Laws on criminal liability of corporations in nigeria



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LAWS ON CRIMINAL LIABILITY OF CORPORATIONS IN NIGERIA


In addition to the Common Law of crime and the codes are enactments and statutes by the respective Federal and State legislatures. Examples of such statutes are the Dangerous Drug Acti, the Consumer Protection Council Act, the Environmental Sanitation Edict of Edo State and the Failed Banks (Recovery of Debt) and Financial Malpractice in Banks Act which would be discussed later. Today, in Nigeria, there are three main sources of criminal law. The three sources are the Common Law of crime, the respective codes, and statutes such as Laws, and Acts enacted by various state governments and the Federal Government. These laws have far reaching effects on the criminal liability of corporate bodies in Nigeria. When the Common Law was being developed, no one ever thought that a corporation could be criminally held liable. This was because the idea of corporation was relatively new. As time went on and the Common Law was going through some changes, the need for the imposition of some forms of corporate criminal liability was gradually being feltii. The model of civil liability of corporation at Common Law through the doctrine of respondent superioriii had exerted a considerable pull on the criminal law, since at Common Law, criminal liability rested on the twin pillars of mens rea and actus reus. Any thought of establishing corporate criminal liability had to confront the issues of mens rea, and actus reus since a corporation has no existence of its own let alone a mind of its owniv. Then there was the issue of punishment, it could not be punished with such sanction as imprisonment. this led to the conclusion that there is no criminal offence that a corporation could commit since it had no physical capacity, and its existence depends entirely on legal fiat. If this were assumed to be true, then the corporation would always be innocent and only the principal officers of the corporations could be punished for wrong doing. As time went on, under the Common Law of crime, particularly in England, it became possible to hold a corporation criminally liable. Corporate criminal liability became very pronounced with the introduction of strict liability offences.

These are offences for which the mental state is not required for the commission of such offences and the penalty (a fine) was such that it could be imposed upon a corporation. Initially, corporations were prosecuted for acts of non-feasance. The case for corporate criminal liability was, strongest in such instances, as public duties imposed upon a corporation by the law. In R v Birmingham and Gloucester Railway Company Ltd, a corporation was convicted for failing to fulfill a statutory duty imposed upon it.

The position in Great Britain today is that, corporations could be held criminally liable under strict liability offences. However, there are some exceptions in such instances as murder, rape, bigamy and so on.

The trend in Nigerian law which is a reflection of the development in England is towards holding an employer (company) criminally liable for the acts of its employees even though the company did not know it had taken place. Crimes created by statute as stated earlier on are usually strict in nature. They do not require the proof of mens rea in form of intention, recklessness, knowledge or even negligence. All that is needed is a proof of the actus reus. In Sharras v D Rutzen, Wright J. Stated that; there is a presumption that mens rea or evil intention or knowledge of wrongfulness of the act is an essential ingredient in every offence, but the presumption is liable to be displaced either by the words of the statute creating the offences or by the subject matter.

In Nigeria, corporate criminal liability is a recent development and as a result, cases are quite few. However, in Ogbuagu v Policev, the appellant was the proprietor and publisher of a Newspaper in Jos, Northern Nigeria.

When leaving Jos, he instructed the man he left in charge not to publish the paper while he was away. The man, however, published the paper, which contained a seditious libel in one issue. In allowing the appeal against conviction by the lower court, the Appeal Court stated that; When the proprietor tells the servant not to publish the paper, in my own view, i see why the proprietor should be answerable for an issue of a paper published by a disobedient servant.

Here the court refused to impute the state of mind of the employee to the proprietor of the newspaper. However, in R.v African Pressvi, a case with nearly the same facts as Ogbuagu, the article was written by and under the responsibility of the editor and the court held both the defendant company and the editor jointly liable since the article was written by and under the responsibility of the editor. In R v I C R Haulage Company Ltd, Stable J.C. emphasised this point when he said that, whether in any particular case there is evidence to show to a jury that the criminal act of an agent including his state of mind, intention and knowledge or belief is the act of the company… must depend on the nature of the charge, the relative position of the officer or agent and the relevant facts and circumstances of the case. In this particular case, a company was criminally held liable for conspiracy to defraud through its managing director. In Inspector General of Police v Mandilas and Karaberis and Anor, the court jointly held liable the company and its manager for the offence of stealing. In his judgment, Thomas J. relied on the general principle that a corporation acts through its agents and that once such agent’s act within the scope of their employment, the principal, which is the corporation would be vicariously and criminally liable.

