Punishment For Polluting Inland Water: Case Of Corporations

Principle of Punishment

Punishment is a penalty that inflicts on someone who had done wrong. It may come in the forms of fine or imprisonment that are imposed by court. Principle of punishment is associated with the aims and objectives of sentencing namely deterrence, retribution, prevention and reformation (Ho, 2014). According to Mah (2000), deterrence means to dissuade the offender from committing offences in the future and to deter potential offenders from committing crime aiming to protect the public interest as mentioned in PP v Loo Chang Hock [1988] 1 MLJ 316. Retribution gives the notion that a sentence must reflect the community’s abhorrence of particular types of crimes. The High Court in PP v Mohd Amin bin Mohd Razali [2002] 5 MLJ 406 expressed that the sentence passed on the accused persons served the public interest and reflected the public abhorrence of the crime committed by them.

Prevention is a punishment against the recurrence of an offence with the intention to prevent the offender from committing further crimes against the members of society. Ho (2014) believes that the public can only be protected from the offenders if they are prevented from continuing their lives of crime. This is done by way of imprisonment. Reformation or also known as rehabilitation intends to reform an offender from being a criminal to being an honest and responsible person. This principle is considered when the offence is not so serious and the court may consider the interest of the accused, for example, a bond for a good behaviour.

For the purpose of discussion and in the context of a corporation, punishment aims for deterrence and prevention of pollution from being continuously done by the corporation culprits. According to the Honourable Judge Wan Yahya in Safian b Abdullah & Anor . [1983] 1 CLJ 324, at 325, punishment, sanction and sentencing should depend “on various considerations of facts and circumstances relating to the offence, the offender and public interest”.

As an entity holding its own personality, corporations are subject to the criminal law, contract law and also torts. Corporations can commit crimes either directly or vicariously. As offence of pollution is subject to punishment of fine or imprisonment, the corporations shall be subject to the same even though some argued on the question of who shall be imprisoned for corporation. Wilson (2017) claimed that the object of punishing companies is to prevent harm, not to apportion blame; therefore, subjecting the corporation to penalty rather than any individual member who may bear the responsibility has a number of advantages, namely: (a) helps to plug an evidential gap: In Alphacell v Woodward [1972] AC 824, it is not to show which company’s employees had caused the river to become polluted but what was clear was that the river had become polluted through the defendant company’s activities i.e. the company had caused the river to be polluted; and (b) ensures that the bill for activities causing social harms is picked up by the entity i.e. the corporation which benefits by those activities. This prevents the company from passing the responsibility.

Individual can be punished separately on retributive grounds but the company needs to be sanctioned as well for a more effective enforcement. Herring (2016) had to relate this with the principle of responsibility where people should only be guilty in respect of conduct for which they are responsible. In other words, people should not be guilty for the conduct over which they had no control. For corporations, blame and guilty should be posted to both the corporations and the person/s responsible for the pollution. In Malaysia, the Environmental Quality Act 1974 (EQA 1974) has clearly identify those can be charged and punished for the environmental offences as mentioned under s 43 of the EQA 1974 which are being discussed further.

Individual or Corporation?

section 25 (1) of the EQA 1974 provides that: “No persons shall, unless licensed, emit, discharge or deposit any environmentally hazardous substances, pollutants or wastes into any inland waters in contravention of the acceptable conditions…”

The section stipulates pollution of the inland water as contravenes the law unless the “persons” are being licenced. Even though nothing was mentioned about the corporations, the word “persons” shall include “a body of persons, corporate or unincorporated” when one looks at the Interpretation Act 1948 & 1967. In other words, “person” who may be guilty of these offences can be an individual or business entities, thus should encompass corporation (to be caught of causing pollution).

Since corporation can be sanctioned, as indicated, with fine or imprisonment, the question is who will be liable for the imprisonment on behalf of the corporation? The EQA 1974 has plainly mentioned that corporate officials who may be held liable in cases of environmental crime are the company director and other corporate officials or their agents (Mustafa & Mohamed, 2015). This is evident from Section 43(1):

Where an offence against this Act or any regulations made thereunder has been committed by a company, firm, society or other body of persons, any person who at the time of the commission of the offence was a director, chief executing officer, manager, or other similar officer or a partner of the company, firm, society or other body of persons or was purporting to act in such capacity shall be deemed to be guilty of that offence unless he proves that the offence was committed without his consent or connivance and that he had exercised all such diligence as to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances.

This section makes clear that among the corporate officials who may be liable for corporate crimes are director, chief executive officer (CEO), manager or other similar officer. However, these officials can defend themselves or avoid the liability when proving the offence as committed without his consent or he has exercised all his diligence in order to prevent the commission of the act. Furthermore, subsection (2) of Section 43 says:

Whenever it is proved to the satisfaction of the court that a contravention of the provisions of this Act or any regulations made thereunder has been committed by any clerk, servant or agent when acting in the course of his employment the principal shall also be held liable for such contravention and to the penalty provided thereof unless he proves to the satisfaction of the court that the same was committed without his knowledge or consent or that he had exercised all such diligence as to prevent the same and to ensure the observance of such provisions: Provided that nothing in this section shall be deemed to exempt such clerk, servant or agent from liability in respect of any penalty provided by this Act or regulations made thereunder for any contravention proved to have been committed by him.

