ABSTRACT
The evolution of the concept of corporate criminal liability of corporations is characterized by relentless struggles of the judiciary to overcome the problem of assigning criminal blame to fictional entities. Initially, a corporation was considered to be an entity devoid of a person in the strict sense; therefore, criminal guilt was considered to be quite difficult to establish in cases of aberrations of criminal nature by it. The principle of vicarious liability instead of criminal liability was invariably sought in such cases. With the emergence of welfare states with considerable emphasis on accountability and in view of some serious violations by corporations resulting in the loss of lives, public money, and damage to health and property, the issue of fixing a strict criminal responsibility was brought to focus. The doctrine of corporate criminal liability is therefore a developing phenomenon. Presently, the courts and the legislatures in Nigeria and other jurisdictions have devised some theories and evolved legal basis in a bid to place liability for crimes of intent on corporations. In this work, attempt is made to show that corporations can have the state of mind together with the physical elements necessary to constitute an offence. The work also examines the legal framework for corporate crime in Nigeria and other common and civil law countries. The work further examines criminal sanctions and their role in controlling corporate crime, the problems of corporate crime, and the incident of corporate killing in work places. The study also discusses the alternative models of corporate liability which are not derivative but which locate the blameworthiness within the corporation itself or at most take cognizance of the compartmentalization of knowledge within a corporation for corporate crime. In this work expository, analytical and comparative jurisprudence has been carried out with the help of relevant statutes and case law. Part of the findings of this work is that criminal law jurisprudence is settled on the point that corporations can be held liable for offences which require evidence and proof of mens rea. It has also been found that the ascription of criminal liability to companies meets several conceptual problems. The research further shows that neither the Nigerian Criminal nor the Penal Code expressly provides for the criminal liability of corporate bodies. Nigerian laws on corporate criminal liability are inadequate; they lack clear basis for corporate criminal responsibility especially as it relates to corporate manslaughter. The thesis also shows that lack of successful prosecution of companies in Nigeria for corporate manslaughter despite the wave of work place killings is largely due to defective and inadequate legal framework. The study has further found that the assumption that corporate liability must be derivative has come under increasing attack from legal commentators, academic writers, jurists and law reform bodies, who all attempt to locate criminal liability on an organizational basis. The work has attempted to outline a number of possible alternative models of corporate liability that have been put forward for Nigeria to borrow ideas from. The result of the work also shows that the existing modes of sanctioning in Nigeria is inadequate; imposing paltry fines of N1000 or N500 Naira for such a high environmental crime as oil spillage is not enough to deter corporations. To also prosecute individual officers of a company is equally unfair and ineffective. The research suggests that there is, therefore, no alternative to an adequate reform, appraisal and revamp of corporate criminal liability law in Nigeria given the recent law reforms that have taken place in other countries like the United Kingdom, United States, Australia, Canada and Netherlands, as indicated in this work. In order to handle these issues successfully, the researcher chose a framework comprising eleven chapters with well articulated headings and sub-headings (as can be seen under the scope of study on pages 26-27 of this discourse) which form a road map which underlines the theoretical basis of this work, while the bibliography concludes the thesis.
CHAPTER ONE GENERAL INTRODUCTION
1.1 Background of the Study
It is important to study corporate crime because of the economic damages that organizations can cause. In the contemporary world, the impact of the activities of corporations is tremendous in the society. In their day-to-day activities, not only do organizations affect the lives of people positively, but they also bring many devastating impact upon the people. Activities of corporations may cause serious damage to health or the environment; and may sometimes result in death. Fraudulent actions by some companies may lead to huge financial losses for individuals, groups, or other companies. In the 1990s, both the United States of America and Europe recorded an alarming number of environmental, antitrust, fraud, food and drug abuses as well as false statements, workers’ death, bribery, obstruction of justice, and financial crimes involving corporations. The most recent and prominent case in the United States has been the Enron scandal in which one of the largest accounting firms in the world, Arthur Andersen LLP, was charged and convicted for obstruction of justice and for destroying Enron- related documents.1 Other corporations, among which are Olympic Pipeline, Exxon-Mobil, Pfizer and Bayer pharmaceutical companies, breached the environmental or health and safety laws.2 MC Wane Incorporated, one of the world’s largest manufacturers of cast iron pipes, has an extensive record of violations which have caused the death of workers in the work place.3
1 Arthur Andersen LLP. v U.S., 544 U.S. 696 (2005).
2 For a detailed list of the top 100 corporate criminals see Russell Mokhiber, Top 100 Corporate Criminals of the Decade, at http://www.corporatepredators.org/top100.html., (accessed on January 17, 2011).
