Criminal liability of corporations is a

hot topic worldwide. From financial institutions to global corporations, almost

daily we hear about a large corporation being investigated, signing a Deferred

Prosecution Agreement or being convicted, usually for money laundering, tax

evasion or bribery.

Criminal liability of corporations is a

hot topic worldwide. From financial institutions to global corporations, almost

daily we hear about a large corporation being investigated, signing a Deferred

Prosecution Agreement or being convicted, usually for money laundering, tax

evasion or bribery.

Even more, countries such as UK, Germany,

Spain, or Canada have already strengthened or are considering strengthening

corporate criminal liability.

While the general impression is that not

many corporations are investigated or convicted in Romania, perhaps because their

criminal liability was introduced only in 2006, the reality is quite different.

According to the last Public Ministry

Report detailing its activity, in 2018 there were 807 corporations

investigated, out of which 242 were indicted for the following

crimes:

I. Crimes

against patrimony, such as bankruptcy

fraud, fraud, fraud committed through computer systems and electronic means of

payment, diversion of public tenders (44 cases – up from 14 in 2017);

II. Corruption

and malfeasance offences, such as bribery,

influence peddling, buying influence, embezzlement, abuse of power, diversion

of funds (8 cases);

III. Crimes

provided by special laws, such as

tax evasion and money laundering (157 cases).

At the first glance, in 2018 there were prosecuted

fewer corporations than in the previous years (the peak was in 2016 when almost

500 corporations were indicted), which may support the impression that corporations

are not usually prosecuted in Romania.

However, at a more cautious look, the

number of corporations indicted in 2018 has grown significantly for crimes

against patrimony and for corruption and malfeasance offences.

In light of this unprecedented

investigations against corporations, we will briefly detail (A) the conditions

under which corporations may be criminally liable in Romania and (B) the related

penalties.

In contrast with other countries which

are considering nowadays strengthening the criminal liability of corporations,

in Romania these conditions are already 360˚ comprehensive.

(A) Conditions under which corporations

may be criminally liable

The corporations are criminally liable

for offenses committed in the performance of their business or in their

interest or on their behalf.

Given the broad terms used by the law and

the various situations which may fall under the criminal law liability, the

following questions have arisen:

· For which

crimes can corporations be liable? – According

to the Constitutional Court, not all crimes can be committed by a corporation,

stating that only corporate crimes may entail their criminal liability. But,

without defying the concept of corporate crimes, corporations may be in

general liable (at least as an accomplice) for any crime committed by its employees,

representatives or agents as long as the crime was committed in the performance

of their business, or in their interest or behalf.

·  Who can

trigger the liability of corporations? - The liability of corporations may arise out of offenses committed

by any person acting in the interest or on behalf of

the corporations or in the performance of their business,

either based on a legal relation or even acting de facto (with or without an

employment contract).

This condition

implies that, in contrast with the identification principle held by countries

such as UK or Canada – where it is important to establish that an individual

who was “the directing mind” of the company committed the offence, in

Romania it is applicable the principle of direct responsibility (which is more

similar with the doctrine of respondent superior, held in the USA).

Thus, a corporation

may be criminally liable for offences committed by any person acting in

the interest or on behalf of the corporation or in

the performance of its business, and not only by the governing bodies.

In a

nutshell, the corporations may be criminally liable for:

(i) any offence

committed in the performance of their business by one of the governing bodies, or

one of their employees or agents, even if the corporation does not enjoy any

benefit (either moral or material); or

(ii)  any offence

which generates a moral or material benefit for the corporation, even if

the crime was not committed in the performance of its business or on its behalf

– e.g. money laundering,

tax evasion; or

(iii) any offence committed on its behalf by any person legally invested to

act in its name (e.g. directors, attorneys), even if the crime was not

committed in the performance of its business or in its interest.

· How to

determine if the corporation is guilty? - For a corporation to be criminally liable, the conditions concerning

the relevant form of guilt must be met (intention or negligence).

In principle, whenever a crime requires the

existence of intention, the corporation will be held liable in cases where:

(i) such intent

can be proved at the level of the governing bodies or other high-level

executives; or

(ii) the

commission of such crimes is a practice well-known and tolerated by the corporation.

In case of crimes of negligence, the corporation

may be liable if it has not taken the necessary measures to prevent such

crimes.

There are no specific lines detailing the

measures that a corporation should apply in order to prove that it does not

encourage or endorse such behaviour. Therefore, courts have a case-by-case

approach taking into consideration the industry where the corporation is

acting, the possible risks etc.

While it is always recommended to

implement compliance programs, in Romania they are even more necessary and

should be even well-designed, integrated in the daily business, in an attempt

to supplement the lack of official guidance.

(B) Related Penalties

Corporations may be subject to the

following penalties:

(a)  main penalty

– fines ranging from 3,000 RON (approx. 635 EUR) to 3,000,000 RON (approx. 636,000

EUR);

(b) ancillary

penalties - winding-up; suspension of one or more business lines for a term

between three months and three years; placement under judicial supervision;

display or publication of the conviction sentence.

We cannot speak about criminal liability

of corporations without referring to the Deferred Prosecution Agreements, which

are started to be regulated in Europe too.

Well, in Romania, there is no such

mechanism and apparently no intention of the Parliament to regulate it. Even

though many drafts of criminal legislation are being discussed, none of them

refers to deferred prosecution agreements or anything similar.

In contrast with other jurisdictions (UK,

France, USA, Canada), where prosecutors and corporations may enter into deferred

prosecution agreements (without any admission of guilt and without an actual

conviction), the only type of settlement available in Romania is the guilty plea

agreement entered into by prosecutors and corporations (or any indicted person)

and endorsed by the court.

In exchange for a reduction of the

penalty, the corporation pleads guilty with the following consequences (a) entering

into a guilty plea agreement entails a recognition of guilt and (b) the guilty

plea agreement triggers a conviction.

As one of the indirect consequences of a

conviction is that, in principle, the corporation is excluded from public

procurement tenders for five years after the judgement of conviction becomes

final, the corporations participating in public procurement tenders should

carefully assess the long-term consequences of concluding a guilty plea

agreement.

In order to reduce as much as possible

the risk of being criminally liable, the corporations should carefully

implement audit systems, compliance programs well-designed for their specific

risk profile, as well as run internal investigations whenever there are signals

of non-compliance.

Given the sensitivity of any internal

investigation, especially if the conclusions will determine a potential criminal

conduct, the corporations should ensure that only external legal counsels are

involved in the investigations, in order to allow the corporation to benefit as

much as possible from the privileged nature of

the investigations’ results.

***

This document is intended for

informational purposes only, does not represent legal advice and does not focus

on particular cases.

For further information or analysis on

specific matters, please contact Alexandru Ambrozie

or Diana Dobra or

the Popovici Nitu Stoica & Asociatii lawyer with whom you normally consult.