The Company As A Criminal

The Company as a Criminal: Comparative Examination of some Trends and
Challenges Relating to Criminal Liability of Corporate Persons
George O. Otieno Ochich1

2008.
1. ABSTRACT
As sophistication engulfs the business sphere, an increasing number of individuals prefer

to incorporate their business enterprises into companies to facilitate their enjoyment of
the advantages of corporate trading.1 That trend has seen many activities that were
previously the preserve of natural persons being increasingly undertaken under the veil of
incorporation. Incidental to such activities are bound to be those that have criminal
dimensions. Of course, there exist a whole lot of persons who would seek to use the veil
of incorporation to disguise their individual criminal intents and acts. Thus, in the pursuit
of their business objectives companies engage in criminal activities, some of which are
deliberate while others are merely incidental to their mandate. While certain such
criminal activities may be blamed on the individuals who comprise the company, others
are attributable to none other than the company itself. As the number of corporations
increases and their involvement in diverse spheres of life expands, the need to call them
to account for their criminal wrongdoing equally grows. This development poses new and
complex challenges to criminal law as traditionally understood. Various jurisdictions have
had to expand or reorient their perspectives of criminal responsibility in response to the
challenges emerging in this area of the law.
The bulk of interventions have come through judicial innovations. Many jurisdictions
have also made legislative interventions, but these have mainly been on procedural
aspects. The nominalist and the realist theories and the vicarious liability, identification
and aggregation models are representative of such trends. The traditionally dominant
trend has centred around the nominalist theory of corporate personality, under which
corporations are viewed as fictional entities and only individuals are treated as the true
subjects of criminal law. Recent trends are now giving faint signs of an emerging
recognition that companies may directly be held criminally liable irrespective of the
culpability or otherwise of the individuals who comprise them, thanks to the realist theory
of corporate personality that considers companies to be real entities capable of being
responsible for their own actions. Recent trends are now giving faint signs of an emerging
recognition that companies may directly be held criminally liable irrespective of the
culpability or otherwise of the individuals who comprise them. Company policies and
systems are the possible basis of such ascription of direct criminal responsibility.
1
LL.M. (Buck.), LL.B. Hons. (Nbi.), Dip. Law (KSL). The author is an Advocate of the High Court of Kenya
and Lecturer in Law at Moi University. He previously served as an adjunct lecturer at the Kenya School of
Law (2001-2005).
KENYA LAW REVIEW Vol. II : [2008-2010]
This aspect of the law still stands at a cross - roads. This paper attempts an analysis of the
law, trends and challenges on this area of the law within the broad context of criminal
law. The paper takes a comparative outlook and includes insights into trends in diverse
jurisdictions, including the United Kingdom, USA, Australia and Kenya. The paper then
concludes that in as much as it is now accepted that corporations are legal persons in their
own right, criminal sanctions are still human based. The law on corporate criminality
must admit this fact and redirect its sanctions accordingly. It is proposed that directing
punishment upon the corporations as entities misses the deserving target and indirectly
punishes the innocent persons – shareholders, creditors, employees and the corporation’s
clientele. A just regime of punishment for crimes of corporations must instead target the
officers and servants of the corporations by whose consent, fault or negligence the
offences have been committed or omitted.
2. COMPANY AND CORPORATION EXPLAINED
Although a ‘company’ is often talked of to mean an incorporated association, ‘company’

has a much wider meaning as it includes unincorporated firms (e.g. partnerships, clubs
etc.) as well. Under the common law, the strict technical term for an incorporated
association was ‘corporation’. The fundamental distinction between incorporated and
unincorporated associations resides in the fact that unincorporated firms normally consist
of a few individuals, often known to each other, who are bound by friendship, mutual
confidence and trust and who need the unanimous consent of all the others before they
may do certain things within the association. 2 Incorporated bodies, on the other hand,
consist of a large fluctuating number of individuals, not necessarily acquainted with each
other and who may join or withdraw from the body’s membership relatively more easily.
The foregoing distinction notwithstanding, in this discussion the terms ‘company’ and
‘corporation’ are used interchangeably to refer to incorporated associations, including
those registered under the Companies Act3 or by special statutes.4 The distinction is,
however, important to bear in mind, as it justifies our concern with incorporated
associations rather than unincorporated associations. Unlike unincorporated associations
which have in practice attracted negligible concern of the criminal law5 and only limited
recognition in the civil law, a corporation is a notional entity, a ghostly person - what
lawyers call a ‘legal person’. It is based upon but distinct from the human beings who
sign the memorandum of association and so bring the company into existence. Thus, when
two or more individuals ‘turn themselves’ into a company, they are perceived as having
brought forth a new person in law, which may hold property and make contracts on its
own account, and that these are not the contracts and property of the individuals who
have formed the company. The individual shareholders may come and go, or even die,
without affecting the legal existence of the company.
The independent legal existence of a company is useful because it bestows the company
with a special status as a juristic person, thus helping to separate the legal antecedents of
the company from those of the individual shareholders. The shareholders should not
suffer for the private wrongs of the company.
2.1 The Fiction of Corporate Personality and the Limits of Corporate Criminal
Liability
Since Salomon v Salomon,6 it has been understood that a company, upon incorporation
acquires an identity distinct and separate from that of its shareholders, with separate rights
and liabilities. The shareholders themselves can legally transact with the company as
distinct persons.
Being a fictitious person, a corporation works through its agents in the real world. Its objects
are stated in the memorandum of association but are executed through the human agency
on behalf of the corporation. These human agents may be the directors, managers or servants
of the company. Where these agents happen to be the shareholders themselves, an intricate
web will have arisen where the shareholders will be acting in a different capacity as
representatives of the corporation rather than as representatives of their shares.
Whereas there would be no difficulty in ascribing criminal liability upon company

directors where their culpability is established, difficulties arise when the company itself
is to be perceived as the subject of criminal law. Although companies are legal persons
and enjoy in many ways the same rights, duties and liabilities as human persons, the
enforcement of liabilities against companies present some problems. A company possesses
peculiarities that distinguish it from the human legal person who has physical integument
which extends his activities beyond those of an incorporated body. The difficulties
revolve around two questions. First, what types of crimes may a corporation commit/omit
or be held responsible for? Second, what forms/kinds of punishment or consequential
penalties may be imposed and effected upon a corporation?
Generally speaking, a corporation, as a legal person, is in the same position in relation to

criminal responsibility and liability as a natural person. The word ‘person,’ if statutorily
used in the prescription of criminal responsibility and liability, is generally understood to
also include a legal person which a corporation is.7 A corporation may, therefore, be
convicted of any offence, whether of strict liability or one requiring mens rea, more so
where the statute creating the offence simply uses the term ‘person’. But the matter is far
from that simple. A corporation has predominantely been viewed as an artificial, rather
than a natural, person with a fictional personality. It is a creature of the law and has no
physical existence of its own.
It is understood that for a majority of crimes, one may be convicted only if he had the
capacity to understand his act – that is, he must have had a capacity to exercise his will. 8
Since a corporation is an ‘invisible, immortal [person that] rests only in intendment and
consideration of the law’,9 that general rule renders a corporation incapable of
committing those majority of crimes even through its agents since it cannot form a will to
communicate with such agents. Unlike a living person who has a mind which can have
knowledge or form an intention or be negligent and who has hands to carry out his
intentions, a corporation has none of these. It is, therefore, inconceivable that a
corporation might conceive a crime, or directly physically execute its corporate intention.
Simply and realistically, there are offences that a corporation cannot commit. Ordinarily,
a corporation, not being a natural person, cannot directly commit such offences as
burglary, sodomy, bigamy, rape, incest, assault, murder and treason as these involve
personal participation.
The absence of animate existence renders the corporation incapable of acting by itself – it
can only act through human representatives. The representatives of a company are the
alter ego of the company who exercise all rights and duties, powers and liabilities on
behalf of the company because it is destitute of a natural will. Generally, a company
cannot perpetrate crimes that involve personal participation, but a company may be
convicted as accessory to those crimes. For example, whereas a company cannot
perpetrate perjury and similar false statements on oath, because a company cannot
practically be put on oath, there is no reason why a company should not be convicted as
accessory to perjury. A corporation may, however, as a principal offender, be indicted for
such offences as fraud or conspiracy which may be perpetrated through its agents.
Similarly, a corporation cannot be sentenced to such forms of physical punishment as
imprisonment or death penalty as the same cannot be effected against the corporation.
Writing generally on a company’s position at criminal law Blackstone had this to say:
[A company] can neither maintain nor be defendant to an action of battery or such
like personal injuries, for a corporate can neither beat nor be beaten, in its body
politic. A corporation cannot commit treason, a felony … It is not liable to
corporate penalties nor attainder, forfeiture or corruption of blood … Neither can
it be committed to prison, for its existence being ideal, no man can apprehend or
arrest it.10
Thus, corporations cannot commit unlawful conduct intentionally or negligently except

through their representatives and they cannot be punished directly, but only indirectly
either by fines or through their representatives.
In R v ICR Haulage,11 the Court of Criminal Appeal in the United Kingdom held that
there is no reason in law why indictment alleging a common law conspiracy to defraud
should not lie against a limited liability company. The court observed:
The offences for which a limited company cannot be indicted are, it was argued,
exceptions to the general rule arising from the limitations which must inevitably attach to
an artificial entity, such as a company. Included in these exceptions are the cases in
which, from its very nature, the offence cannot be committed by a corporation, as, for
example, perjury, an offence which cannot be vicariously committed, or bigamy, an
offence which a limited company, not being a natural person, cannot commit vicariously
or otherwise. A further exception, but for a different reason, comprises offences of which
murder is an example, where the only punishment the court can impose is corporal, the
basis on which this exception rests being that the court will not stultify itself by
embarking on a trial in which, if a verdict of guilty is resumed, no effective order by way
of sentence can be made. In our judgment these contentions of the Crown are
substantially sound, and the existence of these exceptions, and it may be that there are
others, is by no means inconsistent with the general rule.12
Since a company cannot be put behind bars, the most convenient direct penalty is a fine,
apart from any forfeiture of property or cancellation of licence. Indeed, no difficulties
should arise in ascribing criminal liability upon companies for offences, of whatever
description, that are punishable by the infliction of a fine alone or as an alternative
punishment – and more so if responsibility for the offence does not require a particular state
of mind.13 As many offences, with the exception of a few such as murder and treason, are
now finable, there is very little kind of legal trouble that a company cannot get into. The
law has been criticized for not being imaginative enough in its responses to the
sentencing of corporations.14
2.2 The Corporation as a Real Entity

