White-Collar Crime in South Africa: an Initial Overview

Introduction

As violent crime in South Africa has reached unprecedented levels, there is broad agreement, particularly in the business community, that `white-collar crime' has also increased. Heightened concern around this issue has been demonstrated by a number of recent conferences on commercial crime, staged by organised business and the South African Police Service (SAPS).

Police commissioner George Fivaz's declaration of `serious economic offences' as a `priority crime'1 is significant, since the seriousness (or not) with which certain crimes are regarded is reflected in the resources which the state allocates to policing them.

Understandably, more attention is being focused on `street crimes' than so-called `suit crimes', since the former are more visible and immediately threatening. However, by only focusing resources on what is seen by many as `real' crime, hidden areas of criminality the terrain of fraudsters, embezzlers and corrupt characters of all kinds are being allowed to flourish. It is argued here that white-collar crime threatens the relationship of trust between citizens and government, professionals and clients, businesses and customers and employers and employees needed to sustain a healthy community,2 and is placing South Africa's public and private institutions under serious and mounting pressure. By eroding the moral fabric of society, the costs of these crimes may ultimately be higher than those of other, more overt, forms of crime.

It is partly because of ignorance of the harmful practices that count as `white-collar crimes', of which all South Africans are victims, that a major mobilisation around these issues has not occurred. Also, until recently, social movements were largely directed at opposing apartheid. Through research and the media, the public can be made aware of these hidden forms of criminality. Internationally, criminological research and analysis tend to reflect definitions by the public and state agencies of what the principal social problems are.3 In South Africa, very little academic research on `white-collar crime' has been undertaken; some of the most significant work in this field has been done by journalists. However, emergent policy analysis is gradually making its presence felt in this field.

Given the complexity of white-collar crime and the issues surrounding it, comparative multidisciplinary policy research, rather than narrow legalistic or auditing perspectives which until recently have dominated theorising about `white-collar crime', is both necessary and desirable. Research of this nature gauges the nature and extent of the problem, suggesting practical ways in which various stakeholders, including the public, can tackle these crimes.

Another reason why people fail to get excited about `white-collar crime' is its ambiguity, as well as the vast array of crimes4 that fall under its ambit. Compared to Britain and the United States, South African conceptions of `white-collar crime' are very narrow, and largely based on a few high-profile cases relating to property scams, insider trading and round-tripping. Criminal prosecutions for infringements of environmental, health and safety regulations are extremely rare, and injuries resulting from such committed by individuals or corporate `persons' are usually addressed within the province of civil law.5 Various political and ideological considerations may influence why some activities are regarded as crimes, and others not: calls for tough action to deal with white-collar crime and treat powerful corporate executives or government officials as common criminals are hardly likely to be universally welcomed.

Before sketching a broad overview of efforts to police `white-collar crimes' and prosecute its perpetrators, the first challenge is to formulate a working definition of this term.

Defining 'White-collar crime'

A number of difficulties are encountered when attempting to define `white-collar crime'; however, these obstacles should not be allowed to hamper the discussion. `White-collar crimes' can be said to include consumer fraud, tax swindles, insider trading, securities violations, bribery, kickbacks from government contracts, computer fraud, or offences surrounding occupational health and safety. In most cases, fraud a specifically defined crime involving legal considerations of `misrepresentation' and `prejudice' is involved.6

Turning to the literature, the American sociologist Edwin Sutherland, who in 1939 coined the phrase `white-collar crime', deserves critical attention. According to him, "a white-collar crime is a crime committed by a person of respectability and high social status in the course of his occupation".7

Sutherland highlighted the fact that explanatory theories citing poverty and unemployment as the primary causes of crime were inadequate and insupportable, in that they failed to account for the `upper-world' or `white-collar crimes' that were being committed daily within business and government institutions.

Until then, the association of crime with poverty had led to white-collar crime being side-stepped as a subject for serious study. But from then on, the crimes of the powerful would receive as much attention as those of the poor.

However, Sutherland's definition was criticised on a number of points. First, its critics said, it failed to distinguish between crimes committed by corporations as a collective unit, and the crimes of their individual members. Second, it failed to allow for violent white-collar crimes, thereby adding to the debate as to whether price fixing or false advertising were really crimes, since they were usually handled administratively. Three, by stipulating that such crimes had to occur in the course of the offender's occupation, a whole range of offences, including tax evasion and buying on credit with no intention of paying, were excluded.

