Perfecting the mental element of the offense does not require awareness of the existence of the normative component of the offense, i.e., the defendant's awareness that his actions are within the scope of a restrictive arrangement prohibited by law or that his actions constitute a criminal offense. It was held that the mental element required for the formulation of the offense of the restrictive arrangement can exist "even when the perpetrator is not aware of the anti-social nature of his behavior, or even genuinely believes that there is nothing wrong with his actions. Adding the requirement to awareness of the existence of the criminal prohibition ... It is inconsistent with the provision of section 34Y of the Penal Law, which, as a rule, negates the significance of an 'error in the legal situation' with regard to the determination of liability, and it even clearly deviates from the language of section 20(a) of the Penal Law" (Borowitz at paragraph 96; See also Criminal Appeal 845/02 State of Israel v. Tnuva Cooperative Center for Marketing Agricultural Produce to Israel in Tax Appeal at paragraph 24 (October 10, 2007)).
Corporate Criminal Liability
- When it comes to attributing criminal liability to corporations, section 23(a)(2) of the Penal Law states that a corporation will bear criminal liability for an offense that requires proof of criminal intent "... If, in the circumstances of the case and in light of the person's role, authority and responsibility in managing the affairs of the corporation, the act in which he committed the offense and his criminal thought should be regarded ... His action, and his thought... of the corporation."
- In this context, it was ruled that "a senior body or officer in a corporation (a general meeting of shareholders, a board of directors, a director, a general manager, a business administration) will certainly be an organ of the corporation. But even an officer who is not senior may be considered the corporation's organ, if according to the corporation's documents or according to some other normative source, their action and thought are regarded as the activity of the corporation itself" (Criminal Appeal 3027/90 Modi'im Binui and Development Company in Tax Appeal v. State of Israel, paragraph 7 (August 8, 1991)).
- In the case law, two alternative tests were introduced to examine the question of whether a person would be considered an organ of the corporation so that his act and thought would be attributed to the corporation. The first is an organizational test, which examines a person's formal status in a corporation; and the second, a functional test, which examines whether the function performed by the specific officer justifies viewing his actions as the actions of the corporation, whatever his position may be in the hierarchy of the company (Criminal Appeal 99/14 State of Israel v. Melisron in Tax Appeal at paragraph 115 (December 25, 2014))..). 12.14F L v. Melisron in the case of the corporation, its position in the hierarchy of the company will be whatever it may be if the function performed by the specific officer is made clear that the two tests, which are the fruit of common sense, do not include in a closed list the list of functionaries who can be considered organic, and that legal policy considerations are also used in the arena (ibid., in paragraph 116). Thus, for example, it was held in the context of competition law that a branch manager of an elevator company who was responsible for the area of service on which the restrictive arrangement revolved was organized even though he was not authorized to enter into the arrangement (the Nehoshtan case at paragraph 7); and that a marketing person and a sales representative who was not a member of the management or authorized signatory and who were not subordinate to him would have been organized insofar as the matter concerned the submission of bids in competitive proceedings (Ben Dror (District) case at paragraphs 840-842; and see a similar determination with respect to a marketing person and a sales agent, at paragraph 912 there).
- Beyond the identity of the organ, it was held that in order to determine that a corporation is responsible for the activity carried out by the organ, it must be determined that it is appropriate to impose liability on the corporation for the concrete actions of the organ ( Melisron case in paragraph 118). It was clarified that this was a question of legal policy, and in this context a number of auxiliary tests were established (ibid.).
- One auxiliary test that is relevant to our case is whether the organist's action was performed in the course of performing his duties. In this context, it was ruled that the definition of situations that will be included in the expression "in the performance of his duties" should be interpreted extensively. It was held that these situations include, for example, an act of an organ in an alleged deviation from authorization, and even a situation in which the company's board of directors objected to the action taken by the organ (ibid., at paragraph 120; and see also the Nehoshtan case at paragraph 7(a); the Wall case in paragraphs 77 and 78, to which a reference was made).
- Another auxiliary test examines whether the action was for the benefit of the corporation or at least not intended against it ( Melisron case at paragraph 118). It was noted that this was a private case of the test relating to the performance of the organ's role. In this context, it was ruled that "an action that the organ deliberately carried out against the interest of the corporation will not bind the corporation itself, since in this case the organ does not act as an organ but as a private person, and therefore its conduct should not be attributed to the corporation". Thus, for example, when it comes to false registration in a company's books in order to generate a profit for a party other than the company or where the organ exceeds the company's funds. On the other hand, an action by the organ that is both for the benefit of the company and for the benefit of the organ and the group of companies to which it belonged, was found to be binding on the corporation (ibid., in paragraph 121). In this context, it was further noted that it is sufficient that the corporation's best interest is the main purpose of the action, and it is not even necessary that the act actually benefited the corporation (Criminal Case (Jerusalem District) 54822-08-15 State of Israel v. Cohen at paragraph 23 and the reference there (October 27, 2020)).
Liability of Officers - Section 48 of the Competition Law
- In various charges in the indictment, some of the defendants are attributed responsibility by virtue of the provision of section 48 of the Competition Law.
This section deals with "officer's responsibility". The section, as it is currently drafted and after Amendment 21 to the Law, states that "an officer of a corporation must supervise and do everything possible to prevent an offense under this law by the corporation or by one of its employees" and that the person who violates this provision is liable to a sentence of one year's imprisonment and a fine (section 48(a) of the law). "Officer" is defined as "an active manager of the corporation, a partner other than a limited partner, or an official responsible on behalf of the corporation for the field in which the offense was committed" (section 48(c) of the Law). The section establishes a presumption that "an offense under this law was committed by a corporation or by one of its employees, the presumption is that an officer of the corporation breached his duty under subsection (a), unless he proves that he did everything possible to fulfill his duty" (section 48(b) of the law).