Some corporate entities, firms, conglomerates, and corporations have grown to
be so large, powerful, or structurally vital to the government that the
government cannot credibly enforce
effective criminal penalties when they
violate laws or contravene corporate governance principles.
Corporates Becoming Too Influential:
With the passage of time, these corporates have become Too-Big-to-Jail, and this
dilemma has harmed the ability to investigate agencies to deter corporate crimes
by simply issuing minimum monetary fines or warnings. When guilty
individuals/entities are not prosecuted under the law, the administration of
justice and the Rule of Law are jeopardized. In the case of India, structural
reforms are required, which will include incorporating a stringent
political-economic constraint into a normal microeconomic model of corporate
liability.
Investigative agencies and prosecutors frequently lack the resources and
experience necessary to charge corporate crime or to implement institutional
reforms. The threat of criminal prosecution alone is insufficient to motivate
large organizations to invest in internal controls or cooperate with government
agencies; however, in order to deter these companies and their management,
investigating agencies should legitimately investigate and prosecute the accused
management and officials with criminal and monetary sanctions.
How to Prosecute the Companies?
Normally, a company cannot be named as an accused in a criminal proceeding; but,
when a firm is named as an accused, the relevant management/officials must also
be named as an accused. The prosecution will be quashed if the
management/officials involved are not named as an accused. In
Aneeta Hada vs.
Godfather Travels & Tours Pvt. Ltd. (2012) 5 SCC 661, the Hon'ble Supreme
Court held that a company cannot be prosecuted without naming the directors
involved in the crime.
The Corporate Veil- Lifting:
It would be difficult to hold the corporation liable for the wrongdoer's
deception, mismanagement, or reckless activities every time because the firm
lacks any 'MensRea' to commit wrongdoing on its own because it is a
legal/juristic construct. The concept of a corporate body was created to
encourage and promote trade and business, not to commit illegal crimes or
deceive others. The corporate veil can unquestionably be pierced if the
corporate personality is found to be opposed to justice, and the public
interest. This veil must be lifted in order to enforce the law without prejudice
in the interests of equity, a good conscience, and justice. The idea of 'Lifting
of Corporate Veil' is rarely invoked by Indian courts in its decisions, which
are based on numerous statutory provisions.
The courts, as a dynamic institution of the law, must work effectively within
the scope of the law in order to accomplish justice by piercing the corporate
veil to examine the individuals responsible for a Corporate Crime. In Delhi
Development Authority vs. Skipper Construction Company Co. Pvt. Ltd. 1996 SCC
(4) 622, the Supreme Court examined the issue of lifting the corporate veil and
laid down the necessary principles.
Law Enforcement & Prosecution:
The fact that investigating agencies, governmental agencies, and prosecutors
currently rely on an investigation apparatus that may produce valuable
information for corporate settlements, but does not reliably produce evidence
sufficient to charge culpable individuals of corporate entities, is one
structural explanation for the lack of individual prosecutions in relation to
negotiated criminal settlements with these big companies. Because of the
participation of investigating agencies, government agencies, and prosecutors,
the courts rarely have the opportunity to decide situations involving corporate
crimes, and substantial corporate settlements occur without needing a complete
investigation or adjudicatory process of the courts.
Lack of coordination of Investigating & Government Agencies And
Cross-Jurisdictions Disputes:
In practice, it has been seen that when it comes to corporate crimes, the
investigating and government entities have limited or no coordination. The
techniques for obtaining coordination are lengthy, inconvenient, time-consuming,
and provide unfavorable outcomes.
Coordination on a national and international level is required in
cross-jurisdictional issues, such as in international efforts to establish
uniform accounting standards and having some experience in cross-border laws.
The European Union's efforts to further integrate its common market are
currently demonstrating this trend.
Conclusion:
As a result, investigating authorities must concentrate more narrowly on
bringing individual charges, relying less on corporate internal investigations
for evidence gathering, and drafting more effective structural-reform mandates.
However, this is a limited strategy, and if government agencies are hesitant to
prosecute white-collar crimes, this methodological point is unlikely to yield
results. For governments with a democratic mandate to address the problem of
corporate misbehavior, the comparatively quick political will of
multibillion-rupee settlements made through traditional "cooperative" procedures
may be too appealing to avoid.
In the end, these issues are pathological repercussions of our excessively
concentrated political economy, and the investigation and the governmental
agencies have limited capacity to remedy them. However, the government should
not depend only on corporate penalties/settlements to discourage illegal
behavior as long as some corporations are considered too big to prosecute.
References:
-
https://www.thelawcodes.com/fixing-criminal-liability-of-giant-corporate-firms/
- https://www.thelawcodes.com/bare-acts/the-code-of-criminal-procedure-1973/
- https://www.thelawcodes.com/corporate-lawyers-in-chandigarh/
- https://www.thelawcodes.com/criminal-lawyers-in-chandigarh/
- https://www.thelawcodes.com/corporate-lawyers-in-gurgaon/
- https://www.thelawcodes.com/criminal-lawyers-in-gurgaon/
- https://www.thelawcodes.com/bare-acts/the-companies-act-2013/
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