‘…One of the reasons we fail to understand business crime is because we put crime into a category that is separate from normal business. Much crime does not fit into a separate category. It is primarily a business activity...’
As someone who has spent all his adult life dealing with the phenomenon of white collar crime, I never cease to be amazed at just how little willingness is shown by the financial services industry in encouraging strategically-positioned practitioners to gain higher academic qualifications in an understanding and interpretation of the issue.
Financial crime now costs UK plc billions of pounds annually, money which is deducted directly from the bottom line of the balance sheet. The problem is so acute that the FSA now makes it a primary requirement of good governance that all regulated member institutions must adopt a risk-based approach towards the prevention and interdiction of financial crime, as part of their compliance strategies.
The responsibility for ensuring the successful implementation of this policy lies at senior board level, but when such individuals are questioned as to their domain knowledge of the causes, the practices, the activities, the phenomenology of the problem they are required to prevent, the level of practical expertise is a resounding zero.
Work down the food-chain within the corporation, and try and find anyone who has any understanding of the way in which the criminal mind works, and you will find an almost complete void. Occasionally you may be lucky and you will discover a former detective or seasoned former police officer in post in some dark corner of a financial institution, but their role and position is rarely a senior one, and they have a very limited input on policy-making decisions.
But why stop with the regulated sector, examine the regulatory agencies. How many experienced former detectives with the knowledge or expertise to be able to understand the criminal mentality are there holding down senior policy-informing roles within the various regulatory agencies? Who in their various financial crime teams has really worked in the arena of financial crime and who has had any experience of really dealing with professional financial criminals. This is not to belittle any of the efforts made by these good people, it merely asks the question, what is the basis of their experience or knowledge which befits them for this role?
I recall meeting a woman at a conference not so long ago who asked me a series of questions on my presentation about criminal trends and criminological tendencies. It turned out that she had been seconded to one of the regulators and was responsible for determining a financial crime policy initiative. When asked what experience she possessed, the answer was that she had absolutely none at all, but she did have a Ph.D in finance and as her employing bank had no work for her at that time, she had been sent on a sabbatical to the regulatory agency to fill in the time until the market conditions improved. The regulator obviously had no room for her in any of the financial policy divisions, so they tucked her away in the financial crime office and told her to find something to do. She was reduced to doing the rounds of the conferences, trying to dredge up enough background information to enable her to make a contribution to the internal debate for which she had been employed.
It is instances like this that make the wider white collar crime debate risible, and illustrate just how little anyone, government or industry really care about domain knowledge and expertise in the field of white collar crime.
Perhaps this goes some way to explain why the volume of financial crime is rising exponentially, and why Government is repeatedly demonstrating its powerlessness to deal with the phenomenon.
Recent Government initiatives have either just dwindled away to nothing, (taking yobboes to cashpoints to draw out cash to pay their on the spot fines); and some like the Asset Recovery Agency, (ARA) which have been forced to close down because of their incredible inefficiency. When she was appointed to the role of head of the ARA, Jane Earl was interviewed by reporter Nick Cochan for the Observer. He wrote;
‘…A new crime fighter is gearing up to take on the heaviest of
Ms Earl came to her role with no qualifications, domain knowledge or life experience of dealing with the very people whom she was going to be expected to confront on a daily basis. It’s not her fault that she was appointed by some apparatchik who almost inevitably shared her complete lack of criminological experience, but who believed her when she declared her ‘passion’ for finding new ways of dealing with crime. This was ‘Blair-speak’ with knobs on and people who talk the language of New Labour get the jobs under New Labour!
Some of the applicants for the head of the ARA were deeply experienced practitioners who had already proved their mettle in asset recovery operations against major criminals and Irish terrorists, and who would have brought significant experience to the role. However, skills, knowledge, expertise, a few hardened battle scars, none of these count for anything as long as you can talk the talk of the new regime of Major-Generals appointed by Lord Protector Blair to rule the UK’s public policies.
