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Scuutiny on the bounty: Business rewards for crime tips
Scrutiny on the Bounty: Business Rewards for Crime Tips Gilbert Geis, Ted Huston, and Joseph Wells
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usiness executives are sometimes confronted with criminal acts that take place on their premises, involve their employees, or threaten the community in which they are located. The offer of a reward for information to help solve such crimes is one strategy executives often follow. Money is a powerful incentive to transmit to the authorities clues that otherwise would be kept quiet. Posting a reward can also be a tangible indication that a c o m p a n y cares. There can be a downside as well. The police might resent what they regard as outside interference with their work. They might be sv~amped with people providing false leads in the h o p e of gaining a reward. And of course, there can be problems in determining what information qualifies for a reward and h o w m o n e y is to be divided a m o n g different claimants. Offering rewards can also thrust a c o m p a n y into the world of informers and diverse unsavory characters. But rewards do seem to work. Each year more than 100,000 Americans volunteer information about other taxpayers to the Internal Revenue Service, which pays out more than a million dollars for the 10 percent of the claims that are allowed. In 1988, the Securities and Exchange Commission was authorized to post rewards to encourage informants to come forward with tips on insider trading cases. Typical of the use of rewards by companies was the 1989 case in which Du Pont offered $10,000 for information leading to the conviction 80
of the person w h o had used a Du Pont product, Velpar, to poison a 500-year-old historic tree, the Treaty Oak in Austin, Texas. A conviction resuited from information provided by s o m e o n e seeking the reward. If rewards are desirable, under what circumstances should they be offered and h o w much should a c o m p a n y pay? We surveyed a sample of American firms, offering the following three vignettes and asking a n u m b e r of questions. Vignette A Anna C., a 31-year-old secretary in the accounting department of a large company, was raped and beaten in the c o m p a n y parking lot. She has not b e e n identified in the newspaper, but the comp a n y is in a small town and information about the crime is widely known. The victim had b e e n working overtime, and no one else was in the vicinity w h e n the crime took place. The victim has specifically indicated to the c o m p a n y that she does not regard the c o m p a n y as liable and has no intention of suing. Anna is able to offer only fragmentary descriptive information about the offender. Other w o m e n employees have b e e n frightened by the crime, and the c o m p a n y has improved the lighting and installed a security station in the parking lot. The rape victim was not hospitalized but missed several days of work and is n o w receiving counseling at a rape crisis center. Vignette B The 15-year-old son of a couple w h o have worked for the c o m p a n y for more than ten years was beaten and killed on a deserted road outside the city. The boy, an excellent student, was, so far as anyone can tell, simply in the wrong place at the wrong time. It appears he was waylaid by s o m e o n e w h o wanted to steal his car and take Business Horizons / November-December 1992
his money. Several clues have b e e n found, but the police anticipate that the crime, which occurred five days ago, will not be readily solved.
Vignette C Auditors have discovered a $10,000 discrepancy in the accounts for the purchasing department and believe it was brought about b y a conspiracy involving several employees. The c o m p a n y has suspects but has b e e n unable to gather enough satisfactory evidence to bring charges. The comp a n y is considering offering a reward for additional information. orty executives responded to our survey. On a ten-point scale, the c o m p a n y representatives thought the rape case was b y far the most likely to induce their c o m p a n y to offer a reward (6.62 points). The murder was far behind (3.97), though relatively close to the embezzlement case (3.38). A slight majority of the respondents believed that if a reward were offered in the rape or murder case, it should be b e t w e e n $1,000 and $5,000, but that it ought to be under $1,000 for the embezzlement. About 30 percent believed the reward should be in the $5,000 to $10,000 range for the rape and murder, though none went as high as this for the embezzlement. More executives (83.8 percent) thought the rape episode should draw a reward offer from the c o m p a n y than for either the murder (59.5 percent) or the e m b e z z l e m e n t (40.5 percent). On the other hand, there was a strong feeling that the reward, though smaller, would be more effective in solving the embezzlement than either of the other two criminal offenses. Most of the executives (56.8 percent) believed the award should be paid on conviction, though 30.6 percent said on indictment and 11.1
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Scrutiny on the Bounty: Business Rewards for Crime Tips
percent on arrest. Only 16.7 percent favored granting an award to a law enforcement officer, and only 19.4 percent believed it should be given to an accessory w h o turned state's evidence. Somewhat less than half (42.9 percent) of the respondents replied that police agreement should be a prerequisite to making an award. Some of the comments by the respondents are worth noting: • "I think rewards are probably most effective in smaller communities, though they m a y work in large urban areas." • "Rewards send a message to criminals that the c o m p a n y will come after them and see that justice is carried out for acts committed against its employees." • "Should be very carefully h a n d l e d ~ u s e d selectively." • "I do not believe in exchanging m o n e y for stolen property; otherwise, you will set up a secondary market that will be overrun with p e o p l e selling you back your o w n property." • "Rewards provide a selfish motive for n e e d y persons to speak up w h o otherwise would not do so. Therefore, this method will b u y information that is not available otherwise." fil
Gilbert Geis is a professor emeritus of social ecology at the University of California, Irvine. Ted Huston is the Amy Johnson McLaughlin Centennial Professor of Human Ecology and Psychology at the University of Texas at Austin. Joseph Wells is chairman of the National Association of Certified Fraud Examiners, Austin, Texas.
