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Problems pertaining to Corporate Crime

Universiti Kebangsaan MalaysiaFaculty of Law Pursuing PHD Program in Law P58462

Musbri MohamedDIL; ADIL ( ITM )MBL ( UKM )

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In many years, it has been common place for corporations to be prosecuted for criminal offences in United Kingdom. Numerous Acts of Parliament contain provisions aim specifically to make body corporate liable for the offences.

Even if there is no such provision pertaining to criminal liability towards corporation, the Interpretation Act 1978 (UK) provides that, subject to the appearance of a contrary intention, the word ‘person’ in a statute or subordinate legislation is to be construed as including “a body of person corporate or incorporate”.

This definition applies to any Act “whenever passed relating to an offence punishable on indictment or on summary conviction”. The first Interpretation Act to contain this provision was enacted in 1889, but an identical provision was enacted as early as the Criminal Law Act of 1827. It has now been held repeatedly that companies may be indicted for common law offences as well as statutory, and for offences requiring proof of criminal state of mind as well as those of strict liability.

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The term "corporate crime" refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals that may be identified with a corporation.

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Until at the middle of nineteenth century, company developed somewhat haphazardly. The construction and operation of railways for the purpose of transporting soil and mining at that time was the cause of significant injury to the public and workers as well as causing the property damaged.

The first modern company law statute was the Joint Stock Companies Act 1844, introduced following the report of the Parliamentary Committee on Joint Stock Companies. This legislation was passed in the period of rapid expansion of the railways industries. The demand by railways companies for incorporation in order to acquire the special powers (in particular, powers of compulsory purchase) necessary for construction required the passing of numerous private Act of Parliament. The 1844 Act provided, for the first time, for restricted incorporation by registration and to that end established the Registrar of Companies. Therefore, the registered companies had the legal status of a corporation.

Prosecutions were occasionally brought in respect of conduct said not to be in conformity with the powers conferred on the company by the legislature. In earliest reported case, the prosecution relied upon non-feasance by the company where the particular failure was prescribed on pain of criminal sanction.

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In Great North of England Railway Co. (1846) 9 Q.B 315 case concerned a highway leading from the village of Hurworth, Co. Durham to a nearby bridge which was habitually used ‘by and for all the subjects on foot and with their horses and carriages’. A workman employed by the defendant company ‘with force and arms unlawfully and injuriously’ cut a trench through and/or dug up the highway ‘to the great damage and common nuisance of all her Majesty’s liege subjects’. Defendant company argued that there is no indictment for misfeasance against the corporation. The company was convicted and appealled. On appeal, Lord Denman CJ resoundingly dismissed that submission and then stated that:

“The law is often entangled in technical embarrassments; but there is none here. It is as easy as to charge one person, or a body corporate, with erecting a bar across the public road with the non repair of it and they as well be compelled to pay a fine for the act and for the omission”.

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It is apparent in the earlier development of laws, the corporate criminal liability regarded as being narrow as to the extend only for public nuisance, criminal libel and breach of statutory duties. Section 4 of the Malaysian Interpretation Act 1948 and 1967 (Act 388) has been amended and states that a ‘person’ will include a body of corporate or unincorporated.

These is inline with Interpretation Act 1978 (UK) and define a corporation whether incorporated or not, are considered as a legal person under the law.

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The haphazard development of writing on white-collar and corporate crime may in part be attributed to the reluctance of criminologists to study the intricacies of corporate crime and corporate law and to the problems of gaining access for more detailed studies of the corporate organisation or boardroom. The paucity of theoretically driven research in this area is perhaps also related to the somewhat ambiguous nature of white collar and corporate crime in that such conduct may often be seen as being both criminal and yet not justifying the imposition of legal sanctions because of the social standing of those involved.

Related to this have been ideological problems inherent in challenging the crimes of politically powerful elements of society. Some have suggested that the hegemonic role of the corporation will hinder the development of a body of corporate law theory that provides for effective legal control of the corporation.

