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 Agenda For the Day

Y Corporate crimes

Corporate crime liability

Statutory Inadequacy

 Causes of corporate crimes

 Cases
Corporate Crime

v Crimes committed by a corporation or by individuals who may be

identified with a corporation.

v Activities undertaken by an individual or company that are done in a

dishonest or illegal manner, to gain an advantage.

v Corporate crime poses a significant threat to the welfare of the community

v Corporate crime may involve acts like fraud (Mad off, Enron),
environmental pollution (corporate crime, such as the 1984 Union Carbide
accident in Bhopal, India), making of unsafe products and dangerous work
environments.
Composition






 











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Concepts

v Maxim actus non facit reum, nisi mens sit rea.

v Œhe principle of corporate criminal liability is based on the doctrine of

respondent

v Œraditional Approach

v Modern Approach
Corporate criminal liability

v Corporate cannot have the mens rea or the guilty mind to commit offence

v Corporate cannot be imprisoned.

Statutory Inadequacy
v Indian Act still make official liable for the act criminally liable.

v Sections. 45, 63, 68, 70(5), 203, etc of the Indian Companies Act wherein
only the officials of the company are held liable and not the company itself.

v Œhe various sections of the IPC that direct compulsory imprisonment does
not take a corporate into account since such a sanction cannot work against
the corporation

v A corporation was incapable of committing the offence of cheating as it has

no mind (mens rea).
Causes

v Need

v Greed

v Corporate culture theory

v Self Control view

v Any corporation can be made liable for act of its agent or
servant if he/she :

Commits a crime

Acts within the scope of employment

With the intent to benefit the corporation

v Corporate Punishment
Cases of Corporate Crime

[

Satyam Fiasco
v Largest Corporate Crime in Indian History. One of the largest in the World.

v Main accused: Mr. Ramlinga Raju

v Inflated (non-existent) cash and bank balances of Rs 5040 crore ($1.04

billion) (as against 53.61 billion reflected in the books).

v An accrued interest of Rs 376 crore which was non-existent.

v An understated liability of Rs 1230 crore

v An overstated debtors position of Rs 490 crore

Main issues related to Satyam case
v Falsification of account

v Responsibility of Auditors and bankers

v Corporate governance issue

v Role of independent directors

Charges against Raju

v IPC Sec 120B: For alleged criminal conspiracy

v IPC Sec 409: Criminal Breach of Contract

v IPC Sec 420: Cheating

v IPC Sec 468: Forgery

v IPC Sec 471: Falsification of Account

åarious Case Laws
v Œippecanoe Beverages, Inc. v. S.A. El Aguila Brewing Co., 833 F2d 633
(CA7 1987); Œhe proper standard for jury instruction is that the corporation
may be held criminally responsible for antitrust violations committed by its
employees if they were acting within scope of their authority, or apparent
authority, and for benefit of corporation.

v United States v. One Parcel of Land, 965 F.2d 311, 316 (7th Cir. 1992)
(stating agent's knowledge of illegal act may be imputed to corporation if
agent was "acting as authorized and motivated at least in part by an intent
to benefit the corporation"
How can a Business be "Punished" if convicted of a Crime?

v Only in financial terms

v ³Corporate Death Penalty"

Imposing fines
business shuts down

Probation
monitored by the court