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usiness executives are sometimes confronted with criminal acts that take place on their premises, involve their employees, or threaten the community in which they are located. The offer of a reward for information to help solve such crimes is one strategy executives often follow. Money is a powerful incentive to transmit to the authorities clues that otherwise would be kept quiet. Posting a reward can also be a tangible indication that a c o m p a n y cares. There can be a downside as well. The police might resent what they regard as outside interference with their work. They might be sv~amped with people providing false leads in the h o p e of gaining a reward. And of course, there can be problems in determining what information qualifies for a reward and h o w m o n e y is to be divided a m o n g different claimants. Offering rewards can also thrust a c o m p a n y into the world of informers and diverse unsavory characters. But rewards do seem to work. Each year more than 100,000 Americans volunteer information about other taxpayers to the Internal Revenue Service, which pays out more than a million dollars for the 10 percent of the claims that are allowed. In 1988, the Securities and Exchange Commission was authorized to post rewards to encourage informants to come forward with tips on insider trading cases. Typical of the use of rewards by companies was the 1989 case in which Du Pont offered $10,000 for information leading to the conviction 80
of the person w h o had used a Du Pont product, Velpar, to poison a 500-year-old historic tree, the Treaty Oak in Austin, Texas. A conviction resuited from information provided by s o m e o n e seeking the reward. If rewards are desirable, under what circumstances should they be offered and h o w much should a c o m p a n y pay? We surveyed a sample of American firms, offering the following three vignettes and asking a n u m b e r of questions. Vignette A Anna C., a 31-year-old secretary in the accounting department of a large company, was raped and beaten in the c o m p a n y parking lot. She has not b e e n identified in the newspaper, but the comp a n y is in a small town and information about the crime is widely known. The victim had b e e n working overtime, and no one else was in the vicinity w h e n the crime took place. The victim has specifically indicated to the c o m p a n y that she does not regard the c o m p a n y as liable and has no intention of suing. Anna is able to offer only fragmentary descriptive information about the offender. Other w o m e n employees have b e e n frightened by the crime, and the c o m p a n y has improved the lighting and installed a security station in the parking lot. The rape victim was not hospitalized but missed several days of work and is n o w receiving counseling at a rape crisis center. Vignette B The 15-year-old son of a couple w h o have worked for the c o m p a n y for more than ten years was beaten and killed on a deserted road outside the city. The boy, an excellent student, was, so far as anyone can tell, simply in the wrong place at the wrong time. It appears he was waylaid by s o m e o n e w h o wanted to steal his car and take Business Horizons / November-December 1992
his money. Several clues have b e e n found, but the police anticipate that the crime, which occurred five days ago, will not be readily solved.
Vignette C Auditors have discovered a $10,000 discrepancy in the accounts for the purchasing department and believe it was brought about b y a conspiracy involving several employees. The c o m p a n y has suspects but has b e e n unable to gather enough satisfactory evidence to bring charges. The comp a n y is considering offering a reward for additional information. orty executives responded to our survey. On a ten-point scale, the c o m p a n y representatives thought the rape case was b y far the most likely to induce their c o m p a n y to offer a reward (6.62 points). The murder was far behind (3.97), though relatively close to the embezzlement case (3.38). A slight majority of the respondents believed that if a reward were offered in the rape or murder case, it should be b e t w e e n $1,000 and $5,000, but that it ought to be under $1,000 for the embezzlement. About 30 percent believed the reward should be in the $5,000 to $10,000 range for the rape and murder, though none went as high as this for the embezzlement. More executives (83.8 percent) thought the rape episode should draw a reward offer from the c o m p a n y than for either the murder (59.5 percent) or the e m b e z z l e m e n t (40.5 percent). On the other hand, there was a strong feeling that the reward, though smaller, would be more effective in solving the embezzlement than either of the other two criminal offenses. Most of the executives (56.8 percent) believed the award should be paid on conviction, though 30.6 percent said on indictment and 11.1
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Scrutiny on the Bounty: Business Rewards for Crime Tips
percent on arrest. Only 16.7 percent favored granting an award to a law enforcement officer, and only 19.4 percent believed it should be given to an accessory w h o turned state's evidence. Somewhat less than half (42.9 percent) of the respondents replied that police agreement should be a prerequisite to making an award. Some of the comments by the respondents are worth noting: • "I think rewards are probably most effective in smaller communities, though they m a y work in large urban areas." • "Rewards send a message to criminals that the c o m p a n y will come after them and see that justice is carried out for acts committed against its employees." • "Should be very carefully h a n d l e d ~ u s e d selectively." • "I do not believe in exchanging m o n e y for stolen property; otherwise, you will set up a secondary market that will be overrun with p e o p l e selling you back your o w n property." • "Rewards provide a selfish motive for n e e d y persons to speak up w h o otherwise would not do so. Therefore, this method will b u y information that is not available otherwise." fil
Gilbert Geis is a professor emeritus of social ecology at the University of California, Irvine. Ted Huston is the Amy Johnson McLaughlin Centennial Professor of Human Ecology and Psychology at the University of Texas at Austin. Joseph Wells is chairman of the National Association of Certified Fraud Examiners, Austin, Texas.
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