Henrik Sigstad, Assistant Professor at the BI Norwegian Business School held a seminar on 7 May in Skatteforsk.
Title of his presentation was: How Is Illegal Activity Organized? Evidence from Corruption Cases
Abstract of the presentation:
How is illegal activity organized when agreements cannot be enforced in court? We identify six mechanisms that can sustain trust in illegal transactions—relational trust, reputation, kompromat, intermediaries, hierarchy/coercion, and contractual formalization—and derive predictions about how they shape organizational form.
We test these predictions using a new dataset of 3,458 documented corruption cases from 13 sources covering 179 countries. The evidence strongly supports the trust framework. Cross-border schemes rely far more on intermediaries than domestic ones (57% vs. 26%). Kinship ties are associated with more durable arrangements. Contractual formalization—where legal contracts are used to sustain illegal arrangements—appears in 18% of cases and is concentrated among insiders with access to legal expertise.
A companion paper extends the analysis to 5,950 cases across multiple crime types, including drug trafficking, organized crime, money laundering, human trafficking, and tax evasion. Across contexts, organizational form responds predictably to the available trust technologies: violence dominates where it is credible, contracts where legal tools are accessible, and intermediaries where parties are distant. Tax evasion, in particular, relies heavily on professional enablers and contractual formalization, mirroring cross-border corruption.