HOW CAN THE CORPORATION BECOME A CRIMINAL?

- ANALYZING THE PATHS TOWARDS CORPORATE CRIMINAL LIABILITY By Vanja-Ivan Savi, LL.M., M.Sc. 1

Inroduction

The law on criminal liability of corporations in various legal regimes varies from the systems which do not recognise it at all to systems which apply criminal liability for legal entities on a very large scale. Corporation is a fiction per se and when we talk about it, we talk about something what is creation of law and does not exist out of legal system. 2 Why is this important? There is one simple reason which is to have in mind when we discuss this topic. Criminal liabilty of corporation does not posess that kind of legal dimension which could make it naturally and easily acceptable. Criminal liablity of corporation is a creation of law and we have to have that in mind (regardless of the fact that it seems obvious) for at least two most important reasons: first one is that corporation does not have mens rea necessary that one could observe it as a person which knows what is right or what is wrong and second is that corporation is not in possition to understand and to learn form the sanction which will be imposed on it. 3

Vanja-Ivan Savi, LL.M., M.Sc. is a teaching assistant-lecturer at University of Zagreb, Croatia, Faculty of Law, Department for General Theory of Law and State and International Fellow at International Human Rights Law Institute at DePaul University, College of Law, Chicago, Illinois. Author holds his Master of Science in Law degree on the topic concerning Fundamental Questions of Criminal Liability of Juristic Persons and currently is writing J.S.D. thesis on Application of Theoretical Models of Criminal Liability of Juristic Persons in Croatian and Comparative Law. This paper is written for IHRLI Review as a part of the Institutes efforts to help legal reforms in Vietnam where criminal liability of corporations is one of the new issues. 2 On contrary, physical persons are creations which exist without and regardless of legal and political intervention. Although there have been a number of examples in legal history where humans were treated as things starting from Roman Law to more recent examples in various legal systems including Americas and former South African Republic. 3 The most famous and most quoted sentence: Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked, Edward, First Baron Thurlow (1731-1806). Also Pope Innocent IV argued that corporation could not be able to commit the crime since it has no soul. See: Dereninovi, Croatian Law on Liability of Juristic Persons for Criminal Acts with commentary (Zakon o odgovornosti pravnih osoba za kaznena djela, s uvodnim napomenama, komentarskim biljekama, pojmovnim kazalom i prilozima), in Croatian, Nocci d.o.o., Zagreb, Croatia, 2003, 14.
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On this two questions all critique is built: the one who should be responsible is human within a corporation and the prevention trough the sanction will only be achieved if the system hits someone who is capable to understand the crime and feel the consequence in respect that she/he would not do it again. It is very simple as that. But, there should be said that chasing legal entities as criminals has its own social, sociological and legal dimensions and that making the corporation a subject to criminal prosecution is more than just a legal mechanism which will strike the felloner. Especially it is like that in the modern systems where the real power lies in the hands of corporations and techno living today is the time when it happens. The major question will be how to make the link between criminal action of the employee and connect it with the criminal behaviour of the corporation. It is obvious that corporation is not capable of commiting the crime by itself and therefore law accept the mechanism which is nothing than technology by which legal system allows to state to held the corporation liable (and responsible) for the acts of humans connected to a corporation itself. It is more appropriate to use the term connected to a corporation than employees, since theory and practice both proved that not just persons directly connected with the company with labour contract can produce criminal liability for companies. It is sometimes the case that even contractors who were doing business for the company provoked liability of corporation iself, if was important that those actions were under company's control. Seasonal workers who are not employees in strict sense of the word also can provoke that liability if they act in favour of the company. It is important to stress that generally speaking we can observe two different paths of law when we talk about criminal liability of corporations 4. One development is regarded to civil law countries who did not have that concept since very recently. Those countries which are bound with Civil Law tradition (conditionally also can be said: Roman Law tradition) did not except that corporation can be criminally liable at all. Only form of liability for corporations were in civil or eventually administrative form. European countries like Germany, Austria, Croatia, Slovenia, France, Belgium, Hungary, Luxembourg, Spain, Portugal etc. as well as Russia and most of the Asian countries and countries of Latin America followed the principle societas delinquere non potest. This old Roman Law principle which basically says that corporations can

It would be more appropriate to say juristic person or legal person, but since most of the legal entities (not to be mixed with legal subjects) are corporations this term is used in this article.

