Is identification liability an appropriate method for determining corporate

There are two main criticisms against identification liability. The first is that due to the narrowing down of who in a company can be considered as acting as and possessing the mental state of the company, the effectiveness of identification

83 _{Peter Cartwright Consumer Protection and the Criminal Law (2001) at 104. See also Celia}

Wells Corporations and Criminal Responsibility 2 ed (2001) at 104. See also Clough & Mulhern at 100-4.

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liability is limited.84 _{This first criticism is more directed at the formulation of} identification liability as enunciated in Tesco Supermarkets than to identification liability as a doctrine. The second criticism is targeted at identification liability as a doctrine for the determination of corporate criminal liability. This criticism suggests that identification liability does not reflect ‘corporate fault’ adequately. Specifically, identification liability fails to reflect corporate fault adequately in two ways: it is hinged on the conduct and fault of one person which may often disregard how decisions in companies that lead to crime are really made; and it fails to account for corporate fault on the basis of a ‘corporate culture’ that favours the commission of an offence. These are discussed below in turn.

3.4.6.1 Identification liability relies on the establishment of criminal liability of a natural person

The formulation of identification liability in Tesco Supermarkets states that a company cannot be liable for an offence if a ‘directing mind and will’ was not involved in the commission of the offence. Identification liability in this form is more suited to smaller companies where the involvement of individual directors in actions or omissions that lead to crime is more likely to be proved.85 _Professor Gobert points out that identification liability is under-inclusive. By this he means that that ‘the range of persons within a large company who will possess the relevant characteristics to render the company liable will inevitably be a rather small percentage’.86 _{Where this range is small – ordinarily in small companies –} identification liability would be a suitable method of establishing corporate fault. However, in large companies, this would generally not be the case.87

Large companies and multinational corporations tend to have diffuse company structures in which directors or controlling officers are far removed both tactically

84 _{Smith & Hogan at 260.} 85 _{Ibid 260-1.}

86 _{James Gobert ‘Corporate criminality: four models of fault’ (1994) 14 Legal Studies 393}

at 400.

87 _{Professor Gobert aptly expresses the limits of identification liability stating that it}

‘propounds a theory of corporate liability which works best in cases where it is needed least and works least in cases where it is needed most’ (Ibid 401).

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and operationally from the implementation of decisions of the company.88 Importantly, Professor Clarkson notes that decision-making in large companies and multinational corporations ‘is often the product of corporate policies and procedures rather than individual decisions’.89 _{Identification liability as formulated} in Tesco Supermarkets fails to take into account these two factors: complex organisational structures and the role played by corporate policies and procedures in decision-making. Therefore, where decisions in large companies or multinational corporations lead to the commission of an offence, it would be very difficult to find corporations liable criminally through the doctrine of identification since this doctrine requires that an individual official’s criminal liability be established first before that can be regarded as being the criminal liability of the company.90

3.4.6.2 Identification liability does not reflect corporate fault on the basis of ‘corporate culture’

As indicated above, in terms of identification liability, the fault of the company is the fault of an individual director.91 _{A related point that follows from the above} criticism is that modern day corporations and multinational corporations may commit criminal offences as a result of a ‘corporate culture’ that is indifferent to abuses or corporate practices that permit abuses by failing to observe due diligence mechanisms. Hence, since identification liability is hinged on the establishment of liability of one individual, it would not assist in establishing fault where there may be a pervasive culture or mind-set in a company that leads to the commission of crimes but one that cannot be located in one director or senior company official. Therefore, where criminal wrongdoing would more likely be a consequence of management or corporate policy rather than of a decision or act traceable to an individual director, identification liability has little or no

88 _{See James Gobert ‘Corporate criminality: four models of fault’ (1994) 14 Legal Studies}

393 at 401.

89 _{C M V Clarkson ‘Kicking Corporate Bodies and Damning their Souls’ (1996) Modern Law}

Review 557 at 561.

90 _{Consultation Paper 195 at 105.}

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application. Identification liability – hinged on individual criminal liability – is modelled on business forms and decision-making arrangements that existed at the start of the twentieth century which have largely been abandoned by modern corporations. Hence, identification liability cannot satisfactorily be a method for the determination of corporate criminal liability and business accountability in general.

3.5 Vicarious liability, identification liability and growing calls for business