The government is set to consult on plans to extend the scope of the criminal offence of a corporation ‘failing to prevent’ offending beyond bribery to include other economic crimes, such as money laundering, false accounting and fraud, saying it wants to ensure senior management takes responsibility for any financial wrongdoing which is uncovered
The move was signalled in a speech to the Cambridge Symposium on Economic Crime given by attorney general Jeremy Wright.
Wright said the proposals would be similar to those outlined in draft legislation for the new criminal offence of corporate failure to prevent the criminal facilitation of tax evasion, and were part of prime minister Theresa May’s drive to ensure businesses have effective corporate governance.
Wright said: ‘Our current system of limited corporate liability incentivises a company’s board to distance itself from the company’s operations. In this way, it operates in precisely the opposite way to the Bribery Act 2010, one of whose underlying policy rationales was to secure a change in corporate culture by ensuring boards set an appropriate tone from the top.’
In his speech, Wright said that ‘failure to prevent’ bribery legislation has put companies of all sizes on a level playing field whereas in the past, the reliance on the identification doctrine may have made it easier to prosecute smaller companies, rather than to go after larger, more complex ones.
He said this model should now be adopted for other economic crimes, citing the public dissatisfaction that banks were not held responsible in the recent Libor rigging cases, although individuals were.
Wright said: ‘The identification doctrine that currently exists for other economic crime has made it difficult to attribute criminal liability to large corporations where one cannot demonstrate the ‘controlling mind’ of the individuals involved.
‘This has meant that it has not always been possible to bring corporate bodies to justice for the criminal acts of those who act on their behalf and for their benefit.’
Wright went on to say that: ‘The threat of conviction is greater under “failure to prevent” and as a result, companies might be more likely to not just enter into deferred prosecution agreements (DPAs) but also, crucially, to take the actions necessary to discourage such offending within the organisation in the first place.
‘The prospect of being convicted of criminal offences often encourages greater cooperation between the parties involved, saving time and public money.
‘An extension of the failure to prevent offence can enhance the UK’s reputation in the fight against fraud and help to promote improved corporate governance.’
Wright's speech is here.
