«FaOM SAWDUST TO TOXIC BLOBS AConsideration of Sanctioning Strategies to Combat Pollution in Canada STUDIES IN REGULATION AND COMPLIANCE Canada.~ ...»
This chapter is concerned principally with general deterrence, which has as its underlying hypothesis the proposition that human behaviour can be influenced by incentives. This leads to the special prediction that increases in the severity of penalties or the certainty of their imposition on offenders who are detected will reduce crime by those who are not directly sanctioned... [A]ll theories of deterrence predict a negative association between aggregate crime rates and sanction levels, with sanction levels measured either by sanction severity, by sanction risk, or both. All tests of deterrence hypothesis search for that negative association. 181 Since the 1970s a substantial effort has been made by scholars across a lll'mber of disciplines to establish such a negative association in regard to a range of crimes. 182 This effort has been successful in compiling weak but supportive evidence that under limited conditions the threat of punishment may be effective in preventing or reducing certain types of undesirable behaviours. 183 The evidence also suggests that the certainty and, to a lesser degree, severity of punishment are important variables in determining whether or not a deterrent effect is secured. 184 Two decades ago, in a prescient and influential article, Chambliss 185 drew early attention to the significance of these variables as they related to a number of offences, including white collar crimes.
Two principal and partly interrelated issues seem to emerge from the white collar crime literature regarding the sanctioning of corporations. First, there is a still-ongoing debate as to whether any, or at least some, forms of corporate misconduct, including polluting behaviour, should be dealt with by the use of criminal sanctions. 189 Second, there is considerable discussion about the effectiveness of different types of sanctions, whether criminal or civil, in deterring corporate misconduct.
(1) Criminal vs. Non-Criminal. The debate on this issue has two components. In the 1960s legal scholars like Kadish 190 argued forcefully that much of the economic conduct of American business that was regulated by ant~-trust, securities and similar laws was "morally neutral" in quality.191 The conduct prohibited by these economic regulatory laws, said Kadish, was not immediately distinguishable from modes of business behaviour that were not only socially acceptable, but applauded in a free enterprise society. As such, this conduct was not an appropriate target of criminal sanctions, which should be reserved for activity deserving moral reprobation.1.92 Even so, Kadish acknowledged that because this conduct was calculated, deliberative and directed towards economic gain, it was "a classic case for the operation of the deterrent strategy."193 Kadish's views about the nature of these regulatory laws are not so dissimilar to those voiced today in legal circles by those justifying distinctions between criminal, strict liability and absolute liability offences. 194 These distinctions have, as seen earlier, important legal consequences. However, in the context of polluting behaviour, it has also been suggested that this conduct is no longer seen by the public to be of a "morally neutral" quality. Thus the Kadish view, at least as far as environmental regulation is concerned, requires modification to accommodate to contemporary values. 195 A second component of the criminal vs. non-criminal debate concerns the practicality of applying criminal sanctions to corporations and/or their officials.
Indeed, in the view of Stone,196 one of the leading scholars in the field, neither existing criminal nor civil sanctions can deal effectively with corporate misconduct. Instead, what is needed to make "corporations more moral" is a change in their internal cultures - something that cannot be achieved through the simple application of formal legal controls. 197 As an analogy, Stone refers to the police culture and its reaction to "pro suspect" rulings of the United
States Supreme Court:
The police are organised around a dominant organizational goal of apprehending wrongdoers an.j stopping crime. The [Supreme] Court, in handing down such rulings as Miranda (police must inform interrogees of their legal rights) represents an attempt by an outside agency to intrude a value - fair play to the 'criminal' - that is almost impossible to reconcile with the organization's dominant goal: 'collaring' wrongdoers. 198 Apart from his idealism and vision, Stone's contribution in this area, together with others,199 has been to expose the culture of the corporation to critical review. Corporations, like communities, vary enormously in complexity, sophistication, power, cohesiveness and other qualities. They are not monolithic organizations that march to the beat of a single drum, but diverse and often
divided bodies that act accordingly. Thus the law, to quote Stone again:
Ought constantly to be searching out and taking into account the special institutional features of business corporations that make the problems of controlling them (and of controlling men in them) a problem distinct from that of controlling human beings in ordinary si tuations. 200 For some commentators "the special institutional features of business corporations" are such that civil rather than criminal sanctions represent the most effective way of achieving a deterrent impact. 201 Those who support this view tend to emphasize that corporate wrongdoing is normally motivated by some economic goal and that corporate decision makers are guided by cost- benefit calculations. 202 To obtain successful deterrence of such activity it is necessary to threaten the imposition of a sufficiently high level of monetary deprivation something that can be done far more readily by using civil rather than criminal fines. Prosecuting a corporation or its officials for a "real crime", according to this view, is a far more difficult, costly and time-consuming task than proceeding with a "non-criminal" remedy. The burden of proof in a criminal case is onerous; a corporation is likely to defend a criminal case to the bitter end using the services of the finest legal talent available; and even if a verdict of guilty eventually results, the penalty imposed by the court may be unduly lenient. 203 Other commentators, who are concerned with the question of sanctioning individual officers in a corporation as well as or in preference to the corporation itself, point to additional problems associated with criminal prosecutions. These problems include attributing responsibility to individuals within a corporation for criminal acts. 204 Such problems can be acute in a large, multinational organization where decision making may be delegated from corporate headquarters to branch plant managers. 205 For example, the branch plant manager may set production goals that can only be achieved by breaching local environmental regulations - a fact that is not necessarily known by, or of concern to, the corporate heads. Steps may even be taken to insulate corporate headquarters from any knowledge of local regulations regarding polluting behaviour.
