain of conflicts of interests in the sense that corruption is criminalised while other harmful mechanisms are widely accepted. We explain this with some examples, such as lobbying, networking and revolving doors. Some would call this point of view “conspiracy” while it is simply a completion of an until then incomplete explanation of some kind of injurious corporate activities (Pipes D., 1997). Even if the comparison between corruption and legal mechanisms of political influence creates a feeling of uneasiness it is not totally unfounded since some exploratory studies have focused on a kind of interaction between corruption and lobbying. We end this contribution with a plea for the criminological perspective on the continuum of conflicts of interest in the interest of the victims.
This contribution is the first step in a research project that aims to study the anticorruption strategies in the public and private sector to prevent public corruption of companies. More specifically, tt is a reflection that we have made during the exploratory study of literature on corruption and a study of empirical data collected during an exploratory phase of observations and interviews with public officials and business representatives. Some documentary sources havebeen written by journalists or belong to the grey literature even if the work is well-founded.
2. How political-economic changes may have an impact on corruption
The domain of public corruption is an interesting laboratory to study the implications of a changed social landscape: the basic principle of public corruption is the illegal exchange relation between a decision maker (a politician or a civil servant) and an individual or organisation offering or promising an advantage in exchange for a desired decision outcome (Van Duyne, 2001, 2-3). It seems a reasonable hypothesis that changes in the political-economic ratio will directly influencethe significance of corruption. What is meant by the alluded changes atthe political-economic level? In the last decades, we have movedslowly from a central government to diversified governance with more responsibility for a field of private and semi-private organisations.Because of this diversification public and private actors are more than ever before working in partnerships and networks. In other words, society has evolved from a system of authoritarian regulation to public-private coregulation (see for example. Heere W., 2004; Meehan E., 2003). Because these changes have a direct impact on the heart of public corruption, namely at the power relation between the state and the company, the interest of corruption may change(see for example Kamminga M., 2003, 11; Richter J., 2001, 11). Why would a company bribe if it has been asked for advice in the decision making process?
Theidea that gaining political power reduces briberyin the private sectoris occasionally the subject of discussion on the prevention of corruption, most of the time from an economic point of view (Williams and Beare, 1999 ,90): “privatization can reduce corruption by removing certain assets from state control and converting discretionary official actions into private, market-driven choices” (cited in Rose-Ackerman, 1999, 35). Becker suggests that “if we abolish the state we abolish corruption” (Gary Becker cited in: Hodgson and Jiang, 2007, 1047). Other authors even relate the anti-corruption movement to deregulation. For example, Hopkins points out that the anti-corruption strategies advocated by mainstream economists largely consist of two main planks: reforming the state administration to minimize corrupt incentives and reducing the role of the state in economic life in order to leave as much economic activity as possible in the hands of the market (Lambsdorff, 2007, 2; Hopkinscited in: Hodgson and Jiang, 2007, 1048).In contrast to this economic point of view,Tillman and Indergaard consider the changed relation between the private sector and the state rather as a crime-inducing fact for corporate corruption. They studied the new economy and more specifically the corporate accounting scandals. The authors argue that “analysts should focus on the creation of rules – both formal and informal – that govern markets, how those rules are the products of political projects and how those rules create opportunities for white-collar crime and corporate corruption”They clearly believe that the type of market regulation may or may not create opportunities (Tillman and indergaard, cited.in: Tillman, 2009, 74).
Maybe both points of view make sense. Deregulation probably means a reduction of corruption in the sense of criminal law but at the same time other harmful activities such as lobbying can create the same risks. Most conflicts of interest in the relation between the private sector and the state are not perceived as illegal even if the mechanisms are basically the same and even if the injurious effects could be much “higher”. It seems that the underlying mechanisms of these conflictsdiffer depending onwhen and wherethese conflicts occur. The legal definition of corruption is a social construction of some activities of conflict of interest that are considered as criminal. This definitionexcludesother activities that are not considered as problematic but that are equally harmful. The first careful attemptsof the EU and the UN to open the debate to other mechanisms of conflict of interest point at a growing consciousness that the risk factors can be completely hidden because of the institutionalised and legal character. We refer to article 12 of the EU Criminal Law Convention on Corruption that asks member states to criminalise:
the promising, giving or offering (…) of any undue advantage to anyone who asserts or confirms that he or she is able to exert an improper influence over the decision-making of any person referred to in articles 2, 4 to 6 and 9(…) whether or not the influence is exerted or whether or not the supposed influence leads to the intended result.
This article refers to the activity of paying bribes or giving advantages to lobbyists. Also the UNCAC offerssome advice to prevent corruption, which is mentioned in article 12 as well. The advice focuses on the prevention of conflicts of interest by imposing restrictions on the professional activities of former public officials or on the employment of public officials by the private sector after their resignation or retirement. These functions directly relate to those held or supervised by thepublic officials in question during their tenure. In both regulations, not only corruption but also related mechanisms such as lobbying and revolving doors are considered.
