Is it time for ‘ordinary’ crime to get the white-collar treatment?
Opinion: The practice of using imprisonment to deal with fine-defaulters continues unabated
The imposition of a non-custodial sentence on two former Anglo executives is likely to cause public controversy due to its perceived leniency. But despite increasing revelations of corporate wrongdoing in the public domain in recent years, convictions and imprisonment for such individuals remain extremely rare.
By contrast, the criminal justice system commits thousands of low-level and petty property offenders to prison on an annual basis.
How can these two seemingly incongruous trends be reconciled? The answer lies in an analysis of the different strategies employed to deal with “white-collar” and “ordinary” crime.
The first person ever committed to prison for a breach of company law was Mark Synnott in 1996. He was sentenced to four years and three months imprisonment.
Though there are over 400 offences in the Companies Acts, nobody was imprisoned for these crimes prior to Synnott and precious few since.
In fact, the first effective custodial sentence for breaching the Companies Acts since the establishment of the Office of the Director of Corporate Enforcement (ODCE) in 2001 occurred in 2011.
According to the latest report from the ODCE, it successfully prosecuted just four individuals in the District Court in 2012. This resulted in a total of 16 convictions, none of which led to an actual committal to prison. The aggregate penalties imposed for all four individuals totalled €8,208.
The ODCE is not a normal law enforcement body. It is statutorily charged with promoting compliance with the Companies Acts and only prosecutes white-collar criminals when methods of persuasion and civil or administrative sanctions, such as disqualification orders, have failed. Law, particularly criminal law, is a sanction of last resort.
Civil and administrative sanctions are sometimes an easier, though less dramatic option because regulators can avoid due process safeguards that apply in criminal trials.
Furthermore, they do not necessarily preclude a subsequent criminal prosecution, allowing regulators to combine civil and criminal strategies in appropriate cases.
Compliance-oriented approaches try to speak to the “good” man who ordinarily obeys the law but occasionally breaks the rules. If he were always sanctioned for his wrongdoing, it would undermine his good will for the law.
He might regularly challenge the law in court, posing problems for regulators with limited resources. The sanctioning approach tries to deal with the “bad” man who repeatedly refuses to obey the law through the imposition of imprisonment. In the corporate sphere, “bad” man strategies are only used when other efforts have failed. In the “ordinary” criminal justice system, the “bad” man strategy dominates. While there may be a perception that those committed to prison have committed serious and violent offences, an analysis of annual committals indicates otherwise.
A total of 12,489 offenders were committed to prison for a criminal offence in 2013. Of these, 69 per cent of committals were for sentences of less than three months and almost 90 per cent of committals were for less than a year. Only 1.7 per cent of committals in that year related to offenders convicted of a homicide or sexual offence. By contrast, 53 per cent of committals under sentence were for road and traffic offences, public order and social code offences or theft offences.
Of course, the prison population contains many serious offenders serving significant terms of imprisonment.
However, there is also a large group of individuals serving short periods in prison whose criminality could easily be dealt with outside the prison system altogether.
The Fines Act 2010 promised to deliver a more compliance-oriented approach in dealing with those who failed to pay a court-ordered fine because imprisonment for fine-defaulters was inappropriate, ineffective and a waste of resources.
However, the practice of using imprisonment to deal with fine-defaulters continues unabated. In 2009, the year prior to the enactment of this legislation, the number of fine-defaulters committed to prison was 4,806. This increased to 8,121 by 2013. The Fines (Payment and Recovery) Bill 2013 recently passed through the Houses of the Oireachtas and it will be interesting to see whether this amending legislation will have any effect on current practice.
‘Crime in the boardroom’
Recent events have led many to question why “corporate” offenders are not subject to the full rigours of the criminal justice system in the same way as “ordinary” offenders. Perhaps, however, we should ask why “crime in the streets” cannot be treated like “crime in the boardroom”? Non-punitive “good” man strategies, if used effectively, could greatly reduce the number of committals to prison for “ordinary” crimes. The Office of the Director of Corporate Enforcement secured, without recourse to formal legal sanctions, the repayment of illegal directors’ loans to companies totalling €105 million in 2011-2012.
Meanwhile, the taxpayer continues to foot the bill for housing fine-defaulters in prison. Even the most hardened individual could hardly justify this paradoxical situation. The rich get richer and the poor get prison.
Dr Diarmuid Griffin and Dr Joe McGrath are law lecturers at NUI Galway