This is the first definitive examination of the practice of corporate regulation and enforcement from the foundation of the Irish State to the present day. It analyses the transition in Ireland from a sanctioning, ‘command and control’ model of corporate enforcement to the compliance-orientated, responsive regulatory model. It is also unique in locating this shift in its broader sociological and jurisprudential context. It provides a definitive account of a State at a critical stage of its economic development, having moved from an agrarian and protected society to a free-market globalised economy which is trying to cope with the negative aspects of increased corporate activity, having experienced an economic boom and depression in a remarkably condensed period of time. Traditionally, corporate wrongdoing was often criminalised using conventional criminal justice methods and the ordinary police were often charged with the responsibility of enforcing the law. Since the 1990s, however, the conventional crime monopoly on corporate deviancy has become fragmented because a variety of specialist, interdisciplinary agencies with enhanced powers now address corporate wrongdoing. The exclusive dominance of conventional crime methods has also faded because corporate wrongdoing is now specifically addressed by a responsive enforcement architecture, taking compliance orientated and sanctioning approaches, using both civil and criminal enforcement mechanisms, where criminal law is now the sanction of last resort.
This introduces the reader to the argument in this monograph. It outlines the need for this project by locating it within the existing literature on corporate and white-collar crime and regulatory jurisprudence. Finally, it briefly summarises the structure of the monograph.
Chapter 1 introduces the reader to systemic biases in the Irish legal system through an analysis of the definition of crime. A doctrinal analysis reveals that crime is defined according to a ‘real crime’ perspective. Crime is defined in accordance with certain particular indicia, such as the presence or absence of criminal procedure, the role of the State as prosecutor, the presence of culpability requirements, the vocabulary used in the construction of a provision and the severity of the sanctions employed. Corporate and white-collar crimes, however, are often enforced by regulatory law. Regulatory crime does not always use traditional criminal law procedures, does not always provide for extended custodial sentences, may not always be enforced by the DPP on behalf of the State, and may be enforced on the basis of strict liability to deter rather than punish wrongdoing. The Irish legal system has marginalised corporate crime from traditional discourse on crime. A sociological analysis of crime is used to reveal how the legal definition of crime reinforces the public perception that corporate crime is not truly criminal and, conversely, how this public perception also supports the legal marginalisation of this wrongdoing from crime debates.
Chapter 2 shows that the failure to develop a jurisprudence incorporating corporate wrongdoing into the architecture of the criminal law is not surprising. It was a consequence of Ireland’s history as a predominantly agrarian state and the resulting political and social inertia surrounding corporate affairs. Ireland remained a largely agrarian state for most of the 20th century. Initially it advanced protectionist policies to shield Irish industry from outside competition and as an assertion of sovereignty. Later, it opened up its economy, embracing free market capitalism to boost the prosperity of the State. However, earlier protectionist policies meant that there was little big business in Ireland so it had neither need nor experience of constructing a regulatory framework. Corporate activity was viewed positively and there was little political reflection on the desirability of corporate accountability and there was even less cultural recognition of the negative effects of corporate activity. The Irish State did not regularly or rigorously review company law and it avoided passing any original Irish company legislation. Corporate wrongdoing was addressed using conventional criminal law, without adoption or reflection, because it was easier than designing a specialised system of corporate enforcement.
The third chapter explores how the social and political inertia documented in Chapter 2 impacted on policy choices in addressing corporate crime. It is shown that addressing corporate wrongdoing by a conventional criminal justice model meant that corporate wrongdoers were entitled to a whole range of due process safeguards. The burden was on the prosecution to prove that the company officer committed the offence beyond a reasonable doubt. In general the accused had to be found subjective culpable and he was protected by the right to privacy, the right to liberty, the right to silence, the right of reasonable access to a lawyer, among others. Though not fully settled in Irish law, companies also seem to be able to claim constitutional protections in criminal proceedings, reflecting the traditional respect for fairness and 42 the fundamental principles of justice. Finally, the accused was entitled on conviction to proportionality in sentencing, whereby his punishment reflected both the particular personal circumstances and those surrounding the commission of the offence. The purpose of this chapter is to show that this system of punishment was developed under an equality of arms framework to act as a check on government power, and against the sweeping use of criminal sanction for instrumental purposes. In keeping with conventional criminal justice, punishment was personal and individuated because the traditional system emphasised punishing blameworthy conduct which was morally reprehensible.
