QLLM 323-The denial industry public relations, crisis management and corporate crime – Tho | Study notes Law

Readings – State-corporate Crime

The denial industry: public relations, crisis management and corporate crime –

Thomas MacManus

Introduction

Crisis management – the control information pertaining to reputational crises which

are widely publicized, highly negative events that lead important stakeholders to re-

evaluate their impressions of an organisation. There is a lack of state impetus to

enforce rules in the case of corporate and state-corporate crime.

Capitalism provides the major incentives for organisations to use illegitimate means

to achieve profit. It promotes impunity for the main actors in the market sector.

In the absence of state prosecution of corporate crime, it falls to civil society to label

the wrongdoing and apply sanctions. Civil society censure of corporate and state-

corporate deviance triggers in states a discourse of defence, denial and

neutralisation.

Cohen’s three forms of denial: (i) denial of the past – systematic efforts to cover-up

the record of the crime, (ii) literal denial – organised cover-ups and purposeful

evasion of reasonable conclusions made plain by the fact and (iii) implicatory denial

– seeks to negotiate or impose a different construction of the event form what might

appear the case and offer justifications or excuses.

Trafigura ‘ship of death’

August 2006 – over 100 gallons of toxic waste was dumped in Abidjan. There were

16 deaths and hundreds of thousands of cases of injury by poisoning. The ship had

been chartered by Trafigura co. operating from London. The material was a by-

product of a chemical washing process banned throughout the EU and the US.

July 2006 – APS was engaged to process slops and took a sample after noticing a

strong smell. It told Trafigura that it didn’t have the facilities to treat the material due

to its high toxicity. The waste was reloaded and Trafigura later said that the refusal

was not explained by APS.

12 July – Company Tommy was granted an operating license. 17 August, Trafigura

emailed its subsidiary to make arrangement for the dumping, it arrived on 18 August

and was immediately dumped.

21 August – the Ivorian Ministry for the Environment set up a crisis committee and

investigation.

25 August – Prime Minister was informed that there had been a case of illegal toxic

waste trafficking.

UN Special Rapporteur visited Abidjan in 2009 and concluded that evidence

supported the fact that the health problems were as a result of the toxic dumping.

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Readings – State-corporate Crime The denial industry: public relations, crisis management and corporate crime – Thomas MacManus Introduction Crisis management – the control information pertaining to reputational crises which are widely publicized, highly negative events that lead important stakeholders to re- evaluate their impressions of an organisation. There is a lack of state impetus to enforce rules in the case of corporate and state-corporate crime. Capitalism provides the major incentives for organisations to use illegitimate means to achieve profit. It promotes impunity for the main actors in the market sector. In the absence of state prosecution of corporate crime, it falls to civil society to label the wrongdoing and apply sanctions. Civil society censure of corporate and state- corporate deviance triggers in states a discourse of defence, denial and neutralisation. Cohen’s three forms of denial: (i) denial of the past – systematic efforts to cover-up the record of the crime, (ii) literal denial – organised cover-ups and purposeful evasion of reasonable conclusions made plain by the fact and (iii) implicatory denial

seeks to negotiate or impose a different construction of the event form what might appear the case and offer justifications or excuses. Trafigura ‘ship of death’ August 2006 – over 100 gallons of toxic waste was dumped in Abidjan. There were 16 deaths and hundreds of thousands of cases of injury by poisoning. The ship had been chartered by Trafigura co. operating from London. The material was a by- product of a chemical washing process banned throughout the EU and the US. July 2006 – APS was engaged to process slops and took a sample after noticing a strong smell. It told Trafigura that it didn’t have the facilities to treat the material due to its high toxicity. The waste was reloaded and Trafigura later said that the refusal was not explained by APS. 12 July – Company Tommy was granted an operating license. 17 August, Trafigura emailed its subsidiary to make arrangement for the dumping, it arrived on 18 August and was immediately dumped. 21 August – the Ivorian Ministry for the Environment set up a crisis committee and investigation. 25 August – Prime Minister was informed that there had been a case of illegal toxic waste trafficking. UN Special Rapporteur visited Abidjan in 2009 and concluded that evidence supported the fact that the health problems were as a result of the toxic dumping.