3 D. Barstow & L. Bergman, “Deaths on the Job, Slaps on the Wrist”, (2003), N.Y. T, Jan. 10, p. 1.
The capsized Zeebrugge ferry, the King’s Cross fire, the Clapham and Paddington Rail crashes, and the Hillsborough football tragedy all represent recent disasters in the United Kingdom.
In Nigeria, we have had incessant reports of plane crashes, collapsed buildings, petroleum oil pipe and gas explosions, sea disasters and breaches of environmental or health and safety laws by corporations, killing innocent Nigerians in their thousands. There is also an account of the loss of lives involving over 120 employees of a rubber-related product manufacturing factory aggravated mainly by the company’s policy of locking the workers inside the factory at the
commencement of work daily.4 The recent events in the Nigerian Banking sector are reminiscent
of what was witnessed during the era of the Failed Banks Tribunals.5 Directors and bank officers were prosecuted and punished despite the fact that they acted on behalf of the banks. We can not also forget in a hurry the dumping of harmful toxic waste materials in Koko, Delta State of Nigeria in June, 1988 by a foreign company.
Generally, corporations are now involved in relatively new and usually white collar crimes such as: tax evasion, fraudulent trading or insider dealing, fraud, unfair competition, breach of fiduciary duty, banking and insurance frauds, and false invoicing (including over- invoicing). Companies may also commit crimes ranging from corporate fraud, commercial pollution of air and water, environmental and health and safety violations, illegal currency manipulations, capital transfers, illegal mining, maritime fraud scheme, currency counterfeiting,
murder and corporate manslaughter, and so on.
4 L. Ali, Corporate Criminal Liability in Nigeria, (1st edn., Malthouse Press Limited, Lagos, 2008), p.181.
5 Four of the five bank chiefs sacked by the Central Bank of Nigeria Governor were arraigned before a Federal High Court on five separate charges of 131 counts bordering on fraud, concealment and grant of loans without adequate collateral running into about N625.95 billion. This Day, Tuesday September 1,
2009, p. 1.
Corporate criminal liability, more than ever before, is becoming increasingly prevalent. These corporate crimes result in great loss of lives and properties. The consequences which most directly affect our society are the enormous loss of money, jobs and lives. At the same time, the long-term effect of these crimes, such as the damaging effects on the environment and health, which may not be apparent now, should not be underestimated.
The reaction to this corporate criminal phenomenon has been the creation of judicial and legal regimes that could deter and punish corporate wrongdoing. Corporate misconduct has been addressed by civil, administrative, and criminal laws. At the present, most countries agree that corporations can be sanctioned under civil and administrative laws.
However, criminal liability of corporations, which is the focus of this study, has been very controversial. While several jurisdictions have accepted and applied a concept of corporate criminal liability under various models, other legal systems have not been able or willing to incorporate these theories into their legal systems. Critics have voiced strong arguments against its efficiency and consistency with the principle of traditional criminal law. At the same time, a large pool of partisans has vigorously defended corporate criminal liability.
In this study, attempt is made at justifying the purposes of corporate criminal liability, the reasons that some jurisdictions adopt this concept, but others still refuse to accept it, the models of corporate criminal liability developed so far, the reason that corporate criminal liability developed differently in different countries and the lessons that may be learnt from these developments. Now, it is well settled that a corporation can be held criminally liable for committing offences that require mens rea. Generally, corporations may be held responsible for the illegal acts of its employees if such acts are related to and committed within the course of employment, and in furtherance of the business of the corporation.
This work is an attempt at looking into both the Common Law and the Civil Law experiences and to offer plausible bases for effective enforcement of criminal liability on corporations in Nigeria.
