The Government has just consulted on draft legislation and guidance for the new criminal offence of corporate failure to prevent the criminal facilitation of tax evasion ... In addition, the Government will soon consult on plans to extend the scope of the criminal offence of a corporation 'failing to prevent' offending beyond bribery to other economic crimes, such as money laundering, false accounting and fraud. The current 'failure to prevent' bribery legislation has put companies of all sizes on a level playing field where in the past, the reliance on the identification doctrine may have made it easier to prosecute smaller companies, than to prosecute larger, more complex ones. 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. The new bribery offence has also encouraged better governance within large corporations and this is something that we would seek to encourage further through additional 'failure to prevent' offences. 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. 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 but also, crucially, to take the actions necessary to discourage such offending within the organisation in the first place ... 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".
Tuesday, 13 September 2016
The Attorney General, the Rt Hon Jeremy Wright QC MP, delivered a speech earlier this month in which he spoke about the existing and proposed 'failure to prevent' offences: see here. Here is an extract from the speech, in which the Attorney General makes the link between improved corporate governance and the introduction of new 'failure to prevent' offences: