The Ministry of Justice (MOJ) is considering introducing new laws as part of a crackdown on corporate economic crime, and is seeking views on whether further reform is needed to combat corporate criminality, following fraudulent, dishonest activity by some banks and other commercial organisations, reports Pat Sweet
The MOJ says that under existing laws, enforcement agencies can struggle to prosecute corporations for criminal offences such as fraud, money laundering and false accounting. It claims the issue is whether there is potential for reform of the law, in areas of economic crime other than bribery and tax evasion, so as to provide a just and proportionate method of holding companies to account.
It has issued an open call for evidence asking for views on whether the need to prove the involvement of a ‘directing mind’ in corporate offending is hindering the prosecution of companies for wrongdoing and inviting comment on the alternatives.
These could include introducing a US-style ‘vicarious’ liability offence, making companies guilty through the actions of their staff, without the need to prove complicity. Another option would be adopting the failure to prevent model, whereby a company is liable unless it shows it has taken steps to prevent offending.
The call for evidence also asks for views on the benefits of strengthening regulatory regimes. It is asking for views on the costs and benefits of further reform, against the background of the significant changes that have already been made to tackle misconduct in some sectors, and with regards to the costs to businesses associated with the implementation of prevention procedures.
Justice Minister Sir Oliver Heald QC said: ‘Companies must be held to account for the criminal activity that takes place within them.
I want to restore public faith in business and make sure we have the right tools available to crack down on corporate criminality.’
Heald said the call for evidence was the latest in a series of moves to repair trust in business and improve accountability, including measures in the Financial Crime Bill to penalise firms who fail to prevent staff conducting tax evasion.
The move comes as the government is finalising details on the upcoming Criminal Finances Bill 2016-17 which is set to introduce wider powers for the authorities to target accountants, tax advisers or lawyers who advise on disputed tax avoidance schemes which are subject to court review.
The feedback period closes on 24 March and responses needed to be submitted via an online consultation.
Ministry of Justice - Corporate liability for economic crime: call for evidence.
The online call for evidence is here.
