Published online by Cambridge University Press: 02 January 2018
The relationship between criminal law and regulatory techniques in responses to corporate crime is complex and changing. The Serious Fraud Office's increased proactivity in relation to economic crime is precariously balanced on the fulcrum of criminal and regulatory rhetoric. In this paper I note significant developments and suggest that the similarities and differences between regulatory and criminal law approaches to corporate accountability are ripe for re-examination.
1. Khanna, V ‘Corporate crime legislation: a political economy analysis’ (2004) 82 Wash U LQ 95 at 140Google Scholar. See also Ainslie, E ‘Indicting corporations revisited: lessons of the Arthur Andersen prosecution’ (2006) 43 Am Crim L Rev 107 Google Scholar, arguing that prosecution was disproportionate.
4. Notably the work of criminologist Michael Levi in Regulating Fraud (London: Tavistock, 1987) and in his many publications since. Legal commentary has been more common in the USA, including John Coffee's important article to which my title refers: ‘Beyond the Shut-eyed sentry: toward a theoretical view of corporate misconduct and an effective legal response’ (1977) 63 Virginia Law Review 1099.
5. Reported to be $21.2 billion (Financial Times 29 October 2009). Beale, SS and Safwat, A What developments in Western Europe tell us about American critiques of corporate criminal liability’ (2004) 8 Buff. Crim. L. Rev 89 CrossRefGoogle Scholar; see the FBI investigation into insider dealing on Wall Street, available at http://www.guardian.co.uk/commentisfree/2009/nov/08/will-hutton-wall-street-corruption/.
6. Sutherland, EH White Collar Crime: The Uncut Version (New Haven: Yale University Press, 1983) p ix.Google Scholar
7. Ibid, p 10.
8. See generally McBarnet, D, Voiculescu, A and Campbell, T (eds) The New Corporate Accountability: Corporate Social Responsibility and the Law (Cambridge: Cambridge University Press, 2007).Google Scholar
10. International Commission of Jurists Final Report of the Expert Legal Panel on Corporate Complicity (2008), available at http://icj.org/news.php3?id_article=4405=en.
11. Though we might bear in mind van Caenegem's reminder that domestic national laws are of relatively recent origin: Van Caenegem, RC European Law in the Past and the Future (Cambridge: Cambridge University Press, 2002).Google Scholar
12. Judge Chin, 29 June 2009. In contrast Jeffrey Skilling, Enron's former chief executive, is serving a 24-year sentence, while former WorldCom head Bernard Ebbers was sentenced to 25 years in 2006.
14. Khanna, above n 1, at 100.
15. There is a large law and economics literature in this area. See Faure, M and Tilindyte, L ‘Towards an effective enforcement of occupational health and safety regulation’ in Faure, M and Stephen, F (eds) Essays in the Law and Economics of Regulation (Antwerp: Intersentia, 2004) pp 325–340 Google Scholar and Garoupa, N and Gomez-Pomar, F ‘Punish once or punish twice: a theory of the use of criminal sanctions in addition to regulatory penalties’ (2004) 6(2) American Law and Economics Review 410 CrossRefGoogle Scholar. For a general overview see Morgan, B and Yeung, K An Introduction to Law and Regulation (Cambridge: Cambridge University Press, 2007).CrossRefGoogle Scholar
17. Anticipated in WG Carson's classic work: ‘White-collar crime and the enforcement of factory legislation’ (1970) Brit J Crim 383 and The Other Price of Britain's Oil (Oxford: Martin Robertson, 1982). See too Haines, F Corporate Regulation (Oxford: Clarendon Press, 1997).Google Scholar
19. Eg ss 66 and 123 of the Financial Services and Markets Act 2000 empower the Financial Services Authority to impose financial penalties on corporations guilty of market abuse. See Ainslie, above n 1: automatic civil sanction of automatic disbarment from practise caused Arthur Andersen to fold, though the firm was later successful on appeal.
21. Serious Crime Act 2007, s 1 (Sch 1 lists the serious crimes for which SCPOs can be given).
22. See the website available at http://www.belfasttelegraph.co.uk/news/local-national/smashed-the-fuel-smugglers-secret-network-13876732.html.
23. Eg under the Financial Services and Markets Act 2000 settlements can be negotiated at any stage, appealable to Financial Services and Markets Tribunal; see the website available at http://www.fsa.gov.uk/pages/About/Who/Accountability/FSAMT/index.shtml. These settlements do not require judicial approval; cf Australian competition regulation. See Yeung, above n 15, pp 96–101.
