Law/6. Criminal law and criminology

Candidate of Juridical Sciences

Solovyev O. G.

P. G. Demidov Yaroslavl State University, Russia

Candidate of Juridical Sciences

Baumova M. G.

P. G. Demidov Yaroslavl State University, Russia

Economic crime in the modern world: legal contents, main characteristics, trends and forms of development

Economic crimes refer to illegal acts committed by an individual or a group of individuals to obtain a financial or professional advantage. In such crimes, the offender’s principal motive is economic gain. Cyber crimes, tax evasion, robbery, selling of controlled substances, and abuses of economic aid are all examples of economic crimes. It will surprise few to learn that economic crime - such as fraud, IP infringement, corruption, cybercrime, or accounting fraud-continues to be a major concern for organisations of all sizes, across all regions and in virtually every sector. That’s one headline from our 2015 Global Economic Crime Survey, one of the broadest and most comprehensive economic crime surveys we have ever conducted, with over 5,000 respondents contributing from every corner of the world. But the real story is not so much that economic crime stubbornly persists. The real story is that economic crime is threatening your business processes, eroding the integrity of your employees, and tarnishing your reputation. Which is why this year’s report is focused on how and where it may be affecting you - so you can address the issue from both a preventive and a strategic perspective. The threats from economic crime continue to evolve. Like a virus, economic crime adapts to the trends that affect all organisations. Especially impactful megatrends include the increasing reliance on technology and technology-enabled processes in all aspects of business, and the growing movement of economic energy toward emerging markets [1, р. 56].

With organisations increasingly depending on technology, it’s perhaps not surprising to find that cybercrime continues to increase in volume, frequency and sophistication. One quarter of all respondents report having been victimised by electronic fraud. Meanwhile, sometimes overlooked categories of economic crime-such as procurement fraud, money laundering and human resource fraud—are moving up the list of threats, alongside the historically common threats of asset misappropriation, bribery and corruption, and accounting fraud. Economic crimes fundamentally threaten the basic processes common to all business—buying and selling, paying and collecting, importing and exporting, growing and expanding [2, р. 78]. All organisations in the course of daily business face exposure to various types of economic crime from multiple angles that threaten these activities as they interact with third parties to create or exchange value. Small wonder, then, that economic crime is very much on CEOs’ minds. More than half of global chief executives, polled in our just-released 2014 Global CEO Survey, told us they are concerned or extremely concerned about bribery and corruption.

While the risk of bribery and corruption is a threat to many different types of transactions, it is of particular concern when companies are dealing with government agencies and state-owned businesses— and, consequently, with government officials. For example: A pharmaceutical organisation would like to sell a recently developed medicine to a country that operates a public healthcare programme. The permission to sell the medicine, the decision to buy it and the price paid will likely be in the hands of government officials. Or, an equipment company would like to sell their product to a state-owned enterprise whose senior executives are members of the political party currently in office. The specifications in the tender documents, the budget available for the acquisition, the ancillary support services needed for training, spare parts, and maintenance, the evaluation of the bid proposals - all will likely be decided by government officials.

If the territory has a culture that is relatively permissive to bribery and corruption, some of these officials may be predisposed to expect or at least be open to bribes [4, р. 89]. This exerts pressure on sales and marketing staff, who have been tasked by leadership with bringing a new product to a growing market—pressure which could be felt by individual staff as justifying offering a bribe or kickbacks, or otherwise rigging the sales process to try and secure a better price. While the profit potential will likely be obvious to the sales and marketing team, the systemic risk of operating in a culture with a “high demand” component of the corruption equation may be less so [3, р. 23].

As we have often seen, FCPA and other enforcement actions frequently have far-reaching financial and organisational impacts. These can include altering your sales processes, sales incentives, distribution networks, authority levels and approval requirements for marketing activities and other payments, choice of agents and brokers, and in extreme cases, the ability to operate at all in certain countries.

Literature

1. Green, Stuart P. Lying, Cheating, and Stealing: A Moral Theory of White Collar Crime. Oxford University Press, 2006.

2. Friedrichs, David O. Trusted Criminals: White Collar Crime in Contemporary Society. Wadsworth, 2003.

3. Cornwell, C., and W. N. Trumbell. Estimating the economic model of crime with panel data. The Review of Economics and Statistics. 1996. 76 (2): 360–6.

4. Simon, D. & Hagan, F. White-collar Deviance. Boston: Allyn & Bacon. 1999.