Crime has been traditionally associated with individuals but today it is a known fact that companies too can commit crimes. According to law, companies are legal persons who can commit crimes and can sue or be sued. The two articles forming the subject of this present essay are representative of this fact. In both cases, big corporate houses are involved in fraud perpetrated by their Directors for the benefit of both the company as well as the individual.
The crime committed by the two companies fall under the definition of felony and not misdemeanor. Felony is said to include serious crimes such as aggravated assault or battery, arson, burglary, embezzlement, grand theft, robbery, murder, rape and fraud among other serious crimes. The definition of felony states that persons who actually committed the crime together with persons who aided and abetted the crime, and also persons who helped before and after the crime took place are all guilty of committing the crime of felony.
In both the cases, the Directors of the Company were involved in the crime of fraud and theft thereby causing great loss to the public at large. In both cases the crimes committed by the Directors were within the scope of their duties and were beneficial both to the individuals concerned and the Company. Thus in both the cases we can safely say that the Company can be held liable for the crime committed by its Directors.
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The Principles of Federal Prosecution of Business Organizations as laid down by the United States Department of Justice state that the nature of crime and its seriousness should be taken into consideration while charging a Corporation with a criminal offence (Principles of Federal Prosecution of Business Organizations, 2003). In the case of Worldcom, it is clear that a major fraud in the markets where the CEO has filed false securities statements and also published fraudulent accounts of the Company so as to increase the credibility of the Company in the Stock Market (Ex WorldCom, 2005).
In the case of Reliant Energy Services the Directors had stopped distribution of power by fraudulently stating that there was a shortage in supply thereby trying to regulate the Electricity market. During this period, it was seen that the Company bought many of the smaller Electricity Supply companies (Reliant, 2004). In both cases, the crime was of a serious nature where the public is put to great losses due to the fraud perpetrated by the Companies.
This again as per the principles of federal prosecution of business organizations is one of the major factors in deciding the criminal liability of a company (Principles of Federal Prosecution of Business Organizations, 2003). Further as the crimes are serious in nature they constitute felony and not misdemeanor.
Acceptance of responsibility plays a main role in determining liability of a company. In the first case, the CEO in question very clearly stated his non involvement in the crime as the actual perpetrator of fraud resigned before the fraud came to light and the present management was ready to co-operate with the investigation process (Ex WorldCom, 2005).
In the second the Company refuses to believe their conduct to be a crime as per the existing laws. This nonchalant attitude of the Reliant Energy and its unwillingness to co-operate in the investigation process leads us to believe that the company had indeed committed the felony in question and should be prosecuted (Reliant, 2004).
Though in both cases it can be argued that individuals were responsible for the crime that has been committed, it cannot be denied that the company has benefited from the crime. The company could have refused to condone and comply with the actions of the individuals but it did not do so. In such cases we can safely state that the Company is actually guilty of the crime committed by its individuals. Further, when the frauds of both the companies came to light, they did not propose any remedial measures but instead chose to defend the charges by denying it.
This again shows the intention on the part of the company to defraud the public and hence we can state that the companies were guilty of felony. In both cases serious loss was caused to shareholders, public at large and employees by the actions of the Companies as much as they were by the actions of the individuals. Thus in both cases, along with holding the individual Directors liable, it is necessary to hold the Companies liable and accord adequate punishment. This would not only be retributive but would serve as a deterrent to future crimes.
Ex-WorldCom Chief Ebbers Convicted of Fraud. (March, 2005). Retrieved February 14, 2007 from money.cnn.com/2005/03/15/news/newsmakers/ebbers
Principles of Federal Prosecution of Business Organizations. (January, 2003). Retrieved February 14, 2007 from www.usdoj.gov/dag/cftf/corporate_guidelines.htm
Reliant Indicted for Manufacturing California Energy Crisis. (April, 2004). Employment News Service. Retrieved February 14, 2007 from http://www.ens-newswire.com/ens/apr2004/2004-04-09-03.asp
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