UNIVERSITY COLLEGE DUBLIN

UCD Working Papers in Law, Criminology & Socio-Legal Studies

Research Paper No.16/2017

Joe McGrath

Sutherland School of Law

University College Dublin

Electronic copy available at: https://ssrn.com/abstract=3042540

 Forthcoming in the Law and Financial Markets Review (2017)

Instrumental and Expressive Governance:

Corporate and White-Collar Crime in Contemporary Society

Dr. Joe McGrath, Sutherland School of Law, University College Dublin

Introduction

This paper analyses the evolution and enforcement of corporate and white collar criminal
liability in contemporary societies. It commences by analysing the emergence of a new
architecture of corporate enforcement in Ireland. This architecture consists of new ways of
thinking about white-collar wrongdoing, new legal structures, and their enforcement in
practice. It then proceeds to analyse the extent to which similar patterns of laying blame may
be evident in America and England and Wales. While exercising sensitivity for the different
cultural, political and legal norms prevailing in these States, it is not a comparative study of
regulatory approaches in these jurisdictions. It does not seek to identify common differences
or similarities on a point-by-point basis for their own sake, but rather draws together common
regulatory experiences to argue that a shared process of social and cultural change has
emerged. It is argued that this has produced a generative structure of corporate enforcement
in societies which has shaped responses to business wrongdoing. This facilitates a deeper
understanding of the characteristics and strategy choices that give a distinctive shape to the
modern system of justice in common law countries and how they might be changing as
societies transition in the direction of more instrumental and expressive strategies after the
global financial crisis.

The Irish Transition From ‘Command and Control’ to ‘Responsive Regulation’

In Ireland, from the foundation of the State to 1998, Ireland operated a ‘conventional crime’
model addressing corporate wrongdoing. Corporate obligations in the Companies Acts were,
for the most part, underpinned by criminal sanctions. There were, for example, 280 distinct
criminal offences in the Companies Acts 1963 - 1990.1 Moreover, they were underpinned by
conventional crime methods. Prosecutors often bore the burden of proving that the accused
had acted intentionally to break the law, reflecting a respect for the presumption of innocence
and subjective culpability requirements.2 For example, in defining the meaning of “officer in
default” for the purposes of criminal liability under the Principal Act, section 383 stipulated
that this “means any officer of the company who knowingly and wilfully authorises or
permits the default, refusal or contravention mentioned in the provision.” Therefore, in every
offence in the Companies Acts that sought to pin criminal liability to company officers “in
default” of their obligations, there was a blanket subjective culpability requirement, unless
otherwise stated in that particular offence. Civil sanctions also existed but arguably the most
powerful civil sanction at the time, the disqualification order, stipulated by section 184 of the
1963 Act, could only be triggered by the criminal conviction of the accused, on the

1
Report of the Working Group on Company Law Enforcement and Compliance (Dublin: Stationery Office,
1998), p. 9.
2
J. McGrath, Corporate and White-collar Crime in Ireland: A New Architecture of Regulatory Enforcement
(Manchester University Press, 2015a), p. 47-59.

Electronic copy available at: https://ssrn.com/abstract=3042540

application of a criminal prosecutor, and breaching the order was also a criminal offence,
thereby illustrating the primacy of the criminal law in the 20th century.3

In theory, a number of specialist enforcers, like the Minister, Companies Registration Office
(CRO), and the Central Bank, addressed corporate enforcement. For example, the Minister
could prosecute summary offences in the Companies Acts. However, there were “no
Departmental resources allocated for the enforcement of the law [so] the day to day
investigation and prosecution of breaches of company law (other than the Companies
Registration Offences) is close to non-existent”.4 In addition, the CRO was only empowered
to prosecute filing offences, 34 offences by 1990, still just a small fraction of the hundreds of
offences in the Companies Acts at the time, so it continued to perform a largely
administrative role.5 In any event, this agency was also so under-resourced that a registration
agent for the CRO complained that the office is so “seriously understaffed and
underequipped” that it is not “available to check and file the bundles of documents stacked on
the floor”.6 Meanwhile, the Central Bank was not empowered to prosecute summary offences
until 1971, as stipulated by section 59 of the Central Bank Act 1971. Moreover, there is no
record that it ever used this power thereafter.

If specialist enforcers played a marginal role in criminal law enforcement, it is because the
ordinary police and prosecutors, the Gardaí and the Director of Public Prosecutions (DPP),
monopolised most of the authority for enforcing the law, even though they lacked the skills,
training and resources to do so effectively. Unsurprisingly, perhaps, the law was very rarely
enforced. Of the 280 offences in the Companies Acts, there were only a handful that were
ever prosecuted, and only the failure to file annual accounts was prosecuted with any
regularity.7 The traditional failure to enforce the law is evident in the Irish response to one of
the most significant corporate frauds in the Irish State in the 20th century, involving Merchant
Banking, a company in the Gallagher Group which failed in the early 1980s. The liquidator's
investigation concluded that Merchant Banking had seriously breached the Companies Acts,
the Central Bank Acts and the Larceny Acts, finding evidence of 79 criminal offences.8 The
bank had failed to hold annual general meetings, had falsely recorded transactions, made
false returns to the Central Bank and obtained and managed its assets fraudulently. Though
the Gardaí subsequently investigated, they lacked the resources and skills to deal effectively
with cases of white-collar crime. It took several fraud squad officers working full-time on the
case six years to complete their investigation and for a report to be sent to the DPP.9 Even
then, the police had not been able to compile sufficient evidence to ground a successful
prosecution so the State decided not to prosecute the case. By contrast, the British authorities
dealt much more decisively with Merchant Banking's activities in Northern Ireland. The
British conducted a two-year investigation that provided sufficient evidence to prompt
Patrick Gallagher, the Chairman of the Gallagher Group, to plead guilty to five offences. He

3
K. O’Connell, “Deemed Disqualification Orders” (10th Annual National Prosecutors’ Conference, Dublin
Castle Conference Centre, 23 May 2009).
4
Report of the Working Group on Company Law Enforcement and Compliance (Dublin: Stationery Office,
1998), paras. 2.21-2.22.
5
Report of the Working Group on Company Law Enforcement and Compliance (Dublin: Stationery Office,
1998), para. 2.9. See also: Cahill, N. Company Law Compliance and Enforcement (Haywards Heath: Tottel,
2008), p. 545-549.
6
N. Foley, “Letter to the Editor” Irish Times (23 February 1989), 11.
7
McGrath, 2015a: 67-84.
8
S. Carswell, Something Rotten: Irish Banking Scandals (Dublin: Gill & Macmillan, 2006), p. 79.
9
F. O’Toole, “Assault on the public’s right to know” Irish Times (7 December 1989), 14.

