Law and Financial Markets Review

ISSN: 1752-1440 (Print) 1752-1459 (Online) Journal homepage: http://www.tandfonline.com/loi/rlfm20

Instrumental and expressive governance:

corporate and white-collar crime in contemporary
society

Joe McGrath

To cite this article: Joe McGrath (2017) Instrumental and expressive governance: corporate and
white-collar crime in contemporary society, Law and Financial Markets Review, 11:2-3, 96-104,
DOI: 10.1080/17521440.2017.1355045

To link to this article: https://doi.org/10.1080/17521440.2017.1355045

Published online: 03 Sep 2017.

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 Law and Financial Markets Review, 2017
Vol. 11, Nos. 2–3, 96–104, https://doi.org/10.1080/17521440.2017.1355045

Instrumental and expressive governance: corporate and

white-collar crime in contemporary society

JOE MCGRATH
Sutherland School of Law, University College Dublin, Dublin, Ireland

This paper analyses the evolution and enforcement of corporate and white collar criminal liability in
contemporary societies. It analyses the Irish transition from a conventional crime, sanctioning model of
criminal justice to a much more sophisticated model, which combines both compliance and sanctioning
approaches, in which criminal punishment is now often a last resort. It also traces the shared American and
British regulatory experiences, noting common features of corporate and white collar criminal justice in these
jurisdictions. The approach is thematic, exploring: the implications of increased commercialisation for
regulatory reform; the fragmentation of the State monopolies in corporate criminal justice; the utilisation of
regulatory crime mechanisms for instrumental purposes; increased/over-criminalisation but with criminal law
as the sanction of law resort; and the politicisation of business wrongdoing as a generative force for
“expressive” enforcement.

A. Introduction wrongdoing. Corporate obligations in the Companies Acts

This paper analyses the evolution and enforcement of corpor-
ate and white-collar criminal liability in contemporary
societies. It commences by analysing the emergence of a
new architecture of corporate enforcement in Ireland. This
architecture consists of new ways of thinking about white-
collar wrongdoing, new legal structures, and their enforce-
ment in practice. It then proceeds to analyse the extent to
which similar patterns of laying blame may be evident in
America and England and Wales. While exercising sensitivity
for the different cultural, political, and legal norms prevailing
in these states, it is not a comparative study of regulatory
approaches in these jurisdictions. It does not seek to identify
common differences or similarities on a point-by-point basis
for their own sake, but rather draws together common regu-
latory experiences to argue that a shared process of social and
cultural change has emerged. It is argued that this has pro-
duced a generative structure of corporate enforcement in
societies which has shaped responses to business wrongdoing.
This facilitates a deeper understanding of the characteristics
and strategy choices that give a distinctive shape to the
modern system of justice in common law countries and
how they might be changing as societies transition in the
direction of more instrumental and expressive strategies after
the global financial crisis.
B. The Irish transition from “command and
control” to “responsive regulation”
In Ireland, from the foundation of the State to 1998, Ireland
operated a “conventional crime” model addressing corporate
were, for the most part, underpinned by criminal sanctions.
There were, for example, 280 distinct criminal offences in
the Companies Acts 1963–1990.1 Moreover, they were
underpinned by conventional crime methods. Prosecutors
often bore the burden of proving that the accused had acted
intentionally to break the law, reflecting a respect for the pre-
sumption of innocence and subjective culpability require-
ments.2 For example, in defining the meaning of “officer in
default” for the purposes of criminal liability under the Prin-
cipal Act, Section 383 stipulated that this “means any officer
of the company who knowingly and wilfully authorises or
permits the default, refusal or contravention mentioned in
the provision”. Therefore, in every offence in the Companies
Acts that sought to pin criminal liability to company officers
“in default” of their obligations, there was a blanket subjective
culpability requirement, unless otherwise stated in that par-
ticular offence. Civil sanctions also existed but arguably the
most powerful civil sanction at the time, the disqualification
order, stipulated by Section 184 of the 1963 Act, could
only be triggered by the criminal conviction of the accused,
on the application of a criminal prosecutor, and breaching
the order was also a criminal offence, thereby illustrating the
primacy of the criminal law in the twentieth century.3
In theory, a number of specialist enforcers, like the Minis-
ter, Companies Registration Office (CRO), and the Central
Bank, addressed corporate enforcement. For example, the
Minister could prosecute summary offences in the Companies
Acts. However, there were “no Departmental resources allo-
cated for the enforcement of the law [so] the day to day inves-
tigation and prosecution of breaches of company law (other
than the Companies Registration Offences) is close to non-
existent”.4 In addition, the CRO was only empowered to

