The growth of multinational corporations in both size and number has raised concerns in many jurisdictions about the State’s capacity to hold corporations liable for crimes committed in the course of their business activities, including (but not limited to) bribery of foreign officials. One of the challenges of using the criminal law to address corporate misconduct is that the traditional criminal law evolved with “natural persons” (that is, real people) in mind. The law therefore typically focuses on the conduct and states of mind of individuals to determine whether a criminal offense has been committed. Corporations are comprised of, and act through, individuals, but corporations are greater than the sum of their parts. The law developed principles of attribution of responsibility—legal principles for ascribing conduct and states of mind of a particular person or persons to a corporation—in order to hold the corporation liable for ordinary criminal offenses. In practice, however, these do not produce a perfect fit, particularly in the case of large decentralized corporations.
The perceived inadequacy of traditional notions of criminal responsibility when applied to problems like corporate bribery has led some jurisdictions to introduce novel approaches to corporate criminal liability for such crimes. Perhaps most notably, in 2010, the United Kingdom enacted the Bribery Act, which introduced a novel criminal offense, specific to corporate defendants, of failing to prevent foreign bribery. Under this provision, corporations are liable if they fail to prevent their associates—including agents engaged to act on behalf of the corporation to win contracts and expand operations in foreign jurisdictions—from committing bribery, subject to an affirmative defense that the corporation had in place adequate procedures to prevent such bribery. The “failure to prevent bribery” offense, together with the deferred prosecution agreement (DPA) scheme introduced in 2014, have been important steps forward. As Professor Liz Campbell has explained, the “failure to prevent” model involves utilizing the criminal law “as leverage to effect change in corporate behaviour,” rather than an accountability framework that operates only after the fact. In reviewing the operation of the UK Bribery Act in 2019, the House of Lords Bribery Act Committee described the “failure to prevent” reforms as “remarkably successful” in promoting compliance.
Australia is now considering adopting a similar approach to the United Kingdom. In December 2019, the Australian government introduced the Crimes Legislation Amendment (Combating Corporate Crime) Bill. This Bill, which is currently before Australia’s federal Parliament, would introduce an offense of failure to prevent bribery of foreign public officials by a corporation into Australia’s federal Criminal Code, along with a DPA scheme for foreign bribery. More generally, Australia is considering more seriously the limitations of traditional notions of criminal responsibility when applied in the context of corporate crime. The Australian Law Reform Commission (ALRC), on which we serve, recently undertook an extensive inquiry into this issue and published a Final Report that made 20 recommendations for reform of Australia’s corporate criminal liability regime. Among these recommendations, a few seem especially pertinent to the debates over the Crimes Legislation Amendment, and the effective control of corporate bribery more generally:
- First, despite the fact that Australian law is traditionally been viewed as having an innovative and sophisticated approach to attribution of criminal responsibility, this has not necessarily translated into successful prosecutions of corporations, and for that reason the ALRC emphasized the need to strengthen and simplify Australia’s framework for attributing criminal responsibility to corporations.
- Second, the ALRC recognized that relying on traditional principles of attribution is sometimes insufficient for promoting compliance in the context of modern corporations. The ALRC therefore emphasized the importance of what it termed “specific offenses,” of which “failure to prevent” offenses (the sort embraced by the UK Bribery Act) are a particular species. The ALRC identified two other types of specific offenses: “duty-based offenses.” which impose a duty on a corporation itself and hold it liable if the duty is breached, and a novel type of offense developed by the ALRC called “system of conduct offenses,” where a corporation engages in a pattern of behavior that amounts to a breach of the law. Such an offense recognizes that corporate misconduct may arise from policies, procedures, collective decision-making, and corporate systems and processes. These are not easily accommodated within traditional approaches to criminal liability based on attribution.
- Third, while the UK experience demonstrates the success of the “failure to prevent” model in relation to foreign bribery, the ALRC also recommended its expansion to other offenses that might arise in the context of transnational business, such as tax evasion, slavery, human trafficking, and violation of foreign sanctions.