21 November 2016
An important bill aimed at tackling the big issue of corruption is currently making its way through Parliament. It is called the Criminal Finances Bill.
Money laundering, recovering the proceeds of crime, tax evasion and terrorist funding are among the key targets for Home Secretary Amber Rudd. In her 10 November speech to the Financial Conduct Authority, she pledged to “make the UK a hostile environment for fraudsters and those seeking to move, hide and use the proceeds of crime and corruption.”
The bill includes a new corporate offence (i.e. an offence that applies to companies) of ‘failure to prevent tax evasion’. This builds on the model in the Bribery Act 2010, which places a burden of proof on companies to show they have adequate procedures in place to prevent bribery.
CORE and our partner organisation Corruption Watch are supporting a crucial amendment to the bill that would expand this to a ‘failure to prevent economic crime’, making it much easier for large companies to be prosecuted for their role in economic crime and ending the current situation where individual employees are prosecuted, but the companies they work for escape sanction.
The new offence would end the requirement for prosecutors to prove that senior company officers intended to commit an offence – the so-called ‘directing mind’ test. This results in impunity for large, decentralised multinationals, where directors are not closely involved in decisions taken by lower-level employees.
For instance, to date, no UK company has faced criminal charges as a result of the 2008 financial crisis nor have there been corporate prosecutions for the attempt to rig LIBOR rates. This is despite that fact that individuals prosecuted have argued that their actions were encouraged and condoned by their employers, including Barclays, UBS and Deutsche Bank.
The Public Bill Committee has reviewed all amendments to the bill and has reported on them to the House Of Commons. The revised bill will now be considered by parliament and subject to further debate by MPs in a “Third Reading” stage.
Protecting human rights and the environment
In the longer term, CORE would like to see the ‘failure to prevent’ model extended further to enable UK companies to be held criminally accountable for harming people and the environment abroad.
In the last 15 years, no country has put a company on trial for human rights-related crimes despite a raft of examples of serious corporate abuse, negligence and misconduct.
Bold, fundamental reforms are required to address a range of corporate abuses, to end impunity and to deliver justice for victims.
Blog by Ayesha Carmouche