The government has recently announced that it is consulting on plans to extend the current provisions dealing with ‘failing to prevent’ offences beyond bribery and tax evasion.
It would spell the biggest shakeup in corporate criminal history, meaning that large businesses could be held to account for fraud, money laundering and other economic crime committed in the course of commerce, where they have failed to implement adequate preventative measures in their business practices.
Justice Minister Dominic Raab said on the 12th May 2016:
“The government is finding new ways to tackle economic crime and we are taking a rigorous and robust approach to corporations that fail to prevent bribery or allow the tax evasion on their behalf…
We now want to carefully consider whether the evidence justifies any further extension of this model to other areas of economic crime, so that large corporations are properly held to account.”
The announcement comes hot on the heels of a similar announcement by the prime minister of a raft of new initiatives, following the highly publicised anti-corruption summit in London, meaning they are less likely to be dropped in the face of business opposition.
Many commentators have observed that the expansion of the current remit of the Bribery Act * would significantly increase the onus on companies to commit resources to compliance and preventative measures, even in the absence of any evidence of illegitimate conduct or criminal activity. A net result could be that businesses are forced to re-evaluate and limit their business activities to exclude high-risk jurisdictions or companies.
A similar proposal to deal with economic crime was quietly dropped in September 2015 after the big business lobby got involved. However, it is the opinion of the author that this time the government is serious and that the prosecutorial armouries of the major enforcement agencies (such as the NCA, CoLP, CPS and SFO) will be strengthened as a result. Accordingly, corporates will have to plan carefully for its introduction so as to ensure costly investigations and potentially damaging prosecutions are avoided.
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* Section 7 of the 2007 Act introduced a totally new offence of failure on the part of a commercial organisation to prevent bribery being committed in connection with its business. This represented a huge shift in the corporate criminal landscape, as knowledge on the part of the organisation is not a requirement for an offence to have been committed. However, an organisation will have a complete defence in law where it can demonstrate that “adequate” procedures designed to prevent bribery were in place at the time.
Section 7 is far-reaching. It is deliberately intended to have a broad-jurisdictional reach and applies to businesses in the UK and abroad.