not commit crime. Recent influences form common law countries and common law systems, namely United Kingdom (England in the first place 5) and the United States of America made geographical picture of applying corporate criminal liability much different. Netherlands was first one of the countries which introduced corporate criminal liability in Europe and was progresivelly followed by number of other European countries. Even Austria changed its law recently and allowed criminal liablity for corporations. 6 Only some European countries remain on the position that corporation can not be criminally liable, like for examlple Germany and Italy did-although both of those countries have provisions in their statutes which allow some form of prosecution over corporations even they do not call them criminal. It is offten said that German Law created terminological figs leaf 7. In United States there were attempts that corporations have to be criminalised through statute law, namely Model Penal Code, but those attempts remained on more theorethical level. United States, England and most of the common law jurisdictions have longer tradition of punishing corporations, although it is not always easy for those countries to deal with those issues as well. It is appropriate to say that the range of liablility which those juristictions and especially courts are ready to apply is based on traditional concepts which have more time to develop and to become a part of national legal psyche. Something what is almost or was almost (although I am not sure how many European lawyers are ready to admit that corporation can be criminally liable) heretical to civil law lawyers is at the same time almost routine to common law ones. The most wide approach is taken by American courts which apply criminal liabilty of corporations in
It is not to be forgotten that United Kingdom has two different legal systems: English and Scottish, but regarding this area of law they are much the same since Scotland adopted English common law and was heavily under its influence. Classic cases are Dean v John Menzies, Scots Legal Times (SLT), 1981, 50., Purcell Meats (Scotland) Ltd v McLeod, Scots Legal Times (SLT), 1987, 528.; Purcell Meats (Scotland) Ltd. v McLeod, (HCJ Appeal), High Court of Justiciary(appeal), 1996. To see more on Scots Law: Richard Mays: The Criminal Liability of Corporations and Scots Law: Learning the Lessons of Anglo-American Jurisprudence, Edinburgh Law Review 2000 (4) 46. 6 Austria was one of those countries which rejected application of corporate criminal liability very seriously; it is commonly taught that Germany and Austria usually follow same legal destiny since both of those countries share big part of their legal history. For many jurists it was a surprise that Austria, although among last European countries, changes its legislation. 7 See in literature: Mitja Deisinger, Liability of Juristic Persons for Criminal Actions (Odgovornost pravnih osoba za kazniva dejanja), in Slovenian, GV Zaloba, Ljubljana, 2007., p. 28. and urevi, Zlata, Commentary on Croatian Law on Liability of Juristic Persons for Criminal Acts (Komentar zakona o odgovornosti pravnih osoba za kaznena djela), in Croatian, Narodne novine, Zagreb, 2005., 17.
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a such broad spectrum under strict liablity schemes that it can be argued that a limit or distance line between civil (tort) liablity and criminal one is deminishing and disapearing. It would be impotant to make criminal liability more exclusive in my opinion. By too extensive application of corporate criminal liability criminal law looses its exclusivity which is necessary if we approach it as a social tool for ethical and moral purposes. Although I am a supporter of introducing criminal liablity into the legal systems, this should be done with the reason. The major reason should be ethical: it is the stigma which has to be attached to a corporation which commites crime. If any civil wrongdoing will provoke criminal liability than the system will loose the differnce between those systems (civil-tort and criminal) and with that it will loose its regulative and preventional role of law. It is very important for a country which is thinking about introducing radically new concept into its legal system to be aware of all potential options and choose one which is best for its legal structure in the first place, as well as historical ideas and structural possibilities. It will be advantage for most Asian, African and Latin American countries which have their roots in civil law logic, to examine what happened in Europe, the cradle of civil law, after the decission that not just humans are criminals. The biggest challenge would be to find a solution which will hit the real criminal centres regardless if those are natural or legal entities and not to harm those who did not profit or even did not intend to profit from criminal activities. Two basic approaches to corporate criminal liability Most of the authors would agree that there are basically two major ways how liability should be attached to a corporation. 8 It is necessary to understand that those models are simplified and that there are at least dozen of sub-theories and sub-models how to make a corporation liable (and responsible). Here I will not discuss justification of incorporation of corporate criminal liablilty within one particular legal system. This article seems to be more analysis of what exist and how it is applied-as an introduction to someone who enters this area for the first time. I belive that sometimes it is more difficult to write an introduction to a subject than to write volumes of books on the topic. I will try to be brief and simple.

Sometimes they will call it differently or put under different scheme but this will be the case. See supra note 12.

Corporations are held criminally liable on two major principles: first one is based on derivative principle of attribution and second one is based on direct principle of attribution. Derivative liability is most accepted principle of criminalization of juristic persons, although another principle of liabilty-direct liability principle or as lawyers call it, autonomous liability, is also accepted relatively widely. Let's go step by step. What does derivative principle actually mean? Corporation will be criminally liable if prosecution manages to prove that one or more people employed within the company acted in that way that they commited a criminal act and that criminal act can be attributed to a corporation as corporation has commited it itself. Basically it means: if an employee committed criminal act, that criminal act will be attributed to a corporation. Depending which employees count as persons which can provoke criminal liability to a corporation, we differ two major subcathegorical models: a) identification principle (model) and b) vicarious principle (model). It will always be important to prove, and this is in my opinion essential, that those employees acted within the scope of company's business 9 and that corporation had a profit/interest or benefits or expected benefits form those actions. Other principle is based on autonomous liability which means that corporation will be liable for its own actions. In this sense corporation is observed as self-determined organism and its organs and organisational bodies are regarded as body parts at humans. Some lawyers consider organisation as an organism, and therefore the mechanism in which they form criminal liability to a coproration is called Organic Theory 10. In that sense action of individuals would be separated form the action of corporation and corporation would than have its own criminal liability. 11 It is principle which says if hand did something wrong, all body will be responsible.