Some critics suggested disposing of the term `white-collar crime' altogether, in favour of two alternative concepts. The first would be `organisational' crime, or those committed with the support and encouragement of a formal organisation, and often even required by its occupational norms. The second would be `occupational' crime, or those committed by an individual or group of individuals for purely personal gain.8 This distinction is important, for it highlights the fact that besides individuals within a company defrauding it for personal gain, the business or organisation itself may be the perpetrator of a crime, even though the common image of deviance focuses on people acting individually or in small groups.9 `White-collar crimes' may be committed both against and by, among or within institutions.

But Sutherland's pioneering definition of `white-collar crime' was found to be too useful a conceptual tool to be thrown on the intellectual scrap-heap, and has been universally adopted for identifying certain activities as criminal, however broadly or narrowly. By supplementing this with other definitions that address the criticisms mentioned above, an acceptable working definition can be reached.

`White-collar crime' has also been defined as "a non-violent crime for financial gain committed by means of deception by a person whose occupational status is entrepreneurial, professional or semi-professional, utilising his or her special occupational skills and opportunities; also, non-violent crime for financial gain utilising deception and committed by anyone having special technical and professional knowledge of business and government, irrespective of the person's occupation".10

Another formulation is that of "an economic offence committed through the use of some combination of fraud, deception or collusion."11 And yet another is that of "a violation of the law committed by a person or group of persons in the course of an otherwise respected and legitimate occupation or financial activity".12

By combining the above, an inclusive, albeit tentative, working definition of `white-collar crime' can be established: a `white-collar crime' is "a violation of the law (by violent or non-violent means) for financial gain, committed by means of deception and concealment, by a person or group of persons, irrespective of occupational status, utilising special skills and opportunities".

This broadened definition addresses the fallacious claim that white-collar crimes are by nature `non-violent', as it covers the extremely harmful implications of corporate and occupational wrongdoing. Stating `irrespective of the person's occupation' gets rid of Sutherland's respectability requirement, thereby allowing organisations such as the Mafia (whose principal activity may be crime) to be included. Also, the case of whether a T-shirted teenage computer hacker's activities be regarded as a `white-collar crime' is solved by the qualification stressing `utilising special skills and opportunities'.

The nature of 'white-collar crime'

Closely related to defining `white-collar crime' is the question of disclosing its unique nature. In this respect, it is useful to examine ways in which these crimes differ from traditional offences. It has been argued that these crimes are costlier, and affect more individuals. They rely on deceit and concealment rather than force and violence, although it is generally agreed that personal pathology plays no significant role in the genesis of white-collar crime.13 Whereas the traditional felon uses brute force and crude tools, the white collar criminal often employs sophisticated technology, and successfully plays on people's ignorance, naivete' and greed. Since technology enables these crimes to be committed without the perpetrator being physically present, the easy identification and tracing of perpetrators are frustrated.

All criminal behaviour requires a motive and opportunity, which must coincide before a crime can occur.14 When it comes to motive, it is difficult to understand why trusted and well-paid employees would jeopardise their position by stealing from their employers. While primary motivations may include the desire for financial gain, others may be financial difficulties, low loyalty, revenge and boredom.15 In South Africa the desire to `protect what one already has' bodes ill for the future of such crimes, where employees threatened by uncertainty may seek to `feather their own nest', albeit through illegal means. Indeed, when weighed up against the actual fear of being detected, the urge to commit a commercial offence to protect what one has may prove stronger.

Unlike `mugging', white-collar crimes such as commercial fraud are not `equal opportunity crimes'. Rather, the opportunity to commit various types of white-collar crimes is unevenly distributed according to occupational structure. For example, pilfering may be commonplace among certain employees, whereas crimes such as price fixing and insider training might occur at different levels in the company and are largely related to the degree of trust placed in those occupying different positions. Therefore, to the extent that there is disadvantage or discrimination by class, gender, ethnicity or religion in occupying certain roles, the opportunities for particular types of crimes are correspondingly restricted.16 It is not because they are morally superior that there are so few female and/or black management fraudsters in Britain, the United States17 or South Africa, for that matter. To date, very little research has been conducted on the gender and race aspects of white-collar crime, areas of particular relevance to South Africa as affirmative action policies seek to make private and public institutions more representative.

