1

CORPORATE CRIME- THE RULING CLASS CRIMINALS

INTRODUCTION

Corporate crime and other forms of crime are socially sanctioned and negative
phenomena, which includes all forms of criminal activity that causes the relevant criminal and
legal consequences in relation to the entire economic system, and in terms of some of its
essential elements. Characteristic of corporate crime is to commit offenses related to business,
or even the very economic activity in whole or part of the criminal character, regardless of the
type of property and other rights in the commission of crimes or violate and endanger.
Corporate crime is characterized by extreme variability of forms of expression, which is
logical, because of his conditioning to new socio-economic and political relations which
inevitably creates conditions for change and the emergence of new forms. Changes in the
economic and political systems gives rise to new forms of crime in a shape of corporative, not
included in the scope definition, or because there were no qualification as socially dangerous
acts, ie. It is not recognized by law as a criminal offense1 .

In fact, corporate criminal now has a dominant transnational character. In addition, the
gap between theory and practice is particularly prominent in countries where property relations
are changing, faster than the law, so that the same offense discriminates depending on whether
it is attacked or private social capital. It is meant primarily on the countries which have gone
through (or are going) transition. The main characteristic of this process is that the economic
system of a country is no longer based on the dominant role of social ownership of the means
of production, but the dominant public and private property. The process of ownership
transformation, which is still in progress, has led to the recognition of other forms of ownership,
or the pluralism of ownership relations in the economic system. Economic activity through
various forms of property, as more and more pervasive private ownership by enterprises and
other legal entities and entrepreneurs, but the public enterprises still operate mostly state-owned
assets. Another important feature of the present economic system of countries in transition

1
This indicates the need for constant monitoring of these issues in order to change the law and comply with
the defini on of crime corpora ve its content and features in a certain period of social development, both
na onally and interna onally, as more and more, through appropriate forms of organized, interna onal gains
dimension. Šikman, M. (2013). Corporate Crime - New Approaches and Future Challenges. Ed. Čaleta, D., Vršec,
M. Management of Corporate Security – New Approaches and Future Challenges. Ljubljana: Ins tut of
Corporate Security. (103-114).
 2

consists in the fact that the planned economy becomes the past, and that economic activity is
gaining market character, which certainly has some input into the determination of behavior
that should be included in the concept of corporate crime (Boskovic, 2009).
In the context of opposing corporate crime, because of its specificity, the degree of social
danger, status offenders, and the consequences, relation in many aspects differ from other forms
of contemporary crime. The complexity, diversity and dynamism, and undercover of damage
of corporative crime, there is the need for continuous improvement and building adequate
criminal justice response. In this sense, it is necessary to harmonize criminal legislation,
particularly POCT issues of criminal liability of legal persons. In addition, it is necessary to
devising new methods, in which we must take into account the possible use of the achievements
of natural, technical and social sciences, the application of which is of particular importance in
providing financial or personal evidence in the process of clarification and proof of certain
crimes from corporate crime.

DEFINITION OF CORPORATE CRIME

Defining corporate crime is necessary methodological approach that is essential in

understanding and understanding of the phenomenon that is the subject of study. Also, the
proper definition of corporate crime largely depends on the definition of preventive and
repressive measures and actions in combating corporate crime and profiling of individual
operational, investigative and special investigations that have special meaning and usage in
combating this type of crime. Any serious research and study of some phenomenon implies
defining its concept. If we understand the definition of "statement defining the content of an
idea," and the term "thought about the essential characteristics of what we think", then by
definition of the concept of corporate crime must imply the corresponding logical process that
will lead us to a statement which will contain the essence and all the essential features of the
crime.

However, in theory and in practice, the fact that many attempts to define the term, but
to a single, generally accepted definition that would apply to everyone in a certain period of
time could not be reached, the diversity of the socio-economic and political systems in the
contemporary world, which is undoubtedly the main cause of this situation at the international
level. Therefore, in defining corporate crime should start with the word'' etymological meaning
of Corporate Crime'', which is composed of words and criminal corporations. Corporation (Lat.
corpus - the body, Eng. Corporation) "body made of people" (Oxford English Dictionary), is a
 3

legal entity consisting of an organized group, which is an independent legal subject different
from the articles of the corporation (Modly, Šuperina, Korajlić, 2009).

Corporation represents the highest form of joint stock companies2 . Corporation as a

legal entity that has the same rights as a person: to own property, to borrow, sue or be sued. Its
purpose is incorporating the grouping of business interests and is the most common form of
business association. This is a subjective business, which operates in accordance with the
commercial law frame. The term criminality comes from the word crime, which means offence,
or activities which are against the law and dangerous for the society since there are not in
accordance to the regulations and they are marked as crime acts for which the certain sanction
is determined. Crime as a negative social phenomenon, a set of activities of a person or group
of people over time, which is inconsistent with the regulations and standards of conduct which
draws contempt and violation of the appropriate criminal sanction, and whose value depends
on the type and degree of social danger of acts committed3 .

By simply connecting the word'' corporation'' and'' crime'' can be derived etymological
meaning of the term'' corporate crime'' as the totality of socially negative phenomena (crime)
activities resulting corporation or interconnected group of people in a certain system
(corporation) to commit criminal acts in a certain period. Of course, if this is the etymological
definition of the term'' corporate crime'' adds certain features of modern corporate crime, such
as an area where drought is done (the realm of business, insurance, banking, stock exchanges),
status offenders (members of the highest social class) and protected perpetrators from
prosecution and punishment given to offenders who have influence due to their social status,
may better define the concept of corporate crime4 .

The biggest criminological research on corporate crime was carried out North America,
while a small number of these studies were conducted in the UK and Australia, where we can

2
The corpora on has managed to eliminate all the weaknesses of partnerships, especially those related to the
risk, as in the case of bankruptcy of the corpora on shareholder loses only what is invested in equi es.
Corporate governance is a system of monitoring mechanisms by which all vendors providing cri cal resources
to recover their investment in the corpora on, with care taken not to jeopardize long-term prosperity and
survival of the business system
3
The term crimen, it called on a significant number of sciences that are the subject of a criminal offense or
crime, as well as its collec ve expression (criminology, criminology, criminal policy, criminal law,
etc.).(Krivokapic, 1996)
4
Corporate Crime - New Approaches and Future Challenges. Ed. Čaleta, D., Vršec, M. Management of
Corporate Security – New Approaches and Future Challenges. Ljubljana: Ins tut of Corporate Security. (103-
114).
 4

speak about a certain theoretical concept5 . The starting point of their approach is Sutherland's
study of white-collar crime (Gobert, Punch, 2003). In this context, Kramer corporate crime is
as a subtype of criminality of the white collar, which is a result of the decision-making of those
who occupy positions in the organization as corporate executives or managers. These decisions
are based on organizational business rules (mostly aimed at making profit), standard operating
procedures and cultural norms of the organization and directed towards profit of corporation.
Thus, in contrast to the white-collar crime, where covetous motives predominate, the benefit
from part of corporate crime goes to the company, not just the perpetrator (Kramer, 1984).
According to Friedrichs, corporate crimes are "illegal and harmful acts committed by officers
and employees of corporations to promote corporate and personal interests." (Freidrichs, 1996).
Similarly, Simon Refers to corporate crime as "acts of economic domination." (Simon, 2002).
Criminology vocabulary McLaughlin and Muncie corporate criminality define as the illegal
conduct and omissions punishable under administrative, civil or criminal law, which are the
result of deliberate or criminal decision making negligence (culpable negligence) within the
legitimate formal organization. These acts or omissions are based in legitimate and formal
activities of organizations, complying with the normative goals, standard operative procedures
and / or cultural norms of the organization with aim to get to the organization (McLaughlin,
Muncie, 2006)6 . Many authors do not agree with such a broad definition of corporate crime,
as the crime refers only to those behaviours that are designated as such criminal law.

Schlegel has recently pointed to the dangers of too wide conceptualization of corporate
crime and has adopted a definition of corporate crime as "any act that violates the criminal
law." (Schlegel, 1990). Also Clinard and Yeager on corporate crime refer only to those offenses
that are criminalized by the law as criminal offenses. Moreover, if a corporation is fined a
million dollars under administrative or civil law, it does not receive the'' stigma'' represented
by prosecution under the criminal law. As far as a corporation goes, however, a civil or criminal
fine are the same, except only one thing is missing: there is not the stigma, and many come
with a criminal fine that may or may not mean anything to the corporation or to others (Clinard
& Yeager, 2006). Hunter and Dantzker talk about crime within occupations (occupational

5
A variety of modern theore cal explana ons of criminal behavior have been put forth in the criminological
literature. Among these are Self-Control Theory (Go redson & Hirschi, 1990), General Strain Theory (Anew,
2006), Ins tu onal Anomie Theory (Messner & Rosenfeld, 2007), Contextual Anomie / Strain Theory (Robinson
& Murphy, 2009)
6
Corporate Crime - New Approaches and Future Challenges. Ed. Čaleta, D., Vršec, M. Management of
Corporate Security – New Approaches and Future Challenges. Ljubljana: Ins tut of Corporate Security. (103-
114).
 5

crime) defining as crime committed within employment (workplace). As a special category of

crime allegations and corporate crime (corporate crime) which they say is the hardest
criminality process.

Corporate crime is the criminal activity performed at their work or that result from
improper business practice (Hunter & Dantzker, 2002)7 . According to Hartley, "For
criminologists," Corporate Crime "Refers to acts in violation of the law that are committed by
businesses, corporations, or individuals within those entities." (Hartley, 2008). In addition to
violations of the existing law, corporations may commit acts that, while legal, have many
negative social consequences (Passas, 2005). For this reason, definitions of corporate crime
should include any harmful actions caused by negligent, reckless, or intentional behaviors that
are both lawful and illegal. Frank Lynch and corporate crime defined as, "socially injurious and
blameworthy acts, legal or illegal, that cause financial, physical, or environmental harm,
committed by corporations and businesses against their workers, the general public, the
environment, corporations and other businesses, the government, or other countries. "(Frank &
Lynch, 1992). There are those authors who understand corporate crime as a form of organized
crime.

Organizational crime Refers to crime committed on behalf of and for the benefit of a
legitimate organization. Corporate (business) crime is a type of organizational crime committed
in free enterprise economies and criminal activity thus final, on behalf of and for the benefit of
a private business or corporation. Included in the discussion of crimes against individuals by
organizations (the public) are multinational bribery, corporate fraud, price fixing,
manufacturing and sale of faulty or unsafe products, inequitable taxes, and environmental
crimes, to mention just a few. The areas in which corporations conduct criminal activities are
heterogeneous, with corporate crime usually manifests in the area of economic activities, such
as tax evasion, embezzlement, forgery of money, bankruptcy abuse, bank fraud, falsifying
business records, money laundering, and so on. (Berg, 2008). The essence of corporate crime
is reflected in the planned illegal activities, within the legal business, with the intention of
increasing profits by direct or indirect violation of the law. Such circumstances responsible

7
The difference between these two categories see that crime in the profession are persons or groups for
personal use, while corporate crime are persons or groups for the benefit of the company or organiza on.
(Kovčo-Vukadin, 2007). Šikman, M. (2013). Corporate Crime - New Approaches and Future Challenges. Ed.
Čaleta, D., Vršec, M. Management of Corporate Security – New Approaches and Future Challenges. Ljubljana:
Ins tut of Corporate Security. (103-114
 6

persons in the corporation or managers, skillfully used, which leads to many illegal acts cannot
be subsumed under existing charges, where offenders use their status to avoid accountability.

In fact, this type of crime can be considered occasional crime, since criminal activity
Corporation is not their core business, but businesses that otherwise legitimate businesses when
they get an adequate opportunity, and planned exercise specific common kind of criminal
activity that can be considered a corporative crime (Djurdjevic, 2003). When determining the
concept of corporative crime it is very important to differ terms like crime, white collar, fraud
and organized crime.

Corporate crime, along with the aforementioned criminal phenomenon has a number
of characteristics in common, but the key difference: the subject of criminal responsibility. In
corporate crime that is a legal entity, while in other criminal phenomenon that is solely an
individual, as an individual or group of individuals.

THEORIES OF CORPORATE CRIMES

The corporation are enjoying the culture of impunity as there is the need for developing
a culture whereby there could be voluntary compliance of law and cooperation will law
enforcement as the objective is to prevent the crime by laying down norms whereby criminal
activities can be discouraged. Also, failure to control the corporate misdeeds may lead to
retarded development and also loss of capital in many ways. The magnitude of harm which is
caused by the corporates must have the adequate legal mechanism to deal with it. There are
different theories of punishment which are Retribution, deterrence, Prevention and
Reformation which takes care of different circumstances of crimes and criminals .

In relation to retribution as freedman points out expressive retribution justifies the

corporate punishment the expressive retributivists commitment is to assert moral truth in the
face of denial. In relation to deterrence theory the punishment are more severe in order to deter
the convict and the prospective criminals from committing future crimes. And since the
corporate form of punishment is not possible in the case of corporation the alternative forms of
deterrence can be adopted in dealing with the case of corporations. If one starts with a view
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that there is under deterrence corporate wrongdoing in order to reduce corporate criminal
liability but laws are mostly focusing on the more of corporate civil liability. 8

In most cases corporations are operating for benefits or profits therefore deterrence of
excessive cost of non-compliance of law could be more deterrent for them though the same is
not generally true in the case of individual criminal behavior. It has been seen the deterrent fine
which are imposed on the corporates would affect many innocent employees, shareholders or
a public too but it should not be used as the excuse as we see some cases of the corporates are
making a profit from the crime committed and enjoy the culture of impunity.

In the case of MC Mehta vs Union of India 9famous case where the Supreme court
recognized absolute liability on the enterprise for carrying on inherently dangerous and
hazardous activities held that quantum of damages in such cases should be a deterrent in the
event of any disaster. Also, one more thing taken by court that such quantum of damages can
be taken based on the capacity of enterprise which in most cases are high .One more thing can
be taken that in relation to such incident the damages should be awarded to such enterprises
only then such multinational corporation which runs the hazardous activities at social cost
which could be deterred in order to stop such corporates to get way from such hazardous
activities resulting widespread rampage in society. In relation to preventive theory of
punishment been mostly applied in order to incapacitate or prevent the offenders in order to
stop them from committing further crimes, the question arises how far the preventive theory is
appropriate in determining and punishing the corporations and if so in what circumstances? It
can be said that prevention are more workable with corporate criminals asthe kind of criminal
activity dependent on being able to maintain legitimacy in formalized roles in the economy.
The corporation can permanently incapacitated by order of wounding up which can be equal
to capital punishment in individual cases also corporation can be restrained from continuing
the activities which violated the law.

It is been also observed that many of the corporate crimes arise from defective control
system, insufficient checks and balances to ensure that the law is complied with poor
communication, inadequate standard operating procedure which fail to incorporate safeguards
as against reckless behavior. These defects can be due to negligence or some of the conscious
decisions which still can be controlled by proper regulatory authorities who regulate corporate

8
Vikramaditya S. Khanna, “Corporate Crime Legisla on: A Poli cal Economy Analysis”, Washington Law Review
82 100-141(2004
9
AIR 1987 SC 1086
 8

policies and practices. In any way the formal mechanisms can be applied by putting the
corporation under the supervision of auditors, environmental experts and other authorities in
order to make sure that such order must be regulated and function properly