1.2 Statement of the Problem
The underlying rationale and relevance of this study aims at analyzing the emerging debates of the 21st century in the arena of corporate criminal liability. The idea is to focus on situations and circumstances that are essential to proving the mental element of criminal liability of corporations. There are two major problems of accountability confronting criminal law in its attempt to address the commission of wrongful acts by large scale corporations and companies registered by law.6 One problem that judges and jurists have had to contend with over the years is that criminal law was concerned with crimes by individual human beings. Crimes by corporations were not considered possible since a corporation was considered as not having a physical existence. The reasons for this attitude were that, although a corporation is a “legal person”, it is in reality an artificial creation that can only act through human agents – hence tracing mens rea or a guilty state of mind in an abstraction like the corporation posed a formidable challenge.
Punishment provided another obstacle to the liability of a corporation. At this time, felonies were punishable by death, and most other crimes by imprisonment. Since a corporation has no body, it could not be hanged or imprisoned and so, there was no point in taking
proceedings against it.
6 For more discussion on these problems and their nature see for example, B. Fisse & J. Braithwaite, “The Allocation of Responsibility for Corporate Crime: Individualism, Collectivism and Accountability’’, Sydney Law Rev., vol. 11 (1988), pp. 469 -513.
This work seeks to show that the individualistic maxim that corporations do not commit crime is not an absolute principle but simply a social creation. The law as a social engineer has been constantly manipulated to meet the needs of all ages and the principles of criminal liability are no exception to that. The history of criminal liability shows that collective punishments and punishment of non-human entities were culturally accepted, and it was only after the predominance of the ideals of the enlightenment that the individual became the only agent able to be held criminally liable. The historical analysis reinforces the notion that the legal system can and should create a legal institution to serve social needs. The acceptance of corporate criminal liability is one of these needs and the present research reveals that although there are problems of attributing criminal responsibility to corporations generally, these problems are far from being unique, and it would be a serious mistake to view corporate criminal liability in isolation divorced from other legal concepts. Indeed, a comparative view of corporate criminal liability suggests that if there is to be a reform, the agenda should be broader. Reformers should consider whether to make it easier, rather than harder, to prosecute corporations, at least in certain contexts.
This study intends to highlight how the adoption of an individualistic model of liability is problematic in relation to corporate criminal liability.
1.3 Literature Review
Criminal liability of corporations is not a universal feature of modern legal systems. Related literature on corporate crime, in general and corporate manslaughter in particular, is most challenging, thoughtful, and insightful and at the centre of scholarly discussions in the legal system of countries including Nigeria. This ranges from writings by scholars and eminent jurists to the case laws. Despite the fact that much has been written on this subject, the debate on
appropriateness of assigning criminal responsibility to corporations is far from over. Contributing to knowledge in the area of scholarly writing, Laufer7 posits that the control of corporate bodies has been unsuccessful historically, and that reforms targeted at such control will continue to fail in yielding the required result if there is no agreement between academic and judicial authorities on the application and limits of corporate criminal law. However, according to Sheehy,8 the position of Laufer is lacking in that it focuses on the prosecution of corporations, which may be considered the reasonable and expected result of lack of substantive corporate criminal law, and which fails to move the discussion of corporate criminal law forward in a meaningful way.
On the issue of the treatment of corporations as natural persons under criminal law, Aggarwal9 maintained that in an attempt to hold corporations criminally liable for true crimes and regulatory offences, two models have been identified and used, to wit: the vicarious liability theory and the identification doctrine. According to him, while the former holds the corporation criminally liable for the act of her servants in the course of the corporation’s business without proof of any personal fault on the part of the corporation, the later recognizes the acts and state of mind of certain senior officers in a corporation as the directing mind and acts of the corporation. However comparative and highly analytically sound the position of Aggarwal is, it has still failed to show how a company could be held criminally liable where the only
punishment imposed by the statute prohibiting the criminal act, is custodial sentence
(imprisonment).
7 S. Laufer, “Corporate Bodies and Guilty Minds, The Failure of Corporate Criminal Liability”, University of
Chicago Journal, vol. 1 (2007) pp. 29-32.