Contrary to the view that corporate personality is merely fictional and that corporate
criminal liability can only be derived from natural persons associated with the company,
there has developed a view that corporations operate as real entities in ways that are not
reducible to propositions about individuals. This view is attributed to the realist theories
of corporate legal personality, which argue that organisations comprise not only
individuals but also institutionalised relationship amongst the individuals. The resulting
entities involve more than the sum of the individual parts. They shape the outlook and
channel the conduct of their members in ways that may not be chosen or even understood
by any of the individuals concerned. They can possess knowledge or means of knowledge
that may not be available in total to any single individual.15
The realists maintain that organisations have decision-making processes that can function
without any individual member necessarily making or even taking part in the making of
the decision. Organisations are, therefore, legal entities with real, and not mere fictional,
personality. Thus, there is no reason why corporations should be immune from blame for
wrongful conduct, neither is there any reason why attributing blame to corporations
should necessarily be regarded as fiction.
If corporate bodies are to be treated like natural persons, there must be something common
between the two. And this is that both are bestowed with legal personality and they both
enjoy rights and duties defined and imposed by law. These rights and duties cannot belong
to a fictitious body; their inherence must be in something that can hold them – the holder
cannot be an artificial body. In this regard, a corporation is also deemed to be a convenient
holder of the rights and duties of its members.
3.THE NOMINALIST THEORIES AND THE DERIVATIVE MODELS OF

CORPORATE CRIMINAL RESPONSIBILITY
The view that corporations can be criminally responsible has gained momentum fairly
recently, the same arising largely out of the twentieth century judicial innovations. 16
Traditionally, the predominant thinking was that a corporation could not be indicted for a
crime at all.17 This was partly attributable to the fact that it was necessary that the accused
person makes a personal appearance in the courts, and a corporation, not being a physical
person could not appear. Personal appearance is no longer mandatory in all cases as an
accused person, including a corporation, may now appear and plead through a
representative. The earliest recognition of criminal liability of corporations coalesced
around offences that were rather straightforward, such as where a statute imposes a duty
upon a corporation as a legal person to act and no action is taken. As far back as 1842, in
Birmingham and Gloucester Railway Corporation,18 a corporation had been convicted for
failing to fulfil statutory duty.
The momentum of the twentieth century has been fuelled by the courts principally
through two models of corporate liability, both of which adopt a derivative approach
within the broader context of the nominalist theories of corporate personality. The
nominalist theories of corporate personality view corporations as fictional entities and
nothing more than collectivities of individuals, so that any reference to corporate conduct
or corporate fault is deemed to be a reference to the conduct or fault of the individual
members of the collectivity. The corporation is simply a name by which the collectivity
of individuals refer to or describe themselves and the idea that the corporation itself can
act and be blameworthy is a fiction.19
Thus, the nominalist theories adopt a derivative approach in which the responsibility of a
corporation for a criminal offence can only be derived from or located through the
responsibility of an individual actor. That is to say, an individual first commits the
offence and then the responsibility of that individual is imputed upon the corporation.
This means that if a fault cannot be traced to an individual in such a way as would render
the individual criminally responsible then there can be no corporate responsibility.
Out of this nominalist perception of corporate personality have been evolved two models
of corporate liability, namely: the vicarious liability and identification liability. It is worth
of emphasis that despite their difference in scope and approach, both the vicarious
liability and identification liability models are derivative in orientation in the sense that
they derive corporate liability from the fault of an individual.
3.1 Vicarious Liability Model

Vicarious liability is basically a civil law of torts principle whereby a principal becomes
automatically liable for the wrongs committed by his officers, employees and agents
acting within the scope of their authority or employment. Thus companies would be
liable for the misdeeds of t h e i r employees to the same extent as a human employer
would be.
In the eyes of the law, a corporation is not regarded as so abstract as not to lead to a master
and servant relationship. It has the capacity to act and, therefore, an ability to form such a
relationship. Being an artificial person a company may act or form an intention only
through its directors or servants. As each director or servant is also a legal person quite
distinct from the company, it follows that the liability of a company for consequences
flowing out of the unlawful intentions and acts of its directors or servants may be visited
upon the company only vicariously. A company is bound by the acts of it agents or
representatives. It, therefore, remains liable for the torts of its servants committed intra
vires, that is, within the scope of their employment.20 In the words of Lord Lindley,
If it is once granted that corporations are for civil purposes to be regarded as
persons, i.e. as principals acting by agents and servants, it is difficult to see why
the ordinary doctrines of agency and of master and servant are not to be applied to
corporations as well as to ordinary individuals.21
There is no doubt, therefore, that the principle of vicarious liability is applicable to

corporations, and on the basis of which principle there should be no difficulty in finding a
corporation responsible for the acts of its servants, for their negligent and fraudulent
behaviour. An incorporated body always acts through its agents. The acts of its agents in
the course of the business of the corporation, if the acts are intra vires, are the acts of the
corporation. Winfield22 opines that a corporation should be liable as a joint tort feasor for
the intra vires acts of its agents. Commenting on the applicability of the vicarious liability
principle to corporations, Pollock states:
Our modern way has been to circumvent it. The real difficulty was to make out how any
man, any natural man, could be vicariously liable to pay damages for the wrongful act or
negligence of his servant, which he had in no way authorised and might even have
expressly forbidden. When this was overcome, the difficulty of ascribing wrongful
intention to an artificial person was in truth only a residue of anthropomorphic
imagination.23
Under the vicarious liability approach, a corporation is held liable for the conduct of all
its officers, employees and agents who are acting within the scope of their employment or
authority if the circumstances were such that the individual officers, employees or agents
would themselves be liable. Thus, the conduct that makes a corporation vicariously liable
must be within the scope of the individual’s employment or authority. There need not be
an express instruction or authority to engage in the particular conduct giving rise to
liability. There may have been a violation of express instructions from the corporation but
it is still sufficient if the conduct falls within the area of operation that has been assigned
to the individual and also, perhaps, has or is intended to have some benefits for the
corporation.
There is no consensus, however, regarding the liability of a corporation in cases of ultra

vires acts. The easier way should be to conclude that since a corporation is fictitious, any
acts of its officers, employees or servants that are ultra vires the corporation are deemed
to be outside the corporation’s sphere and, therefore, not acts of the corporation as the
corporation itself does not exist there. It would be illogical to hold a company liable for
wrongdoing when it exceeds its powers, especially because it is illogical to presume that
a corporate body has authorised its representatives or agents to do what the corporate
body itself has no power to do. According to Salmond:
A legal person is as incapable of conferring authority upon an agent to act on its

behalf, as of doing the act in propria persona. The authority of the agents and
representatives of a corporation is therefore conferred, limited and determined,
not by the consent of the principal, but by the law itself. It is the law that
determines who shall act for a corporation and within what limits his activity must
be confined. Any act which lies beyond these legally appointed limits will not be
imputed to the corporation, even though done in its name and on its behalf.24
Generally exempting companies from liability for all wrongs that arise ultra vires their
powers may, however, leaves wide room for serious mischief as it may result into
innocent victims of such ‘ultra vires wrongs’ going without legal redress. Salmond
himself seems to realise this problem and observes:
The true principle is, it is submitted, the following: Every act done, authorised, or
ratified on behalf of a corporation by the supreme governing authority of that
corporation, or by any person or body of persons to whom the general powers of
the corporation are delegated, is, for the purpose of the law of torts, the act of the
corporation itself, whether intra vires or ultra vires of the corporation, and the
corporation is liable accordingly for that act or for any tort committed in respect
of it by any agent or servant of the corporation within the scope of his authority or
employment. If, for instance, a municipal council establishes the business of a
tramway, the municipal corporation will be liable in for the negligence of the
servants employed in the management of the tramway, or for any nuisance created
by the working of it, notwithstanding the fact that the business so undertaken is
beyond the limits of the corporation’s statutory power.25
Salmond’s latter view presents a better exposition since it takes into consideration public
convenience and it also takes a realistic approach to the concept of corporate personality.
The principle of ultra vires should not hold sway in determining a corporation’s liability
in torts and contracts where innocent third parties are involved, and for criminal
activities. There would be no sound basis for excusing a corporation from liability since a
natural person doing similar acts would also not escape liability. In the words of
Salmond,
In the absence of anything to the contrary, it is presumed that the Legislature intended the
corporation to incur the same liabilities as would be incurred by an individual doing the
same thing.26
Thus, if the directors of a company authorise the company employees or agents to

undertake an act which is ultra vires the corporation, the corporation will not escape
liability merely because the act was outside the powers of the corporate body. Here, the
corporation cannot claim to have delegated powers to its representatives because what
one has not got it cannot delegate.
Goodhart, however, disagrees with Salmond’s view that a corporation should remain
vicariously liable even for torts that arise out of ultra vires acts. According to Goodhart,27
a corporation is liable for torts committed in the course of intra vires acts but not in the
course of ultra vires acts. He cites Anson’s28 view that no one can appoint an agent who is
not otherwise capable of entering into contract. He cites an example, where A without
authority, engages B to be the servant of C. He then concludes that in such circumstances,
C is clearly not liable for the torts of B committed in the course of his supposed
employment.29 Goodhart’s illustration does not, however, aptly sustain his argument. The
relation of master and servant cannot be established where a human being without the
authority of his master, who is also a human being, acts on his behalf in his dealing with a
third person. But in the case of a corporation such a relation can be established because it
is not the corporation itself that has to authorise, but the directors who for all purposes are
the corporation; and they act and establish a relation with a third person. Thus the relation
of master and servant is established in the case of a corporation, and the directors cannot
deny the relation which they as human beings and masters have established on behalf of
the corporation.
In Goodhart’s view, a company is liable for ultra vires acts only if it authorised them.30
The authority of the directors of the company in their official capacity makes the
company liable for torts which arise out of such authorised ultra vires acts. Thus, where a
tort arises out of an act which is ultra vires and is not authorised by the corporation, the
corporation will not be liable. There has also been the view that as a memorandum of
association cannot lawfully authorise a company to commit a crime, all crimes are ultra
vires. This view, however, has been largely ignored in both the law of tort and crime and
10
its relevance remains only in contract and property law.31
Although vicarious liability is now well entrenched in civil actions, its applicability in
full extent in criminal law has not been without controversy. Vicarious liability has
generally been resisted in criminal law where it has been seen not even to have an
equivalent.32 In the context of criminal law, it has been considered unjust to condemn and
punish a person for the conduct of another without reference to whether the former was at
fault for what occurred. The leading case of Huggins33 had long rejected the applicability
of vicarious liability in criminal cases. Huggins, a fleet warden was charged with the
murder of a prisoner whose death had been caused by the servant of Huggins’ deputy. It
was held that, though the servant was guilty, Huggins was not, since the acts were done
without his knowledge. Raymond CJ said:
It is a point not to be disputed, but that in criminal cases the principal is not
answerable for the act of the deputy as he is in civil cases: they must each answer
for their own acts, and stand or fall by their own behaviour … to affect the
superior by the act of his deputy, there must be the command of the superior
which is not found in this case.34
The acceptance of vicarious liability in criminal law, in instances in which it has been
accepted, has been very cautious. It has been restricted to the determination of the
criminal liability of corporations only in those instances in which parliament has
sanctioned its application. There is no doubt that parliament may, pursuant to its broad
legislative power, impose criminal liability vicariously whenever it deems fit. Whenever
parliament expresses the intention that a corporation should be criminally liable
vicariously, the courts will uphold such intention. In the words of Atkin J in Mousel
Brothers Ltd v London and North-Western Railway Co,35
“… while prima facie a principal is not to be made criminally responsible for the
acts of his servants, yet the legislature may prohibit an act or enforce a duty in
such words as to make the prohibition or the duty absolute; in which case the
principal is liable if the act is in fact done by his servants. To ascertain whether a
particular Act of Parliament has that effect or not regard must be had to the object
of the statute, the words used, the nature of the duty laid down, the person upon
whom it is imposed, the person by whom it would in ordinary circumstances be
performed, and the person upon whom the penalty is imposed.”
Indeed, some statutes have prescribed offences for which liability is expressly or
impliedly imposed upon principals or employers for the criminal acts of their officers,
employees or agents. This form of liability would attach to corporations in their capacity
as employers or principals. In such instances a corporation may escape liability only if it
can prove that there was no culpability on the part of the corporation or that every
reasonable care was taken to avoid the commission of the offence.
11
Although it has been applied to solve many cases of corporate criminality, vicarious
liability has been criticized for being both too narrow and too broad in scope in its
treatment of corporate liability. It is too narrow because it is only activated through the
criminal liability of some individual. Where fault is required as an element of the offence
in question, that fault must first be present at the individual level. If it is not present at
that level, then there is no corporate liability regardless of the level or measure of
corporate fault. Attributive liability does not generally apply to offences requiring mens
rea, and the same limitation applies to companies in so far as their liability is based upon
ordinary rules of attribution for rank-and-file employees. 36 It is too broad because if there
is individual liability, corporate liability follows even in the absence of corporate fault.
Thus, the liability of the individual will be prima facie evidence that the corporation is
liable and there need not be further inquiry to ascertain corporate culpability. These
criticisms of vicarious corporate liability have caused dissatisfaction with the vicarious
liability model leading to efforts to explore other models.
12
3.2 Identification Liability Model

