Post on 31-Jan-2016
description
Part VIChapter 36
Deviant formal organizations share bond of membership in large-scale, highly-structured associations that extend over time & space
They entail more highly sophisticated relationships than less-structured or committed crews, where a division of labor exists & members learn specific skills & pursue specialized tasks within the group
Since WWII organized crime has carried out a wide range of domestic activities, using violence, extortion, bribery & murder to advance its interest Part 6: Ch. 36
Part 6: Ch. 36
While organized crime is growing, there is no integrated centrally directed criminal conspiracy
The first business of criminal organizations is usually business, its protection & promotion
Like legitimate enterprises, the activities of separate “corporations” can be cooperative or competitive
Part 6: Ch. 36
Activities must be criminal; individuals engaged in such activities
must be organized; profit-oriented; use of violence & bribery to advance causes;
Forms of entrepreneurial activity that are classified illegitimate if they do not meet the state’s test for permits, licenses, etc.
These organizations account for significant proportion of all meaningful economic activity
For example, in Italy, Peru, Columbia, Russia, Mexico, etc Part 6: Ch. 36
Most major crime organizations have a family or ethnic base
Operate out of small, tight-knit communities
Rituals, codes of allegiance, ethnic bonds & quasi-religious ceremonies help to engage compliance & loyalty
Involvement places individuals outside of law & subject to arrest helps reinforce ties that bind
Murder is usually the final sanction to ensure loyal silence
Part 6: Ch. 36
First, the broader, global canvas of traditional criminal activity
Second, the growth of transnational links between criminal organizations & other groups
Third, growing ability & power of international criminal organizations (ICOs) to threaten stability of states, undermine democratic institutions, hinder economic development & undermine alliance relationships
Part 6: Ch. 36
Part 6: Ch. 36
ICOs transnational scale & ability to challenge national & international authority sets them apart from other major criminal organizations
Disposing of large quantities of ready cash, diversified into a wide range of activities, & employing a workforce spread around the globe, the ICOs represent a different order of magnitude in criminal operations
Part 6: Ch. 36
America Mafia or La Cosa Nostra (LCN)Hells Angels motorcycle gangChinese TriadsColumbian cartelsMexican cartels
Part 6: Ch. 36
Part 6: Ch. 36
It’s more economical, for example, for a farmer to grow drug-related crops given the profitable nature of these products Example: Poppy in Afghanistan
Large markets, such as the US & Europe make them the world’s most lucrative markets for illegal as well as legal enterprises
Part 6: Ch. 36
Growth of international crime parallels global trend of ungovernability – the declining ability of governments to manage or govern a modern state & to provide adequate or effective servicesExample: The Andes & Amazon of Latin
America, regions in Afghanistan & Pakistan, Burma, Peru, Southern China
Part 6: Ch. 36
Part 6: Ch. 36
Ethnic criminal organizations likely to follow immigration patterns – not always but there’s a strong correlation
Economic pressures & ethnic turmoil generate refugees & immigrants from regions where international criminal groups are basedExample: Chinese, Mexicans, Middle-
Easterners, Russians, etc
Part 6: Ch. 36
US’s long open borders with Mexico & Canada provide ready access for criminals & illegal goods & tens of thousands of miles of coastline
The North American Free Trade Agreement (NAFTA) & EC lowers many existing safeguards
(However, after 9/11 a lot more scrutiny & security does exist)
Part 6: Ch. 36
Continued advances & international transportation will facilitate growth in ICOs
The movement of trillions of dollars in wire transfers make it difficult for law enforcement to track every transaction down
(The use of the internet, which cannot be controlled or monitored adequately, reinforces this)
Part 6: Ch. 36
Preventing, disrupting & successfully prosecuting organized crime in most parts of the world is difficult
Criminal organizations have survived the onslaught of law enforcement for decades
Now, ICOs pose a bigger threat and are more powerful than their predecessors
Enforcement of law globally poses jurisdictional issues as well
Part 6: Ch. 36
In a post-9/11 world, what challenges do ICOs face that they would otherwise not experience?
With a focus on terrorism & terrorists, have ICOs been able to operate under the radar of law enforcement?
