CORPORATE CULPABILITY AND THE LIMITS OF LAW

William S. Laufer

Abstract: Ethicists and legal theorists have proposed models of corporate

culpability that shift the standard of guilt determination from vicarious
attribution of individual action and intention to an assessment of
culture, policies, as well as organizational action and inaction. This
paper briefly reviews four prominent models of corporate culpability,
arguing that each makes claims that extend well beyond the limits of
existing law. As an alternative to these models, a constructive corporate fault is described that relies on both objective and subjective
reasonableness judgments. The paper concludes with a consideration of
constructive corporate fault in relation to an Accountability model of
corporate liability.

or nearly a century, the criminal law has imputed individual action to

corporate entities. Corporations under both state and federal law have
been vicariously liable for the criminal acts of agents and employees (Brickey,
1984). The law's strong allegiance to vicarious liability has thwarted any
serious consideration of a genuine corporate liability, or culpable policies and
attributes of organizations. The distinction between vicarious and genuine
corporate liability was highlighted with the passage of the federal sentencing
guidelines for organizations in 1991 (Nagel & Swenson, 1993; Rakoff,
Blumkin, & Sauber, 1993). The guidelines are the first codified references to
corporate actions and inactions in federal and state criminal law. Corporate
action before and after the commission of the offense is critical in determining
an entity's culpability score (a proxy for an entity's blameworthiness) at sentencing. Aggravating factors, such as evidence that the organization obstructed or impeded justice during the investigation or prosecution of the
offense or failed to report the commission of the offense, reveal an unprecedented consideration of corporate action and corporate fault. This consideration of corporate action and fault, however, is strictly limited to the
determination of proportional sentences after conviction. Substantive criminal
law, responsible for the adjudication of culpability in relation to liability,
considers the acts and intentions of corporate agents, not corporate entities
(Laufer, 1992).
Even with the law's strong individualistic bias, a number of business ethicists
and legal commentators have proposed models of corporate culpability that shift
the inquiry of guilt determination from vicarious liability to genuine corporate
liability. Models of genuine corporate liability consider the proactive efforts of
1996. Business Ethics Quarterly, Volume 6, Issue 3. ISSN 1052-150X. 0311-0324.

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organizations to prevent the commission of crime, the reactions of organizations

to the discovery of illegalities, the organizational ethos or personality that tolerates illegalities, and policies that may have contributed to the commission of an
offense. This paper briefly reviews four prominent models of corporate culpability, arguing that each makes assumptions or relies on constructs that extend
well beyond the limits of existing federal and state law. A second and third part
of this paper discuss the prospects of a model of corporate liability that considers
both objective and subjective judgments of fault (Laufer, 1994).

Vicarious Liability and Corporate Fault

Courts find corporations criminally liable for the conduct of employees acting
within the scope of employment and with an intent to benefit the corporation.
The doctrine of respondeat superior, derived from tort law, views corporations
as principals, and officers, directors, and employees as agents. Under federal
law, the intentions of agents are simply imputed or attributed to the principal.
State laws vary, but most require acts authorized, requested, performed, or
tolerated by the board of directors or by high managerial agents (See, Model
Penal Code, 1962; Brickey, 1984, 1993). Both federal and state law hold steadfast to the principle that: "A corporation can only act through its employees and,
consequently, the acts of its employees, within the scope of their employment,
constitute the acts of the corporation" (United States v. T.I.M.E.-D.C, 1974).
The only notable exception to vicarious liability was proposed in United States
V. Bank of New England (1987) where the First Circuit Court of Appeals ruled
that a bank may be presumed to have that knowledge representing the collective
knowledge of all employees. Aggregate employee knowledge constitutes corporate knowledge. No other court has ventured so far from a commitment to
respondeat superior.
There are at least two sources of the law's allegiance to vicarious liability.
First, there is evidence that vicarious liability rules were adopted as a matter of
judicial convenience and expediency (Mueller, 1957). According to one English
court, vicarious liability is a "necessary doctrine for the proper enforcement of
much modern legislation" {Coleman v. Mills, 1897). At the turn ofthe century,
when the substantive criminal law was first applied to corporations in the United
States, it appeared to courts as if employees were the only source of criminal
action and intention. "[T]here are some servants or agents of a corporation," one
judge wrote, "who can be treated as 'the directing mind and will of the corporation, the very ego and centre of personality of the corporation'...."(Len/iarrf's
Carrying Co. v. Asiatic Petroleum Co., 1915). Typically, senior management
were considered the mens ofthe corporation. Judges had not considered the role
that the collective or group plays in shaping employee behavior (May, 1989).
Further, corporations were not yet considered capable of possessing an organizational or structural dynamic tbat transcended the individual acts of employees
and agents (Ashworth, 1991).

