Part VI The Social Organization of Deviance This section looks more closely at the lives and activities of deviants. Best and Luckenbill (1980) have noted in their analysis of the social organization of deviants that relationships among deviants take many forms varying in: (1) numbers of members (2) task specialization (3) stratification within group (4) type of authority structure Part 6 Such deviants are most solitary interacting with others but keeping their deviant attitudes, behaviors or conditions secret This category includes sexual asphyxiates, self-injurers, anorectics, bulimics, computers hackers, and pedophiles Websites now permit many such ?loners? to connect online with others like themselves thereby presenting potential surrogate forms of ?community? A. Loners Part 6 Such websites provide several latent functions for participants, they: Transmit technical and ideological know-how enabling deviants to more effectively engage in and legitimate their deviance Bring together persons into common discourse regardless of age, gender, marital status, ethnicity, or SES Are global spanning several continents Such deviant cyber-communities provide a ?space? for deviance to grow A. Loners Part 6 Such deviants have face-to-face relationships with others like themselves but don?t need their cooperation to perform their deviance This category includes the homeless, recreational drug users & con artists Big advantage over loners is that mutual association brings possibility of membership in a deviant subculture or counterculture The individual gains social support from colleagues B. Colleagues Part 6 Such deviants engage in deviance with others like themselves but have only minimal division of labor This category includes neighborhood gangs who congregate with their friends but have little division of labor except possibly a leaders C. Peers Part 6 A deviant group of 3-12 persons who band together to engage in more sophisticated deviant acts with larger monetary payoffs such as theft, smuggling, hustling at gambling Especially fascinating to media and the public, crew deviance involves a complex division of labor involving specialized training and socialization D. Crew Part 6 Larger than crews and extending over time and space, this category includes Cosa Nostra Mafia ?families? and the Columbian drug cartels Such organizations may involve transnational links to other similar groups They are much larger than crews & may have 100 or more members They are ethnically homogenous, employ violence & are vertically & horizontally stratified, and have been known to infiltrate and corrupt law enforcement E. Formal Organizations Part 6 Legitimate persons and organizations may engage in deviant acts although these may be an occasional or ?side? activity to their main activity This is crime that is directly related to those privileged persons and groups in a position to abuse financial, organizational or political power Such deviance may be financial but may also extend to bodily injury and death White collar crime can be divided into two main subsections: occupational and organizational crime F. White-Collar Crime Part 6 Pursued by persons acting on their own behalf This includes employees at all levels of organizations who may steal from their companies, including embezzlement & computer crimes Corporate executives at firms such as Enron, Tyco, and WorldCom looted their companies, shareholders & employee retirement plans through fraudulent accounting, offshore & dummy corporations to live in high style G. Occupational Crime Part 6 Persons in charge of purchasing for their firms are in a position to accept bribes to give business to its vendors In government sector persons evade taxes through offshore companies and false tax shelters often sold to them by accounting and brokerage firms who charge millions for their services Politicians may sell political power such as awarding of military contracts G. Occupational Crime Part 6 Professionals may collect money for their individual benefit such as doctors who accept gifts from drug companies to steer patients toward the use of their drugs This includes a stockbroker who may engage in insider trading (e.g., Martha Stewart case) Physicians who overcharge and/or over-service patients with Medicare/Medicaid fraud G. Occupational Crime Part 6 Crime committed with support of a legitimate formal organization & designed to advance goals of the firm or agency Examples: false advertising, fraud, Antitrust violations, corruption pertaining to government contracts Unsafe products represent another area: drugs, auto and tire industry, medical products H. Organizational Crime Part 6 Worker safety violations & unsafe working conditions result in hundreds of deaths and thousands of injuries annually including but not limited to coal mining, oil and chemical industries, nuclear power plants, pesticide manufacturers Government activity such as illegal domestic or international police or military operations Secret FBI files, Iran-Contra scandal, secret CIA prisons, etc H. Organizational Crime Part 6 Part VI Chapter 32 Drug Use & Disordered Eating Among College Women Sirles Most research focuses on either eating disorders or drug use. This study reports original research on college women who used licit pharmaceutical drugs or illicit street drugs in an ongoing effort to manage their body weight. Evidence of eating disorders since ancient times, but