25. See the website available at http://www.ilisu.org.uk/balfour.html and other publicly available information.
26. See the website available at http://www.independent.co.uk/news/record-fine-for-heathrow-disaster-1071175.html.
27. Trawled from the somewhat incomplete Health and Safety Executive online database, available at http://www.hse.gov.uk/Prosecutions/.
28. See the website available at http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2008/balfour-beatty-plc.aspx.
30. Braithwaite, J and Ayres, I Responsive Regulation: Transcending the Deregulation Debate (Oxford: Oxford University Press, 1992)Google Scholar conceived a static pyramid, while Yeung, above n 16, p 167, suggests it is fluid and dynamic.
31. See D Corker ‘Waiting for a verdict: the jury is out on the SFO's new prosecution policy’ (2009) New Law Journal 1457.
32. 5 February 2010; see the website available at http://www.sfo.gov.uk/our-work/latest/bae-systems-plc.aspx.
33. See text accompanying n 49 below.
34. For example, in 2009, UBS were fined £8 million, and Seymour Pierce £154,000, for failing to prevent employee fraud; see the website available at http://www.fsa.gov.uk/Pages/Library/Communication/PR/2009/index.shtml. However, the Financial Services Authority believes that action against individuals has more deterrent value than against companies: Enforcement Annual Performance Account 2008/9 p 8.
36. Snider, quoting Reichman, N ‘Moving backstage: uncovering the role of compliance practices in shaping regulatory policy’ in Schlegel, K and Weisburd, D (eds) White-collar Crime Reconsidered (NorthEastern University Press, 1992) pp 244–268 at p 245Google Scholar; see also MacKenzie, S and Green, P ‘Performative regulation: a case study in how powerful people avoid criminal labels’ (2008) 48 Brit J Criminol 138.CrossRefGoogle Scholar
37. Moore Stephens v Stone Rolls Ltd (in liquidation)  UKHL 39,  2 BCLC 563 (a good example also of a company created in order to perpetrate fraud), Safeway Stores v Twigger EWHC 11 (Comm) and Griffin v UHY Hacker Young and Partners EWHC 146 (Ch).
38. The BB order was followed in October 2009 by a Civil Recovery Order of almost £5 million against AMEC plc, an international engineering and project management firm. And see ‘Ashley/JJB investigation’The Guardian 11 September 2009, available at http://www.guardian.co.uk/football/2009/sep/10/mike-ashley-faces-fraud-investigation. For a theoretical exploration see Parker ‘Legal pluralism, privatization of law and multiculturalism’ (2008) 9 Theoretical Inquiries L 349.
39. D McBarnet ‘After Enron will “whiter than white collar crime” still wash?’ (2006) 46 Brit J Criminol 1091 arguing that the fraud cases brought against Enron et al may have indirectly endorsed the creative compliance strategies. The use of deferred prosecution agreements may have been equally or more effective in bringing about changes in corporate practice. This would only work of course where there was a functioning corporation available to persuade.
40. Announced in March 2009: see the website available at http://www.attorneygeneral.gov.uk; see also N Vamos ‘Please don't call it “plea bargaining”’ Crim LR 617.
42. R v Wallace Duncan Smith (No 4) EWCA Crim 631,  QB 1418 and Criminal Justice Act 1993.
43. Serious Crime Act 2007, s 2(5).
44. R Alderman, Director of the SFO ‘How the SFO and corporates can work together’ speech 11 March 2009, available at http://www.sfo.gov.uk/about-us/our-views/speeches/speeches-2009/how-the-sfo-and-corporates-can-work-together.aspx.
45. A fine of £6.6 million was imposed. R Alderman ‘Bribery Bill and anti-corruption’ speech 10 November 2009, available at http://www.sfo.gov.uk/about-us/our-views/speeches/speeches-2009/bribery-bill--anti-corruption,-richard-alderman.aspx.
47. It was alleged he conspired between 2002 and 2008 with others to give or agree to give corrupt payments (contrary to s 1 of the Prevention of Corruption Act 1906) to officials and agents of certain Eastern and Central European governments, including the Czech Republic, Hungary and Austria, as inducements to secure contracts for the supply of fighter jets by BAE Systems plc; see the website available at http://www.sfo.gov.uk/our-work/latest/former-bae-agent-charged-with-corruption.aspx.