Electronic copy available at: https://ssrn.com/abstract=3042540

was not treated deferentially. He was arrested and initially denied bail.10 He was subsequently
sentenced to two years imprisonment, despite the payment of significant compensation on his
behalf.11 Even though Merchant Banking had a significantly smaller operation in Northern
Ireland than in the Republic, the investigation was taken more seriously in the United
Kingdom and Patrick Gallagher served time there while all that happened in Ireland was that
the liquidator considered a civil suit.12

In 1998, the McDowell Group on corporate compliance and enforcement reported that “Irish
company law has been characterised by a culture of non-compliance” and “those who are
tempted to make serious breaches of company law have little reason to fear detection or
prosecution.”13 This apathy and inertia in corporate enforcement, characterised by McGrath
as an era of “protectionism and procrastination”,14 may be understandable given Irelands long
history as an agrarian state,15 with relatively low levels of corporate activity,16 where the
public was more concerned with job creation rather than crime, particularly white-collar
crime.17 Nevertheless, as Ireland transitioned from a rural state with low levels of corporate
activity to a highly open and global centre for commerce and finance, particularly in the
1990s, a new model of corporate and financial regulation emerged. The State became less
concerned with regulating commerce as an assertion of sovereignty, as it was in the early
decades of the state when protectionist policies were advanced to guard against foreign
economic intervention. It embraced competition and light-touch regulation to promote itself
as an attractive location for foreign investment, in order to boost the prosperity of the State.18

As the economic and social context changed, so too did corporate enforcement. The
conventional crime monopoly became more fragmented because a variety of specialist
agencies were established to police and prosecute corporate wrongs, colonising functions
formerly held by government departments and conventional crime fighters.19 The ODCE, for
example, created in 2001, was the first agency dedicated to the enforcement of company law.
Moreover, it is an interdisciplinary agency, combining lawyers, accountants and police and it
has more significant resources and extensive powers.20 Additionally, corporate wrongdoing
was further criminalised, such that there were approximately 400 criminal offense in the
Companies Acts 1963-2001.21 Moreover, these offences are more likely to employ regulatory
crime strategies, like strict liability and reverse onus provisions. For example, section 100 of
10
“Gallagher faces NI fraud charges over bank collapse” Irish Times (31 March 1988), 1; “Patrick Gallagher,
businessman, has chequered career” Irish Times (2 April 1988), 6.
11
“Belfast Court Jails Banker” Irish Times (2 October 1992), 13.
12
C. McCullagh, Crime in Ireland A Sociological Introduction (Cork, Cork University Press, 1996), p. 72-73.
13
Report of the Working Group on Company Law Enforcement and Compliance (Dublin: Stationery Office,
1998), para. 2.5.
14
2015(a), p. 30. See also: J. McGrath, “The Prosecution of White-Collar Crime in a Developing Economy: A
Case Study of Ireland in the 20th Century” in: J. Van Erp, W. Huisman, & G. Vande Walle, (eds). The
Routledge Handbook of White-Collar and Corporate Crime in Europe (Oxford: Routledge, 2015b), p. 399.
15
J. Lee, Ireland 1912-1985; Politics and Society (Cambridge: Cambridge University Press, 1989), p. 284.
16
D. Ferriter, The Transformation of Ireland 1900-2000 (Dublin: Profile Books Ltd, 2005), p. 313.
17
S. Kilcommins, I. O’Donnell, E. O’Sullivan & B. Vaughan, Crime, Punishment and the Search for Order in
Ireland (Dublin: Institute of Public Education, 2004), p. 136. On the marginalization of corporate wrongdoing
from crime debates, see: J. McGrath, “The traditional court of crime approach to the definition of a crime” in S.
Kilcommins and U. Kilkelly, Regulatory Crime in Ireland (Dublin: Lonsdale, 2010), p. 29.
18
R. Mc Sharry, & P. White, The Making of the Celtic Tiger: The Inside Story of Ireland’s Boom Economy
(Cork: Mercier Press, 2000); N.J. Smith, Showcasing Globalisation: The Political Economy of the Irish
Republic (Manchester: Manchester University Press, 2005).
19
C. Scott, (2012) “Regulating Everything: From Megaregulation to Metaregulation” Administration, 60, 57.
20
McGrath, 2015a: 124-130.
21
CLRG, First Report (Dublin: Stationery Office, 2001), para.8.1.1.
the 2001 Act repealed and replaced section 383, noted above, removing the need to prove that
company officers have acted intentionally in over 90 offences that apply to both companies
and to every officer in default.22 So, while once the State had to prove that the accused had
acted intentionally (or “knowingly and wilfully” to use the language of the Act), now the
accused must not only prove that he did not act intentionally, but also that he has not acted
recklessly or negligently.23 This blanket reversal of the burden of proof requires officers to
prove their own innocence by showing that they did everything they reasonably could have
done to prevent the wrongdoing from occurring. Moreover, as noted by Cahill, section 383(3)
specifies that “whenever a company fails to comply with a requirement of the Companies
Acts, every director has automatically committed a breach of duty. This heightens
considerably the likelihood of enforcement of the provisions of the Companies Acts against
individual directors.”24

In parallel with increased regulatory criminalisation, the State also diversified its enforcement
arsenal, increasingly demonstrating the tendency to ‘civilise’ law and corporate enforcement.
The civil ‘restriction order’ was created in 1990 to prevent dishonest and irresponsible
persons from acting as a director, or secretary and from being concerned with the
management or formation of the company, unless that company is capitalised by a certain
amount. The discretionary disqualification order, a total ban on further participation in
corporate life, was created that same year. It was entirely unshackled from the criminal
justice system and was available as a stand-alone civil sanction.25 Administrative sanctions,
involving fines of up to €5 million on companies and unincorporated bodies and fines of up
to €500,000 for individuals may also be imposed,26 a system which the Financial Regulator
acknowledged which is more punitive than the criminal justice system.27 Gathering these
threads together, regulatory crime mechanisms, civil orders, and administrative sanctions
have been introduced to avoid the high level of proof and evidence that are sometimes
required in criminal trials. They obviate the need to prove guilt in criminal cases. Unlike
criminal prosecutions, these orders are more instrumental than expressive, less severe but
more certain in their application.