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Ambiguity and definitional problems have been themes that have

long been part of the debate about corporate and white-collar

crime.

The ambiguity inherent in our understanding of white-collar

and corporate crime had been identified by Norwegian sociologist

of law Vilhelm Aubert in his 1952 essay on the relation between

White-collar crime and social structure, in which he argued that

one reason for the failure of theory in the area of white collar

crime, is that criminal behaviour and criminal sanctions have been

regarded as two quite different systems, leading to the

development of incomplete theories explaining such conduct.

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The imposition of criminal liability is a means of regulating corporations. This can also be accomplished through civil law remedies such as the issuance of an injunction or the award of damages.

Generally, criminal sanctions include imprisonment, fines and community service orders. Because a corporation has no physical existence, and therefore cannot legally form the requisite criminal intent for liability, it can only act vicariously through the agency of the individuals it employs. Thus, while it is relatively commonplace for individuals who commit crimes to be punished accordingly, the extent to which a corporation should incur liability is less clear. Since a corporation cannot be sent to jail, punishment is often in the form of a fine, which diminishes both the money available to pay the wages and salaries of its employees, and the profits available to pay its shareholders.

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Corporate crime is usually characterized as either white-collar crime, because the majority of individuals who represent the interests of the corporation are employees or professionals of a higher social class, or as organized crime, because criminals can set up corporations either for the purposes of crime or as vehicles for laundering the proceeds of crime.

 

Most corporate crime is a breach of both criminal and civil law, and any evidence obtained for the purposes of a criminal trial is usually admissible in civil proceedings. Criminal prosecutions take priority, so if civil proceedings uncover evidence of criminality, the civil action may be stayed pending the outcome of any criminal investigation.

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Corporate crime typically falls into the following categories of white-collar crime: fraud, antitrust, environmental, financial crimes, campaign finance, obstruction of justice, bribery, public corruption, and tax evasion. While each category holds significant convictions and sentences against corporations, the focus of this section will be on fraudulent corporate crime, for purposes of discussing general post-Enron trends.

The majority of corporate crimes are committed because the offender has the right opportunity, i.e., the offender simply sees the chance and thinks that he or she will be able to commit the crime and not be detected. For the most part, greed, rather than conceit, is the motive, and the rationalization for choosing to break the law usually arises out of a form of contempt for the corporation, namely that it will be powerless to prevent the crime, and has it coming for some reason. For these purposes, the corporation is the vehicle for the crime.

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Exactly who pays when a large corporation is fined for breaking the law? To begin with, the stockholders pay. Many of these are innocent retirees who have money invested with the company and had no idea they were breaking the law. Then the employees pay with the loss of jobs, if the financial situation of the company is damaged by the fines. Who doesn't pay? Just the criminals - the individuals who chose to break the law.

All crimes are committed by PEOPLE, not companies. When a company dumps poisons into the environment, a PERSON made the decision to do that (or several people). When a company steals from a pension fund or violates workers rights, INDIVIDUALS made those decisions. People commit corporate crime, not corporations.

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If you want to stop corporate crime, start putting the individuals who are involved in the crime in PRISON. Our current system often has company officers making cost/benefit calculations as to whether the profits from certain crimes are greater than what the occasional fines add up to. Even though laws are broken, they stand little chance of being held personally responsible. Why not hold them responsible?

To fine companies for the actual costs imposed on others by a crime is appropriate. We have to clean up toxic messes, and in other cases compensate those who suffer damages. This also means that shareholders have a reason to be careful in who they elect to the board of directors. However, "punitive" fines are ridiculous unless they are levied against the individual criminals. Make the person who committed the crime pay the fine.

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Is this such a radical idea? I don't think so! By the way, which do you

think is more likely to deter a corporate officer from committing a crime, a fine that is paid by the company, and doesn't even affect his salary, or ten years in jail? The answer to that gives us the answer to corporate crime.

