“Corporate Atrocities”: Perspectives From International Criminal Law

“The Harvard International Law Journal Online presents its Online Symposium, “An International Jurisdiction for Corporate Atrocity Crimes.” This special feature series, which gathers short contributions from distinguished academics and practitioners in relevant fields, explore the topic of an international jurisdiction for corporate atrocity crimes. Are international forums to pursue such cases even appropriate or feasible? And if so, what form or forms might such tribunals take?”

Contributions include an interview with Luis Moreno Ocampo, Chief Prosecutor of the International Criminal Court from 2003-2012 and Benjamin Ferencz’s article An International Jurisdiction For Corporate Atrocities: Observations of a former Nuremberg War Crimes Prosecutor.  Luis Gallegos and Daniel Uribe write about the possibility of establishing a “World Court on Business and Human Rights”.

No Such Thing As “Built To Last”

J B MacKinnon writes about the environmental impact of short-lived consumer products for The New Yorker, touching on anti-competitive conduct, consumer law and environmental regulation of commercial activity in the process.

In a 2010 book that he edited, “Longer Lasting Products,” Cooper suggests possible ways to accomplish this: Minimum standards of durability, repairability, and upgradeability. A decrease in taxes on labor and an increase on energy and raw materials, to help make it cheaper to repair or recondition things and more expensive to make new ones. Sales-tax rates based on product lifetimes. Longer consumer guarantees and warranties. Labelling programs or rating schemes that let consumers know how long stuff will last.

The economic model to aim for, Cooper said, is founded on people buying fewer, but better, products, and paying more across those products’ lifetimes. The manufacture of quality goods would employ more people, and the goods would sell at higher prices. A dramatic expansion of the repair-and-servicing sector, the secondhand market, and the sharing economy would provide additional levels of commercial activity. And while consumers would likely end up spending less money on stuff over all, that would free up income for services and investment.

Such visions date back at least to 1982, when an O.E.C.D. report urged governments to address the volume of solid waste by encouraging more durable products, but they remain little studied or implemented. Almost thirty-five years later, Cooper, who has been researching product durability since the early nineties, couldn’t name any instances when national governments or world bodies implemented policies to promote longer life spans.

Well, this last point is not quite right.  In Australia, and a growing number of international jurisdictions, consumer products come with a statutory guarantee of durability – surely this counts as an implemented policy to promote longer life spans for consumer products.  (See: ACL s54(2), explained here.) It will be interesting to watch the jurisprudence on this one develop, and to see whether regulators (and consumers) might argue environmental points to convince courts that products ought to have a very significant durability (if properly cared for and serviced).  Unfortunately, most cases are heard in tribunals like VCAT, or Magistrates’ courts, so there’s no precedent established.

Review Of Online Reviews Results In Guidelines Issued

“The International Consumer Protection and Enforcement Network (ICPEN) has released a set of guidelines for market participants involved in the collection, moderation and publication of online reviews and endorsements.

Global enforcers have found that online reviews and endorsements are proving useful to consumers when, for example, booking travel accommodation and other travel-related products and services. It is important that consumers can trust the reviews and endorsements they use to help make these buying decisions.”


Big News!  First Criminal Cartel Charges Filed

The moment we’ve been waiting for: the first criminal cartel charges have been filed by the CDPP in the Federal Court.  Will the Federal Court hold its first jury trial?  Probably not.  These charges did not proceed through a committal process, from what I can see.  So presumably it’s an ex officio (direct) indictment filed with the assistance of the ACCC.  The most likely reason for this is that the “accused wants to “fast track” a plea of guilty by by-passing proceedings for commitment for sentence before a magistrate”, a process permitted under s6(2A) DPP Act 1983 (Cth).  (See the CDPP’s manual for further detail.)  A bit of a shame for those of us eager to watch a Federal Court jury trial unfold… but, better for the parties, one supposes.