The identification liability model goes a step beyond the vicarious liability approach.
Unlike the vicarious liability model which derives corporate liability from the conduct of
any agent, servant, officer and employee, the identification liability model recognises that
the liability of the corporation can be derived only from a narrower range of personnel.
The identification model equates the corporation with certain key personnel or officers
who act on its behalf. In other words, these key personnel or officers are identified with
the corporation and perceived as acting as the corporation rather than for the corporation.
Their conduct and state of mind are attributed to the corporation. These personnel are said
to represent the ‘directing mind’ of the corporation. In the eyes of the law the will of
these representatives is the will of the company. In the words of Salmond,
“The directors or other superior agents or representatives by whom a corporation
fulfils its functions are not the fellow-servants of the inferior servants of the
corporation... The acts of those superior agents or representatives are treated in
law as the acts of the corporation itself, rather than those of its servants.”37
By this scheme, a corporation can only be held criminally liable if the acts of its agents
are regarded in law as the acts of the corporation itself; it can only incur responsibility
through them.
The identification liability model owes its origin to a civil case where it was held that for
the purpose of a statute referring to “actual fault or privity,” the privity of the manager
was that of the company. In the words of Viscount Haldane LC,
“… a corporation is an abstraction. It has no mind of its own any more than it has
a body of its own; its active and directing will must consequently be sought in the
person of somebody who for some purposes may be called an agent, but who is
really the directing mind and will of the corporation, the very ego and centre of
the personality of the corporation.”38
In other words, those who control or manage the affairs of a company are regarded in a
sense as the company itself. When they act in the company’s name, such persons are
considered to be the ‘embodiment of the company’.39 These are the persons that have
been designated as ‘controlling officers’ in the United Kingdom’s draft Criminal Code. 40
Whenever they act in their capacity as controlling officers, the company is identified with
both their acts and states of mind.41 Although spoken in a civil law context, the words of
Lord Denning in H. L. Bolton Engineering Co. v T. J. Graham & Sons Ltd 42 have often
been quoted in criminal law contexts:
“A company may in many ways be likened to a human body. It has a brain and
nerve centre which controls what it does. It also has hands which hold the tools
and acts in accordance with directions from the centre. Some of the people in the
13
company are mere servants and agents who are nothing more than hands to do the
work and cannot be said to represent the mind or will. Others are directors and
managers who represent the directing mind and will of the company and control
what it does. The state of mind of these managers is the state of mind of the
company and is treated by the law as such.”43
As regards the application of the identification model in criminal cases, the leading
judicial opinion has been expressed in R v ICR Haulage Ltd44 where a company, its
managing director, and others were indicted for a common law conspiracy to defraud.
The Court of Criminal Appeal upheld the indictment. Although the crime charged
required a state of mind, and although a corporation has no mind of its own, the court
imputed the state of mind of its managing director to the company, so that his fraud was
its fraud: the acts of the managing director were the acts of the company, and the fraud of
that person was the fraud of the company. It is worthy of pointing out that the court was
able to convict the company of conspiracy only because of the involvement of the other
persons besides the company. It is unlikely that the company could have been convicted
of conspiracy if the fraud exclusively involved the company and its managing director,
because then, technically, there would have been only one party and one mind involved
yet conspiracy requires more than one player and one cannot be convicted on account of
conspiring with himself. A company, through its director, may conspire with another
person. In a majority of cases, where a company is found liable under the identification
model, it is likely that a director or other controlling officer will also be found to be an
accomplice or accessory in the offence, or be implicated in the offence by reason of the
offence having been committed with his consent or connivance or to have been facilitated
by his negligence. It has been suggested that a company may be convicted of conspiracy
‘only if at least one of the human beings [with whom it has conspired] is a controlling
officer of the corporation acting within the scope of his authority’.45
The courts’ willingness to attribute to the company the blameworthy acts and mens rea of
controlling officers developed rapidly in the mid-1940s.46 In DPP v Kent and Sussex
Contractors Ltd47 the offence required an intention to deceive and it was held that the
transport manager’s intent was the intent of the company. Kent was approved in ICR
Haulage Ltd.48
Where an offence is one of strict liability, a company may be held liable for any act of its
employee or agent that is attributable to it by operation of the ordinary rules of
attribution. Where, however, an offence requires mens rea or a belief or some other state
of mind, the company will not be held liable unless that mens rea49 or belief or state of
mind was possessed by a controlling officer. 50 But the belief of a controlling officer will
be inconsequential if another controlling officer, especially his superior knows that the
belief is ill-founded.51 Thus, all the controlling officers involved in the offence must
possess the required state of mind.52
14
In certain decisions that have brewed some discontent, it has been held that the acts of a
controller are attributed to the company even when the controller is acting in fraud of the
company.53 In Moore v I Bretler Ltd,54 the company was convicted of making false returns
with intent to deceive contrary to the Finance (No 2) Act 1940 of England when returns
were made by the company secretary and a branch sales manager. The decision has been
criticised for ‘going too far down the scale in identifying a controlling officer’ 55 and also
because the object of the false returns was to hurt the company by concealing the
fraudulent sale by these two officers of the company’s property. Recently in Re Supply of
Ready Mixed Concrete,56 the House of Lords held a company liable for contempt of court
for the act of an employee in making an arrangement in breach of an undertaking which
the company had given to the Restrictive Practices Court despite the fact that the Board
of directors knew nothing of the arrangement and had, in fact, given instructions that no
such arrangements were to be made. These are the sorts of reasoning that Glanville
Williams has characterised as ‘mechanical jurisprudence’. There is little sense in
punishing the company by a fine when the act was directed against the company and
therefore against the shareholders. Does it mean that the controller ceases to exist as a
separate person merely because he is a controlling officer in the company? Can’t the
controller commit offences and be wrong in his own right separate from the company if,
for example, he defrauds the company. Lord Reid’s argument that the controller and the
company are deemed merged would justify a conclusion that the controller ceases to
independently exist so that a fraud against the company cannot be held against him, for
that would be holding one liable against his own self. The United Kingdom draft Code
proposes a reversal of the import of that decision by providing that a corporation is not
liable for the act of a controlling officer when it is done with the intention of causing
harm, or concealing harm done, to the corporation.57
Although authority is lacking, it can be argued that, as in the case of vicarious liability,
identification applies only in respect of acts done on company business, not in the
manager’s private concerns, and that it applies only in respect of acts done in a
managerial or directorial capacity.58 In other words, the persons who are identified with
the corporation must have acted within their corporate capacity in the ordinary course of
the company’s business and within the scope of their employment and authority. The
requirement here is stricter than it is in the tort principle of vicarious liability where it is
merely required that the actor should either have had authority or should have acted in the
course of employment. Suppose, for example, that the managing director of a company
drives out to meet a branch manager of the same company and in the course of driving is
guilty of causing the death of a pedestrian by dangerous driving. Although the company
may be liable in the tort of negligence, it is unlikely that the company will be held guilty
for the offence since the act of the director, though within the course of his employment
for the purpose of the law of tort, is not what may be called a managerial act. It is not an
exercise of the corporate powers, or a decision relating to the corporate activities.
15
The doctrine of identification applies equally to private and public companies as well as
statutory corporations. There is difficulty, however, in applying the identification model
to state corporations, or corporations that exist principally as agents of the state. These
are what Glanville Williams refers to as being ‘emanation of the Crown’, 59 and which he
suggests can be protected by the general immunity that exempts officers of the Crown
from penal statutes when they are acting on behalf of the Crown:
The Crown itself cannot be prosecuted, for that would be Regina v Reginam,
which is thought to be impossible (it is not, of course) and the same rule applies in
favour of Government Department and other Crown Agencies.60
Attempts to extend the identification model to human employers has, however, been
rejected. In the Tesco Supermarkets Ltd case, Lord Reid disapproved a dictum of Lord
Parker CJ that a human employer would be liable if his manager was ‘a person to whom
delegation in the true sense of the delegation of management has been passed’. 61 On the
other hand, Lord Pearson, speaking specifically with regard to the defence of ‘no
negligence’ under section 24 of the Trade Descriptions Act 1968 of England, said:
“Section 24 requires a dividing line to be drawn between the master and any other
person. The defendant cannot disclaim liability for an act or omission of his ego
or his alter ego. In the case of an individual defendant, his ego is simply himself,
but he may have an alter ego. For instance, if he has only one shop and he
appoints a manager of that shop with full discretion to manage it as he thinks fit,
the manager is doing what the employer would normally do and may be held to be
the employer’s alter ego. But if the defendant has hundreds of shops, he could not
be expected personally to manage each one of them and the manager of one of his
shops cannot in the absence of exceptional circumstances be considered his alter
ego.”62
The opinion that the identification doctrine may apply to human employers was not
voiced by the other law lords, and was evidently a minority view of Lord Pearson’s. The
issue of whether the identification doctrine should be extended to non-corporate
employers remains unsettled. But the distinction in the ascription of criminal liability
arises out of the legal personality between a company and other employers like
partnerships, in the sense that whereas companies and human employers possess their
own personality in law, partnerships merely represent the partners themselves. It is for
this reason that the big shots in a company are identified with the company, while a
manager employed by a partnership cannot be identified with the partners. In the words
of Glanville Williams:
“The delegation rule for companies is a response to the difficulty that otherwise
no company could be convicted of an offence requiring mens rea. This difficulty
does not arise in the case of a sole trader or a partnership, because here the human
16
beings carrying on the business can have mens rea.”63
The doctrine of identification offers a better model than that of vicarious liability as it
addresses the issues of culpability more appropriately. Moreover, it avoids being too
broad-based as it narrows the scope of corporate liability by restricting the range of
persons who can make corporations liable. Through this principle, though a corporation
cannot act except through human agents, it may nevertheless have personal negligence
imputed to it. By equating the controller’s state of mind with that of the corporation, the
corporation can be made liable for offences which require men.s rea even in
circumstances where a human employer would not be liable.
The identification liability model has been adopted and developed in various
jurisdictions. The general principles have been adopted in decisions in Australia 64 and
New Zealand.65 The form of identification liability adopted differs from one jurisdiction
to another in terms of the range of personnel from whom corporate liability can be
derived. The common law perception of corporate identification liability, in the version
expounded by the House of Lords in Tesco Supermarkets Ltd v Nattrass,66 is especially
restrictive. In that case,67 the question arose whether the branch manager of a supermarket
firm was sufficiently in control of the company’s affairs to have his negligence attributed
to the company as the personal fault of the company when he had failed to supervise the
assistant who actually committed the offence. The House of Lords answered in the
negative, holding that the personnel with whom the corporation is identified are only
those at the centre of corporate power: the board of directors, the chief executive officer
and other officers at a similar level. Thus, that the company may be criminally liable for
the acts only of: ‘the board of directors, the managing director and perhaps other superior
officers of the company [who] carry out the functions of management and speak and act
as the company’,68 or of a person ‘… who is in actual control of the operations of a
company or of part of them and who is not responsible to another person in the company
for the manner in which he discharged his duties in the sense of being under his orders’. 69
Thus, the company would have been liable if it had been a director rather than a manager
who had failed in his duty.
By this standard, that a person is not a directing mind merely because he does ‘brain’
work within the company or he exercises some managerial discretion. Although it is now
clear in the United Kingdom that a branch manager is not necessarily to be regarded as a
member of the top echelon with which the company is identified, the actual decision was
helped by the fact that the supermarket’s branch managers were tightly controlled by
visiting branch inspectors and above them by area inspectors. But it seems that even
without this fact the branch manager would not have had sufficient administrative powers
to be identified with the corporation. Lord Pearson said:
“In the present case the company has some hundreds of retail shops, and it would
17
be far from reasonable to say that every one of its shop managers is the same
person as the company… Supervision of the details of operations is not normally
a function of higher management; it is normally carried out by employees at the
level of foreman, chargehands, overlookers, floor managers and ‘shop’ managers
(in the factory sense of ‘shop’)”.
It is difficult to understand why the domicile of the brain of the company should be
varied depending on the size of the company. As Glanville Williams observes,
“I find it strange if the number of retail shops is a factor. Is it the law that a
company with two retail shops is identified with branch managers, while a giant
company with hundreds of shops has its brain located entirely at HQ? Why should
such a line be drawn?”70
Lord Pearson’s remark has been dismissed as having been, probably, no more than
rhetoric as there is no reason to suppose that the matter depends upon the number of
branches.71
More generally, it can only be said that the identification doctrine is a compromise on a
difficult question of policy. On the one hand, it would be possible to say that every
company employee is identified with the company, in which case the company would be
liable for a mens rea offence committed by the lowliest workman. This would make a
remarkable contrast with the rule for human employers. At the other extreme it would be
possible to say that the company is never liable except for an offence of strict liability.
But then it could not be liable for an inchoate offence (even one committed for the
purpose of committing an offence of strict liability), nor could it be liable as accessory,
even to an offence of strict liability. Both inchoate offences and accessoryship require
mens rea. A company could not even be liable for an offence of negligence; and since the
present legislative tendency is to turn strict liability into negligence liability, this might
eventually exclude corporate liability altogether.
The Tesco Supermarkets Ltd standard was admittedly too high. Glanville Williams has
expressed the view that even if it be accepted that a compromise is necessary, the ‘voices
of infallibility’ drew the line too tightly:
“There is no absolute right and wrong about this, but the practical effect of Tesco
appears to be to confine the identification doctrine to the behaviour of a few men
meeting, say, in London, when the activities of the corporation are country-wide
or even world-wide. It would seem on the whole to have been more sensible to
have extended identification to cover the person or persons in control of local
branches.”72
18
By the Tesco Supermarkets Ltd standard, delegation of decision-making authority over