Added to motive and opportunity, `techniques of neutralisation' enable individuals to violate important normative and ethical standards while neutralising any definition of themselves as deviant or criminal.18 For instance, at an individual level, the neutralisation of ethical restraints may justify theft as `borrowing'. At an organisational level, criminal activities are defined in such as way as to make them appear routine, unproblematic and necessary. Offenders may justify their behaviour by claiming that they are not really hurting anyone; that the law itself is unnecessary or unjust; that while something may be illegal, it is not criminal (in that it doesn't harm anyone); that `everyone else is doing it', for example, cheating on tax returns; that they were merely continuing a pattern of behaviour accepted among their peers, or in the industry; and that the activities at issue were a necessary part of the business. Many of these claims relate to an argument to be touched on later: that the structural demands of certain positions virtually force their occupants to violate the law.19

In South Africa, motives, opportunities and the neutralisation of ethical concerns regarding white-collar crime have been exacerbated by historical circumstance. One example is the `sanctions-busting mentality', which encouraged legitimate businesses to seek alternative systems, whether legal or illegal, to maintain their profits. These systems and habits, shrouded in secrecy, die hard and have resulted in a lack of transparency which is advantageous to criminality. Also, the dual financial system, only recently scrapped, encouraged `round tripping' ie sending funds out of South Africa in commercial rands, bringing them back via the financial unit, and making a profit on the discount between the two20 a practice which lost the country billions.

Tax evasion is another example. The state is said to lose some R17 000 million every year as a result of tax evasion;21 but this was argued to be a rational response towards a government which the majority of citizens regarded as illegitimate. It is this background, combined with increased opportunities, a `get-rich-quick' social ethos, tolerance of expense fiddles and observation of large-scale malpractice escaping unpunished that has contributed to the growth of fraudulent activities in the economy.22

The costs of white-collar crime

Besides their social and moral costs, the financial and economic ramifications of these crimes are very difficult to quantify, for even the acceptability of a national currency depends to some degree upon trust and confidence, which these crimes tend to erode.

Calculating the costs of white-collar crime depends on one's definition of it, as well as how these crimes are categorised and recorded by the police. Recording offences such as fraud and forgery often requires difficult judgments as to what constitutes one offence, since cases may involve many instances of deception and forgery, with several offenders acting together or in different groups on different occasions. Because of these problems, recorded numbers are particularly sensitive to variations in recording practice.23 Although these judgments are fraught with difficulties, comparative research suggests that commercial crimes have increased the world over. However, it is argued that it is more useful to focus on intra- rather than international changes, for national classifications of the boundaries of fraud may differ, as do police resources and recording policies.24

In South Africa, commercial crime statistics are gathered by means of a register, and are thus based on the values held when they were originally reported. Since these investigations often take a long time to complete, the number of charges and amounts involved tend to fluctuate during the investigation. Currently, however, the system does not differentiate between potential and actual loss, which could differ substantially.25 It has been argued that an additional `dark figure' representing crimes unknown to the victim and the police which further accentuates the shortcomings of commercial crime statistics, should not be ignored. Amendments to police procedures are being suggested to remedy the situation.26

On 31 December 1995, the Commercial Branch of the SAPS was handling 25 260 cases of white-collar crime, involving some R7,3 billion. Some 80 percent of these cases involved fraud, and the other 20 percent theft (from employers) as well as transgressions of more than 50 statutes which the branch polices.27 These figures reflect the situation on a certain date, and provide an indication of the investigative workload on average, detectives handle 20 dockets each. Besides this, on 29 February 1996 the Office for Serious Economic Offences (OSEO) was investigating 33 matters involving approximately R8,5 billion.28

It is well known that official crime statistics are beset with difficulties, since they only reflect crimes that are reported to the police. For various reasons, most white-collar crimes are not reported and are therefore never recorded. In an attempt to estimate the `dark figure' of white-collar crime, surveys have been conducted among top businesses on the extent of fraud, whether or not these were reported, and why, their value, how they were committed, and what steps were being taken to prevent them from recurring. A recent study undertaken locally found that a mere 20 percent of respondents had reported detected fraud to the police ie, 80 percent of detected fraudulent activity was going unreported.29

Very little is known about factors influencing the non-reporting of commercial fraud by companies. These include company culture, as well as legal requirements for reporting fraud. Reasons for non-reporting may include embarrassment, and possible damage to a company's reputation. However, in the absence of a legislative requirement or clear insurance or compensation benefit, organisations may perform a cost-benefit analysis before making the decision to report a case of fraud. The most likely reason for non-reporting is a management decision that the time and expense involved in dealing with prosecutors and the courts will be excessive.30 Since reporting management fraud to management is prone to conflicts of interest, this may explain the enthusiasm of some directors to keep the matters in their own hands.31 However, it has been found that companies are willing to invest the management time and effort required to obtain a successful prosecution where the evidence sustains it.