Jane Earl herself expresses disappointment at the failure of her agency to deliver results. She talks in a surprised voice of the tactics adopted by her targets and their lawyers in using the civil court procedure to fight back against ARA actions. She appears distracted by the fact that those with the most to lose, financially, do not appear to have any qualm about taking every point to obfuscate the issue and to deflect the Court’s direction, and make the ARA prove its case to the ultimate degree.
What did she expect? It was not her fault that she had no experience of dealing with professional law breakers, who would and should be expected to fight back with every last resource against having their assets confiscated. The fault should lie with the bureaucrat who failed to understand the problem either, and who, instead, unblinkingly obeyed Tony Blair when he said that taking the profits of crime from criminals would teach them not to do it again, and would prove to be a major disincentive to crime.
Let me let you into a little secret known only to former detectives. All you do when you take assets from a thief is to guarantee another series of thefts!
The point of my concern is that there is frankly no agenda, either within Government or within the industry it seeks to regulate, to provide any level of real academic expertise designed to enable the acquirer to truly understand the nature of the criminal mentality and criminogenic behaviour.
Why should this be? Is it that those who administer these environments have merely overlooked the importance of these subjects; or is it more sinister, reflecting a deeply submerged realization, as the quotation at the start of this essay pointed out, that so many of the practices which are commonplace in the financial sector, and which are openly encouraged by those with money to make, are little more than thinly-disguised criminal activities in themselves, and that those who engage in them are indeed nothing more than financial criminals, in nice suits?
Could it be that those with the most to lose from a truly transparent evaluation of so many of the business customs and practices prevalent in the market, deliberately discourage any wish to study or become proficient in the understanding of the problem, for fear that this new-found knowledge might become antithetical to the continued ambitions of those with the most to gain from an unfettered continuation of the status-quo.
Now before someone from a training company suffers a sudden rush of blood to the head, let my stress that I am not talking about training! There are more training companies out there than you can shake a stick at, some are very good, some are not quite so good, and some are downright useless!
Training is vital for a well-regulated industry, and is legally mandatory, but with respect, a training course is designed for entirely different purposes. It is there to enable staff to be aware of their role and responsibilities within the regulated sector, and to give them a very basic but workmanlike knowledge of the jobs they have to perform.
It simply does not and can provide the level of academic input, nor demands the depth of intellectual rigour which a higher degree requires, and it is this level of academic excellence of which I speak. Training merely looks at the status quo and provides responses in suitable circumstances. Education looks at the status quo and asks ‘Why?’ and ‘How?’ and ‘What If?’ and ‘How does this inform me?’ and ‘What if this were to happen again in other circumstances?’ and ‘How would I react if I saw this conduct but in very different circumstances?’ Training gives people a series of possible answers. Education teaches people to ask further questions.
All too often I have addressed these issues with practitioners, only to be told, and with apologies to Pink Floyd, ‘we don’t need no education’. Academic study, so it seems, is not required, merely a minimally-necessary level of training to satisfy the regulators. Universities have serious difficulty in attracting students to study for higher degrees in white collar criminology or financial crime management. I have approached a major
Yet this is such a short-sighted policy. What lies behind the adamant refusal to admit the need for more academic knowledge, research and study in appropriate circumstances?
The study of white-collar criminology teaches us a significant amount about the human condition, and helps to interpret the attitudes which are so often expressed by practitioners.
The work of the American criminologist, Austin Turk on ‘Conflict and Criminality’ provides an illuminating insight into the work attitudes of financial services compliance officers, and explains a great deal about their discomfiture about being perceived to be performing a ‘policing’ function within a financial environment. The fact that the original research dealt with township kids in
White collar criminology also assists in our understanding of why City people behave in the way they do and why they so often get their institutions into difficulty. Nick Leeson was an accident waiting to happen. Had one of his managers read and understood Christopher Stanley’s research on the legitimation of deviancy and the Anomie of Affluence, they would have identified the risk Leeson posed.
