An Accurate Reflection of the State of Corporate Crime Literature review

An Accurate Reflection of the State of Corporate Crime - Literature review Example On another level, given the absence of political control today, corporations serve to destroy the foundations of the civic community and the lives of people who reside in them. There are, of course, many different types of corporate crime. There is what is known as "corporate manslaughter", as when it involves a corporation causing a fatal disaster resulting in massive loss of lives. A good example of this would be the Union Carbide case of 1984. A more common type of corporate crime is one involving embezzlement by the directors of the corporation, resulting in prejudice to the minority shareholders and the public at large. In cases involving tax evasion, there is prejudice to the government as well. There is no dearth of examples of abuse of fiduciary duty by company directors. This paper will focus on the latter type of corporate crime, wherein fraud is perpetrated by directors wielding control over the corporation in a bid to earn a maximum profit at the expense of the other shareholders. The move to develop the notion of corporate governance and make it apply to corporate enterprises in the United Kingdom began in the late 1980s to the early 1990s, as a result of corporate scandals like Polly Peck and Maxwell. The idea of corporate governance is rooted in the idea of agency. Those who infuse capital into a business enterprise hire managers to run the business for them and see to its day to day affairs. The board of directors and institutional investors also play a role in the monitoring and control of firms. However, the relationships of these players - to each other and to the general public -- must not be left alone and unregulated. It is imperative that there be well-established rules for companies to follow as they navigate the course of the growth. (Demott, 1999.) In a company, virtually all policy-making is left in the hands of the Board of Directors or on the majority shareholders. The definition of the directions given in section 741(1) of the Companies Act 1985 'includes any person occupying the position of director by whatever name called. This definition can also be found in the Insolvency Act 1986 section 251 and the Company Directors Disqualification Act 1986 section 22, where it is extended to include shadow directors. While allowing directors to control business strategies has merit - for instance, decision-making is streamlined and businesses largely depend on the need to be able to respond to issues not only with soundness but also with dispatch -- some problems inevitably arise. Â