In America the prosecutors and juries have repeatedly sent corporate America the message that white-collar crime is a crime after all, starting with the prosecution of the accounting firm Arthur Andersen, which resulted in its conviction and demise in 2002. Since then, dozens of executives at Enron, WorldCom, Tyco International and other big public companies have been charged with fraud, obstruction of justice and other crimes. Many have pleaded guilty; others are being tried or awaiting trial.

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Now the prosecutions may have reached a critical mass that will make executives think twice before lying to shareholders and federal officials, experts on white-collar crime say.

No one expects corporate executives to suddenly give up their pay packages and devote their lives to good works. But they may back away from the aggressive accounting practices and tax shelters that became common even among blue-chip companies in the last two decades, as well as some of their more egregious perks.

"The pressures on executives to cut corners and shade the truth is very strong, and there's a lot of rationalization that goes on," said Donald C. Langevoort, a professor at the Georgetown University Law Center, and a former lawyer for the Securities and Exchange Commission. Often, executives tell themselves that questionable decisions are for the good of their companies, not personal gain, Mr. Langevoort said.

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Now they will have to think about how a prosecutor or jury might view their actions, he said. The convictions are "going to hit home for a lot of executives.“

Kirby D. Behre, a former federal prosecutor who is a white-collar defense lawyer at Paul, Hastings, said senior executives had already become warier of pushing legal boundaries. "I think the effect is already incredibly profound," Mr. Behre said. "The wake-up call was sent and received in a huge way.“

Of course, some companies will still be tempted to use accounting gimmicks, pay off officials in countries where bribes are a part of doing business and look for ways to avoid taxes. Moreover, while corporate boards have begun to question management more aggressively, executives are still in charge, and some will undoubtedly try to line their pockets at the expense of shareholders.

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But the current wave of cases has shown executives that they can face long prison terms for the sort of accounting gimmickry that during the 1990's often led to little more than minor civil charges from the S.E.C. Just as federal prosecutors used aggressive prosecutions in the 1980's to force Wall Street to change its view toward insider trading, which was long considered a minor offense, the new cases have compelled some executives to rethink their attitude toward fraud.

In aggressively prosecuting white-collar cases, prosecutors are both reflecting the public's increased anger toward executive misdeeds and helping to stoke that anger. In that way, corporate fraud is a bit like drunken driving and domestic violence, which a generation ago were rarely prosecuted or viewed as a serious crime. Today, both are, and both can lead to long prison sentences.

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Prison terms for white-collar crimes are also lengthening. Jeffrey K. Skilling, Enron's former chief executive, and L. Dennis Kozlowski and Mark H. Swartz, two senior executives at Tyco International, could all face more than 25 years in prison if they are convicted.

Andrew S. Fastow, the former chief financial officer of Enron, faces at least 10 years in prison for his guilty plea even though he has agreed to cooperate with investigators.

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At present, the concept of corporate criminal liability has attracted members of the public in UK and Australia to such an extent that a body corporate may be convicted under the crime of manslaughter or homicide. The relevant legislation in UK is the UK Corporate Manslaughter and Corporate Homicide Act 2007; and in Australia is the Australian Law Reform Commission in the Criminal Code Act 1995 (Cth).

In Malaysia, criminal sanctions received the attention of the CLRC but unfortunately the reform is targeting only at the individuals. The study will therefore serve as filling the gap where the potential of the concept is relatively unexplored. It is the aim of this study to explore whether the concept of corporate criminal liability can be suitably adopted in Malaysia through legislation or any other means.

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There is a growing jurisprudence of recognising the concept of corporate criminal liability as a technique to enhance corporate governance, particularly in UK and Australia with the presence of Statutes which recognize corporate killing. Quite in the opposite, the idea of prosecuting corporations in Malaysia is relatively uncommon in practice even though it is possible.

Criminal sanctions as part of corporate monitoring mechanisms have reached a new height in Malaysia, as a consultative document on the review of criminal, civil and administrative sanctions in the Malaysian Companies Act 1965 was already released awaiting feedbacks from the public. However, many of the enforcement measures are aimed at the directors or officers personally, and not to the body corporate as a separate entity.

