Reforming Corporate Fraud Regulation in the UK: A Model of Manifest Liability

Authors: Cronin, A.

Start date: 31 March 2015

The current approach to the attribution of corporate criminal liability is ill-suited to address instances of pervasive and systemic corporate fraud, such as, for example, may have been evidenced in the recent widespread mis-selling scandals. In response to the difficulties associated with the fictionist ‘identification principle’ generally, various alternative approaches have been mooted. Whilst acknowledging the realist nature of organisations, the proposals for reform implicitly perceive the need to prove mens rea as problematic and typically construct an altogether different basis of fault, such as negligence or the ‘failure to prevent’ model. However, whereas the negligence-type model fails to express adequately the deceptive nature of fraud, the ‘failure to prevent’ construct is equally ill-suited in that fraud is, in essence, a lawful activity, done in an unlawful, dishonest, way. A historiographical analysis of the law reveals that a return to the orthodox, but previously displaced, doctrines of fault would facilitate corporate conviction for fraud without the need to use either the problematic identification principle to impute mens rea or to defer to alternative bases of liability. It is suggested that a renewed recognition of the traditional evidential presumptions would provide the means by which both the capacity of an organisation and the blameworthiness of its conduct could be identified. Seemingly effecting a subtle shift towards a ‘manifest’ assessment of the behaviour, the re-instatement of the presumptions would accommodate the contemporary theory of action and accord with recent advancements in neuroscience and the discovery of the mirror neuron system in the brain. As regards a theory of corporate liability, it is of note that ‘mirroring’ not only provides the means by which individual action is understood, it has been shown to apply equally to collective action and, in line with realist theory, also explains how the autonomous collective personality can emerge.

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