One cannot ignore the perception that the police and criminal justice system are simply not equipped to handle such cases, even should they be reported. The police have freely admitted this, and have called for a partnership with the private sector in addressing these crimes. Thus, to the extent that the policing system is failing to cope with fraud, many people who have legitimate complaints are not making them. While calls have been made internationally that all financial institutions, auditors and lawyers should be legally bound to report irregularities to law enforcement agencies, this presents numerous problems: firstly, this move is strongly opposed by management, and secondly, it is questionable whether the current system which is failing to handle 20 percent of cases effectively will cope with more, should they be reported.

It is well documented that the financial costs of white-collar crime far exceed the value of all street crimes. However, costs and harms need to be understood more broadly than in purely financial terms, for not only do they cost considerably more money than all other types of crime, but many white-collar crimes can cause great harm in other senses. For example, if funds are embezzled from an aid agency, thousands of people may die from malnutrition as a result.32

The indirect effects of such crimes, of which all South Africans are victims, need to be spelled out. These include insurance premiums rising significantly due to false claims it is conservatively estimated that 30 percent of South Africa's R5 billion annual insurance bill is fraudulent, or grossly inflated.33 Tax evasion has major public policy implications, for if nations cannot raise the revenue to meet their needs, the institutions and programmes that have been geared towards the citizenry must either falter or be supported by a smaller tax base.34 Most importantly, white-collar crimes erode trust and integrity, the glue holding the social fabric together, harming society in ways that cannot be measured.

White-collar crime and the criminal justice system

Worldwide, commercial fraud and offences related to industrial safety, for example, command a far smaller proportion of criminal justice resources than more conventional forms of crime. Even though there may be ample evidence and a clear-cut violation, the complexity of the issues and the volumes of evidence makes it a Herculean task to bring white-collar criminals to book. Unfortunately, potential perpetrators of white-collar crimes are often well aware that the resources for doing so are hopelessly inadequate.

Whereas the law potentially stigmatises those who violate its standards which is especially repugnant to those typically involved in white-collar crime such a stigma is only a deterrent if the law is actively enforced. The issue then is how to prevent potential white-collar criminals from committing these crimes in the first place, since there is little likelihood that sufficient resources will be available in the near future to effectively police and prosecute these crimes once they have occurred.

Besides these concerns, debate continues about whether commercial malpractice is in fact a proper subject for public law, the police and the courts, or whether it should be dealt with either in terms of private law and civil redress for those wronged, or by `self-regulatory' bodies of business people and professionals.35

Policing the crisis

Police efforts to combat white-collar crime lends credibility or otherwise to the state's avowed commitment to eradicate these crimes.36 For various reasons, the police have not regarded white-collar crime as a key priority, although this perception is changing. In South Africa it is widely accepted, as well as openly admitted, that the Commercial Branch, which is responsible for policing all instances of fraud, numerous forms of theft, and offences under almost 60 acts of parliament, is unable to effectively police white-collar crimes in the business and broader consumer sector. Its resources in terms of trained staff and equipment are wholly inadequate. If the perceived seriousness of a problem is measured by the extent of training offered, by this criteria fraud is not a problem: over the last 25 years only five training courses have been conducted for personnel of the commercial unit of the SAPS, and it is generally accepted that learning takes place on the job.

Comparative research confirms that South Africa is not alone in terms of these problems: minimal resources are committed to fraud units worldwide,37 and problems exist internationally with investigators who are under-educated, ill-trained and poorly equipped for the task of combating white-collar crimes.

Since the police cannot be relied on to police white-collar crime, policing partnerships appear to be the route out of the current crisis. In this respect, the state already relies on numerous enforcement agencies and professional bodies to regulate violations in their spheres of activity. Therefore, consumers, and businesspeople and professionals such as accountants and corporate lawyers have come to play important roles as as initiators of action via their decisions to report fraud or not, as well as in initiating the investigation process.

The point has been made that there is something incongruous about companies complaining of being defrauded of millions of Rands being told that, because of pressure of work, the case cannot be investigated for 12 months, and their best option would be to conduct their own investigation and come back later. What have they been paying their taxes for?38 In South Africa, organised business has agreed to fund the multi-disciplinary teams needed to help investigate and prosecute white-collar crimes. As a result, one may ask: why should businesses pay taxes if the state can't do its job properly? If business is prepared to assist with the investigation into such crime, why can't it benefit from a tax rebate? These are important issues for further consideration.