any unit of the corporation is relevant to establishing corporate liability only where the
delegation is total and supervision is no longer exercised. Thus, if the persons who are
identified with the company delegate their duties to some other person in such a way that
the delegation is deemed to be total then the acts of that other will be deemed to be the
acts of the company.73 The general principle was restated in the leading statement of Lord
Reid thus:
“Normally the board of directors, the managing director and perhaps other
superior officers of a company carry out the functions of management and speak
and act as the company. Their subordinates do not. They carry out orders from
above and it can make no difference that they are given some measure of
discretion. But the board of directors may delegate some part of their functions of
management giving to their delegate full discretion to act independently of
instructions from them. I see no difficulty in holding that they have thereby put
such a delegate in their place so that within the scope of the delegation he can act
as the company. It may not always be easy to draw the line but there are cases in
which the line must be drawn.”74
In crimes requiring mens rea it does not greatly matter if the range of persons inculpating
the company is restricted, since the purposes of deterrence are generally best served by
prosecuting those who are responsible. It is in offences of negligence that the limitation
of liability imposed in Tesco is most injurious. That a company should not be liable for an
offence of negligence committed by its branch manager, who after all represents the
company in the particular locality, is a considerable defect in the law.75
It is true that decisions in many large corporations are taken at the level of branches or
units or even at the middle management levels. To the extent that top-most officers of the
company are the only ones to be identified with the company, the identification doctrine
would insulate the corporation from liability for those other decisions. This would only
be avoided where the doctrine of identification is given a wide scope so that it may cover
even those decision-makers at the unit or branch levels. What is evidently needed is a
statutory redefinition of the officers whose acts and mental states implicate the
company.76 The law commission for England and Wales proposed a statutory definition of
‘controlling officers’ as follows:
“Controlling officer of a corporation means a person participating in the control of
the corporation in the capacity of a director, manager, secretary or other similar
officers (whether or not he was or was not validly appointed to any such
office).”77
Both Lords Diplock and Pearson opined that the determination of who is to be equated to
the company should consider also the constitution of the company and identify ‘those
19
natural persons who by the memorandum and articles of association or as a result of

action taken by the directors or by the company in general meeting pursuant to the
articles are entrusted with the exercise of the powers of the company’. 78 This echoes the
position under Kenyan law where liability is extended to ‘every person charged with, or
concerned or acting in, the control or management of the affairs or activities of [the]
company …’79 This necessarily involves taking into account the company’s constitution,
because it is only then that the ‘person charged with … the control or management’ may
be ascertained. It also involves taking into consideration the resolutions of company
general meetings, as these may help determine the individuals whom the company at the
meeting may have ‘charged … with … control or management’. A major limitation of
such an approach would be the likelihood of prejudicing the position of innocent third
parties who may be victims of the criminal acts of the company on the narrow
considerations of essentially internal arrangements of corporations.
In a recent decision in Meridian Global Funds Management Asia Ltd v Securities

Commission,80 the Privy Council has attempted to relax the identification doctrine by
giving it an interpretation that would broaden the range of circumstances in which a
company may be found criminally liable. The Privy Council held that the acts of the
company’s investment manager were properly attributed to the company for the purposes
of the New Zealand Securities Act 1998. The Privy Council adopted the position that
whether or not an act is to be attributed to a corporation is a question of construction of
the particular statute under which the proceedings are brought. The Privy Council’s
interpretation leaves no room for the development or application of general principles in
the identification doctrine, as each case turns on its own circumstances. This expansion
has, however, been criticised as being an ‘imperfect guide to the approach to the rule for
attribution of a crime’81 and for reducing ‘the degree of certainty in the law’. 82 The Court
of Appeal has subsequently emphasized that the Meridian approach is only applicable to
offences of statutory origin.83
The Supreme Court of Canada in Canadian Dredge & Dock Co v R84 endorsed the basic
principle expounded in Tesco Supermarkets (above) but qualified its application in a way
that could extend the scope of corporate liability under the identification model. The
Supreme Court agreed with the House of Lords that the key idea is that of a ‘directing
mind’ with whom the corporation can be identified. The Supreme Court rejected,
however, the idea that a corporation necessarily has a single directing mind wielding
centralized authority. Justice Estey in his Supreme Court judgement argued that a
corporation can have more than one directing mind. He explained that in a country such
as Canada where corporate operations are frequently geographically widespread, a
corporation may operate by delegation and sub-delegation of authority from the corporate
centre; by the division and subdivision of the corporate brain; and by decentralizing by
delegation the guiding forces in the corporate undertaking.
20
In the United States, the identification doctrine has been formulated in various ways -
there is no reference to a directing mind and the tests adopted are wider than that
enunciated in Tesco Supermarkets. For example, the American Law Institute’s model
penal code makes a corporation liable for the conduct of its board of directors or any
‘high managerial agent’ acting on behalf of the corporation. 85 The United State’s
formulations also tend to adopt the more flexible test of whether the agent was acting on
behalf of the corporation, so that any agent who was acting on behalf of the corporation
may make the corporation liable. More emphasis also appears to be put on the idea that
the conduct should in some sense, reflect corporate policy.
Some recent proposals for codification of the identification model have recommended its
extension beyond the scope of the Tesco Supermarkets principle. In Australia, for
example, the committee reviewing the Australian commonwealth law has recommended
that the definition of ‘controlling officer’ should be extended to cover any person in
control of a particular part of the operations of the corporation as well as someone at the
centre of its affairs.86 Like the US model penal code, the Australian Criminal Code,
allows the culpability of the board of directors or of a ‘high managerial agent’ to be
transferred to the corporation.87 ‘High Managerial agent’ is defined as a ‘servant, agent or
employee or officer of the body corporate with duties or such responsibility that his/her
conduct may fairly be assumed to represent the policy of the body corporate’.88
Despite the fact that the identification liability doctrine is more popular than the vicarious
liability model, it has also been criticised in certain aspects. One of the major
shortcomings of the identification doctrine is that it fails to reflect the reality of modern
day large companies or multinational corporations and produces what “many regard as an
unsatisfactory narrow scope for criminal liability.”89 The doctrine is seen to be distorting
the allocation of liability as between large and small corporations. The proposition that
the corporation and the directing mind get merged so that the corporation only acts
through the central mind is not without fault. Although it may easily be applied in small
corporations, the identification doctrine breaks down in larger and more complex
corporations in which the range of personnel who can be identified with the corporation
is widened and in which the corporation can act in many other ways recognised by law.
The identification doctrine renders it impossible to draw a sharp line between the top
brass (the controlling officers) and the lower ranks in a large company. It fails to
appreciate that even a workman who is sent out with his mate to do a routine maintenance
job is invested with certain discretion. The law provides no clear principle for deciding
who is a controller. According to Lord Reid in Tesco Supermarkets Ltd v Nattrass,90
It must be a question of law whether, once the facts have been ascertained, a
person in doing particular things is to be regarded as the company, or merely as
the company’s servant or agent … The judge must direct the jury that if they find
certain facts proved then as a matter of law they must find that the criminal act of
21
the officer, servant or agent including his state of mind, intention, knowledge or
belief is the act of the company.91
Unfortunately, the decision does not make it clear the particular or kinds of facts to which
the judge must direct the jury’s attention.92 It can certainly be said that the directors are
controllers, but the company manager or even secretary93 will join the select circle only if
he has an important say in the company. Lord Denning in a civil case described the
distinction as being between the ‘brain’ of the company and its ‘hands’, 94 but that is no
more than a metaphor.
The other criticism is that like the vicarious liability doctrine, identification doctrine
assigns liability arbitrarily without first bothering to find elements of culpability on the
part of the corporation. Corporate liability turns onto the conduct of the corporate
personnel rather than on the presence of culpability on the part of the corporation and
without bothering to establish whether the corporation itself contributed to the conduct of
the personnel.
While some people have viewed the identification doctrine as part of the vicarious
liability model, the only difference being that identification liability doctrine attempts to
limit the category of persons who can make the corporation liable, others have argued
that there is no question of vicarious liability in identification doctrine. The latter
maintain that in the identification doctrine, the two persons have merged so that the
directing mind is the corporation. In Tesco Supermarkets Ltd,95 Lord Reid made it plain
that vicarious liability does not arise in the identification liability, as the liability of a
company for the acts of its controllers is equivalent to the personal liability of a human
being:
“There is no question of a company being vicariously liable. He [the directing
mind] is not acting as a servant, representative, agent or delegate. He is an
embodiment of the company or, one could say, he hears and speaks through the
person of the company within his appropriate sphere and his mind is the mind of
the company.”96
Ultimately, however, it is right to assert that there has been dissatisfaction with both the
vicarious liability and identification models, both of which are derivative forms of
corporate liability.
4. CORPORATE DISASTERS AND THE SEARCH FOR NEW MODELS OF

