Occupational Crime

1
Occupational Crime

• By
• Ankit Desai
• Jeff Dougherty
• Patrick Crotty
• Juan F. Calles

2
Occupational Crime

• Occupational Crimes are crimes committed by
  people of high social or economic status in the
  course of their occupation.
• They conspire with other companies in order to
  make money for themselves or to drive a
  particular competitor out of the market.

3
Occupational Crime

• A white-collar crime is a type of occupational
  crime which deals with the further advancement of
  the organizations.
• In turn, it actually does benefit themselves in
  that as the company profits more and more, so to
  does the individual.
• The economic cost of such a crime is much greater
  than the combined cost of larceny, burglary, auto
  theft, forgery, and robbery.

4
Why Does It Exist?

• Who doesnt like money?
• Financial pressures and family difficulties are a
  few significant motivations for committing
  white-collar crimes
• One way to view occupational crime is that it is
  in essence an indirect form of theft.
  Perpetrators often rationalize that because it is
  indirect, it is victimless and therefore
  acceptable.

5
Why Does It Exist?

• The risk of internal misdeeds occurring in an
  organization is based upon a combination of
  factors
• motive - usually caused by personal financial
  pressures
• opportunity - caused by poor accounting controls
• the personal integrity of the employees

6
Corporate Criminals

• Corporate crime costs 200 billion a year, more
  than even organized crime

7
Enron Facts

• Enron was formed in 1985 when two smaller energy
  companies merged
• Enron then set up over 3000 offshore companies,
  and used them to manipulate market price for
  energy
• Through accounting tricks, the offshore companies
  also provided an easy way for Enron to hide debt
  and increase profits

8
Enron Facts

• When California and other states came to Enron
  desperate for energy, the energy giant was able
  to charge them astronomical prices based on their
  other contracts (the ones it had made with its
  offshore partners, which were nothing more than
  puppets)

9
Enron Facts

• Enron also pushed their debts off onto their
  offshore partners, making the company look even
  better to Wall Street and pushing their stock
  higher.
• Kenneth Lay (CEO of Enron) told his employees
  that Enron stock was an incredible bargain and
  a rise in the value of Enron stock "has never
  been more certain"

10
Enron Facts

• At the same time, Lay was selling off his shares
  rapidly he made 21 million in profit selling
  his Enron stock in 2001
• The SEC caught Enrons accounting tricks, and
  begun an investigation

11
Enron Facts

• Enron was forced to restate profits and debt
• Reduced profits by 500 million
• Increased debt by 2 billion
• Enron shares dive from 80 a share to less than
  1
• Enron employees lost 1 billion in pension funds,
  while the top executives pocketed millions.

12
Enron Stock
Price
Year
13
Action Steps

• Don't become an unwitting co-conspirator in shady
  dealings.
• Six steps to maintaining your ethical integrity
  when those around you seem to be skimping on
  theirs.

14
Action Steps

• 1. Watch for signs of ethical trouble.
• These include
• Directives that violate the organization's own
  policies.
• Orders to keep an action secret.
• Requests to "do it this way just this one time,"
  or to "do it for the good of the organization."
• Pressure to mislead, lie, cheat or steal or to
  change, falsify, hide or destroy documentation
  or to keep no records of something that
  ordinarily should be documented.

15
Action Steps

• 2. Listen to the voice of doubt in your head.
• If you get an uncomfortable feeling with a
  directive or request (or a course of action that
  you are contemplating), heed the hesitation.
• If, even for an instant, you think you might be
  crossing the ethical line, ask yourself Would I
  be embarrassed if this action came to light?
  Would I feel cheated or harmed if I were on the
  receiving end of this action? Then move to Step 3.

16
Action Steps

• 3. Ask (your boss, your colleague, yourself)
  directly about the ethical soundness of a pending
  action that strikes you as questionable.
• "This seems to be an unusual course of action. Is
  this ethical?"
• Or, "For some reason, I get an uncomfortable
  feeling about this. Isn't it misleading / shady
  /dishonest?" "If this truly is an ethical action,
  why am I uneasy about it?"