In addition, the departure from the conventional criminal model also had a significant impact
on the enforcement process. Enforcement became much more sophisticated, moving away
from the ‘command and control’ model to a ‘responsive’, compliance-orientated, pyramidal
model of enforcement.28 The adoption of this model in Ireland was explicitly acknowledged
by the former Director of Corporate Enforcement, Paul Appleby.29 In accordance with the
‘responsive’ model, the Irish approach to corporate wrongdoing is now specifically addressed
by a pyramidal enforcement architecture, taking compliance-orientated and sanctioning
approaches, using both civil and criminal enforcement mechanisms. Under this model,
enforcers first educate company officers about their responsibilities and encourage them to
comply with their obligations. If this approach is unsuccessful, responses escalate to warning
letters, civil sanctions and ultimately to criminal liability on indictment. Criminal law is often

22
T. Courtney, The Law of Private Companies (Dublin: Tottel, 2002), para. 12.032.
23
Cahill, 2008: 784.
24
Ibid.
25
O’Connell, 2009.
26
Financial Regulator, Outline of Administrative Sanctions Procedure (Dublin: IFSRA, 2005), para. 5.1.
27
Ibid, para. 2.2.5.
28
I. Ayres & J. Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (Oxford: Oxford
University Press, 1992), p. 35.
29
P. Appleby, “Compliance and Enforcement – The ODCE Perspective” in S. Kilcommins and U. Kilkelly,
ed.s, Regulatory Crime in Ireland (Dublin, First Law 2010), 177 at 187.
the sanction of last resort.30 By design, most corporate and financial wrongdoing is often
addressed in the civil jurisdiction of the law rather than the criminal courts, as is
demonstrated when contrasting the number of persons on the register of restricted persons
and register of disqualified persons as against the number of persons summarily prosecuted
each year under the Companies Acts. By the end of 2002, there were just 54 people on the
register of restricted persons.31 However, this number rose to 961 by the end of 2016.32 Just
10 company directors were named on the register of disqualified persons in 2002 but by the
end of 2016 this number had risen to 3,664.33 The ODCE, by contrast, prosecuted eight cases
resulting in 20 convictions for offences prosecuted on a summary basis in 2002 but this
declined to 7 convictions in 2015.34

Moreover, the enforcement context appears to be changing again. Since 2008, extensive
wrongdoing in the financial services sector was revealed and corporate wrongdoing became
politicised. In response, politicians said that white-collar criminals were guilty of economic
treason and should be treated like terrorists.35 More new laws were introduced to make it
easier to investigate corporate wrongdoing and to secure convictions. The Criminal Justice
Act 2011, for example, strengthens the investigative powers of regulators and reduces delays
in the investigation and prosecution of white-collar crime. It breaks up detention periods into
segments so that suspects can be re-questioned after release if interim investigations require
it. The period of detention may be suspended twice and the total period of the suspension
cannot exceed four months (s.7). The Act confirms that adverse inferences may be drawn
from the refusal to explain suspicious circumstances involving the accused, provided that he
has been informed of this beforehand and has had the opportunity to consult a solicitor (s.9).
The Gardaí have the power, on application to the District Court, to require people with
relevant information to provide this information and answer questions about it (s.15).
Furthermore, the Gardaí may also apply to the court to determine if material is subject to
legal privilege and if not, to seize it (s.16)(2)). If the volume of documents is substantial, the
court may appoint an independent expert to examine it and prepare a report for the court on
whether the documents are privileged (s.16)(5)). The judgment of the District Court can be
appealed to the Circuit Court but no further (s.16(8)). Moreover, the Act makes it a criminal
offence, punishable by up to five years imprisonment, for people to fail to report information
to the Gardaí pertaining to corporate or financial crime (s.19).

Similarly, the Central Bank (Supervision and Enforcement) Act 2013 further increased the
investigative and sanctioning powers of the Central Bank by specifying new information
gathering powers, specifying rules to challenge legally privileged information, protecting
whistle-blowers, and doubled penalties for administrative sanctions so that companies may be
fined €10 million and individuals may be fined €1 million. These new laws show that an
active legislature has adopted an even stricter attitude to corporate and financial regulation.
Moreover, unlike previously, when initiatives were introduced for mostly instrumental
reasons, to address problems with proving guilt in white collar crime cases, they also have
ostentatiously political purposes. Cracking down on due process rights and limiting
30
K. Hawkins, Law as Last Resort: Prosecution Decision-Making in a Regulatory Agency (New York: Oxford
University Press, 2002).
31
ODCE, Annual Report 2006 (Dublin: Stationery Office, 2007), p. 31.
32
Companies Registration Office, Annual Report Dublin: Stationery Office, 2017, p. 39.
33
Ibid.
34
ODCE, Annual Report 2002 (Dublin: Stationery Office, 2003), p. 17; ODCE, Annual Report 2015 (Dublin:
Stationery Office, 2016), p. 40.
35
H. McGee, “Dempsey accuses wrongdoers at Anglo of economic treason” Irish Times (24 February 2009), 1;
E. Burke-Kennedy, “Bankers did more economic damage than IRA” Irish Times (29 October 2010), p. 10.
conventional criminal procedure was the convenient way of blaming regulatory failure on
something outside of politics. Therefore, these developments, in addition to responding to
issues which had been long neglected, also reflected the political desire to “tool up” executive
power and “act out” for public approval in an attempt to “govern through crime”. 36
Instrumental justice has been colonised by the political establishment for expressive
purposes.