While they may be `nice guys', because the police are unlikely to be familiar with the systems and issues concerned, many South African companies realise they have to put in the necessary legwork and expense and assemble the greater part of the case.39 In other words, fraud has become a subject for private policing.40 Once a company has conducted a thorough internal investigation, involving auditors and legal advisers, and has enough evidence to establish a prima facie case, it might depending on corporate policy and the position of the suspect within the company call in the police. Internal company investigators do not replace police or make arrests, but rather assist as well as expedite a criminal investigation. Many commercial branch detectives are being drawn into the private sector as organisations are forced to appoint internal fraud teams. While this disadvantages the police force, which loses valuable personnel, since it is unable to compete with private sector salaries, the advantage is that experienced detectives handle internal investigations and are able to compile complete dockets for prosecution.41

The complexity of many white-collar offences and the chronic shortage of resources for their investigation and prosecution requires difficult decisions about which cases to pursue and which to ignore. Cuts in resources may force law enforcement agencies to prioritise cases on the basis of their estimated likelihood to yield a result. In South Africa, priority is given to cases that are considered likely to result in a prosecution. The Office for Serious Economic Offences (OSEO), established in 1991 to investigate serious economic offences which the police were failing to do, uses multi-disciplinary investigation teams, prioritising cases according to the amounts involved, the complexity of the offence, the public interest as well as their urgency.42 The overflow of cases is dealt with by the commercial branch of the SAPS. Currently OSEO is limited to the investigation of economic offences, and does not have the power to prosecute. Recently, calls have been made to parliament to address this issue so that, instead of handing over a case, which wastes of time, those who have worked on it would be able to conduct the prosecution.43

Courting the criminals

White-collar criminals often escape punishment because of the antiquated legal apparatus that is brought to bear against them, a system that has traditionally addressed the poorer, more visible criminal element. They have mostly been segregated from traditional criminals, their crimes adjudicated by regulatory agencies and their offences handled administratively, thus shielding them from the traditional criminal justice apparatus.44 Criminal referrals are rare and prosecutions almost non-existent, since the wealth and influence of these criminals allow them to avoid the full weight of the law a primary concern raised by Sutherland.

The belief that the courts favour the rich and influential, be they individuals or companies, appears to be supported by the small number of convicted fraudsters. If one ignores the fact that tax fraud may invoke administrative penalties that are more severe than many meted out by the courts, it might seem as if there is `one law for the rich, and one for the poor'.45

In terms of access to justice, the wealth and influence of many offenders enable them to employ the best legal talent to conceal their crimes often a complex web of economic interactions, requiring much investigative work to reconstruct. Since criminal justice agencies simply cannot match the salaries commanded by these kinds of professionals, young and inexperienced prosecutors come up against defence teams including some of the nation's best lawyers. That any cases get as far as the recommendation to prosecute has been described as `miraculous'.46

It has been suggested that complainant companies should be allowed to appoint and pay for their own prosecutors. This would have the following advantages: it would relieve the state of a massive financial burden; make available to the state the investigative and courtroom expertise it lacks at senior level; expedite prosecutions; and level the balance between the accused, grown wealthy from ill-gotten gains and able to afford senior counsel, and young and inexperienced state prosecution teams.47 The current development of policing partnerships bodes well for such initiatives.

Other factors that make it difficult to prosecute white-collar offenders include the fact that the primary concern of the law has always been to regulate relations between persons, ie individuals, rather than `corporate persons' or companies. Corporations can, however, also be held liable for criminal intent, as in the Ford Pinto case, where the court ruled that the Indiana homicide statute was applicable to corporations as well as individuals, allowing Ford to be charged with reckless homicide.48

When it comes to sentencing, these cases raise questions such as whether conventional sentencing and correctional standards can be applied to white-collar crimes, considering that most white-collar criminals are usually first offenders.49

In terms of sentencing, judges have been accused of favouritism towards offenders of high socio-economic status who may share their cultural background.50 Because these people may provide employment, come from `good homes', give money to charity, or confer other social benefits such as letting friends have goods cheaply,51 it is argued that they may be advantaged by the courts. However, in some cases, higher status defendants are more likely to receive longer prison sentences if the judge feels that `crimes of greed' by the wealthy are more blameworthy than `crimes of need' by others.52

This view has been recently expressed in South Africa.53 The rare cases where white-collar criminals do receive jail sentences, but are often released early due to general amnesties, does not help to deter potential criminals.

