Corporate Criminal Liability in Australia: An Evolving Corporate Governance Technique?
Jennifer G. Hill
University of Sydney - Faculty of Law; European Corporate Governance Institute (ECGI); NYU Law School, Hauser Global Fellows Program
Vanderbilt Law School, Law and Economics Research Paper Series No. 03-10
Journal of Business Law, p. 1, 2003
In the era of international corporate collapses, comparative corporate governance has become increasingly important. Yet, there is an inherent ambiguity in the scope of corporate governance and the relationships encompassed by the term, and it does not necessarily have the same meaning across different jurisdictions. Increasingly, the boundary between corporate governance and other areas of law is becoming blurred. Furthermore, inconsistencies of theoretical approach often exist within a single jurisdiction.
The article concerns developments in an area of law generally treated as peripheral to corporate governance - namely, corporate criminal liability. Adopting a comparative law approach, the article analyzes the underlying principles of corporate criminal liability across a number of jurisdictions, specifically focusing on some significant reforms relating to corporate criminal liability in Australia. Although Australian corporate law, including directors' duties, adopts a traditional Anglo-US shareholder-centered model of the corporation, the reforms in the area of corporate criminal liability are underpinned by a fundamentally different, organizational model of the corporation. The reforms constitute a major paradigm shift in corporate criminal liability, and affect a range of important areas, such as competition and consumer law, occupational health and safety, including the concept of corporate manslaughter, and environmental law. The article also discusses a number of other areas, which adopt an organizational model of the corporation for accountability purposes, including the courts' approach to the issue of whether corporations possess the privilege against self-incrimination.
The article argues that there appears to be a disjunction between the underlying principles in the area of directors' duties and corporate criminal law in Australia. Under traditional Australian corporate law principles, issues of social responsibility are kept at a distance and directors' duty of oversight in relation to corporate misconduct is limited. In contrast, the Australian corporate criminal liability regime recognizes concepts of organizational due diligence, organizational blameworthiness and corporate culture. The regime is thus designed to cultivate self-regulation, with particular emphasis on compliance programs. This parallels the growth in importance of compliance and ethics programs in the U.S., under the Federal Sentencing Guidelines for organizations.
Under the new paradigm, issues relating to corporate criminal liability will inevitably become more closely integrated at an operational level into corporate governance, as corporations introduce compliance programs to ensure that their corporate cultures do not potentially trigger criminal liability. It is possible that these reforms to corporate criminal liability may be more effective than directors' duties in recognizing that directors are ultimately accountable for their corporation's culture, and have a corresponding obligation to monitor diligently.
Number of Pages in PDF File: 41
Keywords: Corporate governance, corporate theory, corporate crime, criminal liability, organizational blameworthiness, corporate culture, compliance programs, sentencing guidelines, directors duties, corporate groups, privilege against self-incrimination, competition law, occupational health & safety, env law
JEL Classification: D23, G34, G38, J33, J38, K22, K31, K32, K33
Date posted: August 13, 2003
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