Criminal liability of corporations – Global vs Romanian approach

Criminal liability of corporations is a
hot topic worldwide. From financial institutions to global corporations, almost
daily we hear about a large corporation being investigated, signing a Deferred
Prosecution Agreement or being convicted, usually for money laundering, tax
evasion or bribery.

Criminal liability of corporations is a
hot topic worldwide. From financial institutions to global corporations, almost
daily we hear about a large corporation being investigated, signing a Deferred
Prosecution Agreement or being convicted, usually for money laundering, tax
evasion or bribery.

Even more, countries such as UK, Germany,
Spain, or Canada have already strengthened or are considering strengthening
corporate criminal liability.

While the general impression is that not
many corporations are investigated or convicted in Romania, perhaps because their
criminal liability was introduced only in 2006, the reality is quite different.

According to the last Public Ministry
Report detailing its activity, in 2018 there were 807 corporations
investigated
, out of which 242 were indicted for the following
crimes:

I. Crimes
against patrimony
, such as bankruptcy
fraud, fraud, fraud committed through computer systems and electronic means of
payment, diversion of public tenders (44 cases – up from 14 in 2017);

II. Corruption
and malfeasance offences,
such as bribery,
influence peddling, buying influence, embezzlement, abuse of power, diversion
of funds (8 cases);

III. Crimes
provided by special laws,
such as
tax evasion and money laundering (157 cases).

At the first glance, in 2018 there were prosecuted
fewer corporations than in the previous years (the peak was in 2016 when almost
500 corporations were indicted), which may support the impression that corporations
are not usually prosecuted in Romania.

However, at a more cautious look, the
number of corporations indicted in 2018 has grown significantly for crimes
against patrimony and for corruption and malfeasance offences.

In light of this unprecedented
investigations against corporations, we will briefly detail (A) the conditions
under which corporations may be criminally liable in Romania and (B) the related
penalties.

In contrast with other countries which
are considering nowadays strengthening the criminal liability of corporations,
in Romania these conditions are already 360˚ comprehensive.

(A) Conditions under which corporations
may be criminally liable

The corporations are criminally liable
for offenses committed in the performance of their business or in their
interest or on their behalf.

Given the broad terms used by the law and
the various situations which may fall under the criminal law liability, the
following questions have arisen: 

· For which
crimes can corporations be liable
? – According
to the Constitutional Court, not all crimes can be committed by a corporation,
stating that only corporate crimes may entail their criminal liability. But,
without defying the concept of corporate crimes, corporations may be in
general liable (at least as an accomplice) for any crime committed by its employees,
representatives or agents as long as the crime was committed in the performance
of their business, or in their interest or behalf.

·  Who can
trigger the liability of corporations
? – The liability of corporations may arise out of offenses committed
by any person acting in the interest or on behalf of
the corporations
or in the performance of their business,
either based on a legal relation or even acting de facto (with or without an
employment contract). 

This condition
implies that, in contrast with the identification principle held by countries
such as UK or Canada – where it is important to establish that an individual
who was “the directing mind” of the company committed the offence, in
Romania it is applicable the principle of direct responsibility (which is more
similar with the doctrine of respondent superior, held in the USA).

Thus, a corporation
may be criminally liable for offences committed by any person acting in
the interest
or on behalf of the corporation or in
the performance of its business
, and not only by the governing bodies.

In a
nutshell, the corporations may be criminally liable for:

(i) any offence
committed in the performance of their business by one of the governing bodies, or
one of their employees or agents, even if the corporation does not enjoy any
benefit (either moral or material); or

(ii)  any offence
which generates a moral or material benefit for the corporation, even if
the crime was not committed in the performance of its business or on its behalf
– e.g. money laundering,
tax evasion; or

(iii) any offence committed on its behalf by any person legally invested to
act in its name (e.g. directors, attorneys), even if the crime was not
committed in the performance of its business or in its interest.

· How to
determine if the corporation is guilty
? – For a corporation to be criminally liable, the conditions concerning
the relevant form of guilt must be met (intention or negligence).

In principle, whenever a crime requires the
existence of intention, the corporation will be held liable in cases where: 

(i) such intent
can be proved at the level of the governing bodies or other high-level
executives; or

(ii) the
commission of such crimes is a practice well-known and tolerated by the corporation.

In case of crimes of negligence, the corporation
may be liable if it has not taken the necessary measures to prevent such
crimes.

There are no specific lines detailing the
measures that a corporation should apply in order to prove that it does not
encourage or endorse such behaviour. Therefore, courts have a case-by-case
approach taking into consideration the industry where the corporation is
acting, the possible risks etc.

While it is always recommended to
implement compliance programs, in Romania they are even more necessary and
should be even well-designed, integrated in the daily business, in an attempt
to supplement the lack of official guidance.

(B) Related Penalties

Corporations may be subject to the
following penalties: 

(a)  main penalty
– fines ranging from 3,000 RON (approx. 635 EUR) to 3,000,000 RON (approx. 636,000
EUR);

(b) ancillary
penalties – winding-up; suspension of one or more business lines for a term
between three months and three years; placement under judicial supervision;
display or publication of the conviction sentence.

We cannot speak about criminal liability
of corporations without referring to the Deferred Prosecution Agreements, which
are started to be regulated in Europe too.

Well, in Romania, there is no such
mechanism and apparently no intention of the Parliament to regulate it. Even
though many drafts of criminal legislation are being discussed, none of them
refers to deferred prosecution agreements or anything similar.

In contrast with other jurisdictions (UK,
France, USA, Canada), where prosecutors and corporations may enter into deferred
prosecution agreements (without any admission of guilt and without an actual
conviction), the only type of settlement available in Romania is the guilty plea
agreement entered into by prosecutors and corporations (or any indicted person)
and endorsed by the court.

In exchange for a reduction of the
penalty, the corporation pleads guilty with the following consequences (a) entering
into a guilty plea agreement entails a recognition of guilt and (b) the guilty
plea agreement triggers a conviction.

As one of the indirect consequences of a
conviction is that, in principle, the corporation is excluded from public
procurement tenders for five years after the judgement of conviction becomes
final, the corporations participating in public procurement tenders should
carefully assess the long-term consequences of concluding a guilty plea
agreement.

In order to reduce as much as possible
the risk of being criminally liable, the corporations should carefully
implement audit systems, compliance programs well-designed for their specific
risk profile, as well as run internal investigations whenever there are signals
of non-compliance.

Given the sensitivity of any internal
investigation, especially if the conclusions will determine a potential criminal
conduct, the corporations should ensure that only external legal counsels are
involved in the investigations, in order to allow the corporation to benefit as
much as possible from the privileged nature of
the investigations’ results.

***

This document is intended for
informational purposes only, does not represent legal advice and does not focus
on particular cases.

For further information or analysis on
specific matters, please contact Alexandru Ambrozie
or Diana Dobra or
the Popovici Nitu Stoica & Asociatii lawyer with whom you normally consult.

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