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313

Second, courts and legislative bodies have made two critical assumptions
about the application of vicarious liability to illegal corporate action. First,
courts use the doctrine of respondeat superior in the corporate criminal law with
the assumption that it achieves fairness in risk and loss allocation. This is not
surprising given that the tort law doctrine of respondeat superior allocates risks
and economic losses based on the abilities of the parties to compensate for
realized losses (Prosser, 1971). It seems obvious that entities are in a better
position to assume responsibility for losses due to the acts of agents. And
second, courts assume that in practice respondeat superior induces organizations to enforce individual accountability (Braithwaite & Fisse, 1985). There is
an intuitive appeal to the notion that upper level management will exercise
greater care in supervising subordinate employees who may bind the entity with
any acts, committed in the scope of their authority, that may be said to benefit
the corporation.
Notwithstanding this allegiance, commentators have been critical of the fictional imputation of action and intention that is the hallmark of vicarious liability. A "corporate fault" makes little sense when it is based on the actions of a
rogue employee who, under the scope of her authority, acts to benefit the corporation by violating express corporate policy, administrative regulations, or the
criminal law. The same criticism applies when courts attribute culpability to a
parent corporation for the actions of several departments in a remote subsidiary.
In large part, it is the tenuous connection between entity and agent that has
resulted in the emergence over the last decade of four models of corporate
culpability that attempt to capture a genuine corporate intention. Credit also
must be given to an increasing prominence of research on organizational deci^
sion making and culture (Sims, 1994;; Trevino, 1990; March, 1989). There is
considerable support for the notion that corporate entities share characteristics
or attributes that are distinct from the sum of their members. Finally, it appears
as if the often lively debate over the place of criminal law in relation to corporate
personhood has reached an impasse. Many philosophers, ethicists, and criminologists question whether corporate entities should be criminally, no less morally, responsible for the actions of employees (Keeley, 1981; Velasquez, 1983;
Manning, 1984; Cressey, 1988; Wolgast, 1992; Geis, 1995). They argue persuasively that corporate acts are found strictly in the actions of corporate agents;
that the corporation is a convenient fiction through which autonomous individuals act; and that corporate intentions are insufficient for the purpose of ascribing
moral responsibility. This debate, however, has only theoretical importance
(Walt & Laufer, 1991, 1992). As a practical matter, the law has granted the
fiction of corporate action and intention for nearly a century through the sortilege of vicarious liability. There is no meaningful legal distinction made
between, for example, corporate action and individual employee action, or individual action and bodily movement (See, Moore, 1988). With a sense of
resignation that corporations are held criminally liable as a matter of law for

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reasons of public policy, commentators have turned their attention to how this
may be best accomplished. Each model of genuine corporate liability described
below is notable for its departure from or rejection of vicarious liability, and
exploration of culpability in relation to features of the corporate form.

