Regulation and Corporate Crime: Managers and Auditors

Authors: Levi, Michael1; Dorn, Nicholas2

Source: European Journal on Criminal Policy and Research, Volume 12, Numbers 3-4, December 2006 , pp. 229-255(27)

Publisher: Springer

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Do laws ever deepen the crime risks facing managers and auditors? According to the literature and drawing upon several research traditions—actuarial, opportunity reduction and sectoral vulnerability studies—a provisional approach to assessment is developed and applied. Some headline risk concepts are: incoherence or lack of clarity of legalisation; potential for opening up opportunities for illegal acts by market participants; and the extent to which legislation might or might not signal to exposed persons that opportunities exist. This approach is deployed briefly in relation to EC directives on business transparency and auditing and, in more detail, in relation to the Enron debacle. The latter very clearly shows how changes in regulation in two distinct sectors, the energy market and securities (financial instruments), produced an excrescence of risk. Whilst some risks may come from regulation/de-regulation that is intended to directly apply to specific roles (e.g., auditing), other risks come from regulation/de-regulation in adjacent policy areas. Assessment has both to cast its net wide and to drill down to detail, looking for risks in the nooks and crannies of economic practices. In reaching such assessments, it would be most appropriate to ask traders, compliance persons, enforcement agents and jurists how they would understand the provisions of and risks implied by legislative proposals. Whilst officials can steer that process, it seems questionable whether the actual authors of legislative proposals should be asked to critically assess those same proposals, so “Chinese Walls” may be required within the European Commission. Finally, there are questions of the limits to assessment in cases when details of implementation have yet to supplied by future measures. EC Regulations, which do not rely upon transposition into national laws, may be easer to assess than Directives.

Keywords: accountancy, auditors; crime and security; energy policy; enron; governance; private sector; quantitative and qualitative approaches; questions about comparison points; regulation, self regulation and deregulation; transparency

Document Type: Research Article


Affiliations: 1: Email: 2: Email:

Publication date: December 1, 2006

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