3850B Corporations and the criminal law
The corporation is an aggregation of once-separate capital, assets,
investors (equity and credit suppliers), managers and workers. Law
pretends the corporation is an individual so that it can own
property and take advantage of rights and freedoms of the Charter
of Rights and Freedoms. The pretence also renders corporations
liable for breach of civil law, regulatory law and criminal law.
However, such pretence regarding large corporations distorts
reality. The effect is that culturally it is difficult to apply the
criminal law – designed to avert and punish individual criminal
acts – because there is a hesitancy and reluctance of prosecutors
and courts to apply the criminal law to corporations and those who
manage them.
In Canada, there is considerable pressure to apply the criminal law
to corporations, particularly since the Westray tragedy and inquiry.
The difficulty in the Canadian criminal law prior to the change
from the directing mind theory to aggregation theory was that the
directing mind was difficult to establish in view of delegation of
authority and the complexity of corporate decision making.
Perhaps due to lack of funding, prosecutors seemed unwilling to
lay criminal charges against the corporation, executive officers,
managers or directors of the corporation.
Judges became frustrated by this. Judge Miles Lord believed that
directors and executives who appeared as witnesses in the Dalkon
Shield case against A.R. Robins ought to have been held
responsible for the harm caused to the plaintiffs. It has not been
explained why they were not required to answer civil actions or
criminal charges. One factor may have been the difficulty in
pinning liability on senior executives for actions taken throughout
the organization. Judge Lord had a feeling of uselessness and
impotence.
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Similar frustration was shown by Chief Justice Evans of the
Ontario Supreme Court when dealing with the Amway
Corporation's fraud of $30 million in customs duties against the
Government of Canada in the early 1980s. The company used shell
companies, dummy invoices, false price lists, and fraudulent oral
and written misrepresentations (as per Hoffman-LaRoche to raise
prices in U.K. and Canada). In exchange for Amway Corporation's
guilty plea, the prosecutors dropped charges against senior
managers, who were also major shareholders of the huge
corporation. Chief Justice Evans was scathing in his remarks that
the senior managers/executives ought to have been before him.
Interestingly, the fine imposed on the corporation was just $20
million.
Glasbeek contends that the evidentiary problems faced by
investigators and prosecutors arise from a cultural bias against
prosecuting corporate managers and executives for crimes. The
economic benefits of corporations appear to trump the social and
economic problems created by corporate deviance and crime. This
bias appears to exacerbate the evidentiary problems confronting
police, prosecutors, and some judges that result in extremely rare
criminal prosecutions of corporations let alone convictions.
Glasbeek avers "this inhibiting mindset stems from some deep
structural understandings of our political economy and is,
therefore, not an ideological perspective that will be easily shed".
Criminal law reflects, or ought to reflect, societal values. However,
not everyone in societies agree with particular values or the
criminal law. Lord Devlin, an English judge professed that we
know what conduct needs to be treated as criminal when the
reasonable man or woman thinks the conduct is unacceptable to
our moral fabric and threatens to tear that fabric. However, how do
we know or decide who the reasonable person is? Is this just a
matter of leaving the decision to luminaries such as Devlin,
politicians, prosecutors, and judges?
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Throughout history, law, including criminal law, has been decided
by those in power. In the middle ages, those in power treated
witchcraft as a heinous crime because it supposedly threatened the
social fabric. Witches were mainly, but not exclusively, women
whose supposed evil powers threatened those in power. Millions of
women throughout Europe and later in the USA were executed as
witches. Slavery was condoned by the laws of European states and
in America. Gambling, alcohol abuse, homosexuality, and usury
(charging outrageously high interest on loans) were also unlawful
in earlier times but are now acceptable in many countries including
Canada. In some Islamic countries, criminal responsibility for the
rape of a woman falls on the woman, not on the perpetrator(s).
Glasbeek notes that it is difficult to base criminal conduct on
conduct that offends our supposed shared morality. Is the
(criminal) law better seen as what serves the interests of the
powerful, than what offends our supposedly shared morality? The
use and sale of proscribed drugs such as heroin, cocaine,
marijuana, and crack-cocaine has been criminalized in Canada as a
risk to the social fabric. Such people are treated as moral lepers
and criminals but those selling or using tobacco are not treated as
criminals, in spite of the fact that the sale and use of tobacco has
serious negative effects on society beyond the harm created by the
proscribed drugs. Can one justify the criminalization of the sale
and use of proscribed drugs but not the sale and use of
tobacco?