Models of Corporate Culpability

It took some time for common law courts to demonstrate confidence with rules
that held corporations liable for crimes. At the turn of the century, many courts
and legal commentators appeared to have difficulty justifying a criminal indictment against an entity, rather than its employees. Even so, the law became clear
after the landmark case of New York Central & Hudson River Railroad v. United
States (1909). The Supreme Court, in quoting from Bishop's treatise New
Criminal Law, acknowledged an equivalence between the actions and intentions
of corporate agents and the corporate entity. According to Bishop (1901),
"[s]ince a corporation acts by its officers and agents, their purposes, motives,
and intent are just as much those of the corporation as are the things done. If,
for example, the invisible, intangible essence of air, which we term a corporation, can level mountains, fill up valleys, lay down iron tracks, and run railroad
cars on them it can intend to do it, and can act therein as well viciously as
virtuously."
With this reference to Bishop, the Supreme Court signaled an appreciation of
the distinct capacity of the corporate entity to act and intend. The doctrine of
respondeat superior allowed the court to find equivalence between agents and
principals. Over the last decade, commentators have revisited this equivalence
and the prevailing allegiance to vicarious liability. Should courts consider the
efforts of corporations to prevent crimes? Should the inquiry regarding entity
liability and culpability turn on the reactions of the entity to the discovery of
illegal behavior? Should courts focus on corporate cultures that encourage
crime commission or corporate policies that tolerate, if not promote, law violation? Nearly a century after the criminal law was first applied to the corporate
entity, commentators are considering proactive, reactive, culture-based, and corporate policy models of culpability.
Proactive Corporate fault (PCF) assumes culpability where a corporation's
practices and procedures are inadequate to prevent the commission of a crime
(Fisse, 1983). Corporations are culpable when they fail to take reasonable steps
to implement policies and practices that reduce the likelihood of crime commission. Evidence of reasonable efforts to prevent crime commission would come
from: (1) the development and implementation of certain proactive safeguards,
and (2) the effective delivery to employees of ethical and legal prohibitions.
Proactive efforts include the ordering of internal audits, external audits, and
compliance reviews. The proactive exercise of due diligence (i.e., that amount
of prudence and attentiveness ordinarily exercised by corporate officials under
similar circumstances) is the definitive test for PCF. Evidence of proactive

CORPORATE CULPABILITY

315

measures serve as a proxy for the reasonableness of corporate practices and

procedures.
Reactive corporate fault (RCF) considers the corporate reaction to the criminal act or inquiry from fault prior to the time of the criminal act (or actus reus),
to fault in reaction to the actus reus (Fisse, 1983; Fisse and French, 1985).
Evidence of a "reactive due diligence" or "responsive adjustment" following the
discovery of an offense becomes the basis of finding both liability and culpability. Failure to undertake reasonable corrective or remedial measures in reaction
to the discovery of an offense is evidence of fault (Note, 1979). Both PCF and
RCF abandon the legal convention that fault must be time-bound or contemporaneous with the commission of an offense. This departure is justified given the
dynamic nature of corporate action (Fisse and Braithwaite, 1993).
Where an organization's ethos or personality encourages agents to commit
criminal acts there is liability under a theory of corporate ethos (CE) (Foerschler,
1990; Bucy, 1991, 1993; Moore, 1992). A corporate ethos or personality may
be deciphered from the corporate hierarchy, corporate goals and policies, efforts
to ensure compliance with ethics codes and legal regulations, and the indemnification of employees. Questions relating to the role of the board of directors,
and how the corporation has reacted to past violations, if any, will be asked as
well. CE falls under the broad rubric of Corporate Character Theory (see
Moore, 1992). Corporate Character Theory considers those features of a corporationits policies, structures, and proceduresthat cause employees to commit crime in the name of the company. Three circumstances are required: (1)
the presence of an illegal policy and an agent responsible to act on the policy,
(2) an illegal act committed, authorized, ordered, or endorsed by a high managerial agent, and (3) an implicit ratification of the violation by the organization.
Finally, commentators have argued that corporate action and intention may be
found in decisions and choices that are communicated through corporate policy
(CP) (French, 1984). It has been argued, for example, that the components of
the corporation's internal decision structure, consisting of the corporation's
flowchart and procedural and recognition rules, define corporate intentionality.
The corporation establishes certain goals and objectives that reflect prosocial as
well as criminal action or intention. A summary of the postulates, constructs and
hypotheses of all four models appears below in Table One.