8 B. Sheehy, “A Book Review of Corporate Bodies and Guilty Mind, The Failure of Corporate Criminal
Liability” by S. Laufer, (2007) School of Law, University of Newcastle, NSW. Email:
benedict[email protected].
9 K. Aggarwal, “Corporate criminal liability – the issue revisited in the context of recent
Supreme Court decision”, Available at: http://www.ulcc.ca/en/criminal/index.cfm?sec=3&sub=3e (last visited on 12/9/2009).
The learned author also failed to state whether those two approaches will be sufficient to deal with the conviction and sentencing of corporations. The author further failed to state whether vicarious liability and identification doctrine should be imposed on corporations for crimes of unlawful act of manslaughter or gross negligence manslaughter which results from a
breach of a duty of care. Thus, the author has not covered the subject matter discussed in this
work.
Podgor10 has shown that several scholars have argued that corporate criminal liability is
inefficient and should be scrapped in favour of civil law liability for corporate entity or at least be strictly limited. However, Beale11 maintains that as much as corporations are very real and enormously powerful actors whose acts often cause very significant harm both to individuals and society as a whole, the imposition of criminal liability on them makes sense as they are not fundamentally fictional entities. According to Beale, if the priority in the criminal justice system is the reformation of corporate criminal law, the concern should be not only on restrictions of corporate criminal liability but also of the enforceability of existing offences more vigorously. Beale, in comparing the US criminal justice system with that of the UK and Canada, maintained that by the enactment of the Corporate Manslaughter and Homicide Act, 2007, the UK and
Canada have adopted legislation intended to provide easy prosecution for corporate homicide. This Act, according to Beale, holds organizations guilty of an offence if it is established that the way in which its activities are managed or organized causes a person’s death, and amounts to a gross breach of a relevant duty of care owed by the organization to the deceased. In the aspect of
corporate manslaughter, Beale, while citing the prosecution of Continental Airlines for
10 S. Podgor, “A New Corporate World Mandates a Good Faith Affirmative Defence.”
Criminal Law Review, vol. 44 A M (2007) pp 1537-1538.
11 S. Beale, “A Response to the Critics of Corporate Criminal Liability” Criminal Law
Review, vol. 8 (2004) pp 89-90.
manslaughter by French government, stated that corporate criminal liability is increasingly regarded as a necessary part of the law of developed Western nations. However, the learned author fails to state whether under the French legal system a company can successfully be prosecuted and convicted for offence of unlawful act manslaughter. If that is true, which model and or approach should be adopted in the case of Continental Airlines for manslaughter in France and what kind of punishment should be imposed. These and others are some of the questions which the learned author has not averted his mind to address.
In their view, Streteam and Chirita12 say a corporation has the mental capacity to commit
offence requiring mental fault, because if the corporations’ capacity to act and decide has been recognized in contract, administrative, and constitutional laws and if a corporation has the capacity to think and decide when it is a party to a contract (and thus being the subject of contractual rights and obligations), it cannot therefore be sustained that corporate will power does not exist when the effects created are illegal (that is to say criminal offences). They conclude, and, rightly too, that the blameworthiness of corporations exists and it is sufficient for the culpableness required by the criminal law. This author respectfully subscribes to this view and adds that a corporation has the independent existence which does not always identify with the collectivity of the members of the corporation.
Chinyere13 states that corporations do not constitute mere fiction but subsist, occupy
major positions within the organization of our society, and like human beings are capable of causing harm. Consequently, it is only just and consistent with the principles of equality before the law to treat them like natural persons and hold them liable for offences that they may commit. In arguing on the issue, whom the hammer of corporate criminal liability should fall on,
12 S. Florin & R. Chirita, Raspunderea Penala a persoanci Juridice (edn., 7 Rosetti 2002) p. 34, Citing
C. Wells, Corporations and Criminal Responsibility (Claredon Press, 1993) p. 96.
13 C. Chinyere, “Corporate Liability for Crimes”. AJBPCL vol. 1 No.2 (2009) at p. 46.
Chinyere maintained that where corporate criminal liability is in issue, those that may be held liable include the corporation itself, members of the corporation and officers of the corporation. Regarding how corporate criminal liability could be imputed to corporations, Chinyere maintained that the circumstances under which corporate criminal liability could be imputed to corporations include instances when an employee acted within the scope and nature of his employment, or the employee acted at least in part to benefit the corporation, or intent is imputed to the corporation or, where the criminal act is the policy of the corporation’s internal decision- making procedures, or where such an act is encouraged to be committed by the corporation. However, on the issue as to whether the corporation is to be held criminally liable in all respects of the act of individual employees, Chinyere maintained that the corporation shall be liable unless it is shown that the corporation has done everything in its power to prevent such wrongdoing from occurring.
