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Corporate Criminal Liability – What was the company thinking?

The prosecution of corporations has become more complex, and also more common. Financial and environmental regulation has gradually developed into a more punitive approach, and regulators have recently enjoyed...

Justin Wong

The prosecution of corporations has become more complex, and also more common. Financial and environmental regulation has gradually developed into a more punitive approach, and regulators have recently enjoyed an increase in funding to prosecute corporate criminal behavior.

Under federal criminal law, a corporation can be prosecuted and found guilty of any criminal offence, even one that carries a penalty of imprisonment.

If a company’s employee or agent does something whilst acting within their authority or scope, their actions can be attributed to their company.

However, it can be more complicated in figuring out whether the company also intended to commit the offence, or had the required knowledge or “mental element”.

“Authorised or Permitted”

The Commonwealth Criminal Code lists the ways in which a “mental element” can be attributed to a company in a criminal prosecution.

For most offences, it must be established that the company authorised or permitted the commission of the offence.

Authorisation or permitting can be established by proving:

  • The board of directors carried out the conduct or authorised it; or
  • A high managerial agent engaged in the conduct or authorised it; or
  • A corporate culture existed within the corporation that directed, encouraged, tolerated or led to the non-compliance; or
  • The corporation failed to create and maintain a corporate culture that required compliance with the relevant provision.

Authorisation can be by express, tacit or implied.

Records such as emails between employees, minutes of the board, company policies, financial records, conversations between employees, and also interviews might all be relevant in establishing any one of the above.

Proving what was going on in any individual accused mind can be difficult and complex. Establishing what a company was thinking and whether it had the required criminal “mental state”, can sometimes be even more complex.

For more information about corporate crime, visit our White Collar Crime Page.