Corporate Criminal Liability Still Disregarded

IN 85% OF CASES, IN THE JUDICIAL PROCESS, COMPANIES DISAPPEAR FROM PROSECUTORS' RADARS, WHO USUALLY PROCEED ONLY AGAINST EXECUTIVES. THUS CORPORATIONS HAVE NO INCENTIVES FOR ENGAGING IN PREVENTION

by Massimo CeresaGastaldo, Bocconi Department of Legal Studies
Translated by Alex Foti


When it comes to corporate criminal liability, there is one point on which everybody agrees: the legal discipline of the early 2000s (Decree 231/2001), a body of legislation which revolutionized sanctions by breaking the taboo that said societas delinquere non potest (a company cannot commit crimes) is in need of legal maintenance. Especially when it comes to judicial procedure in trial, the correct functioning of which guarantees the feasibility, reliability, and even credibility of the system.

For the discussion on reform to be serious, there is a neglected piece of evidence that needs to be considered: the practical ineffectiveness, emerging from the analysis of trial statistics, of the sanctioning and preventive model drawn up by Decree 231, due to the widespread lack of judicial implementation of the relevant legislation.

In fact, there is a huge 'gray area' of offenses that are systematically ignored by criminal prosecutors. The number of cases in prosecutors’ offices that end up nowhere is impressive. Prosecutors fail to register criminal offenses made by corporations, even in the face of court proceedings for crimes that, according to the law, would entail clear responsibility of the corporate entity. Suffice it to say that in a judicial district like Milan, most of the companies disappear from the radar of the prosecutor's office: only in 10-15% of cases, charges against corporate institutions are registered. In 85-90% of the cases, therefore, magistrates proceed only against chief administrators or subordinate corporate officials and the company, although it is clearly involved, is spared from any charges.

Legislative avoidance does not depend on the failure to detect the offense or on the inability of the flooded judicial machine to dispose of the workload in courts. These are known offenses, highlighted by the onset of proceeding for the alleged crime, which are destined to merge into the same proceeding, without excessive duplication or burden. And yet they are completely ignored. At the time of formally bringing criminal charges, the hypothesis of the corporate entity’s criminal liability almost always vanishes into nothing. The criminal offense entered in the general register, by the annotation envisaged by the Decree’s article 55 is omitted: only in a negligible number of cases the information is recorded and criminal charges against the company are brought. In truth, article 55, in prescribing the immediate and dutiful annotation of the offense, would seem to prevent cherry-picking by public attorneys: all offenses should be recorded. Yet, the unobservant practice is widespread, because the idea has prevailed that the prosecutor has substantial freedom in deciding whether or not to investigate a company. The Report on the Social Balance Sheet of the Milan Public Prosecutor's Office admits it plainly: commenting on the incredible spread between offenses and charges, it explains that "the basic reason is that the registration of a legal entity in a criminal inquiry is still considered a matter of discretionary assessment".

And what are the criteria for deciding to bring charges? The most diverse: individual skills of magistrates, availability of resources, their awareness of, and preference for one criminal subject over another. The outlook is discouraging. The decree continues to threaten heavy penalties for corporations with severity and rigor, relying on criminal jurisdiction precisely to guarantee the impartial application of the law and maximum effectiveness in ascertaining the crimes. But all this risks translating into a mockery. That same criminal justice, administered in the rooms where the memento states "all are equal before the law", actually applies the law in one case out of ten, making all traces of the other nine disappear. This “black hole” documents the resounding denial of the legality of proceedings and sanctions, which are only rhetorically ensured by the rules.

Today, according to business economists, Italian companies are aware of how scarce the likelihood is of being involved in a criminal trial together with their official who is a defendant; and, with the exception of the more structured ones, they are hardly committed to prophylaxis. From a research study conducted by Confindustria, almost two-thirds of companies interviewed have not adopted a model for business crime prevention.

And so, if we want to recover the effectiveness of legality and equality before the law, the most urgent objective is to restore the 'forgotten' principle of mandatory prosecution and sanctioning, introducing the (now absent) judicial control on inaction in prosecution and reiterating the fact the there is no individual discretion when it comes to start an investigation into a corporate crime.