Corporate Criminal Liability. a Review of Law and Practice Across the Globe

Corporate criminal liability. A review of law and practice across the globe Linklaters 3 Contents Introduction 4 Acknowledgements 6 Jurisdiction by jurisdiction analysis Australia 8 Belgium 12 Brazil 16 France 20 Germany 26 Hong Kong 30 Indonesia 34 Italy 36 Japan 40 Luxembourg 42 Mongolia 46 The Netherlands 50 Papua New Guinea 54 People’s Republic of China 58 Poland 60 Portugal 64 Russia 68 Singapore 72 South Africa 76 Spain 80 Sweden 84 Thailand 88 United Kingdom 92 United States 96 Contacts 100 4 A review of law and practice across the globe Introduction A review of law and practice relating to corporate criminal liability in 24 jurisdictions across Europe, Africa, the Americas and Asia-Pacific Obviously, the implementation of effective In our globalised world, companies compliance programmes is a must for operating internationally may be any corporation or bank. However, no particularly concerned to know whether compliance programme can be perfect corporate criminal liability rules in a and crimes committed by persons certain jurisdiction extend to foreign connected with the company will continue companies not incorporated there but to happen. As pressure from prosecution conducting business there. Very few of authorities increases, it is becoming even the jurisdictions considered in our review more important for in-house counsel have explicit legal provisions dealing of international companies to be aware with the liability of foreign companies. of the impact of criminal conduct in all Usually, no differentiation at all is made parts of the world where the company is between national and foreign companies doing business – not the least in order when it comes to holding a company to fine-tune and reinforce the company’s criminally liable since, generally speaking, compliance programme and to be able it will be the fact that the criminal offence to have an informed discussion with was committed at least in part in the local advisors. respective country and not fully abroad that will be determinative. This major comparative review considers the position of the concept of corporate Unsurprisingly, monetary fines are the criminal liability in 24 jurisdictions, with main form of sanction imposed on the chapters provided by 18 Linklaters companies. However, most jurisdictions offices being enhanced by chapters from also provide for other forms of sanction, our contributor firms: Allens, Lefosse such as disgorgement of profits, Advogados, Widyawan & Partners and publication of the judgment, exclusion Webber Wentzel. from public tenders, temporary operating bans, revocation of licences or, as a last Of all the jurisdictions we considered, resort, the dissolution of the company. only Germany, Italy, Poland, Russia and And while monetary fines are the most Sweden did not recognise the concept common sanction, there are no uniform of criminal liability for companies. rules on the amounts to be imposed. Nonetheless, all of them provide for Whereas some countries provide for a measures by which companies can maximum fine by law, for example Poland be sanctioned if criminal offences are and Sweden, in others, such as the committed by individuals associated with People‘s Republic of China and the them, although the legal prerequisites United Kingdom, there is no maximum for such sanctions may be different. limit. In yet others, such as Brazil, the calculation of the fine may be tied to Generally speaking, the acts and omissions annual turnover of the company. of individuals are the link by which a company may be held (criminally) liable. While companies are increasingly In most jurisdictions the group of individuals sanctioned for misconduct, the existence for whose acts and omissions a company of an effective compliance system is can be held liable is not limited to the gaining in importance, both when it comes legal representatives and people with to determining the amount of any fine managerial functions, but may extend to to be imposed and at an earlier stage, ordinary employees or even third parties, when the decision is to be made whether as is true for the United Kingdom under a company should be prosecuted at all. the UK Bribery Act. However, not every However, only very few of the jurisdictions jurisdiction requires the identification we considered, for example Spain, of an individual to find a company liable explicitly provide for provisions regarding for wrongdoing. the relevance of an effective compliance system when it comes to corporate criminal liability. Linklaters 5 Future developments to be expected > what kind of sanctions can be imposed in this area of law vary from country on companies? to country. In some jurisdictions it is expected that prosecution authorities > what is the relevance of an effective will take an increasingly tough stance compliance system? against companies, which may result > how are criminal proceedings against in a growing number of proceedings. companies conducted in practice? In Germany, for example, there are discussions about the introduction of > likely future scope and development? Generally speaking, corporate criminal liability and in Sweden, an increase in the amount of fines is We have recently published a related the acts and under contemplation. However, in some publication, Taking stock. A review of omissions of countries, major legal changes have anti-bribery and corruption law and come into force only recently, such as the enforcement across the globe, which individuals are introduction of corporate criminal liability provides a global picture of the fight the link by which generally in Spain and Luxembourg, so against corruption in 25 jurisdictions. that implementation in practice remains The publication is available from our a company may be to be seen. client knowledge portal, or by emailing held (criminally) Edwina Larsen-Jones. An understanding of these global trends liable. and the position with respect to the This comparative review is intended concept of corporate criminal liability in to highlight issues rather than provide different jurisdictions is key to managing comprehensive advice. If you have any corporate risk. Therefore, Linklaters’ particular questions about corporate review of corporate criminal liability will criminal liability and the risks companies be of particular interest to businesses can face, please contact me or the with international operations. It provides Linklaters LLP lawyers with whom at-a-glance answers to twelve questions: you work. > can companies be criminally liable for wrongdoing? > for what kind of wrongdoing can a Robert Henrici, Partner company be held criminally liable? > how far does criminal liability extend? > does criminal liability extend to foreign companies? > is the company legally obliged to disclose criminal offences to the competent prosecution authorities? > are the prosecution authorities legally obliged to conduct a criminal investigation into corporate wrongdoing? > what is the position of the defendant company in criminal proceedings? > is the company legally obliged to co-operate with the prosecution authorities in the proceedings? Law stated as at September 2016 6 A review of law and practice across the globe Acknowledgements Thank you to our contributors This Review has been developed by lawyers from 18 of Linklaters’ global offices, working in collaboration with expert local Allens is a leading Australian independent partnership, operating in law firms. Our special thanks goes to alliance with Linklaters LLP. our contributor firms for providing the following chapters: > Allens Australia; Mongolia; Papua New Guinea Lefosse Advogados is a leading independent law firm operating in Brazil > Lefosse Advogados Brazil > Widyawan & Partners Indonesia Linklaters and Widyawan & Partners have a formal association in Indonesia and work closely together to provide clients with a market-leading > Webber Wentzel international and Indonesian law capability. South Africa Their involvement and support are greatly appreciated. Webber Wentzel is a leading full-service African law firm operating in alliance with Linklaters LLP. Linklaters 7 8 A review of law and practice across the globe Australia Can companies be criminally liable Under the Code, the physical element for wrongdoing? of an offence will be attributed to a body corporate where it is committed by an Criminal liability of corporate legal persons employee, agent or officer acting within has been recognised in Australia for over the actual or apparent scope of his or her a century. Principles governing corporate employment (section 12.2 of the Code). criminal liability mainly derive from the The fault element of intention, knowledge common law. However, Chapter 2, Part 2.5, or recklessness will be attributed to a Division 12 of the Criminal Code (“Code”), company if the “company expressly, tacitly Schedule 2 to the Criminal Code Act or impliedly authorises or permits the 1995 (Cth) provides a statutory framework commission of an offence” (section 12.3 for corporate criminal responsibility at the of the Code). A company may expressly, federal level. Each State and Territory tacitly or impliedly authorise or permit also has its own anti-bribery laws. For the the commission of an offence where it is most part in Australia, private sector proved that: bribery is covered in State and Territory criminal codes, which have uncertain (i) the corporation’s board of directors extraterritorial application. intentionally or knowingly carried out the relevant conduct or expressly,

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