What law school ought to be.

OVERVIEW
MULTI-DIMENSIONAL LAWYER
PREVENTIVE LAW AND PROBLEM SOLVING: LAWYERING FOR THE FUTURE
ESSAYS
ASPECTS OF PRACTICE
CORPORATE COMPLIANCE
RULE OF LAW
CENTER FOR CREATIVE PROBLEM SOLVING
OTHER LINKS
PREVENTIVE SUCCESS STORIES
FEEDBACK

 


ESSAY ON CORPORATE CRIMINAL COMPLIANCE

Robert Miller

Preventive Law like Preventive Medicine can take many shapes and forms and while it may be difficult to prove nobody doubts the value of either. Because of my prosecution background (District Attorney and United States Attorney) I have been interested in the increasing criminalization of American business and when coupled with the dramatic penalties (up to $290 million in fines) provided under the relatively new Sentencing Guidelines for Organizations ("Guidelines"), I have, consequently, focused on corporate criminal compliance as an area of interest in preventive law.

A corporation is liable for any illegal act committed by an employee which has the actual or intended effect of benefitting the company. However, the act must be within the scope of the employee's actual or apparent authority.

The company will generally be liable even if it had a strict policy against such acts or made efforts to prevent them. An effective company policy may, however, be introduced to mitigate the punishment or reduce the charges against the corporation.

The Guidelines provide for the substantial reduction of fines for corporations that have implemented effective programs to prevent and detect violations of the law. The Guidelines further mandate that the corporation use "due diligence" in seeking to prevent and detect criminal conduct by its employees.

The following seven minimum steps are required for due diligence:

  • •Policies defining standards and procedures to be followed by the corporations' agents and employees (possibly written in a Corporate Code of Business Conduct).
  • •Assign specific high-level personnel who have ultimate responsibility to ensure compliance.
  • •Use due care not to delegate significant discretionary authority to persons whom the corporation knew or should have known had a propensity to engage in illegal activities.
  • •Communicate standards and procedures to all agents and employees and require participation in training programs.
  • •Take reasonable steps to achieve compliance by use of monitoring and auditing systems and by implementing and publicizing a reporting system where employees can report criminal conduct without fear of retribution (Hotline or Ombudsman programs).
  • •Consistently enforce standards through appropriate discipline ranging from dismissal to reprimand.
  • •After detection of an offense, the corporation must have taken all reasonable steps to appropriately respond to this offense and to prevent further similar offenses - including modifying its program and appropriate discipline for the individuals responsible for the offense and those who failed to detect it.

Because of the many complexities and the wide-ranging ramifications of the Guidelines, a corporation (or any organization) should review its potential criminal exposure against its current policies, procedures and compliance plans in order to determine if it at least complies with these seven minimum "due diligence" steps. Compliance with these seven steps can do more than lessen potential criminal fines -- compliance can prevent the criminal conduct in the first place!