Landscape Changes

Considering the criminal liability of a corporation as a whole, not merely the liability of its constituent members, is important for several reasons. Firstly, the power of a corporation is greater than the power of its members only. Therefore, it is logical to consider corporate accountability to be attributed to the corporate entity as a whole rather than merely its constituent parts. This is particularly important when corporations may structure themselves specifically to avoid legal liability.¹¹⁹ As a result, the recognition of corporate personality, followed by the imposition of criminal liability of the corporate entity, ensure that individuals cannot hide themselves behind corporate activity, nor can the corporate entity as a whole shelter behind the criminal liability of individual members.¹²⁰

Secondly, recognising that the corporate entity as a whole is criminally liable allows for more effective legal and moral sanctioning of wrongful corporate activity. As such, criminal liability of corporations through the recognition of legal personality directly encourages the adoption of better standards, more responsible corporate behaviour and deterrence from future misconduct.¹²¹ The recent development in the European civil law jurisdictions provides strong arguments for the effectiveness of this kind of reasoning. It has

118 J G Stewart, „A Pragmatic Critique of Corporate Criminals: Theory, Atrocity, Commerce and Accountability;

A Paper Presented at the University of Toronto Workshop on Corporate Criminal Liability, 2012.

119 C A Williams, „Corporate Social Responsibility in an Era of Economic Globalization‟, (2002) 35 University of California Davis Law Review 769.

120 N Gotzmenn , „Legal Personality of the Corporation and International Criminal Law: Globalisation, Corporate Human Rights Abuses and the Rome Statute‟, (2008) Queensland Law Student Review, The University of Queensland, Australia, 43.

121 S Beale and A Q Safewat , „What Developments in Western Europe Tell Us about American Critiques of Corporate Criminal Liability‟, (2004) 89 Buffalo Criminal Law Review, 154.

38 been documented in several European countries that criminal sanctioning of corporate activity plays an important role in reinforcing norms of acceptable corporate conducts.¹²² Thirdly, recognizing the corporate entity as having legal personality for purposes of criminal law ensures the availability of effective means of punishment. For instance, it has been noted that the criminal sanctioning of corporate actors leads to effective shaming and stigmatization.¹²³ Punishments for criminal activities engaged in by a corporation may include fines and, in extreme cases, dissolution.¹²⁴ In many, cases, such means of punishment may be more effective than imposing tortuous liability or imprisoning individual members of the corporation, both of which effectively allow the corporate entity as a whole to continue its business relatively unimpeded.¹²⁵

Corporations are a part of the community which enjoys a range of similar rights, although certainly not identical, as those accorded to individuals. As a result, corporations can be considered to be bound by the same laws and social norms like any other individual.¹²⁶When corporation‟s engage in criminal conduct, the consequences that follow are usually of considerable costs. Therefore, the types of harm inflicted by a corporation are far beyond what any individual could produce, both in terms of the amount of money involved and the impact of the misconduct on broad portions of society. For example, as part of its guilty plea to violating the FCPA, German conglomerate Siemens A. G. admitted to paying approximately $ 1.4 billion in bribes, over a six-year period, through subsidiaries in France, Turkey and the Middle East to obtain contracts.¹²⁷ Similarly, pharmaceutical giant

122 Ibid.

123 Ibid.

124 B Fisse, „Restricting Corporate Criminal Law: Deterrence, Retribution, Fault and Sanctions‟, (1983) 56 California Law Reveiw, 1165.

125 S Beale and A Q Safwat , op cit.

126 P Henning, „Should the Perception of Corporate Punishment Matter?‟ (2011) Journal of Law and Policy, Wayne State University Law School, 82.

127 Siemems A. G. and three subsidiaries plead guilty to Foreign Corrupt Practices Act Violations and agreed to pay $ 450 million in combined criminal fines, United States Department of Justice, 15 December, 2008<

http://www.justice.gov/opal/pr/2008/decembre/08-Crm-1105.html>Accessed on 19 August, 2017.

39 Pfizer paid $ 2.3 billion, including a criminal fine of $ 1.195, billion to settle civil and criminal investigations for promoting “off-ideal” uses of its drugs.¹²⁸ It is obvious that the fines put on the companies, in the above mentioned cases, are of an enormous amount.