© 2017 Informa UK Limited, trading as Taylor & Francis Group


prosecute filing offences, 34 offences by 1990, still just a small
fraction of the hundreds of offences in the Companies Acts at
the time, so it continued to perform a largely administrative
role.5 In any event, this agency was also so under-resourced
that a registration agent for the CRO complained that the
office is so “seriously understaffed and underequipped” that
it is not “available to check and file the bundles of documents
stacked on the floor”.6 Meanwhile, the Central Bank was not
empowered to prosecute summary offences until 1971, as sti-
pulated by Section 59 of the Central Bank Act 1971. More-
over, there is no record that it ever used this power thereafter.
If specialist enforcers played a marginal role in criminal law
enforcement, it is because the ordinary police and prosecutors,
the Gardaí and the Director of Public Prosecutions (DPP),
monopolised most of the authority for enforcing the law,
even though they lacked the skills, training, and resources
to do so effectively. Unsurprisingly, perhaps, the law was
very rarely enforced. Of the 280 offences in the Companies
Acts, there were only a handful that were ever prosecuted,
and only the failure to file annual accounts was prosecuted
with any regularity.7 The traditional failure to enforce the
law is evident in the Irish response to one of the most signifi-
cant corporate frauds in the Irish State in the twentieth
century, involving Merchant Banking, a company in the Gal-
lagher Group which failed in the early 1980s. The liquidator’s
investigation concluded that Merchant Banking had seriously
breached the Companies Acts, the Central Bank Acts, and the
Larceny Acts, finding evidence of 79 criminal offences.8 The
bank had failed to hold annual general meetings, had falsely
recorded transactions, made false returns to the Central
Bank, and obtained and managed its assets fraudulently.
Though the Gardaí subsequently investigated, they lacked
the resources and skills to deal effectively with cases of
white-collar crime. It took several fraud squad officers
working full-time on the case six years to complete their
investigation and for a report to be sent to the DPP.9 Even
then, the police had not been able to compile sufficient evi-
dence to ground a successful prosecution so the State
decided not to prosecute the case. By contrast, the British
authorities dealt much more decisively with Merchant Bank-
ing’s activities in Northern Ireland. The British conducted a
two-year investigation that provided sufficient evidence to
prompt Patrick Gallagher, the Chairman of the Gallagher
Group, to plead guilty to five offences. He was not treated
deferentially. He was arrested and initially denied bail.10 He
was subsequently sentenced to two years imprisonment,
despite the payment of significant compensation on his
behalf.11 Even though Merchant Banking had a significantly
smaller operation in Northern Ireland than in the Republic
of Ireland, the investigation was taken more seriously in the
United Kingdom (UK) and Patrick Gallagher served time
there while all that happened in Ireland was that the liquidator
considered a civil suit.12
In 1998, the McDowell Group on corporate compliance
and enforcement reported that “Irish company law has been
characterised by a culture of non-compliance” and “those
who are tempted to make serious breaches of company law
have little reason to fear detection or prosecution”.13 This
apathy and inertia in corporate enforcement, characterised
by McGrath as an era of “protectionism and
Law and Financial Markets Review 97
procrastination”,14 may be understandable given Irelands
long history as an agrarian state,15 with relatively low levels
of corporate activity,16 where the public was more concerned
with job creation rather than crime, particularly white-collar
crime.17 Nevertheless, as Ireland transitioned from a rural
state with low levels of corporate activity to a highly open
and global centre for commerce and finance, particularly in
the 1990s, a new model of corporate and financial regulation
emerged. The State became less concerned with regulating
commerce as an assertion of sovereignty, as it was in the
early decades of the State when protectionist policies were
advanced to guard against foreign economic intervention. It
embraced competition and light-touch regulation to
promote itself as an attractive location for foreign investment,
in order to boost the prosperity of the State.18
As the economic and social context changed, so too did
corporate enforcement. The conventional crime monopoly
became more fragmented because a variety of specialist
agencies were established to police and prosecute corporate
