By Ibitoye Demilade
A company once incorporated becomes a legal entity or a body corporate, having perpetual succession and also a common seal, as well as the ability to use and be used in its corporate name. This concept of corporate personality gives the company the status of a person, albeit artificial, having all the qualities of a real human being. This concept was given judicial flavour in the celebrated case of Solomon v. Salomon & co (1897) A.C 22.
INTRODUCTION
Corporate crimes are defined as, illegal acts, omissions or commissions by corporate organisations themselves as, social or legal entities or by officials or employees of the corporations acting in accordance with the operative goals or standard, operating procedures and cultural norms of the organization, intended to benefit the corporations themselves. The Nigerian Legal system, which is fashioned along the same system as the English Legal system, accommodates the position and Common law to the effect that corporations could be criminally held liable but not for every offences.
In Nigeria, the legal system, which takes after the English legal system, accommodates the position traceable to centuries old precedent that corporations could be criminally held liable. Section 36(12) 1999 Constitution provides that crimes must be statutorily created; the old case of Aoko v Fagbemi [1961] ANLR 406 decided under section 21(10) of the 1960 Constitution was a forerunner in this regard.
UNDER COMPANIES AND ALLIED MATTERS ACT (CAMA)
The concept of corporate criminal liability under Nigerian law now has a specific statutory prescription with the advent of Companies and Allied Matters Act (CAMA) in 1990. The foundation of the principle is Section 65(l) (a) of the Act, which provides that acts of members of the company in a general meeting or the Board or the managing Director “shall be treated as the act of the company itself”. The Section went further to state that “the company shall be criminally and civilly liable therefore to the same extent as if it were a natural person”. Section 66 of CAMA also provides that a company shall also be liable for the acts of any of its officers or agents if the company, acting through its members in a general meeting, board of directors, or managing director, expressly or impliedly authorized such officer or agent to act in the form or manner agreed at such meetings.
In Iyere v. B.F.F.M. Ltd [2008]18 NWLR (Pt. 1119), 300, it was held that a wrongful act is deemed to be in the course of the employment if it is either:
(i) a wrongful act authorized by the master
(ii) a wrongful and unauthorized mode of doing some act authorized by the master.
As such, an employer may be held liable for a tortuous act committed by his employee in the course of the employee’s employment. Section 70, Companies and Allied Matters Act (CAMA) illustrates that a company registered in Nigeria can be fined, penalized and liable to a third party for wrong doings of its officer or agent. It is essential that before a corporation may be held liable for such a servant, the prosecution must be in a position to ascertain the agent who committed the crime.
Thus, Section 66 of CAMA attributes the acts of the agents or officers to the company provided that agents or officers acted under authority from the general manager, board of directors, or the managing director. In other words, the acts of the agents or officers are deemed to be that of the company, thereby making the company liable for the misdeeds of its agents or officers.
Furthermore, Section 70 of CAMA makes the company criminally liable for the acts of its officers or agents. The implication of the provision of Section 70 is that the company will be held liable for acts purportedly carried out on behalf of the company by any of its organ, agent or officer in the course of the transaction.
From the foregoing, it is sufficiently clear that CAMA tried to address the inherent issues in the common law development of corporate criminal liability by attempting a Nigerian approach.
Apart from the Companies and Allied Matters Act, statutes such as Food and Drug Act, Cap.F32 LFN 2004, Standards Organization of Nigerian Act Cap, S9 LFN 2004, Weight and Measures Act Cap, W3 LFN 2004, Federal Environmental Protection Agency Act, Cap F10 LFN 2004, just to mention a few, have also made provisions for corporate criminal liability. Thus, corporations can be held liable for ‘corporate offences’ in Nigeria.
UNDER INVESTMENT SECURITIES ACT (ISA) 2007
Some of the provision of the Investment and Securities Act being regulated by the Securities and Exchange Commission (SEC) recognizes and affirms the provision of corporate criminal liability. Section 66 of ISA provides thus:
1) where a contravention of any provision under this part is committed by a body corporate and it is proven that the contravention is committed;
a) with the connivance of or as a result of any neglect on the part of the director, manager, secretary or similar officer, servant or agent of the body corporate or any person purporting to act in such capacity; or
b) as a result of a director, manager, secretary or a similar officer, or agent of the body corporate or any person purporting to act in such capacity knowingly or willfully authorizing the contravention, the director, secretary or similar officer, servant or agent of the body corporate or any person purporting to act in such capacity shall be deemed liable to the same extent as the corporate body.
Similarly, Section 305 of ISA corroborates the provision of Section 66 of ISA by affirming the provision of corporate criminal liability. It provides thus:
(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against.
