Proposed criminal offence may impose new burdens on companies
Bill Dixon, a partner in the Dispute Resolution & Litigation team, considers the government’s proposals to extend the existing corporate offence of failure to prevent bribery to other economic crimes.
Section 7 of the 2010 Bribery Act imposed a harsh burden on companies and other commercial organisations. A new corporate criminal offence was introduced of failing to prevent bribery. In effect, the onus was put on a commercial organisation to establish that it had put in place “adequate procedures” to prevent bribery. In a far reaching move, the offence could be committed not only by a company failing to prevent bribery within its own organisation but also by others who were “associated” with it. For example, employees, subsidiaries or agents.
There are now proposals to extend this liability even further. There is already a consultation paper on a proposed new corporate offence of failing to prevent the criminal facilitation of tax evasion. In recent weeks the government has signalled that it may go even further by beginning consultations on a corporate offence of failing to prevent economic crime.
At present few details are available. Examples of the kind of offences likely to be covered include false accounting, fraud and money laundering. It may well be that as with the Bribery Act there will be a statutory defence that depends on organisations having good internal procedures e.g. clear policies and training.
Contracts of employment and employee disciplinary procedures may also need to be reviewed.
If implemented, this legislation could potentially impose a harsh burden on business. In the case of the Bribery Act the Ministry of Justice was careful to help organisations have a reasonable understanding of what was required by issuing guidance with case studies. One can only hope that similar detailed guidance is published in relation to the new offences.
Bill Dixon regularly gives guidance on corruption and other compliance procedures.
This article is provided free of charge for information purposes only and is accurate as at September 2016. It does not constitute legal advice and no responsibility for the accuracy of the information and commentary set out in the article is assumed by Field Seymour Parkes LLP.