wrongs, colonising functions formerly held by government
departments and conventional crime fighters.19 The Office
of the Director of Corporate Enforcement (ODCE), for
example, created in 2001, was the first agency dedicated to
the enforcement of company law. Moreover, it is an interdis-
ciplinary agency, combining lawyers, accountants, and police,
and it has more significant resources and extensive powers.20
Additionally, corporate wrongdoing was further criminalised,
such that there were approximately 400 criminal offences in
the Companies Acts 1963–2001.21 Moreover, these offences
are more likely to employ regulatory crime strategies, like
strict liability and reverse onus provisions. For example,
Section 100 of the 2001 Act repealed and replaced Section
383, noted above, removing the need to prove that
company officers have acted intentionally in over 90 offences
that apply to both companies and to every officer in default.22
So, while once the State had to prove that the accused had
acted intentionally (or “knowingly and wilfully” to use the
language of the Act), now the accused must not only prove
that he did not act intentionally, but also that he has not
acted recklessly or negligently.23 This blanket reversal of the
burden of proof requires officers to prove their own inno-
cence by showing that they did everything they reasonably
could have done to prevent the wrongdoing from occurring.
Moreover, as noted by Cahill, Section 383(3) specifies that
“whenever a company fails to comply with a requirement
of the Companies Acts, every director has automatically com-
mitted a breach of duty. This heightens considerably the like-
lihood of enforcement of the provisions of the Companies
Acts against individual directors”.24
In parallel with increased regulatory criminalisation, the
State also diversified its enforcement arsenal, increasingly
demonstrating the tendency to “civilise” law and corporate
enforcement. The civil “restriction order” was created in
1990 to prevent dishonest and irresponsible persons from
acting as directors, or secretaries, and from being concerned
with the management or formation of the company, unless
that company is capitalised by a certain amount.25 The discre-
tionary disqualification order, a total ban on further partici-
pation in corporate life, was created that same year. It was
entirely unshackled from the criminal justice system and was
98 J McGrath
available as a stand-alone civil sanction.26 Administrative sanc-
tions, involving fines of up to E5 million on companies and
unincorporated bodies and fines of up to E500,000 for indi-
viduals may also be imposed,27 a system which the Financial
Regulator acknowledged is more punitive than the criminal
justice system.28 Gathering these threads together, regulatory
crime mechanisms, civil orders, and administrative sanctions
have been introduced to avoid the high level of proof and evi-
dence that is sometimes required in criminal trials. They
obviate the need to prove guilt in criminal cases. Unlike crim-
inal prosecutions, these orders are more instrumental than
expressive, less severe but more certain in their application.
In addition, the departure from the conventional criminal
model also had a significant impact on the enforcement
process. Enforcement became much more sophisticated,
moving away from the “command-and-control” model to a
“responsive”, compliance-orientated, pyramidal model of
enforcement.29 The adoption of this model in Ireland was
explicitly acknowledged by the former Director of Corporate
Enforcement, Paul Appleby.30 In accordance with the
“responsive” model, the Irish approach to corporate wrong-
doing is now specifically addressed by a pyramidal enforce-
ment architecture, taking compliance-orientated and
sanctioning approaches, using both civil and criminal enforce-
ment mechanisms. Under this model, enforcers first educate
company officers about their responsibilities and encourage
them to comply with their obligations. If this approach is
unsuccessful, responses escalate to warning letters, civil sanc-
tions, and ultimately to criminal liability on indictment.
Criminal law is often the sanction of last resort.31 By design,
most corporate and financial wrongdoing is often addressed
in the civil jurisdiction of the law rather than the criminal
courts, as is demonstrated when contrasting the number of
persons on the register of restricted persons and register of dis-
qualified persons as against the number of persons summarily
prosecuted each year under the Companies Acts. By the end
of 2002, there were just 54 people on the register of restricted
persons.32 However, this number rose to 961 by the end of
2016.33 Just 10 company directors were named on the register