before the late 1960s, virtually unknown to the general public. Diagnosis of anorexia nervosa, bulimia nervosa & other eating related medical syndromes skyrocketed during the 1970s Part 6: Ch. 32 I. The Study Part 6: Ch. 32 In-depth life-history interviews conducted with 57 college-age women at large, public university (N=57) Freshman to seniors, living on & off campus Ages 18-25 years From middle to upper-middle SES groups Convenience sampling given difficulty of finding participants Semi-structured interviews A. Methods Part 6: Ch. 32 II. Instrumental Drug Users Part 6: Ch. 32 Licit: pharmaceutical, generally prescribed Illicit: ?street? drugs A. Types of Drugs Part 6: Ch. 32 Instrumental: motivation to use predicated on substances? specific effects Instrumental drug-using women varied according to temporal nature: Some reported disordered eating before onset of drug use Others reported development of non-normative weight managing behaviors after a period of drug use B. Instrumental Users Part 6: Ch. 32 III. Typology of Users Part 6: Ch. 32 Reported history (foundation) of disordered eating prior to instrumental prescription drug use for weight loss Conventional in that they used more socially acceptable Rx drugs instead of street drugs Overall motivation ? achieving cultural ideal of thinness, thus the goal was to conform Conforming became over-conforming Most presented as thin, but not too thin Largest category in typology (n = 24) A. Conventional Over-Conformists Part 6: Ch. 32 Reported foundation of disordered eating after turning to street drugs for weight control Drugs used were described as ?dirty,? ?unacceptable? & ?inappropriate? Access to drugs not as reliable or consistent, thus they scrounged to find them Second largest category of instrumental users (n = 13) B. Scroungers Part 6: Ch. 32 Those whose drug use pattern ?journeyed? or ?evolved? Used Rx drugs recreationally or medicinally prior to their instrumental use for weight control Journeyers comprised smaller typology (n = 11) C. Journeyers Part 6: Ch. 32 Engaged in substance use before they turned into instrumental drug users Initially used street drugs recreationally & later instrumental patterns for weight control purposes Smallest category (n = 9) D. Opportunists Part 6: Ch. 32 Part 6: Ch. 32 IV. Solitary Deviance Part 6: Ch. 32 Individuals engaged in deviance alone as ?loners? (Best & Luckenbill, 1980) Examples: sexual asphyxiates, self-injurers, substance abusing pharmacists, embezzlers, anorectics & bulimics Solitary operators act alone & don?t associate with deviant others, while subcultural participants acted alone but their behaviors heavily influenced by group memberships (Prus & Grills, 2003) A. Solitary Deviance Defined Part 6: Ch. 32 Lies & secrecy employed by participants in this research They kept their deviant behaviors hidden Many feared if others found out about their instrumental drug use, they would be forced to stop Chose loner lifestyle to avert potential negative consequences Online communities (?pro-anorexia? & ?pro-bulimia?) provide community of support that encourages their deviance B. Loners & Secrecy Part 6: Ch. 32 Often embarrassed about methods of weight control Other methods employed by participants to control weight: Severe caloric restriction Episodes of bingeing & purging Laxative abuse Cigarette smoking Dishonesty in the course of medical care Obsessive thoughts about weight & body management B. Loners & Secrecy Part 6: Ch. 32 In general, research participants were high achievers or perfectionists, included: Honor students College athletes Social leaders Award winners Future professionals B. Loners & Secrecy Part 6: Ch. 32 Participants worried that instrumental drug use would be associated with disordered eating, which was generally negatively stigmatized Obtaining their medications entailed lies & secrecy: Visiting campus clinic during the week Created alibis for such visits C. Secrecy Among Licit Users Part 6: Ch. 32 Different kind of secrecy employed in that street drug illegal & frowned upon socially Had to access those who valued and used psychoactive substances Secrecy about their drug use dropped when around others who engaged D. Secrecy Among Illicit Users Part 6: Ch. 32 V. Social Isolation Part 6: Ch. 32 This was voluntary during episodes of drug use Fear of others finding out would result in benefits of weight control diminishing Part 6: Ch. 32 VI. Practical Hurdles Part 6: Ch. 32 Participants not truthful with medical personnel thus they were forced to rely on self-created systems of interpreting signs & signals regarding changes in their bodies Rx users too felt the need to withhold negative information from their doctors Most Rx users went to psychiatrists, thus no physical exams conducted to make sure they were ?fit? enough to take medication All users reported effects on their moods & energy levels A. Health Consequences of Drug Use Part 6: Ch. 32 Costs varied depending on dosages of drug use & specific substances On average, cocaine users spent more for their supply ($50-$100 per gram) Rx users costs? varied (estimated $40-$200/mo) Some given generous allowances, others worked None engaged in selling to support drug use Some played ?middleman? role hooking sellers with users without benefits for themselves But more time they spent with dealers & drug subculture, less their drugs costs B. Financing Drug Use Part 6: Ch. 32 Rx drug users filled prescriptions & the cost varied depending on whether they had health insurance Patterns of use depended on supply ? the more available the more they did, however, money was not a significant concern for participants Overall, financing drug use didn?t force illicit drug users out of their deviant careers B. Financing Drug Use Part 6: Ch. 32 How does this form of deviance differ from other forms in the context of its stigmatizing effects? What were some of the major differences among illicit & licit drug users? Review Questions Part 6: Ch. 32 Part VI Chapter 33 Cyber Communities of Self-Injury Adler & Adler I. Self-Injurers Part 6: Ch. 33 Those who cut, burn, brand, pick at, or otherwise injure themselves in a deliberate but non-suicidal attempt to achieve relief by harming themselves They grew from relatively small & unknown population into a burgeoning but largely secretive group in the late 1990s A. Characteristics Part 6: Ch. 33 The early 2000s saw rise of online communities of self-injurers first just as places where individuals could find each other and gain non-judgmental acceptance later as support groups composed of like-minded others. Self-injurers thus represent a hybrid associational form, behaving as loners in the solid world and colleagues in the cyber world. A. Characteristics Part 6: Ch. 33 II. The Study Part 6: Ch. 33 In-depth interviews with 25 self-injurers conducted between 2001 to 2004 (N = 25) Ages 16-35 years with most given up behavior Self-injury for most occurred in middle & high school, with just a few continuing past that age Three-quarters women, all white Convenience sampling used Focus on loner self-injurers ? 80% of total A. Data Analysis / Methods Part 6: Ch. 33 Characteristics of loners outlined Describes ways self-injurers are similar & differ from Best & Luckenbill?s (1982) ideal typical model: where some deviants organize & commit their acts as loners, without the support of fellow deviants A. Data Analysis / Methods Part 6: Ch. 33 III. The Social Organization of Solitary Deviance Part 6: Ch. 33 Depression, alienation, rebellion, malaise A form of comfort during stressful periods A. Reasons for Self Injury Part 6: Ch. 33 As loners, on their own in constructing meaning & set of rationalizations to legitimize their deviance Similar to rationalizations of convicted rapists where rapists denied violent nature of act & suggested that victims precipitated or wanted it B. Formulating Deviant Ideology Part 6: Ch. 33 Nonetheless, self-injurers had a much more difficult time giving social meanings & legitimacy to acts Some focused on neatness ? ability to do it without making a mess For others, control was the issue ? they could control where to hurt themselves & when B. Formulating Deviant Ideology Part 6: Ch. 33 Behavior viewed as private, not to be shared A need for focus & concentration of being alone while injuring themselves Given opportunity to interact or meet other self-injurers, many withdrew from or avoided interactions C. Social Isolation Part 6: Ch. 33 Without a subculture, self-injurers found themselves on their own in coping with practical problems presented by their deviance Unable to anticipate peoples? reactions Prior to 1996, scars could be explained away, but no now Led to cutting in places that weren?t as visible such as the stomach, thighs, etc. D. Practical Problems Part 6: Ch. 33 Self-injurers socialized by society, not by fellow deviants, to choose deviance Thus they choose it because they face situations where respectable courses of action not attractive or satisfactory Resulted in condemnation of their behavior & feelings of shame E. Normative Socialization Part 6: Ch. 33 Self-injurers lack of support made deviance unstable, with difficulty sustaining their deviance over long periods of time Structural strain between normative expectations & deviant behavior Lack of support also made it difficult to reaffirm meaning of their deviance Ceasing of their deviance left strong feelings of absence F. Strain Part 6: Ch. 33 Why do self-injurers have difficulty sustaining their deviance over an extended period of time? Review Questions Part 6: Ch. 33 Part VI Chapter 34 Cooks are like Gods: Hierarchies in Methamphetamine-Producing Groups Jenkot Since the 1970s, there?s been an increase in domestic clandestine production of meth & rise in meth use through the 1990s Little known about social relations within groups that produce meth Part 6: Ch. 34 I. The Study Part 6: Ch. 34 In-depth surveys with 31 women incarcerated in county jails in Missouri & Arkansas; two didn?t want to participate (n = 29) Ages 18 to 48 years; average age 36 Mostly white population Drug-related charges included possession, intent to deliver & maintaining a drug premises All women reported using meth at least one time A. Methods Part 6: Ch. 34 II. The Status Hierarchy Part 6: Ch. 34 Hierarchy within meth-producing groups focuses on maintaining a supply of the drug Cook holds the highest position of prestige and privilege Seen as goal for non-cooks Attaining the position entails a constant supply of meth, deference from others & ability of having anything you want The power is considered economic in nature, with meth as the currency A. Methamphetamine Cook Part 6: Ch. 34 The ones who would supply the anhydrous ammonia, which is difficult to obtain Riskier than being the cook, they run risk of being arrested, injury & death At highest risk for physical injuries