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This ambiguous response to white-collar crime may in part also be attributable to the

perceived higher status and more powerful social connections of white collar and

corporate criminals; other explanations for the generally less punitive approach to

white collar and corporate crime include the trend away from the use of criminal

sanctions in this area (in favour of the use of civil and administrative measures) and

the lower intensity of public outrage in regard to white collar and corporate crimes

when these are compared with more conventional conceptions of crime such as those

of murder and rape. Even when corporate crimes are dealt with by the courts, it has

often been noted that they are “generally treated with an aura of politeness and a

respectability rarely afforded, if ever, in cases of ordinary crimes.”In addition, it

might be said that the law is often much less effective in dealing with complex

corporate crimes than it is in dealing with more traditional street crimes.

This ambiguity and incoherence in our approach to dealing with business crime can

be traced back to the pioneering study of white-collar crime by Edwin H Sutherland.

In a 1945 article, Sutherland asked: “Is ‘White Collar-Crime’ Crime?”. Sutherland

saw white-collar crime as often involving the deliberate violation of the law by

corporations as organisations; he focussed especially on the crimes of businessmen.

He defined white-collar crime as “…a crime committed by a person of respectability

and high social status in the course of his occupation.”

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In more recent times, some theorists have begun to pay attention to the organisational

dimensions of white-collar crime, whilst others have argued that white-collar

criminals have used the organisation as a weapon, in much the same way as a gun

might be used in street crime . Corporate crime and white-collar crime are

significantly overlapping expressions and would perhaps now be described more

abstractly as economic crimes.

Although the concept of white-collar crime may be a little anachronistic and (like

many other crimes) sometimes hard to clearly define, it does retain some meaning

through its continued use in popular and academic writing. It has taken us some time

to see that corporate crimes are essentially very different in nature from crimes

committed by individuals, whether the latter are occupational crimes or otherwise.

This is because of the distinctive features of the organisational context of corporate

crime.

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To some extent, corporate crime is a subset of the

broader concept of white-collar crime; it might be argued that

white-collar crime overlaps with the above typology of

corporate crime (especially its second and fourth categories),

although white-collar crime need not involve a corporate

entity at all.

However, as we have seen, Edwin H Sutherland argued that

white-collar crime should however be seen as a crime

performed by respectable and higher status

persons in the course of their occupation.

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Problems of definition in this area have led to distinctions being made between

occupational crimes and corporate crimes. However, theoretical attempts to explain

the causes of white-collar crime or corporate crime have proved difficult where

different forms of conduct have been conflated. As noted above, this paper looks

primarily at that type of white-collar crime that comes within the more readily

definable notion of corporate crime.

Much more attention has been given in the literature to corporate crime than to

occupational crime, perhaps because in many ways organisational or corporate crime

subsumes occupational crime, as occupational crime is usually undertaken within the

context of an organisation. For this reason, Wheeler and Rothman have seen the

organisation as the weapon that is used to undertake the crime.

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As Marshall B Clinard and PC Yeager have

also noted:

“Corporate crime is, of course, white collar

crime, but it is of a particular

type…[C]orporate crime is actually

organizational crime that occurs in the

context of complex and varied sets of

structured relationships and interrelationships

between boards of directors, executives, and

managers on the one hand and between parent

corporation, corporate divisions

and subsidiaries on the other….”

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In reality then, the question that should concern us is not whether white-collar crime

is a crime (a question posed by Sutherland in 1945), as this is something that can be

readily determined by reference to the legal definition and associated enforcement

procedures that are adopted by the courts or the legislature in any one society.

We should instead be looking at how the ambiguities between the law in the books

and the law in action in this area are handled. This may lead to a greater focus upon

regulatory, cultural and organisational issues rather than definitional questions. As

David Nelken has more recently pointed out, one key problem with Sutherland’s

definition is that it fails to adequately differentiate between crimes committed for an

organisation or a business from crimes committed at the expense of such entities.