of disqualified persons in 2002 but by the end of 2016 this
number had risen to 3664.34 The ODCE, by contrast, prose-
cuted eight cases resulting in 20 convictions for offences pro-
secuted on a summary basis in 2002 but this declined to seven
convictions in 2015.35
Moreover, the enforcement context appears to be chan-
ging again. Since 2008, extensive wrongdoing in the financial
services sector was revealed and corporate wrongdoing
became politicised. In response, politicians said that white-
collar criminals were guilty of economic treason and should
be treated like terrorists.36 More new laws were introduced
to make it easier to investigate corporate wrongdoing and
to secure convictions. The Criminal Justice Act 2011, for
example, strengthens the investigative powers of regulators
and reduces delays in the investigation and prosecution of
white-collar crime. It breaks up detention periods into seg-
ments so that suspects can be re-questioned after release if
interim investigations require it. The period of detention
may be suspended twice and the total period of the suspension
cannot exceed four months (section 7). The Act confirms that
adverse inferences may be drawn from the refusal to explain
suspicious circumstances involving the accused, provided
that he or she has been informed of this beforehand and has
had the opportunity to consult a solicitor (section 9). The
Gardaí have the power, on application to the District
Court, to require people with relevant information to
provide this information and answer questions about it
(section 15). Furthermore, the Gardaí may also apply to the
court to determine if material is subject to legal privilege
and if not, to seize it (section 16)(2)). If the volume of docu-
ments is substantial, the court may appoint an independent
expert to examine it and prepare a report for the court on
whether the documents are privileged (section 16)(5)). The
judgement of the District Court can be appealed to the
Circuit Court but no further (section 16(8)). Moreover, the
Act makes it a criminal offence, punishable by up to five
years imprisonment, for people to fail to report information
to the Gardaí pertaining to corporate or financial crime
(section 19).
Similarly, the Central Bank (Supervision and Enforce-
ment) Act 2013 further increased the investigative and sanc-
tioning powers of the Central Bank by specifying new
information gathering powers, specifying rules to challenge
legally privileged information, protecting whistle-blowers,
and doubled penalties for administrative sanctions so that
companies may be fined E10 million and individuals may
be fined E1 million. These new laws show that an active leg-
islature has adopted an even stricter attitude to corporate and
financial regulation. Moreover, unlike previously, when
initiatives were introduced for mostly instrumental reasons,
to address problems with proving guilt in white-collar crime
cases, they also have ostentatiously political purposes. Crack-
ing down on due process rights and limiting conventional
criminal procedure was the convenient way of blaming regu-
latory failure on something outside of politics. Therefore,
these developments, in addition to responding to issues
which had been long neglected, also reflected the political
desire to “tool up” executive power and “act out” for
public approval in an attempt to “govern through crime”.37
Instrumental justice has been colonised by the political estab-
lishment for expressive purposes.
Moreover, however, there is some initial evidence that cor-
porate enforcers also indicated a greater willingness to escalate
to more serious sanctioning approaches. More prosecutions
on indictment are being taken against company officers.
Former officers of Anglo Irish Bank, a bank at the centre of
the Irish financial crisis, have been prosecuted for various crim-
inal offences, albeit with mixed successes.38 The ODCE has
also a stated preference for a gradual shift away from
summary prosecutions in the District Court in favour of prose-
cutions on indictment, with more significant penalties.39 The
Central Bank, in its policy document Our New Approach has
also committed to taking a more aggressive intrusive approach
and has imposed more severe administrative sanctions.40 Sen-
tencing principles have also been subtly reformulated by the
judiciary which make it much more likely now that convicted
white-collar offenders will go to jail.41 In general, these depar-
tures stem from a new awareness, arising particularly since the
financial crisis, that economic crime, so called “crime in the
suites”, can damage the security of the State in ways that are
at least as harmful as “street crime”.