CIVIL OR CRIMINAL PUNISHMENTS TO CORPORATES

When we talk about punishments for corporations which in most of the times are
punished under the civil as well as under the administrative law even though corporate crimes
are one of the most controversial issues. The penal statutes prescribing the punishments have
not been able to make any distinction for the offence which could otherwise be the same for an
individual and the corporation, The problem and matter with regards to punishment which came
under scrutiny in the case of Assistant Velliappa Textiles Ltd And Ors10 where the court
observed the criminal liability cannot be imposed upon the corporations where the punishment
for the offence also prescribes imprisonment. The Law commission of India in its 41st and 47th
report did suggest the punishments for criminal liability which is either imprisonment or fine
as in most cases the corporate should be fined in relation to the white collar crimes. 11 but, sadly
the recommendation never get through even though we have many provisions under the Indian
laws which deals with the matter of corporate crimes like fraud, bribery , insider trading etc.
which in most cases are punished under civil regulation but no penal regulations are been
incorporated which punish the company.12

The main issue which has been faced today is that corporations cannot be imprisoned
as they were not been amended to any prosecution for a criminal offence as in most cases the
corporates even though fine or compensation been paid which is one of the easiest ways to get
away from any criminal prosecution or imprisonment the reasons are for corporations who are
economically wealthy and continue to grow for them it not much to pay little compensation or
fines in case of any violation of statutes and committing any crime however bad the it affect
the society at large . It was additionally worthy to say that our Parliament has additionally
understood this issue associate degreed projected to amend the IPC during this regard by

10
AIR 2004 SC 86
11
Law Commission of India, 41st Report on Reform of Judicial Administra on Pertaining to the Code of Criminal
Procedure, 1973 (September 196
12
Akhil Mahesh, “Corporate Criminal Liability”, Na onal University of Advanced Legal Studies Kochi (2015)
 9

together with fine as an alternative to imprisonment where corporations are involved in 1972.
However; the bill was not passed by parliament.

There are certain mechanism or law mostly civil regulation which determine the
liability of the corporation and punishments are given under section 45 ,63 , 68,75(5),203 under
the companies act but there are no effective mechanism which can punish or prosecute the
corporation itself as most of the times only individuals who commit crimes or offence held
liable and most of the cases of corporation are been dealt under these civil regulation as mostly
they get away from any criminal prosecution or punishment which usually been given to
criminal offender which shows the real problem in the current legal system .

CORPORATE CRIME AND WHITE COLLAR CRIME

American criminologist Edwin Sutherland first popularized the term "white collar
crime" in 1939, defining such a crime as one "committed by a person of respectability and high
social status in the course of his occupation." Sutherland also included crimes committed by
corporations and other legal entities within his definition13 . Sutherland's study of white collar
crime was prompted by the view that criminology had incorrectly focused on social and
economic determinants of crime, such as family background and level of wealth. According to
Sutherland's view, crime is committed at all levels of society and by persons of widely divergent
socio-economic backgrounds. In particular, according to Sutherland, crime is often committed
by persons operating through large and powerful organizations (Strader, 2002). So White Collar
Crime is a kind of professional crime, performed by higher society members, criminal elite and
criminal aristocracy, which uses their influence and social status. (Aleksic, Škulić & Zarkovic,
2004). In this category we can include all persons which have some public function or are in
some position. In this manner the members of the highest society are representatives of the
white collar crime, where political and economic decisions are made. '' Activity'' of the white
collar crime is pointed to the economy, jobs in the governmental structures and usage of
authorization of control and state and finance jobs. (Boskovic, 1999).

Based on the definition of the white collar crime a definition of corporate crime is made.
Some authors believe that there are some differences and both types of criminal activity are
classified in the same group in organized crime which is characterized by conducting illegal
business. These authors see the only difference is that in the white-collar crime and corporate

13
Sutherland used the term in a 1939 speech, en tled "The White-Collar Criminal," he gave to a joint mee ng
of the American Sociological Society and the American Economic Associa on. (See more: Sutherland, 1940).
 10

crime of unlawful activities for individuals and institutions that have entered into a business to
make a profit gained legitimate business, and organized crime include illegal activities of
entities whose goal from the start was to obtain profits illegitimate. There is justification for
equating the term crime of "white collar" and "corporate crime" because both of them work
performed in the same areas, akin to the way victims are either all citizens or organization that
employs offenders, or other, competitive, firm. It is performed by the same person, with the
crime of "white collar", understood in the narrow sense, but more pronounced sordid personal
motive. It should be noted that in fact the perpetrators immunity they enjoy the social prestige
that they have, and the fact that individual behaviour can hardly be subsumed under existing
charges (Ignjatovic, 2007). The following facts favour the opinions of those authors and
corporate crime to use the term "white collar": corporate crime violated the rules governing the
operations of a corporation, this form of crime is carried out in the same or similar functions
as the crime of "white collar"; performed in a similar or identical manner; offenders are persons
with the same status makes the otherwise recognizable crime "white collar".

Interesting opinion indicates that the crime of "white collar" and corporate criminality
developed capitalist countries, with which are characteristic for each American society, and
they belong to his "social economic top layer." This is a typical form of crime in capitalist
society in the American criminological and sociological literature deals with the crime of
"white collar" and corporate crime as a special type of criminal activity different from
organized crime, although it is closely associated with him. This connection is often such that
it is impossible to accurately delineate (Milutinovic, 1988). It is difficult to state the difference
between these two phenomena crime. Yet it exists. As we noted in the experiments were the
subject of a criminal offense. In the case of white-collar crime subject of a crime may be a
natural person, and the responsibility of corporate crime to commit a crime is primarily the
legal entity.

