Network on Developments in Corporate Criminal Liability

Can the Law cope with Corporate Crime? How do states go about investigating, prosecuting and sentencing companies that cause serious harm? Do laws have any effect on corporate behaviour?

The Network on Developments in Corporate Criminal Liability aims to enhance our knowledge and understanding of how states deal with corporate misconduct by bringing together international scholars from different disciplines to compile, compare and critically analyse current laws on Corporate Criminal Liability. Corporate wrongdoing has been tackled variously by economists, accountants, sociologists, criminologists, lawyers and human rights advocates. However, it is evident that each of these disciplines can benefit from increased exposure to the ideas and research of the other disciplines. Our purpose therefore is to create a multi-disciplinary and global network of scholars who can pool their expertise to produce a better understanding of the causes of corporate wrongdoing and how it can be addressed through law.

Recent events have heightened public awareness of the enormous harm that can result from flawed risk management by companies. The damage may be economic, as evidenced by the current crisis in the banking industry and the downfall of such previously well-regarded companies as Lehman Brothers, Merrill Lynch, Enron, Parmalat, and Worldcom; or it may involve serious injury and even loss of life, as occurred in the crash of the Concorde in France, the capsize of the Herald of Free Enterprise, and rail crashes at Southall, Paddington, Hatfield, and Potters Bar in the UK.

Failed prosecutions (and the failure to bring prosecutions because of anticipated problems of proof) have highlighted the inadequacy of traditional criminal law doctrines for coping with corporate wrongdoing. Legal concepts such as actus reus, mens rea, and causation, constructed with natural persons in mind, do not easily lend themselves to fictional entities such as companies.

Many states, in response to the lack of effective regulatory mechanisms or the perceived inadequacies of existing laws, have enacted new statutes. These laws differ widely in approach from an across-the board criminal liability to administrative sanctions only. A key objective of the Network will be to assess the impact of these laws on corporate behaviour by determining how the laws are enforced and by whom (the police, a regulatory agency, or a specialist agency such as the Serious Fraud Office); how violations are dealt with by the authorities, the factors that influence decisions to bring criminal prosecutions; and the sanctions available to be imposed on companies, and executives and directors found to have promoted or sanctioned their company's offence, following a criminal conviction, as well as the extent to which these sanctions are applied in practice.

As the business community becomes more familiar with laws imposing corporate criminal liability, more and more companies can be expected to establish internal compliance departments to avoid violations. The end result may be a shift from the external enforcement of corporate criminal liability through regulatory agencies and the police to internal self-regulation. But is self-regulation the solution, and what are the alternatives?

We will disseminate the results of the research as widely as possible through thematic papers, workshops, conferences, and the publication of books, articles, and occasional papers. We will also establish a website, regularly updated, where new developments in the area, as well as contibutions from persons outside of the network, can be presented and made available. These activities will enhance the impact of the research and also ensure full engagement with a wide audience. The Network will be of interest to members of the business and legal communities, companies, public interest groups, NGOs, legislative bodies, academics, students and members of the public.

It is no secret that the world is enmeshed in a global financial crisis stemming from misguided risk management policies by the corporate and financial communities, compounded by inadequate supervision by state regulators appointed specifically to monitor business activities. Many governments have discovered that national laws are both inadequate to punish past offenders or to effectively deter future corporate misconduct.

Who will benefit from the Network's research and how will they benefit?

Legal Practitioners, Policy-makers, and Government Agencies

One of the main objectives of the Network will be to develop legal and other models of corporate accountability. The Network will review current and proposed laws, and offer proposals for strengthening existing legal regimes. Our research will benefit states and legislatures which have concluded that their existing law is inadequate to cope with modern forms of corporate misconduct, as well as states which have yet to consider issues the Network will be raising.

Businesses and Companies

Companies and others in the commercial sector will benefit from the Network's examination and appraisal of mechanisms, such as corporate compliance departments, designed to prevent legal and regulatory infractions. Whether external or self-regulation is the best way for preventing corporate wrongdoing is a critical issue for both businesses and corporate policy-makers. The findings of the Network will also have a significant impact on the development of models of good practice.

Public Interest Groups, NGOs, Trade Unions

In an era of globalisation, there is widespread interest not only on the part of the business, legal and academic communities, but also on public interest groups, NGOs, and trade unions as to the most effective way to deal with corporate misconduct. Through its publications, website and public presentations the Network plans to reach these audiences.

The General Public

There is hardly any individual that is not affected, either directly or indirectly, by corporate misconduct. Victims of corporate fraud will be directly affected, while pensioners, whose retirement funds may be adversely affected by reckless investment policies, will be impacted indirectly. The Network's research will be made available in a form that can be understood by ordinary citizens.

What will be done to ensure that they have the opportunity to benefit from this research?

Our findings will be published in a book, and presented at a major conference in London. Expected to attend the conference will be lawyers, legislators, members of regulatory authorities, representatives of the business community, public interest groups, NGOs, and academics from a wide range of disciplines. From this initial European phase of our project, we plan to broaden the scope of our inquiry to examine developments in North America, China, Russia, and the Pacific Rim, thereby extending the input to and the impact of the Network. Activities of the Network will be promoted in the media and the wider community through our communication offices.

Over the period of the grant, the Network will continue to monitor developments in the corporate crime area. Through books, articles, and occasional papers, the Network will publish the results of its research. In order to encourage and stimulate collaborative and inter-disciplinary research, the Network will create a website, which will be regularly monitored and updated, where all who are interested in the topic of corporate crime and corporate accountability, and not just members of the network, can publish and contribute commentary. It is expected that the website and materials posted on it will lead to collaborative research projects, provide a model for those interested in investigating their own country's laws and practices, and provide up-to-date