Business Manipulation, Conspiracy

Corporate loyalty and discipline is an important part of doing business. This means business organizations and their personalities should behave in a responsible manner while doing their job. However due to different factors, there is a strong belief in the business world that ‘bad and good go together`. Business manipulation and conspiracy motivated by the motive for lucrative profit and undue benefit are not uncommon in today’s globalized world where the business community is on the verge of revolution. The purpose my article therefore is to show how businesses may behave badly to conspire at the expense of the lawful business as well as the social and economic capital; and the possible factors thereof. A well known criminologist, called Hansen distinguishes between economic, business, and elite crimes where each of them may behave independently but also act in consortium to conspire and manipulate the business community by monopolizing the market, inflating the economy and involving in a racket business. Traditionally or before the era of internet, illicit lucrative profits that again circulate in the volatile economic transaction could be concealed by fraudulent recording (paper based book-keeping). On the other hand, the contemporary advanced and globalized system enable them to hide and legalize (launder) illicitly earned profits any place where domestic legislation and regulatory schemes are more favourable. These places are known as safe tax heavens.

According to Hanson, individuals employed by and in legitimate business organizations or business groups probably commit most of white-collar crimes (crimes in business offices, occupational or elite crimes) for their own purposes or enrichment, and/or for the enrichment of the organization on a whole, in spite of supposed corporate loyalty and business responsibility than freewheeling and organizationally unattached predators (outsiders). Explanation of why this type of crime is so prevalent among seemingly respectable individuals and businesses call the need for examining business behaviour and the crime nexus. Apart from external factors discussed above such as technological buffer zones, different theories explain why business elites tend to commit white collar business crimes.

A social learning theory (differential association theory), for instance, proposes that a person associating with individuals who have deviant or unlawful mores, values, and norms learns criminal behavior. According to this theory, certain characteristics such as the proposition that criminal behavior is learned through interaction with other persons and interactions occurring in small intimate groups play a key role in placing business persons to behave unlawfully. It is like an old fashioned Ethiopian maxim which says “Tell me whom your friend is, and I could tell you who you are.” Some studies suggest that most crimes are learnt from the usual business environment than being inherited.

However, personal inclinations should not be overlooked since there are some extra-ordinary personal exposures of criminal mentality behavior (‘born criminal’). Despite the influence the law of attractions, not all corporate elites commit crimes and necessarily behave in an overtly deviant manner. But most of the business crimes are learnt since most of them are motivated by undue lucrative profit and manipulation.

In general, the four key elements of belief, attachment, commitment, and involvement may lead to elite misdeeds based on the strength of the bonds formed between corporate “bad boys.” For instance, micro-level business actors would involve in economic exchanges where white-collar crime might be the consequence of attraction, competition, differentiation, integration, and opposition.

Another theory known as ‘control balance theory’ that measures the potential for individuals to commit corporate crimes utilizes a ratio of control exercised in relation to the degree of control experienced. According to this theory, control balances surpluses, rather than deficits, which leads to white-collar crime and corporate deviance. On the other hand, the role or a position that the criminal or potential criminal is occupying for the time being influences the risk of criminality and criminal behavior or poses a danger or exposes to crime.

An example of this type of individuals is politically exposed persons or individuals who are entrusted with prominent public functions. It is argued by Gilligan that such an individual must be tracked by financial institutions as he or she poses potential reputation risk to regulated entities. Cases which were recently viral in different media outlets such as the former president of the Philippines, Ferdinand Marcos, and former president of Nigeria, Sani Abacha and some figured personalities in Ethiopia who were accused of fostering corruption within their countries as well as in their respective institutions and transferring millions of dollars of public funds out of their home countries into bank accounts overseas are few examples of corporate business criminality.

Another model of criminalization called the monopolistic model (a criminal organization in the form of a monopolistic firm), is predominantly used to analyze organized corporate crimes. It implies that potential criminals have no other choice but are forced to join a criminal organization if they decide to commit a crime and hence, they use the corporate organization as a ‘front company’ or as a criminal shield to undertake a corporate crime since they could not engage in such criminal activities perhaps without having a business license. A ‘labor agent’ involved in trafficking persons or a ‘tobacco company’ engaging in drug dealing could be an example in this regard. These kinds of organizations usually attract individual criminalists to do a corporate offence as a normal course of business while individuals by themselves or independently cannot do so. Even though this approach seems less than exhaustive in terms of describing criminal behavior, the determination of the market structure for crime should be endogenous, which has notable implications for the optimal crime enforcement policies and crime itself. In such cases, individual crimes and organized crimes are coexisting alternatives to a potential offender. Here, the method adopted to allocate the criminal organization’s payoffs and the extra benefit provided by the criminal organization play crucial roles in an individual’s decision to involve and commit a crime and the way in which he or she commits that crime.

On the other hand, Gross explains the relationship between corporate structure and organizational criminal behavior as follows: First, the internal structure and setting of organizations is of such nature as to raise the probability that ‘the attainment of the goals of the organization will subject the organization to the risk of violating societal laws of organizational behavior’. Secondly, persons who actually act for the organization in the commission of crimes will, by selective processes associated with upward promotion in organizations, be persons likely to be highly committed to the organization and be, for various reasons, willing and able to carry out crime, should it seem to be required in order to enable the organization to attain its goals, to prosper, or minimally, to survive.

Last but not least that explains business criminal behavior is an agency theory that is based on principal-agent relationship. This theory has in mind an illegal monopoly where it is difficult to detect and punish the principal unless an agent is detected due to the ambiguous nature of organizational ownership, temporal and spatial organizational culture between and among the principal(s) and one or multiple agents. It is also assumed that agents work rather independently so that the likelihood of detection of one agent is fairly independent from another. Drug dealers in the streets with the principal being the local distributor or agent extortionists or blackmailers distributed across a country with the principal being the coordinator of their activities providing them information or criminal know-how could be good examples.

Criminal organizations are often based on trust (which is a critical success factor in partnership businesses in its many forms) between its members. Individualized trust relates specifically to agreeable behavior of an individual and trust based on reputation relates to trust based on publicly formed and held opinion about the ones to be trusted. This type of trust hinges on the flow of information. Information may be dispersed in a context associated with illegality, for example the underworld “grapevine system”.

In general, study reports show that the tendency of business organizations to engage in illicit economic activities is increasing from time to time. This will not only spoil the political economy of each country but also the healthy business undertaking. The “trade warfare” between the United States and China which is also termed as global ‘trade fare’ is a simple example that is directly or indirectly attributed to bad business behavior of transnational business companies. This is aggravated by the proliferation of new technologies that eases and interests significant number of business organizations to explore it to pursue their criminal intentions. Emerging technologies greatly assist ill gotten or dirty money. Informal and parallel banking businesses bypass the monetary and regulatory systems. Electronic fund transfer frauds, racketeering offences, forgery and counterfeiting crimes are some of these criminal offences that are alarmingly on the rise both in coverage and in its devastating effect. Therefore a concerted effort is not a matter of choice to alleviate the problem.

8th Year • Jan.16 – Feb.15 2019 • No. 70

Gashaw Tamir

is a legal expert. He can be reached at

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