What had been discussed so far is transnational organized crime usually associated with threats and violence. It is time to peek under the radar to examine transnational organized white-collar and/or corporate crime. 

Nicholas Leeson

An example of the former is the unscrupulous activities of Barings Bank’s Nicholas Leeson that led to $1.35 billion trading losses and the eventual collapse of Barings P.L.C., one of the world’s oldest merchant banks.  According to experts, a number of reasons including lack of supervision, enabled Leeson to do what he did.  Some of you may complain that Leeson should not be held as an example of transnational organized white-collar crime since he supposedly acted alone.  Leeson himself is quite mum regarding his methods (and accomplices, if any), at least,  as long as no money is put up front to pay for the information.   Leeson became a cult icon of sort and popular actor Ewan McGregor portrayed him in the aptly-titled movie Rogue Trader.  After his prison term, Leeson’s life turned normal.  He chaired an Irish football club and became a financial risk consultant.

“Rouge Trader” posters


The Leeson incident was repeated years later at the French bank Societe Generale supposedly involving a solitary trader with larger amounts involved.

As more and more people had access to the Internet, one of the most scams most common is the Nigerian advance fee fraud, where unwitting victims are advised that they may receive a bequest, or are offered an incentive to assist in the international transfer of funds, if they pay a fee in advance and/or facilitate access to their own bank account. Those unwise enough to do so have found their assets disappear.  These crimes were previously committed through snail mail and fax,  new technologies broadened and deepened the net of victims.

Logo of Lockheed Aerospace Corporation


Japanese PM Kakuei Tanaka

A clear instance of transnational corporate crime are the series of bribes and contributions made by officials of US aerospace company Lockheed from the late 1950s to the 1970s in the process of negotiating the sale of aircraft.  The scandal caused considerable political controversy in West Germany, Italy, the Netherlands and Japan.  Lockheed executives admitted paying millions in bribes over more than a decade to the Dutch (Prince Bernhard, husband of Queen Juliana, in particular), to key Japanese and West German politicians, to Italian officials and generals, and to other highly placed figures from Hong Kong to Saudi Arabia.  Japanese prime minister Kakuei Tanaka was arrested and was released a ¥200 million ($690,000) bond. He was eventually found guilty by a Tokyo court for violations of foreign exchange control laws but not on bribery. He was sentenced to four years in prison, but remained free on appeal until his death.

Prins Berhard of The Netherlands


One may say that bribing procurement officials is considered par for the course.  It can be written off as selling cost to ensure that potential purchases actually buy one’s products.  The practice may violate generally-accepted standards for fairness.   However, it may also be seen as the sordid version of suppliers’ credits—usually granted by a country’s export-import bank to other countries.  The Lockheed scandal, meanwhile, played a part in the formulation of the Foreign Corrupt Practices Act, which made it illegal for American persons and entities to bribe foreign government officials.  In the early 1990s, similar allegations of bribery involved the Canadian prime minister and Airbus, a European aircraft manufacturing consortium. 

Logo of Airbus

As noted earlier, the sale of home mortgage-based financial goods did not lead to charges filed against any financial executive or trader in the industrial and financial supply chains of such products.  A strictly laissez faire or ‘marketist’ perspective frees the seller of all responsibility and assigns the ‘blame’ on the investor.  Caveat emptor! Let the buyer beware!  The buyer should  know and the market supplies needed information so investors can make informed decisions.  Critics of laissez faire emphasize the information asymmetry between buyer and seller and insist on (strict) disclosure rules for sellers. 


The strict regulationist argument suffers however from several defects.  One: what if both parties are party to the fraud?  Consider NINJA (no-job-no-income) mortgages.  Within the context of rising housing prices, a mortgage broker cajoles non-prime (meaning jobless or low-incomed) borrowers to take out mortgages without even putting in equity.  The loan documents can be ‘cooked’ so the borrower is recorded to be employed and had made a down payment.  Both sides end up happy: the borrowers transfer to their new homes with zero down payment while the broker earns his fees and passes on the mortages to the mortgage banks.   Eventually, however, somebody has to shoulder the financial responsibility.  In most cases, it will be the taxpayers.


Two: the trade in financial goods does not only involve the original borrower and lender. Real goods like cars and computers have finite lives while financial products enjoy (theoretically, that is) infinite lives.  Due to wear and tear, real goods can no longer be continuously used or re-sold.  On other hand, financial goods can be resold ad infinitum.  A given financial good can also be transformed (derivatives).  Improvements in information and communications also enable transnational financial markets to operate on a 24/7 basis. 


Three:  financial goods are fungible while real goods are not.  If you borrowed my Mercedes Benz coupe,  I will not accept your Lexus in return.  However, I will not insist that you return the same bills worth, say, $100 to repay a loan. 

Four:  financial goods are more portable than real goods. 

Five:  financial goods are less visible than real goods. 

All these points lead to the conclusion that crimes involving real goods are difficult to conceal while it is comparatively easier to mask financial crimes.  The greater complexity of financial markets compared to real goods markets and the actual (and virtual) existence and operation of tax havens, shell companies, numbered accounts, and electronic fund transfers provide a congenial environment for transnational organized crime.


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