This does not necessary mean that the activities of the employees have to be in direct connection with the principal business activity, but those activities should be in functional connection with the activities of the corporation. It means that secondary activities which are important for normal functioning of the corporation will count as the activities of the corporation as well. 10 B. Fisse, Reconstructing Corporate Criminal Law: Deterrence, Retribution, Fault and Sanctions, 56 Southern California Law Review, 1141.; V. Savi, Fundamental Questions of Liability of Juristic Persons for Criminal Acts and Finding the Responsible Persons in Companies (Temeljna pitanja odgovornosti pravnih osoba za kaznena djela i odreivanje odgovorne osobe u trgovakim drutvima), in Croatian, Master Thesis, University of Zagreb, Faculty of Law, Zagreb, Croatia, 2006, 41. et seq., (in Croatian), C. Wells, Corporations and Criminal Responsibilty, Oxford University Press, 156. et seq. (aggregation and holistic models). 11 In German: Klaus Tiedemann, Die Bebussung von Unternehmen nach 2. Gesetz zur Bekmpfung der Wirtschaftskriminalitt, 1988 NJW 1172.-73.; Klaus Tiedemann, Strafbarkeit von juristischen Personen?-Eine

Through this theory system is attaching human elements to the corporation. But, autonomuous principle is more than that! In various combinations it is consisted of more than few principles which form or better to say intend to form autonomous principle which is creation of it own. Non-succsessful applications of derivative principle led to a search of a system which could fill the gap between neccessities to punish a corporation and possibilities to do it, since state was unable to find phisical (natural) person and a his/her guilt which will make the guilt of corporation as a whole. That model, called aggregation, is a model of corporate culture or model of corporate ignorance (or failure in organisation). Those are just few attempts which intent to blame corporation as a whole. 12 Derivative liability Most of the systems in the world apply this form of liability. What derivative liability means? 13 As it was noted previously it means that if a State wants the corporation to be responsible for crime, it has to prove that the crime is beeing commited by one of its employees. It is important to have two preconditions: a) a criminal act of the person who has this particular form of connection with the company, which is usually management or labour contract, and b) possibility that company can be prosecuted for that crime 14. After we have those two preconditions we can make a link between act of the natural person and company itself.

rechtsvergleichende Bestandsaufnahme mit Ausblicken fr das deutsche Recht, Freiburger Begegnungen, 45.-48. (Trger der Juristischen Studiengesellschaft ed., 1996.) 12 It is obvious that failure in organisation or breaking of the corporate culture can also be found in acts of any of employees or workers within the company. But, when the term corporate culture or corporate ignorance is used it is more likely to be used for omissions of the corporation as a whole. Coporative ignorance model is used when it is possible to determine natural person within the company who did not act in accordance with court order and did not find and punish the offender (Dereninovi, note 3, 24.). Some authors make the structure of the principles of liability in some other order and choose to examine agency, identification and aggregation separately without putting into the prespective of derivative and underivative responsibility. See: Daniela Holler Branco, University of Saskatchewan, Canada, 2006, see:contence. Sometimes they just call oranise them differently. See: Wells, Chapter 8.:The responsible corporation. I belive that there are those two basic approaches to responsibility and that all theories are serving to application of one of them. Once we seek responsibility of corporation based on human element and secondly we look for mechanisms which will allow criminalisation of corporations sepatate of the human element. Of course that strict liability offences are solid ground for arguing that viaroius liability and corporate culture doctrine are laping each other. It will be material for more broader discussion, but in that case utilitarian principle prevails. 13 To see what attachment of liability means in legal theory I advise H.L.A. Hart and Henri Honore, Causation and the Law, 2nd Edition, Clarendon Press, Oxford, 1985 to be red. 14 This is very important issues and deserves a separate writing. But for the purpose of this work I will mention that each legal system has its own list of crimes for which a corporation can be found liable. For instance until recently France had just 88 crimes for which company could be responsible (see more in: Savi, note 10) and it changed in