17
Action Steps

• 4. Decide, thoughtfully with great awareness,
  whether the proposed course of action meets the
  ethical standard by which you want to conduct
  yourself and be known for.
• Reject self-justifying and destructive platitudes
  such as Go along to get along. The ends justify
  the means. Everybody does it. Just this once. It
  really doesn't hurt anyone. And other deceptions.

18
Action Steps

• 5. Act in accord with your decision.
• Proceed without reservation. If in doubt, don't.
  If you act against your better judgment, you'll
  regret it. And when you stop regretting it,
  you'll be a lesser person. And you'll know it,
  and hate yourself for acting against yourself.
• You'll be more stressed (keeping track of lies,
  covering up actions, being constantly on
  guard---all take a great deal of energy).
• The quality of your relationships will suffer.
  You'll be more guarded, more withdrawn, and less
  trusting. It's darned difficult to be genuine
  with others when you feel disingenuous yourself.

19
Action Steps

• 6. Live comfortably with the consequences of your
  choice.
• When faced with an ethical dilemma, there likely
  are difficult consequences to whichever way you
  decide to go.
• So choose to take the high road. While it is the
  steepest at the beginning, it's the least
  stressful and most fruitful path over the long
  haul.

20
Ethical Issues

• A poor system of internal accounting contributes
  to an environment where occupational criminals
  develop an attitude that they believe that the
  organization will not mind if if you take
  something because it's an unofficial perk of the
  job.
• This feeling results because organizations do not
  promote internal control concepts and ethics.

21
Utilitarian Perspective

• The utilitarian approach aims to produce the
  greatest balance of benefits over harms.
• When Enron failed its 15,000 employees learned
  they had lost 1 billion in pension funds as well
  as their jobs.

22
Rights Perspective

• Fundamental civil, political and economic rights
  that merit protection and respect.
• Employee's right to not be cheated by their
  employer.
• Stock holder's right to receive honest stock
  quotes.
• Customer's right to purchase energy at a fair
  price.

23
Common Good Perspective

• What is ethical is what advances the common good.
• Employees losing their jobs and pension funds.
• Stockholders lost millions.
• Destroyed the publics faith in corporate America.

24
Virtue Perspective

• What is ethical is what develops moral virtues in
  ourselves and our communities.
• Honesty
• Courage
• Faithfulness
• Trustworthiness
• Integrity
• Compassion

25
Conclusion

• Youve seen what happens when you try to use the
  back door and get rich in a hurry.
• Take these action steps into consideration in the
  future if you ever find yourself in a similar
  situation.
• Question the ethics of your actions before acting.

26
Bibliography

• White-collar Crime. Encyclopedia Britannica.
  2003.  Encyclopedia Britannica Online. 11 Oct,
  2003  
• lthttp//0-www.search.eb.com.sculib.scu.edu80/eb/
  article?eu78860gt.
• White Collar Crime. Boston College. 2003.
  August 7, 2003
• lthttp//www.bc.edu/offices/audit/fraud/whitecolla
  r/gt
• "Crime and Punishment." Encyclopedia Britannica.
  2003.  Encyclopedia Britannica Online. 11 Oct,
  2003
• lthttp//0-www.search.eb.com.sculib.scu.edu80/eb/
  article?eu120709gt.
• Burke, Stephanie J. The Collapse of Enron A
  Bibliography of Online Legal, Government and
  Legislative Resources. 2002. 30 June, 2003
• lthttp//www.llrx.com/features/enron.htmgt
• Behr, Peter. Ex-Enron Accountant To Settle,
  2003. The Washington Post. 10 October, 2003
• http//www.washingtonpost.com/wp-dyn/articles/A59
  33-2003Oct9.html
• Enron 101, 2002. The Daily Enron. 13 Oct, 2003
• lthttp//www.thedailyenron.com/enron101/gt