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The Environmental Quality Act 1974 has been enacted which inter alia to hold the corporation responsible and accountable for the crimes committed against the environment such as open burning, illegal toxic waste disposal and the need to submit the environmental impact assessment (EIA) before proceeding to develop certain area.

The 1974 Act empowers Department of Environment (DOE) to take any legal action against the corporate offender for any breach of environmental laws.

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Consumer Protection Act 1999 (Act 599) is enacted and came into force on November 15, 1999 which provide for the protection of consumers and the establishment of two important councils that is the National Consumer Advisory Council and Tribunal for Consumer Claims.

There is a few offences provided under Part II of Act 599 such as misleading conduct, false and misleading representation, false representation and other misleading conduct in relation to land, misleading indication as for price, prohibition against demanding or accepting payment without intending to supply the goods and etc. Under sect.25 of the Act provided that any person including the corporation who contravenes any of the provision under Part II commits an offence and shall on conviction be liable will be punishable to a fine not exceeding five hundred thousand ringgit.

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Companies are a separate legal entity in contemplation of company law after incorporated. It comprises of shareholder, trustee, officer, directors and the trustee of such companies. Corporate crimes will injure investors and the capital markets that fund the needs of existing firms and promote new businesses in the country. It will also hurt the investors and retirees who had entrusted their financial futures when they placed their faith in the promises of the companies' growth and integrity.

Therefore the Malaysian Companies Act 1965 is the principal law outlining the basic statutory implications to all companies and corporation in our country. For example the prohibition against the company providing financial assistance for the purchase its own share as enumerated under sect.67(5) of the Companies Act 1965 provides that if a company contravenes this provision then notwithstanding s.369 (general penalties under the Act) the Company is not guilty of the offence. Instead, each officer who is in default is guilty of the offence. An offence will result in criminal liability and the penalty is imprisonment for five years or fine of RM100,000 or both.

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Intellectual property such as trademarks, patent law, copyright and industrial design is one branch of law which is closely associated with the rights evolved in the development information technology. It is immensely important for those involved in the development, exploitation, use and producing of computer program to be protected from any corporate crimes committed against it. Corporate crime in infringement of copyright for example will deprive the owner of his rights to the ownership of his patent or intellectual property of the said product.

Though we have Copyright Act, Trademark Act, Industrial Design Act and Pattern Act being enacted to cater the problem of intellectual property infringement, it is submitted that the protection against the owner of the computer is still inadequate. Therefore the civil law measures such as injunctions are important tools to prevent and to curb any infringement of the proprietor’s right.

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Irresponsible corporate behaviour will severely affect the public health and the companies who are responsible fail to respond in an adequate manner. They normally show how companies routinely fail to compensate and/or assist an affected community.An example is how they (corporation) evade their obligations to clean up or to remediate damaged environments and violate the human and community rights to live in a healthy environment by failing to monitor or report or provide necessary information of their routine activity or processes that relates to their daily operation.

Bhopal Tragedy In India (1984) for instance is the world’s worst chemical disaster which occurred when a gas leaked in the Union Carbide plant in Bhopal, killed at least 8000 workers & residents in the first three days after the disaster. 150,000 suffered from permanent and debilitating injuries.

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In the borderless world and with the rapid development in information technology, our society in this new millennium has the ablity to gain knowledge virtually for the purpose of advancement of knowledge and education.

It is important to have such advanced so called IT knowledge as corporate crimes nowadays also involve computer crimes such as the act of hacking the computer data or gaining unauthorised access to computers to collect classified information. Failure to eliminate the problem would injure the victims involved such as the hacking into the account of the certain individuals and making illegal money transfer.

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Corporate Crime has been committed in all continents across the range of industrial activities in various sectors (e.g. chemicals, forestry, oil, mining, engineering, nuclear, military, etc).

It clearly points the need for greater control, monitoring and accountability of corporate activities in a globalised economy. This is because it will effect the various segments of community in the future.