Both points of viewshow the function of state intervention as a regulator: a state that exchanges its authority for a collaborative relation opens some problematic relations. This responsibility of the state authority has never been seriously questioned in criminology. Except for the conflict criminologists and marxist criminology, the state has never been considered as a real player. That is why the introduction of the concept ‘state-corporate crime’byKramer and Michalowski is a big step in the aetiology of organisational crime.
3. The added value of State-corporate crime
For decades,researchers of corporate crime have neglected the role of the state in committing crime (Kramer, Michalowski and Kauzlarich, 2002, 270). In theories explaining corporate crime, state responsibility was reduced to a lack of state regulation or a lack of enforcement (Box, 1983, 64) or, in the words of Sutherland, was conceived as belonging to the same social class (1961, 248). For most scholars of corporate crime, the state has never been perceived as a full partner in the commission of crime. The only exception is public corruption because it requires a governmental department, an individual civil servant or a politician as an indispensable participant. However, the statement: “no corporate crime without the state” holds water. If we consider cases such as Bhopal, Enron, Lernout and Hauspie, the Fortisgate or smaller ones, the state always has a certain responsibility: the state created a kind of opportunity because of the lack of enforcement, an unclear legal framework or a relation between the regulator and the regulated that is too close. To fill this gap, Kramer, Kauzlarich and Michalowski reintroduced the state as a participant in the commission of corporate crime, either as a facilitator or as the initiator. By introducing the concept of state-corporate crime, Kramer, Michalowski and their other colleagues reintroduced the state, not in the baseline as an element of explanation, but as an actor who is really responsible. The original concept has been further modified but the core of the definition is: “state-corporate crimes are illegal or social injurious actions that occur when one or more institutions of political governance pursue a goal in direct cooperation with one or more institutions of economic production and distribution” (Kramer, Michalowski and Kauzlarich, 2002, 270). The most important element of this definition is maybe the demarcation of state-corporate crime. The definition could be applied to illegal as well as socially injurious actions. The injurious character is the standard to decide if we are talking about a crime or not rather than the penal code. Other researchers such as Green and Ward specified the aspect of social injurious by referring to human rights violations (Green and Ward, 2004, 28). Especially in cases of socially injurious activities carried out with the help of the state, which is in the end the law maker and law enforcer, it is important to go beyond the legal definition and to look at the implications of these activities. Barak even went so far to say that injurious activities of the state are more threatening than harmful activities of the private sector because the first is making the rules in the name of common interest or national welfare (Barak, ).
The concept of state-corporate crime goes beyond the scope of the penal code to legal conflicts of interest that are equally harmful. The following questions are addressed: to what extent is the law-making process captured by industrial interests?Do the criminal definitions chosen encompass the socially injurious activities of companies?. It is a debate that reminds us of the radical criminology of the Schwendingers who pleaded for a human rights definition of crime because “the legalistic definitions cannot be justified as long as they make the activity of criminologists subservient to the state” (Schwendinger and Schwendinger, 1972). In recent years, it has mainly been Van den Heuvel who has gone further than the legalistic delineation and has added collusion or the Holland way of corruption.[1]
We do not intend to debate the enlargement of the criminal stigma from corruption to other legal mechanisms. However, since we are mainly interested in the victims of conflicts of interest, this paper will narrow down its focus to all kinds of conflicts of interest between the “company” and “the state”, legal or illegal, that carrythe risk on victimisation. The concept of state-corporate crime enables us to have a complete understandingof the continuum of mechanisms of influence. The continuum consists of corruption, of a grey zone of collusion and of legal and legitimate but not unproblematic relations of interest between the private sector and the state.
In the following sections,we would like to draw attention to thiscontinuum by offeringthree examples, namely networks, lobbying and revolving doors. We consider deregulation, coregulation and privatisation of regulation as important stimuli for the growth of this grey area around corruption.
4. “It takes two to tango”: a framework for public corruption
A first mechanism of conflict of interest is public corruption, which is a rather vague concept because of its sociological origin.To avoid misunderstanding about our point of view, it is important to further explain this concept. The term ‘public corruption’ was defined byPetrus van Duyne as: an improbity or decay in the decision-making process in which a decision-maker (in a private corporation or in a public service) consents or demands to deviate from the criterion, which should rule his decision making, in exchange for a reward, the promise or expectation of it (van Duyne, 2001).
This decision making process can be situated at different professional levels, in different functions and with a difference in efficiency. The standardcategories of public corruption are bureaucratic corruption and political corruption. Bureaucratic corruption attempts to influence the executive level, whereas political corruption is located at the level of law making. Some authors such as Moody-Stuart and Tillman added the category of grand corruption or “misuse of public power by heads of state, ministers and top officials for private profit”,whichin fact correspondsto a superlative of bureaucratic and political corruption (Moody-Stuart, 1996, 4; Tillman, 2009). The customs officer who allows to load an illegal freight in return for a bribe and the politician who inserts some exceptions to the environmental law in return for financial support in the elections are both committing corruption.