C ORPORATE C RIME R EPORTER

Business Groups, Defense Lawyers Launch Attack on Corporate Criminal Liability

22 Corporate Crime Reporter 28, July 14, 2008



A group of big business groups and corporate defense lawyers have launched a frontal attack on corporate criminal liability.

They have hired the former head of the Enron Task Force, Andrew Weissmann, to lead the assault. Weissman is a partner at Jenner & Block in New York City.

And they have picked an obscure environmental crimes case as their vehicle.

The case is United States v. Ionia Management SA.

The company was convicted in 2007 of dumping waste oil and falsifying records and was fined $4.9 million.

The conviction was appealed to the Second Circuit. And there, the Chamber of Commerce, the National Association of Manufacturers, and other business groups, jumped in.

They filed an amicus brief arguing that strict liability has no place in the criminal law.

That even if Ionia had the gold standard compliance program, it wouldn’t have mattered in this case because the standard jury instruction was used – that is – if even the lowest level employee acted illegally, that employee’s intent would be imputed to the corporation.

And the corporation would be found guilty of the crime.

“Let’s assume you have a company that has these stellar, Grade A, gold standard compliance program – a program that the Department of Justice and the SEC would say is perfect,” Weissmann said in an interview with Corporate Crime Reporter. “Under the current standard for corporate criminal liability, if the lowest level employee, in spite of that program, commits a crime – the company can be held criminally liable.”

“What is the point of that? There is nothing that you would ask the company to do differently in terms of its conduct. It still has a great program. There is no behavior that you are seeking to punish or deter. And that is precisely because under the current standard, you are strictly liable. And strict liability and criminal law usually don’t go hand in hand.”

What did the District Court do wrong?

“The court gave the standard instruction, which held the company strictly liable for the conduct of the employee,” Weissmann says. “It did not allow the company to argue that it had an effective compliance program that was in place and that the individuals who may have committed the crime were acting in contravention of a policy that was not just on paper, but was in fact was enforced. That’s just a factual issue. Whether the company could prove that to a jury is another question. But the company was not even given the chance to argue that it was unfair to impute the intent of the employees to the company.”

Weissmann would require the prosecution to prove that the corporation lacks “effective policies and procedures to deter and detect criminal actions by their employees.”

And he would restrict corporate criminal liability to where senior corporate officers are at fault.

[For a complete transcript of the Interview with Andrew Weissmann, see 22 Corporate Crime Reporter 28(11), July 14, 2008, print edition only.]

Home