See examples of selling sickness and drugs to the well rather than
to the unwell. Why is this condoned? Banking is viewed as a
prestigious profession yet usury still operates with crippling
interest charges and low payment of interest by banks for savings
accounts. See also the heavy interest rates of the IMF and the
World Bank for poor countries. Usury once warranted the wrath of
the criminal law. Why not now? Why is such lending considered
prestigious? Why did shared morality change so quickly?
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Glasbeek follows Marxian reasoning that, in reality, morality is not
shared rather it reflects the ideology of the ruling class. Those in
power economically and politically are unlikely to acknowledge
that their every-day actions are criminal.
The criminal code, founded on broadly-defined, contestable
principles cannot claim to be anchored in the uncontested values of
society. Society's values are contested. Witness the recent U.S.
presidential election. The Republicans painted Obama as a
socialist, destined to share American society's wealth through
taxation and social programs. This illustrates a fear of
government's meddling in private wealth and other matters. Obama
painted McCain as out of touch with modern hopes and visions of
people historically disadvantaged by the social, political and
economic systems and policies. The popular vote was 51% for
Obama and 48% for McCain, indicating disagreement about values
and beliefs. Clearly there is no consensus about social policy,
including criminal law.
In Canada the dominant values are the values of the dominant
capitalist class. Market transactions are viewed by those engaging
in them as having social and economic value. Those engaging in
such activities argue that, while risks of harm to others accompany
market activities, those engaging in them should not be considered
to have committed a crime. The benefits of market activities are
seen as more important than the risks accompanying them such as
workplace deaths, poisoning consumers, speculating (gambling)
with other people's money etc.
Capitalist governments view their role as that of facilitating the
accumulation of private wealth. Their aim is to legitimate the
system of accumulation of private wealth. Canadian John Kenneth
Galbraith quoted the remarks of capitalist John D. Rockefeller:
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"The American Beauty Rose can be produced in the splendor
and fragrance which bring cheer to its beholder only by
sacrificing the early buds which grow up around it…This is not
an evil tendency in business. It is merely the working out of a law
of nature and a law of God". Glasbeek contends that regulatory
laws reflect this (social) Darwinian starting point.
What might this mean? The regulatory scheme as opposed to
criminal law typically involves minimal fines on the corporation.
Indeed, depending on how much enforcement of regulations there
is, there may be no fines at all. Furthermore, there is no social
stigma if fines are levied. It is seen as a cost of doing business.
Glasbeek refers to two types of legal wrong referred to by the
judiciary: (a) malum in se and (b) malum prohibitum.
The first means wrong in itself and the second means a wrong
prohibited by the law. The distinction between the two is that
malum in se is a matter dealt with by the criminal law because it is
more serious than a mere malum prohibitum, which can be dealt
with by regulators not criminal court prosecutors and judges.
Glasbeek challenges the attempt by jurors and politicians to draw
the line between corporate crime and misdemeanours, which the
SCC did in the case City of Sault Ste. Marie.
Scenario
A building contractor is retained to build an 80 story building. His
intent is to build it according to given specifications for a price
yielding profit for him. Builder knows from experience and
statistics that for every ten stories over 50 one worker will be killed
or injured. If a worker dies on the project, should the builder be
held criminally responsible? Usual answer is "NO" because the
builder bore the worker no malice and never intended him to be
injured and killed.
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However, criminal law does not always require malevolence by
anyone. See e.g. a drunk driver mistaking a pedestrian for a
cardboard box. Reckless indifference to life is sufficient to
criminalize. Can the builder by held liable for reckless indifference
to the life of the worker? Did he impose the risk on others simply
to make money? Was this more or less culpable than the drunk
driver, who was simply stupid?
See the Ford Pinto case and the failure of the criminal prosecution.
Punitive damages were awarded but substantially reduced.
Note the successful civil suits against tobacco companies but not
criminal suits. This is a political decision not a legal one.
See gun-makers in the 1990s in U.S.A. Shooters are criminally
responsible for their actions and in 1999 a Brooklyn court found
gun-makers liable. Basis of decision was while the gun-makers did
not shoot anyone or know that their gun would be used by a
criminal, they were responsible because of their marketing
practices. They distributed guns in states that had weak laws
regarding sale and possession of guns. This made it easy to buy a
gun in one state and use it in a state with tougher regulations.
There was civil liability because their marketing activities were
indifferent to the outcome of their profit-seeking activities. This
indicates a level of inadvertence can give rise to criminal liability
for reckless indifference to harm that might foreseeably befall
another.
The challenge for our society is to find rational ways of deciding
when an alleged corporate crime is sufficiently serious to warrant
prosecution under the criminal law. Bill C-45 has facilitated the
possibility of such prosecutions but the dominant culture may
resist such inroads into corporate behavior and misbehavior.
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