CORPORATE CRIME AND ECONOMIC CRIME

In defining economic crime is necessary to consider its etiological significance 14 . In

the most general terms, economic crime has assumed the totality of the illegal activities that
are manifested in economic activity, which is foreseen for appropriate sanctions. Many authors

14
Šikman, M. (2013). Corporate Crime - New Approaches and Future Challenges. Ed. Čaleta, D., Vršec, M.
Management of Corporate Security – New Approaches and Future Challenges. Ljubljana: Ins tut of Corporate
Security. (103-114).
 11

believe that the criminal economic hard to define, because it is a complex, dynamic and highly
variable.

Korsell economic crime is defined as "crimes of profit that is taking place in the
commercial sector" (Korsell, 2002: 201). From the viewpoint of the changes the current
definition gives professor Bozidar Banovic, according to which economic crime are all tort
behavior and acts or omissions that occur in economic relations in connection with that
relationship by legal and natural persons, as subjects of these relations, have the appropriate
authority to the property on which these relations based, and that tort behaviors directly harmful
to the property and the violation of the economic relations (Banovic, 2002). The analysis of the
contents of this definition it can be concluded that the author of the concept of economic
criminality, in addition to crime, and puts economic crimes and misdemeanors, and one of the
subjects of responsibility and legal entities. Other authors, for example Professor Mico
Boskovic considers this approach as too broad to offenses against the economy and official
duties as are prescribed by the criminal law and that, as such acts are in the area of economic
crime, and criminal laws do not include economic crimes and misdemeanors as a special type
of offenses for which, in addition to physical, and may correspond to legal entities, provided
that there is a tendency to regulate and criminal liability of legal persons, which is nothing else
than a substitute for economic crimes, as against a legal person cannot be sentenced to prison
(Boskovic, 2009).

The Committee of Ministers of the Council of Europe adopted a Recommendation No.

R (81) 12 on Economic criminality which is defined as the following offenses,

Economic Crime:

1. Cartel offenses;

2. fraudulent practices and abuse of economic situation by multinational companies,

3. Fraudulent procurement or abuse of state or International organizations' grants;

4. Computer crime (e.g. theft of data, violation of secrets, manipulation of

Computerized data);

5. Bogus firms;

6. Faking of company balance sheets and book-keeping offenses;

7. Abusive situation concerning economic and corporate capital of companies;

 12

8. Violation by a company of standards of security and health concerning employees;

9. Fraud to the detriment of creditors (e.g. bankruptcy, violation of intellectual rights

and industrial property);

10. Consumer fraud (in particular of falsification and misleading statements on goods,
offences against public health, abuse of consumers' weakness or inexperience);

11. Unfair competition (including bribery of an employee of a competing company)

and misleading advertising;

12. Fiscal offenses and evasion of social costs by enterprises;

13. Customs offenses (e.g. evasion of customs duties, breach of quota restrictions);

14. Offenses concerning money and currency regulations;

15. Stock exchange and bank offenses (e.g. fraudulent stock exchange manipulation
and abuse of the public's inexperience);

16. Offenses against the environment (Recommendation no. R (81) 12, 1981)

The link between economic crime and corporate crime is clear. There is no doubt that
corporate crime is primarily manifested in the economic field, in the field of business
corporations. It is in this area, in addition to legal services, corporations often make the illegal
activity, with the goal of acquiring and increasing profits. Thus, in the exercise of unlawful
corporations as legal persons may be held liable for the acts of individual criminal economic
crime.

CORPORATE CRIME AND ORGANIZED CRIME

Organized crime is a global phenomenon, which attracts the attention not only of
experts and the scientific public, but also the wider community. Moreover, in practice,
organized crime is still quite unclear for several reasons (Fijnaut, & Paoli, 2004): it is a concept
that is changing with time, organized crime is a dynamic process characterized by adaptation
to new socio economic conditions for criminal activity ideas on organized crime as clearly
defined concepts can be wrong (Levi, 2001), the difference between organized and economic
crime poses certain difficulties, etc. Based on a long term analysis of organized crime of Jay
Albanese identifies it as a permanent crime activity which is being used and sustains on the
force usage, threats, control and manipulation of civil servants among which 4 primal elements
 13

are distinguished: 1. Existence of crime organization, 2. Rational criminal activity, 3. Profit

gain as a final goal of crime activity, 4. Use of force and threats (Albanese, 2004). With the
ability of to not be listed, all the characteristics of organized crime, crime analysis allows
organized crime to identify the following four essential (main) characteristic of organized
crime: first, the organization in formal sense, second, in terms of content organization, third,
the acquisition and profit maximization and monopolization, and fourth, influence on
government bodies, individuals and other entities of social control (Šikman, 2011).