(2) Notwithstanding anything contained in subsection (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the offence and shall be liable to be proceeded against.
Thus, the Court of Appeal while considering Section 305 of ISA in the recent case of Olawepo v SEC, held that where an offence under the ISA had been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against.
UNDER COMPANIES INCOME TAX ACT (CITA)
Like the Investment and Security Act of 2007, the Companies Income Tax Act, 2007 (CITA) recognizes the concept of corporate liability. The Act contains some statutory provisions that address corporate criminal liability. Section 55(5) of CITA expressly states that;
Where an offence under this section by a company is proved to have been committed with the consent or connivance of, or to be attributable to, any neglect on the part of any director, manager, secretary or other similar officer, servant or agent of the company (or the person purporting to act in any such capacity), he as well as the company shall be deemed to have committed the offence and shall on conviction, be liable to a fine not exceeding N100,000 or imprisonment for a term not exceeding two years or to both such fine and imprisonment.
The above provision of Section 55(5) of CITA is similar with the provision of Section 305(2) of ISA of which the Court of Appeal gave its decision upon. Thus, the CITA recognizes that companies as artificial entities act through their human organs and the deeds of such human organs while acting for the company are deemed to be the deeds of the companies.
Furthermore, Section 92 of CITA, which deals with penalty for offenses recognized as criminal liability of companies.
Specifically, Section 92(1) & (2) of CITA provides thus:
(1) Any person guilty of an offence against this Act or any person who contravenes or fails to comply with any of the provisions of this Act or of any rule made thereunder for which no other penalty is specifically provided, shall be liable on conviction to a fine of N20,000.00, and without prejudice to Section 55 (4) or (5), where such offence is the failure to furnish a statement or information or to keep records required, a further sum of N 2,000.00 for each and every day during which such failure continues, and in default of payment to imprisonment for six months, the liability for such further sum to commence from the day following the conviction, or from such day thereafter as the court may order.
(2) Any person who‐ (a) fails to comply with the requirements of a notice served on him under this Act; or (b) without sufficient cause fails to attend in answer to a notice or summons served on him under this Act or having attended, fails to answer any question lawfully put to him, shall be guilty of an offence against this Act.
The word ‘person’ as used in the above provisions is defined in Section 105 of CITA to include a company. Thus, the CITA recognizes that a company can be held criminally liable and subject to conviction for any breach of the provisions of CITA.
UNDER THE FAILED BANK (RECOVERY OF DEBTS) AND FINANCIAL MALPRACTICES IN BANK ACT
Another Act that provides for corporate liability is the Failed Bank (Recovery of Debts and Financial Malpractices in Bank Act 46. The Act seeks to instil sanity into the banking industry by making it punishable for the bank or any financial institution and any of its staffs who contributed in any manner to the collapse of the financial institutions. An early case decided under this provision, was the Federal Republic of Nigeria V. Dr. Nwochie Odogwu and Capital Merchant Bank. In this case, the managing director of Capital Merchant Bank, was also the promoter of the Bank in its formative stage. He floated other sham companies to which he granted unsecured loans, which he later diverted to his personal purse. Within a short time, the bank went into liquidation and all the depositors lost their money. Both the bank and its managing director were charged before the Failed Bank Tribunal. The managing director, was sentenced to 18 years jail term and ordered to refund N76 million Naira, with a fine of N35,000.00 while the bank itself was discharged and acquitted. It would seem from this judgement that the tribunal simply lifted the veil of incorporation to find out who was behind the mask. It accordingly dealt with the natural person behind the mask instead of chasing the ghost by holding the bank criminally liable for an act that was masterminded by its employee for his own benefit. This kind of judgment, although, is in the best interest of the public seems to have done away with the principle of distinct corporate entity.
CONCLUSION AND RECOMMENDATIONS
Attempt at understanding the concept of corporate criminal liability in Nigeria is blurred by the age-long acquiescence that corporations on their own do not have the mental or physical capacity to perform an act or to refrain from one. Also from the analysis of the CAMA, CITA and ISA, it is crystal clear that the application of this principle of corporate criminal liability is limited to offenses termed ‘white-collar crimes’ under the respective Acts and does not include offenses which might be prima facie called ‘criminal offenses’ such as homicide, manslaughter, etc.
In pursuit of strict regulation to provided laws that governs a corporate entity, I would suggest a few measures that can be put in place to curb the existence of corporate crimes and where feasible, make liability accountable enough. They include:
-Formulation of a Uniform Corporate Criminal Code in Nigeria
-Reformation of the Corporate Sanctioning Regime in Nigeria
– Unlifting of the veil of Incorporation (to sanction real perpetrators)
-Effective Enforcement of Corporate Sanctions etc.
