Chapter 22: The Politics of Civil and Criminal Enforcement Regimes
Michelle Welsh Often the response to a financial crisis, large corporate collapse or perceived failure in corporate regulation is a call to provide regulators with greater enforcement powers. Increasingly legislatures consider the provision of civil penalty regimes either as an alternative to or in addition to criminal sanctions for corporate misconduct. Frequently the introduction of a civil penalty regime is justified because the regulator has experienced difficulty in obtaining criminal convictions. Theoretically civil penalty orders are easier to obtain than criminal sanctions. The introduction of civil penalties is desirable from the regulators’ perspective because it can increase the range of available enforcement mechanisms in a manner envisaged by responsive regulation theory (Ayres and Braithwaite 1992). The opposing argument is that civil penalties are not desirable because they allow the state to bypass the limits imposed by criminal procedure in order to achieve a regulatory result. No penalty of any kind should be imposed without the protection of the rules of the criminal law. If regulators are provided with civil penalty regimes the risk is that they will use them at the expense of criminal prosecutions. This chapter examines the policy and political tradeoffs faced by legislatures when they consider whether or not to introduce a criminal enforcement regime, a civil penalty regime or both. In addition this chapter examines the dilemma faced by regulators who have been provided with overlapping criminal sanctions and civil penalties. When faced with an alleged contravention of the law these regulators are required to determine...
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