Corporate Criminal Liability Under the Microscope – but to What Effect?

Image source: RACOLB LEGAL

In recent years, the relationships between corporations and the general public have become increasingly strained. There is a growing skepticism towards the motivations and actions of corporations.

In particular, corporate entities have been under the microscope in relation to the lives and rights of individuals and environmental issues. 

A 2019 survey revealed that 72% of consumers demand more transparency around corporate responsibility. People want to know what corporations are doing to address social and environmental issues. 

Corporations can be held responsible for activities that are regarded as criminal. In addition to blatant illegal acts such as falsifying financial accounts, manipulating the stock market, misleading advertising, and embezzlement, corporations are coming under increasing scrutiny for wrongful conduct in relation to human rights.

In the current paradigm, proving corporate criminal liability is difficult. There is a huge cloud of thick fog around business crime laws and regulations. Prosecutors are constrained in their ability to prove corporate criminal liability.

The introduction of laws such as the Dodd-Frank Wall Street Reform and Consumer Protection Act has done little to stem the tidal wave of scandals.

The financial industry alone continues to defy government crackdowns. The lack of clarity and consensus around criminal activity renders law enforcement tools impotent which lead to an exemption from punishment. 

Corporate Criminal Liability Reforms

Efforts to hold corporate entities accountable for criminal activity are in the process of revision. The United Nations Guiding Principles on Business and Human Rights (UNGPs) released in 2011 seeks to regulate the behaviour and motivations of bug business. 

The Law Commission in the UK has also declared an intention to improve corporate criminal liability to ensure appropriate action is taken against individuals involved in criminal activity. 

In the US, Senator Elizabeth Warren introduced the Corporate Executive Accountability Act which threatens CEO’s with jail time – for “up to a year if certain conditions are met.” It has been met with resistance.

Since the collapse of the banking system precipitated by misleading conduct within the financial industry, governments have levied fines against corporations for misconduct. However, the penalties that have been handed out is little more than taxation on ill-gotten gains. 

Consumers are becoming increasingly infuriated by headline fines that do not hold individuals accountable. Moreover, corporate executives go unpunished providing they “do not commit the same crime again.”

Crimes Against the Environment

Environmental offences are also shrouded in the carbon clouds pummelled from power stations.

Harmful acts against the environment are considered as a “victimless crime” but the fact of the matter is that pollution has a negative impact on the health of people. 

Illnesses related to pollution are not typically investigated. The unbreakable links between government and energy companies ensure the eco-crime is never challenged. 

For example, The Rome Statute includes environmental damage as a war crime under Article 8 (2) (b)(iv). Prosecutors would have to prove there was an intentional attack that could cause widespread, severe and long-term damage to the environment. 

We’re now in the midst of a battle to reverse climate change due to burning fossil fuels – an attack on the environment. 

Scientists warned governments about the impact CO2 would have on the environment in the 1950s. 70 years later, governments are pushing consumers to make changes to their power consumption.

Meanwhile, power stations continue to burn fossil fuels. 

Advocates of punishing business crimes like Elizabeth Warren, together with increasing public demand to punish perpetrators, could prompt heavier penalties to be handed out to corporate executives. But don’t bank on it.