Within a branch plant, pressures may also exist on middle managers to meet certain production targets by ignoring environmental regulations. The motivational goals set for promotion within a corporation may outweigh concerns regarding any possible sanctions that might be imposed should any criminal prosecution arise from breaches of these regulations. 206 Numerous scenarios like these can and have been sketched by commentators to illustrate how difficult it may be to identify and prosecute those really responsible for polluting behaviour in a large corporation, especially if its operations cross borders. In Canada, which is host to many branch plants of major multinational corporations, these scenarios have a special meaning, although they do not settle the issue as to whether or not criminal sanctions should be used. This is the point, however, at which the discussion can turn usefully to a consideration of the second issue emerging from the white collar crime literature, namely, the relative merits of a number of different types of sanctions for deterring corporate misconduct.
(2) Choosing Alternatire Types of Sanction. Commentators who remain convinced of the viability of using sanctioning strategies in this area, whether they involve those labelled criminal by lawyers or other penalties that may not fit this technical description, now possess some quite persuasive evidence from the research literature that these strategies do have an impact on corporate behaviour. One study that stands out in this literature as iIIustrative of this impact is that of Fisse and Braithwaite. 207 These researchers conducted case studies of 17 large transnational companies that had been the subject of severe adverse publicity, including several for grave polluting behaviours. This publicity stemmed from allegations of gross misbehaviour that was not always criminal but still sufficiently grave to warrant criminalization as a matter of reform. 208 The researchers were interested primarily in the effects that this adverse publicity had on the corporations and their officials. 209 The results of the research showed that the large corporations studied cared greatly about their reputations. The adverse publicity they received was of concern not so much because of its financial impacts, which in many cases were very substantial, "but because of a variety of non-financial effects, the most important of which is loss of corporate prestige."210 In situations like these the good repute of the company was valued for its own sake. As Fisse and
Business organizations are not unusual in seeking prestige for its own sake; universities, service groups, and football clubs do the same. One should never underestimate the importance to senior business executives... of being perceived by their middle-class peers as working for a prestigious company. And quite apart from these intrinsic rewards, for most people there is basic satisfaction in the feeling that they are working with a reputable team.
None of this is to deny the importance of individual responsibility and reputation to the social control of corporate crime. However, individual personnel often cannot be held responsible for corporate offen"ces for a long string of reasons, practical and theoretical. 211 Fisse and Braithwaite go on to consider the potential for exerting regulatory control over corporations provided by the use of informal and formal publicity devices. Under the former category they review the areas of consumer activism, investigative journalism, enforcement actions by regulatory agencies, official inquiries, corporate disclosure laws and international exposure. 212 They also explore under the latter category ways of using formal publicity as a stigmatizing, prestige-lowering sentence in criminal proceedings. 213 They conclude that publication of the details about an offence should be made available as a court-ordered sentence against corporate offenders, and that pre-sentence or probation orders against such offenders should be used to require disclosure of organizational reforms and any disciplinary actions initiated as a result of the offence. 214 Recommendations like these regarding new, innovative corporate crime sentencing strategies have sparked quite substantial controversy, as have questions about the philosophies of punishment that should apply in this area beyond deterrence. 215 That deterrence, both general and specific, has an effective role to play in dealing with corporate misconduct is becoming more widely acknowledged as socio-Iegal and criminological scholars probe more deeply into the corporate soul. 216 But these probings have also revealed the inadequacies of traditional sanctions like fines and imprisonment in curbing corporate misconduct.
Many problems exist with financial penalties as a deterrent in this area, some of which have been mentioned earlier in this paper. 217 These problems include the fact that in order for a fine to be high enough to deter a corporation it may have severe side effects, including possible bankruptcy, layoffs, closing of marginal plants, and injuries to creditors and stockholders. 218 Not everyone may view such consequences as being undesirable if the corporation has been gUilty of grave misconduct, but commentators have suggested that they might be avoided in many cases by focusing punishment on individual officers in preference to the corporation. It has also been suggested that, rather than imposing a cash fine on a corporation, an "equity fine" might be imposed, which would have a less drastic impact on the financial health of the organization.