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Thomas Hedger

Thomas Hedger

Crime—particularly violent crime—may be our national obsession. It dominates the news, it's the subject of pop novels, and it'southward all over goggle box, from FX's The People v. O.J. Simpson to HBO's The Night Of to Netflix's Making a Murderer.

Our mental attitude toward white-collar crime is a piddling different. On the one manus, it fascinates us: Why do well-paid professionals commit it—on their own, with colleagues, or as office of an organization-wide collaboration? On the other paw, information technology bores united states: Complicated financial schemes are difficult to understand, and the perpetrators and victims are often unclear. Who suffers when a company shifts numbers around on a spreadsheet? Who'south to blame when it has thousands of employees and layers of bureaucracy? And even if we can identify those responsible, how should we punish them? Two new books shed light on these and other questions.

Exploring the legal issues is Uppercase Offenses, by Samuel W. Buell, a law professor at Duke University who was a lead prosecutor in the Enron case. Buell starts by pointing out that corporate crime is all about context and that cases may come down to whether those accused knew their actions were illegal—which means prosecutors must try to read minds after the fact. He notes, for example, that the standard defense in a fraud instance is not that the fraud didn't happen; it'due south that the fraudster didn't know he or she was breaking the law—or that, any the government may think, the fraudulent behavior is business as usual in that industry.

Drawing these fine lines around intention is even trickier when executives rely on expert advisers to help with their decisions. If a lawyer or an auditor tells y'all that something is legal—even just barely—should you accept to become to jail if he's incorrect? Many things that appear greedy or selfish in hindsight are not illegal, and many actual crimes occur when valid business practices border beyond what the police allows.

Prosecution is especially difficult when criminal behavior spans a whole organization. In such cases it'southward extremely hard to figure out exactly where the fault lies. (Think of how often the public fails to distinguish between a corporation and the individuals who piece of work for it.) Those loftier upwardly on the org chart, who deport the most responsibility for the company, may know little near its twenty-four hour period-to-day activities. And punishing a big visitor—through massive fines or by sending its most senior leaders to jail—can destroy it, which has serious economic ripple effects for innocent employees, customers, and communities.

There are no easy answers, and Buell notes that the government tends to pursue only those white-neckband cases it thinks it can win. Notwithstanding, we can take solace in this bit of progress: From 1996 to 2011 the average sentence nearly doubled in fraud cases—even every bit it dropped for federal crimes overall.

Whereas Buell's expertise is in organizational abuse and the difficulty of fighting it, Why They Do Information technology, by Eugene Soltes, a professor at Harvard Business School, focuses squarely on individual perpetrators who have been caught and punished. His volume is based on extensive interviews he'southward conducted with white-collar criminals, with Soltes seeking to empathize how these men (nigh all corporate wrongdoers are male, he notes) went from the C-suite to a prison cell.

Over the years, people accept offered all sorts of explanations: deviant nature, the "bad apple" theory, concrete characteristics, poor self-control, lack of empathy, brain chemistry, psychopathy, peer pressure. Some of these ideas have been discredited; others, Soltes says, are insufficient. But what do the criminals themselves say?

If 1 idea can sum upwardly the results of his enquiry, information technology's that white-neckband criminals rarely pause to think about the outcomes or potential victims of their decisions. Consider these revealing quotations from his interviews: "I never once idea about the costs versus the rewards" (insider trading); "I know this is going to audio baroque, only when I was signing the documents, I didn't retrieve of that as lying" (fraud); and "I never idea virtually the consequences…considering I didn't recollect I was doing anything blatantly wrong" (insider trading).

To accost this hitting lack of self-reflection, Soltes delves into the psychology of determination making within organizations, which dovetails nicely with Buell's work. One consequence of the mod corporation, he writes, is that leaders are removed from shareholders, customers, and the public. This psychological distance can crusade executives to lose their mode. In case afterward example, Soltes shows that white-collar crimes tend to effect when the "routine unremarkableness" of everyday actions lets them skid through the perpetrators' moral filters. Business school ethics courses tin can assist, but making tough choices in the classroom is far different from facing them in the real world.

The two authors agree that nosotros need better ways to deal with white-neckband crime. Soltes's remedy is to terminate illegal behavior before it starts. Given that much of information technology is committed without criminal intent, he says, the best solution is for executives to surround themselves with people who aren't agape to question their decisions. On the legal side, Buell says we need greater corporate transparency and incentives for executives to act in the interests of shareholders. He besides calls for better regulations, but emphasizes that they would aid merely to a bespeak, because corporations cascade money into keeping the ones that constrain them from becoming constabulary. And, more to the indicate, regulations don't forestall crimes.

The existent solution, Buell says, is to rethink what corruption looks similar, both in business and in politics. Later on all, campaign contributions that influence policy are among those greedy, selfish acts that aren't illegal. Until the definition of "legal" is no longer controlled past the people or organizations with the deepest pockets, it's unlikely that real change will come virtually.

A version of this article appeared in the Nov 2016 issue (pp.110–111) of Harvard Business Review.