Even though Chinyere’s work provides a valuable reference material by discussing when and how the state of mind of particular human beings may be imputed to the corporation such that the corporation itself may be said to have the state of mind, the author has failed to examine criminal sanctions and their role in controlling corporate crime.
As regards the degree of criminal punishment on corporations, Lott Jr14, posited that
criminal proceedings involving corporations, as a definite entity, requires higher level of proof than would attain in civil proceedings but that the ultimate penalty is conviction to pay fine and not imprisonment. Also, Wells15 maintained that corporations are legally deemed to be single entities distinct, and separate from all the individual who composed them and subject to incur
14 J. Lott. Jr. “Corporate Criminal Liability” Journal of Business, Vol. 69 (1996) pp 339-382.
15 C. Wells, Criminal Responsibility of Legal Person in Common Law Jurisdiction: A paper
for OECD Anti-Corruption Unit Working Group on Bribery in International Business Transactions. Paris
4th October, 2000.
civil as well as criminal liabilities where Jurisdictions so allow. The author expresses the view that corporate liability for crime has appeared on the agenda in many jurisdictions and at the level of international bodies such as the Council of Europe16 and the European Union. In considering liabilities of corporations’ vis-à-vis criminal offences committed by corporations, Wells identified the theories upon which corporations could be held criminally liable to include the vicarious liability theory, the alter ego (identification) theory, and the modern holistic theory. She, however, stressed that the theories have rarely been applied to serious criminal offences such as corporate manslaughter. However, she views this as a limitation of the theory which has led to a debate on the more appropriate mechanism for establishing corporate culpability, with
regard to bringing manslaughter prosecution against corporations. Wells finally suggested that the institutional arrangements for enforcement and the structure of penalties should be taken into consideration in assessing the effectiveness of corporate criminal liability rules.
The learned author has failed to state whether the corporate fault model as a basis for the imposition of liability on corporations is suitable for corporate killing. Wells also failed to state whether this principle has also not stay away from the established principle of individual criminal responsibility, rather than collective mens rea.
The view expressed by Stessens17 is the fact that nowadays, an important part of crime
takes place through companies which compels every legal system to take action in prosecuting corporations. He maintains that the only effective way to combat corporate crime is to direct punitive sanctions against corporations. To prosecute individual workers only is not simply unfair, it is ineffective too. He examines the question of how to punish corporate criminality in comparative perspectives. He compares the national law system of some countries, like USA,
16 Ibid.
17 G. Stessens, “Corporate Criminal Liability, a comparative perspective”, International and
Comparative Law Quarterly, Vol 43 (1994) pp 495-519.
France, the Netherlands, Germany, Canada, England and Wales. This comparison helps to bring out a clearer view of the advantages and disadvantages of corporate criminal liability. He further maintained that the only effective way to combat corporate crime is to direct punitive sanctions against corporations. Though Stessens has extensively examined the corporate criminal liability, and has shown that criminal sanction on corporations is preferable to civil sanction, he has not shown clearly how the sanction should be executed when imposed.
Anyanwu18 says that before now at common law, it was virtually impossible for a
company to incur criminal liability, especially with offence which requires mens rea. He pointed out that with the passage of time, the problem of fixing the will or mental fault of an artificial personality which a company is was taken care of in the case of H. L. Bolton (Engineering) Company Ltd v. T. J. Graham and Sons Ltd19 in which the court held that the directors and managers who represent the company are the directing mind and will of the company and control what it does. He further says that after solving the problem of mental element, it appears that the only obstacle in corporate criminal liability now is how to impose a commensurable punishment, especially where only imprisonment is provided for. He identifies as a fact that under the Penal Code in Nigeria, the corporate criminal liability seems as uncertain as it is under the criminal code. He states however that section 24 of the Criminal Code and section 48 of the Penal Code reflect the nature of criminal liability which merely states the fundamental and wide principles, the exact extent of which is uncertain. He concludes with a suggestion that our law makers should consider the reforms in this aspect of the law in line with the recent development in other jurisdictions. Anyanwu’s work focused on the traditional position of the common law vis-à-vis the law in Nigeria, that is, on how the problem of attributing mens rea to corporations was
18 C. Anyanwu: An Outline of Nigerian Criminal Law, Kasimefuna publication, Enugu
(2009).
