A groundbreaking study of the psychology and motivations of white-collar criminals.
Using interviews, correspondence, and phone calls over seven years with, among many others, Bernie Madoff, Enron’s chief financial officer Andrew Fastow, and Tyco’s Dennis Kozlowski, Soltes (Business Administration/Harvard Business School) provides special insight into insider trading, violations of financial reporting requirements, and pyramid schemes. In his impressive debut, the author has gathered in one place the thoughts and reflections of this group of criminals, many of whom have become well-known thanks to extensive media exposure. Soltes begins with a theoretical discussion of the roots of human behavior in an intriguing attempt to discern how propensities for ethical misconduct and criminal behavior occur. The subsequent discussions with the perpetrators concern their crimes, motives, and rationalizations. The author refutes the contention that white-collar criminality is distinct from criminality at large as essentially a race- or class-driven argument. He emphasizes instead how the business environment and the incentives for management to succeed foster white-collar crime. Management decisions, he insists, involve moral choices since they involve “the potential to help or harm another person.” Soltes prefers to “consider the possibility that illegal business decisions—moral decisions in their own right—are actually made much like any other kind of decision.” The interviewees’ rationalizations and “euphemistic labeling” are quite illustrative. Fastow, Enron’s financial wizard, said, “I was doing exactly what I was incentivized to do. We wouldn’t have gone through all this trouble if we just wanted to cheat. We were finding ways to get around the rules but going through a complex process to find the loopholes to allow us to do it.” Madoff preferred to view the fraudulent scheme for which he was convicted as “something closer to oversight than to recklessness.” The author also discusses the regulations related to white-collar crime and corrects some popular misconceptions—about insider trading, for example.
A forcefully developed and documented contribution to our further understanding of high-level criminality in lightly regulated free markets.