Subsequently, if the court satisfies that the offence was committed by a clerk, servant, or agent when acting in the course of his employment, the principal, that is the corporation, shall also be held liable. This is when the operation of vicarious liability applies, where the act was committed by the employees in the course of their employment unless the principal/corporation can prove that the action was committed without his consent and he had exercised his diligence to prevent the act. In other words, the act of clerk, servant or agent can make the company as the principal liable, and such individuals themselves could not be exempted from the liability if it has been proven that the act was committed by them.

Section 43 shows that both corporation and individuals can be charged and punished for the pollution caused. When the Act provides so, there should not be a problem in imposing both fines and imprisonment to a corporation because the corporation can be fined and the individual/s that had been the “directing mind” and caused the harm can be locked up. In actual fact, the punishment of imprisonment should be furthered when ones look at the principle of punishment that among others is for deterrence and to educate the wrongdoer. The idea is for the corporation to learn from fault and damage they had caused so that the individuals within the corporation would take further notes for not being the “mind” that causing the harmful act that can damage the environment.

Punishment Imposed by Court

Table 1 shows 19 cases involving 17 companies and 21 charges between years 2013 and 2015. The offence was a violation of section 25 (1) EQA 1974. There were 7 cases recorded in 2013, 5 cases in 2014 and 7 cases in 2015, with 13 of them occurred in Negeri Sembilan, 2 cases in Johor, 2 cases in Selangor and 1 case each in Perak and Kuala Lumpur. Looking at the punishment imposed, a maximum fine was RM80, 000 while the lowest was RM8, 000 with only one case for each. Details of the range of fine imposed by the court are shown in Table 2 .

It is interesting to note that, although section 25 imposes punishments of fine or imprisonment or both, the court essentially in its judgment had imposed imprisonment only for default of payment. In other words, it is not the imprisonment as the punishment, but due to default payment. It is also remarkable that all companies opted for paying the fine. Nevertheless, there was one case where the court imposed imprisonment on the individual in-charged (no. 19) with 1 month imprisonment for the first charge, and 14 days for the second charge that run concurrently. Furthermore, looking at the length of imprisonment, except three, it was less than one year ranging between three to five months.

From Table 2 , 13 charges/companies (61.9%) were fined with the lowest range i.e. below RM20,000; five charges/companies (23.8%) were imposed within the range of RM20,001-RM40,000; two charges/companies (9.5%) with the amount of RM50,000 and RM60,000; and only one charge/company (4.7%) was imposed with a fine of RM80,000. The highest charges was imposed on the company that recorded to have committed the second offence.

Discussion

In response to the rapid economic growth, stiffer penalties had been proposed by virtue of the Environmental Quality (Amendment) Act 1996. As such, penalties under section 25 was amended and increased to reflect the seriousness of the offences. After 20 years of its implementation, cases of environmental violations are still mounting with a variety of pollution sources (DOE, 2017). In the case of river, its water quality has declined in year 2014 with the percentage of clean rivers have decreased to 52% in year 2014 compared to 58% in year 2013. Meanwhile the percentage of polluted rivers has increased from 5% in year 2013 to 9% in year 2014. In the case of rivers, the trend since 2009 until 2014 showed a decreasing number for clean rivers and a fluctuation for slightly polluted and polluted rivers with the increasing trends in 2014.

It has clearly shown that EQA 1974 imposes criminal sanctions in environmental pollution both for individual and corporate wrongdoers (Mustafa & Mohamed, 2015). While section 25 sanctions the punishment of fines and imprisonment for the “person”, either the individuals or corporations, Section 43 plainly mentions the individuals within the corporation who can be charged for the environmental harm committed by the corporations, subject to certain defence.

Looking at the penalties imposed on the corporations particularly on fines, it shows that majority of companies are still being sanctioned with mild punishment compared to the harm they have committed. Only two cases had been charged with the amount of fine Malaysia Ringgit fifty thousand above; one case was fined with Malaysia Ringgit fifty thousand and without imprisonment, and another one was charged with two charges amounting to Malaysia Ringgit sixty thousand and eighty thousand respectively. Moreover, for this latter case, the punishment can be said as stiffer when it came with imprisonment for default in payment and also imprisonment for the individual who committed the act.

Even so, majority of the companies were imposed below Malaysia Ringgit twenty thousand. Small amount of fines is too light to big company with business mind that aiming just for profit. Without prejudice to the courts’ judgment nevertheless, the amount of fines imposed might not be able to deter the company from repeating the same harm. For punishment of imprisonment, it seems that the court is not willing to impose it on the corporations, except in cases of default payment. Although the courts had imposed the punishment of fines or imprisonment in default of payment, the company would definitely prefer the fines. It indicates the companies’ willingness to pay. Evidenced from the Tables above, they showed a very small number of cases being fined with the amount of Malaysia Ringgit fifty thousand and above when compared to the maximum penalties of one hundred thousand. Low amount of fine would probably be the cause for the company to repeat committing the act especially when the amount is affordable and within their means. At the same time, the only possible conclusion for a higher fine could be due to the repeating offences, as clearly observed from the two charges of repeating offences by the corporations as shown in Table 1 .

Perhaps the approach of sanctioning imprisonment to the corporations is impossible. However, it should be noted that there is still an alternative to impose it on the individuals within the corporations though it may face some complications. If stiffer punishment like imprisonment can be imposed on the individuals within the corporations, it may become a lesson not only to the corporations but also to its “directing mind”. One however must bear in mind that the severity of punishment could not be merely judged from the amount of fine but to look from the circumstances of the case without neglecting the function of court in upholding justice.