19 (1957)1 QB at p. 159.
resolved and the inadequacy of our laws. Even then, he did not state how mens rea is to be assigned to corporations in Nigeria on serious crimes like murder, manslaughter, or negligent homicide. He also failed to state whether in our laws, there is or there is no clear basis for grounding corporate criminal liability.
Ali in his book, Corporate Criminal Liability in Nigeria20 has made outstanding
contributions in the field of corporate criminal liability. He identifies three theories upon which corporations could be held criminally liable, namely: the respondeat superior, the vicarious liability, and the alter ego theory. In analyzing these theories, he examines the corporate organizational and managerial structures with a view to pointing out that corporations could also commit corporate crime. In examining the classical bases of corporate criminal liability, he pointed out how a corporation can be held liable first, for civil wrong and, secondly, for criminal act. He acknowledges the fact that none of the models or bases of criminal liability developed so far provide complete and satisfactory considerations for liability without some difficulties. The author argues that no precise legal formula has been evolved upon which to predicate corporate criminal liability. He asks the question, “should we need to find out guilty mind at the directorial level, or should we simply judge the company by the outcome of its conduct?” The learned author maintains that it is now clearly settled that the legislature and the courts have come to recognize corporate criminal liability.
So much was gained in reading this book during research as we place significant reliance on it. However, this book did not cover corporate responsibility for murder and manslaughter in
Nigeria and other jurisdictions which is intended to cover in this work
20 L. Ali, Corporate Criminal Liability in Nigeria, (1st edn Malthouse Press Limited, Lagos 2008).
Glanville Williams in his book, Textbook of Criminal Law21 states that a company or corporation is a legal person distinct from the human corporators who constitute its framework and it is attributively liable for its employees to the extent that a human employer is. The learned author goes further to assert that in addition, the corporation or company is identified with its controlling officers, whose acts and states of mind are imputed to it. He contends that in the case of a trading company the controllers are the directors and other person(s) (such as the manager or secretary) to who they delegate wide discretion to act on their behalf. But a branch manager who is highly controlled by a higher officer is not himself a controller. Citing the case of Tesco Supermarket Ltd v. Nattrass22 He asserts that the company is identified with its controller even though he acts in fraud of the company, but it seems probable that the identification takes effect only in respect of acts done on company business.
The learned author in his discussion in that book did not mince words in stating that through identification the company can become liable for an offence requiring mens rea, even in circumstances where a human employer would not be liable. Interestingly, however, the learned author raised a very serious question in line with the position in this work. According to him, “Do you mean that a man can commit crimes under the disguise of a company?”
In a bid to answer this question, the learned author stated that the law recognizes corporate liability, but the device of incorporation is not a bolt-hole for people who commit offences. A company can act only through human beings, and a human being who commits an offence on account of or for the benefit of a company will be responsible for that offence
himself, just as any employee committing an offence for a human employer is liable. The
21 G. Williams Criminal Law (2nd edn., London Stevens & Sons 1983) 15. 19.
22 28.1.
importance of incorporation is that it makes the company itself liable in certain circumstances for offences, as well as the human beings.
The learned author also asked another very important question which is also in line with this work as follows: “What is the point of saying that a company is a person in law?” In answering this question, the author submits that and rightly in our view that the independent legal existence of the company is useful because individual shareholders may come and go; and it has the great advantage of creating limited liability. Only the company is liable for its debts. If the company is insolvent, creditors cannot go against the private property of the shareholders. The shareholders are responsible only to the extent of their shares, and when their shares are fully paid up they are not liable at all. Few people would invest in a large company if they were liable without limit for the debts of the company if things went wrong.
