Economic Crime as Hiding Behavior

Autor: Oskar Engdahl
Rok vydání: 2009
Předmět:
Zdroj: American Journal of Economics and Sociology. 68:747-773
ISSN: 1536-7150
0002-9246
DOI: 10.1111/j.1536-7150.2009.00649.x
Popis: Introduction IN JANUARY 2008, the French bank Societe Generale announced that it had suffered a nearly 4.9 billion [euro] trading loss caused by the activities of a securities trader in its employ (see Societe Generale 2008). The losses posted, largest ever in banking history, were a result of bad bets place on the risky derivatives markets, an area in which the bank ranks as one of the world's leading players. And yet, it could have been worse. What the trader had done was to build up a 50 billion [euro] unhedged position, gambling on a stock market boom. The boom never came, and the losses kept multiplying until the activities could no longer be hidden--for that is exactly what the trader had attempted to do. The risky investments were made without proper authorization and, as the 31-year-old trader himself put it during his police interrogation, "covered up with fictive operations" to prevent detection (Davet and Vincent 2008). The criminal investigation has narrowed down to a series of illicit and fictitious activities stretching back longer than initially thought. Even though much about the events remains unclear, it seems safe to assume that for the ante he kept upping the rogue trader will soon be sharing the top honors with the field's famous fraudsters such as Nick Leeson at Barings Bank, John Rusnak at Allfirst Financial, and Toshihide Iguchi at Daiwa Bank. All these are cases in which, through dubious deals, the trader went on secretly exposing other people's money to risk. The immediate aim of their actions was not to enrich themselves but to cover up their losses and make money for their clients, and in that way to improve their standing in a culture of fierce competition, in which a man's measure was the richness of the deals he cinched. Just as Leeson, Rusnak, and Iguchi, the French trader also enjoyed considerable freedom of action and possessed intimate knowledge of the bank's management systems and security routines. And just as in the past, so now, too, are fingers pointed at those around the one accused, for ignorance of the goings-on or for shutting their eyes for as long as the money kept coming in (see, e.g., Board of Banking Supervision 1995; Creaton and O'Clery 2002; Engdahl 2009; Promontory Financial Group 2002). Due to the almost unfathomable amounts of money at stake in the gamble, the drama of the hidden dealings, and the momentous consequences of the machinations, the cases can but attract attention far beyond the boundaries of banking and finance. They, moreover, have already proven recurrent. Nonetheless, the events have only barely registered among researchers on economic crime, catching them, as it seems, poorly prepared for the task of tackling the actions in question, whether conceptually or causally. What the research has noticed, however, is that crime can often constitute a means for concealing problems and resolving crises, for instance, those brought on by gambling debts, impending bankruptcy, or, as in the case of the French trader, Leeson, Rusnak, and Iguchi, bad business deals and mistakes in professional practice. What is common in all these cases is the perception that stigmatization and loss of status will result from the problems becoming known to others. Available concepts to identify, describe, and explain this phenomenon include "nonshareable problems" (Cressey 1953: 34; 1986: 199), "fear of falling" (Weisburd et al. 1991: 189), and "crisis respondents" (Weisburd et al. 2001: 59-64). Such concepts are often invoked but only infrequently examined in any further detail. The research area seems built up around general ideas and quick labeling rather than rigorous work advancing theoretical and conceptual development. This is especially evident concerning the question of what a person does when he or she carries out a crime. Despite extensive discussion of how to define and categorize economic crime, the content of the criminal act is seldom investigated or even problematized. …
Databáze: OpenAIRE
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