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Table One
Summary of Models
Models

Postulates

Constructs

Hypotheses

PCF

Culpability is a function
of the reasonableness of
steps taken to prevent an
offense

Proactive corporate
fault; Proactive due
diligence; Proactive
duty

An entity is more or less

blameworthy if it engages
or fails to engage in
proactive efforts.
Proactive safeguards (e.g.,
internal audits) are
effective in inhibiting law
violation.

RCF

Culpability is a function
of the reasonableness of
steps taken in reaction to
the discovery of an offense

Reactive corporate
fault; Reactive due
diligence; Reactive
duty

An entity is more or less

blameworthy if it engages
or fails to engage in
reactive or remedial
efforts. Reactive programs
and remedial efforts are
effective in controlling
corporate deviance.

CE

Culpability derives fronn

the corporate ethos,
culture, or personality

Corporate ethos;
Corporate
personality;
Corporate culture

Corporate ethos is
strongly associated with,
or causes, corporate
deviance. A distinct
corporate culture and
personality may be
determined from
organizational attributes.

CP

Corporate intentionality is
found in decisions and
choices that are
communicated through
corporate policy

Corporate internal
decision structure
(CID); Corporate
policy

Corporate policies, goals,

and objectives reflect
corporate rather than
individual intentionality.

Limitations
The ground breaking consideration of culpable organizational attributes and
processes by Fisse, Braithwaite, Bucy, Moore, and French, make the imputation
of intention under vicarious liability seem inadequate. After all, if we are resigned to the criminal liability of corporations, as the law dictates, it is difficult
not to find the notion of a genuine corporate culpability preferable to an imputed culpability. While Geis and Velasquez might argue that developing models of corporate fault only furthers an untenable personification of corporations,
all critics would likely agree that a corporate criminal law must reasonably
ascribe blame for acts attributed to entities. Questions of corporate personhood
pale in importance when paired with questions over how to best realize the
objectives of an established corporate criminal law.
Each model described above, however, has significant limitations that deserve
brief discussion. The most significant limitation is that models of corporate

CORPORATE CULPABILITY

317

culpability and liability generally ignore the requirements of substantive criminal law. PCF, RCF and CE models do not require a finding of criminal intention
(mens rea) in relation to the illegal corporate act. In particular, all three models
neglect the fact that the criminal law requires proof of a culpable mental state,
i.e., purpose, knowledge, recklessness, or negligence (Robinson & Grail, 1983).
This requirement, true for individuals and organizations alike, reflects a strong
commitment to restrict the reach of the criminal law to those who have acted
intentionally. Models of corporate culpability that fail to consider mens rea can
not be incorporated into existing statutory provisions without significant revision to the Federal Criminal Code and state criminal codes, which at present
seems quite unlikely.
Models of corporate culpability also obscure the difference between the assessment of pre- and post-conviction culpability. Prior to a conviction, culpability is raised in relation to an entity's liability. The prosecution must establish
that the organization is sufficiently culpable so as to render it criminally liable.
The task is a narrow one, limited to establishing proof of culpable mental states
in relation to the elements of the offense. A second examination of culpability,
which is considerably more broad, occurs after conviction. Here courts consider
culpability in relation to sentence severity. The effort is to fashion a sentence
that is proportional to the crime committed, and the culpability of the corporate
offender. Under the federal sentencing guidelines, federal courts consider a wide
range of evidence including PCF, RCF, and the existence of an effective ethics
code (Rakoff, Blumkin, & Sauber, 1993).
In many cases, the assessment of culpability before trial informs the post-conviction assessment of blame. An entity's reckless disregard of an illegality, for
example, may satisfy a standard of culpability in relation to liability and provide
useful evidence to a sentencing judge regarding the extent to which that entity
was to blame for the commission of the offense. The inverse, however, is not
true. Inquiry regarding the proactive or reactive culpability of an entity does not
provide evidence of culpability in relation to liability (cf. Fisse and Braithwaite,
1988, 1993). Unless existing standards of liability are all but abandoned PCF,
RCF, and CE should be considered as models of post-trial culpability. The
narrow inquiry required by pre-conviction culpability is simply not satisfied.
This is implied or acknowledged by architects of ethos and culture-based models. Moore (1992), for example, goes so far as to say that, "the corporate
character theory is more suitable for use at sentencing than at trial" (p. 768).
A number of models of corporate culpability fail because the criminal law
requires a contemporaneity or concurrence between the mens rea and actus reus
of an offense (Ashworth, 1991). In short, a mental state must actuate a related
or concurrent act (White, 1985). As Ashworth (1991) has noted, this requirement
"forms part of the ideology that the function of the criminal law is not to judge
a person's general character or behaviour over a period of time; its concern is
only with the distinct criminal conduct charged" (p. 133). This requirement
underwrites a strong argument against assessing a corporation's culpability in
relation to liability through evidence of its reactive behavior after an offense.

