Legal Definitions - organizational crime

Organizational crime refers to illegal activities committed by, or on behalf of, an organization to advance its interests, achieve its objectives, or benefit the organization as a whole. Unlike individual crimes, these offenses are often facilitated by the organization's structure, culture, and policies, and their primary aim is to serve the entity rather than just individual employees. Corporate crime is a specific type of organizational crime, focusing on illegal acts committed by business corporations.

• Example 1: Environmental Fraud by a Manufacturing Firm

  A large chemical manufacturing company instructs its plant managers to bypass expensive wastewater treatment processes and instead illegally dump partially treated industrial waste into a local river. This decision is made at a high level to significantly reduce operational costs and increase the company's quarterly profits, thereby boosting its stock value and executive bonuses tied to financial performance.

  This illustrates organizational crime because the illegal act (environmental pollution) is committed by the company, through its employees acting on its behalf, with the direct aim of benefiting the organization financially. The crime serves the company's objective of maximizing profit and shareholder value, rather than being solely the act of an individual employee for personal gain.

• Example 2: Misuse of Funds by a Non-Profit Organization

  A prominent international charity, dedicated to providing disaster relief, systematically diverts a substantial portion of its donated funds. Instead of using these funds for direct aid, the organization uses them to pay for lavish executive retreats, aggressive lobbying campaigns to secure more government grants, and to inflate its administrative budget, all while misrepresenting its financial statements to donors and regulatory bodies.

  This is an example of organizational crime because the charity, as an entity, is engaging in fraudulent financial practices and misuse of funds. The illegal acts (misappropriation, false reporting) are committed to benefit the organization itself by enhancing its perceived status, ensuring its continued operation and growth, and enriching its leadership within the organizational structure, rather than solely for individual personal gain outside the organizational context.

• Example 3: Systemic Discrimination by a Government Agency

  A state employment agency develops an unwritten but widely understood policy to subtly discourage job applications from individuals over the age of 50 for certain public sector roles, despite official anti-discrimination laws. This practice is implemented to cultivate a younger workforce, which the agency believes will be more adaptable to new technologies and less costly in terms of benefits, aligning with an unstated organizational goal to modernize and reduce long-term expenses.

  This demonstrates organizational crime because the government agency, through its agents and unofficial policies, is engaging in illegal age discrimination. The crime is committed by the organization's operational framework to achieve an organizational objective (a younger, potentially cheaper workforce), rather than being an isolated act of individual prejudice by a single employee.