Corporate Sanctions: Structuring Corporate Liability and Nontrial Resolutions to Deter Corruption
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Description
Corruption causes enormous harm to countries around the world. It nevertheless is prevalent because it benefits both parties to the corrupt transaction. Corrupt officials have gotten rich through corruption. Corporations benefit from the government largess they receive as a result; their employees profit when their corrupt actions to benefit their firms lead the firm to give them a bonus, a promotion, or enhances their job security. To safeguard their citizens and their economies, countries must deter corruption by companies. Currently, most countries are failing to do so effectively. First, most countries enable companies to profit from corruption by adopting overly restrictive rules governing corporate criminal liability, overly restrictive rules on non-trial resolutions, and inadequately funding corporate enforcement authorities. Sanctions imposed on companies also often are too low to ensure that companies do not profit from crime. Second, countries currently fail to effectively deter public officials and individual bribe payers through the threat of prosecution because their enforcement authorities rarely detect and sanction corporate misconduct. The resulting risk of sanction often is too low to be material, leading wrongdoers to ignore it altogether. To deter effectively, countries must ensure that companies do not profit from corruption and that individual bribe payers and recipients face a salient threat of being detected and convicted if they pay or accept bribes; the sanction must be sufficient to ensure they do not expect to benefit from corruption. To create this threat, countries must increase the funding and other resources provided to government investigators and enforcement authorities. In addition, they must hold companies criminally liable for all organizational misconduct by their employees, and adopt rules governing non-trial corporate criminal resolutions structured to induce them to detect and self-report misconduct, to fully investigate, and to fully cooperate by providing authorities evidence about misconduct and those responsible for it. Enforcement authorities also must be given authority to impose a monitor on companies whose senior officers and board have evidenced insufficient commitment to deterring misconduct. To detect reliably, countries also need to adopt appropriate whistleblower protection law and bounty provisions. Finally, they need to properly incentivize enforcement officials to pursue the individual wrongdoers responsible for the misconduct. This chapter explains why corporate liability needs to have these features, identifies needed reforms, and discusses corporate sanctions.
Source Publication
Elgar Concise Encyclopedia of Corruption Law
Source Editors/Authors
Mark Pieth, Tina Søreide
Publication Date
2023
Recommended Citation
Arlen, Jennifer H., "Corporate Sanctions: Structuring Corporate Liability and Nontrial Resolutions to Deter Corruption" (2023). Faculty Chapters. 1102.
https://gretchen.law.nyu.edu/fac-chapt/1102