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In regard to corporate crime, it has been noted that such crimes were rarely

committed by top management, and were instead more often committed lower down

in the corporate structure; moreover, knowledge of such breaches usually did not

flow to the top management who were therefore insulated and thus less likely to be at

risk of successful legal action against them due to a lack of direct knowledge of the

breach.

As Braithwaite explains: “while it is middle management who perpetuate the

Criminal acts, it is top management which set the expectations, the tone, the

corporate culture that determines the incidence of corporate crime.” He adds that this

implies that “reforms to ensure that top management will be tainted with knowledge

of illegalities, as well as reforms to facilitate prosecution of chief executives who are

wilfully blind to the creation of criminogenic corporate cultures.” It is this focus on

corporate culture and internal corporate compliance programs that many have seen as

being at the heart of effective understandings of the control of corporate criminality.

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It has been difficult to find a single explanation for

white-collar or corporate crime; this is especially so

when we refer to conduct as diverse as insider trading,

deliberate environmental pollution, breaches of health

and safety laws and price fixing.

Consequently, causal explanations of white-collar

crime, which are to apply to a diverse range of conduct

such as this, will inevitably become superficial or

simplistic. However, causal explanations may well be

applicable to some subtypes of white-collar or

corporate crime, such as the application of

crime and opportunity theory to insider trading.

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Efforts have also been made to find other theoretical models applicable to

Organisational crime, such as Braithwaite’s shaming theory that integrates a variety of

other sociological theories such as “the seemingly incompatible theoretical traditions of

labelling, sub-cultural, control, opportunity, and learning theories of crime.” .This

allows for the development of a series of propositions that provide a basis for theory

building in the area of organizational crime. This has provided a rich vein for further

research in this area.

In some ways this focus on shaming is an extension of Sutherland’s attempt to apply

differential association theory to explain white-collar crime, as the latter emphasised

the importance of a person’s social status and respectability. However, as Donald

Cressey has noted, differential association theory, and other psychological theories,

may have little relevance when considering the behaviour of an artificial entity such

as the corporation.

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Braithwaite has also observed:

“Crime flourishes in organizations which isolate people into sealed domains of

social responsibility; crime is controlled in organizations where shady

individuals and crooked subunits are exposed to shaming by those in the

organization with a commitment to the law. The key to understanding so

much organizational crime, be it fraud in the safety testing of drugs or police

corruption, is that organizational complexity can be used to protect people

both from their own consciences and from shaming by colleagues with

stronger consciences.”

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Any contemporary discussion of “corporate crime” should assume that the

conduct that is being discussed involves a breach of the criminal

law,whether or not it is prosecuted. To this extent, the law has labelled the

type of conduct in question as corporate crime; once this has happened,

dealing with such conduct is primarily a matter of proof of the facts of the

case and not of definition. The conduct in question must constitute a

crime, as legally defined, and not merely something that is considered

morally questionable or socially harmful. However, this does not

provide an adequate explanation of the motivations for corporate and

white-collar crime; these may be found within the wider cultural milieu in

which white collar and corporate crimes are committed.

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The concept of corporate crime must then be understood by

reference to the way in which corporate laws and those engaging in

such criminal conduct can use legal institutions.

It also calls for an understanding of regulatory theory; this extends

beyond the application of formal rules by state institutions to the

operation of more informal rules and social control institutions and

practices.

In relation to corporate crime, corporate regulation applies to the

large area that extends from corporate governance rules , to stock

market fraud and financial fraud and to issues of corporate

responsibility for such matters as corporate manslaughter and

product liability.

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Corporate crimes nowadays can be considered as serious crimes

committed by the corporations. Something has to be done in order to curb or to overcome the problems as it implicates the social, economy, political and legal framework of the country at large. Eventually, in the end the corporate crimes will be eradicated.