Moreover, however, there is some initial evidence that corporate enforcers also indicated a
greater willingness to escalate to more serious sanctioning approaches. More prosecutions on
indictment are being taken against company officers. Former officers of Anglo Irish Bank, a
bank at the center of the Irish financial crisis, have been prosecuted for various criminal
offences, albeit with mixed successes.37 The ODCE has also a stated preference for a gradual
shift away from summary prosecutions in the District Court in favour of prosecutions on
indictment, with more significant penalties.38 The Central Bank, in its policy document Our
New Approach has also committed to taking a more aggressive intrusive approach and has
imposed more severe administrative sanctions.39 Sentencing principles have also been subtly
reformulated by the judiciary which make it much more likely now that convicted white
collar offenders will go to jail.40 In general, these departures stem from a new awareness,
arising particularly since the financial crisis, that economic crime, so called “crime in the
suites’, can damage the security of the State in ways that are at least as harmful as “street
crime”.

In concluding on the Irish approach, a number of trends in corporate enforcement have

recently been reversed since the 1990s and particularly since 2008. Traditionally, corporate
wrongdoing was often criminalised using conventional criminal justice methods (subjective
culpability and presumption of innocence requirements) and the ordinary police were often
charged with the responsibility of enforcing the law. Now, specialist enforcers, with more
powers, employ a more sophisticated, graduated, responsive approach, using civil and
criminal sanctions, where criminal law is often the sanction of last resort. Legislative reform,
cultural sentiments requiring increased corporate accountability, and a greater emphasis on
enforcement in practice, have coincided to create a new architecture of corporate
enforcement. In many ways, however, the State has transitioned from one contradictory
model of corporate enforcement to another. Traditionally, it invoked the state’s most
powerful weapon of state censure, the criminal law, but was remarkably lenient in practice.
The contemporary model is more reliant on cooperative measure and civil orders, but also
contains remarkably punitive and instrumental measures.

36
J. Simon, Governing Through Crime: How the War on Crime Transformed American Democracy and
Created a Culture of Fear (New York: Oxford University Press, 2007).
37
The People (DPP) v Whelan and McAteer Circuit Criminal Court (Judge Nolan), 17 April 2014; The People
(DPP) v O’Mahoney, Daly and Maguire, Circuit Criminal Court (Judge McCartan), 29 July 2015); The People
(DPP) v McAteer, Bowe and Casey, Circuit Criminal Court (Judge Nolan), 29 July 2016). See also: C. Taylor,
“FitzPatrick omnishambles a defining moment for State”, Irish Times (27 May 2017), available at:
<https://www.irishtimes.com/opinion/cliff-taylor-fitzpatrick-omnishambles-a-defining-moment-for-state-
1.3097892?mode=amp>.
38
ODCE, Annual Report 2014 (Dublin: Stationery Office, 2015), p.6; ODCE, Annual Report 2015 (Dublin:
Stationery Office, 2016), p.5.
39
Central Bank of Ireland, Banking supervision: our new approach (Dublin: Central Bank of Ireland, 2010).
40
J. McGrath, (2012) “Sentencing White-Collar Criminals: Making the Punishment fit the White-collar Crime”
Irish Criminal Law Journal, 3, 72.
International Trends: The New Logic of Action

In the eighteenth and nineteenth century, policing was private, local and principally
concerned with the regulation of trade, commerce and the markets. Policing was not
restricted to theft or offences against the person, but also extended to the regulation of
weights and measures, and early forms of health and safety law, consumer protection and
environmental protection.41 Braithwaite noted that it was only in the nineteenth century, when
the centralised State monopolies on policing were established, that criminal justice systems
became preoccupied with conventional crime offences:

Uniformed paramilitary police, preoccupied with the punitive regulation of the

poor to the almost total exclusion of any interest in the constitution of the markets
and the just regulation of commerce, became one of the most universal of
globalized regulatory models. So what happened to business regulation? From the
mid-nineteenth century, factories inspectorates, mines inspectorates, liquor
licensing boards, weights and measurements inspectorates, health and sanitation,
food inspectors and countless others were created to begin to fill the vacuum left
by constables now concentrating only on crime. Business regulation became
variegated into many different specialist regulatory branches.42

In the past, the State had increasingly monopolised investigative and prosecutorial functions
as part of the process of modernising criminal justice. Developments in this direction were
informed and balanced out by liberal legalism, so that the rights of the accused and
procedural safeguards were institutionalised under an equality of arms framework to protect
individuals from the increasing powers possessed by the State. The criminal process
attempted to guarantee individuals, to the greatest extent practicable, substantive and
procedural justice. Though exceptions existed, this usually meant that the prosecution usually
bore the burden of proving beyond a reasonable doubt that the accused had acted
intentionally to break the law.43 Even if convicted of a crime, the offender was protected from
the state by the requirement that only proportionate punishment would be imposed, reflecting
both the personal circumstances of the offender and the particular circumstances of the
offence. These protections addressed the problem of the previously ‘bad economy of power’
which ‘vested too much on the side of the prosecution … while the accused opposed it
virtually unarmed’.44

In the contemporary context, those accused of corporate and white-collar offences can expect
to face a powerful State apparatus seeking to enforce the law on behalf of the people, albeit in
a fragmented form through a variety of specialised enforcers. In the USA, these include
regulatory bodies and agencies like the Federal Reserve, the Securities and Exchange
Commission (SEC) and specialised subgroups within conventional investigative and
prosecuting agencies, including those within the Federal Bureau of Investigation (FBI) and
the Department of Justice (DOJ). In the UK, the responsibility for the investigation and
prosecution of white-collar crime is fragmented among the Serious Fraud Office (SFO), the
Financial Conduct Agency, and the Office of Fair Trading, with more serious frauds

41
J. Braithwaite, Neoliberalism or Regulatory Capitalism (Canberra, Regulatory Institutions Network, 2005), p.
13-14; J. Braithwaite, (2000) “The New Regulatory State and the Transformation of Criminology” 40 British
Journal of Criminology, 222, 225.
42
J. Braithwaite, Regulatory Capitalism, (Cheltenham: Edward Elgar Publishing, 2008), p. 13-14.
43
H.L. Packer, The Limits of the Criminal Sanction (Stanford: Stanford University Press, 1968).
44
M. Foucault, Discipline and Punish: The Birth of the Prison (Harmondsworth: Penguin 1991), p. 79.
prosecuted by the Crown Prosecution Service Central Fraud Division. What were once
private corporate governance issues are increasingly being reconstituted as public matters to
be resolved through the legitimate forum of the criminal courts. Prior to this, such conduct
had not generally been considered immoral, but merely a consequence of being involved in
the markets and having the desire to make money.45 These developments have arisen from
broader changes in social, political and economic conditions.

