Corporate crime and making amends.

• Author: Laufer, William S.
• Position: Symposium: Corporate Criminality: Legal, Ethical, and Managerial Implications

INTRODUCTION

Increasing calls for limits on the use of corporate criminal liability naturally follow periods of heightened regulatory scrutiny. (1) The cyclical history of corporate scandals, resulting in law reforms, active law enforcement, subsequent periods of regulatory laxity, and new scandals, invites the specter of over-criminalization. (2) In the aftermath of the most recent spate of scandals, the post-Enron era, conservative and libertarian concerns about the overreaching of criminal law must account for an emerging trend: The pre-trial diversion of large entities through plea agreements that ask offending corporations to simply make amends. Corporate making amends allows miscreant corporations of scale to express remorse, engage in a reincarnation through compliance, and resume business as a reformed non-offender. In this article, we ask how the principles and practices of making amends or restorative justice connect with standards of corporate culpability and liability and, ultimately, questions of fairness.

Over the last 100 years, the attention given to corporate punishment has dramatically overshadowed efforts to make sense of the connections between and among corporate personhood, liability, and culpability. Below we point to a small number of examples that reveal failed connections, what we call congruence problems, between and among the basic premises of corporate criminal law. Perhaps most obvious is the design of Sentencing Guidelines for Organizations and more recently, a series of highly publicized prosecutorial guidelines, both of which create new conceptions of corporate liability and culpability forming a new substantive law, as if extant rules and standards are of no relevance or concern. (3) The incongruence of guidelines, rules, and substantive law is rarely if ever raised, no less challenged. We argue that corporate restorative justice is not as susceptible to congruence problems as other sanctions that consider or account for specific post-offense behaviors. This is in part because of the breadth of stakeholders whose harm might be addressed by such sanctions. (4)

Beyond the elasticity of restorative principles, the practice of making amends may be said to minimize externalities, in particular the harm to innocent stakeholders. Large corporations with multiple stakeholders and constituencies that would be adversely affected by the continuance of the criminal process are spared the costs associated with further criminal investigations, a protracted prosecution, and trial. Law enforcement no longer spends their precious resources desperately chasing inculpatory evidence. (5) It is of little surprise then, that corporate making amends has now emerged as the preferred sanction to address the harm done to multiple stakeholders, while minimizing the stigma and costs to corporations and their shareholders of the most formal of social controls--the criminal law. (6)

In spite of these demonstrated benefits and apparent appeal, we raise significant fairness concerns with the practice of restorative sanctions; profound concerns that leave us quite wary of corporate making amends.

1. CORPORATE MAKING AMENDS

   Hard retributivists are single-minded in their account of justice. Distribution of punishment does not matter. Guilt is personal, as is justice. The idea of restoration, reconciliation, and rapprochement are inimical. Even those on the softer side of retributive theory are befuddled by the rhetoric and boundless requirements of restorative justice. Reconciling the restorative and soft retributive accounts is regularly discussed, but entails unusual inventiveness. (7) The values underlying restoration are said to violate those of punishment.

   In an unusually creative accommodation to those on the softer side of the desert paradigm, Andrew von Hirsch, Andrew Ashworth, and Clifford Shearing propose a "making amends" model of restorative justice. (8) Making amends is designed to satisfy both desert and restorative theories offering an alternative to proportionality-oriented sentencing systems through the implicit or explicit acknowledgement of fault, and an apologetic stance on the part of the offender, ordinarily conveyed through the undertaking of a reparative task.

   Von Hirsch and his colleagues break new ground in reconceiving traditional precepts of justice along these novel restorative lines. They would find themselves in far more hospitable territory, though, if their account was limited to corporate wrongs. Corporations subjected to the indignity of a criminal investigation and threats of prosecution are increasingly asked by the government to end the impending nightmare of criminal investigation and indictment by making amends. In this post-Enron world, federal regulators are diverting an ever-increasing number of organizations from formal adjudication by asking senior management to apologize, cooperate, make restitution, and commit to a more compliant corporate existence. Behind this restorative ideology is a "mixed goals" approach to corporate criminal justice--an ideological soup that defies simple description, explanation, and justification.

   Deferred and non-prosecution agreements emerged as bargaining strategies as command and control styles of corporate regulation lost favor. (9) Now corporations face little choice but to trade concessions with authorities given their representations about impending threat of significant fines, possible debarments, suspensions, and other sanctions. (10) And the importance of and need for these reciprocal promises are rarely challenged. (11) With limited resources, the complex nature of the corporate form, and the accompanying evidentiary challenges facing prosecutors, it is far from surprising that leniency or even amnesty is exchanged for conciliatory post-offense behavior. The threat of strict liability and harsh sanctions, which leverage the criminal law, has long been recognized as inhibiting corporate cooperation by constricting the free flow of information throughout complex organizations and, as a result, access to necessary inculpatory evidence. (12) Such command and control styles, some say, encourage law evasion and further deviance. (13)

   As important, emerging concerns about overcriminalization and the corresponding burden of regulations on the business community support principles of reciprocity and negotiated forbearance. (14) This not only frees the hand of Criminal justice functionaries and minimizes the costs of compliance, but it placates business interests and softens the impact--or perceived impact--of new regulations. Creative plea agreements along with a host of agency programs encouraging disclosure, leniency, and amnesty now densely populate the enforcement and regulatory landscape. (15)

   The substantive corporate criminal law may not have changed in more than a century; however, the administration of justice is no longer ruled by existing principles of vicarious liability. (16) In its place a brand of negotiated cooperation and compliance, at least in theory, facilitates the free flow of evidence. (17)

2. INCONGRUENCE PROBLEMS

   The abandonment of more formal dispositions for large corporations in favor of restorative sanctions raises some obvious concerns. Most obvious is the possible incongruence between the fashioning of a restorative sentence and the way in which corporate culpability is assessed and ascribed. In fact, two kinds of congruence problems arise with the disregard of the general part or specific part of the corporate criminal law. First, forward problems emerge where changes in the general part of the law--liability rules and culpability standards--are conceived without concern for how punishment is crafted or justified. And reverse problems arise where standards for punishment impose liability or culpability that conflict with extant law in theory or practice. With vicarious liability, both kinds of problems are commonplace. For example, the general part of the corporate criminal law remains wedded to vicarious liability. Yet sanctions disregard principles of respondeat superior and, instead, turn on features of the corporate person. With reverse problems, reactions of the corporation, in most cases post-offense behaviors, seem to dictate sanctions. These behaviors may bear little correspondence to the underlying offense. (18)

   The inspiration for thinking about such incongruence is not new. (19) For example, the need for reform of liability rules and standards of culpability that connect, in meaningful ways, with the Sentencing Commission's...