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318

The inquiry must center on culpable mental states in concurrent relation to the
prohibited act, not "its antecedents or its sequels" (Ashworth, 1991, p. 134),
Reactive fault, in particular, fails to the extent that a reactive program of a
corporation reflects an entity's response to the discovery of an illegal act, rather
than the commission itself. A corporation's failure to respond reasonably may
reveal blamebut it is blame in relation to its failure to act. It is not necessarily
evidence of a distinct intention in relation to acts that gave rise to the omission.
Thus, even though blameworthiness in general may not be limited to an absolute
temporal standard, culpability in relation to actus reus must be. An entity's
disregard of an agent's act creating an unreasonable risk of injury is not the same
as an intention to commit the act. This is made clear in considering May's
(1983) notion of vicarious negligence. Vicarious negligence is determined by
evidence of a failure on the part of a person with authority to assume preventive
measures when a harm or offense could have heen predicted. Standing alone,
vicarious negligence is an inadequate liability rule for corporate illegality. At
present, there is no distinct criminal offense associated with failing to assume
preventive measures. Vicarious negligence is also too narrow to capture the
culpability associated with many corporate offenses.
Moore, Bucy, and Foerschler also do little to distinguish culpability from
liability in their treatment of corporate personality, ethos and character. Discussion of the foreseeability that a corporate policy or practice would lead to the
crime; the authorization or approval of high managerial officials; and the ratification of employee violations are couched in terms of culpability when each
appears, in their respective models, to reflect a set of liability rules (Moore,
1992, pp. 769-770). There is only passing reference to "a negligence standard
for corporate fault" (Moore, 1992, p. 769), Limitations of this sort suggest the
need for a model of corporate intention that remains within the limits of existing
law (see Table Two). It is of utmost importance that this model consider attributes and processes of the organization. This conceptualization, however, must
make use of existing standards of culpability and be capable of implementation
without significant changes to existing law. A constructive corporate liability
and culpability, proposed in some detail in an earlier article (Laufer, 1994), is
outlined below.

Table Two
Limitations

PCF
RCF
CE
CP

Proof of
Culpable
Mental State

Most
Appropriate as
Post Conviction
Culpability

Temporal
Fallacy

No
No
No
Yes

Yes
No

Yes
Yes
No
No

Yes
No

Reveals
Evidence of
LiablUty and
^ not Culpability
No
Yes
Yes
No

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319

Constructive Liability and Culpability

In law, the word constructive stands for "that which has not the character
assigned to it in its own essential nature, but acquires such character in consequence of the way in which it is regarded by a rule or policy of law" (Black,
1968). Constructive corporate liability and culpability are implied or inferred
where there is proof of: (1) an illegal corporate act, and (2) a concurrent corporate criminal state of mind. The former is satisfied by evidence of a primary act,
defined as an act owned or authored by the entity. Primary action is identified
through an objective test where it is determined that given the size, complexity,
formality, functionality, decision making process and structure of the corporate
organization, it is reasonable to conclude that the agents' acts are the actions of
the corporation. This reasonableness test is a threshold assessment that separates cases in which primary corporate acts have occurred, from secondary acts,
defined as acts attributable to agents rather than to the corporate entity. It is
argued that this constructive test of primary corporate action should replace
vicarious liability. In those cases where the acts are constructively those of the
entity, courts would also require proof of a culpable state of mind. To avoid the
vagaries of obscure mental states, the Model Penal Code's four part conceptualization of culpable mental states is adopted, requiring proof of purposeful,
knowing, reckless, or negligent corporate acts.

