Corporations and Criminal Liability — Guilty Despite Reasonable Doubt?
19 November 2021
Authors: Anders Bygglin and Marcus Nyberg
Everyone who has ever watched a US sitcom knows that in order to convict a natural person for criminal liability, the prosecutor must prove — without a reasonable doubt — that the accused natural person has committed the criminalised actions for which they stand accused. Up until recently, it has been clear that unless the threshold of “without a reasonable doubt” is met, no criminal liability would attach to any natural or legal person. But is this still the case, or is there reason to believe that something fundamental may change in the years ahead?
Today, legal persons may be imposed significant fines of up to SEK 500 million in Sweden or EUR 850 000 in Finland. The legislation supporting the criminal liability of legal persons has been going through major developments over the last 30 odd years leading up to today. In a climate supportive of corporations taking responsibility for their actions, and the consequences of their actions, the notion that a company should also be held responsible for criminal actions performed in the course of its business is not difficult to understand.
If anything, the political and legal trends seem to lean towards more enforcement measures against corporate activity that is seemingly immoral and breaks our common sets of rules (regardless of whether criminal or not). In other words, the pressure is on, and as a result, “compliance” is so important in any company’s day-to-day business that it no longer is the buzz word it used to be — it is just business.
So, for the politicians and lawmakers who actually want to prevent illegal behaviour, it is obviously not ideal that a corporation in whose business crimes have been committed may go on unpunished, save for the few individuals who personally take the hit. It is hard to disagree with these fundamental issues. But so far, criminal sanctions have still been reserved for situations where the stringent requirements of reasonable doubt and burden of proof have been met, and a criminal sanction has therefore always been looked at slightly differently than, say, administrative sanctions (which themselves, depending on the underlying legislation, can also be very severe). A crime is always a crime, is it not? Nullum poena sine lege, nullum crimen sine lege, and all such Latin phrases learnt in law school, was for a reason. Criminal law is simply its own animal.
By way of background, Swedish legislation (Swedish Criminal Code Ch. 36 § 7) provides that a company may be imposed a company fine where a criminal act was committed in the practice of the company’s business and (i) the company has neglected to “… perform what can be reasonably required to prevent the criminal act” or (ii) the crime was committed by a leading person within the company with the authority to represent the company or make decisions on the company’s behalf.
In Finland, the situation is very similar, although the Finnish Criminal Code also specifically states that criminal liability can also attach to the company even if it cannot be determined which individual person committed the crime, meaning criminal liability may attach even if a natural person cannot be convicted for the alleged crime. The situation, in practice, is the same in Sweden in this respect, meaning you may be dealing with an anonymous perpetrator.
But still, unless it can be proven that a specific person, or an anonymous perpetrator, as the case may be, has really committed a crime (with all that this entails in terms of burden of proof and “without a reasonable doubt”), then the company will walk. And in cases where the authorities did not catch the perpetrator, the company usually did — until now.
A recent judgment from the Finnish Supreme Court (KKO 2021:6) may serve as a reminder that not even criminal law is entirely black or white. Or at least that what is black to some may appear white to others. In the judgment, a gaming association was criminally sanctioned for money laundry by negligence even though the sole individual that had actually been charged for the crime was found not guilty already at an early stage of the proceedings. The Supreme Court, however, became convinced that a crime had been committed in the activities of the legal entity.
In the reasoning of the Supreme Court, there is nothing to indicate that the Supreme Court would have misunderstood or interpreted the fundamental legislation any differently than what could be expected; the legal entity does not itself commit a crime but is attached a criminal liability due to someone having committed a crime in the business of the legal entity. In the case, at hand the Supreme Court reasoned that it had been shown that an anonymous perpetrator had committed a crime in the course of business, and thus, given also the other circumstances of the case, sentenced the legal entity to a corporate fine.
The decision has gained some publicity and views from commentators. Many seem excited at the prospect that the actual application of the anonymous perpetrator concept (which has been something of a dead letter of the law) now opens new possibilities; now, finally, companies may more easily be criminally sanctioned for their criminal conduct! The prudent litigator remains cautious, however, and even somewhat concerned.
One could argue that the Supreme Court did not sufficiently analyse all aspects of the anonymous perpetrator’s actions, such as their negligence (which is, admittedly, difficult to show for a person whose identity is unknown). We are not, however, writing this to scrutinise the case in detail or to comment on the case any more than this. But sometimes society’s good intention and will to see progress can over-shadow what are legitimate concerns.
Our concern is this: under no circumstances should the burden of proof required to criminally sanction a corporation be more easily met than for an individual. One could easily picture where this could lead — suddenly investigating and prosecuting individuals would no longer be interesting. What prosecutor would bother investigating (and proving) the poor CFO’s actions and intents (the actual suspected crime), if the company can just as easily — or even more easily — be held solely liable with a hefty corporate fine, setting an important precedent for others?
The burden of proof for corporations and individuals cannot differ to the detriment of the former, at least not for the same crime and absolutely not unless the law explicitly provides for it. And there we are again, back at the Latin phrases: nullum crimen sine lege, nulla poena sine lege.
Let’s progress in the realm of corporate criminal liability, while still remembering the fundamentals and avoiding a slippery slope. Sometimes, there is beauty in being old-school.