Part 6: Ch. 36
Part VI Chapter 37
Intersection of state & corporate interests during war is basic part of war-making
Every capitalist country must rely on private sector production to make weapons
With a permanent wartime economy in US after the end of World War II, major providers of weapons and logistical support such as General Electric, Lockheed and Boeing became regular recipients of government contracts
Part 6: Ch. 37
These companies also were at center controversies regarding cost overruns and questionable charges
Much of this situation had been described by C. Wright Mills (1956) in Power Elite which also noted the “revolving door” between corporate, military and political organizations as leaders from each move from one to the other
Part 6: Ch. 37
Part 6: Ch. 37
Examines current controversy about former VP Dick Cheney & Halliburton: Claims that Halliburton was awarded no-
bid, cost-plus contracts point to the potential for state-corporate crime and war profiteering becoming a legitimate practice
This study examines the relationship between Halliburton, the Bush administration, the War on Terror, and war profiteering
Part 6: Ch. 37
First established in 1919, Halliburton has had a history since the 1990s and Cheney’s tenure as CEO prior to the 2003 invasion and occupation of Iraq, of what can be classified as corporate crime
Many of its actions have come under the scrutiny of the Securities & Exchange Commission (SEC), US General Accountability Office (GAO), and Congress
Part 6: Ch. 37
These include: Overcharging the US government for
contracted workUtilizing bribes to attain foreign contracts Using subsidiaries and foreign joint
ventures to bypass US law restricting trade embargoes
In 2001 the Treasury Department began an inquiry into whether Halliburton had used transnational trade loopholes to circumvent sanctions on Iran by doing business with it through foreign subsidiaries
Part 6: Ch. 37
In another case, Halliburton’s subsidiary Dressler, Inc. did substantial business with Iraq from 1997 to 2000, $73 million worth of
deals with Saddam Hussein Such business was prohibited by
international trade sanctions at the time & carried out under the guise of the UN’s oil-for-food program
In 2004 Halliburton came under investigation by the French government, the US Dept of Justice & SEC for international bribery
Part 6: Ch. 37
For example the DoJ and France conducted a criminal investigation into an alleged $180 million bribe paid by Halliburton & three other companies to Nigerian government in exchange for a $4 billion contract to build a natural gas plant
In 1997 the GAO charged Halliburton with billing the US Army for excessive charges related to ” cleaning” the same offices up to four time a day
Part 6: Ch. 37
A 2000 follow-up GAO report found systematic overcharges via inflated costsHalliburton paid $2 million in fines to resolve
the fraudulent overcharges Separately the Defense Department
inspector general and a federal grand jury investigated charges that Halliburton’s subsidiary KBR defrauded the government millions of dollars through inflated repair prices at Fort Ord in California
Halliburton again paid $2 million in fines to resolve the fraud charges
Part 6: Ch. 37
The relation between Halliburton and Cheney date back to 1990s when Cheney, then Reagan’s secretary of defense, assigned Halliburton the task of conducting a classified survey detailing how private corporations could do logistical support for US military
Paid $3.9 million for this work, and another $5 million for a follow-up study, this led to Halliburton receiving a 5 year contract to be the US Army’s on-call private logistics arm
Part 6: Ch. 37
It held this contract until 1997 when it was beat out by DynCorp in competitive bidding
Dick Cheney, along with David Gribbin his deputy secretary of defense, was hired by Halliburton as its CEO in 1993 providing the company with invaluable level of access to government
The connection paid off: Between 1995 and 2000 Halliburton
doubled the value of its government contracts, obtaining $1 billion in defense contracts in 1999-2000
Part 6: Ch. 37
Cheney himself after becoming Bush’s Vice President continued to directly hold Halliburton stock until 2002
He had a direct financial interest in the company during his first two years as VP
A number of Bush family members have direct and indirect financial connections with Halliburton in various roles and capacities
Part 6: Ch. 37
While serving as VP, Cheney continued to draw income from both the US government and Halliburton
Since Cheney returned to government service, Halliburton has paid far less for lobbying for defense contracts while receiving greater, even bigger awards
Part 6: Ch. 37
For example, in the two years prior to Cheney’s election as VP, Halliburton spent $1.2 million lobbying & attained about $900 million a year
In 2001-2002, it spent half the previous amount, $600,000 lobbying;
by 2003 it halved that amount again to just $300,000 lobbying for over $6 billion in contracts
The VP’s office apparently coordinated in March 2003 some $7 billion of defense contracts for Halliburton in connection with the Iraqi War as well as future options Part 6: Ch. 37
Many of these contracts were noncompetitive, cost-plus
Essentially blank checks that ensured Halliburton would be reimbursed for whatever it bills for cost, plus its profit
As a result, Halliburton’s stock nearly doubled from $12.62 a share in 2002 to $23.90 in 2004
Halliburton’s “insider” advantage for war contracts is further demonstrated by the fact that very few other corporations, domestic or foreign, received government contracts
Part 6: Ch. 37
Halliburton companies have engaged in systematic, significant overcharging for its Iraq contracts
On April 1, 2001, the Bush administration revoked strict regulations(no. 65 FR 80255) that would have made Halliburton et al.’s overcharging as well as other violations a basis for a period of ineligibility for future government contracts
Part 6: Ch. 37
Some overcharging by Halliburton involved huge amounts of money
A Pentagon audit found in 2003 that it had overcharged $61 million for gasoline deliveries to Iraqi citizens
Another audit found that it overcharged $67 million for military dining services or 3 times the number of dinners it provided
Part 6: Ch. 37
The Pentagon warned Halliburton in 2003 of “serious repercussions” for poor food & dining service quality although nothing ever happened
In addition Halliburton billed for labor never performed as well as charges for delivery & transportation costs of empty trucks and trailers
All of the above clearly fall into the category of state-facilitated corporate crime
Part 6: Ch. 37
Why was Halliburton able to get away with its unethical practices even after Dick Cheney left office?
What would other government contractors (without such a connection to the White House) experience if they would have implemented the same practices as Halliburton?
Part 6: Ch. 37