In the 20th century, US society, previously dominated by agrarianism, became increasing

commercial in nature, with the “white collar” worker typifying modern America.46 As society
became increasing commercial and white collar in orientations and composition, more
opportunities for corporate wrongdoing emerged and the way in which this wrongdoing was
perceived changed accordingly. Empirical surveys since the 1950s, but particularly since the
1970s, demonstrated that the public were willing to punish corporate wrongdoing at least as
seriously as so called ordinary crime, particularly when it caused physical harm.47 Public
apathy and indifference to white collar criminality, so in vogue before 1970, was “a relic of a
more naïve and trusting period” but now “Americans cast a suspicious eye toward the rich
and powerful and were prepared to send them off to prison if given a compelling reason for
doing so.”48

Coinciding with these changing sentiments, federal criminal law also expanded considerably
since the 1970s, when the legislature increasingly demonstrated its willingness to more
closely regulate matters which had traditionally been private matters of corporate governance.
Baer explains that the regulatory legislative expansion was a product of the judicial
reluctance to require companies to manage their own compliance with the law. She states,
“As the Delaware courts demonstrated their reluctance to interfere with the internal
governance of corporate firms, the federal government increasingly expanded both the
content and enforcement of criminal law.”49 In 1974, for example, the State enacted the
Antitrust Procedures & Penalties Act to facilitate judicial review of decisions made by the
DOJ as to whether to permit certain mergers and acquisition. In 1977, it introduced the
Foreign Corrupt Practices Act (FCPA) to tackle the corruption of foreign officials. In 1982,
the Racketeer Influenced & Corrupt Organizations Act (RICO) was enacted. Reflecting on
these developments, Baer states,

Since at least the 1970’s, federal criminal statutes have expanded in both breadth
and intensity. They cover business misconduct previously defined as commercial
wrongdoing, and they apply far more punitive sanctions to both the newly
criminalized misconduct and to the activities—such as embezzlement and bribery
– that were traditionally viewed as crimes. The emergence of the administrative
state has further empowered and expanded federal criminal law.50

45
M. Clarke, Business Crime: Its Nature and Control (Oxford: Polity Press, 1990), p. 162.
46
C.W. Mills, White collar: The American middle classes (Oxford University Press, 1951).
47
D.J. Newman, (1957) “Public attitudes toward a form of white collar crime” 4, Social Problems, 3, 228; J.P.
Reed, and R.S. Reed (1975) “Doctor, Lawyer, Indian Chief: Old Rhymes and New on White Collar Crime”,
lnternational Journal of Criminology & Penology, 3, 279; F.T. Cullen et al. (1985) “Dissecting white-collar
crime: Offense type and punitiveness” 9 International Journal of Comparative and Applied Criminal Justice, 1-
2, 15.
48
F.T. Cullen, J.L. Hartman, and C.L. Jonson, (2009): “Bad guys: Why the public supports punishing white-
collar offenders” Crime, Law and Social Change 31, at 38.
49
M. Baer, (1990) “Governing corporate compliance” 50 Boston College Law Review 949, at 961.
50
Baer, p. 963.
Similarly, Gainer noted the tendency “when a congressional committee adopts new
requirements concerning commercial transactions ... or virtually any other regulated activity,
it routinely incorporates at the end of the requirements a statement that any deviation
constitutions a federal crime. This tendency has led to a gradual absorption of non-criminal
law by the criminal law.”51

Commercial regulation also became increasing more detailed and specific in order to deal
with the more complex and sophisticated nature of society. Regulatory criminal law, in
particular, was increasingly influential, not least because criminalisation was viewed as a cure
for almost any social and commercial problem.52 In the US, for example, there were 165
federal criminal statutes at the turn of the 20th century but this had increased to 4,500 separate
statutes by 2004. The number of corporate criminal offences, which already stood at a count
of over 300,000 prior to the passage of Sarbanes Oxley legislation in 2002, has also increased
significantly.53 Moreover, new business offences were remarkably broad in scope,
increasingly employing strict liability and reverse onus provisions to surmount the traditional
difficulties of proving guilty in corporate and white-collar crime cases.54 This may suggest
that barriers to prosecution are increasingly being curtailed in order to facilitate expediency in
regulatory justice.

Meanwhile, the British Regulatory State emerged. Moran describes this as transition from an
era of “club government” to one of “hyper-innovation”. The former involves an informal,
genteel, laissez faire approach to regulation which lacks transparency. The latter is a new era
of market openness and entrepreneurship, where there is a juridication of social relations, and
the emergence of a sophisticated, responsive regulatory regime, exercised both within and
and from beyond the state.55 Baldwin, while acknowledging that criminal law has long since
been employed to address corporate wrongdoing, noted “an apparent new zest for punitive
approaches to regulation” in the business sector.56 Moreover, in its Consultation Paper on
Criminal Liability in Regulatory Contexts the Law Commission noted,

Since 1997, more than 3000 criminal offences have come on to the statute book.
That figure should be put in context, taking a longer perspective. Halsbury’s
Statutes of England and Wales has four volumes devoted to criminal laws that
(however old they may be) are still currently in force. Volume 1 covers the
offences created in the 637 years between 1351 and 1988. Volume 1 is 1382
pages long. Volumes 2 to 4 cover the offences created in the 19 years between
1989 and 2008. Volumes 2 to 4 are no less than 3746 pages long. So, more than 2
and a half times as many pages were needed in Halsbury’s Statutes to cover
offences created in the 19 years between 1989 and 2008 than were needed to
cover the offences created in the 637 years prior to that. Moreover, it is unlikely

