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8/7/2019 Corporate crime (1)
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Group 1(Finance B)
Ayush Agarwal
Barkha Agarwal
Nitin Shah
Sadaf Ali Khan
Prashant Batra
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Corporate crimes
Agenda For the Day
1
Corporate crime liability2
Statutory Inadequacy3
Causes of corporate crimes4
Cases5
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Corporate Crime
Crimes committed by a corporation or by individuals who may be
identified with a corporation.
Activities undertaken by an individual or company that are done in a
dishonest or illegal manner, to gain an advantage.
Corporate crime poses a significant threat to the welfare of the community
Corporate crime may involve acts like fraud (Mad off, Enron),
environmental pollution (corporate crime, such as the 1984 Union Carbideaccident in Bhopal, India), making of unsafe products and dangerous work
environments.
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Composition
Corporate Crime
Statecorporate
Crime
Organizedcrime
Whitecollarcrime
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Concepts
Maxim actus non facit reum, nisi mens sit rea.
The principle of corporate criminal liability is based on the doctrine of
respondent
Traditional Approach
Modern Approach
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Corporate criminal liability
Corporate cannot have the mens rea or the guilty mind to commit offence
Corporate cannot be imprisoned.
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Statutory Inadequacy
Indian Act still make official liable for the act criminally liable.
Sections. 45, 63, 68, 70(5), 203, etc of the Indian Companies Act wherein
only the officials of the company are held liable and not the company itself.
The various sections of the IPC that direct compulsory imprisonment does
not take a corporate into account since such a sanction cannot work against
the corporation
A corporation was incapable of committing the offence of cheating as it has
no mind (mens rea).
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Causes
Need
Greed
Corporate culture theory
Self Control view
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Any corporation can be made liable for act of its agent or
servant if he/she :
Commits a crime
Acts within the scope of employment
With the intent to benefit the corporation
Corporate Punishment
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LOGO
Cases of Corporate Crime
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Satyam Fiasco
Largest Corporate Crime in Indian History. One of the largest in the World.
Main accused: Mr. Ramlinga Raju
Inflated (non-existent) cash and bank balances of Rs 5040 crore ($1.04billion) (as against 53.61 billion reflected in the books).
An accrued interest of Rs 376 crore which was non-existent.
An understated liability of Rs 1230 crore
An overstated debtors position of Rs 490 crore
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Main issues related to Satyam case
Falsification of account
Responsibility of Auditors and bankers
Corporate governance issue
Role of independent directors
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Charges against Raju
IPC Sec 120B: For alleged criminal conspiracy
IPC Sec 409: Criminal Breach of Contract
IPC Sec 420: Cheating
IPC Sec 468: Forgery
IPC Sec 471: Falsification of Account
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Various Case Laws
Tippecanoe Beverages, Inc. v. S.A. El Aguila Brewing Co., 833 F2d 633(CA7 1987); The proper standard for jury instruction is that the corporation
may be held criminally responsible for antitrust violations committed by its
employees if they were acting within scope of their authority, or apparent
authority, and for benefit of corporation.
United States v. One Parcel of Land, 965 F.2d 311, 316 (7th Cir. 1992)
(stating agent's knowledge of illegal act may be imputed to corporation if
agent was "acting as authorized and motivated at least in part by an intent
to benefit the corporation"
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How can a Business be "Punished" if convicted of a Crime?
Only in financial terms
Corporate Death Penalty"
Imposing fines
business shuts down
Probation
monitored by the court
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