To establish a corporation’s liability for criminal acts committed by individuals, US courts draw upon three theories: 1

  • The theory of agency: This theory allows a company to be held liable for violations committed by its employees (vicarious liability). It must be proved that the employee acted within the scope of his or her duties for the benefit of the company (at least in part), and that the intent (mens rea) and the physical act (actus reus) of the offense committed by the employee are attributable to the company.
  • The theory of identification: This theory allows a company to be held liable for violations committed by its officers or executives. There is a connection between the corporation and those persons not subordinate within the hierarchy of the company. Knowledge of and willingness to commit an offense, conditions required to invoke the company’s criminal liability, must be attributed to an individual regarded as “the directing mind and will” of the company. The conduct of the company’s leader is likened to that of the corporation. Unlike the theory of agency, the theory of identification invokes the company’s strict liability for the actions of its staff and executives who are personally liable.
  • The theory of accomplice liability: Under this theory, a company may be held liable when it has been complicit in illegal acts committed by outside individuals. Complicity must feature a shared criminal intent. 2 In the US, the accomplice must desire that the crime be committed and must assist the primary perpetrator in committing the offense. These provisions have at times been interpreted in such a manner that the primary perpetrator of the offense and his or her accomplice should share the same motivations for the crime. 3 The theory of “shared intent” makes it difficult, however, to determine the complicity of transnational corporations because companies generally do not encourage human rights violations for the same reasons as the perpetrators of such crimes. Indeed, transnational corporations are often motivated solely by profit, thus one can argue that transnational corporations and perpetrators of crimes simply act in common interest. The International Commission of Jurists, however, considers that this interpretation confuses the motivation and intent of perpetrators and accomplices. 4

Given that the United States is a confederated nation, the US criminal justice system is legally grounded not only in the Constitution, its amendments and federal criminal statutes but also in the criminal law of each state. The role of the Attorney General, and that of the applicable penalties, thus varies depending on whether one is charged under federal or state law. 5

The United States, however, has adopted guidelines that broadly determine which penalties may be imposed on legal persons. The Federal Sentencing Guidelines, issued in 1991, have helped to harmonise the penalties legal persons face in different US states. These guidelines contain a number of penalties that have been issued according to the severity of the crime, the company’s culpability and the financial gain the company obtained following the offense.

In addition to these guidelines, each law is accompanied by its own sanctions and penalties:

  • Fines are administrative penalties the court calculates in two stages. The court first calculates the base fine by referring to the amount indicated in the table of offenses and adding to it any financial gains and losses generated by the offense. The fine is then increased or decreased according to the threshold of the company’s culpability. 6
  • Probation is a criminal sanction which permits the company to be monitored for a maximum period of five years. Monitoring is conducted by the government and may include board supervision. The company may also be required to provide periodical activity reports to its probation officer or to the court. In addition to probation, certain laws such as RICO (see below) provide for prison sentences of up to 20 years for individuals convicted of organised crime. 7
  • Forfeiture and disgorgement are civil penalties proposed under RICO and other laws. These penalties require the company to turn over to the US government all property and financial gain obtained through illegal acts.
  • Damages can be awarded to victims of the offense and may be considered a civil penalty charged to the companies. Punitive damages also exist. Unlike civil law countries, common law countries provide for sums of money to be paid as punishment. This remedy seeks to punish reprehensible conduct and prevent its reoccurrence. This sanction is not to be confused with a fine. 8