In concluding on the Irish approach, a number of trends in
corporate enforcement have recently been reversed since the
1990s and particularly since 2008. Traditionally, corporate
wrongdoing was often criminalised using conventional crim-
inal justice methods (subjective culpability and presumption
of innocence requirements) and the ordinary police were
often charged with the responsibility of enforcing the law.
Now, specialist enforcers, with more powers, employ a
more sophisticated, graduated, responsive approach, using
civil and criminal sanctions, where criminal law is often the
sanction of last resort. Legislative reform, cultural sentiments
requiring increased corporate accountability, and a greater
emphasis on enforcement in practice, have coincided to
create a new architecture of corporate enforcement. In
many ways, however, the State has transitioned from one
contradictory model of corporate enforcement to another.
Traditionally, it invoked the State’s most powerful weapon
of state censure, the criminal law, but was remarkably
lenient in practice. The contemporary model is more reliant
on cooperative measure and civil orders, but also contains
remarkably punitive and instrumental measures.
C. International trends: the new logic of action
In the eighteenth and nineteenth century, policing was
private, local, and principally concerned with the regulation
of trade, commerce, and the markets. Policing was not
restricted to theft or offences against the person, but also
extended to the regulation of weights and measures, and
early forms of health and safety law, consumer protection,
and environmental protection.42 Braithwaite noted that it
was only in the nineteenth century, when the centralised
State monopolies on policing were established, that criminal
justice systems became preoccupied with conventional
crime offences:
Uniformed paramilitary police, preoccupied with the
punitive regulation of the poor to the almost total exclu-
sion of any interest in the constitution of the markets
and the just regulation of commerce, became one of the
most universal of globalized regulatory models. So what
happened to business regulation? From the mid-nine-
teenth century, factories inspectorates, mines inspectorates,
liquor licensing boards, weights and measurements inspec-
torates, health and sanitation, food inspectors and countless
others were created to begin to fill the vacuum left by con-
stables now concentrating only on crime. Business regu-
lation became variegated into many different specialist
regulatory branches.43
In the past, the State had increasingly monopolised investiga-
tive and prosecutorial functions as part of the process of mod-
ernising criminal justice. Developments in this direction were
informed and balanced out by liberal legalism, so that the
rights of the accused and procedural safeguards were institu-
tionalised under an equality of arms framework to protect
individuals from the increasing powers possessed by the
State. The criminal process attempted to guarantee individ-
uals, to the greatest extent practicable, substantive and pro-
cedural justice. Though exceptions existed, this usually
Law and Financial Markets Review 99
meant that the prosecution usually bore the burden of
proving beyond a reasonable doubt that the accused had
acted intentionally to break the law.44 Even if convicted of
a crime, the offender was protected from the state by the
requirement that only proportionate punishment would be
imposed, reflecting both the personal circumstances of the
offender and the particular circumstances of the offence.
These protections addressed the problem of the previously
“bad economy of power” which “vested too much on the
side of the prosecution … while the accused opposed it vir-
tually unarmed”.45
In the contemporary context, those accused of corporate
and white-collar offences can expect to face a powerful
State apparatus seeking to enforce the law on behalf of the
people, albeit in a fragmented form through a variety of
specialised enforcers. In the United States (US), these
include regulatory bodies and agencies like the Federal
Reserve, the Securities and Exchange Commission (SEC)
and specialised subgroups within conventional investigative
and prosecuting agencies, including those within the Federal
Bureau of Investigation (FBI) and the Department of Justice
(DOJ). In the UK, the responsibility for the investigation
and prosecution of white-collar crime is fragmented among
the Serious Fraud Office (SFO), the Financial Conduct
Agency, and the Office of Fair Trading, with more serious
frauds prosecuted by the Crown Prosecution Service
Central Fraud Division. What were once private corporate
governance issues are increasingly being reconstituted as
public matters to be resolved through the legitimate forum
of the criminal courts. Prior to this, such conduct had not gen-
erally been considered immoral, but merely a consequence of
being involved in the markets and having the desire to make
money.46 These developments have arisen from broader
changes in social, political, and economic conditions.
In the twentieth century, US society, previously domi-
nated by agrarianism, became increasingly commercial in
nature, with the “white-collar” worker typifying modern
America.47 As society became increasingly commercial and
white-collar in orientations and composition, more opportu-
nities for corporate wrongdoing emerged and the way in
which this wrongdoing was perceived changed accordingly.
Empirical surveys since the 1950s, but particularly since the
1970s, demonstrated that the public were willing to punish
corporate wrongdoing at least as seriously as so-called ordinary
crime, particularly when it caused physical harm.48 Public
apathy and indifference to white-collar criminality, so in
vogue before 1970, was “a relic of a more naïve and trusting
period” but now “Americans cast a suspicious eye toward the
rich and powerful and were prepared to send them off to
prison if given a compelling reason for doing so”.49
Coinciding with these changing sentiments, federal crim-
inal law also expanded considerably since the 1970s, when
the legislature increasingly demonstrated its willingness to
more closely regulate matters which had traditionally been
private matters of corporate governance. Baer explains that
the regulatory legislative expansion was a product of the judi-
cial reluctance to require companies to manage their own
compliance with the law. She states: “As the Delaware
courts demonstrated their reluctance to interfere with the