In Moore v Brester Ltd, the secretary of the respondent company who was also the general manager of a branch of the company and the sales manager of the same branch sold certain of the company goods intended for sale with the object of defrauding the company. They then made false return in respect of the purchase tax on the sales.

Both the company and the two officers were charged and convicted. It’s of the view that the principle applied here was not vicarious one but one of strict liability. This is because, the company was also defrauded. The company could not have collaborated with its employees to defraud itself and the state. Wherever, a duty is imposed by statute in such a way that a breach of the duty amounts to a disobedience of the law, then if there is nothing in the statute either expressly or impliedly to the contrary, a breach of the statute is an offence for which a corporation may be indicted, whether or not the statute refers in terms to corporate.

In R V Tyler and International Commercial Company Ltd, Bowen L.J. stated that, the Interpretation Act of 1889 an English statute provides that; in the construction of any enactment relating to an offence punishable on indictment or on summary conviction, the expression “person” unless the contrary intention appears, includes a body corporate. This principle is also applicable in Nigeria. Certain statutes provide that, where a corporation has committed an offence, its officials shall in certain circumstances be deemed guilty of that offence. However, there’re particular types of corporations exempted from such restrictive legislation.


CRIMINAL LIABILITY OF CORPORATIONS UNDER STATUTE


Statutory offences are usually strict. Strict liability is the term used to describe the imposition of criminal liability without proof of fault on the part of the defendant. It has been said that to punish a defendant for the commission of a strict liability offence is, per se unjustvii. The argument could be faulted. There is need for strict liability offences particularly with respect to welfare offences and more so when corporations are involved in profit making activities.

In Sweet v Parselyviii the court held that; imposition of strict liability maybe more justifiable where the defendant (company) is engaging in a profit making activity which creates hazards for the public. This should be the position, particularly where it becomes difficult to identify a particular officer whose acts could be regarded as the acts of the Company.

The leading authority on the criminal liability of corporations is the case of Griffith v Studebakerix. Here the court held that an employer can be vicariously liable in respect of strict liability offences committed by an employee during the course of his employmentprovided the wording of the statute is appropriate. In this instant case, an employee of the defendant company had taken a number of prospective purchasers for a trial run in one of the company’s cars. The company was charged with using the vehicle contrary to the Road Vehicles (Trade Licenses) Regulations 1922, on the ground that more than two passengers were carried on the trial run. The court held the company liable for using the vehicle through its employee. As the offence was one of strict liability, there was no jurisprudential difficulty, in holding the company liable as the principal offender and the employee liable as an aider and abettor.

Liability of the employer for the criminal acts of the employee depends on how the courts choose to construe the statute in question and in particular, whether the offence is regarded as one of strict liability or one requiring full mens rea. In Police v Adamu Yahayax the court held that once a vehicle is being used to carry smuggled goods, the mens rea of the owner is immaterial because the statute regulating custom and excise is a strict liability one.

In Nigeria, statutes have been specifically enacted in addition to the Nigerian criminal code and penal code which have provisions for corporate criminal liability. Such statutes include the Food and Drug Actxi, Standard Organisation of Nigeria Actxii (SON), Weight and Measures Actxiii, the Companies and Allied Matters Actxiv, the Consumer Protection Council Decreexv, Federal Environmental Protection Agency Actxvi, the Failed Bank (Recovery of Debts) and Financial Malpractice in Banks Decreexvii, Environmental and Sanitation Edictxviii and a host of other statutes. These statutes were enacted to promote the social, economic and well-being of the citizens. The Consumer Protection Council Act seeks to safeguard the consumer from the hands of unscrupulous and exploitative companies, firms, trade associations and individuals. It is intended to encourage the adoption of adequate and appropriate measures to ensure that products are safe.

The Actxix states that; It shall be the duty of the manufacturer or distributor of a product, on becoming aware after such a product has been placed on the market of any unforeseen hazard arising from the use of the product to notify immediately the general public of such risk or danger and cause to be withdrawn from the market such product.

The Act also states that; Any person who violates the provision of sub-section of this section is guilty of an offence and liable on conviction to N50,000.00 fine or imprisonment for five years or both.