CORPORATE CRIMINAL LABILITY
Recent dissatisfaction with derivative forms of corporate liability has been stimulated by
22
the legal outcomes of disasters involving large companies, particularly those involving
ferry disasters and rail crashes in which there have been massive loss of life.
Corporations have been blamed for these disasters but have escaped criminal liability, in
part, because no individual could be found criminally liable.
The outcome of the prosecution following the Herald of Free Enterprise disaster in 1987 97
may serve as a good illustration. This was a ferry disaster in which an English channel
ferry put to sea with its bow doors open capsized killing 154 passengers and 38 crew
members. The official inquiry into the disaster found that errors had been made by both
the board of directors of the company and the company’s servants, agents and employees
such as the boatswain, the captain and the senior master. 98 Thus all persons concerned in
the management of the company from the board of directors to the junior superintendents
were to blame.
The company was prosecuted for manslaughter, together with two representatives of
senior management and the staff members who had been aboard the ferry. They were
acquitted for two basic reasons. First, the organizational sloppiness depended upon an
individual’s criminal liability. Since no individual was found to be criminally liable, the
evidence could not support a finding of manslaughter against the company or any one
else. Second, under the English version of the identification doctrine, only the senior
management representatives could have made the company liable.99 This narrow scope of
identification coupled with lack of individual criminal liability combined to see the
company and its employees or agents acquitted. This case highlighted, at least, in
England and other parts of Europe, the level of dissatisfaction with derivative forms of
corporate criminal liability. It was this structure of the law of corporate criminal liability
that prevented any successful inquiry into the aspect of corporate organization that
formed the basis of the moral condemnation directed at the disaster and the outcome of
the court’s determination.100 Because of this deficiency there has been an increasing
interest in formulating forms of direct corporate liability, rather than derive corporate
liability from individual criminal liability.
23
5. THE AGGREGATION MODEL
It has been argued in some jurisdictions that for the purpose of calculating corporate
criminal liability, the conduct, state of mind and culpability of individual representatives
of the corporation should be aggregated so as to constitute in sum the elements of the
crime. This would be useful especially where none of the representatives of the company
would individually be guilty. Aggregation could involve the matching of the conduct of
one individual with the state of mind or culpability of another individual. Alternatively,
where an offence requires a particular level of knowledge or negligence this could be
found in an aggregation of knowledge or negligence of several individuals. Aggregation
has been viewed as being more reflective of the organizational nature of corporations, as
it constructs a scheme of corporate liability that is organizational rather than that derived
from the liability of an individual. This renders the aggregation model essentially
derivative in approach, the only difference being that unlike vicarious liability that
derives the liability of a corporation from the corporation’s agents or servants and
identification liability that derives the liability from the corporation’s controllers, the
aggregation model derives it from a combination of two or more individuals within the
company.
In the United States, aggregation has been accepted in some federal decisions and it has
been here viewed merely as a qualification to the idea of deriving corporate liability from
individual liability. A case in which aggregation was accepted in the US is the United
States v Bank of New England.101 Here a corporation was charged with the offence of
failing to file reports relating to currency transactions exceeding a certain statutory limit.
The court concluded that the bank would be liable if some of its personnel knew about
the reporting requirement but disregarded it even if this requirement was not known to
those personnel who actually knew of the particular transaction in issue. The court
endorsed the concept of ‘collective knowledge’ in the context of complex organizations
thus:
“[A] collective knowledge instruction is entirely appropriate in the context of
corporate criminal liability …corporations compartmentalize, knowledge,
subduing the elements of specific duties and operations into smaller components.
The aggregate of those components constitutes the corporation’s knowledge of a
particular operation.”102
The idea of aggregation has been resisted in other common law jurisdictions. It was
rejected by the divisional court in the Herald disaster case103 where an argument to
introduce it was dismissed summarily on the basis that a case against a personal
defendant cannot be satisfied by evidence against another defendant, 104 with a more
authoritative rejection being handed later by the Court of Appeal. 105 It has also been
24
rejected in Australia in R. v Australian Film Ltd106 where it was held that the only state of
mind that can be imputed to a corporation is that of the individual who performs the
prohibited act.
However, proposals to introduce some form of aggregation have been made in Australia.
Here the focus has been on aggregation of negligence. The model criminal code of
Australia prepared by the Criminal Law Officers Committee proposed that a corporation
should be held negligent ‘if the conduct of the body corporate when viewed as a whole
(that is, by aggregating the conduct of any number of its servants, employees or officer) is
negligent’.107
In general, the idea of aggregation has found the greatest favour where negligence is at
stake and a decision has to be made about how great the measure of culpability was.
Smith and Hogan acknowledge the usefulness of aggregation in relation to offences of
negligence, although they reject its application to offences requiring subjective fault:
“It is submitted that it is not possible artificially to create a mens rea in this way.
Two innocent states of mind cannot be added together to produce a guilty state of
mind. Any such doctrine could certainly have no application in offences requiring
knowledge, intention or recklessness. [But arguably there is a place for it in
offences of negligence - particularly gross negligence] … a company owes a duty
of care and if its operation falls far below the standard required it is guilty of gross
negligence. A series of minor failure by officers of the company might add up to
gross breach by the company of its duty of care. There is authority for such
doctrine in the law of tort and the concept of negligence is the same in the
criminal law, the difference being one of degree – criminal negligence must be
‘gross’.”108
Thus, through the aggregation doctrine, a corporation would be guilty of any offence that
may be committed by gross negligence.
The idea of aggregation has been justified on the ground that knowledge is a state of
mind that can readily be conceived in collective terms. An organization may ‘know’
complex matters when individuals have access to only some part of the total. Similarly,
aggregation may make an organization collectively reckless if the foresight of individuals
in different parts of the organization is pooled.109
Aggregation may, however, be criticized for the reason that it distorts the nature of
corporate criminal liability. It is illogical to aggregate the state of mind of one person
with the conduct of another. There must be some connection between the two if this form
of aggregation is to be supportable. Viewed alongside the framework of vicarious or
identification liability, aggregation becomes largely artificial. When applied in favour of a
true organizational responsibility, aggregation becomes weak as a conceptual tool. At
25
best, aggregation can be viewed as only one part of a broader conceptual framework for
tackling issues of organizational responsibility.110
6. THE REALIST THEORIES AND THE ‘DIRECT LIABILITY’ MODEL
Unlike the nominalist theories, the realist theories assert that corporations are a reality
with existence that is, to some extent, independent of the existence of their members.
Hence, corporations can act and be at fault in their own peculiar ways, quite different
from the ways in which their individual members can act and be at fault. The realist
approach, therefore, asserts that the responsibility of the corporation is primary and not
dependent on the responsibility of any individual. If, for example, a statute creates an
offence of omission by placing certain responsibility upon the company itself, it may be
unjust to convict any person other than the company itself of failure to do the act, for the
duty is imposed only on the company. The realist framework attaches responsibility to the
corporation by looking at what the corporation itself did or did not do as an organization,
what it knew or ought to have known about its conduct, and what it did or ought to have
done to prevent the harm from occurring.
From the realist theories have been proposed certain new models. One such model is the
‘direct liability’ model, which has been proposed since 1944. This approach seeks to
dispense with the necessity of any connection between corporate and individual liability.
The approach instead aims at constructing a scheme that recognizes the criminal liability
of a corporation on the basis of its organizational conduct and fault regardless of whether
or not any individual would have committed an offence.
The proponents of direct liability prefer it to any other model because it has greater
potentials of ensuring that an offence attributable to a company does not go unpunished,
especially where no individual within the company may easily be pinned down on the
offence. Further, that in direct liability the courts would find no difficulty imposing fines
that are proportionate to the gravity of the offence especially if the fine would be out of
proportion to the means of the individual that would otherwise be liable. Convicting the
corporation itself also has the effect of warning the public of the wrongful acts – selling
of prohibited or unsafe products, conspiracy against the public, or operating passenger
buses with faulty brakes – which are committed in the corporation’s name.
The forms of liability proposed under the direct liability approach differ. First, some
focus on the failure of the corporation to react appropriately to the commission of the
offence by the personnel, whereas others focus on corporate responsibility for original
offences of the corporation’s own commission. Second, whereas others focus their
attention on offences that can be committed through negligence, others view corporate
policy and culture as potential sources of subjective fault. Third, others have argued that
26
the law should recognize that criminal responsibility can flow from the individual to the
corporation and may also be found in the corporations’ structures as well.111 Whatever
forms these proposals take, the direct liability model is, no doubt, a radical break from the
traditional approach as advanced by the nominalist theory.
6.1 Corporate Negligence