51
R.L. Gainer, (1998) “Federal Criminal Code Reform: Past and Future” 2 Buffalo Criminal Law Review, 45, at
72-73.
52
K. Mann, (1992) “Punitive Civil Sanctions: The Middleground between Criminal and Civil Law”, 101 The
Yale Law Journal, 1795.
53
V.S. Khanna, (2004) “Corporate crime legislation: A political economy analysis” Washington University Law
Quarterly 95, at 96.
54
J. Hasnas, Trapped: When acting ethically is against the law (Cato Institute, 2006), p. 31-44.
55
M. Moran, The British regulatory state: high modernism and hyper-innovation (Oxford University Press,
2003).
56
R. Baldwin, (2003) “The New Punitive Regulation” 67 (2003) The Modern Law Review 3, 351.
 that the Halsbury volumes devoted to “criminal law” capture all offences created
in recent times.57

Recognising that there has been a significant increase in regulatory criminalisation, Macrory
stated: ‘that there may be a case for decriminalising certain offences thereby reserving
criminal sanctions for the most serious cases of regulatory non-compliance’.58

Despite such calls for restraint, it has been suggested the USA also suffers from too much
criminal law and too much criminal punishment.59 Though Hagan has demonstrated how
successive administrations vilified ‘crime in the streets’ rather than ‘crime in the suites’, it is
also the case that the courts have punished white-collar criminals with lengthy periods of
imprisonment and enormous fines.60 For example, Michael Milkin, the so-called ‘junk bond’
king was fined $650 million in court and sentenced to 10 years imprisonment. Bernard
Ebbers, CEO of Worldcom was sentenced to 25 years imprisonment. Kenneth Lay, CEO of
Enron, was sentenced to six years imprisonment and died prior to completing it. The need to
act and be seen to act, the “politics of symbolism”, greatly increased following the accounting
scandals at Enron and WorldCom at the turn of the 21st century.61 However, it only fully
crystallised following the financial crisis in 2008 when politicians of all hues promised swift
justice for so-called “banksters”.

In the wake of the financial crisis, Barack Obama promised to “bring a new era of
responsibility and accountability to Wall Street and to Washington”,62 blaming the financial
crisis on “fat cat bankers on Wall Street”.63 He vowed to “hold Wall Street accountable”.64
Other politicians equated banker with criminals “who have made out like bandits”,65 and that
they should “resign, or go commit suicide.”66 Donald Trump also denounced bankers in his
election campaign, calling them “a global power structure that is responsible for the
economic decisions that have robbed our working class, stripped our country of its wealth
and put that money into the pockets of a handful of large corporations.” 67 Meanwhile, senior
staff at the Department of Justice articulated the official approach to tackling white collar
crime during these administrations. In September 2015, Deputy Attorney General, Sally
Yates, declared, “as principles that the Department lives and breathes”, that “fighting

57
Law Commission. Criminal Liability in Regulatory Contexts: A Consultation Paper. Stationery Office, 2010),
para. 1.17.
58
R. Macrory, Regulatory Justice, Making Sanctions Effective (London: Better Regulation Executive, 2006),
para.1.39.
59
D. Husak, Overcriminalization: The limits of the criminal law (Oxford University Press, 2008).
60
J. Hagan, Who are the Criminals? The Politics of Crime Policy from the Age of Roosevelt to the Age of Regan
(Princton: Princeton University Press).
61
J. O'Brien, Redesigning financial regulation: the politics of enforcement (John Wiley & Sons, 2006), p.46.
62
“US election: Full text of Barack Obama's speech on the economy”, The Guardian, 13 October 2008,
available at: <https://www.theguardian.com/world/2008/oct/13/uselections2008-barackobama>.
63
E. Williamson, “Obama Slams 'Fat Cat' Bankers”, Wall Street Journal, available at:
http://www.wsj.com/articles/SB126073152465089651
64
The White House, ‘Remarks by the President in State of the Union Address’, 26th January 2012, available
from http://www.whitehouse.gov/photos-and-video/video/2012/01/25/2012-state-unionaddress-enhanced-
version#transcript
65
Press Release, Senator Bernie Sanders, Wall Street Bailout (Oct 1, 2008),
<http://sanders.senate.gov/news/record.cEm?id=303980>.
66
M. Kady, “Grassley on AIG execs: Quit or suicide” Politico (03/16/09), available:
<http://www.politico.com/story/2009/03/grassley-on-aig-execs-quit-or-suicide-020083>.
67
B. Protess & J. Hirshfeld David, Trump Moves to Roll Back Obama-Era Financial Regulations, New York
Times (3 Feb 2017), available at: < https://www.nytimes.com/2017/02/03/business/dealbook/trump-congress-
financial-regulations.html>.
corporate fraud is a top priority of the Department of Justice”. 68 It echoed the sentiments of
then Attorney General, Eric Holder, in 2009, when he stated, “We will investigate you, we
will prosecute you, and we will incarcerate you. We will be relentless in our investigation of
corporate and financial wrongdoing …”.69

Similar rhetoric was also evident in the UK. In 2008, the leader of the Conservative Party,
while in opposition, David Cameron, promised a “day of reckoning” for bankers in the City.70
When he became Prime Minister, the Coalition Agreement reached by the Conservative Party
and the Democratic Liberals in 2010 also pledged to “take white collar crime as seriously as
other crime”.71 The Chancellor of the Exchequer and conservative party member, George
Osborne, also promised, “We will tackle financial crime”.72 In 2015, he stated that bankers
were responsible for “the biggest single crash of our lifetimes”, explicitly equating traders
with common thieves: “If you go and shoplift at the local WH Smiths you go to prison. But if
you’re the market trader on the trading floor of a big investment bank, and you rip off people
to the tune of millions of pounds, there are no criminal offences to deal with you.”73 The
Mayor of London, Boris Johnson, agreed that white collar crime should be “rooted out and
punished”.74 Condemnation even seemed to cross earthly and celestial divides when the
Archbishop of Canterbury, Justin Welby, weighed in with fire and brimstone, arguing that
British banks should clean up the industry, operating with a “fear of hell and the hope of
heaven.”75