Derivative liability does not allow responsibility of corporation without the responsibility of natural (phisical) person. It is working on scheme: A is phisical person and B is corporation (juristic person). A is working bor B. A commited a crime for the interest of B. B will be responsible for the actions of A. Word interest should not be bound only with interest in a narrow meaning of the word, it is also doing any kind of activity which helps a corporation in performing any illegal activity. This crime also can be done by non-doing something which law required that has to be done. It is not easy to find which mechanism would be the most appropriate to make a link between human action and the brain of the company. There are two most common models of derivative liabilty which are used around the world to determine companies' liabilities in this respect. First model is based on Identification Theory and the second one on Vicarious Liability, as it was allready mentioned. Identification theory15is based on the idea that only senior management is able to commit crime which can then provoke liability for coproration itself. It would mean that if crime is committed by member of the board of directors, CEO, member of supervisory board or any senior official within the company, the company would be liable as well. The basic logic for this approach is that heads of business are the most responsible within the company and that those people will benefit most from the criminal actions which they produce: they are running the core of the company's business, they bear the real power to conduct a mechanism such is corporation and therefore their actions can be considered as actions of the company itself. We can find the application of this doctrine specially in England and Scotland and this doctrine found its full imbodiement in famous English case Tesco v. Natrass which at that moment was a precedent for English Courts (although not Scottish ones). 16 This case was logical although slightly postponed

2006; Marie Elisabeth Cartier, Criminal Responsibility of Legal Entities in French Law, Croatian Journal for Criminal Law and Practice, vol. 13., 1/2006., Zagreb, 2006. In Croatian law company can be liable for all criminal omissions, but it is argued that it can not be responsible for acts where human element of mens rea is required. For instance: murder or rape or provoking the fight. In England corporations can be liable for thousands statutory criminal acts. In United states this is also regulated trough various codes and statutes and there is no such thing as single statute which regulates the area. Some judges argued that it would not be possible to held corporation liable for some acts such perjury or even murder. See Scottish case: Purcell Meats Scotland Ltd. V. McLeod (Lord Stott). 15 Some theorists call this theory Controlling mind theory. 16 Richard Mays: The Criminal Liability of Corporations and Scots Law: Learning the Lessons of Anglo-American Jurisprudence, Edinburgh Law Review 2000 (4) 46., 51.-52.

result of another famous case Lennards Carrying Co. v. Asiatic Petroleum form 1915 17 in which Viscount Haldane stated that representative of the company (member of the board e.g.) is real organisational power of the company and should be considered ego of the company. 18 On the other hand there is vicarious model which function in a little bit different way. It is also derivative principle, but here it would be easier to prosecute the corporation for criminal behaviour. How is this possible? The reason is really very simple and easy to elaborate. It is simple because of the fact that in vicarious liability system, law expands the number of potential crime bringners to the company by the way that allows most or all of employees to be bearers and transferers of criminal liability to a corporation. It means that even lower ranked employees will make corporation responsible if they commit a criminal act which is linked with the company in a sense that is done for the company's interests and purposes. It would be wrong to be absolute and extreme about this approach and think that all what any employee do during her or his time spent at the working place can provoke criminal action against the company. This eventually may cause damages and involve compensation claims, in one word, it can cause civil action 19-but causing criminal action than would not be the case. This system supports the idea that all employees are equally important to criminal process, which is wrong. I agree with the idea that employees should be treated equally in a sense that all of them form a body of the company but it would be far too much to say that they all equally form the mind of it. If they do not form the mind, using all of them to be a bearers of ciminal substance, which like virus can infect all body, would be too much. This system is more acceptable for jurisdictions which have developed strict liability regime and use more utilitarian approach to punishment. I was allways supporter of median way, or golden way as Aristotle's Mesotes might define. The combination of identifaction and vicarious model toghether with some aggregation elements could maybe give a just solution. I am amost sure that using just one model can not give just solution for all problems or even more, can not cover most of them. That is the reason that most all of the countries which apply any specific model
Lennard's Carrying Co. Ltd. V. Asiatic Petroleum Co., (1915) A.C. 705, at 713 (H.L.) It would be interested to discuss is it more appropriate to use the term eo or alter ego of the company. As far as I see things in this respect it would be far more appropriate to say alter ego since by doing that we admit diferent legal personality. It would be wrong to apply Viscount Haldane position: etimologicaly it would mean mergering natural and legal entity which could not be allowed since term identification pretpostavlja dual and separate personalities. 19 Culpa in eligendo.
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reach problems which they are not able to overlap. The crucial question would be how to find a solution which will target real criminals and conect them with the brains of the companies. The question is where is the lower limit when we can still say that the action of the employee can be treated as the action of the company itself? When will we be able to say that action of the employee represents the real ego of the company? At the time we will be able to answer that question, we will be able to say that we found just and even ethical way to punish a corporation. I would go even further and say that solution to a problem of corporate criminal liablity and justification of it lies within the posibilities of lawyers to determine who have the will which can be counted as the will of the company. Autonomous liability When we speak about autonomous liability we should forget about the will of the employees although that will can be relevant for deciding if something happened at all. It does not mean that the employees will not be liable and punished. It does not mean that they would not be civilly liable as well, but existance of that liability does not influence existance of criminal liability on the company's side. Corporate criminal liability has its own existance and ratio. Autonomous liability means that legal system which uses it, does not have to establish the link between natural person and company to be able to blame the company for criminal act in reality commited by one or more its employees (this said it shurely includes members of the board and other senior managers who have specific labour or management contracts with the company itself, not just employees). It is to be expected that more and more jurists and legal scientists will accept this model of liability since it does not cause any difficulties regarding establishing criminal liablity of corporartion based on behaviour of any natural person. 20 What is important in this model is one crucial thing: that is objective consequence of particular (criminal) behaviour. If crime x is commited and crime was comitted by company A (or any of company's organs or bodies A1, A2, A3...) the behaviour of B, C or D where B, C and D are natural persons is not relevant.