49. See the website available at http://www.guardian.co.uk/uk/2010/mar/26/judge-plea-deal-fine-corrupt-innospec,
50. The merged organisation will also provide advice and prosecution services to the Serious Organised Crime Agency and the UK Border Agency. See the website available at http://www.cps.gov.uk/news/articles/the_public_prosecution_service_-_setting_the_standard/.
51. Garoupa and Gomez-Pomar, above n 15, argue that in some circumstances both may be optimal.
53. Hart, ibid, at 56.
54. Ibid, at 57.
56. Ibid, at 593.
57. Harding, C Criminal Enterprise: Individuals, Organisations and Criminal Responsibility (Cullompton: Willan, 2007) ch 2.Google ScholarHarding distinguishes organisations of governance and representation from organisations of enterprise, although the categories may overlap. Here I am talking more of organisations of enterprise.
58. Balmer v HM Advocate SLT 799. See, in general, Scottish Law Commission Report on Unincorporated Associations No 217, 2009.
59. High Court Justiciary 20 May 2009, available at http://www.firmmagazine.com/news/1502/Lord_Matthews_calls_for_law_change_as_third_Rosepark_indictment_falls_at_the_first_hurdle.html.
60. R v L(R) and F(J) EWCA Crim 1970,  1 All ER 786 per Hughes LJ.
61. Salomon v A Salomon Co Ltd AC 22 held that Salomon the incorporated company was entirely separate from Salomon the main shareholder, a decision famously described by O Kahn Freund as ‘calamitous’ in ‘Some reflections on company law reform’ (1944) 7 Mod Law R 54.
62. The matter is not straightforward, however, and it is a matter of statutory interpretation whether an offence applies to an unincorporated association; the discussion excluded offences which require proof of mens rea.
63. Harding, above n 57, ch 5, quoting HLA Hart Punishment and Responsibility: Essays in the Philosophy of Law (Oxford: Oxford University Press, 1968) p 265.
64. Harding, ibid, p 103.
65. From Hart, ch IX. The discussion here is taken from Harding, ibid, ch 5.
66. For example, Harlequins rugby club chairman resigned over fake blood injury scandal, ‘Ultimately this happened under my watch and the failure to control must fall at my door’. But he denied personal blame for the blood capsule scandal, ‘We, Harlequins, failed to control Dean [Richards, the club's director of rugby]’: The Guardian 28 August 2009.
67. Interestingly, as Nick Gaskell has pointed out to me, much of the jurisprudence on the ‘directing mind’ of the company derives from civil maritime liability cases, see cases cited in Meridian Global Funds Management Asia Ltd v The Securities Commission 3 WLR 413.
68. Leigh, L The Criminal Liability of Corporations (London: Weidenfeld and Nicolson, 1969)Google Scholar, Fisse, B and Braithwaite, J Corporations, Crime and Accountability (Cambridge: Cambridge University Press, 1993)Google Scholar, Gobert, J and Punch, M Rethinking Corporate Crime (Cambridge: Cambridge University Press, 2003)Google Scholar, Wells, C Corporations and Criminal Responsibility (Oxford: Oxford University Press, 2001).CrossRefGoogle Scholar
69. Broadly the Hart, Hla and Honore, T view Causation in the Law (Oxford: Oxford University Press, 1968)Google Scholar; see Harding, above n 57, p 111.
71. Harding, above n 57, p 111.
72. See ibid, pp 226–227; Wells, above n 68, ch 4.
73. Wells, ibid, p 151.
74. Wells, C and Elias, J Catching the conscience of the king: corporate players on the international stage’ in Alston, P (ed) Non State Actors in International Law Collected Courses of the Academy of European Law vol XIII (Oxford: Oxford University Press, 2005) p 141 at p 155.Google Scholar
75. Harding, above n 57, ch 9.
76. Report prepared for the UN Special Representative of the Secretary General on Human Rights and Business by Allens Arthur Robinson‘Corporate culture’ as a basis for the criminal liability of corporations (February 2008) p 62, available at http://220.127.116.11/Allens-Arthur-Robinson-Corporate-Culture-paper-for-Ruggie-Feb-2008.pdf.
77. A further matter, the relationship between the prosecution of corporation and the/any individual, is not considered in detail in this paper.
78. It could be argued that this is so in Australia too since the Australian Criminal Code Act's application has been exempted from a number of key federal statutes which have their own models of liability. However, the Australian Code does provide a broad unifying starting point for non-exempt federal offences.
