When is a corporation not criminally liable?
At the end of last year, the Supreme Court opined on the limits of corporate criminal liability. Case law in this field has been quite sporadic. In regards to last December’s amendment to the Corporate Criminal Liability Act, any ruling that interprets the Act’s ambiguities is certainly welcome. Apart from court decisions, there is another helpful tool: a guide through new legislation for public prosecutors, prepared by the Supreme Public Prosecutor’s Office.
Apart from extending the number of offences that corporations may be liable for, the amendment to the Corporate Criminal Liability Act also introduced a new concept of exoneration. Corporate entities have thus been busy revising or redesigning compliance mechanism that may serve to exonerate them from criminal liability. The Act, however, does not provide exact guidelines as to what measures should be adopted. The Supreme Public Prosecutor’s Office thus has taken the initiative and published a methodological guide on how public prosecutors should proceed when applying the provision on a corporate entity’s exoneration. This is a useful document, emphasizing primarily corporate culture and suggesting how to assess the setup and effectiveness of compliance programmes.
Late last year, the Supreme Court also opined on the corporate criminal liability in a case regarding credit fraud. In the case in question, the court held that where an individual commits an offence in a corporation’s name or as part of its activity, but actually to the detriment of the corporation, the offence should not be attributed to the corporation. In such cases, the court held that it is not the purpose of the law to apply criminal liability against the corporation; despite the otherwise generally applicable principle that a corporate entity is liable for choosing the persons authorised to act on its behalf and for persons acting on its behalf.
According to the court, it is necessary to consider the nature of the criminal act and the intention of the person acting, as well as the action on behalf of the corporation within the criminal act that is to be attributed to it, in particular when considering the excesses of persons acting on behalf of a corporation, as described above. In principle, if the act has been committed against the corporation’s interest or to its detriment (harm), any criminal liability of the corporation thus harmed cannot be inferred and in such a case, only the criminal liability of the person acting will apply.
This Supreme Court decision is another piece in the case law mosaic of corporate criminal liability. The conclusion that acts pursuing solely personal interests of individuals who knowingly and deliberately take advantage of a corporation cannot be attributed to the corporation is only to be welcome. The same goes for the Supreme Public Prosecutor’s Office’s methodological guide, bound to become highly useful.