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Also urevi, note 7, 20.

This mechanism is also convenient for tipically utilitarian models or models based on strict liablity since it gives a shortest path for convicting the organisation which did something wrong. Some of the countries, even countries which do not have autonomous liability as prevailing method in their criminal law systems will use autonomous liability as gap filler for some specific omissions and crimes which will be formed in their statute laws. One of the most common model within autonomous liability is aggregation, which, as I mentioned earlier, is complex word which describes combination of reasons, facts and factors which can cause that corporation behaves as malfunctioned mechanism. This can happen as a result of a) wrong organisation or b) failures of surveilance. In both cases criminal act is result of non-compliance with regulations which require that something has to be done or which request that something has to be done in some specific and defined way. Aggregation of factors-mistaques done by management and/or employees will result with criminal act for which all corporation will be held responsible. 21 Corporate ignorance is a term often used in explainations of reasons why is important to apply autonomous theory to some specific case. All that behaviour can be underlined under one mutual term: corporate culture. Corporate culture explains how company should behave in business world and life. Violation of that culture is reason why corporation is held criminally liable. Corporations without corporate culture, which lead them into the crime, do not deserve to be let out of the scope of the criminal law. On the state which applies this theory is to decide, will that liablity have the structure of objective or subjective liablilty. When applying this model only what is important is that crime had happened. That fact is enough for company to be prosecuded. We can talk about objective autonomous liability if state does not require any element of guilt 22. If does, it will be subjective autonomous liability. In this case state will have to prove the intent or some other form of willingness or negligence of the company as artificial body, to be able to prosecute and convict it. It is artificial and to some extent a bizarre formation. In this, law treats the company as natural person-treats it as a human.

Austarlia is good example of the country where aggregation is applied. See Australian Criminal Code Act, par. 12.3. Fault elements other than negligence, www.austlii.edu.au/au/legis/cth/consol_act/cca1995115/sch1.html, access to web site 2nd May 2010. 22 Element of guilt equal to mens rea when we talk about natural persons.

