Crimes in Violation of Corporate Governance Rules: A Critical and Comparative Study (Kuwait-Lebanon)

Dr. Gerges Tohme
Assistant Professor – Faculty of Law – Lebanon University


Corporate governance is not limited to the prudent governance of companies, so as to ensure the interests of the companies, shareholders and consumers per se. It goes beyond that to include the interests of workers, employees, creditors, clients, the national economy and the public treasury (the “Relevant Parties”). Crimes in violation of corporate governance rules are deemed economic crimes and are increasing nowadays as evidenced by the events of recent global financial crisis. This crisis reflects the need for robust rules to act as a deterrent and a safety valve to ensure that companies abide by the principles of corporate governance and achieve their goals, which should be apparent in the companies’ ability to protect the interests of the “Relevant Parties”.
Consequently, any criminalization or punishment must primarily take into account the protection of the above-mentioned interests, whilst not becoming a burden on the companies, especially when companies are seen as the main criminal and in fact they are one of the victims. From here, the importance of this research lies in the presentation of relevant text and its evaluation to verify whether it achieves the goals of corporate governance and the protection of the interests of the intended persons and entities.
This research is divided into two sections:
Corporate crimes in general texts, contrary to the rules of corporate governance rules.
Crimes in violation of the capital market law.
In conclusion, the following results may be observed:
In many instances, the Kuwaiti law does not take into account the criminalization of legal persons, the interests to be protected by the rules of corporate governance, including the company’s interest and national economy, and even in some measures that gave the public prosecutor the right to take withholding action or disposition of funds and its management.
In terms of proposals, I present the following:
I suggest the modification of the law so as to distinguish between natural persons who run the company poorly and the legal persons who are representing their national economy and play a prominent role in moving the economy forwards. I recommend a tougher punishment for the first category.
I suggest that the legislature reconsider the foundations of criminalization taking into consideration the ‘moral person’. There should be a distinction between intentional crimes and non-intentional crimes in terms of accountability and punishment, in order to achieve the purpose of corporate governance, which is the protection of companies and the national economy. The law must target the ‘symptom’, namely, corrupt managers or poor management, not seek the elimination of the patient, a company, which will lead to the opposite results to those the legislature wanted to achieve from the incriminating text and required by the nature of the corporate governance and the concept and purpose of its development.
In addition to the above proposals, this research also puts forward other recommendations, which do not fit into the above framework.

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