Civil Fraud Quarterly Round-Up: Q1 2021
The Ministry of Justice announced last year that it would not proceed with the proposed extension of the corporate criminal offence of failure to prevent bribery to other economic crime. However the issue of how to prosecute big companies more effectively has not gone away.
In a recent press interview (Evening Standard 5.1.16) SFO Director David Green made it clear he was still lobbying for this, calling now for “US style” powers to punish big business and root out financial crime.
Green first mooted the option of extending the s7 Bribery Act offence to encompass a wider range of criminality in 2012 and this proposal gained wide support. In December 2014, the Government published its first Anti-Corruption Plan in which the Ministry of Justice was asked to examine the case for a new offence of a corporate failure to prevent economic crime. However, in September 2015 Andrew Selous MP put the idea into cold storage. (See our related blog). His reasoning was based on the fact that at that stage there had been no s7 Bribery Act prosecutions to inform views one way or the other. Within weeks however, at the end of 2015, two s7 prosecutions were announced; the first resulting in a Deferred Prosecution Agreement against ICBC Standard Bank plc, (the first DPA under English Law), and the second resulting in a guilty plea which will be sentenced next month (Sweett Group Plc.).
Despite these recent s7 successes against large companies, it looks like Parliament is in no great hurry to extend the corporate failure to prevent offence to other crimes. Recognising this, Green’s new approach is to attack the current identification principle (where there is a need to attribute guilty knowledge to the directing mind of a company), saying that it is usually too high a bar for prosecutors to attribute criminal culpability successfully to large companies. Reforms inspired by the system in the United States of “vicarious liability” are what he is after and they would make his job an awful lot easier.
A recent Opposition debate focusing on economic crime and a statement from the Shadow Attorney General at the end of last year that a “full and transparent” review of corporate criminal liability is required, means that reform of corporate attribution in the future seems highly likely; the question is when and what model will be used. Will we in fact extend the pioneering ‘failure to prevent’ style of corporate liability or could we embrace an American view of how companies are vicariously liable for the criminal acts of their employees? Current liability for UK companies in corporate manslaughter cases is arrived at by neither of these routes, so is it right that there should be different ways of attributing liability to a company depending on the crime it is accused of? Given how important this topic is we believe the Law Commission should examine the case for reform and there should be informed debate about how companies should be held to account for the crimes of their employees.
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