Constructive Corporate Actioti

In determining whether or not there is a corporate criminal act, courts and
juries would consider evidence relating to delegation, authorization, reckless
toleration, as well as the status of the agent who has acted and the scope of her
authority. The stronger the agent-entity relationship, the more reasonable it is to
consider an agent's action to be a construction of the corporation's. Agents
given the authority, through delegation, to carry out their duties, with a certain
power and responsibility, act for the organization, on behalf of the organization,
and with a consideration of organizational goals and objectives. The reasonableness test looks to the relationship of the agent to the entity and determines
who, constructively, is the author.

Corporate Mental States

Proof of a constructive corporate act must be accompanied by proof of a
corresponding and concurrent corporate mental state. With the assistance of
reasonableness judgments, constructive corporate culpability considers purpose, knowledge, recklessness, or negligence. Evidence of actual knowledge by
the entity also may be considered. Thus, constructive culpability is not strictly
objective (i.e., derived from evidence of what a reasonable corporation would
have done in like circumstances.) Unlike a model of culpability that makes
reference to the behavior of an average or reasonable corporation, constructive
culpability accommodates for evidence of actual circumstances, characteristics
and awareness.

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Table Three
Corporate Mental States
Corporate Mental States

Description

Purposeful Corporate Acts

Action is purposive, and most culpable, when it is one's

object or desire to engage in an act or cause a particular
result. Implicit in this desire is the assumption that the result
was foreseeable, i.e., the result was a natural and probable
consequence of the act. A corporation acts purposely when it
engages in acts with a desire to bring about a certain,
foreseeable result. Where the elements of the offense entail
external circumstances, as they often do, there must be an
awareness or appreciation that these circumstances exist.

Knowing Corporate Acts

Knowing corporate behavior requires an awareness, not a

desire, that conduct will lead to a result. The law
distinguishes between a corporation that wills a particular act
or result (purpose), as contrasted with an entity that merely
tolerates its occurrence (knowledge). The central questions
are: Is there evidence that the corporation was aware of the
conduct or circumstances of its actions? Would an average
corporation like size and structure have been aware of the
nature of its conduct?

Reckless Corporate Acts

In contrast to purposeful or knowing acts, a reckless entity

assumes a risk of causing harm. Reckless corporate action
entails a disregard of substantial and unjustifiable risk of
harm. The disregard of risks must involve "a gross deviation
from the standard of conduct that a law-abiding person in the
actor's situation would observe" (ALI, 1962, p. 237). This
may be translated into the simple inquiry: Considering the
circumstances known, and the nature of the conduct
committed, should the entity's disregard of risks result in
condemnation?

Negligent Corporate Acts

Corporate negligence is found where an entity inadvertently

creates a substantial and unjustifiable risk of which it ought
to have been aware. Unlike other corporate mental states,
there is no need to establish a positive state of awareness
with negligence. The substantiality and unjustifiability of risk
once again play a central role. Corporate negligence turns on
evidence of inadvertence, as determined by a failure to
perceive a risk that reflects a gross deviation from the
standard of care expected from a corporation in its situation.

Constructive culpability does not require conformance to an external standard.

The question is not: Did the organization, under the circumstances, act reasonably given its size, complexity, and structure? Requiring conformance to an
external standard destroys the state of mind inquiry. Constructive corporate
culpability simply facilitates proof of a corporate mental state, permitting judges
and jurors to move beyond subjective evidence of culpability. Did the actions
of the corporation, given the circumstances, manifest intention or purpose.

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321

awareness or knowledge, indifference or recklessness? Would the average corporation of like size, structure, and complexity have known of the risks of
injury? These questions are addressed in relation to the four part hierarchy of
culpability found in the Model Penal Code: purpose, knowledge, recklessness,
and negligence.