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The local community will suffer from air, water and land pollution if the local

authorities fail in taking stern measures against any corporation that has committed corporate crimes towards the environment. The employees will be exposed to dangerous risks when the employers or corporations that hire them fail to provide a conducive and safe environment in their working places. All these are a few examples of the affected segment of society that needs attention from the authorities from further offences committed by the corporations. As a corporation aims to maximise their profit and minimising their cost this will induce them to commit a breach against any rules and regulations for the sake of their businesses.

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When we discuss about corporation, the most common type of it is the company. After being incorporated and registered under Companies Act 1965 through Companies Commission of Malaysia, companies will enjoy two particularly significant legal characteristics that are the separate legal personality and the legal capacity. They are even considered as a legal person under the law. This means that the company can incur and receive obligations and hold properties in its own name. The company also can sue and be sued under their own seal.

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A corporation can only act within the scope of the powers given it at birth. The Malaysian Companies Act 1965 requires the memorandum and articles of association which act as the constitution of a registered company and has to be set out in two different documents.

 

These two instruments are important so far as corporate criminal liability is concerned for they represent the starting point in determining whose acts may be identified as those of the corporation itself. Lord Diplock in Tesco Supermarkets Ltd v. Nattrass [1972] A.C 153 regarded them as paramount when his lordship in his judgment stated that:

 

“..a corporation, incorporated under the Companies Act …owes it’s corporate personality and its powers to its constitution, the memorandum and articles of association.

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Few initiatives have been initiated by the Government to

overcome and eradicate the corporate crimes in Malaysia. Amendment of laws, the creation of statutory bodies and implementation of certain important policies are among the list of those initiatives.

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The Government realize about the risk of corporation or any companies that can convert any cash or property which is derived from any criminal activity to give it the appearance of having been obtained from a legitimate source so as to avoid detection from the authorities. Thus, Anti Money Laundering Act 2001 has been enacted and came into force on 15 January 2002 in the situation where there are no provisions that criminalise money laundering activities including the forfeiture of such illegal proceeds unless those related to narcotic, corruption and some criminal offences where the illegal proceeds can be traced.

 

Criminal activities such as drug trafficking, illegal arms sale, illegal lotteries and prostitution rings usually generates substantial amounts of money. The Corporation involved will have to find a way to conceal and disguise such ill-gotten gains through money laundering. See Dangerous Drugs (Forfeiture of Property) Act 1952 ss. 3&4, Anti Corruption Act via s.18, Penal Code ss. 411&414, Criminal Procedure Code s.407 and Customs Act s.135(1)(e)(ii)

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The formation of statutory bodies by the Government is also important to enforce, supervise and to take legal action for any breaches under the laws. The agencies such as Companies Commission of Malaysia (SSM), Securities Commission (SC), Energy Commission (EC), Commercial Vehicle Licensing Board (CVLB), Malaysian Industrial Development Authority (MIDA), Central Bank of Malaysia (CBM), Malaysian Communication and Multimedia Commission (CMC) etc are few examples created by the Government through certain legislation.

As we discuss further it will be observed that all of these agencies comprise of various sectors such as financial, licensing, media and communication, energy etc that will exercise their duties under the law to monitor and to control any corporation and businesses in Malaysia.

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It is interesting to note how US government played its active

role in eradicating corporate crimes. The corporation are prosecuted and if convicted will be liable to a fine, placed on probation and ordered to make restitution, and ordered to notify the public and their victims about their criminal wrongdoing. A condition of probation may require the corporation to take actions to remedy the harm caused by the offence and to eliminate or reduce the risk of the harm reoccurring in the future.

Whereas in Malaysia, there is no such provision to punish such companies but instead the officers either the secretary or directors will be held liable on behalf of those companies.

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A new regulatory paradigm is emerging and that this new paradigm

takes us significantly beyond the command and control models that

have dominated consideration of white collar and corporate

criminal activity for some decades. This new paradigm has begun to

look at the regulatory space within which corporations exist and has

led to theories that take us beyond a study of law itself.

The American legal scholar Christopher Stone saw the corporate

world as being a place where the law ends; this was due to the

importance of the cultural and social context in which corporate law

operates.

Musbri Mohamed

May 2011