Another Act that provides for corporate liability is the Failed Bank (Recovery of Debts and Financial Malpractices in Bank Actxx. The Act seeks to instill sanity into the banking industry by making it punishable for the bank or any financial institution and any of its staffs who contributed in any manner to the collapse of the financial institutions. An early case decided under this provision, was the Federal Republic of Nigeria V. Dr. Nwochie Odogwu and Capital Merchant Bank No.147. In this case the managing director of Capital Merchant Bank, was also the promoter of the Bank in its formative stage. He floated other sham companies to which he granted unsecured loans which he later diverted to his personal purse. Within a short time, the bank went into liquidation and all the depositors lost their money. Both the bank and its managing director were charged before the Failed Bank Tribunal. The managing director, was sentenced to 18 years jail term and ordered to refund N76 million Naira, with a fine of N35,000.00 while the bank itself was discharged and acquitted. It would seem from this judgement that the tribunal simply lifted the veil of incorporation to find out who was behind the mask. It accordingly dealt with the natural person behind the mask instead of chasing the ghost by holding the bank criminally liable for an act that was masterminded by its employee for his own benefit. This kind of judgment, although is in the best interest of the public seems to have done away with the principle of distinct corporate entityxxi.

In Public Finance Securities Ltd. V. Jefiaxxii the court stated that; The court will lift the veil of incorporation of any company to find out who was behind the fraudulent and improper conduct of the company. This will be necessary where the canopy of legal entity is used to defeat public convenience, justify wrong, perpetuate and protect fraud and crime. Also where a company was involved in reckless and fraudulent trading activity tainted with fraud, the court can pears the veil of incorporation.

In most cases when prosecution knows that a corporate body has committed a crime jointly with some of its employees, and since in most cases, the corporation cannot be subjected to the same punishment as its workers, it would rather prefer not to charge such corporate body or charge it with a lesser offence or charge its officers alone because of the difficulty in subjecting such corporate body to certain punishments like jail term or death sentence. This position is very unfair as it encourages individual criminal liability, instead of corporate liability thus enabling the corporation that benefited from the whole transaction to escape punishment . it is evident that corporate bodies are now held criminal liable both under the Common Law, or codes and statutes. In so many instances, where they have been held liable, they were fined even when there is provision for a jail term. This stand conflicts with the principle which bestow on a corporate body the attributes of a natural person with corresponding powers, benefits and liabilities. One other issue is whether corporations could be liable for all types of crime. The issue as to whether a corporate body could be liable for certain offences like manslaughter came up in Spooner and Others; Exparte Rohan and Anotherxxiii. In October, 1987 an application was made for leave to apply for judicial review against the decision of the Coroner for East Kent made on the 18th and 19th of September, 1987 in the course of an inquest into the death of 188 people arising out of the capsize on 6th May, 1987 of the Herald of Free Enterprise.

In hearing the application for judicial review, Lord Justice Bingham said that, he was prepared tentatively to accept that a corporate body was capable of being found guilty of manslaughterxxiv. The court, however, refused to grant the application for judicial review because no substantial case had been made against named Directors of the company. From the decision in this case, there seem to be a tentative acceptance of corporate criminal liability for a serious crime such as manslaughter.

In R v Corry Brothers Ltdxxv, the Directors of a company decided to create a fence around a power house belonging to the company to prevent pilfering from it. Accordingly, a wire was erected and charged with electric current on the instruction of the power engineer of the company. Soon after, on the same day, the deceased accidentally stumbled on the fence and died. The company was then charged with the offence of manslaughter. The court, however, held that the company could not be held guilty of manslaughter or for the offence of setting traps with intent to inflict grievous bodily harm. in Granite Construction Company v Superior Courtxxviin a charge of manslaughter, the corporation argued that as an economically motivated entity, it could be liable only for property crimes. The court responded This argument is unsuccessful. It overlooks the substantial indirect economic benefit that may accrue to corporation through crimes against the person. To get these economic benefits, corporate management may short cut expensive safety precautions, respond forcibly to strikes or engage in criminal anti competition behaviour.