Constructive Corporate Culpability and the Limits of Law

No court or commentator has maintained that the corporate criminal law
requires vicarious liability. On the other hand, for a model of corporate liability
to find acceptance in legislatures and courts, it is not too much to ask that it is
set within the requirements of the substantive law. To date, attempts to define
corporate liability have required evidence that defies extant law. Theorists have
disregarded the fact that evidence of a certain culture or ethos, for example, must
accommodate the substantive law. Notwithstanding problems with accommodation, this inattention to legal requirements has limited the application of culpability provisions, as well as obscured the boundary between torts and crimes.
This is illustrated in the recent proposal of an Accountability Model of corporate
liability and culpability, proposed by professors Fisse and Braithwaite (1993).
A corporation is liable, Fisse and Brathwaite argue, when and where it fails to
engage in reactive due diligence for actions that violate the criminal law. According to these theorists: "Under the Accountability Model, the corporation
may be held responsible for the actus reus of the offence and then required to
conduct a rigorous self-investigation which may lead to individual discipline,
remediation of defective SOPs, compensation to victims, or other relevant responses. If the remedial and disciplinary measures documented in the self-investigation are insufficient and inexcusable, then the court can proceed to
criminal conviction and sentencing of the corporation" (Fisse and Braithwaite,
1993, p. 163). The elaborate set of liability rules and related sanctions found in
the Accountability Model are quite impressive. They are, however, limited by a
disregard of certain legal requirements. Fisse and Braithwaite do not require
concurrence between actus reus and mens rea, arguing that restricting the notion
of culpability to a strict temporal standard disregards the dynamic nature and
character of corporate offending.
At least two conceptual problems arise with a system of corporate liability that
dismisses the need for contemporaneity and yet requires a criminal act, as well
as a failure of the entity to respond. First, the Accountability Model unnecessarily limits the criminal law to corporate negligence or recklessness. A failure
to reasonably respond or engage in reactive due diligence is negligence or, at
most, recklessness. The corporation should have known of the risk of harm
associated with the actus reus (similar to a corporate mental state of negligence).
The organization was aware of the potential for harm and, with the awareness,
disregarded a substantial and unjustifiable risk of injury (similar to a recklessness mental state).
Second, where is no concurrencethe mental state does not actuate the
physical conductit is questionable whether the criminal law should have a

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place at all. Without concurrence between the corporate act and an associated
mens rea, courts risk the imposition of strict liability for omissions. Corporate
action in response to the perception of an illegality resembles due diligence and
the duty to exercise reasonable care which already exists in statutory and common law (Knepper and Bailey, 1993). The duty of directors to monitor and
supervise the activities of the corporation, for example, raises questions in tort
law of negligence. Of course, failing to act in such a way as to prevent harm, or
failing to act reasonably after the discovery of an illegality reveals culpability.
Unless or until there is a meaningful connection between the actus reus of a
corporate offense and departures from reasonable action, however, any resulting
blame should derive from tort law. To be fair, Fisse and Braithwaite acknowledge and accept the notion of corporate blameworthiness. They write freely
about corporate negligence and recklessness. The Accountability Model, however, like PCF, RCF, CE, and CP models, does little to unite culpability provisions and liability rules.
The challenge for ethicists and legal theorists alike is to address critical features of the corporate form in the context of culpability provisions and liability
rules. Proposing a conceptualization of genuine corporate fault without attending to existing law, as has been demonstrated, severely limits the usefulness of
any resulting model. Developing models of corporate fault that are incompatible with law is nothing short of a missed opportunity. As corporations increasingly implement ethics codes, compliance programs, and procedures to insulate
the entity from criminal liability, ethicists and legal theorists should collaborate
in reconceptualizing corporate fault (Pitt & Groskaufmanis, 1990; Laufer &
Robertson, in press). This collaboration must, however, allow for the idiosyncrasies and limits of law.

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1996. Business Ethics Quarterly, Volume 6, Issue 3, ISSN 1052-150X, 0311-0324,