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European Perspective It was quite hard for European lawyers, as it was stated earlier, to understand the concept of corporate criminal liablility. Whole European perspective on criminal liablity was connected with the princple societas delinquere non potest and that was firmly and solidly rooted into European lawyers' braines. Netherlands was the first of European continental countries which introduced this form of liability into its own Criminal Law trough Criminal (Penal) Code in 1976. 23 From then until very recently more and more countiries on the European continent choose to change its own legal tradition and introduce corporate criminal liablility into their own systems. 24 There are just few European jurisdictions within the European Union which do not recognise this form of liability: Italy, Germany and Spain. But, even in those countries there will be some form of criminal liability under different name or under different provisions. Austria unlike Germany changed its legislation and adopted it in 2005. The idea of corporate criminal liability spreads to countries of Central and Eastern Europe and until 2009. all of countries in that region accepted it. Slovenia did that in 1999., Hungary in 2001. and Croatia in 2003., which was followed by Bulgaria and Romania, then Bosnia and Herzegovina, Montenegro, Serbia and Macedonia. It is to expect that it will spread to the countries of former SSSR as well. Although there are smaller or bigger differences between all of the states which adopted criminal liability, those legal systems, or to say, most of them, apply derivative criminal rsponsibilty which tend to be more vicarious in its nature. Unlike English and Scottish Courts which apply
The text of article 51 of Dutch Criminal Code was really revolutionary step in changing the way how European lawyers used to think for centuries. The following words will transform European legal culture more than any criminal law text written after WWII. I am giving the text of paragraph 51 of the Dutch Criminal Code, as those are translated into English: The Dutch Penal Code, translated by Louise Rayar (Maastricht University) and Stafford Wadsworth (Wadsforth and Wadsworth Associates, Eijsden), Rothman & Co., London, Colorado, 1997. 1. Offences can be committed by natural persons and corporations. 2. In case an offence is committed by a corporation, prosecution can be instituted and the punishments and measures provided by law, if they are applicable, can be imposed on: 1) the corporation, or 2) on them who have instructed the offence, as well as on them who have actually given guidance to the forbidden action, or 3) on those mentioned under 1) and 2) together. 3. For the application of the former subsections, equal status as a corporation is given to: the corporation without civil legal status, the partnership, the firm of ship owners and separated a property. 24 Today, most of the European Union Countries decided to be part of group of nations which have criminal liability applied not only to humans but to legal entities whic have more and more dominant positions in nowdays World.
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identification model (or controlling mind theory/model) to astablish criminal liability of corporations most continental European countries use the necessary link between any employee and the organisation to create that liabilty. But, it is to be stressed that some European countries, because of their incompetence to use identification model and for utilitarian purpose for filling the gap also use autonomous liability model (usually based on agreggation) to be able to prosecute some number of corporations. Those countiries involve England and Scotland 25 as well as Switzerland, Belgium and Finland. In some countries there are dominant vicarious liability concepts and acts of all employees are relevant for making corporation criminally liable. Denmark and Sweden are examples of that. Most of the European countries still use guilt principle and using only objective element is out of the question: it is always important to prove the guilt of the phisical person and on that prerequisite find the liability of corporation. United States The history of the law of corporate criminal liability in United States differs from what we find on the European continent. Really all started with Elkins Act in 1903.26, when the Congress declared it. 27 Although it can be said that English Law invented corporate criminal liability, it is also the truth that American Law transformed it and make it even more transparent and accepted. Generally speaking it can be said that American Law (on both, federal and state levels) accepts derivative form of liability-both of models: identification model, but also much more broader vicarious model whith elements of agreggation. It can be said that in the USA we can find everything. Accoring to Wells, on the State level (not Federal) many states adopted Model Penal Code 28which means that corporations can be liable under the following key: a) for criminal acts where an intent is needed and where it is not visible in statutory law that State wants to cover that criminal behaviour and include juristic person-but-criminal act was commited by members
Where there would not be possibility to establish criminal liablity on the model of identification, English and Scottish Courts (as well as Crown) have possibility to persue prosecution on the model of autonomous liability based on strict liablity principles offten used in regulaory offences. Therefore in England and Scotlant it will be offten the case that Health and Safety Act (1974) will be used as regulatory document. 26 Elkins Act (57 Congr. Ses. 2., ch 708., 32 Stat. 847 19th Feb 1903). 27 Sanders Elisabeth, Roots of Reform, : Farmers, Workers and American State 1877-1917, Chicago, Chicago University Press, 1999. 28 Model Penal Code, MPC; American Law Institute v. www.ali.org, pristup 17th Feb 2010; Project was started by American jurist Herbert Weschsler 1909-2000, who was director of the Institute for a long time.
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of the management, legal entity will be held responsible under identification model, b) in this segment of liability-here under a)-some states accepted doctrine of respondeat superior, c) for those criminal acts for which intent matters, company will be aquited if senior management did all what was necessary to prevent the crime and if it proves it in the court, which sometimes can be extremely difficult 29 and d) for the crimes for which strict liablity is defined by Statute Law liabilty of the corporation will be based on vicarious liablity, which means that behaviour of any employee can cause criminal liability for the company as entity. 30 Even American states which did not have structured this form of liability for corporations were also heavily influenced by the Model Penal Code. Cases from Illinois, Winsconsin and Indiana are proving that. 31 Dominant position in application of corporate criminal liability is definetly agency doctirne combined with vicarious model. The most important issue in American criminal liablity talk is issue of connection between civil (tort) liabilty and corporate liability based on the vicarious model. From Elkins Act onwards, it can be seen that American courts really accepted modified version of civil liability. They transferred civil law principle of culpa in eligendo into the criminal law trough strict liability and vicarious model. On this spot it is easiest to see the connection between criminal law and tort law or better civil law in general. 32 Principle of strict liablity really means that each employee can cause criminal liability to a corporation if employee or agent did something wrong or criminal by using mens rea and if corporation had interests or benefits form that behaviour. Of course that behaviour does not have to be in direct connection with the principal activity of company's business but have to be necessary for its regular operation. 33 It very important that criminal law retains its moral and socio-therapeutic dimiension and therfore making it so similar to tort law, at least to say similar when it comes to consequences and sanctions, we are annulling the real difference between civil and criminal wrongdoing to some extent. By that, all is leveled by mathematical and economic principle and that is wrong.
I call this model of liablity: vicarious liability with defence. Wells, op.cit., 131. et seq. 31 People of State of Illinois v. O'Neil et. al. and Film Recovery Systems (1990)., State of Winsconsin v. Knutson (1995)., People v. General Dynamics Land Sys. (1985). 32 Coffee, John, C., Does Unlawful Mean Criminal?: Reflections on the Disappearing Tort/Crime Distinction in American Law, 71 Boston University Law Review 193 (1991). 33 V.S.Khanna, Corporate Criminal Liability: What purpose does it serve?, Harvard Law Review, Vol. 109:7, Cambridge, MA, 1996, 1477. et seq.
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The logic of criminal law is different than the logic of civil and tort law; also classic criminal law requires specific state of mind (if we do not accept autonomous liability regime which is not based on the guilt, but where just objective consequence matters.) 34 The crucial notion or question regarding corporate criminal liabilty in USA will be: Under which circumstances corporation will not be liable? and not Under which will be? It is important to distinguish criminal and tort law even more. 35 Parallel to this, a new concept of agreggation forms its place within American legal system which is nothing less than introducing the system of corporate culture and company is now regarded as a sum of many factors which form its unity. 36 All of those elements show that American legal system is firm in setting the rules for companies and their businesses and at least it can be said that is quite determined to set up the mechanism which will prosecute and punish corporation on the higher scale. On one side there is strict liability regime which allows to state(s) to act against coproration when statute requires and allows so. That usually will happen with all dangerous activities 37which can be performed by the companies. Often autonomous liability of corporations will be constructed on the basis of its organisational malfunction. I would say that is not particulary hard to prosecute corporation as a criminal in the United States, but it is always to be aware of impact which will have it on employees, organisational structure, interaction between contractors and connected companies etc. Also what is always important to see is how to treat small and how to treat big companies. Naturally, the punishment have to be connected with the profit and by that it should not loose its social dimension. 38