internal governance of corporate firms, the federal
100 J McGrath
government increasingly expanded both the content and
enforcement of criminal law.”50 In 1974, for example, the
State enacted the Antitrust Procedures & Penalties Act to
facilitate judicial review of decisions made by the DOJ as to
whether to permit certain mergers and acquisitions. In
1977, it introduced the Foreign Corrupt Practices Act
(FCPA) to tackle the corruption of foreign officials. In
1982, the Racketeer Influenced & Corrupt Organizations
Act (RICO) was enacted. Reflecting on these developments,
Baer states:
Since at least the 1970’s, federal criminal statutes have
expanded in both breadth and intensity. They cover
business misconduct previously defined as commercial
wrongdoing, and they apply far more punitive sanctions
to both the newly criminalized misconduct and to the
activities—such as embezzlement and bribery – that were
traditionally viewed as crimes. The emergence of the
administrative state has further empowered and expanded
federal criminal law.51
Similarly, Gainer noted the tendency:
… when a congressional committee adopts new require-
ments concerning commercial transactions … or virtually
any other regulated activity, it routinely incorporates at
the end of the requirements a statement that any deviation
constitutions a federal crime. This tendency has led to a
gradual absorption of non-criminal law by the criminal
law.52
Commercial regulation also became increasingly more
detailed and specific in order to deal with the more
complex and sophisticated nature of society. Regulatory
criminal law, in particular, was increasingly influential, not
least because criminalisation was viewed as a cure for almost
any social and commercial problem.53 In the US, for
example, there were 165 federal criminal statutes at the turn
of the twentieth century but this had increased to 4500 separ-
ate statutes by 2004. The number of corporate criminal
offences, which already stood at a count of over 300,000
prior to the passage of Sarbanes–Oxley legislation in 2002,
has also increased significantly.54 Moreover, new business
offences were remarkably broad in scope, increasingly
employing strict liability and reverse onus provisions to sur-
mount the traditional difficulties of proving guilty in corpor-
ate and white-collar crime cases.55 This may suggest that
barriers to prosecution are increasingly being curtailed in
order to facilitate expediency in regulatory justice.
Meanwhile the British Regulatory State emerged. Moran
describes this as transition from an era of “club government”
to one of “hyper innovation”. The former involves an infor-
mal, genteel, laissez-faire approach to regulation which lacks
transparency. The latter is a new era of market openness
and entrepreneurship, where there is a “juridification” of
social relations, and the emergence of a sophisticated,
“responsive” regulatory regime, exercised both within and
from beyond the state.56 Public condemnation of corporate
wrongdoing intensified.57 Baldwin, while acknowledging
that criminal law has long since been employed to address cor-
porate wrongdoing, noted “an apparent new zest for punitive
approaches to regulation” in the business sector.58 Moreover,
in its Consultation Paper on Criminal Liability in Regulatory Con-
texts the Law Commission noted,
Since 1997, more than 3000 criminal offences have come
on to the statute book. That figure should be put in
context, taking a longer perspective. Halsbury’s Statutes
of England and Wales has four volumes devoted to crim-
inal laws that (however old they may be) are still currently
in force. Volume 1 covers the offences created in the 637
years between 1351 and 1988. Volume 1 is 1382 pages
long. Volumes 2 to 4 cover the offences created in the
19 years between 1989 and 2008. Volumes 2 to 4 are no
less than 3746 pages long. So, more than 2 and a half
times as many pages were needed in Halsbury’s Statutes
to cover offences created in the 19 years between 1989
and 2008 than were needed to cover the offences created
in the 637 years prior to that. Moreover, it is unlikely
that the Halsbury volumes devoted to “criminal law”
capture all offences created in recent times.59
Recognising that there has been a significant increase in regu-
latory criminalisation, Macrory stated “that there may be a
case for decriminalising certain offences thereby reserving
criminal sanctions for the most serious cases of regulatory
non-compliance”.60
Despite such calls for restraint, it has been suggested the US
also suffer from too much criminal law and too much criminal
punishment.61 Though Hagan has demonstrated how succes-
sive administrations vilified “crime in the streets” rather than
“crime in the suites”, it is also the case that the courts have
punished white-collar criminals with lengthy periods of
imprisonment and enormous fines.62 For example, Michael
Milkin, the so-called “junk bond” king, was fined US$650
million in court and sentenced to 10 years imprisonment.
Bernard Ebbers, chief executive officer (CEO) of Worldcom
was sentenced to 25 years imprisonment. Kenneth Lay, CEO
of Enron, was sentenced to six years imprisonment and died
prior to completing it. The need to act and be seen to act,
the “politics of symbolism”, greatly increased following the
accounting scandals at Enron and WorldCom at the turn of
the twenty-first century.63 However, it only fully crystallised
following the financial crisis in 2008 when politicians of all
hues promised swift justice for so-called “banksters”.
In the wake of the financial crisis, Barack Obama promised
to “bring a new era of responsibility and accountability to
Wall Street and to Washington”,64 blaming the financial
crisis on “fat cat bankers on Wall Street”.65 He vowed to
“hold Wall Street accountable”.66 Other politicians equated
banker with criminals “who have made out like bandits”,67
and that they should “resign, or go commit suicide”.68
Donald Trump also denounced bankers in his election cam-
paign, calling them “a global power structure that is respon-
sible for the economic decisions that have robbed our
working class, stripped our country of its wealth and put
that money into the pockets of a handful of large corpor-
ations”.69 Meanwhile, senior staff at the Department of
Justice articulated the official approach to tackling white-
collar crime during these administrations. In September
2015, Deputy Attorney General, Sally Yates, declared, “as
principles that the Department lives and breathes”, that
“fighting corporate fraud is a top priority of the Department