Much like in Ireland, this “zero-tolerance” rhetoric suggests that white collar crime has
become politicised since the financial crisis as politicians competed to be more outraged by
corporate wrongdoing and be to be seen to be tough on white collar criminals. There have
been a number of high-profile white-collar crime cases and punishments have escalated
further. Bernie Madoff, for example, was recently sentenced to 150 years in jail for his role in
a Ponzi scheme. Moreover, however, in addition to being highly punitive, their treatment is
also highly visible. White-collar offenders are increasingly subject to public shaming
techniques, like ‘perp walks’, because “white-collar and other financial crimes of deception
are treated by the mass media as extensions of ‘infotainment’.76 While this might suggest that

68
S.Q. Yates, “Individual Accountability for Corporate Wrongdoing”, Memorandum from Deputy Attorney
General (9/09/2015), available at: https://www.justice.gov/archives/dag/file/769036/download.
69
US Department of Justice, “Attorney General Eric Holder Speaks at the Financial Fraud Enforcement Task
Force Press Conference”, 17 November 2009, available from: <https://www.justice.gov/opa/speech/attorney-
general-eric-holder-speaks-financial-fraud-enforcement-task-force-press>.
70
D. Cameron, (2008) Conservative Party Conference, available at:
https://www.theguardian.com/politics/2008/oct/01/davidcameron.toryconference1.
71
HM Government, The Coalition: Our Programme for Government (HM Government, 2010), p.9, available at:
<https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/83820/coalition_programme_fo
r_government.pdf>.
72
HM Treasury “Speech by the Chancellor of the Exchequer, Rt Hon George Osborne MP, at Mansion House”,
(16/6/2010), available at <https://www.gov.uk/government/speeches/speech-by-the-chancellor-of-the-
exchequer-rt-hon-george-osborne-mp-at-mansion-house>.
73
P. Spense and T. Wallace, “Bad bankers are like shoplifters, says George Osborne” The Telegraph
(11/11/2015) , available: <http://www.telegraph.co.uk/finance/financial-crime/11988110/Bad-bankers-are-like-
shoplifters-says-George-Osborne.html>.
74
H. Kuchler and P. Jenkins, “David Cameron backs criminal sanctions for ‘reckless’ bankers” Financial Times
(19 June 2013), available at: <https://www.ft.com/content/3a711c1c-d8b4-11e2-a6cf-00144feab7de>.
75
J. Salmon, “Jail rogue bankers in the future, say MPs” Daily Mail, 14 June 2013, available at:
<http://www.dailymail.co.uk/news/article-2341363/Jail-rogue-bankers-future-say-MPs-Long-awaited-report-
criminal-sanctions-involved-banking-scandals.html>.
76
M. Levi, (2006) “The media construction of financial white-collar crimes.” British Journal of Criminology 46,
1037.
white-collar cases are regularly channelled through the criminal courts, a location where
businessmen must explain and defend their actions in public, contradictory messages are sent
when these cases are exceptional and symbolic, because the vast majority of serious cases
have long since been addressed by alternative strategies. As noted by Shapiro:

“Out of every 100 suspects investigated by the SEC, 93 have committed

securities violations that carry criminal penalties. Legal action is taken against 46
of them, but only 11 are selected for criminal treatment. Six of these are indicted;
5 will be convicted and 3 sentenced to prison. Thus, for Securities and Exchange
Commission enforcement, criminal prosecution most often represents the road not
taken. Of those found to have engaged in securities fraud, 88 percent never have
to contend with the criminal justice system at all.”77

More recently, for example, deferred prosecution agreements and various other settlement
strategies have allowed corporate and white-collar offenders to escape criminal sanctions
when companies agree to pay fines and install ‘corporate monitors’ to ensure future
compliance with the law.78 This approach has been praised as a form of “new governance”
which aims to reward efforts to institute corporate compliance with less severe
punishments.79 The government requires the corporation to reform and improve its internal
governance norms to induce cultural change within the organisation and to prevent against
future non-compliance and illegality, but the corporation itself is deciding what changes it
makes and how best to implement them.80 In this way, corporations are tasked with solving
their own problems, but the Damocles sword of prosecution will fall if this is unsuccessful.
Reflecting developments in Ireland, it is an approach that moves away from traditional,
command-and-control regulation to one where prosecution can be a last resort when other
strategies fail.

These agreements also allow enforcers to appear tough, sometimes extracting enormous fines
in some particularly high-profile cases. In the USA, for example, HSBC was fined $1.9
billion for facilitating money laundering by terrorists and narcotics traffickers. 81 Similarly, in
the UK, Rolls Royce agreed to disgorge £258 million in illegal profits and pay a further
financial penalty of £240 million to avoid prosecution on corruption and bribery charges.
Nevertheless, there have been significant concerns that individuals have been able to buy
their way out of wrongdoing.82 Judge Rakoff of the Southern District of New York has
expressed significant reservations in circumstances where the fines have been too small,
when individuals have not been held accountable, and when the company has refused to

77
S.P. Shapiro, “The road not taken: The elusive path to criminal prosecution for white-collar offenders” Law
and Society Review (1985): 179 at 182.
78
B.L. Garrett, Too big to jail: How prosecutors compromise with corporations (Harvard University Press,
2014).
79
C. F. Sabel & W. Simon, “Destabilization Rights: How Public Law Litigation Succeeds”, 117 Hart L. Rev.
1015,1097 (2004)
80
E. Rubin, “The Myth of Accountability and the Anti-Administrative Impulse” 103 Michigan Law Review
2073, 2107-08 (2005).
81
HSBC Holdings Plc. and HSBC Bank USA N.A. Admit to Anti-Money Laundering and Sanctions Violations,
Forfeit $1.256 Billion in Deferred Prosecution Agreement, available at:
http://lib.law.virginia.edu/Garrett/prosecution_agreements/sites/default/files/press_release/HSBC.pdf>.
82
D.M. Uhlmann, Deferred Prosecution and Non-Prosecution Agreements and the Erosion of Corporate
Criminal Liability, 72 Michigan Law Review 1295, 1302 (2013); R. Mokhiber, Editor, Corporate Crime
Reporter, Speech Delivered at the National Press Club: “Crime without Conviction: The Rise of Deferred and
Non Prosecution Agreements” (28/12/ 2005), available at:
<www.corporatecrimereporter.com/deferredreport.htm>.
admit wrongdoing.83 In the UK, where DPAs have recently been more recently employed,
Leveson J asked whether companies should be able to avoid criminal convictions in
circumstances where the wrongdoing was particularly serious, deliberate and persistent.
Though approving the DPA, he clearly had some reservations about doing so, asking: “if
Rolls-Royce were not to be prosecuted in the context of such egregious criminality over
decades, involving countries around the world, making truly vast corrupt payments and,
consequentially, even greater profits, then it was difficult to see when any company would be
prosecuted.”84

