Grubby White Collars
A story has recently been developing which has captivated the chilled-out imagination of the whole of California and it has at its heart one of the most spectacular falls from grace in modern memory. A tale which starts to unravel only when a high flying Swedish businessman wrapped his $500,000 Ferrari Enzo tightly around a utility pole at 162mph at 6am on the Pacific Coast Highway. The speedster in question was Bo Stefan Eriksson, and although he stumbled away from the crash with merely a cut lip, his future is now in shreds. The criminal investigation which has followed the accident has been remarkable, and highly entertaining to boot. The whole dirty charade exposes the West’s differing policy towards corporate fraud.
Perhaps this was their only mistake, to head to the land of the free?
One of the highlights to have emerged, is Eriksson’s links with a bankrupt video game company called Gizmondo. Less than a year ago, the value of the British based company –which was listed in the USA - had topped $1 billion, and the future was looking great. Executives were on salaries in excess of £1 million, being chauffeured to work and back in Maybach limousines and spending extravagant sums on exotic sports cars, Rolex and Cartier watches and luxury yachts. Little more than 12 months after Gizmondo hosted a fabulous launch party at the Park Lane Hotel, with artists such as Sting, Danni Minogue and Busta Rhymes impressing guests, the company is in liquidation having burnt through £160 million in less than 18 months.
It’s a fantastic tale behind the downfall. But the one question that remains to be asked is: why would a British based criminal commit white collar crime in the States when it’s so ridiculously easy to get away with it in Europe? Perhaps this was their only mistake, to head to the land of the free? They now quake in their boots facing punitive jail terms.
It would seem that America is the only place in the world where white collar crime is currently being treated with the gravity it deserves. Take a look at the recent developments with the infamous Enron and Worldcom accounting frauds. In the case of Messrs Skilling and Lay of Enron, it has taken the jury less than six days to find both guilty of crimes which could mean they will spend the rest of their lives in jail. In the case of Worldcom, the world’s largest ever bankruptcy, 64 year old founder Bernie Ebbers has been sentenced to a life-consuming 25 year jail sentence.
Our media is obsessed with blue collar crime, with hoodies and ASBOs, as they prey on the everyday fears of the general public.
Contrast this with the two main defendants in the $1.2 billion fraud at Dutch retailing giant Ahold, who were last week punished with offensively mild suspended sentences and Euros 225,000 fines. Shareholders were rightly disappointed, but the directors were obviously thrilled and probably vindicated in their decision to commit the fraud in the first place.
The truth is that white collar crime has always enjoyed a low profile in the UK as well, and we never really hear much about it. In its stead our media is obsessed with blue collar crime, with hoodies and ASBOs, as they pray on the everyday fears of the general public. It’s a well known fact that violence sells newspapers and the complex nature of whiter collar crime is far too difficult to pigeonhole into good versus evil, and therefore makes for a boring story.
There has also been a deliberate focus directed on blue collar crime by our nation’s political parties. Page 2 of the political campaigning manual outlines clearly how support can quickly be gained by introducing tough stances on crime. Further towards the back of the book, there are a number of chapters on how to avoid upsetting powerful and influential benefactors and allies, by simply not levelling any campaigns and strategies against white collar workers.
Criminal activity caught within a corporation is often immediately covered up to avoid drawing attention to any board level mistake and ineptitudes, and to guard against any damage to reputation. Even if news does break, the penalties for white collar crime are pathetic. The main reason being that the majority of the offending is dealt with by regulatory bodies with small budgets and low numbers of docile staff.
Even if it does get to court, the defendant will then enjoy the luxury of being tried by a jury of peers who are almost guaranteed to have little or no understanding of the complex nature of the crime and who tend to lack any sympathy with the victim, a corporate entity.
Interestingly this particular phenomenon has been flipped on its head in the States. The fact that the jury may not understand the crime has ceased to provide a safeguard to a would-be fraudster. On the contrary, should a defendant fail to establish a commonsense argument for their crime, they will ultimately deprive themselves of their greatest chance to connect with a jury of laymen.
Now that the consequences of white collar crime are so well documented in the USA, jurors are finding it easier to sympathise with a more tangible body of victims and as a result are beginning to display new feelings of resentment towards the arrogance and greed of the perpetrators.
Fortunately though, the USA is light years ahead of us in this evolutionary process. Whilst we continue to rely solely upon our limp-wristed regulatory bodies to martial our corporate playing fields (together with an outmoded sense of ‘fair-play’), we can continue to expect the majority of our rules and regulations to be flagrantly abused or ignored. Until a real and appropriate deterrent appears on the horizon, I for one will be seeking every opportunity I can, to strengthen ties with my banking friends in the Cayman Isles. And why not - there’s nobody going to stop me.