of Justice”.70 It echoed the sentiments of then Attorney
General, Eric Holder, in 2009, when he stated, “We will
investigate you, we will prosecute you, and we will incarce-
rate you. We will be relentless in our investigation of corpor-
ate and financial wrongdoing … ”.71
Similar rhetoric was also evident in the UK. In 2008,
David Cameron, the leader of the Conservative Party, while
in opposition, promised a “day of reckoning” for bankers in
the City.72 When he became Prime Minister, the Coalition
Agreement reached by the Conservative Party and the Demo-
cratic Liberals in 2010 also pledged to “take white collar crime
as seriously as other crime”.73 The Chancellor of the Exche-
quer and conservative party member, George Osborne, also
promised, “We will tackle financial crime”.74 In 2015, he
stated that bankers were responsible for “the biggest single
crash of our lifetimes”, explicitly equating traders with
common thieves: “If you go and shoplift at the local WH
Smiths you go to prison. But if you’re the market trader on
the trading floor of a big investment bank, and you rip off
people to the tune of millions of pounds, there are no criminal
offences to deal with you.”75 The Mayor of London, Boris
Johnson, agreed that white-collar crime should be “rooted
out and punished”.76 Condemnation even seemed to cross
earthly and celestial divides when the Archbishop of Canter-
bury, Justin Welby, weighed in with fire and brimstone,
arguing that British banks should clean up the industry, oper-
ating with a “fear of hell and the hope of heaven”.77
Much like in Ireland, this “zero-tolerance” rhetoric
suggests that white-collar crime has become politicised since
the financial crisis as politicians competed to be more outraged
by corporate wrongdoing and to be seen to be tough on
white-collar criminals. There have been a number of high-
profile white-collar crime cases, and punishments have esca-
lated further. Bernie Madoff, for example, was recently sen-
tenced to 150 years in jail for his role in a Ponzi scheme.
Moreover, however, in addition to being highly punitive,
their treatment is also highly visible. White-collar offenders
are increasingly subject to public shaming techniques, like
“perp walks”, because “white-collar and other financial
crimes of deception are treated by the mass media as exten-
sions of “infotainment”.78 While this might suggest that
white-collar cases are regularly channelled through the crim-
inal courts, a location where businessmen must explain and
defend their actions in public, contradictory messages are
sent when these cases are exceptional and symbolic, because
the vast majority of serious cases have long since been
addressed by alternative strategies. As noted by Shapiro:
Out of every 100 suspects investigated by the SEC, 93 have
committed securities violations that carry criminal penal-
ties. Legal action is taken against 46 of them, but only 11
are selected for criminal treatment. Six of these are
indicted; five will be convicted and three sentenced to
prison. Thus, for Securities and Exchange Commission
enforcement, criminal prosecution most often represents
the road not taken. Of those found to have engaged in
securities fraud, 88 percent never have to contend with
the criminal justice system at all.79
More recently, for example, deferred prosecution agreements
and various other settlement strategies have allowed corporate
Law and Financial Markets Review 101
and white-collar offenders to escape criminal sanctions when
companies agree to pay fines and install “corporate monitors”
to ensure future compliance with the law.80 This approach has
been praised as a form of “new governance” which aims to
reward efforts to institute corporate compliance with less
severe punishments.81 The government requires the corpor-
ation to reform and improve its internal governance norms
to induce cultural change within the organisation and to
prevent against future non-compliance and illegality, but
the corporation itself is deciding what changes it makes and
how best to implement them.82 In this way, corporations
are tasked with solving their own problems, but the Damocles
sword of prosecution will fall if this is unsuccessful. Reflecting
developments in Ireland, it is an approach that moves away
from traditional, command-and-control regulation to one
where prosecution can be a last resort when other strategies
fail.
These agreements also allow enforcers to appear tough,
sometimes extracting enormous fines in some particularly
high-profile cases. In the US, for example, HSBC was fined
US$1.9 billion for facilitating money laundering by terrorists
and narcotics traffickers.83 Similarly, in the UK, Rolls
Royce agreed to disgorge £258 million in illegal profits and
pay a further financial penalty of £240 million to avoid pro-
secution on corruption and bribery charges. Nevertheless,
there have been significant concerns that individuals have
been able to buy their way out of wrongdoing.84 Judge
Rakoff of the Southern District of New York has expressed
significant reservations in circumstances where the fines
have been too small, when individuals have not been held
accountable, and when the company has refused to admit
wrongdoing.85 In the UK, where Deferred Prosecution
Agreements (DPAs) have more recently been employed,
Levesons J asked whether companies should be able to
avoid criminal convictions in circumstances where the
wrongdoing was particularly serious, deliberate and persistent.
Though approving the DPA, he clearly had some reservations
about doing so, asking “ … if Rolls-Royce were not to be
prosecuted in the context of such egregious criminality over
decades, involving countries around the world, making
truly vast corrupt payments and, consequentially, even
greater profits, then it was difficult to see when any
company would be prosecuted”.86
Meanwhile, notwithstanding the “tough on white-collar