In his article, 'Mavericks at the Casino: Legal and Ethical Indeterminancy in the Financial Markets',
I suspect that deep at the root of the problem of the institutionalised intransigence to accept that criminology can help understand the white collar fraud and financial crime phenomenon, lie attitudes and preconceptions about class. It is almost as if the final recognition that the wrong-doing of the middle and educated classes can be identified in exactly the same way as the behaviour of more easily recognizable members of the criminal underclass, is something which those who engage in this kind of conduct, do not wish to accept.
The professional and chattering classes do not want to be confronted by the fact that their behaviour is no different from the class they profess to despise, and with whom they would never, ever admit any degree of similarity. In the case of politicians, this sense of social differentiation is even more pronounced, but because they do not understand the criminological implications of their behaviour, they inadvertently make themselves even more ridiculous.
Take, as an example, the recent spat between No.10 and the police investigating the ‘Cash for Honours’ scandal.
Detectives, and particularly those who deal with the crimes of the powerful know, as a given, that when police investigations begin to get close to the source of the problem, the suspects can rely on friends and commercial colleagues to begin to mount a vociferous defence of their interests. It is a well recognized criminological phenomenon within this class type. Those who can still remember the Guinness and Blue Arrow investigations will recall the tidal wave of sneering press stories and adverse publicity that sought to rubbish the validity of the police and SFO investigations. The aim of course, was to seek to influence the political will to continue the investigations and to undermine the possibility of prosecutions.
Detectives ignore these interventions, treating them as nothing more than a mild irritant, because they know that the louder the rubbishing, and the more elevated the status of the rubbisher, the closer they are getting to the truth.
The detectives who arrested the No 10 aide, Ruth Turner, will not have been fazed in the least by the interventions of the likes of David Blunkett, a man who can be relied upon to provide a ‘rent-a-quote’ service at the slightest opportunity, Tessa Jowell or Lord Puttnam. On the contrary, they will have been reassured by these uninformed but clearly coordinated outbursts, because they will know that they are really on the right track, and their investigations are now really ‘shaking the tree’ in the right places.
When people like Blunkett, or Jowell, both of whom have been members of a Cabinet which has introduced some of the most draconian measures to deal with the criminal class in recent history, begin to voice concern at the use of perfectly ordinary police powers against one of their own protected species, what they are really doing is seeking to engage in special pleading on behalf of someone who comes from their politically-elite environment. They don’t mind such powers being used against criminals suspected of burglary or theft or illegal immigrants, because they of course, are different; but when it comes to someone from their milieu, then a whole different range of attitudes is expressed. The fact that Ruth Turner is now suspected of having committed an extremely serious offence of attempting to pervert the course of justice, is irrelevant. She, so they claim, should have been treated differently!
The police know better. They know that when any person is faced with the possibility of going to prison, possibly for a long time, for allegedly committing a serious offence, they will behave in exactly the same way as their brothers and sisters under the skin, and try and cover up their actions, destroy evidence or otherwise seek to impede the police investigation. They know that it doesn’t matter what class you come from, when the chips are down then we all revert to type, and they respond accordingly!
Blunkett, Jowell and Puttnam do not understand the criminological implications of their contributions, they are merely responding in a predictable political class-based fashion, but their words are doing nothing to help Ruth Turner, or anyone else for that matter. They would do their so-called friends a lot more good if they just shut up! However, the arrogance of power and high office is a dangerous combination, and it is to be doubted whether they will see the wisdom of this course of action.
Senior management needs to completely reconsider its attitudes towards providing selected personnel with the academic education necessary to understand the white collar crime phenomenon. Young ambitious graduates, looking to further their careers in business, finance and management, think nothing of signing up for very expensive MBA courses. The MBA has almost become the sine qua non of the level of qualification required for entry to the highest levels of management.
If business provides such recognition of the MBA, then why does it refuse to contemplate the opportunity offered by the provision of the highest level of crime preventative and loss forestalling understanding and expertise offered by a Master’s degree in white collar criminology. Such degrees do exist, but unless they are recognized for being the sources of inspired business awareness and best practice facilitators which they are, the courses will be closed down, and the costs of fraud and losses to business will continue to follow their exponential growth curve.