Legal Alert – Corporate Fines Are Rising – The Supreme Court Signals a Tougher Stance on Corporate Criminal Liability
The Finnish Supreme Court recently ruled on a work safety offence case (KKO 2014:20) where the prosecutor had also requested the court to impose a corporate fine on the company in the operations of which the work safety offence had been committed. The Supreme Court imposed a fine of EUR 180,000 on the company, thereby almost doubling the fine requested by the prosecutor.
This recent ruling is in line with what we have seen as an upward trend in the amounts of corporate fines. Courts of appeal have steadily increased the amounts of corporate fines decided by lower courts. In this ruling, however, the corporate fine was substantially higher than what recent case law would otherwise suggest, and the reasoning of the ruling suggests an interpretation of the Criminal Code that will, at a minimum, motivate prosecutors to request higher fines. It will also likely put pressure on lower courts to impose higher fines than what has been customary until now. The amount of the fine the prosecutor requested was high due to the fact that the work safety offence concerned handling of explosive material. The Supreme Court nevertheless almost doubled the fine, which can be seen as a signal for prosecutors to request considerably higher corporate fines in the future.
When evaluating the amount of the fine, courts take the group structure of a defendant company and its overall financial standing into account. Although the work safety offence had in this case been committed in the operations of the subsidiary, the parent company’s financial standing and the transactions between the companies were also considered. The majority of the Justices evaluated the amount of the fine on the basis of the financial statements of the subsidiary, while the dissenting Justice would have evaluated the amount of the fine based on a more holistic approach, which would have taken into account factors concerning the entire group structure. The dissenting Justice’s approach would be more flexible in evaluating the amount of the fine either upwards or downwards.
Corporate fines may be imposed for, inter alia, marketing offences and corporate espionage, import and export offences (regulation), work safety offences, environmental offences, securities offences, bribery offences, tax fraud and copyright offences.
Attorneys at law Borenius represents corporations, directors, managers and other individuals in connection with a broad range of criminal and government investigations, enforcement actions and litigation. Our Corporate Crime practice operates in various business contexts and at every stage of criminal investigations, trials and appeals.