For those interested, the case number is NSD1143/2016 and case name is Commonwealth Director of Public Prosecutions v Nippon Yusen Kabushiki Kaisha; limited information is accessible via the Federal Court portal.

Update: Sure enough, NYK entered its guilty plea on 18 July 2016.  But, according to the press release, the ACCC expects to prosecute between 1 and 2 of these matters per year from here on; stay tuned.

Rainbow Paddlepops Not So Healthy (What?): Unilever Fined

“Unilever Australia Limited (Unilever) and The Smith’s Snackfood Company Pty Ltd (Smith’s) have each paid a penalty of $10,800 following the issue of infringement notices by the Australian Competition and Consumer Commission for misleading healthy food representations. …

Unilever’s Paddle Pop Rainbow (10 pack) packaging included a logo on the front, back and one side of the packaging with the words “School Canteen Approved” and a tick symbol…

Smith’s Sakata Paws Pizza Supreme Rice Snacks included a logo with the words “Meets School Canteen Guidelines” and an image of a sandwich and apple …

Both products’ packaging included a disclaimer that the product met the ‘Amber’ criteria of the National Healthy School Canteens Guidelines, however they were in a small font size and on a different side to the logos. The ACCC did not consider these disclaimers were sufficiently prominent to correct the misleading representations created by the logos.”

Collective Bargaining And Boycotts: A Guide For Small Business

“Australian Competition and Consumer Commission Deputy Chair Michael Schaper has today launched a new guide for small businesses and farmers on the potential benefits of collective bargaining. … A collective bargaining arrangement allows two or more competing businesses to jointly negotiate with a supplier or a customer over terms, conditions, and prices. Where the ACCC is satisfied that the arrangement provides an overall public benefit, it can allow conduct which may otherwise be prohibited by the Competition and Consumer Act. … “In the last year the ACCC has approved around 10 collective bargaining proposals in sectors such as dairy, chicken growing, hotels, and retailers of plumbing and hardware. We believe there are further opportunities for businesses to harness the benefits of collective bargaining,” Dr Schaper said.”

Should Wholesale ADSL Service Still Be Regulated?

That’s the question the ACCC is asking this fortnight, and your views are invited.

PFAS In Australia Monitered by SA, NSW EPAs

If the DuPont C8 story interested you, perhaps you are also interested in how the presence of PFAS and PFC is being handled in Australia.  This fortnight, both the SA EPA and NSW EPA provided updates.  In the same newsletter, NSW EPA reports on low environmental mercury levels, and notes it has completed 12 prosecutions since March this year.

7-Eleven Franchise and Its Directors Receive Pecuniary Penalties For Underpayments

One of the Fair Work Ombudsman’s cases against 7-Eleven concluded this week; the Federal Circuit Court summarises the relevant principles for determination of appropriate penalties from paragraph [21] onward, adopting the FWO’s view of the matter, and citing the recent CFMEU decision.

New Zealand

Commercial Misconduct By Preschool, Estate Agencies, Payday Lender

Some interesting prosecutions by the Commerce Commission this fortnight, including charges under the Fair Trading Act against Kowhai Montessori Pre-School and its former director, for misleading statements to consumers about the amount of government subsidy it received; substantial civil penalties awarded in a price fixing and anti-competitive conduct case against two real estate agencies; and Twenty Fifty Club Ltd, a payday lender, found guilty of unreasonable fees offences. (Are payday lenders ever good news?)

United Kingdom

LIBOR Convictions and Sentences

Three men were convicted of conspiracy to defraud related to manipulation of the US Dollar LIBOR; each received a jail term.  The SFO intends to re-try their two co-defendents after a hung jury returned no verdict in their cases.

Fatal Falling Frozen Fish

A busy fortnight for the Health and Safety Executive, with convictions for companies with unsafe work environments, including a residential care provider with inadequate safety controls (namely, temperature adjusted taps) to prevent elderly people in its care being scalded (the prosecution was prompted when a woman died of her scalding injuries); a coach company “repeatedly failed to comply with legal notices to get its lifting equipment examined”; and “[a] Plymouth company has been fined £500,000 after an employee suffered fatal injuries when a stack of boxes of frozen fish fell on him”.