I suggest for reading: R. A. Duff, Intention, Agency & Criminal Liability, Philosophy of Action and the Criminal Law, Basil Blackwell Ltd, Oxford, 1990. (It is always good to think how to apply elements of human behaviour to corporate body or how to place it witin the context of corporate activity.) 35 On this topis see more in: Hefendehl, Roland, Corporate Criminal Liability: Model Penal Code Section 2.07 and Development in Western Legal Systems, Buffalo Criminal Law Review, Vol 4:283, Buffalo, NY, 2001. 36 United States v. Bank of New England (1987). 37 Good example for this is Ford Pinto Case (1981) where Ford company was sued for constructiong the car with gas tank which was placed in dangerous spot in the car. As a result of that company's behaviour different states brought different actions in front of US courts based mostly on strict liability. 38 Coffee, John C., Jr.; No Soul to Damn: No Body to Kick: An unscandalized Inquiry into the Problem of Corporate Punishment, Michigan Law Review, No. 79., Ann Arbor, Michigan, 1981.

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Canada Canada is interesting country when we look at the criminal liability of corporations. It is so primarly for the reason of its dual legal existance. It is heavily influenced by th British Common Law, for obvious historical reasons, and on the other hand proximity to the United States of America make it the most inflenced country with American legal logic (athough it is true that those two countries share common law system, if we exempt Quebec in Canada and Louisiana in the United States). Result of this is, in my opinion, mixed legal concept of corporate criminal liability which seems to be more approprate to use if we would like to talk not just in practical but in ethical terms as well. At one point canadain courts are holding on english identification doctrine and on the other hand vicarious model soft that perspective in a way that Canada becomes something in between. For me, it seems that it is close to the concept which is a mixture of identification and vicarious liablity; something as a half way path. The speciality of Canadian Law lies in the fact that Canadian courts gave to English approach one more sophisticated touch, which is really much more than a touch itself. This touch is related to searches of the levels of responisbility which have different degree of the power over act. 39 Canadian courts were drifting between their primary source: English Law and strict liability as it is applied in classical common law. It is also noticed by Dereninovi, in his short but sharp and compressed overview trough cases which created Canadian court practice. He states that Canadian court system abandoned restrictive approach of interpretation of identification model which shows recent attitude of Supreme court of Canada in which the circle of responsible persons within the company was extended to the lower levels in organizational structure, namely to the persons which have their powers transferred from the higher management bodies. 40 This concept of corporate criminal liability should not be mixed with classical vicarious liability since this is still identification model. It is about lowering the liability to the next (lower) management level. But it is still management! It would be interesting to see how the Canadian

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I named this as a Power act Theory, or shorter Power Theory, or as I call it personally Canadian Cut. Dereninovi, note. 3, 48. Dereninovi calls this model a delegation model as a sub model of identification.

