Corporate crimes


This book has considered various approaches to justifying the punishment of individuals. We have not yet considered the issue of whether groups, such as corporations, can be punished and, if so, how they might be punished. For over a century, corporations have been subject to criminal liability. However, the variety of offences and punishments has increased with more increasing enactment of crimes like corporate killing and uses of prison for individuals with responsibility for the criminal actions of the companies they lead.

This chapter will be broadly divided into two. The first part will consider the definition of a company for the purposes of the criminal law and how companies can be held criminally responsible. The second part will examine different ways of approaching the punishment of corporate crimes through reference to different types of corporate crimes. The following discussion is not intended to be exhaustive. But it is to open up for readers this very different category of criminal offending, how we might think about group liabilities and the punishment of groups like corporations that, it is hoped, will inspire further future work.1

Can companies be criminally responsible?

The ‘company’ holds a particular - and perhaps peculiar - status in law. Legally speaking, a company is a legal person.2 But the company is a legal person, unlike any living individual. The company must be a kind of commercial organization that forms a new and separate legal personality from the individuals who create and sustain it through incorporation as its directors and shareholders.3

As a legal person separate from its members, the company has a life of its own and can outlive successive members over time. But it also is merely a person in law and not a citizen - it cannot vote in elections for Congress or Parliament. These common facts about the legal recognition of a company raise the question of how they - as a legal person - can be held responsible separately from the individual members who compose it.

Typically, we most often tend to hold individuals responsible for their actions. We consider whether that person committed the crime - perhaps reflect on his or her desert if we followed retributivism - and impose outcomes tailored to either desert, deterrence, rehabilitation or other characteristics. While there are some examples of assigning blame to groups - such as in holding a country responsible for its actions, especially relating to armed conflict - it is undoubtedly less clear and more controversial how we assign criminal liability to a company rather than to individuals for their individual actions.4 The challenge is to set a threshold where the responsibility of individuals changes and takes on the character of the responsibility of a group.3

Traditionally, companies have been found liable for issues like the non-repair of highways or bridges.6 The justification for punishing companies arose largely as a matter of public policy: ‘[the] tendency of modern decisions has been to make companies, civilly as well as criminally, amenable like individuals’.7

It might be observed that the main reason for the creation of corporate crimes was not out of any view of collective responsibility, but born from the position that some actions linked to corporations required punishment - with rationales for how the collective could be held responsible being drawn up after the decision to impose criminal sanctions had been made. A possible causal factor is public outcries following major events, like railway crashes or acts leading to multiple deaths, where there are some strongly shared public convictions that monetary fines -even if substantial — would not go far enough. But it is also worth noting a clear public interest in ensuring companies do not escape regulation by the criminal law, especially where any relevant individuals could be prosecuted for offences more genuinely the fault of a company’s practices. Plus, a company would be more likely to afford substantial fines out of reach for most, if not all, its responsible agents.9

One early explanation of how companies can be held criminally responsible is offered by Viscount Haldane, who says:

[A] company is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the company, the very ego and centre of the personality of the company ... somebody who is not merely a servant or agent for whom the company is liable ... but somebody for whom the company is liable because his action is the very action of the company itself.1"

This view of a company sees it as something more than its members, and greater the sum of its parts. A company is no mere collection of individuals, but a distinct form of organization centred around shared pursuits held in common by its members. But it is not yet clear how much we might impute liability to a corporate whole for the actions of an individual member.

We can begin shedding some light on this by considering the issue of vicarious liability, where the criminal responsibility of an individual can be imputed to an organization. This is usually set in terms of strict liability defined by law, but not always." Examples include where the British-based supermarket Tesco Ltd was found to have ‘supplied’ an 18-rated video to a child - although a check-out assistant supplied the video.12 In contrast, and in a different case, a firm was found not guilty of selling alcohol outside permitted hours when a messenger boy, lacking the authority to sell alcohol, had done so.13

The most common way of understanding how we might attribute liability to a corporation is as a moral agent. For example, Philip Pettit says:

[A] group of people will constitute a corporate agent... [which is] an individual human person, being capable of advancing considered goals in light of considered representations and, in particular, being capable of registering and responding to desiderata of rationality as well as to the values that members of the group personally countenance.14

Group agents can be held responsible where: there is ‘value relevance’ as the company has the choice to make a ‘right or wrong decision’, ‘value judgement’ where it has the ability to make judgements against relative value of options, ‘value sensitivity’ where decisions can be made after consideration and, finally, ‘intentionality’ when company members are morally responsible for decisions that result in unlawful activity.1’’ This means that a group attains agency where that group is accountable for its values and the decisions it makes based on them -with the assumption that some intentional direction enabling the group to operate in that way can be established. For example, a company can be considered to possess intentions if all four of the following conditions are met: the company’s members have a shared goal, members contribute to advancing the goal, the company makes decisions to advance that goal and members have a common awareness of that goal.16 Where any goal is deficient, we cannot attribute liability to that corporate group.

One potentially interesting arising from this view of a group as a moral agent is to consider whether the company can possess human rights.17 On Pettit’s picture, the company as a moral agent has intentionality, able to make value judgements as part of a collective joint venture. While there might be said to be rights arising for the company and its own interests, these rights do not extend on any account to human rights. For instance, we might oppose the death penalty for any individual human being but insist on dissolving criminally wrong companies. While the intuitions appear clear, the reasons behind the difference may be less so.

There are also peculiarities about how company liability is understood in law that poses some further challenges to that picture. For example, in some jurisdictions, like in the United States, any corporation that results from a merger, consolidation or spin-off inherits all the crimes of ever}' corporation that went into this process. This might be seen as a potential problem insofar as it represents a powerful disincentive to correct problems, etc.18 The sins of the father are always potentially visited on the son.19 On the one hand, this view makes sense from a public policy point of view insofar as ensuring companies engaged in criminal wrongdoing cannot get away with it by simply becoming reorganized or merged into a differently constructed new company. On the other hand, this creates a problem for views of moral agency. These might posit that the company, in becoming transformed into a new legal personality, is a different being and necessarily freed from the shackles relating to any past deeds as Pettit’s four conditions no longer apply - the shared goal and members contribute to it has changed in becoming reoriented within a new organization.

Ian Lee offers a different model of corporate criminal liability built on the notion of team membership.2" He claims that through incorporation, the company develops a persona separate from its individual members. Activities are understood and operate within a collective endeavour. The key implication is that companies can be criminally responsible in such circumstances because to single out an individual wrongdoer alone from among other group members is ‘to implicitly and mistakenly absolve the team’.21 Where, in pursuit of company goals, wrongdoing takes place then the collective merits liability.

This model coheres better with how corporate liability is ascertained. For example, some models of liability look to one or more members of ‘senior management’ and consider their contributions to the collective endeavours of the company. The agency of the group is often driven by particular individuals who lead the organization. While this may often be true, the organization is as much the activity of members at its hierarchical top as it is those at its bottom. To borrow a commonly used phrase, every employee is effectively an ambassador for the company externally, no matter their place in the group overall.

In conclusion, we might be wise to be neutral on whether the group is a moral agent for this part of the analysis. While a company can, as a corporate entity, make decisions of value from its values, its legal personality is more positivist than metaphysical. A group may pursue projects and have goals different from some members, but it does not judge or act independently of the collective actions of its members. A more positivist and non-metaphysical account may help make clear the limited nature, scale and content of a company’s rights as a formal construct embodied by the individual members coming together to give it life. Any member can act for the whole where it acts in pursuit of the group’s shared goals consistently within that organization’s internally accepted rules and procedures.

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