Not So Noble Treatment Of Environment

“The Environment Agency has revoked the environmental permit of Wakefield firm Noble Waste Treatment Ltd following a series of breaches of permit conditions. …The permit revocation means that Noble Waste Treatment Ltd can no longer operate its waste transfer facility at Thornes Lane Wharf, Wakefield, and no more waste can be accepted at the site.”

Permit and licence revocation is often considered the most serious sanction a regulator can impose, constituting a kind of corporal punishment for corporate entities.  Often enough, it features at the apex of the enforcement pyramid, above prosecution.


Two Year Prosecution Delay Doesn’t Create Irremediable Prejudice

Dentons reports on an interesting OHS case this month, in which the corporate accused sought an indefinite stay of its prosecution on the basis of delay and late disclosure of material.  The court dismissed the application.  Delay is often an issue in prosecutions – particularly in corporate and commercial prosecutions, where there can be mountains of electronic and paper evidence to sort through.

Revenue Agency Revokes Charity Registration

“The Canada Revenue Agency (CRA) will revoke the registration of ACTLAP Children’s Foundation (A.C.F.), a charity based in North York, Ontario, effective July 9, 2016. … The audit by the Canada Revenue Agency (CRA) has revealed that the Organization operated primarily for the non-charitable purpose of furthering a tax shelter donation arrangement, the Pharma Gifts International Inc. program.” In Australia, Charities are regulated by the ACNC.

United States

Dupont, Malicious Dumping Of Toxic Waste, Cancer And Teflon

One of the ‘bellwether’ plaintiff suits against DuPont finalised this fortnight, with a US jury finding DuPont acted maliciously when it dumped C8, a chemical involved in the production of Teflon, into the Ohio River.  Being satisfied that plaintiff David Freeman developed cancer as a result of C8 in his drinking water, the jury awarded him over $5M in compensatory damages, plus $500,000 in punitive damages.  There are other plaintiffs; watch this space.  For more information on the DuPont C8 story, see the articles collected here.

New GM, Old (Ignition Switch) Problems

The US Court of Appeals for the Second Circuit overturned a bankruptcy court judgment this fortnight, allowing certain plaintiffs to sue “New GM” despite the post-GFC section 363 bankruptcy sale agreement between Old GM and New GM.  Pages 1-28 set out the facts; discussion of the legal issues commences at page 28. Bloomberg tells the story here.

While the case turns ultimately on the peculiar section 363 insolvency provision (that I believe is) unique to the US, it raises broader questions about how we ought to deal with harms caused by corporations that no longer exist (or continue to exist, but have insufficient assets to compensate victims).  Does your jurisdiction have a great solution to this problem?  Let me know.  Interestingly, the UK Law Commission has just completed its report on Prepayments On Retailer Insolvency, looking at what happens when consumers have made pre-payments for goods (for example, lay-by payments, pre-orders and gift card purchases) but the retailer winds up before the goods are received.  The report sets out five recommendations which would improve consumers’ position on insolvency:

  • Regulating Christmas and similar savings schemes, which pose a particular risk to vulnerable consumers.
  • Introducing a general power for Government to require prepayment protection in sectors which pose a particular risk to consumers.
  • Giving consumers more information about obtaining a refund through their debit or credit card issuer.
  • Making a limited change to the insolvency hierarchy, to give a preference to the most vulnerable category of prepaying consumers.
  • Making changes to the rules on when consumers acquire ownership of goods.

PG&E Objects To Evidence In Criminal Trial

Pacific Gas & Electric, currently on trial for violating pipeline safety regulations and obstructing a federal investigation, following the 2010 San Bruno pipe explosion that killed 8 people and destroyed 38 homes, objected to the admission of 8 exhibits; the court ruled 7 of those exhibits were admissible.