due to dangers of anhydrous ammonia B. The Gas Man/Juicer Part 6: Ch. 34 They obtain the goods necessary to produce the drug ? the more risk she or he takes, the more they are valued At least one shopper per group, up to four in any group C. The Shopper Part 6: Ch. 34 Occupy status slightly above ?simple? or ?pain in the ass? users Usually trade sex for a ?blow? Function to keep the cook happy (sexually), which aids in the production process Not considered threat by girlfriends or wives due to their marginalized status D. The Dope Ho Part 6: Ch. 34 Simple users whose position lacks prestige Their presence creates issue of risk & trust Members of group know users or else they wouldn?t be allowed to interact with them Some might be undercover police or informants, so usually a burden to group E. The Meth User Part 6: Ch. 34 User: usually occupies other positions in group Simple user: just used drug & not considered part of group The greater the involvement in the production process, the higher the status F. Users vs. Simple Users Part 6: Ch. 34 Process of meth production involves multiple individuals performing specific tasks Performance of tasks relates to social roles within group Other tasks include: Obtaining key precursor chemicals Obtaining other items & compounds Actual production of meth G. In-Group Mobility & Status Variation Part 6: Ch. 34 In the hierarchy of the group, what roles are thought to be the most prestigious? What differentiates users from ?simple? users? Review Questions Part 6: Ch. 34 Part VI Chapter 35 Gender & Victimization Risk Among Young Women in Gangs Miller An undeveloped area in the gang literature is the relationship between gang participation and victimization risk Strong evidence (Lauritson, Sampson, and Laub, 1991) suggests that delinquent lifestyles are associated with an increased risk of victimization Part 6: Ch. 35 Gangs are social groups organized around delinquency and participation in gangs has been shown to escalate youth?s involvement in crime and violence Research on gang violence indicates that the primary targets of this violence are other gang members Part 6: Ch. 35 Thus gang participation can be seen as a delinquent lifestyle that involves high risks of victimization Research on female gang involvement has expanded in recent years to include examination of such issues as violence and victimization, but the relationship between gang participation and violent victimization remains undeveloped area here as well Part 6: Ch. 35 I. The Study Part 6: Ch. 35 Data from survey and semi-structured, in-depth interviews with 20 female members of mixed gender gangs in Columbus, Ohio Ages 12-17 years 75% were African American or multiracial (16 of 20); the rest (4) were white A. Methods Part 6: Ch. 35 Sample drawn from several local agencies in Columbus working with at-risk youth Structured as a gang/nongang comparison; a total of 46 girls interviewed (N = 46) Gang membership determined by self-definition A limitation of study is that only young women were interviewed; inferences about gender dynamics and young men?s behavior is based on young women?s perceptions only A. Methods Part 6: Ch. 35 II. Gender, Gangs & Violence Part 6: Ch. 35 Several girls suggest that being a gang member is a source of protection in the neighborhood Females offered a gendered sense of protection by belonging to a group that was mostly male Male gang members could retaliate against violent acts to girls in gang At same time, members recognize that they may be targets of rival gangs and were expected to ?be down? for their gang at those times even when it meant being physically hurt A. Gangs as Protection & Risk Part 6: Ch. 35 Thus members should be tough, able to fight and engage in criminal activities, be loyal to the group, and be willing to put oneself at risk for the gang Initiation rites and internal rules exposed members to submit to violence For example, a person submits to a certain number of blows to the head and/or chest or is ?beat in? by gang members for a certain duration of time A. Gangs as Protection & Risk Part 6: Ch. 35 Breaking a rule such as disrespecting the leader or dating a rival gang member would result in physical punishment Clear that in spite of subjects? views of gangs as a form of ?protection,? being a gang member also involves opening oneself to possible victimization Perhaps because of its more structured nature compared to random vulnerability of being on streets without gang, victimization risk for young women in gangs may seem preferable A. Gangs as Protection & Risk Part 6: Ch. 35 Status hierarchies within Columbus gangs, like elsewhere, are male-dominated All young women reported established leaders as males & in some cases, only males could be leaders Leadership qualities - all perceived as masculine in nature: Being tough Able to fight Willing to ?do dirt? B. Gender & Status, Crime & Victimization Part 6: Ch. 35 Status in gangs for most part based on willingness to use serious violence & commit dangerous crimes, traits more likely found among males Since such traits seen as masculine, young women have greater flexibility in their gang involvement Fewer expectations on them to fight, use weapons, commit crimes As a result victimization risk for girls was less than for males B. Gender & Status, Crime & Victimization Part 6: Ch. 35 Girls could gain status in gang by use of serious violence, being hard Young women also had a