Most often, however, offenders are fined rather than sent to prison. Often the criminal penalties handed down for white-collar crimes are much less severe than the civil liabilities such crimes generate,54 with corporate fines seldom equalling the profit made from the illegal actions. In effect, such fines may constitute nothing more than the cost of doing business. Since financial penalties are not a sufficient deterrent, it has been suggested that convicted corporate offenders should automatically pay a penalty equal to their illegal activities, with violent offences liable for even stiffer penalties.55

Because the criminal justice system deals so ineffectively with white-collar criminals, it has been argued that a dual system of justice has come into being one for the masses who commit traditional offences, and the other for a select group of white-collar felons. When the majority of citizens come to view the legal system in this light, then democracy itself could be threatened, for a segregated system of justice is no less divisive and damaging than a society segregated on the basis of race.56

Proactive prevention strategies

If white-collar crime is to be dealt with seriously, a proactive crime prevention strategy is required. Proactive prevention, rather than attempting to address the aftermath of such crimes, is the course to adopt, although this may be difficult, time-consuming, and require certain changes to organisational structures.

The best protective measures business and government can take is to set their own house in order through effective codes, controls and self-regulation. When it comes to professional self-regulation, the concern has been raised that the boards and agencies charged with controlling professional misconduct often deflect criminal complaints away from the justice system, thus protecting fellow professionals from prosecution.57 However, `whistle-blowers' those individuals who follow their moral beliefs rather than conform to organisational pressure should be protected by law, making it a crime to retaliate against them in any way, and with punitive damages paid to victims.58

Research suggests that the organisational environment of a company plays a large part in creating opportunities for crime. There is something to be said for the `corrupting institution' thesis, which argues: "Of course, there may be corrupt men in sound institutions, but when institutions are corrupting, many men who live and work in them are necessarily corrupted."59 Organisations and occupational subcultures generate powerful pressures on employees to conform to their expectations, and any effort to deal with the problem of white-collar crime at this level must be aimed at changing the ethical climate within corporations and government.60

In business, the ethical behaviour of a company's personnel is determined by the example set by top management ie, the tone is set by those who run the company, and their corruption can quickly corrupt others.61 Interviews conducted with 68 retired middle management executives of Fortune 500 corporations revealed that corporate crimes were triggered off by top managers who pushed too hard and made demands that could only be met by breaking the law.62 Is it possible to create a business ethic favouring honesty at the expense of profit?63

Developing a code of ethics which includes a commitment to expose fraudulent action is a rational safeguard for any institution against victimisation. The King commission's report on corporate governance (based on the United Kingdom's Cadbury proposals on corporate governance) which, inter alia, sets out to ensure greater transparency, integrity and accountability in respect of fraud, has been favourably received by organised business. It recommends that systems should be created to respond when crimes are reported, monitor complaints against members of professions, and that companies should commit themselves to dismiss and prosecute those who commit fraud, in collaboration with the police. For such a policy to be effective, it must be communicated to employees at all levels of the organisation.

The degree to which such a code has been adopted by South African companies remains unclear. Most companies still have no fraud prevention strategies, as is evidenced by the high incidence of secondary victimisation. The fact that multiple victimisation occurs may mean that in practice companies do not, for whatever reason, learn from the incidents they undergo; or that companies do learn from their experiences, but are either unable to prevent them from happening again, or do not believe it is worthwhile to further reduce risk.64 A future area for policy research might include exploring what incentives and disincentives would best persuade the business community to begin to control white-collar crime.65

Proposals such as those of the King commission are not uncontroversial. Research has found that there is `no difference' in respect of fraud or misconduct between between those corporations with codes and penalties, and those with none at all.66 In themselves, such codes are unlikely to have much effect on the ethical climate. Besides this, institutions would be wise to implement common-sense crime prevention strategies, such as screening personnel.

Such entry controls alone are acknowledged to be theoretically inadequate for preventing fraud, and it is argued that the focus of surveillance ought to shift to monitoring the conduct of people while they are transacting business, as well as their domestic lifestyles.67

Whether this sort of control is desirable is a separate moral and economic question, but without it levels of fraud will certainly not abate. It is highly unlikely that white-collar crimes will be entirely eliminated, but their incidence can be greatly reduced by increasing `fraud consciousness' and adopting practical preventive measures.68

Public opinion and the media

Beyond business and government, it is necessary to create a general awareness among the public at large of white-collar crime, and possible ways of preventing it. Members of the public, or anyone who has money or is able to borrow it, can fall victim to at least one white-collar crime, namely fraud. While conventional wisdom suggests that the public is indifferent to white-collar crimes, and may even sympathise with offenders when they are caught, it is argued that the more one knows about such crimes and their harmful consequences, the more they will be condemned.