79. The report is ambiguous here between the physical (ie human) actor and the conduct element of the offence. Here my emphasis is on the latter.
80. Part 2.5, s 12.2. ‘Physical element’ is further defined in s 4.1(2) as including ‘an act, an omission to perform an act or a state of affairs’.
81. Section 22.1(a) and s 22.2. For commentary on s 22, see T Archibald, K Jull and K Roach ‘The changed face of corporate criminal liability (2004) 48 Crim Law Quarterly 367.
82. HL Bolton (Engineering) Co Ltd v TJ Graham and Sons Ltd 1 QB 159 at 172 per Lord Denning, MR.
83. Criminal Procedure Act 51, 1977, s 332(1).
84. In 2003 the US Department of Justice issued revised guidelines to prosecutors (the Thompson Memorandum). Relevant factors include the criminal history of the corporation, the likely collateral consequences of prosecution, the level and role of criminal conduct of the corporate employees, and the existence of an effective corporate compliance programme and placed particular emphasis on analysis of the concrete steps taken by the corporation to cooperate. Thompson Principles of Federal Prosecution of Business Organizations VII.B (20 January 2003), available at http://www.usdoj.gov/dag/cftf/business_organizations.pdf.
85. With some exceptions; one way of putting it is that identification liability applies where vicarious does not.
86. These fall broadly under the self-identity model described by Lederman, E ‘Models for imposing corporate criminal liability: from adaptation and imitation toward aggregation and the search for self-identity’ (2000) 4 Buff Crim L Rev 641 at 677 et seq.CrossRefGoogle ScholarSee also Pettit, P ‘Groups with minds of their own’ in Schmitt, F (ed) Socializing Metaphysics (Oxford: Rowman and Littlefield, 2003) pp 167–193 Google Scholar and Rock, P ‘The corporate form as a solution to the discursive dilemma’ (2006)162 Journal of Institutional and Theoretical Economics 57.CrossRefGoogle Scholar
87. Part 2.5. This applies generally unless specifically exempted. For a list of statutes that have been amended in order to exempt offences, see Hill, J Corporate criminal liability in Australia: an evolving corporate governance technique?’ (2003) JBL 1 at fn 13.Google Scholar
88. Corporate Manslaughter and Corporate Homicide Act 2007, ss 1 and 8.
89. See the cases cited in n 37.
90. Above n 80.
91. Above n 81.
92. Penal Code, Ch 9, s 4.
93. Penal Code, Art 102(2).
94. LC Report 313 Reforming Bribery 2008, Part 6.
95. See C Wells ‘Bribery: corporate liability under the draft Bill 2009’ Crim LR 479.
96. Joint Committee on the Draft Bribery Bill First Report Draft Bribery Bill 16 July 2009, available at http://www.publications.parliament.uk/pa/jt200809/jtselect/jtbribe/115/11502.htm.
97. Bribery Act 2010, s 7. The commercial organisation is liable for the actions of those associated with it, which includes those who perform services for it, employees, agents and subsidiaries (s 8).
98. A consultation paper is now promised for the summer of 2010.
99. Section 33; s 40 provides that the onus is on the employer to show that all reasonably practicable steps have been taken. See M Weismann ‘Why punish? A new approach to corporate criminal liability’ (2007) 44 Am Crim L Rev 1319, arguing that liability should follow where corporation lacks adequate compliance.
100. R v Chargot Ltd UKHL 73 at .
101. Ibid, at .
102. Section 12.3(2)(c).
103. Section 12.3(2)(d).
104. The tiger in Judith Kerr's brilliant children's book of this title (first published in 1968 and still in print) ate all the food in the house and then left. It never returned despite the family's precaution of buying a tin of tiger food in case it should.
105. Khanna, above n 1, at 98.
106. See the strong argument for desert by Laufer, W and Strudler, A Corporate intentionality, desert, and variants of vicarious liability’ (2000) 7 Am Crim L Rev 1285 Google Scholar; see also Yeung, above n 16, pp 85–90 and Morgan and Yeung, above n 15, fig 1.1, p 6.
108. As demonstrated in the cases cited in n 37.
109. See discussion of the new regulatory paradigm in Tomasic, R From white-collar to corporate crime and beyond: the limits of law and theory’ in Chappell, D and Wilson, P (eds) Issues in Australian Crime and Criminal Justice (Melbourne: LexisNexis, 2005) pp 252–267.Google Scholar
110. Yeung, above n 16, p 151 (original emphasis).
111. Ibid, p 151.
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