second route to status unavailable to men via their connections as sisters, girlfriends, family to high-status males in gang This second route maintains gender inequality in gangs but decreases risk of victimization for women B. Gender & Status, Crime & Victimization Part 6: Ch. 35 Young men?s perceptions of girls as lesser members served to keep girls from being targets of serious violence at hands of rival gang males leaving that to their girls Most subjects tended not to be involved in serious gang violence or crime & some reported they chose to exclude themselves due to feelings of ambivalence B. Gender & Status, Crime & Victimization Part 6: Ch. 35 In addition to girls choosing not to participate in serious gang violence, they were also excluded by male members from doing so Two crimes in particular ?off-limits? for girls: Drug sales and drive-by shootings Often framed as protection for girls, and reducing their risk of injury, women?s exclusion perpetuated devaluation of female members as less significant to group C. Girls? Devaluation & Victimization Part 6: Ch. 35 Some women found perception of them as weak & in need of protection frustrating It meant girls had a harder time proving they were serious about their gang commitment Such devaluation of girls in gangs could lead to mistreatment & victimization of girls by members of their own gang if lacking specific male protection like a brother This is exacerbated by gang activities leading to view of women as sexually available C. Girls? Devaluation & Victimization Part 6: Ch. 35 Another problem reinforcing devaluation of women in gang was sexual in nature Girls but not boys could be ?sexed in? as form of gang initiation thereby losing respect Such girls were viewed as sexually promiscuous, weak and not ?true? members and were mistreated by both other males & females C. Girls? Devaluation & Victimization Part 6: Ch. 35 The option of being ?sexed into? gang served to keep girls disempowered since it diminished claim of every woman as to how they gained membership Women gang members, unlike men, could also become potential victims of rival gang sexual violence such as rape C. Girls? Devaluation & Victimization Part 6: Ch. 35 What were the similarities & differences in the initiation of males & females into gangs? Why are females perceived to be more vulnerable than their male counterparts within gang life? Review Questions Part 6: Ch. 35 Part VI Chapter 36 International Organized Crime Godson & Olson 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 I. Organized Crime & Business 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 A. Criminal Organization 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 B. Family Ties 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 C. Three New Characteristics of ICOs Part 6: Ch. 36 II. The New International Criminal 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 gang Chinese Triads Columbian cartels Mexican cartels EXAMPLE Part 6: Ch. 36 III. The Future 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 A. Economics of Production 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 services Example: The Andes & Amazon of Latin America, regions in Afghanistan & Pakistan, Burma, Peru, Southern China B. International Ungovernability Part 6: Ch. 36 IV. Immigration Stream 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 based Example: 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) A. Border Porosity 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) B. Trends in Technology 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 C. Relative Disorganization of Law Enforcement 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? Review Questions Part 6: Ch. 36 Part VI Chapter 37 War Profiteering: Iraq & Halliburton Rothe 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 I. The Study 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 A. Brief History of Halliburton Part 6: Ch. 37 These include: Overcharging the US government for contracted work Utilizing 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 A. Brief History of Halliburton 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 A. Brief History of Halliburton 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 A. Brief History of Halliburton Part 6: Ch. 37 A 2000 follow-up GAO report found systematic overcharges via inflated costs Halliburton 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 A. Brief History of Halliburton 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 B. Halliburton ? Cheney Connections 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 B. Halliburton ? Cheney Connections 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 B. Halliburton ? Cheney Connections 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 C. Halliburton & Cheney Post-Retirement 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 C. Halliburton & Cheney Post-Retirement 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 C. Halliburton & Cheney Post-Retirement 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 D. State Facilitation of Corporate Crime 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 D. State Facilitation of Corporate Crime 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 D. State Facilitation of 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? Review Questions Part 6: Ch. 37
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