In theory, one can find the opinion that corporate crime, as a subset of white-collar
crime, often taking place within organized crime. Therefore, it is important to consider and is
there a difference between white collar crime and corporate crime, and that there are similarities
and differences between these two forms of modern economic crime .It can be concluded that
criminality "white collar" and Corporate Crime, in its essential characteristics, have certain
similarities to organized crime. The essence is in careful planning of illegal activities by
business people, with a view to increase profits by bypassing or in direct violation of the law 15.
Some authors believe that there are some differences and both types of criminal activity are
classified in the same group in organized crime which is characterized by conducting illegal
business. These authors see the only difference is that in the white-collar crime and corporate
crime of unlawful activities for individuals and institutions that have entered into a business to
make a profit gained legitimate business, and organized crime include illegal activities of
entities whose goal from the start was to obtain profits illegitimate. The common point of them
is, among other things, an attempt to undermine the principles of free market economy. It can
thus be concluded that crime is "white collar" and Corporate Crime, in its essential features,
have certain similarities with organized crime, but in the form of crime both perform certain
corruption offenses and various forms of corruption are used to establish and extension of crime
ties, strengthening the status of holders of this criminal activity and their reputation, which is
conditional on adequate protection of the perpetrators of crime, "white collar" and corporate
crime (Ignjatovic, 2007).

15
Profit-oriented economy does not believe that such a viola on of law has the same weight as a viola on of
the law and common crime, with par cipants legi mate business ac vi es try to make some discreet from
illegal ac vi es because what the business needs, make sure they are safe, stable and predictable condi ons.
Such condi ons make it easy to con nue the process of capital accumula on, that no earthquakes caused by
prosecutorial interven on, media publicity and the like can disturb. Šikman, M. (2013). Corporate Crime - New
Approaches and Future Challenges. Ed. Čaleta, D., Vršec, M. Management of Corporate Security – New
Approaches and Future Challenges. Ljubljana: Ins tut of Corporate Security. (103-114
 14

However, if we look at the relationship of organized crime, crime, "white collar" and
corporate crime in terms of their mutual connection and mutual influence, it can be concluded
that organized crime is the broadest term for corruption, white collar crime and corporate crime,
if these forms Crime contain all the elements that characterize organized crime. This means
that corruption, criminality "white collar" crime and corporations may be manifested in the
form of organized crime offenses, but that can be done in a way that will not make hallmarks
of organized crime. Corruption is present in the commission of organized crime, but the crime
and "white collar" and corporative crime, regardless of whether it is done with the
characteristics of organized crime. So, corruption occurs in such a way that the execution of a
criminal activity using organized crime, but the crime is white collar with corporate crime.
From this it can be seen all kinds of hazards and adverse consequences that brings corruption.

CORPORATE RESPONSIBILITY FOR CRIMINAL ACTS

Corporate responsibility for the commission of crimes is a key concept to prevent and
combat this type of crime. So, it's about corporate liability, given that corporations and de jure
and de facto legal entities. Therefore, in the legal systems of European and North American
countries there is a need for the introduction of criminal liability of legal persons 16 .

In fact, over the years, in Europe the number of corporations that participate in
economic life was increased. Although by doing some of their activities corporations did
specific criminal offenses, criminal liability of legal persons for a long time was not provided
for under national law of the European countries from which they originated, and corporations
(Šuput, 2009). At the same October 1988th by the Committee of Ministers of the Council of
Europe adopted is Recommendation No. R (88) 1810.

In order to prevent, combat and control of criminal offenses committed by corporations

Council of Europe recommendation was that the Member States whose criminal codes do not
provide crime responsibility entities revise their laws. For this reason France made a serious
revision of its Criminal Code in 1994, the new Criminal Code of France, which is the first of

16
Earlier in the jurisprudence of the view that there was a legal person may be the subject of a criminal
offense, primarily due to the subjec ve principles of individual responsibility (nulla poena sine culpa) and the
unacceptability of collec ve punishment.U theory there are three posi ons on the criminal liability of legal
persons. The first is that there is not only criminal, but also any other liability of legal persons. The second is
that there is no criminal accountability of legal persons, but there are other forms of criminal responsibility
(responsibility for the infrac on or civil offense). According to the third paragraph, the criminal liability of legal
persons is jus fied and necessary (Ignjatovic, 2007). Šikman, M. (2013). Corporate Crime - New Approaches
and Future Challenges. Ed. Čaleta, D., Vršec, M. Management of Corporate Security – New Approaches and
Future Challenges. Ljubljana: Ins tut of Corporate Security. (103-114).
 15

all the criminal law system of continental countries that predicted sanctions and principles of
liability of legal persons for criminal offenses. France's example was followed by many
European countries. In Belgium in 1999, The Amendments to the Criminal Code were
introduced and Belgium had for first time in its legislation introduced the institution of criminal
liability of legal persons. The Netherlands introduced the concept of criminal liability of legal
persons accepted even much earlier 1976.

In 2002 Denmark amended its Criminal Code and predicted that a legal person can be
a subject of criminal responsibility. Switzerland is by the Article 100, Paragraph 1 of the
Criminal Code predicted a legal responsibility to entity. Corporate crime, as a negative social
phenomenon that manifests itself in a particular place and time, tends to constant expansion
and through new forms of expression, including the greatest threat to society contemporary
forms of committing criminal acts with a foreign element. Values that are threatened
commission of these crimes are of great importance to the state and society, and their successful
detection, and the detection and finding the perpetrators is not possible without the acquisition
of appropriate knowledge, skills and skills in the application of appropriate law enforcement
methods. However, there are many problems in the understanding of corporate crime. A
different theoretical approach in determining corporate crime corporate crime means
understanding the different aspects of science. This is because it is a multidimensional social
phenomenon, which implies a need for a multidisciplinary approach to understanding the
concept of corporate crime, in order to better understand what this criminal phenomenon. In
fact, it's related sciences, but that the determination of economic crime approach with his
subject, which to some extent leads to a different understanding of economic crime. In the
context of corporate crime is viewed simultaneously from several aspects, such as: crime,
criminal, legal, social, political, and international-second.