Having said this, the author submits that the justification for corporate criminal responsibility is that it may help to keep the company up to the mark. Liability without fault does not create the same problems of justice as with human defendants. Fines may also compel errant companies to give up illegal profits.
This work associates itself with Williams’s submissions. However, it must be noted that Williams’s work is limited to the issue of attributing criminal responsibility to the corporations through only the management or the head of organization and nothing is said about the major role which the middle and lower management cadare play in the running of a large corporation as shown in Tesco’s case where the branch manager was seen as not acting for the company. Our study intends to fill that gap.
Ekpo in his book, Company Law Management and Practice 23 states that the organic theory as a basis of corporate liability arises from the fact that a company, upon incorporation, becomes a legal person. According to him inspite of this attribute, a company is invisible and its existence rests only in the interment and contemplation of the law. The learned author further stated that since it is not a human person, and therefore cannot do things that require human thoughts and actions, it therefore requires the assistance of natural human beings. For instance, any physical act that has to be done in order to make a company a party to a voluntary transaction or to formulate and put into effect its policies has to be done by human beings acting on behalf of the company.
He submits that although criminal responsibility requires the concordance of both the mens rea and the actus reus, this is possible by virtue of the organic theory, which attributes the state of mind of certain organs and officers of the company to it. To make his point very clear he quoted the Supreme Court’s decision in the case of Delta Steel (Nig.) Ltd v. A. C. T. Inc.24 according to which the law requires the personal acts or faults of an individual so as to make a legal fiction like a company liable, the directors, the managers or the managing directors are in the eyes of the law, the directing mind and will of the company. And since they control what the company does, the state of mind of this special class of employees is the state of mind of the company
He also opined that section 65 of CAMA expressly renders the company criminally liable for the acts of its members at general meetings, the board of directors or of a managing director. This section supports the assertion that corporate criminal responsibility only arises from the acts
of specific corporate organs whose mind can be identified as the company’s mind.
23 (1996) 5 N.W.L.R (pt.416) 17 at 29, see also, UBN Plc. v. Orharhuge (2000) 2 NWLR (pt. 645) at p. 495.
24 (1999) 4 NWLR (pt. 597) at p. 53.
The author concluded his work by saying that it is doubtful whether a company being a non-human person can be held liable for murder and manslaughter since this entails the killing of a human being by another human being.25 The learned author fails to state whether corporate manslaughter or gross negligence manslaughter which results from a breach of a duty of care is a crime in other jurisdictions and the position of the Nigerian law regarding the matter.
Finally, Ekpo’s book apart from essentially examining the use of organic theory as a basis of corporate criminal liability in Nigeria, failed to state whether the organic principle as it is codified under section 65 of CAMA provides satisfactory, theoretical or jurisprudence basis for attributing corporate criminal liability in Nigeria. This work intends to fill that lacuna.
In an article entitled “Corporate Crimes and Liability under the Nigerian Laws” Folorunsho traces the history of corporate criminal responsibility to England from where Nigeria inherited her corporate criminal liability. He states that in the past it was inconceivable that a corporation could be held liable for offence that requires mens rea. The learned author says at present, in Nigeria and other jurisdictions corporations are now criminally liable subject to certain limitations such as assault, murder, manslaughter and rape. He states that in Nigeria, corporate criminal liability is a recent development and as a result, cases are quite few.
According to him the Penal Code of the America Law Institute makes it clear that a corporation should only be punished or held criminally liable for conduct authorized, performed, or recklessly tolerated by its Board of Directors or by a high managerial agent acting on behalf of the corporation within the scope of his office or employment. “A high managerial agent” is
defined as “an officer of a corporation, or an agent, having duties of such responsibility that his
25 R v. Murray Wright Ltd. (1970) NZLR at p. 470.
conduct may fairly be assumed to represent the policy of the corporation”26 towards this end, the court has held that a company will be liable for the acts of its controlling officers even where the officer acted to defraud the company itself.
The author further says that this principle is also applicable in Nigeria. For instance, certain statutes provide that, where a corporation has committed an offence, its officials shall in certain circumstances be deemed guilty of that offence.
