The Sentencing Guidelines Council has today published its definitive Guidelines for Sentencing Corporate Offenders convicted of Fraud, Bribery and Money Laundering Offences. The Guidelines will be effective from 1 October 2014.
As there have been few criminal prosecutions of corporates for these types of offences there is no established sentencing practice in place. The Guidelines have also been created to support the introduction of Deferred Prosecution Agreements, which are expected to come into force during February 2014.
They are not however a guideline for Deferred Prosecution Agreements as they will only be relevant in cases where corporates are prosecuted for and convicted of offences covered by the Guidelines.
The Sentencing Council has however indicated that it hopes that these guidelines will be of assistance as a point of reference when fine levels are being considered and negotiated for Deferred Prosecution Agreements. This is the reason that the Council has published these guidelines at this stage although as indicated above they will not be in force until later this year. The Council is expected to publish guidelines relating to sentencing individuals in respect of these offences later this year which are also expected to come into force on 1 October 2014.
The guidelines envisage when sentencing a corporate for these offences that a court must firstly consider making a compensation order and secondly it must consider confiscation at the prosecution’s request or if the court considers it appropriate. The Court should then assess any financial penalty and the guidelines set out factors to take into account when assessing a corporate’s culpability in the offence. The Court should also consider the level of harm and the guidelines provide a percentage based harm figure multiplier. Once these steps have been gone through by the court in assessing the appropriate starting point, any mitigating or aggravating features are considered.
Companies are expected to provide comprehensive financial information for the previous three years to enable the court to make an accurate assessment of its financial status. A failure to provide such information, or if the Court is not satisfied it has been given reliable information, will mean the Court can draw inferences as to means.
Once a Court has arrived at a fine level the court should “step back” and consider the overall effect of its orders. The guidelines state that the fine must be substantial enough to have a real economic impact which will bring home to both management and shareholders the need to operate within the law. Whether the fine will have the effect of putting the corporate out of business is a relevant factor but in bad cases may be an acceptable consequence.
The Sentencing Council Guidelines can be seen online here.
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