16 October 2015
Government Says No Change to Economic Crime Law in Near Future
The Government appears to have brought a swift end to any proposed new law to bring about change to corporate criminal liability.
Speaking on 28th September 2015, Andrew Selous MP said:
"The UK has corporate criminal liability and commercial organisations can be, and are, prosecuted for wrongdoing. The UK Anti-Corruption Plan tasked the Ministry of Justice to examine the case for a new offence of a corporate failure to prevent economic crime and the rules on establishing corporate criminal liability more widely.
“Ministers have decided not to carry out further work at this stage as there have been no prosecutions under the model Bribery Act offence and there is little evidence of corporate economic wrongdoing going unpunished."
Presumably this is much to the dismay of the current Director of the Serious Fraud Office (SFO), David Green QC who has for a long time been a driven advocate for change to UK legislation in the fight against economic crime. This most recent stance of the Government seems to contradict the long standing views of the SFO, Attorney General, Solicitor General, HMRC and indeed their own 2015 Conservative manifesto.
On 1st July 2011, the Bribery Act 2010 was brought into force, and with it a new power to fight corporates concerned in bribery. It was thought that by bringing in this new legislation the Government recognised the limited powers available under UK legislation to allow prosecutors to amount successful prosecutions for corporate wrongdoing. In 2012, the Ministry of Justice (as part of its Consultation Paper on Deferred Prosecution Agreements) concluded that:
"The law of corporate criminal liability poses some problems. Under the current law, in order to obtain a conviction a prosecutor must show that the "directing mind and will" of the commercial organisation had the necessary fault element or "mens rea" for the offence. However, this is often difficult to prove, especially in increasingly large and more sophisticated modern commercial organisations. While the new offence in connection with the failure of a commercial organisation to prevent bribery under section 7 of the Bribery Act 2010 will help, more needs to be done, especially in relation to other types of economic offending."
It was clear that the Government recognised that “more needs to be done” in the battle against economic crime. These views were strongly supported by David Green QC who has for a long time advocated for a change in UK law. His robust view was that when prosecuting corporates, the SFO is unfairly disadvantaged and change is needed. He has previously stated that an offence similar to section 7 of the Bribery Act, namely one of a company failing to prevent economic crime by its associated persons, would significantly increase the SFO’s reach on corporate crime.
On 24 February 2014 Deferred Prosecutions Agreements (DPA) became available to the SFO but there have been no DPA’s in the UK to date. The SFO has stated that it is hopeful that two DPA’s will be signed by the end of the year. In September 2015 Mr Green commented that to enable to SFO to make good use of DPAs the law needs to move away from the current doctrine of the identification principle and move to something closer to the powers available to prosecutors in the USA.
The SFO’s view on this seemed to be well supported. The Attorney General, Solicitor General and HMRC all seem to be in favour of a change to the legislation and the Government undertook to examine the case for a new offence of a corporate failure to prevent economic crime. In fact this summer HMRC have been in consultation about a proposed new corporate criminal offence of failure to prevent the facilitation of tax evasion. Sarah Sharp from the Slater and Gordon Business Crime team was part of this consultation and submitted their views on the proposed legislation before the deadline of the 8 October 2015.
Discussions on a new offence of a corporate failure to prevent economic crime were due to take place in June 2015 and as part of its 2015 manifesto, the Conservative Party pledged to make it a crime "if companies fail to put in place measures to stop economic crime". Although the new corporate offence to tackle tax evasion seems plausible, the latest comments from the Government demonstrate a U-turn on their previous position with regard to a wider alteration to corporate criminal liability.
The latest comments of Mr Selous MP namely that there is "little evidence" that corporate economic wrongdoing is going unpunished, and “commercial organisations can be, and are, prosecuted for wrongdoing”, go firmly against the views of many experts in this field. It is a concern that the comments do not to take into consideration the change in company culture towards bribery and the mass overhaul of corporate’s anti-bribery and corruption policies and procedures that stemmed from this legislation.
But the Government’s position seems to be clear. They will not be considering any change in the law with regards to economic crime in the near future. Only time will tell as to how long the Government will retain this view.
If your business has suffered due to economic crime, or you have been accused of wrongdoing, please contact our expert solicitors at Slater and Gordon. Call us on freephone 0800 916 9054 or contact us online and we will call you.
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Wednesday 21st November 2018