Introduction

• Author: Miriam Weismann
• Pages: 20-25

xix

INTRODUCTION

The New Age of Corporate Crime

Whatever happened to the good old days . . . when t he typical sc enario of corporate

crime involved slush funds , fraudulent billing scheme s, and tax cheats? Cor porate

misconduct was hidden from accounta nts, corporate general counsel, a nd outside

counsel. It was an inside job. But the world has cha nged. The third-par ty corporate

“watchdogs,” including accountants, ban ks, investment advis ors, and attorneys,

who were supposed to “bark ” when clients crossed the li ne between legal and il legal

conduct, have now become part of the problem and, often, i ntegral players in the

scheme. Violations by and with in an organi zation are facil itated by other business

organizations in t he same network.

In plain terms, v iewing corporate white-c ollar crime as d iscreet and relatively

straightforwa rd financial t ransactions has cha nged. The nature of corporate crime

has morphed into a new paradig m of accounting frauds a nd investment schemes

facilitated by the speed of tech nology and the genius and exp ertise of business pro-

fessionals whose compensation is tied to short-term performance. W hen the com-

pany fails to perform, t he new whiz kid professionals ma ke it perform by engaging

in new and complicated forms of accounting, such a s earnings mana gement and

balance-sheet accounti ng. They find new fi nancial packages a nd products to facili-

tate deception. Former Federal Reser ve Board Chairman Alan Greenspa n, before the

fatal descent of the subprime mor tgage market, commented on the positive contribu-

tion made by derivatives in the fi nancial market, noting also that only a ver y few on

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