Finally the author states that corporate bodies are now held criminally liable both under the Common Law, or codes and statutes. He says that in many instances, where they have been held liable, they were fined even when there is provision for a jail term. He submits that this stand conflicts with the principles which bestow on a corporate body the attributes of a natural person with corresponding powers, benefits and liabilities.
Folorunsho did not state what should be done if a company was sentenced to imprisonment but asked to pay a fine. Thus, the author has not covered the issue of corporation sanctions which is a part of what this thesis attempts to address.
From the angle of Judicial precedents, the literature was more elaborately pronounced upon by the House of Lords, in the case of Lennard’s Carrying Company Ltd. v. Asiatic Petroleum Company Ltd.27 where His Lordship, Viscount Haldane (as he then was) in his lead judgment succinctly fashioned a model of primary corporate criminal liability for offences that required mens rea as follows:
a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation; the very ego and centre of the personality of the corporation. 28
26 American Law Institute, Model Penal Code, proposed official draft, 1963, S. 207 Quoted by A. Aguda, Principles of Criminal Law (2nd edn., Ibadan University Press, (1990) p. 3309.
27 (1915) A.C. at p. 705.
28 Ibid, at p. 713.
His Lordship further said:
If Mr. Lennard was the managing director of Lennards Carrying Company Ltd and he was aware of the unseaworthiness of a vessel in his fleet. He allowed the vessel to set sail and when the vessel was lost the plaintiffs sued when they lost cargo as a result. The plaintiff’s loss was limited by legislation unless the loss could be attributable to the fault of the defendant. Lord Haldane held that “Mr Lennard was the directing mind of the company… his action is the very action of the company itself”. Therefore, Mr Lennard’s knowledge was enough to attribute the knowledge to the defendant company and hold Lennards Carrying Co Ltd liable.
Also, in Canada, in the case of Canadian Dredge and Dock Company v The Queen29 the Supreme Court in a bid to determine when and how the state of mind of particular human beings may be imputed to the corporation, such that the corporation itself may be said to have the state of mind stated thus:
The category of directing mind can be found in different geographical locations in such a decentralized corporate environment30 to include the board of directors, the managing director, the superintendent, the manager, the chief financial officer or anyone else delegated by the board of directors to who is delegated the governing executive authority of the corporation.
The Nigerian courts on the other hand, have ruled consistently in favour of the identification doctrine. The case of Yesufu v. Kupper International N. V, 31 is an example of such decisions. Where the Supreme Court observed that:
A director of a company is the very corpus, the think – tank the alter ego and the directing mind and will of the company. The court went further to say where the law requires the personal acts or faults of an individual so as to make a legal fiction like a company liable, the directors, managers or the
29 (1983) 19 C.C.C. (3rd) 1 at p. 22.
30 The effect of this is that directing mind can be located at a lower level within the corporate structure.
31 (1996)5 NWLR (pt. 416)17 at p. 29.
managing directors are in the eyes of the law, the directing mind and will of the company.
The author concedes that the decision of the English House of Lords in the Lennard’s case has made valuable contribution for developing a theory that attributes the mental element of human agents to that of a company and has been of a great persuasive value to the court in Nigeria and other jurisdictions. However, the principle enunciated in this case did not cover the subject matter of this work because only the senior management or the head of the corporation can be successfully identified with the company. This analogy does not take into account the major role which the middle and the lower management play in the running of a large corporation.
The Companies and Allied Matters Act which is the principal legislation on companies’ law and practice in Nigeria equally recognized the issue of corporate criminal liability and the place of the mental element of corporations and companies registered under the law. Section 65 of CAMA states inter alia that:
Any act of the members in general meeting, the board of directors or of a managing director while carrying on in the usual way the business of the company shall be treated as the act of the company itself and the company shall be criminally and civilly liable therefore to the same extent as if it were a natural person.32
Section 66 (2) of the same Act made provision for vicarious liability of the company for the acts of its servants while acting within the scope of their legitimate employment.33
This material content is developed to serve as a GUIDE for students to conduct academic research
DEVELOPING AN EFFECTIVE LEGAL FRAMEWORK FOR CORPORATE CRIMINAL LIABILITY ADMINISTRATION IN NIGERIA
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