Forensic aspects of corporate crime is seen as a form of crime, and dealing with the
study of methods of detecting and investigating crime corporate crime and their offenders, as
DEVELOPMENT strategies of opposing corporate crime. Criminological approach to the
study of corporate crime is reflected in the study of the forms and causes of corporate crime
(phenomenology and etiology of corporate crime), looking at corporate criminality as a real
phenomenon in society, with all its characteristics, objective and subjective, as well as
measures to prevent and eliminate corporate crime such offenses. Criminal law aspects of
corporate crime are reflected in the study of corporate crime, specifically the crime which
demonstrates corporate crime offenses.
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JUDICIAL APPROACH

The judiciary plays the major role in determining the corporate criminal liability as
there are certain cases which shows what are the problems which judiciary faced in determining
the criminal liability in corporation and what are its observations ,the below mentioned cases
are being critically been analyzed .

Standard Chartered Bank and ors. V Directorate of Enforcement And ors17 The
appellant went to the High Court of Bombay to contest the notices issued to them under Section
50 read with Section 51 of the Foreign Exchange Regulation Act, 1973.

The appellant asserted that it could not be prosecuted for the offence under Section 56
of the FERA Act. The appellant filed an appeal against the judgment of the Division Bench of
the Bombay High Court, dated 7thNovember, 1998 where the appellant contended that no
criminal proceedings can be initiated against the appellant-company for the offence under
Section 56(1) of the FERA Act as the minimum punishment prescribed under Section 56(1)(i)
is imprisonment for a term which shall not be less than six months and with fine. The questions
raised at the moment included if a company or a corporate body could be made liable for crimes
for which the punishment is necessarily imprisonment and if the sentence is both imprisonment
and fine, can fine alone be imposed by the court for the guilty. Judgements The majority view
was given by K.G. Balakrishnan, Arun Kumar, J. and D.M. Dharmadhikari, J. Reference was
made to Section 11 of the Indian Penal Code which says that “The word “person” includes
any Company or Association or body of persons, whether incorporated or not” and to the 41st
and 47th law commission report in which the law commission stated that –

“In every case in which the offence is only punishable with imprisonment or with
imprisonment and fine and the offender is a company or other body corporate or an association
of individuals, it shall be competent to the court to sentence such offender to fine only.”19
References were also made to Craies on Statue Law and Maxim lex non cogit ad impossibilia
which gave that law has to be followed mainly with respect to intent and not just based on the
construction. Also, in case of impossibility of events, it can be safely assumed that the
parliament intended it to be changed. Analysis B.N. Srikrishna, J. mentioned that legislative
intent was what was important and that the construction of statute only advances the intent.

17
AIR 2005 SC 2626
 17

The maxim ‘lex non cogit ad impossibilia’, is also referred which conveys that the court
cannot order the execution of an impossible event. Thus after this case it has been established
that a corporate cannot claim immunity from punishment claiming that it does not possess the
required mens rea for committing offences. The idea that a corporation cannot be made liable
for its crime has been rejected since this case.

Sunil Bharti Mittal vs CBI 18 CBI ordered investigations into three companies Bharti
Cellular Limited, Hutchison Max Telecom (P) Limited and Sterling Cellular Limited for
irregularities in the granting of licenses in the 2G band and spectrum allocation and filed
charges against them for the same before the judge. The judge mandated that the managing
directors of the company should also be prosecuted individually along with the companies
themselves. The major issue was to decide if the liability of the company can be attributed to
the person(s) at the helm of the affairs of the company by invoking the theory of attribution?

JUDGEMENT AND ANALYSIS

The Court reiterated that the “Criminal Intent of the person(s) controlling company can
be imputed to the company based on the principle of “Alter-ego”, however, the reverse
application of this principle is not permissible. If the company is accused, then the directors
cannot be automatically assumed to be guilty and they can be 20 prosecuted only if the evidence

Showcasing their malicious intent, roles and involvement in the crime is adequate or if
the statute provides for specific vicarious liability of directors of the acts of the company by
way of a legal fiction (deeming provision). Two directors were summoned as the directing will
and mind of the company but the judge reversed saying they were brought up by the magistrate
without any incriminating role assigned to them. So, the case was dismissed.

Iridium India Telecom Ltd. v. Motorola Inc.19 The question of punishing a corporate
came up again in the Supreme Court in the case filed by Iridium India Telecom Ltd. Against
Motorola Inc. The complaint pertained to allegations of cheating and criminal conspiracy under
Section 420 of the Indian Penal Code and the original complaint spanned over 35 pages. The
appellant challenged that the deceptive nature of the respondent was revealed from the fact that
the proposal was taken to the Board of Directors of the Respondent, was not accepted by the

18
(2015) 4 SCC 609
19
(2011) 1 SCC 74
 18

Board of Respondent and the high court sentenced that the Board of Respondent as a corporate
did not possess the mens rea to commit the fraudulent act.

