Armed with extensive experience gained in law firms, Heli Korkka-Knuts will begin as Research Fellow at the Helsinki Institute of Sustainability Science (HELSUS) on 1 June 2020. In her private sector carrier, she has specialised in corporate criminal liability and related sanctions.
Corporate criminal liability has the potential to guide companies towards sustainable conduct, which requires, in addition to a sufficient sanction level and detection risk, a regulatory model that accounts for the root causes of corporate wrongdoing.
“Traditionally, criminal law has been very much centred on individual liability, which orientation must be changed to also perceive corporate bodies as relevant actors in the field of criminal law. Corporations are players whose negligent actions have relevance under criminal law,” Korkka-Knuts says.
According to Korkka-Knuts, research on regulatory liability models has international significance, since the behavioural root causes of corporate misconduct are not bound by geographical location and regulation.
A healthy corporate culture prevents misconduct
The research conducted by Korkka-Knuts is multidisciplinary in nature. Together with Associate Professor Annukka Vainio, she analyses the behavioural causes of corporate crime and their significance in formulating an optimal regulatory model. The timing of the research is optimal, as it can draw on existing research results in the fields of criminology and behavioural science, which data, however, has not previously been analysed from the perspective of regulatory regimes covering corporate criminal liability.
“Research shows that misconduct is often associated with a weak corporate culture,” Korkka-Knuts says.
Human behaviour is strongly guided by social norms. Even if certain conduct is actually illegal, the corporate culture may support the notion of conduct being accepted and even encouraged.
For example, Volkswagen’s emissions scandal originated in profit-seeking, which forced the company engineers, at any cost, to invent a system that would fulfil the official emissions standards. The result was a software that switched the relevant filter on only when the emissions were measured.
“Communication at Volkswagen was dysfunctional, as the management culture was extremely centralised. Employees were not listened to, let alone encouraged to highlight problems. The financial targets were set without consulting lower level employees who could have helped to align corporate goals with lawful engineering solutions.”
It appears that a similar problem of organisational culture also underlies the recent crashes of Boeing 737 MAX planes. Media reports indicate that Boeing employees expressed their concerns about safety risks, but their worries went unheard. The results were catastrophic.
“Adopting shared ethical values is necessary in a healthy organisational culture.”
In this context, culture not only means a good workplace atmosphere. It can also have relevance with regard to criminal law. A well-functioning corporate culture stems from good management and leadership as well as solid goals based on a sustainable foundation.
“Corporate crime cannot be prevented by merely informing the employees of the regulations to be complied with and the sanctions in which breaching the rules may result,” Korkka-Knuts points out.
Each individual must personally understand and internalise why the rules must be followed and what good comes out of working together in an appropriate and ethical manner. Companies must be capable of identifying damaging group behaviour, promote open flow of information and ensure sufficient reporting and monitoring.
“The criminal liability model must encourage lawful and ethical conduct of business.”
A regulatory model based on corporate negligence
Korkka-Knuts’ research aims at displaying that corporate criminal liability should be linked to the corporation’s own negligence to organize its business operations in a diligent manner, as this model appears to best capture the behavioural causes of corporate wrongdoing. The model is efficient as it fields an incentive to organize the business operations in a diligent manner and incorporate ethical values in business practices. The project intends to provide companies practical guidance on how to prevent unwanted group behaviour and its significance in terms of corporate compliance practices.
The Finnish corporate criminal liability regime is already partially based on corporate negligence, but the regime is not very efficiently enforced. Due to the existing regulatory model, however, there is useful research data available, for example, in the form of court decisions. This angle of the project enables an analysis of existing legal norms and practice as opposed to an assessment of corporate negligence as a hypothetical regulatory option.
“We have a great opportunity to analyse domestic court rulings and test whether the root causes as defined in the field behavioural science matches with actual corporate criminal cases,” Korkka-Knuts says. “Our findings can possibly justify a regulatory model with export potential. After all, the many jurisdictions does not recognise a liability model based on corporate negligence.”
According to Korkka-Knuts, the number of court decisions leading to corporate criminal liability is fairly low in Finland. At HELSUS, she intends to analyse and clarify the existing corporate liability regime in order to promote relevant knowhow amongst Finnish enforcement authorities. The liability structure must be considered already during and from the early stages of the preliminary investigation, which is why the competence of investigatory enforcement authorities is particularly important. In her HELSUS project, Korkka-Knuts specifically focuses on environmental offences and related behavioural patterns.