‘Who’ Should Be Held Responsible?

1. ‘Who’ Should Be Held Responsible? Corporate Crime and Liability Monica Zamfir

2. The Problem… “Because the corporation is a legal abstraction without a physical presence, the range of sanctions available in sentencing a corporation found to be in breach of criminal law is more limited than in the case of a natural person.” Braithwaite (1984:6)

3. What is Corporate Crime? In Canada, the Competition Act outlines what are considered unfair business practices. The major sections are: competition offences, deceptive market practices, restrictive trade practices and notifiable transactions; and all four of them contain specific subsections pertaining to defined crimes (ex. price fixing, false advertising). Because of a corporation’s easy access to finance, it becomes a force to be reckoned with in the market and for this reason it needs some regulation.

4. Why Do We Have Corporate Crime? The most commonly held view is that it is the ‘perverse personalities of the perpetrators’ who are motivated by greed and a good opportunity.

5. ‘Who’ Gets theBlame Till this day, there are still no well-defined and specific guidelines as to who will incur the liability in the case of corporate abuse/negligence. In the United States the dominant approach and the one used in the federal courts is known as the imputation theory. In Canada the equivalent approach is known as the identification theory.

6. The Identification Theory and the Imputation Theory According to these theories there are three criteria required in order for a corporation to assume vicarious liability for one of their employees: the agent has committed a crime was acting within his/her authority was intending to benefit the corporation

7. An Agent’s Intent to Commit a Crime Corporations employ many people and because of their size the vertical chain allows for much room to delegate tasks. The results are that some have a greater onus to the company than others as defined by the corporate ladder. So what is the issue here? First it must be determined how important the individual is to the corporation in order to address the issue of who should be penalized when a crime is committed by a lower ranking employee to whom a task was delegated. Furthermore, what happens if a crime is the by-product of negligence?

8. An Agent’s Authority Canada and the United States have a similar view towards individuals with the intent to commit a crime – it is unforgiveable in both countries. Where they do differ however, is in their definition of whose actions can actually deem the corporation liable. In the United States there is an overly broad definition of vicarious liability which imposes ‘liability on the company for any acts of its officers, agents, and servants’. Conversely, the Canadian identification theory rejects the American model as ‘overly broad for criminal offences’ since in Canada focus is placed on the persons in the ‘upper echelon of the corporation who have decision making authority which renders the corporation immune from liability for acts of its “inferior” agents’.

9. An Agent’s Intent to Benefit the Corporation The critical difference between this section and the previous ones is the assumption that the firm is also profiting due to an individual’s criminal actions and that it is not simply the individual’s greed being satisfied at the expense of the corporation. ‘A Canadian court noted that corporations are “more powerful and more materially endowed and equipped than are individuals and, if allowed to roam unchecked in the field of industry and commerce, they are potentially more dangerous and can inflict greater harm upon the public than can their weaker competitors’

10. Conclusion When a corporate crime is committed by a person with the intention of furthering his/her own personal interests it would be more beneficial to society if that person was punished directly in order to prevent similar future behavior on their part as opposed to holding an entire company liable. Since the individual doesn’t get charged, it is as though the company incurring the full penalty for the mistake(s) of one of its employees. In this respect Canada’s law is marginally better than U.S. law because fewer people are deemed responsible for a corporation’s actions. When an agent commits a corporate crime in which the corporation itself benefits as well as the agent, both should be held liable for the offence. Corporations are usually highly endowed, which allows them to pay the price in the form of reparations (damages).