courts would define management level at the end. In that answer the solution hides for balancing identification doctrine and strict liability regime. The most important cases which lead to this conclusion were R. v. Sault Ste. Marie from 1978 41, Canadian Dredge and Dock Co Ltd v. The Queen form 1985 42and R. v. Safety-Kleen Canada43 from 1997. Wells quotes Canadian Law Reform Commission which proposed that persons who can create corporate (criminal) liability are those with authority over the formulation or implementation of corporate policy. 44 One of the best overviews about Canadian legal system of corporate criminal liability is given in Fergusons work where he argues that identification theory is just one form of vicarious liability45. 46 Most of the Canadian authors (jurists) accept that in Canada courts are trying to establish a system which is still very close to identification model, but at the same time, they are trying to soft its non-flexibility. It is also accepted that the responsibility and therefore liability of higher managerial structures is closer to the liability of the corporation itself than which can be closer to any other employee. For that reason it would be more appropriate to make the link between the corporation and physical (natural) persons on the level which is managerial in its core. 47 That is the reason why Canadian law requires that responsible person should be found in managerial body, even if that body will be considered very spread and broad (lowered down). This obviously will not influence other forms of liability which, under common law scheme, will be a part of strict liability regimes.

R. v. Sault Ste. Marie (1978), 40 C.C.C. (2d) 353 (S.C.C.) Canadian Dredge and Dock Co Ltd v. The Queen (1985), 19 C.C.C. (3d) 1 (S.C.C.) 43 R v. Safety Kleen-Canada (1997) 145 DLR (4th) 276; 1114 C.C.C. (3d) 214. 44 Wells, note 10, 131. 45 Ferguson, G., Corruption and Corporate Criminal Liability, Seminar on New Global and Canadian Standards on Corruption and Bribery in Foreign Business transactions, Vancouver, British Columbia, Canada 1998.and International Colloquium on Criminal Responsibility of Collective Legal Entities, Berlin, Germany, 1998, 7. 46 Although this doesn not look as non logical, it would be more appropriate to consider that vicarious liabilty was made after the identification model was uses, primarly for the reason that it was not enoug efficient. But anyway, this would be of more theoretical than practical value. 47 Healy, P., Hans de Doedler & Klaus Tiedemann (prep.), La Cimilinalisation du Comportement Collectif, Acadmie internationale de droit compar, Kluwer Law International, The Hague, 1996, 182.
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Conclusion-or-advice? When a country decides to introduce corporate criminal liability into its own legal system, it is a good decision. It is a good decision for at least two major reasons: first, corporations are the most influential legal subjects of modern times and have unimaginable amount of power. Multinational companies and corporate groups are crossing the borders of national jurisdiction and become even more influential and powerful. Even recent history shows us that without firm and consistent control it is not possible to follow all activities which are taking place in modern business world we are living today. Cases like Enron which resulted by introducing SarbanesOaxley Act and recent developments with Toyota show us that administrative law and civil law measures are just not enough. Secondly, it is very important to show that corporation can have criminal behavior. It is just to formalize what people already talk and think about (Vox populi, vox Dei). People already think and they are very convinced when they say: this and that was done by the corporation (company polluted the river, company made those cars, company produced that food etc.). Fines and administrative sanctions are just not enough in respect that they do not have stigma element which criminal law has. By using the criminal law we would improve the most important part of criminal law: we will increase the impact of general prevention. What is to be aware of? First of all, for everyone it is important to understand its own legal roots and legal culture and do all necessary steps to be prepared for revolutionary measures with introducing corporate criminal liability. It is right to use that word revolutionary, because it was revolutionary for all countries in which criminal legal system was based on societas delinquere non potest principle. Even countries which introduced that form of liability for some time now still have the problem how to understand it and how to implement it. It is to be careful to use proper legal model (mechanism) to reach the goal of it. The goal of shifting the corporations to criminals is to prevent future harm, to punish accordingly and justly and not to have collateral damages. Collateral damages would be if punishments do more harm to innocent employees because the factory is closed or because of stopping the production which is essential for the region etc.

It is always top priority to target the most responsible and in my opinion to punish those who benefit the most. At the end, it would be management and with them connected bodies. Even in cases where lower management or employees are responsible for criminal acts, the system have to follow some guidelines: first, corporation has to be held criminally liable to achieve show effect (prevention). Second, the natural persons which would benefit form that action have to be sanctioned most severely. Third, if the act was committed by the lower employee the punishment for company itself should not be too hard to affect corporation too badly. Of course that behavior of seniors have always to be observed in manner that they do not hide behind the actions of others as their excuse and specially when it will be obvious that they would benefit from criminal action if the act was not discovered. I would say that by decreasing the level of responsible person in the company, system should decrease level of criminality of the corporation itself. In that respect Canadian searches are valuable source of finding the right way. It is always important to know that in private companies, system should hit the capital more and in public companies, position and power. Destroying a public owned company can cause contradiction in a way that the state ruins its own good. Small companies should not be in worse position than big ones since it would always be easier to find responsible person in small corporate body than in big multinational firm. System of sanctions should do its part here. Having good and just system of corporate criminal liability is a guarantee for protection of a society as a whole.