VW Partially Resolves Cheat Devices Litigation

In two related settlements, one with the United States and the State of California, and one with the U.S. Federal Trade Commission (FTC), German automaker Volkswagen AG and related entities have agreed to spend up to $14.7 billion to settle allegations of cheating emissions tests and deceiving customers. Volkswagen will offer consumers a buyback and lease termination for nearly 500,000 model year 2009-2015 2.0 liter diesel vehicles sold or leased in the U.S., and spend up to $10.03 billion to compensate consumers under the program. In addition, the companies will spend $4.7 billion to mitigate the pollution from these cars and invest in green vehicle technology.”

“The settlements partially resolve allegations by the Environmental Protection Agency (EPA), as well as the California Attorney General’s Office and the California Air Resources Board (CARB) under the Clean Air Act, California Health and Safety Code, and California’s Unfair Competition Laws, relating to the vehicles’ use of “defeat devices” to cheat emissions tests.  The settlements also resolve claims by the FTC that Volkswagen violated the FTC Act through the deceptive and unfair advertising and sale of its “clean diesel” vehicles. The settlements do not resolve pending claims for civil penalties or any claims concerning 3.0 liter diesel vehicles.  Nor do they address any potential criminal liability.” (My emphasis) It will be interesting to see how this settlement is taken into account in the calculation of any future civil or criminal penalty.  Stay tuned.

Abolishing The Corporate Form

The Corporate Crime Reporter has published an interview with Professor David Whyte regarding his book, The Corporate Criminal: Why Corporations Must Be Abolished.

DOJ Goes Undercover To Bust Discriminatory Housing Complex

“The Justice Department announced today that the owners and manager of the Westland Apartments, a 28-unit apartment complex in Lakewood, Colorado, have agreed to pay $75,000 to settle a lawsuit alleging discrimination against families with children in violation of the Fair Housing Act.  The settlement must still be approved by the U.S. District Court of the District of Colorado.”

LATAM Airlines Penalised For Corruption

“LATAM Airlines Group S.A. (LATAM), a commercial airline company based in Chile, has agreed to pay a $12.75 million criminal penalty in connection with a scheme to pay bribes to Argentine union officials via a false consulting contract with a third-party intermediary in violation of the accounting provisions of the Foreign Corrupt Practices Act (FCPA). … LATAM entered into a three-year deferred prosecution agreement (DPA) to resolve the case. … In a related matter, LATAM reached a settlement today with the U.S. Securities and Exchange Commission (SEC) under which it agreed to pay $6.74 million in disgorgement and $2.7 million in prejudgment interest.  Thus, the approximately $22.2 million in combined penalty, disgorgement and prejudgment interest far exceeds the $6.7 million in savings the company had received from its improper payments.”

Contaminated Ultrasound Gel Causes Serious Injuries

In a nice illustration of the limitations of criminal sentencing, the DOJ has pursued both criminal and civil litigation against Pharmaceutical Innovations Inc.  The civil suit allowed a permanent injunction to be issued against the company – essential when you’re dealing with unlawful and dangerous products, but not something a criminal court can issue.

As for the facts, “[i]n February 2012, a Michigan hospital reported that 16 surgical patients were infected with Pseudomonas aeruginosa, a bacterial pathogen.  The hospital believed the infections were associated with a particular lot of Pharmaceutical Innovations ultrasound gel. … A sample of that lot then tested positive for Pseudomonas aeruginosa.  A second lot was shipped in April 2012 and found to be contaminated with two types of bacteria, Pseudomonas aeruginosa and Klebsiella oxytoca, both at the Michigan hospital, and at the company’s Newark facility.”  Charming.


New Whistleblower Contact Point

Germany’s Financial Regulatory Authority, BaFin, has established a special hotline for whistleblowers, assuring confidentiality for people providing tipoffs.