corporate crime (1)

8/7/2019 Corporate crime (1)

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Group 1(Finance B)

Ayush Agarwal

Barkha Agarwal

Nitin Shah

Sadaf Ali Khan

Prashant Batra


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Corporate crimes

Agenda For the Day

1

Corporate crime liability2

Statutory Inadequacy3

Causes of corporate crimes4

Cases5


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Corporate Crime

Crimes committed by a corporation or by individuals who may be

identified with a corporation.

Activities undertaken by an individual or company that are done in a

dishonest or illegal manner, to gain an advantage.

Corporate crime poses a significant threat to the welfare of the community

Corporate crime may involve acts like fraud (Mad off, Enron),

environmental pollution (corporate crime, such as the 1984 Union Carbideaccident in Bhopal, India), making of unsafe products and dangerous work

environments.


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Composition

Corporate Crime

Statecorporate

Crime

Organizedcrime

Whitecollarcrime


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Concepts

Maxim actus non facit reum, nisi mens sit rea.

The principle of corporate criminal liability is based on the doctrine of

respondent

Traditional Approach

Modern Approach


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Corporate criminal liability

Corporate cannot have the mens rea or the guilty mind to commit offence

Corporate cannot be imprisoned.


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Statutory Inadequacy

Indian Act still make official liable for the act criminally liable.

Sections. 45, 63, 68, 70(5), 203, etc of the Indian Companies Act wherein

only the officials of the company are held liable and not the company itself.

The various sections of the IPC that direct compulsory imprisonment does

not take a corporate into account since such a sanction cannot work against

the corporation

A corporation was incapable of committing the offence of cheating as it has

no mind (mens rea).


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Causes

Need

Greed

Corporate culture theory

Self Control view


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Any corporation can be made liable for act of its agent or

servant if he/she :

Commits a crime

Acts within the scope of employment

With the intent to benefit the corporation

Corporate Punishment


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LOGO

Cases of Corporate Crime


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Satyam Fiasco

Largest Corporate Crime in Indian History. One of the largest in the World.

Main accused: Mr. Ramlinga Raju

Inflated (non-existent) cash and bank balances of Rs 5040 crore ($1.04billion) (as against 53.61 billion reflected in the books).

An accrued interest of Rs 376 crore which was non-existent.

An understated liability of Rs 1230 crore

An overstated debtors position of Rs 490 crore


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Main issues related to Satyam case

Falsification of account

Responsibility of Auditors and bankers

Corporate governance issue

Role of independent directors


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Charges against Raju

IPC Sec 120B: For alleged criminal conspiracy

IPC Sec 409: Criminal Breach of Contract

IPC Sec 420: Cheating

IPC Sec 468: Forgery

IPC Sec 471: Falsification of Account


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Various Case Laws

Tippecanoe Beverages, Inc. v. S.A. El Aguila Brewing Co., 833 F2d 633(CA7 1987); The proper standard for jury instruction is that the corporation

may be held criminally responsible for antitrust violations committed by its

employees if they were acting within scope of their authority, or apparent

authority, and for benefit of corporation.

United States v. One Parcel of Land, 965 F.2d 311, 316 (7th Cir. 1992)

(stating agent's knowledge of illegal act may be imputed to corporation if

agent was "acting as authorized and motivated at least in part by an intent

to benefit the corporation"


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How can a Business be "Punished" if convicted of a Crime?

Only in financial terms

Corporate Death Penalty"

Imposing fines

business shuts down

Probation

monitored by the court


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corporate crime (1)

Documents