Legal Definitions - corporate crime

Corporate crime refers to illegal acts committed by a corporation, or by individuals acting on behalf of a corporation, that are intended to benefit the corporation itself. These crimes are distinct from individual crimes because the perpetrator is often the corporate entity, or its agents acting within their corporate capacity, and the motive is typically to increase corporate profit, market share, or avoid costs.

Here are some examples to illustrate corporate crime:

• Example 1: Environmental Pollution

  A large manufacturing company, facing pressure to cut costs, knowingly disposes of hazardous waste into a local river, violating environmental protection laws. The company's management was aware of the illegal dumping but allowed it to continue to save money on proper waste disposal methods.

  This is a corporate crime because the illegal act (polluting the river) was committed by the company's agents (its management and employees) on behalf of the corporation, with the intent to benefit the corporation by reducing operational expenses, even at the expense of public health and the environment.

• Example 2: Accounting Fraud

  The executives of a publicly traded technology firm deliberately inflate the company's revenue and assets in financial reports to mislead investors and boost the stock price. This manipulation allows them to secure larger bonuses and prevent a decline in the company's market valuation.

  This constitutes corporate crime because the fraudulent financial reporting was orchestrated by individuals acting in their corporate roles, directly benefiting the corporation by artificially enhancing its perceived value and financial health, and indirectly benefiting the executives through performance-based compensation tied to these inflated figures.

• Example 3: Product Safety Violations

  An automobile manufacturer discovers a critical defect in its braking system during pre-release testing that could lead to serious accidents. Despite this knowledge, the company decides to proceed with the vehicle's launch without recalling the affected models or issuing a warning, to avoid significant financial losses from a recall and production delay.

  This is an example of corporate crime because the decision to conceal a dangerous defect and knowingly put consumers at risk was made by corporate agents (executives) to protect the corporation's financial interests, demonstrating a disregard for public safety in pursuit of corporate profit.