Corporations possess resources of personnel, expertise, technical ability and money. A
corporation may devote some of its available resources to guard against the occurrence of
harm as a result of either the activities of the corporation or of the use of its
organisational structure. If a corporation fails to prevent harm from occurring in either of
those ways then it may be blamed. If the failure is sufficiently culpable then it may be
appropriate to impose criminal liability on the corporation for negligence. 112 Moreover, if
the harm actually occurs and its commission constitutes criminal conduct then a
corporation that is sufficiently culpable should be held criminally responsible for the
negligence. Even in the absence of fault for the initial or original occurrence of the harm
it may be appropriate to impose criminal liability for the fault on the part of the
corporation in failing to act appropriately, or for its failure to take adequate precautions to
ensure that the commission of the harm is prevented.
In some areas of a corporation’s operations, reasonable care may involve the

establishment of a formal system to minimise the risks of causing harm and to ensure
maximum compliance with the dictates of the law. Here, due care will only have been
taken if all safety and compliance systems that exist on paper are backed by an informal
corporate culture that insists that a system be taken seriously. 113 In other words, a
corporation must promote a culture in which its safety measures are observed in practice.
Under this model of corporate liability, criminal responsibility is attributed to the

corporation for a negligent omission to prevent the occurrence of harm. Corporations
should, therefore, be held criminally liable for permitting the occurrence of the harm, or
for negligently omitting to do that which it is required in the circumstances to prevent the
harm from occurring.
Moreover, it may be appropriate to impose a general duty upon corporations to guard

against their operations causing harm and their resources and structures being used to
cause harm. This may be justified on a number of reasons. First, because corporations act
in a larger scale than individuals, the chances of their actions causing harm are very high.
Second, corporations have resources that can enable them implement such preventive
measures. Finally, the veil of incorporation enables corporations to operate under a
‘protective umbrella’ of the law.114
The liability of the corporation for an offence resulting from negligence should be
addressed along the lines of the general principles of negligence. So, where a corporation
27
is under a duty to guard against the occurrence of a criminal act, which duty it fails to
discharge, it should be held criminally liable. But like all other negligent faults, the
unjustifiable harm should be that which is reasonably foreseeable.
Some jurisdictions like Canada and Australia have adopted proposals which incorporate
the models of corporate negligence. The Australian model Criminal Code, for example,
has adopted a scheme of corporate negligence that is independent of individual liability.
The proposal is that a corporation be made liable for offences of negligence if the conduct
of the body corporate ‘when viewed as a whole’ is negligent.115
6.2 Corporate Liability for Offences Requiring some Mental Status

Some offences require, as a matter of statutory prescription or entrenched common law,
an intention to commit the offence or some other subjective mental status such as
knowledge or recklessness with respect to the conduct of the offence. In other words, the
criminal conduct (actus reus) must have been accompanied by prescribed state of mind.
This category of offences poses difficulties to the nominalist theories which subscribe to
the view that corporations are fictional entities which are incapable of acting or
possessing a mental status except through its directors, servants or agents. The realist’s
perception, on the other hand, is that corporations as real entities are, like natural persons,
capable of possessing a state of mind and that corporations express their state of mind
through their policies.116
The most radical of the current crop of proposals for the reform of corporate criminal
liability remains that advanced by the Australian Model Criminal Code. The code seeks
to derive corporate criminal liability from corporate fault both for offences of negligence
and offences requiring state of mind. The key proposals of the code are that for offences
involving intention, knowledge or recklessness, a corporation should be held criminally
liable if it ‘authorised or permitted the commission of the offence’. 117 It prescribes two
alternative tests for making a corporation liable for such offences. First, the corporation
may be identified with some of the key personnel, officers and agents acting within the
scope of their authority or employment. Second, a corporation may be liable if it is
proved that its corporate culture directed, encouraged, tolerated or led to non-compliance
with the law. Thus, even if the fault cannot be located through an individual it may still be
located through the corporate culture. ‘Corporate culture’ is defined as ‘an attitude,
policy, rule, course of conduct or practice existing within the body corporate generally or
within the area of the body corporate in which the relevant activities take place’.118
Even with this broad definition, the test of corporate liability may appear too vague. In a
prosecution, there may be need to prove that specific identified features of the culture
favoured non-compliance. Indeed, two specific factors are expressly mentioned in the
28
Model Criminal Code as being relevant to the determination that a culture of non-
compliance existed. These are whether the authority or permission to commit a similar
offence had previously been given by a high managing agent of the body corporate and
whether the person actually committing the offence reasonably believed that a high
managerial agent would have authorised or permitted the commission of the act that
constituted the offence in issue.119 ‘High managerial’ agent is defined as a person whose
role in the corporation is such that his conduct can be taken to represent the policies of
the corporation.120 Such definition renders this model not much different from the
identification model, as it traces the crime to some key agent of the company.
A corporation may be reckless, in the case of an offence requiring recklessness, where it

is proved that a policy of the corporation or its culture encouraged or caused non-
compliance with the law creating the offence.121 If knowledge is a required element of an
offence, that knowledge may be established by proof of the fact that the relevant
knowledge was possessed by the corporation. Knowledge may be attributed to the
corporation where it was possessed within the corporation and the culture of the
corporation caused or encouraged the knowledge.122 The corporation is liable not
because it authorises its representatives to commit wrong acts but because it is wrongful
for it to have careless and dishonest agents.
In summary, it may be said that in respect of offences requiring particular mental status,
such as knowledge, intention or recklessness, the proposals of various jurisdictions
incline towards the view that the mental status of a corporation may be seen or drawn
from the corporation’s culture.
6.3 Direct Liability and the Offence of ‘Corporate Killing’123

In response, perhaps, to the many accidents and disasters in which mass lives have been
lost, the Law Commission of England and Wales 124 recommended the creation of a new
offence of ‘corporate killing’ which a corporation would commit if it commits a
‘management failure’ that causes a person’s death, and if that failure fell far below what
could be expected of the corporation in the circumstances. A ‘management failure’ would
occur if the way in which the corporation’s activities are managed or organised failed to
ensure the health and safety of persons employed in or affected by those activities. The
offence would be punishable by a fine and no individual would be liable to be convicted
as a secondary party. The UK government accepted the need for this new offence as a
means of giving ‘useful emphasis to the seriousness of health and safety of offences and
[giving] force to the need to consider health and safety as a management issue’ 125 and a
draft Homicide Bill embodying the same was produced in March 2005.
7. CRIMINAL LIABLITY OF UNINCORPORATED BODIES
29
There is no legal reason for not holding an unincorporated association liable for an
offence in the same way as a corporation. To the extent that the law defines a ‘person’ to
include both incorporated and unincorporated associations, and to the extent to which a
company includes both incorporated and unincorporated associations, both should be the
concern of criminal law just as they are the concern of civil law. Thus, Woolf J misstated
the law when he stated that ‘[i]t must be remembered that the [Voluntary Euthanasia
Society] is a unincorporate body and there can be no question of the society committing
an offence’. 126 An offence which may be committed by a ‘person’ may be committed by
an unincorporated body as well. In Clerk to Croydon Justices, ex p Chief Constable of
Kent,127 an unincorporated body as a registered keeper of a vehicle was held capable of
liability as a ‘person’ to fixed penalties for illegal parking under the Transport Act 1982.
The determination of the criminal liability of unincorporated bodies should proceed along
the same path as that of corporations. The same rules or principles that are applicable in
prosecuting corporations may be analogized for the prosecution of unincorporated
associations, since such associations have officials corresponding to the controlling
officers of corporations. By this approach, an association would be liable only for the acts
of those of its members who have a part in the management of its affairs.
8. REFLECTIONS ON KENYA
As the developed democracies grapple with this complex subject of corporate criminality,
a majority of younger democracies in the developing world seem not to have thought that
the subject warrants any serious attention. This may be exemplified by the position in
Kenya. Since the pre-independence days, Kenyan courts have recognised that companies
may be indicted for crimes. Unfortunately, the courts have proceeded as though corporate
criminality is not any different from that of natural persons and should, therefore, present
no difficulties. Upon that assumption, the Kenyan courts have either convicted or
acquitted companies without developing any clear principles upon which their decisions
are founded.128 Given the English background of Kenya’s criminal law principles, one
may argue that the relevant English law principles are applicable in Kenya. English law,
including the decisions of English courts as on the reception date (i.e.12 th August 1897),
are applicable in Kenya,129 and those after the reception date are of persuasive relevance.
Thus, the English principles of corporate liability, having been developed long after the
reception date are merely persuasive to the Kenyan Courts. This leaves Kenya with a
highly fluid default situation and there is clearly need for the development of local
principles on the criminality of corporate citizens.
Notwithstanding absence of clear judicial principles on corporate criminality, certain

indicators may be discerned from some Kenyan legislative provisions. For example,
section 23 of the Penal Code130 provides:
30
“Where an offence is committed by any company or body corporate, or by any

society, association or body of persons, every person charged with, or concerned
or acting in, the control or management of the affairs or activities of such
company, body corporate, society, association or body of persons shall be guilty
of that offence and liable to be punished accordingly, unless it is proved by such
person that, through no act or omission on his part, he was not aware that the
offence was being or was intended or about to be committed, or that he took all
reasonable steps to prevent its commission.”
It would appear that the Kenyan legislature has not intended that companies should bear
the criminal burden alone. Although the provision recognises that a company may
commit an offence in its own right, it does not contemplate that the criminal charge may
be brought against the company or that the criminal penalty may be imposed upon the
company alone. On the contrary, it suggests that when a company commits an offence
then the company may only be prosecuted alongside natural persons within the company
who were ‘charged with, or concerned or acting in, the control or management of the
affairs or activities of such company…’131 Similarly, returning a verdict of guilty against
the company automatically extends a verdict of guilty upon the natural person who is the
company’s co-accused and makes him equally liable to punishment unless he can
successfully plead the recognised defence.
By recognising that a person may escape liability if he shows the commission of the
offence was ‘through no act or omission on his part, he was not aware that the offence
was being or was intended or about to be committed, or that he took all reasonable steps
to prevent its commission’,132 Kenyan law requires a causative link between the natural
co-accused and the offence. There must be some fault on his part either in form of an act
or omission, or negligence. The absence of all these operates as a total defence.
By placing liability upon ‘every person charged with, or concerned or acting in, the
control or management of the affairs or activities of [the] company’, 133 the law casts the
net so wide as to make it capable of gathering not only the controlling officers but also
any other persons involved in the management of the company’s activities or affairs.
This would include very lowly officers and workmen in the company. As regards
negligence offences, the Kenyan courts have accepted that the applicable test is that of
foreseeability,134 but even this remains not elaborately developed.
Given the massive risks of unregulated corporate activity in any field, including risks of
unredressed criminal consequences, the development of sound and clear judicial
principles and statutory rules on corporate criminal liability in all aspects is a matter of
urgency for Kenya. A hybrid system in which the foregoing models complement each
other may hold sway.
31
9. THE REALITY OF CORPORATE CRIMINAL LIABILITY AND SOME