Corporate unlawful activity is punished considerably and the company has to pay a lot. The considerable fines make the companies more aware of what they have to pay if they risk acting unlawfully during their activities.

One of the main purposes of punishment is deterrence which is the prevention of future crime by the wrongdoer (specific deterrence) and other (general deterrence). Corporate criminal liability would not be needed if administrative fines and penalties were sufficient to keep corporations in line, but they are not. Corporations tend to treat fines as a cost of doing business; if the benefits of socially irresponsible behavior outweigh the potential cost (times the likelihood of getting caught) they will undertake it. The prospect of a criminal conviction, however, is different in kind. A corporation‟s reputation is one of its biggest, and a criminal conviction tarnishes that reputation in a serious and often unpredictable way. The corporation has an immense incentive to avoid this outcome.

Corporate criminal liability also serves the purpose of punishment: rehabilitation.

Punishing a few wrongdoers is not likely to change the atmosphere of a big corporation, but collective entity liability will. By holding the corporation liable, prosecutors (and judges) can ensure that corporation puts in place compliance programs with real teeth in them. In recent times, corporations have even agreed to place outside “watchdog” directors on their boards to help with the oversight process. Overtime, compliance programs and careful over sight can reform the organization.¹²⁹ One part of rehabilitations is the paying of restitution to the

128 Justice Department Announces Largest Health Car Fraud Settlement in its History, United States Department of Justice, 2 September 2009 < http://www.justice.gor/usao/ma/press office-press release files / Pfizer>

Accessed on 19 August, 2017.

129 B Fisse, op cit.

40 victims of one‟s crime often, white collar prosecutions involves millions, even hundreds of millions or billions of dollars of fraud. Convicted individuals do not have at their disposal anything near the amount of money necessary to pay restitution to the victims. The corporate entity however does.

Corporate criminal liability has some very significant benefits in deterring corporate crime and forcing corporations that commit crime to clean up their act. These benefits should not be underestimated, given the extent to which our economy is dominated by corporations, without such liability, white collar crime could very well run rampant throughout our business sector.

On the other hand, in holding corporations criminally liable, some innocent people are harmed. Where the corporation suffers monetarily because of the punishment and reduces in size or in rare situation, goes bankrupt as a result, innocent employees will be hurt financially. Also where the corporation raises its prices to offset the cost of a criminal conviction, innocent consumers will literally pay the price, although market forces should act to keep this harm to a minimum.

2.1.10 The Distinction between Criminal Offences and Regulatory (Statutory) Offences There is a distinction between criminal offences and regulatory offences. The first, also

referred to as mens rea offences,¹³⁰ are usually contained in penal codes and require proof of both an actus reus and mens rea in the sense of some culpable state of mind. On the other hand, regulatory offences encompass those offences that consist of an omission to discharge a specific duty of affirmative performance imposed on corporations by law.¹³¹ The differences

130 S Idhiarchi, „An Examination of the Scope of Corporate Criminal Liability in Nigeria‟ (2017),

<htpps://www.researchgate.net> Accessed on 25 Nov., 2017.

131 E K Ainslie, „Indicting Corporations Revisited: Lessons of the Arthur Anderson Prosecution (2007) 43 American Criminal. Law Review, 107 at 121 <http://www.schnader.com >Accessed on 20 August, 2017.

These categories of offences were also referred to as “quasi-criminal”.

41 between these types of offences are that sanctions for criminal offences may only be imposed by court whereas sanctions for regulatory offences may also be imposed by administrative authorities (at least at the first instance imposed by administrative authorities unless an appeal was made to a court). There are also differences between criminal and regulatory offences as regards the stigma effect of sanction: while such effect is clearly present in sanctions for criminal offences, it is not present (or only present to a smaller extent) in sanctions for statutory offences.¹³²

The most significant point about this distinction between the two is that in respect of regulatory offences it is unnecessary for the prosecution to specify any individual whose conduct will be attributed to the corporation for criminal purposes, and therefore a sort of strict liability is thus imposed.¹³³ Thus, it may be argued that the dialectics about the appropriateness of attribution of mental element to an artificial entity do not apply to statutory/regulatory offences.