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Corporate strategies to legitimise potentially criminal business actions

A pump-jack mining crude oil with the sunset in the background

Isabel Schoultz at the Sociology of Law Department has studied how two major Swedish companies have defended themselves against accusations of corporate crime.

When corruption accusations against Swedish telecommunications provider Telia surfaced in 2012, regarding the acquisition of its business permit in Uzbekistan, the company initially denied the allegations. “I feel convinced that Telia has not bribed anyone and has not participated in money laundering,” said then CEO, Lars Nyberg, at a press conference the day after the allegations were made public. At the same time, Telia justified its business in Uzbekistan by appealing to higher loyalties, such as contributing to the development of democracy, human rights, peace and stability.

Later on, when Telia reached a global settlement to resolve charges relating to violations of the Foreign Corrupt Practices Act (FCPA), responsibility was pinned on a small group of people managing the Central Asian operation.

Isabel Schoultz, researcher and associate senior lecturer at the Sociology of Law Department, studies how companies use neutralization techniques like denial, appealing to higher loyalties, and scapegoating to deal with allegations of corporate crime, and how the strategy may change over time. She found that company structure and the alleged crime affects which strategies a company employs.

In the case of Telia, the primary owner is the Swedish government, holding 40 percent of the company’s shares. Telia therefore had to adopt a certain degree of transparency, and when inquiries into the company’s activities in Central Asia showed that it was unethical and possibly criminal, the company had to cease its strategy of denial.

In the article “Denials and confessions. An analysis of the temporalization of neutralizations of corporate crime”, published in April in International Journal of Law, Crime and Justice, Isabel Schoultz and co-author Janne Flyghed (Stockholm University) compare the Telia debacle with that of Lundin Petroleum, a privately owned family business in the oil industry. The company is currently being investigated for crimes against humanity, allegedly committed in southern Sudan where they were awarded an oil-prospecting contract in 1997. They note that Lundin Petroleum, unlike Telia, has not changed strategies over time, partially due to the nature of the accusations.

“In the case of Lundin, the company's alleged offences are so openly condemned and pejorative that openly admitting to these crimes, or defending their necessity, would have severe consequences for the corporation. By comparison with the allegations of corruption levelled against Telia, the criminal allegations directed at Lundin Petroleum are more serious.”

Lundin Petroleum has maintained its denials of guilt and appealed to higher loyalties, claiming that their presence in Sudan has benefitted local communities. The corporation has also adopted a tactic called “condemning the condemner” – a process by which Lundin Petroleum tries to discredit the NGOs accusing the company of criminal acts, by claiming that they are doing so out of ill will or monetary benefit.

“One of the overarching functions of neutralizations of corporate crime is to maintain the current state of things and to preserve or improve the company's market position,” Isabel Schoultz and Janne Flyghed write in the concluding remarks.

 

Read “Denials and confessions. An analysis of the temporalization of neutralizations of corporate crime” at sciencedirect.com.

Read more about Isabel Schoultz's research on her personal page.