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William K. Black - Apple's Anti-Employer Control Fraud
January 23, 2012 Apple has released a report on working conditions in its suppliers’ factories, highlighting a form of control fraud (fraud in which the head of a company subverts it for personal gain) that criminology has identified but rarely discussed. I write overwhelmingly about accounting control fraud because it drives our recurrent, intensifying financial crises. The primary intended victims of accounting control frauds are the shareholders and the creditors. Other private sector control frauds target customers (e.g., George Akerlof’s 1970 article on “lemons”), and the public (e.g., the unlawful disposal of toxic waste, illegal logging, and tax fraud).
Anti-employee control frauds most commonly fall into four broad, but not mutually exclusive, categories – illegal work conditions due to violation of safety rules, violation of child labor laws, failure to pay employees’ wages and benefits, and frauds based on goods and loans provided by the employer to the employee that lock the employee into quasi-slavery. Apple has just released a report on its suppliers that shows that anti-employee control fraud is the norm. Remember, fraud is hidden and is often not discovered and Apple did not have an incentive to make an exhaustive investigation. Apple calls its inquiries “audits” and it is apparent that most of its information comes from reviewing written and electronic records at its suppliers.
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