crime” rhetoric, others note that very few people have been
prosecuted for misconduct leading to the recent financial
crash.87 Instead, the US Department of Justice has reached
eye-wateringly large settlements against a range of institutions
for misleading investors on mortgage securities and related
matters. These include settlements against Bank of America
for US$16.7 billion; JP Morgan Chase & Co for US$13
billion; Deutsche Bank for US$7.2 billion; Citigroup for US
$7 billion; Goldman Sachs Inc. for US$5.1 billion; and
Morgan Stanley for US$3.2 billion.88 The Credit Rating
Agency, Standard and Poor’s, also entered a US$1.375
billion settlement for misleading investors as to the value of
subprime mortgages.89 On occasion, political pressure has
been exerted on the Department of Justice not to prosecute
banks that might be of systemic economic importance.90
The observation that serious corporate and white-collar
102 J McGrath
crime is not being prosecuted assumes greater significance in
light of a study conducted by researchers with the Transac-
tional Records Access Clearinghouse (TRAC) at Syracuse
University, which claims that white-collar crime prosecutions
are at a 20-year low.91 Gathering these threads together, a
new logic of action has emerged in which enforcement is
specialised, where wrongdoing is increasingly criminalised
with harsher penalties, but, paradoxically, where there
remains unwillingness to use criminal sanctions in the vast
majority of cases, except as a last resort.
D. Conclusion
This paper analysed the evolution and enforcement of corpor-
ate and white-collar criminal liability in contemporary
societies. It analysed the Irish transition from a conventional
crime, sanctioning model of criminal justice to a much
more sophisticated model, which combines both compliance
and sanctioning approaches, in which criminal punishment is
now often a last resort. It also traced the shared American and
British regulatory experiences, noting common features of
corporate and white-collar criminal justice in these jurisdic-
tions. The approach was thematic, exploring: the implications
of increased commercialisation for regulatory reform; the
fragmentation of the State monopolies in corporate criminal
justice; the utilisation of regulatory crime mechanisms for
instrumental purposes; increased/over-criminalisation but
with criminal law as the sanction of law resort; and the poli-
ticisation of business wrongdoing as a generative force for
“expressive” enforcement. In particular, it analysed the
Notes
1
Report of the Working Group on Company Law Enforcement and Com-
pliance (Dublin: Stationery Office, 1998), 9.
2
J. McGrath, Corporate and White-collar Crime in Ireland: A New
Architecture of Regulatory Enforcement (Manchester University
Press, 2015a), 47–59.
3
K. O’Connell, “Deemed Disqualification Orders” (10th Annual
National Prosecutors’ Conference, Dublin Castle Conference
Centre, 23 May 2009).
4
Report of the Working Group on Company Law Enforcement and Com-
pliance, 1998: paras. 2.21–2.22.
5
Report of the Working Group on Company Law Enforcement and Com-
pliance, 1998: para. 2.9. See also: N. Cahill, Company Law Compli-
ance and Enforcement (Haywards Heath: Tottel, 2008), 545–549.
6
N. Foley, “Letter to the Editor”, Irish Times, 23 February 1989, 11.
7
McGrath, 2015a, 67–84.
8
S. Carswell, Something Rotten: Irish Banking Scandals (Dublin: Gill
& Macmillan, 2006), 79.
9
F. O’Toole, “Assault on the public’s right to know”, Irish Times, 7
December 1989, 14.
10
“Gallagher faces NI fraud charges over bank collapse”, Irish Times,
31 March 1988, 1; “Patrick Gallagher, businessman, has che-
quered career” Irish Times, 2 April 1988, 6.
11
“Belfast Court Jails Banker”, Irish Times, 02 October 1992, 13.
12
C. McCullagh, Crime in Ireland A Sociological Introduction (Cork,
Cork University Press, 1996), 72–73.
13
Report of the Working Group on Company Law Enforcement and Com-
pliance (Dublin: Stationery Office, 1998), para. 2.5.
broader international tendency to disfavour the exclusive
dominance of a conventional crime model and the transition
to what some commentators praise as “a new governance
model”, employing alternative sanctions, where criminal
law is now often the sanction of last resort. This evolution,
however, is less likely to be motivated by research or best
practice on regulatory governance, and more by the particular
dynamics compelling the negotiating parties to reach settle-
ments, especially when the criminal corporation is a financial
institution that is considered systemically important to the
economy. Nevertheless, even if this new approach is much
more effective, it still remains the case that white-collar crimi-
nality tends to be treated much more deferentially than ordin-
ary crime, despite the advancement of more stringent
enforcement policies and strategies since the financial crisis.
Meanwhile, politicians act out for public approval, but prose-
cutors and corporations resolve criminality in-house, with
limited transparency, scrutiny, and oversight. The discourse
on financial criminality is ratcheted up but the response to it
is cooled down. The number of prosecutions and convictions
across the board for white-collar crimes declines as there
emerges a tendency to “manage” corporate wrongdoing
through strategies such as guidance, persuasion, and settle-
ment rather than punish it. ▪
Dr. Joe McGrath is a lecturer at the Sutherland School of Law,
University College Dublin. He is the author of the monograph:
Corporate and White Collar Crime in Ireland: A New Architec-
ture of Regulatory Enforcement (Manchester University Press).
Email: joe.mcgrath@ucd.ie
14
2015(a), p. 30. See also: J. McGrath “The prosecution of white-
collar crime in a developing economy: a case study of Ireland in
the 20th century” (2015b) In: Van Erp, J.; Huisman, W.; Vande
Walle, G (eds). The Routledge Handbook of White-Collar and
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