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The previous post discussed white collar crime generally; this one focuses on Canada.

We lack good information about the extent of white collar crime and prosecution in Canada. Still, according to federal Criminal Intelligence Service Canada financial crime costs $5 billion per year, an amount equivalent to the entire annual cost of running Canada’s jails and prisons, both federal and provincial.  Very few of these crimes are prosecuted.  Police investigations of these kinds of crimes often drag on for years and rarely lead to charges.

Some 50,000 people were charged in Canada in 2016-17 with robbery, theft and break and enter; to equal $5 billion they would have had to stolen on average $100,000.  Meanwhile, Canada was well behind other countries in prosecuting people for offshore tax evasion, while spending significant money advertising its efforts to do so!  In Canada “…not one person has been charged with overseas tax evasion, much less convicted, fined or sentenced since the 2006 information leak”.

It isn’t just tax evasion that is not addressed properly, either.  Workplace safety is another area in Canada where even deaths and serious injuries rarely result in serious consequences for employers.  The incidence of injuries in workplaces is increasing while inspection to prevent them has been decreasing.

Common but rarely prosecuted

There are many reasons why white collar crime, even when it results in huge damage, is so rarely prosecuted.  One is that white collar crime tends to involve people who have more resources, can afford good lawyers, and have more social connections.  Whatever we may like to think, in reality criminal law tends to be used mainly against those who are least powerful in society.  In the US “A 2015 study found that judges showed increasing mercy as fraud offenders moved up the income scale: Criminals who stole more than $400 million got sentences that were less than half of the minimum recommended by federal guidelines. Criminals who stole $5,000 or less served sentences well over the minimum.”

So of course wealthy defendants win cases by arguing that fraud statutes and insider trading rules are poorly written. They are. But so are the rest of the laws. (Numerous… anti-gang statutes, for example, define “gang” so imprecisely that they could apply to most sororities.) The only difference is that white-collar defendants have the ability to dispute every step of the process used to convict them—and a judicial system all too happy to oblige.”

Then there are practices like deferred prosecution agreements (DPAs), at the centre of the SNC-Lavalin case here in Canada.  Hobbes says that the origins of DPAs were in trying to keep juvenile offenders out of jail, and it was only in the 1990s that they began to be used for corporations.  Although they are supposed to be monitored, “since 1999, only three companies [in the US] have ever been prosecuted for violating the terms of their agreements”.

The problem of individual responsibility

A second reason is that law largely focuses on individual responsibility, and struggles – just as it does when prosecuting gangs or conspiracies – when responsibility for wrongdoing runs across multiple people or over longer periods of time.  And this in turn has to do with the limits of human thinking, in which an individual action is obvious while we have a much harder time tracing responsibility through chains of events and actions.

So for example we arrest an opiate addict for stealing to support a habit without much questioning of the social circumstances, such as promotion by pharmaceutical companies, that did so much to create the addiction in the first place.  Even when there is clear corporate wrongdoing, it’s rare that the key leaders are actually prosecuted.  It’s not that we are blind to these issues – as the lawsuits against pharma companies or Boeing over the 737Max clearly show.  Rather, the criminal law does not handle them very well.

Do governments really care?

But one of the most important reasons is that governments just don’t invest in finding and prosecuting white collar crime.  Hobbes points out that the budgets for this work have steadily been cut in the US even as court decisions have also made it more difficult for such cases to be prosecuted successfully.  The same is true in Canada.  While police budgets go up steadily, governments have cut back on resources to address white collar crime such as health and safety inspections.

Meanwhile police resources are devoted very largely to street crime where harms or losses are often small; white collar crime gets less attention. This allocation is driven by public pressure based on fear; people are frightened of being robbed on the street or in their home in a way that they are not by financial crime or a company that behaves negligently.  But public fear is itself shaped substantially by media coverage which focuses heavily on street crime, while media coverage is in turn influenced by police activity.  So we have a self-reinforcing cycle leading to misallocation of attention in terms of crime.

If we investigated and prosecuted crime based on real harm to real people, we would have a very different situation than now exists in Canada.