For any company, the risk that employees or agents may engage in criminal conduct in connection with their work and thereby potentially expose the company (or at least the responsible individuals) to criminal, administrative, and/or civil liability is ever present; for multinational companies, which are necessarily subject to the laws of multiple jurisdictions, this risk is only heightened. How a company manages the risk of corporate criminal liability, in particular, can not only determine its success, but also protect (or imperil) its viability. The stakes do not get much higher than when the company is facing a criminal investigation or, worse, a criminal prosecution. When armed government agents raid corporate offices, when executives are arrested and paraded before news cameras in handcuffs, when shareholders bring lawsuits alleging malfeasance and neglect on the part of directors and officers, when legislators clamor for corporate accountability in politically charged public hearings, and especially when criminal charges against the company are announced, the reality is stark—the company's good name and culture are under attack, and its very existence may hang in the balance.
The sudden demise of the global accounting firm Arthur Andersen in the aftermath of its conviction on obstruction of justice charges in the Enron scandal is the best—but only one—example of the potentially devastating consequences for companies that find themselves in the cross-hairs of a criminal investigation. In the nearly 20 years since Arthur Andersen ceased to be, the enforcement of corporate crime has only escalated. This trend shows no signs of abating. At any given moment, a number of the world's leading business organizations are under scrutiny from law enforcement authorities who possess an assortment of investigative tools and an increasing appetite to use them to combat corporate crime, sometimes with questionable judgment and motivations. And the opportunities for enforcement officials across the world to launch investigations into allegations of corporate crime are abundant—with whistleblower laws offering substantial financial "bounties" to persons who disclose legal violations, the revelation of corporate scandals in media reports, the increased sharing of information by and among enforcement authorities in multiple countries, and the ability of industry participants to assert (accurately or inaccurately) that a competitor has broken the law. Multinational companies are at everincreasing risk of aggressive criminal enforcement, often across numerous jurisdictions at once.
To be sure, aggressive enforcement of corporate crime can help ensure that such crime is appropriately punished and deterred and that the rights and interests of victims are honored through a criminal proceeding. But the reasonableness of a criminal enforcement action is not always apparent, especially when the alleged misconduct could instead be more effectively redressed through civil or administrative action.
Moreover, in cross-border matters, it can be far from clear whether a corporate entity could even be criminally charged for certain conduct and whether a particular country would actually have jurisdiction to bring a criminal case against the entity premised on that conduct. This is because the jurisdictional analysis in such matters can be complex, and because countries differ not only in what they criminalize, but also in whether and how corporations can be punished under their laws. Thus, even companies with robust compliance programs and legal departments may face challenges in understanding, implementing, and adapting to regulatory requirements across the jurisdictions in which they operate.
Identifying, evaluating, and mitigating the risk of corporate criminal liability is a process. An important step in this process for any multinational company is understanding the landscape of corporate criminal liability and enforcement for every jurisdiction in which the company does business. Because these landscapes change over time, sometimes abruptly, this process must be ongoing and continuous.
This Survey is designed to aid this process by providing an overview of relevant laws in 31 countries and territories spanning the globe. The Survey reports on significant—even dramatic—variations in the landscape of corporate criminal liability, including on foundational topics like these:
- Corporate criminal defendants. In many countries, criminal prohibitions apply generally to corporations just as they apply to natural persons. Other countries do not have corporate criminal liability regimes (e.g., Turkey), although companies there may still face sanctions. Others extend corporate criminal liability only to select offenses (e.g., Brazil) or have "quasicriminal liability" for corporations with some hallmarks of criminal liability (e.g., Italy).
- Corporate criminal liability for acts of others. A corporation can act only through its agents. Countries that do provide for corporate criminal liability differ on the circumstances under which a corporation is criminally liable for the acts of those agents, including both natural persons and subsidiaries. In some countries, so-called vicarious liability is linked to acts of senior officers (e.g., Canada); in others, the question focuses on the wrongdoer's actions, functions, authority, and responsibility within the corporation (e.g., Israel)
- Corporate consequences. Depending on the country, corporations face a wide range of criminal penalties—as well as collateral consequences of a criminal conviction—including fines, forfeiture, restitution, probation, debarment from government contracts, loss of licenses or security clearances, temporary suspension, or even dissolution.
- Corporate incentives. Countries vary with respect to the incentives their laws provide to companies to mitigate the risk of corporate criminal liability and related penalties, if not avoid liability altogether. In some countries, the implementation of an appropriate compliance program can be a defense to corporate criminal liability in certain situations (e.g., Spain); in others, it can be relevant to charging or sentencing decisions (e.g., United States). Countries likewise offer differing incentives for companies to self-report wrongdoing, with some requiring it as a matter of law in certain situations. Countries also differ on the protections and incentives offered to whistleblowers.
Each country's answers to these and other foundational questions offer a starting point to assessing prosecution risk in and across the countries covered by this Survey.
They form the basis for foreign enforcement actions— providing legal authorization for law enforcement activity, shaping the scope of criminal investigations, determining the tools and leverage available to prosecutors, and setting the terms of a company's engagement with enforcement authorities. Outside the context of a pending enforcement action, an evaluation of foreign prosecution risk can provide guideposts for company decisions on designing and implementing effective international compliance programs, addressing employee misconduct, monitoring activities of third-party agents, and conducting due diligence on vendors and other potential business partners.
In this era of ever-increasing enforcement of corporate crime, the trend worldwide is toward expanding corporate criminal liability and imposing greater demands on corporate self-governance and social responsibility. Resolutions of criminal investigations that include a company's agreement to pay nine- or even ten-figure financial penalties are now commonplace, as is political pressure to prosecute individuals and companies alleged to be responsible for failed or suspicious transactions or economic downturns. Greater international cooperation between law enforcement agencies has accelerated this trend, increasing both the number and efficacy of cross-border investigations and the associated risks to multinational corporations. The responsibility of addressing foreign prosecution risk is, thus, more pressing and more challenging than ever before.
This Survey is intended as a starting point to give some sense of the scope of corporate criminal liability laws and trends in a particular country, but it is not a substitute for a review of the actual regulations in light of a particular set of facts. This Survey should not be construed as legal advice on any specific facts or circumstances.
If questions come up in relation to the laws of a specific country, the last section of this Survey lists contacts at Jones Day who are in a position to provide information based on specific facts and circumstances or provide guidance with respect to contacting local counsel. If questions come up in relation to multiple jurisdictions, the Jones Day team, including its local contacts where appropriate, can effectively coordinate to provide a comprehensive and focused response
Jones Day has extensive experience in providing multidisciplinary and multijurisdictional advice to some of the largest international companies on a wide array of complex criminal law issues and delivers targeted, high-value service wherever our clients do business. In this complex, multijurisdictional environment, and with its team of highly experienced and accomplished international investigations and white-collar lawyers, Jones Day stands ready to assist.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.