Amendment 53 would amend Colorado law to hold executive officials criminally liable for corporate illegalities.
It would condition an executive's liability on his or her knowledge of the duty imposed by law and of the business entity’s failure to perform such duty. It would give an affirmative defense to executive officials who disclose to the attorney general all facts known concerning company criminal conduct.
The Blue Book sets forth the following Arguments Against 53:
1. It would negatively impact a business climate in which most businesses and their executives comply with the law. For example, the new criminal penalties could drive higher insurance costs for law-abiding executives, which may ultimately be passed along to consumers. Additionally, fear of prosecution could hinder recruitment of top business talent and may leave community leaders reluctant to serve on nonprofit boards.
2. State and federal laws already hold business executives accountable. For example, executives can be prosecuted under Colorado law for their own criminal conduct on behalf of their business. Recent federal laws have strengthened criminal and civil penalties for business executives who commit fraud. Criminal prosecution when it is clearly deserved already exists.
The Blue Book sets forth the following Arguments For 53:
1. Amendment 53 addresses a gap in state law. While business entities themselves can be prosecuted, their executives can currently avoid responsibility for their businesses' failure to follow state law.
2. The measure helps ensure that these executives are held accountable when they know of a legal duty that their business has failed to perform.
3. Over time, Amendment 53 can foster a business environment that attracts and retains responsible employers. Amendment 53 may encourage a healthy and moral economic climate for Colorado. When businesses fail to comply with state law, the state's economy can be impacted in a variety of unexpected or far-reaching ways.
Is it time to hold executives criminally liable in this way when they know their companies are breaking criminal laws and fail to take action?
Source: Colorado Legislative Council, Blue Book: http://www.leg.state.co.us/LCS/InitRefr/0708InitRefr.nsf/89fb842d0401c52087256cbc00650696/db82dfb60f6ccfc687257465006d9778/$FILE/2007-2008%2074bb.pdf