Government shelves new corporate offence of failing to prevent economic crime

Government shelves new corporate offence of failing to prevent economic crime

The government appears to have killed off the idea of any change to corporate criminal liability. Adrian Darbishire QC and Rachna Gokani of QEB Hollis Whiteman, consider the implications of this policy change and what it means for the future of corporate criminal liability.

Original news

Government abandons more stringent corporate counter-fraud laws, LNB News 30/09/2015 70

Independent, 30 September 2015: In an about turn, the government has abandoned its plans to make it easier to prosecute companies which fail to stop economic crimes, such as fraud and money laundering. The reversal follows the viewpoint there is no evidence corporate doing is going unpunished.

What was the government’s original plan in this area?

In enacting the Bribery Act 2010, s 7 (BA 2010), Parliament acknowledged the inadequacy of the identification doctrine (in that sphere at least) and recognised that wider reform of the law on corporate criminal liability was still some way off.

In its UK Anti-Corruption Plan, published in December 2014, the government undertook 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’ by June 2015. The rationale was that, ‘in addition to bribery, there are likely to be other forms of economic crime for which it is appropriate to ensure that senior corporate actors are sufficiently accountable’.

Further, in its 2015 election manifesto, the Conservatives pledged to make it a crime ‘if companies fail to put in place measures to stop economic crime, such as tax evasion, in their organisations’ and make sure that the penalties are ‘large enough to punish and deter’.

What problem with/gap in the existing legal framework was it aimed at resolving?

In English law, criminal liability for ‘guilty mind’ offences requires proof of the guilt of a controlling mind of a corporation (R v St Regis Paper Company Ltd [2011] EWCA Crim 2527, [2011] All ER (D) 36 (Nov)). The application of the identification doctrine by the courts has been inconsistent but generally strict, and

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