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Issues in Corporate Crime: An Introduction

Helen Power and Brian Dowrick

Senior Lecturers, University of Glamorgan

<[email protected]>
<[email protected]>

Copyright © 1998 Helen Power and Brian Dowrick
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.

Introduction

Interest in the issues arising out of the potential criminalisation of corporations has undoubtedly increased in the UK in the last decade. A series of well-documented disasters⁽¹⁾ in the late 1980s and early 1990s has served to bring potentially lethal corporate activities to the general attention of the public and has stimulated the academic legal community to pay greater attention to some very basic questions about the possible use of the criminal law in this area.⁽²⁾ It was with a view to bringing together some of those at the forefront of the debate that a conference, Issues in Corporate Crime, was held at the University of Glamorgan's Law School in September 1997. Four speakers addressed the conference: Celia Wells and Chris Clarkson addressed the substantive issues whilst James Gobert and David Bergman focussed on sentencing. (The papers reproduced here are those of Chris Clarkson and James Gobert).

Criminalisation: why and how?

The substantive issues are, essentially, whether corporations should be criminalised at all and, if so, on what doctrinal basis criminalisation might be achieved. Certainly there is no universal support for criminalisation - Smith & Hogan were still sufficiently confident of this to have stated in the latest edition of their work that "the necessity for corporate criminal liability awaits demonstration" (see Smith 1996, p 190). In her contribution to the conference, Celia Wells asked the question why corporations might be blamed for the harmful results of their activities. She traced the development of an increasing tendency for corporations to be blamed for these results, a tendency reflected, for instance, in the greater willingness of the Law Commission to take seriously the possibility of corporate criminalisation, indicated in the significant attention devoted by the Commission to corporate responsibility in its 1996 review of the law of manslaughter, Legislating the Criminal Code: Involuntary Manslaughter (Law Com 237). Wells ascribed this tendency to a number of factors which add up to a somewhat paradoxical modern acceptance of risk coupled with a growing intolerance of harmful results. Such a cultural shift at the wider social level is being reflected, Wells argued, at the judicial level, with the caselaw manifesting a greater judicial willingness firstly to found corporate liability on the doctrine of vicarious liability rather than on the identification doctrine, and secondly to extend the identification doctrine.

The issues tackled by Chris Clarkson's paper, published here, are two-fold and in some respects follow naturally from Wells' concerns. Firstly, assuming that corporations can be blamed for the results of their activities, Clarkson asks whether the use of the criminal, as opposed to the civil, law is the most appropriate response and, if criminalisation is preferred, whether the corporation or the individuals within it should be its targets. Secondly, aving argued that the criminalisation of corporations themselves is the most appropriate mechanism for achieving corporate accountability, and a reduction in corporate wrongdoing, Clarkson then discusses how this might best be achieved. He concludes that the way forward is via adoption of the "corporate mens rea doctrine", a form of direct liability which, he argues, avoids the pitfalls of extant doctrines (identification, aggregation and so on) which "involve fictitious imputations of responsibility."
The sentencing issues addressed by David Bergman and James Gobert at the conference included the appropriateness of notions of individual justice, with which the sentencing regime in the UK is suffused, to corporate criminality.

The justiciability paradox and imaginative sentencing options

The courts appear to have a particularly myopic view of the wider social and practical implications of corporate liability - the decisions in the senior appellate courts have concentrated upon drawing analogies between coproate entities and human actors and their acts and states of mind. It may that recognition needs to be given to the collective morality and thought that may reside in a board of directors, distinct from and possibly antagonistic to that of any one of the individuals themselves.