RECOMMENDATIONS
The law’s present approach to criminal liability of corporations is perceived as being

relatively simplistic and unsatisfactory since the law has not established a specific model
that accurately reflects the modern day corporation. 135 This has been attributed to the
law’s reliance on ‘strained fictions in an attempt to fit the corporate wrongdoing within
the model which has evolved for criminalising and prosecuting the individual human
actor’136 or ‘by shoehorning [corporations] into the orthodox model of criminal liability
via the identification model’.137 Indeed, all the models we have examined above derive
from the orthodox model and they have clearly been enslaved by that model. The courts
have not been open to exploring more drastic or novel models of liability that may be
reflective of the structures and operations of modern day corporations.
Approaches to corporate criminal responsibility and liability need to strike a delicate

balance between justice and the social utility of the product. Imposition of criminal
liability upon corporations must be alive to the broader social purposes of criminal
punishment and the effectiveness of the punishments administered. Convicting
companies for whatever offences, while considering the general good of society that may
result out of it, must not fly in the face of logic. There is no doubt that corporate criminal
liability serves some social utility. First, companies are averse to the idea of being
convicted and often fight hard to avoid or resist convictions lest the criminal process
exposes them to adverse publicity which may threaten the otherwise fair reputation that
the company may have tried to build in the minds of the public. Thus, it promotes
obedience to law. Second, to the extent to which it may publicly expose a company’s
criminal activities through the criminal process, corporate criminal responsibility enables
the public to know the company for what it truly is. The public may then deal with the
company from an informed position.
The trends in criminal liability of corporations exemplify a predominantly utilitarian

outlook in criminal law. They are not quite based on the theory of justice but largely upon
the need for deterrence. They are scarcely concerned with justice to the victims of
corporate offences or other parties who may get affected by the punishments slapped
upon the company. In many instances when a fine is slapped upon a company, the
expectation is that the pain of paying the fine may cause the company to pull up its
corporate socks.
While it is acceptable that a company can commit virtually any crime, it does not always
makes sense to prosecute or convict a company. Prudently, criminal responsibility should
be human, because in the last resort only human beings can be punished and even
punishment that is apparently slapped upon a company ultimately inflicts suffering upon
32
the individuals associated with the company, albeit indirectly. No justice is really served
by purporting that responsibility for a crime may fall upon the person known as the
company. The company itself is a legal figment whose physical embodiment is only a
piece of paper – in the case of a registered company, the certificate of incorporation or the
memorandum of association. It has no feelings and it can hardly be said to have been
convicted or acquitted or punished ‘justly’ or ‘unjustly’.
Sometimes, placing criminal responsibility upon the company rather than an individual
within the company may fall for the unscrupulous designs of criminal individuals within
the company. Upon the knowledge that companies may be criminally liable on their own
account, ill-bent individuals may disguise their criminal activities under the veil of the
company and use the company as a shield. An individual may commit an offence under
the cloak of a company so that the company is convicted as the individual escapes
liability. Such conviction will shift the criminal liability (e.g. fine), or part of it, that
would otherwise fall upon the individual so that it falls upon the company or its
shareholders. Although where there is clear evidence that a company director intends to
enter a plea of guilty in order to shift criminal responsibility from the individual offender
to the company, the courts may come to the aid of minority shareholders and grant them
an injunction to forbid the plea.138 That unnecessarily burdens the shareholders with the
further responsibility of having to initiate the court action.
In all cases, the individuals are the ones who ultimately bear the brunt of the so-called
criminal liability of corporations. The reality of a fine imposed upon a company is that it
is a fine upon the company shareholders whose assets or profit margin is depleted or
reduced. Or, if the company is insolvent, the fine falls upon the creditors. The employees
may be affected too, because if the fine impoverishes the company then their salaries may
be delayed or their jobs may be in peril. A company that feels that payment of the fine
imposed has caused it a financial loss which it deems necessary to recover may increase
the prices of its goods or services and thereby pass on the burden to consumers who will
thereby contribute in paying the fine. Though apparently a more direct and logical
sanction, winding up a company for fraudulent trading or other offences, whether at the
instigation of the police or otherwise, still inflicts suffering upon the company
shareholders who would lose the advantages they derived from the company and
employees who would lose the jobs. The shareholders, the creditors, ordinary employees
and / or consumers in their totality may actually be blameless for the offence and there
may be no justice in punishing them, albeit indirectly. Punishing them is also illogical,
considering especially that they actually have no immediate rights whatsoever to control,
appoint or dismiss the board of directors or other controlling officers especially in large
corporations.
The officers are in a position to prevent the offences, while the shareholders, creditors,
ordinary employees or consumers are not. Thus, it may be more prudent to simply
33
convict the directors or other persons responsible for the offence within the corporate
organization.139 A prudent model of liability must never shy away from the fact that
corporations are no more than collectivities of individuals and the so-called corporate acts
are, indeed, acts of the individuals who make up the corporation. The contention that
corporations are realities capable of committing offences and bearing the burdens of
criminal liability in their own rights is largely theoretical and academic. Where an
offence, especially a mens rea offence, is clearly attributable to company directors - for
example, that the directors perpetrated the offence or were accessories to it, or were
guilty of what may be called a ‘company officer’s offence’, it may be better policy to
concentrate upon them. Statutes creating offences which corporations may commit should
place criminal responsibility upon a company officer by reason of whose fault, neglect,
consent or connivance the company may have committed the offence so that where such
offence is found to have been committed by the company the officer should be liable and
punishable accordingly. Once the officers are punished, it may be unnecessary to impose
any additional penalty upon the company itself.
The major difficulty in confining liability to the human perpetrator is that it may not
always be possible to identify the individual within the company who was at fault, or
doing so may simply occasion further injustice. Even when the individual is found, he
may have been blatantly ‘leaned on’ or influenced by pressures from his superiors, which
makes it unjust to treat him as solely responsible. Many work places tend to produce a
subculture – an environment in which individuality becomes submerged – exacting
complete conformity to the organization’s norms as the price of job security. But even in
such instances, the liability for the criminal offence is still traceable to some natural
person within the company. In such circumstances, it may be necessary to punish not only
the offending individual but to also extend the chain of criminal responsibility to other
levels within the organisation as a whole and also punish the individual superiors who are
responsible for the culture that has facilitated the crime or created an environment for its
perpetration. That may cause the officers of the company to change their policy or
compel a change of behaviour within the organisation.140
It has been suggested that rather than deal with corporate criminality as a punishment
regime, it would be more sensible to justify fines upon a company as a means of
compensating the society for the breach of law. 141 That may be appropriate, for example,
where the offence in question is blatantly against public welfare, or the fine is used as a
mechanism for disgorging from the company ill-gotten gains for purposes of clawing it
back to the society, as when it trades without obtaining the licence that is legally required.
10. CONCLUSION
At first, corporate criminal liability was regarded in the traditional sense as being only
34
derivative, with some offences regarded as capable of being committed by corporate

persons only vicariously. That traditional approach was realised to be too restrictive, as
corporations could not be held criminally liable unless the offence in issue was, in the
first instance, traceable to an individual within the corporation. Recent approaches,
particularly beginning the 1940s have tended to be more expansive as they seek to attach
direct criminal liability to a corporation without necessarily requiring an individual to be
liable first. Approaches are still developing and various proposals are being made in
various jurisdictions. New models or schemes are likely to emerge. Internal corporate
policies and systems are the more credible bases upon which corporate criminal
responsibility should be founded. Whatever basis is used to find a company liable for an
offence, it is unrealistic to purport to punish ‘the person of the company’. The individuals
responsible for those policies and systems or the individuals possessing the actus reus
and the mens rea, where applicable, rather than the fictitious company, are the ones who
should bear the brunt of criminal liability.
Endnotes
1 The advantages of corporate trading over other business enterprises include
limitation of the liability of shareholders (if it is a company with limited liability),
the better opportunity that it presents for massive investment outlay and
placement of management in the hands of relatively impartial persons i.e. the
board of directors.
2 For example, partnerships require the consent of all the partners before a new
partner may be admitted into the partnership.
3 Companies Act, Chapter 486, Laws of Kenya.
4 Such as state/public corporations or parastatals registered under the State
Corporations Act, Chapter 446, Laws of Kenya.
5 The popular thinking that unincorporated associations should attract no concern of
the criminal law is largely an accident of judicial oversight, because there is no
basis for it in law. See discussion on liability of unincorporated associations infra.
6 Salomon v Salomon [1897] AC 22.
7 Interpretation and General Provisions Act (Chapter 2 of the Laws of Kenya)
section 3(1) defines ‘person’ to include ‘a company or association or body of
persons, corporate or unincorporated’. This provision corresponds with the
relevant provision of the Interpretation Act 1989 of England.
8 Penal Code, Chapter 63 of the Laws of Kenya, section 9(1) for example,
provides: “Subject to the provisions of this Code relating to negligent acts and
omissions, a person is not criminally responsible for any act or omission which
occurs independently of the exercise of his will, or for the event which occurs by
accident.”
9 10. Co. Rep. 1(a) 32 quoted in Hallis,F.,(Ed) (1930) Corporate personality: A
Study in Jurisprudence London: Oxford University Press p 24
10 Blackstone, W., (Ed) (1765) Blackstone’s Commentaries on the Laws of
England Chicago: University of Chicago Press Vol 1 p 464.
35
11 R v ICR Haulage Ltd [1944] 1 KB 551; [1944] 1 All ER 691.