It was also argued that all the jurisdictions of the world agreed that corporates have to
mad liable for certain criminal offences. The respondent challenged that no representations
were made on the success of the project and the respondent was not controlling appellant. It
argued that it could not be established by the appellant that its intentions were dishonest and
representations were made to experts of their fields and they were able to gauge the risks of the
project. The other argument was that the corporation did not possess the necessary mens rea
for the crime.

Judgement

The Supreme Court reiterated the legal position on two counts: (i) the scope of
jurisdiction of the High Court in quashing criminal proceedings under Section 482 of the
Criminal Procedure Code; and (ii) the fact that companies can be prosecuted for offences
involving mens rea. The Hon’ble Supreme Court further held that Appellants were entitled to
an opportunity to establish that Respondent and its representatives were aware of the falsity of
the representations at the time when they were made.

The judgement given by high court was set back and it was said 21 that a corporate will
be made liable to its offences and it cannot claim immunity that it does not have the mens rea
required to commit crimes. The Supreme Court allowed the prosecution of the respondent
setting aside the sentence given by the high court.

Satyam Scandal Lifting Up Of Corporate Veil20

Lifting up of corporate veil is a doctrine used to identify the real people who have
committed the crime and claim immunity by using the company’s name. The court will not
allow the use of the corporate name and it will go through the process of lifting of corporate
veil where all the names of the directors, members and shareholders should be identified and
they will be prosecuted accordingly This doctrine is divided into two theories: Alter ego and
Instrumental theories The alter ego theory gives that a distinction exists between the
shareholders and the company while the instrumental theory finds out the methods in which

20
AIR 2005 SC 2622
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the shareholders use the company for their personal benefits. The court does not easily issue
orders to remove the corporate veil and only does when it becomes absolutely necessary.

Case And Judgement

Satyam Computer Services was the fourth largest software firm in India before its
infamous scandal. The infamous Satyam Scan first became visible to the public through a letter
from the CEO himself to SEBI and later investigated in detail by CID and other departments.
It was revealed that the balance sheet as on Sept. 30 2008 was heavily manipulated and was
carrying fictitious cash and bank balance that did not exist. The books were overstated by 5000
to 6000 crores leading to inflated stocks that helped the management earn money. After the
revelation, Ramalinga Raju wastaken into police custody and the Raju brothers along with the
CFO of the company, Srinivas Vadlamani have been arrested. The above cases shows the
crimes which the corporation are committing and how much it is influencing the society at
large mostly in negative way and violating the legal system, Also how the court faced difficulty
in determining or attributing the criminal liability on corporations as they observe that the
individual or corporation can only be held liable if there is sufficient evidence of the active role
criminal intent the second was when the statute specifically imposes the liability. The court
mostly attribute criminal liability on corporations based on the principles of vicarious liability
and use the tool of mens rea and actus rea

CONCLUSION

Terminology problems understanding corporate criminality represent terminological

ambiguities that appear in the literature on corporate crime. In fact, it is about technical
problems, which do not necessarily have implications for understanding the essence of
corporate crime. This issue is particularly evident in the definition of the basic terms used
meanings and expressions of a purely economic nature, and have the necessary knowledge and
in certain other areas as well. Different socio-economic and political system at the national
level, too, is a problem of understanding corporate criminality. The corporate crime occurs in
all countries, both developed, less developed, countries in transition, and developing countries,
and he has a remarkable ability to use the favourable conditions for their infiltration and
skillfully adapted to specific social, political, economic and other situation, not only within
countries but also internationally.

However, different socio-economic and political planning at the national level has
affected the perception of corporate crime. Also, different socio-economic and political
 20

structure of certain countries is conditioned and manifestation of various forms of corporate

crime. That's why there are also different views of corporate crime, by which certain negative
social phenomenon in one country are corporate crime, such as criminal activities in another
country do not have such a qualification. Recognizing this fact, some theorists who deal with
these issues exclusively related to the home country.

It is also important to note that the definition of corporate crime aggravate various
judicial and prosecutorial systems in different countries, and different approaches to police
methods and activities to be undertaken in order to detect and investigate crime corporate
crime. Also features of corporate crime show an inability to perceive the real situation, the
structure and motion offenses of corporate crime and criminal offenses in the area of crime,
"white collar" solely on the basis of official statistics, since the current difficulties in the
detection of these crimes and to provide evidence give rise to the "dark figure" of crime, which
is not negligible.
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REFERENCES:

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1. Albanese, Ј. (2004). Organized Crime in Our Times. Cincinnati: Anderson Publishing

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2. Berg, L. B. (2008). Criminal Investigation. New York: McGraw Hill.

3. Clinard, B. M. & Yeager, P.C. (2006). Corporate Crime. New Jersy: Transaction
Publishers.

4. Frank, N. K., & Lynch, M. J. (1992). Corporate crime, corporate violence: A primer.
Albany, NY: Harrow and Heston.

5.Gobert, J. & Punch, M. (2003). Rethinking Corporate Crime. London: Butterworths

6. Hunter, R. D. & Dantzker, M. L. (2002): Crime and criminality: causes and

consequences. New Jersey: Prentice Hall, 15. Ignjatović, Đ. (2007). Kriminologija, Beograd:
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7. Korsell, L. (2002) ‘Economic crime’, in Crime Trends in Sweden 1998–2000.

Stockholm: National Council for Crime Prevention.

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1. h ps://scholarworks.wmich.edu
2. h ps.//www.jstor.org
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