Trafigura responded stating that the report was inaccurate and potentially damaging (implicatory denial). Civil society actors (Greenpeace, BBC, Al Jazeera, The Guardian etc., Leigh Day and Sherpa) launched a coordinated attempt at labelling Trafigura’s actions as deviant and contrary to prevailing social norms. Trafigura’s lawyers were engaged in propaganda including (i) the waste was not toxic so couldn’t have injured anyone and (ii) we didn’t dump the waste, Tommy did. Trafigura could engage institutions of the state to assist with silencing dissent and securing impunity as they had connections in the legislative and executive power as well as expertise in law relating to libel. By the end of 2009, UK newspapers that had originally reported on the dumping started to alter that public record with corrections and apologies. The settlement between media companies and the corporation close off avenues for further investigation and refuses to put the information out for public consumption. Minton was one of Trafigura’s scientific consultants reports that the waste was capable of causing severe human health effects including death. It was leaked by the Guardian but Minton released a statement denying the veracity of the research. A critical introduction to state-corporate crime – Kristian Lasslett Kramer and Michalowski authored a series of papers which initiated a new criminological research agenda whose focus would be those illegal or socially injurious actions that resulted from one or more institutions of political governance pursuing a goal in direct cooperation with one or more institutions of economic production and distribution. State initiated v state facilitated corporate crime State initiated – corporations employed by the government engage in organisational deviance at the direction or, or with the tacit approval of the government. State facilitated – government regulatory institutions fail to restrain deviant business activities, either because of direct collusion between business and government or because they adhere to shared goals whose attainment would be hampered by aggressive regulation. Corporate initiated v corporate facilitated state crime Corporate initiated – corporations directly employ their economic power to coerce states into taking deviant actions. Corporate facilitated – corporations either provide the means for state criminality or when they fail to alert the domestic/international community to the states criminality because these deviant practices directly/indirectly benefit the corporation concerned. Kramer et al’s theoretical model of state-corporate crime is based on the proposition that criminal/deviant behaviour at the organisational level results from a coincidence of pressure for goal attainment, availability and perceived attractiveness of illegitimate means and an absence of effective social control.

State-facilitated corporate crime – this is the failure of governmental regulatory agencies to restrain deviant business activities because of direct collusion between business and government or because they adhere to shared goals whose attainment would be hampered by aggressive regulation e.g. state-facilitation in the granting of land concessions to large shrimp farmers to the detriment of communally owned land and corporate immunity granted to shrimp companies which torture and kill locals. The Nigerian oil industry follows a pattern of state-initiated crime. The states own 50- 60% of the joint ventures with European and US oil companies. The state is involved in protecting the interests of the oil companies by violently repressing local dissent. In some states, the government has restructured existing security forces to protect oil industry interests. The US and Britain in conjunction with companies such as British Aerospace played a central role in arming the Indonesian occupation of East Timor. Britain was involved in arming Saddam Hussein’s dictatorship in Iraq. State-corporate actions and human rights violations The role of the state in initiating or facilitating corporate crime could be perceived as a human rights violation in and of itself. Nigeria and Honduras have also seen a similar pattern of forced displacement, environmental devastation and serious human rights abuses commit by security forces in the interests of the oil and shrimp industries. Nigeria 1990 – state action against a protest occurring outside shell facilities in Rivers State resulted in the murder of 80 unarmed protestors and the destruction of homes. Environmental damage as a result of oil spoils has also caused deaths, severe illnesses and economic hardship for many Nigerian communities. Deviance The behaviour of states in the above examples amounts to deviance because (i) all three case studies have involved the breach of multiple institutionalised rules as well as moral/ethical policies. The actions of all three industries have been labelled as deviant by both national and international civil society organisations attempting to institute sanctions ranging from public shaming and consumer boycotts to direct action and sabotage of corporate installations. The role of individuals Close personal connections motivate and facilitate many instances of state-corporate deviance. In some instances, it’s difficult to distinguish between the state and the corporation in identifying the individual government officials who are implicated in the

crimes. There are also individuals who invest in the industries e.g. oil and shrimp industries. Institutional frameworks for state-corporate crime The duality of interests determines the organisational goals of the regulatory institutions. Because of this duality, the state will seek to advance institutional and personal aims, translate these aims into policy objectives and measure any proposed policy on the basis of how it serves their priorities and support a national policy on the same basis. In the UK, the lack of parliamentary in defence contracts allows a tighter confluence of interests to be brought into play when making export decision, by narrowing the circle of potential opponents and restricting the flow of information. Political economy The debt service obligations almost compels governments to look the other way when foreign and domestic investors offer hope of increasing economic development from foreign trade. The export-led growth model which the IMF and the World Bank insist is a purely extractive one involving more mining than management of resources. Nigeria has attempted to service its debts through exports with 90% of them provided by the oil industry. Motivation The first catalyst for action is the emphasis on goal attainment. Pressure for goal attainment in Latin America derives from state institutions which are strongly motivated to increase exports in order to obtain foreign exchange to finance debt. Phythian – it is difficult to find a rational explanation for Britain’s high-profile involvement in the arms trade. The dominant official justification has been the number of jobs reliant on the industry. Profit considerations have now largely replaced foreign policy as the motivation driving the illicit arms trade. Opportunity structure Restrictions on legitimate means for governments and corporations to achieve their organisational goals has been key e.g. the demand for arms through illicit channels at a state level is a consequence of the application of either embargoes or restrictions on the flow of certain categories of equipment to target states. Lack of control Kramer – a lack of control and enforcement mechanisms leads to the erosion of norms supporting the use of legitimate means to accomplish organisational goals.

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