Meanwhile, notwithstanding the “tough on white collar crime” rhetoric, others note that very
few people have been prosecuted for misconduct leading to the recent financial crash.85
Instead, the US Department of Justice has reached eye-wateringly large settlements against a
range of institutions for misleading investors on mortgage securities and related matters.
These include settlements against Bank of America for $16.7 billion; JP Morgan Chase & Co
for $13 billion; Deutsche Bank for $7.2 billion, Citigroup for $7 billion; Goldman Sachs Inc.
for $5.1 billion; and Morgan Stanley for $3.2 billion.86 The Credit Rating Agency, Standard
and Poor’s, also entered a $1.375 billion settlement for misleading investors as to the value of
subprime mortgages.87 On occasion, political pressure has been exerted on the Department of
Justice not to prosecute banks that might be of systemic economic importance.88 The
observation that serious corporate and white collar crime is not being prosecuted assumes
greater significance in light of a study conducted by researchers with the Transactional
Records Access Clearinghouse (TRAC) at Syracuse University, which claims that white
collar crime prosecutions are at a 20-year low.89 Gathering these threads together, a new logic
of action has emerged in which enforcement is specialised, where wrongdoing is increasingly
criminalised with harsher penalties, but paradoxically, where there remains unwillingness to
use criminal sanctions in the vast majority of cases, except as a last resort.

83
Sec. Exch. Comm'n. v. Bank of Am. Corp. (Bank of America Opinion 1), 653 F. Supp. 2d 507 (S.D.N.Y.
2009); Sec. Exch. Comm'n. v. Vitesse Semiconductor Corp., 771 F. Supp. 2d 304 (S.D.N.Y. 2011); Sec. Exch.
Comm'n. v. Citigroup Global Markets Inc., 827 F. Supp. 2d 328 (S.D.N.Y. 2011).
84
Serious Fraud Office v Rolls-Royce plc, (High Court, 17 January 2017), Leveson J at para. 61.
85
H.N. Pontell, W.K. Black, and G. Geis, (2014) “Too big to fail, too powerful to jail? On the absence of
criminal prosecutions after the 2008 financial meltdown” Crime, Law and Social Change 61, 1. See also S. Will,
R. Handelman, & D.C. Brotherton, How they got away with it: White collar criminals and the financial
meltdown (NY: Columbia University Press: 2013).
86
S. Arons, D. McLaughlin , and G. Farrell, “Deutsche Bank Completes $7.2 Billion U.S. Mortgage Pact”
Bloomberg, (17/11/2017), available at: <https://www.bloomberg.com/news/articles/2017-01-17/doj-deutsche-
bank-agrees-to-pay-7-2b-for-misleading-investors>.
87
Department of Justice, “Justice Department and State Partners Secure $1.375 Billion Settlement with S&P for
Defrauding Investors in the Lead Up to the Financial Crisis” (3/02/2015), available at:
https://www.justice.gov/opa/pr/justice-department-and-state-partners-secure-1375-billion-settlement-sp-
defrauding-investors.
88
J. Hensarling, Chair, Too Big to Jail: Inside the Obama Justice Department’s Decision Not to Hold Wall
Street Accountable, Report Prepared by the Republican Staff of the Committee on Financial Services, U.S.
House of Representatives, 114th Congress, Second Session, July 11, 2016, p12-14, available at
<http://financialservices.house.gov/uploadedfiles/07072016_oi_tbtj_sr.pdf>. See also: K. Freifeld and Y. Le
Guernigou, “Obama deflects French pressure to intervene in BNP dispute”, available at:
http://www.reuters.com/article/us-bnpparibas-usa-idUSKBN0EG15420140605.
89
Transactional Records Access Clearinghouse, “Federal White Collar Crime Prosecutions At 20-Year Low”
(29 July 2015), available at: <http://trac.syr.edu/tracreports/crim/398/
Conclusion

This paper analysed the evolution and enforcement of corporate and white collar criminal
liability in contemporary societies. It analysed the Irish transition from a conventional crime,
sanctioning model of criminal justice to a much more sophisticated model, which combines
both compliance and sanctioning approaches, in which criminal punishment is now often a
last resort. It also traced the shared American and British regulatory experiences, noting
common features of corporate and white collar criminal justice in these jurisdictions. The
approach was thematic, exploring: the implications of increased commercialisation for
regulatory reform; the fragmentation of the State monopolies in corporate criminal justice;
the utilisation of regulatory crime mechanisms for instrumental purposes; increased/over-
criminalisation but with criminal law as the sanction of law resort; and the politicisation of
business wrongdoing as a generative force for “expressive” enforcement. In particular, it
analysed the broader international tendency to disfavour the exclusive dominance of a
conventional crime model and the transition to what some commentators praise as “a new
governance model”, employing alternative sanctions, where criminal law is now often the
sanction of last resort. This evolution, however, is less likely to be motivated by research or
best practice on regulatory governance, and more by the particular dynamics compelling the
negotiating parties to reach settlements, especially when the criminal corporation is a
financial institution that is considered systemically important to the economy. Nevertheless,
even if this new approach is much more effective, it still remains the case that white-collar
criminality tends to be treated much more deferentially than ordinary crime, despite the
advancement of more stringent enforcement policies and strategies since the financial crisis.
Meanwhile, politicians act out for public approval, but prosecutors and corporations resolve
criminality in-house, with limited transparency, scrutiny and oversight. The discourse on
financial criminality is ratcheted up but the response to it is cooled down. The number of
prosecutions and convictions across the board for white collar declines as there emerges a
tendency to ‘manage’ corporate wrongdoing through strategies such as guidance, persuasion
and settlement rather than punish it.