David Bergman has long been active as a researcher in the field of corporate crime through his work with the Workers' Educational Association and the London Hazards Centre. A rallying call for sceptics of general corporate criminal liability is the regulatory regime provided by the Health and Safety at Work Act 1974. Responsibility for investigation and prosecution for breaches of the Act lie with the Health and Safety Executive, whose main responsibility is to advise employers on safe working practices, to inspect workplaces and negotiate compliance with the relevant health and safety standards. In his paper Bergman identified the justiciability paradox: deaths and injuries in the work place merit state investigation as infractions of the Act, but they do not involve 'real' crimes. The philosophical justification for this view seems, argued Bergman, to be at the root of the 1974 Act and is certainly identifiable in its formative stages. This has led to a two-track system for 'crimes' involving violence and death in the work place. This he identified as involving consideration of such deaths and injuries as stemming primarily from apathy in the work place for which prospective remedial measures were important, such as ensuring that practical improvements are made. Criminal offences are viewed as having no or very little relevance to such occurrences. He argued that it is pertinent to address this misconstruction in the philosophy underlying the Act with a rational recognition of 'dangerous' companies -those discovered not to have complied with the law, and 'violent' companies - those whose conduct had, in addition, caused the death or injury. Accordingly, it is implicit in the formative stages of the Act that criticism of the role of criminal law "when ... applied to the process of enforcing higher standards on 'dangerous' companies was mistakenly extended to the role it should play towards violent companies". The criminal law was considered only in the context of strategies that could be deployed by the Health and Safety Executive in enforcing standards.

If corporations are to be subjected to the criminal law, then an appropriate sentencing regime is a prerequisite. This cannot be divested from the substantive argument. From a penal standpoint, it is currently accepted that certain crimes are inapplicable to corporations (i.e. those crimes for which incarceration is an obvious sanction). There have been imaginative approaches to penal sanctions in this area but the limitations are obvious⁽³⁾. James Gobert considers the company as the paradigmatic rational actor - acting or reacting when it is in its financial interests to do so. After reviewing the current regime, Gobert identifies a need in any penal response to corporate crime to recognise this rational feature of corporate life. Current approaches already emphasise the economic aspects to sentencing via the fine. Accordingly, it is right to recognise this behaviour and provide a financial incentive for corporations, not only to comply with the law but also proactivley to police its activities and report its own violations.

As a last word, we should like to thank the four speakers at the Glamorgan conference for their contributions. Our thanks also to the editor of this journal, Michael Allen, for agreeing prior to the conference to place papers from the conference together in a single issue.

Bibliography

Bergman, D (1991) Deaths at Work: Accidents or Corporate Crime? (London:WEA)
Box, S (1983) Power, Crime and Mystification (London:Tavistock)
Clarkson, C (1996) `Kicking Corporate Bodies and Damning Their Souls' 59 Modern Law Review 557
Cullen Report (1990) Public Inquiry into the Piper Alpha Disaster (London:HMSO) Cmnd 1310
Field, S and Jorg, N (1991) `Corporate Liability and Manslaughter: should we be going Dutch?' Criminal Law Review 156
Gobert, J (1994) `Corporate Criminality: New Crimes for the Times' Criminal Law Review 722
Sheen Report (Department of Transport) (1987) The Merchant Shipping Act 1984, M V Herald of Free Enterprise - Report of Court No 8074 (London:HMSO)
Slapper, G (1993) `Corporate Manslaughter: An Examination of the Determinants of Prosecutorial Policy' Social and Legal Studies 423
Smith, JC (1996) Smith and Hogan: Criminal Law (8th ed) (London:Butterworths)
Sullivan, G (1995) `Expressing Corporate Guilt' Oxford Journal of Legal Studies 281
Wells, C (1988) `The decline and rise of English murder: corporate crime and individual responsibility' Criminal Law Review 788
Wells, C (1993a) `Corporations: Culture, Risk and Criminal Liability' Criminal Law Review 551
Wells, C (1993b) Corporations and Criminal Responsibility (Oxford:Clarendon Press)

(1) E.g. the explosion on the North Sea oil rig Piper Alpha (on which, see the Cullen Report, 1990); the sinking of the cross-Channel ferry Herald of Free Enterprise (on which, see the Sheen Report, 1987). For general discussion, see Bergman, 1991
(2) See, e.g., Wells, 1988, 1993(a) and 1993(b); Bergman, 1991; Field & Jorg, 1991; Gobert, 1994; Slapper, 1993; Sullivan, 1995; Clarkson, 1996.
(3) Box, 1983 suggests compulsory nationalisation and appointment of public directors as a response, but if we recognise a punitive element what is the public board to do? It would seem odd that they be required to deliberately run at a loss for x years, possibly as a burden to the taxpayer. After the period of 'incarceration' is served, presumably there is a return of an (un)healthy company to the private sector.