In: Accounting
The Greek shipping company Ionia Management managed a 600-foot oil tanker that delivered oil to ports along the eastern seaboard of the United States. During these deliveries, Ionia's engine room crew, at the direction of their ship supervisors, regularly dumped oily waste into the ocean. To conceal the wrongdoing, the ship's crew falsified entries in its oil record book and lied to Coast Guard officials regarding the waste. The top executives and officials at Ionia did not know that employees were violating company policy and falsifying ship records to cover up their wrongdoing. A jury convicted Ionia of conspiracy, pollution, and obstruction of justice, and the company was fined $4.9 million in addition to probation and assessments. The corporation appealed. Should the corporation be found criminally liable for the illegal actions of its lower-level employees under the doctrine of respondeat superior? Why or why not? [United States v. Ionia Mgmt, 555 F.3d 303 (2009).]
Solution:-
Doctrine of respondeat superior means a case wherein the Employers are made responsible for all the acts done by the employees at the time of employment.The above is valid only if there exists a master servant relationship between employer and the employee.
Herein the Employer is Lonia Management and the ship supervisors or the ship crew are the lower level employees and thus the Employer Employee relationship exists.
Therefore in my opinion, the corporation can be found criminally liable for all the illegal actions of its employees under the doctrine of respondeat superior since those employees were related to the corporation and $4.9 million could not be recovered from them as they were representing the corporation and there was no proof or evidence that the corporation was not involved, In other case also, if the company is not held responsible then in future many such companies can commit fraud and act innocent by shifting the blame of the fraud on the Employees and not taking the responsibility for the same.
Hope this helps.
Note:- The answer is given as per my knowledge. There can be different opinions