Tuesday, October 2, 2007

Blackwater - What About the Corporation?

Erik Prince, CEO of Blackwater, says it is up to the Justice Department to investigate "and, if warranted, prosecute personnel involved in the deaths of Iraqi civilians." (Washington Post here)

But the question should also be whether Blackwater, the company, could be held criminally liable if DOJ or the FBI finds conduct that demonstrates that the company failed to promote a culture that avoided criminality within its midst.  Can a corporation be prosecuted if its employees commit criminal acts when discharging their employment?  And how many criminal acts by the employees will warrant an investigation of the entity?

Corporate criminality dates back to the New York Central case in 1909, when a company was criminally liable for violations of the Elkins Act.  Federal courts today use the common law theory of respondeat superior (as opposed to the Model Penal Code) which examines whether the agent was acting within the scope of his or her employment in behalf of the corporation. Courts also use a "collective knowledge" approach that allows the bits and pieces of knowledge from the different parts of the corporation to be combined together. 

Now maybe Blackwater has no criminal culpability here and Prince is right that this was a rogue employee. And maybe any acts that were improper were not within the scope of that person's employment. But perhaps the questions here need to also include: 1) whether the company had a corporate compliance program - which maybe it did ( it has an ethics statement here); 2) whether there was oversight to make certain that people would not be working while intoxicated or committing other possible improper acts; and 3) whether the companies actions were in violation of any criminal laws.  Maybe there will be nothing to write home about here - and that's good, as companies that act in good faith should not be held criminally liable for acts committed by rogue employees.  But as long as corporate criminal liability exists, and as long as a good faith defense for corporations is not embodied in the law, there can always be a question to ask regarding whether there was any corporate criminality liability.

(esp)

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