It is true that many citizens do not realise that they are being victimised by price fixing or restraint of trade, and under these circumstance the public can hardly be expected to react to such behaviour.69 In fact, opinion polls abroad indicate a great deal of resentment about the crimes of those in positions of trust and responsibility.70 Organisationally deviant actions are strongly condemned, especially when they cause illness, injury or death.71

Although they may be used selectively in the case of the death penalty, for instance appeals to `public opinion' are an important aspect of criminal policy. Such opinion is used to justify particular policing strategies, including manpower distributions, prosecution policies and sentencing levels. An important question is whether public attitudes to white-collar crimes determine enforcement action, or whether vigorous enforcement will inform and shape public attitudes towards these crimes.72

There can be little doubt that the media plays a significant role in defining (and therefore moulding) the crime problem.73 While some believe that white-collar crimes receive little or no attention in the media since they are owned by big business, the relative media neglect of business crime compared with other forms of crime is explicable more in terms of the invisible nature of the crime, and the difficulty in presenting it simply in human terms expected by mass audiences, than in terms of an elite conspiracy to suppress it.74 Hence the media should be challenged to help raise public awareness of these issues, by pointing out, for instance, that white-collar crime results in hidden costs which are passed on to the consumer. Since the more harmful a crime, the more the citizenry is mobilised, public concern may be stimulated as the definition of white-collar crime in South Africa is broadened beyond fraudulent financial transactions, and alleged bribery and corruption within business and government.

Conclusion

There are various political reasons for correcting the balance between policing suit and street crimes. In a law and order society, such as South Africa, where major significance is attached to crime, there is a great deal of political mileage in harping on the unfairness of fraudsters particularly those who are members of social elites who `get away with it' while the poor ones go to jail.75 However, while it is generally accepted that crime in South Africa must be addressed through socio-economic upliftment a view based on the assumption that providing people with sustainable employment will inhibit them from committing crimes it is worth bearing in mind that those who commit white-collar crimes are generally not unemployed.

As such the problem of white-collar crime will only increase as more people, not just social elites, are formally employed, and motives and opportunities to commit crime flourish in a transitional climate of distrust. If the criminal justice system is not bolstered significantly, burdening it further as a result of increasing public concern over these issues may not in fact be to the government's political advantage. If these cases are not handled speedily and effectively, they may actually serve to further undermine the credibility of the justice system.

Internationally, attacking such crimes through forfeiture of assets, ie removing the profits of crime, is receiving high priority. At a conference earlier this year it was emphasised that the driving force behind economic crime internationally was drug money and the laundering thereof.76 In line with such developments, South Africa's eagerly awaited Money Laundering Act will be enacted in 1996. However, the question remains whether the criminal justice system will be able to enforce the new legislation effectively. This is doubtful, and points to the conclusion that legislation can only be effective if it can be enforced. In addressing white-collar crime, the state must give top priority to supplying law enforcement agencies with the necessary tools and resources to do their job. Future trends in controlling white-collar crime thus point towards increasing the visibility of fraud to those who are not directly party to it, enhancing inter-agency co-operation, both domestically and abroad, and improving the capacity of policing agencies and the courts to cope with investigations and trials.

Notes and references

1. Business Day, 4 December 1995.
   
   

2. H Edelhert & T D Overast, White-collar crime: an agenda for research, Lexington Books, D C Heath and Company, Lexington, 1982, p 28.
   
   

3. M Levi, Regulating fraud: white-collar crime and the criminal process, University Press, Cambridge, 1987.
   
   

4. For an overview of the types of activities that fall in the realm of white-collar crimes, see Edelhert & Overast, White-collar crime, pp 23.
   
   

5. M D Ermann & R J Lundman, Corporate and government deviance: problems of organisational behaviour in contemporary society, Oxford University Press, Oxford, 1992.
   
   

6. KPMG, Fighting Fraud 1, p 4.
   
   

7. E H Sutherland, `The white-collar criminal', American Sociological Review 5, 1940, pp 112.
   
   

8. Clinard & Quinney, 1973, in J W Coleman, The criminal elite: the sociology of White-collar crime, St Martin's Press, New York, 1989, p 9.
   