Chapter 4 explored how the use of conventional crime methods and political and social apathy on corporate wrongdoing impacted on the enforcement of the traditional framework. It is contended that the system could not cope effectively with the detection, investigation and prosecution of corporate crime in practice. The policing and prosecution of corporate crime was mostly monopolised by the agencies that policed ‘street crime’ Therefore, these agencies lacked the necessary experience to address victimless and invisible forms of crime perpetrated by wealthy, educated, middle class offenders. Though assisted by some specialised agencies, none of these agencies had corporate enforcement as their core responsibility. In general, enforcers were often unaware that the law had been breached; did not treat cases with any urgency; lacked the necessary resources, education and expertise to competently deal with sophisticated corporate wrongdoing after they were reported or discovered; and felt hamstrung by outdated laws and by a criminal procedure framework which favoured the accused. This context may be understood as a reflection of the lack of political and social support for tackling corporate wrongdoing and in terms of the light-touch model of regulatory enforcement which Ireland was advancing to attract investment.
Chapter 5 is the point of departure from the traditional system of corporate wrongdoing. It takes a diagnostic rather than a descriptive approach to collate and analyse the causal factors that led to a new way of thinking about corporate 43 misconduct. It will be shown that Europeanization and globalisation created opportunities for business in Ireland and that Ireland’s developing entrepreneurial spirit made it seize these opportunities. These phenomena enhanced business in the State. Others, however, made society more aware that companies could cause it significant harm. Global scandals involving losses of hundreds of millions of Euro made the international community more sceptical of corporate financial statements and more aware of the scale of losses when things go wrong. Domestic scandals made Irish society more aware that its light-touch principled approach facilitated and encouraged wrongdoing. Public tribunals of inquiry revealed the extensive corporate corruption of politics at the highest levels initiating a new regulatory impulse in Ireland. The banking crisis of 2008 acted as a tipping point, politicising corporate crime, and crystallising existing sentiments which demanded more corporate accountability in law. Though each development had a different momentum and dynamic, all had a significant impact in replacing apathy with activism, changing how society thought about corporate activity and how the State regulated it.
The sixth chapter of this thesis shows how new sentiments regarding corporate wrongdoing translated into institutional changes and changes in the content and scope of company law. It is shown that the State has created specialist agencies with skilled professional personnel to police corporate enforcement. These agencies have significant powers to detect, investigate and prosecute corporate crime. Furthermore, accountants and other professionals are obliged to report to regulators if they suspect that criminal offences have been committed, facilitating a targeted, evidence-based approach to enforcement. Regulatory crime stratagems, like strict liability, have been employed and due process rights which were thought to overly privilege the guilty and have been eroded. In some contexts, criminal procedure has been sidestepped entirely through the use of administrative and civil sanctions. These sanctions are depersonalised and more concerned with containment and risk management than blaming and finding fault. The legal system has shifted focus from individual protection and legal rights to protecting society from the systemic risk posed by corporate wrongdoing. In the new legal architecture, law is a means-ended instrument where corporate enforcement and compliance are prioritized over other values in our legal system. It will be shown that this has led to a contradictory legal system: one which is more concerned with accountability but less concerned with blaming with certainty.
In Chapter 7, it is shown that regulatory agencies have taken a ‘tiered’ or ‘responsive’ approach to regulation, combining compliance and sanctioning models of corporate enforcement. They first educate company officers on their legal obligations and encourage them to comply with the law and only apply civil sanctions or prosecute offenders when the compliance approach has failed. However, it will be shown that despite having this graduated, mixed-model in place, there has been a failure to escalate from compliance to sanctioning approaches, particularly in the regulation of the financial services sector. It will be shown that the commitment to enforcing the sanctioning approach has only emerged in recent years since the banking crisis as the State ‘governs through crime’ in an expressive way to show it is ‘tough on crime’.