12 Ibid.
13 Welshi, RS., 1946. The Criminal Liability of Corporations. Law Quarterly
Review, 62 p 363.
14 Ormerod, D., (Ed) (2005) Smith & Hogan: Criminal Law Oxford: Oxford
University Press 11th Edn p 241.
15 E. Calvin,E., 1995. Corporate personality and criminal liability.Criminal Law
Forum, 6(1) p 2.
16 Ibid.
17 Anon (1701) 12 Mod Rep 560.
18 R v Birmingham and Gloucester Railway Company [1842] 3 QB 223.
19 Calvin, E., op. cit., at p 24.
20 Goodhart,AL., (Ed) (1931) Essays in Jurisprudence and common Law
Cambridge: University Press pp 91-109.
21 Citizens’ Life Insurance Co v Brown [1906] AC 423.
22 Winfield, PH., (Ed) (1971) Law of Tort London: Sweet & Maxwell p 107.
23 Pollock, F., (Ed) (1922) Essays in Law London: MacMillan p 179.
24 Stallybrass, WTS., (Ed) (1945) Salmond’s Law of Torts London: Sweet &
Maxwell 10th Edn p 345.
25 Ibid, p 66.
26 Ibid.
27 AL Goodhart, op. cit..
28 Anson, WR., (Ed) (1910) Principles of the English Law of Contract and of
Agency in its Relation to Contract Oxford: Clarendon Press p 404.
29 AL Goodhart, op. cit., pp 94-95.
30 Campbell v Paddington Corporation [1911] 1 KB 869.
31 D Ormerod, op. cit., p 235.
32 E Calvin, op. cit., at p 6.
33 R v Huggins [1730] 2 Stra 883; 93 ER 915
34 Ibid, p 885.
35 Mousel Brothers Ltd v London and North-Western Railway Co [1917] 2 KB 836
at 845.
36 Ross Hillman Ltd v Bond [1974] 1 QB 435; [1974] 2 WLR 436.
37 Salmond, op. cit., p 102.
38 Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705, at
713. Applied in J F Alford Transport Ltd [1997] 2 Cr App R 326 at 331.
39 Essendon Engineering Co Ltd v Maile [1982] RTR 260; [1982] Crim LR 510.
40 Law Com No 143, para 11-6, and cl 43.
41 Williams, GA., (Ed) (1983) A textbook of criminal law London: Stevens & Sons
2nd Edn p 971.
42 HL Bolton Engineering Co v T J Graham & Sons Ltd [1957] 1 QB 159 at p 172.
36
43 Ibid, at p 172.
44 Supra, note 11
46 Ibid, p 236.
47 Director of Public Prosecutions v Kent & Sussex Contractors Ltd [1944] KB 146;
[1944] 1 All ER 119.
48 Supra, note 43.
49 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at p 170.
50 GJ Coles & Co Ltd v Goldsworthy [1985] WAR 183.
51 Brambles Holdings Ltd v Carey (1976) 15 SASR 270 at 280.
53 Moore v I Bresler Ltd [1944] 2 All ER 515. But see Belmont Finance Corpn Ltd
v Williams Furniture Ltd [1979] Ch 250, a much more sensible decision of a civil
court.
54 Supra, note 53
55 D Ormerod, op. cit., p 238. Also Supra, note 13
56 Re Supply of Ready Mixed Concrete (No 2) [1995] 1 AC 456; [1995] 1 All ER
135
57 Clause 30(6).
58 GA Williams, op. cit., p 974.
60 Ibid.
61 Supra note 49
62 Ibid.
63 GA Williams, Op. cit., p 977.
64 Hamilton v Whitehead (1988) 166 CLR 121, at p 127
65 Nordik Industries Ltd v Regional Controller of Inland Revenue [1976] 1 NZLR
194.
66 Supra note 49
67 Ibid.
68 Per Lord Reid in ibid, at p 171.
69 Per Viscount Dilhorne in ibid, at p 187.
70 GA Williams, op. cit., at p 973.
71 Ibid.
72 Ibid.
73 Supra note 60, at p 193.
74 Ibid at p 171.
76 For example, the proposed United States Federal Criminal Code includes among
these officers “an executive officer or any other agent in a position of comparable
authority with respect to the formulation of corporate policy or the supervision in
a managerial capacity of subordinary employees.” A minor employee of the
37
company does not become a controller merely because the sole director is absent:
Essondon Engineering Co Ltd v Maile [1982] Crim LR 510.
77 England & Wales, Law Commission: A Criminal Code for England & Wales,
(1989) Report No 177 p 130.
78 Per Lord Diplock in Supra note 49 at p 200, followed in Seaboard Offshore Ltd v
Secretary of State for Transport [1994] 2 All ER 99, at p 104 (HL).
79 Penal Code (Chapter 63 of the Laws of Kenya) section 23
80 Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2
AC 500; [1995] 3 All ER 918; [1995] 3 WLR 413
81 Re Odyssey (London) Ltd v OIC Run Off Ltd (2000) The Times, 3 Mar, Court of
Appeal (Civ Div); [2000] EWCA Civ 71. Per Buxton LJ.
83 Attorney General’s Reference No 2 of 1999; [2000] QB 796.
84 Canadian Dredge & Dock Co v R [1985] 1 SCR 662 (Canada).
85 Model Penal Code [US] sections 2.07(1) (c).
86 Review [Committee] of Commonwealth Criminal Law, Australia, Third Interim
Report: Principles of Criminal Responsibility and other matters, section 4BA (3)
(a) (1990).
87 Model Criminal Code [AUSTRALIA] section 501.2.2, referred to in supra, note
15, p. 12.
88 Ibid, section 501.2.2.
90 Supra note 60, at 173.
91 Ibid.
92 For the resulting difficulty, see Andrews-Weatherfoil Ltd [1972] 1 WLR 118; 1 All
ER 65.
93 Supra, note 53. Kent & Sussex Contractors Ltd [1944] KB 146, the company’s
transport manager was included, but that decision may, perhaps, be reconsidered
since Tesco.
94 H L Bolton (Engineering) Co. Ltd v TJ Graham & Sons Ltd [1957] 1 QB 172.
95 Supra, note 60.
96 per Lord Reid in ibid, p 170.
97 R v P & O European Ferries (Dover) Ltd, (1991) 93 Crim App Rep 72.
98 The Merchant Shipping Act, 1984 [UK] Department of Transport, , , MV Herald
Free Enterprise – Report of the Court No 8074 (Mr Justice Sheen, Wreck
Commissioner, July 24, 1987).
99 Supra, note 60.
100 E Calvin, op. cit., pp 18-19. In an appropriate case, however, there would be
nothing to prevent a company from being convicted of manslaughter or any other
offence involving personal violence. For example in R v P & O European Ferries
(Dover) Ltd, (1991) 93 Crim App Rep 72. Turner J held that an indictment for
manslaughter would lie against the company. See also Roy Bowles Ltd (1999) The
38
Times, 11 Dec where a company was successfully prosecuted for the offence of
manslaughter.
101 821 F. 2 d. 844 (1st Cir.) 484 US 943 [1987].
102 Ibid, at p 856.
103 Supra, note 93.
104 R v H M Coroner for East Kent 88 Crim App 10, 16 (QB Divisional Ct, 1987),
England.
105 Supra note 83
106 R v Australian Films Ltd (1921) 29 CLR 195.
107 Supra note 86, s. 501.3.1.
108 D Ormerod, op. cit., pp 240-241.
109 E Calvin, op. cit., p 22.
110 Ibid, pp 22-23.
111 Wells, C.,(Ed) (2001) Corporations and Criminal Responsibility Oxford: Oxford
University Press 2nd edn p 157.
112 E Calvin, op. cit., p 25.
113 Ibid, pp 25-26.
114 Ibid, p 26.
115 Supra note 86, section 501.3.1.
116 E Calvin, op. cit., p 31-34.
117 Supra note 86, section 12.3(1).
118 Ibid, section 501.2.2.
119 Ibid, section 12.3(4).
120 Ibid, section 12.3(6).
121 E Calvin, op. cit., pp 38, 39, 30.
122 Ibid, pp 39, 41.
123 D Ormerod, op. cit., pp 245-246.
124 Legislating the Criminal Code: Involuntary Manslaughter, Law Com No 237
(1996).
125 See D Ormerod, op. cit., p 246.
126 Attorney General v Able [1984] QB 795; [1984] 1 All ER 277.
127 Regina v Clerk to Croydon Justices, ex p Chief Constable of Kent [1989] Crim
LR 910; (1989) 154 JP 118
128 R v Rootes (Kenya) Ltd & B S Dobbs [1958] EA 13 where the accused persons
were charged, convicted and fined on the offence of obtaining money or goods by
false pretences contrary to section 308 of the Penal Code. Also EA Oil Refineries
Ltd v Republic [1981] KLR 109 where the appellant was convicted of the offence
of causing the death of a workman through its failure to provide safety equipment
and a safe working environment as required by sections 53 and 57 of the Factories
Act, Chapter 514 of the Laws of Kenya. Also Republic v Gachoka & another
[1999] KLR where both respondents were convicted of the offence of contempt
39
of court. While the first respondent was sentenced to a jail term, the second
respondent was fined.
129 Judicature Act, Chapter 8 of the Laws of Kenya. section 3
130 Penal Code Chapter 63, Laws of Kenya.
131 Ibid.
132 Ibid.
133 Ibid.
134 EA Oil Refineries Ltd v Republic [1981] KLR 109.
135 See D Ormerod, op. cit., p 234.
136 Ibid.
137 Ibid, p 242.
138 Glanville Williams gives an example of a case where the High Court in England
accepted to grant such an injunction on behalf of some minority shareholders: G
Williams, op. cit., p 976 at n. 3.
139 See G Williams, op. cit., p 974.
140 Ibid, p 975.
141 Ibid, p 976.
40

The Company As A Criminal

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The Company As A Criminal

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The Company as a Criminal: Comparative Examination of some Trends and

Challenges Relating to Criminal Liability of Corporate Persons

George O. Otieno Ochich1

As sophistication engulfs the business sphere, an increasing number of individuals prefer

2. COMPANY AND CORPORATION EXPLAINED

Although a ‘company’ is often talked of to mean an incorporated association, ‘company’

Whereas there would be no difficulty in ascribing criminal liability upon company

Generally speaking, a corporation, as a legal person, is in the same position in relation to

Thus, corporations cannot commit unlawful conduct intentionally or negligently except

2.2 The Corporation as a Real Entity

should necessarily be regarded as fiction.

3.THE NOMINALIST THEORIES AND THE DERIVATIVE MODELS OF

3.1 Vicarious Liability Model

There is no doubt, therefore, that the principle of vicarious liability is applicable to

There is no consensus, however, regarding the liability of a corporation in cases of ultra

A legal person is as incapable of conferring authority upon an agent to act on its

Thus, if the directors of a company authorise the company employees or agents to

its relevance remains only in contract and property law.31

3.2 Identification Liability Model

beings carrying on the business can have mens rea.”63

By the Tesco Supermarkets Ltd standard, delegation of decision-making authority over

natural persons who by the memorandum and articles of association or as a result of

In a recent decision in Meridian Global Funds Management Asia Ltd v Securities

4. CORPORATE DISASTERS AND THE SEARCH FOR NEW MODELS OF

5. THE AGGREGATION MODEL

6. THE REALIST THEORIES AND THE ‘DIRECT LIABILITY’ MODEL

6.1 Corporate Negligence

In some areas of a corporation’s operations, reasonable care may involve the

Under this model of corporate liability, criminal responsibility is attributed to the

Moreover, it may be appropriate to impose a general duty upon corporations to guard

6.2 Corporate Liability for Offences Requiring some Mental Status

A corporation may be reckless, in the case of an offence requiring recklessness, where it

6.3 Direct Liability and the Offence of ‘Corporate Killing’123

7. CRIMINAL LIABLITY OF UNINCORPORATED BODIES

Notwithstanding absence of clear judicial principles on corporate criminality, certain

“Where an offence is committed by any company or body corporate, or by any

9. THE REALITY OF CORPORATE CRIMINAL LIABILITY AND SOME

The law’s present approach to criminal liability of corporations is perceived as being

Approaches to corporate criminal responsibility and liability need to strike a delicate

The trends in criminal liability of corporations exemplify a predominantly utilitarian

derivative, with some offences regarded as capable of being committed by corporate

11 R v ICR Haulage Ltd [1944] 1 KB 551; [1944] 1 All ER 691.

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