   

9. Ermann & Lundman, Corporate and government deviance.
   
   

10. Dictionary of criminal justice data terminology, 1981.
    
    

11. Wheeler, Weisburd & Bode in Levi, Regulating fraud.
    
    

12. Coleman, The criminal elite, p 5.
    
    

13. For a discussion of the personality profile of `white-collar criminals', see Spencer in ibid, p 202.
    
    

14. Ibid, p 200.
    
    

15. KPMG, Forensic accounting, Fighting Fraud 3, July 1995.
    
    

16. In Levi, Regulating fraud, p 2.
    
    

17. Ibid.
    
    

18. Sykes & Matza in Coleman, The criminal elite, p 211.
    
    

19. Ibid, p 204.
    
    

20. `Tracking round-trippers', Financial Mail, 17 December 1993.
    
    

21. See the paper given by auditor-general Henry Kluever at the workshop on serious economic crime, 25 October 1995.
    
    

22. Levi, Regulating fraud, p 56.
    
    

23. Ibid, p 3.
    
    

24. Ibid, p 6.
    
    

25. Commercial Crime Semester Review, September 1995, CAICI Unit C2, p 3.
    
    

26. Ibid, p 12.
    
    

27. Ibid, p 3.
    
    

28. Levi, Regulating fraud.
    
    

29. KPMG. `South Africa', Fraud Survey 1994.
    
    

30. Edelhert & Overast, White-collar crime, p 8.
    
    

31. Levi, Regulating fraud, p 129.
    
    

32. Ibid, p 46.
    
    

33. Business Day, 24 October 1994.
    
    

34. A Bequai, White-collar crime: a 20th century crisis, Lexington Books, D C Heath and Company, Lexington, 1987.
    
    

35. Levi, Regulating fraud, p 15.
    
    

36. Edelhert & Overast, White-collar crime, p 11.
    
    

37. Bequai, White-collar crime.
    
    

38. Levi, Regulating fraud, p 282.
    
    

39. Ibid, p 133.
    
    

40. Ibid.
    
    

41. Business Day, 2 July 1995.
    
    

42. OSEO brochure.
    
    

43. Notes of attorney-general's hearings, Union Buildings, September 1995.
    
    

44. Bequai, White-collar crime.
    
    

45. Levi, Regulating fraud, p 56.
    
    

46. Ibid, p 284.
    
    

47. Sunday Independent, 20 August 1995.
    
    

48. Coleman, The criminal elite, p 145.
    
    

49. Edelhert & Overast, White-collar crime, p 5.
    
    

50. Conklin, 1977 in Coleman, The criminal elite.
    
    

51. In Levi, Regulating fraud, p 74.
    
    

52. Coleman, The criminal elite, p 171.
    
    

53. See opening address by Azhar Cachalia, Secretary of Safety and Security, Workshop on Serious Economic Crime, 25 October 1995.
    
    

54. Coleman, The criminal elite, p 171.
    
    

55. Ibid, p 251.
    
    

56. Bequai, White-collar crime, p 4.
    
    

57. Coleman, The criminal elite, p 155
    
    

58. Ibid, p 254.
    
    

59. Wright Mills, 1956, in W G Carson, Challenge of white-collar crime, La Trobe University, 1983.
    
    

60. Coleman, The criminal elite, pp 2489.
    
    

61. Coleman, The criminal elite, p 219.
    
    

62. Ermann & Lundman, Corporate and government deviance, p 35.
    
    

63. Ibid, p 81.
    
    

64. Ernst & Young, Fraud - the unmanaged risk, 1995, p 5.
    
    

65. Edelhert & Overast, White-collar crime, p 9.
    
    

66. Mathews & Frederick, 1987, in Coleman, The criminal elite.
    
    

67. Levi, Regulating fraud, p 353.
    
    

68. M Levi, The prevention of fraud, Crime Prevention Unit, Paper 17,l 1988.
    
    

69. Edelhert, & Overast, White-collar crime, p 33.
    
    

70. Coleman, The criminal elite, p 186.
    
    

71. Ermann & Lundman, Corporate and government deviance, p 35.
    
    

72. Edelhert & Overast, White-collar crime, p 14.
    
    

73. Levi, Regulating fraud, p 10.
    
    

74. Ibid, p 13.
    
    

75. Ibid, p 83.
    
    

76. KPMG, Fighting Fraud 3.