Mueller is of the view that such a corporation must not be allowed to go free. In his wordsxxvii; Why should not a corporation be guilty of murder where, for instance, a corporation’s resolution sends the corporation workmen to a dangerous place of work, without protection, all officers secreting from these workmen the fact that even a brief exposure to the particular work hazards will be fatal, as was the case in the notorious Hawk’s West Venture in West Virginia, where wholesome death (as in Bhopal’s case in India) was attributed to silicosis.

In line with the above stand, in Northern Mining Construction Company Ltd. v Glamorgan Assizesxxviii, a corporation was tried for manslaughter, but acquitted on merit. The facts of this case simply establish the position that a corporation could be tried for such an offence as manslaughter, but the problem is whether the corporation could be made to face the punishment? Here in Nigeria, there are yet no known cases of corporations being charged for the offences of manslaughter or murder. Whatever may be the reason for this, it is clear that there are certain offences for which a corporation cannot be charged because of the difficulty in holding such corporations liable and making it to undergo the prescribed punishment.



i Dangerous Drug Act Cap. 91 L.F.N.1990 Now Cap D 1 Vol.5 Laws of the Federation of Nigeria 2004.

ii See Smith and Hogan. Criminal Law Cases and Materials (6th ed. Butterworth 1996) p. 254 where it is stated that a Corporation may be a party to a Common law conspiracy and manslaughter. 13

iii The doctrine of “respondeat superior” makes a master liable for the action of his servant. It was very easy to adopt this doctrine under the civil law to make corporation liable since a corporation can only act through its servants.

iv Introduction to Criminal Law, (London, Butterworth 9th ed 1980) p.107.

v [1953] 30 NLR 139

vi [1957] W.R.N.L.R. 1 See also Ako Adjei and Anor. (1951) 12 WACA 253 where the West African Court of Appeal held that the Chairman, the managing director and the editor of a newspaper which published a seditions publication could be found guilty under a similar provision of the Gold Coast (now) Ghana Criminal Code.

vii R. V. Larsonner [1933] 24 Gapp. R. 74

viii Sweet v Parsely [1970] AC 132

ix [1924] 1 KB. 102

x [1942] 16 N.L.R; 1944 – 57 14 NLR 98 at 1011

xi Cap. 150 L.F.N. (1990). Now Cap F 32 vol. 7. LFN 2004.

xii S.O.N. Act (Amendment Decree) No. 18 of 1990. Now Cap S9 vol. 4 LFN 2004.

xiii Cap. 467 Laws of the Federation 1990. Now Cap W 3 vol. 5. LFN 2004.

xiv Companies and Allied Matters Act, 1990. Now Cap. C 20 vol. 3 LFN 2004.

xv Decree No. 66 of 1992. Now Cap C 25 vol. 4 LFN 2004.

xvi F.E.P.A. Act Cap. 131 L.F.N. 1990 as amended by Decree S. 9 of 1992. Now Cap F 10 vol. 6 LFN 2004.

xvii Decree No 18 of 1994. Now Cap F 2 vol. 4. LFN 2004.

xviii Environmental and Sanitation Edict 1994, Edo State (enacted by virtue of Constitution Suspension and Modification) Decree 1993.

xix S. 9 (2) Decree No. 66 of 1992. Now Cap. C. 25 vol. 4. LFN 2004.

xx Failed Bank (Recovery of Debts) and Financial Malpractices in Bank Decree No. 18 of 1994. Now Cap F 2 Vol. 6 LFN 2004.

xxi Salomon v Salomon [1897] A.C. 22 where the court held that Salomon was a distinct person from the company

xxii [1998] 3 NWLR pt. 59.

xxiii The Times, 10th October, 1987

xxiv Smith and Keenan English Law, (9th ed, London: Pitman Publishing Ltd. 1990) P.504-505. 56 (1927) 1 KB 810.

xxv (1927) 1 KB 810

xxvi 149 Cal. App. 3rd 465, 197 Cal. Rptr. 3 (1983) Quoted by Wayne lafave and Austin W. Scott Jnr., Criminal Law 2nd ed. (St. Paul MNN, USA, West Publishing Company, 1986, p. 258.

xxvii See Mueller,’ Mens Rea and Corporation’ 19 U.P.L. Rev. 21, 23 (1957) quoted by Wayne Lafave and Austin W. Scott Jnr. Criminal Law (2nd ed. St. Paul MNN, U.S.A. West Publishing Company 1986) p. 259

xxviii Unreported February 1, 1965.


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