July 26, 2005
The Honorable Alberto Gonzales
Department of Justice
Robert F. Kennedy Building
Tenth Street and Constitution Avenue, N.W.
Washington, D.C. 20530
Dear Attorney General Gonzales:
It has been over 25 years since the Department of Justice undertook a comprehensive study of corporate crime in the United States.(1)
We are writing you to urge you to direct the department to once again look at this important issue in a comprehensive manner. Such a report would not only spell out the magnitude and nature of this complex and multi-faceted issue, but would also provide law enforcement officials with a comparative analysis of recent trends and the relative effectiveness of different sanctions as deterrents.
The concept of collecting national crime statistics and using them to explore the complexion and scope of the country’s crimes originated with discussions among law enforcement officials in the late 1800s. The FBI oversees the Uniform Crime Reporting (UCR) Program, which tracks certain categories of street crime from over 17,000 local and state law enforcement agencies. As you know, the UCR reports constitute a useful barometer of trends in street crime.
An equivalent program and report should be used to collect and track information on the various types of corporate crime, including but not limited to antitrust and price-fixing, environmental crimes, financial crimes (including the various types of accounting fraud witnessed in recent years), overseas bribery, health care fraud, trade violations, labor and employment-related violations (discrimination and occupational injuries and death), consumer fraud and tax fraud.
Some information is already compiled by different federal and state agencies, including the department, but the data is rarely aggregated so as to provide an overall assessment of the state of corporate crime. Other agencies and departments that currently do not compile this kind of information could also be encouraged to do so. As the nation’s top law enforcement officer, your efforts would provide the kind of leadership necessary for that to occur.
The potential use of such information for deterrent measures also makes such an effort worthwhile. Information on individuals who commit criminal offenses is easily accessible to law enforcement agencies through the National Crime Information Center, which maintains a national database used by local, state and federal law enforcement officials to track criminals. Unfortunately, a similar database on corporations does not currently exist, although it could be used in a variety of ways – e.g. to enhance the kind of information necessary to screen out those corporations that do not meet the “responsible contractor” standards of the Federal Acquisition Regulations, and to help state and federal prosecutors identify recidivist violators and trends in corporate crime in specific industries. This data could also be shared with the public, so that the growing sector of the investing public interested in putting their money into responsible corporations have a way to assess the track records of individual companies.
Organizing the data can be done, and as the history of the UCR reports demonstrates, improvements in collection and presentation can be made with time. The Syracuse University-based Transactional Records Access Clearinghouse (TRAC), which analyzes federal government enforcement statistics, could be consulted on questions of methodology.
The specific data that we believe would be useful (searchable by parent company and major subsidiaries) include:
Individual company data. The number of civil, administrative and criminal enforcement actions brought against corporate defendants by government agencies involving a felony charge or misdemeanor or civil charge where potential fines may be $1,000 or more, specifying the agency bringing the charge, the charge, the name of the company charged (including ultimate parent company), and the outcome of the action if any, including plea agreements, consent decrees, findings of innocence, convictions and fines and other penalties.
This company-specific information could also be organized in a publicly-available, searchable database, just as the Federal Procurement Data Center provides a searchable, online database of federal contractors.
Overall Enforcement agency data. The number and status of investigations initiated by federal agencies (including the FBI, but also EPA, SEC, IRS, OSHA, CPSC, etc.), as well as the number of cases referred to U.S. Attorneys for criminal prosecution.
Prosecution Record. The number of cases referred to U.S. attorneys for prosecution each year by the FBI or federal, state agencies. The status and ultimate disposition (i.e. how many of those referrals were prosecuted; how many of those prosecuted were found guilty; the magnitude and kind of penalties involved).
Methodology Recognizing that efforts to collect and categorize this information are likely to improve with time, a clear explanation of the methodologies used and an index of all information categories.
An analysis of any new trends in corporate crime and an explanation of the relative effectiveness of different sanctions should also be included in each annual report.
The UCR measures some of forms of corporate crime – certain forms of white-collar crimes in particular. But because corporate crime is multifaceted and complex, it does not always come to the attention of law enforcement officials. That is why we encourage you to collect this data in collaboration with other agencies responsible for enforcing related regulations. We understand that the Criminal Justice Information Services Division has begun to develop a system to capture data from the federal agencies willing to participate in this kind of effort, and would like to see that effort expanded, with publicly-available online databases and an annual corporate crime report similar to the Crime in America report.
By putting a focus on statistics related to corporate (organizational) crime in addition to white-collar (individual) crime the Department of Justice will enhance public understanding of “crime in the suites,” improve the government’s ability to avoid contracting with criminal corporations and provide a modest corporate crime deterrent by exposing corporate misdeeds. A relatively modest amount of resources devoted to this task will go a long way towards promoting a change in corporate behavior that rewards compliance with the law.
We look forward to hearing from you about this important issue.
Center for Corporate Policy
PO Box 19405
Washington, DC 20036
(1) See Marshall Clinard, Project Director, Illegal Corporate Behavior U.S. Department of Justice, Law Enforcement Assistance Administration, National Institute of Law Enforcement and Criminal Justice, October 1979.