Corporate crime: where are we now?

Blog by Marilyn Croser

Criminal Finances Bill

It’s day two of Committee Stage in the House of Lords. This involves detailed line by line examination of the separate parts of the bill.

As a reminder, the bill will create a new corporate offence of ‘failure to prevent tax evasion’, extending the ‘failure to prevent’ model in the UK Bribery Act 2010 to corporate tax evasion, although there is some question over what, if any, differences there are between ‘adequate procedures’ as specified by the Bribery Act and ‘reasonable procedures’ as specified in the new failure to prevent facilitation of tax evasion offence.

CORE is working with anti-corruption organisations including Corruption Watch UK and Transparency International to have this model broadened out to a ‘failure to prevent economic crime’ (i.e. fraud, money laundering and false accounting).

Members of the House of Lords have tabled amendments to the bill to this effect. CORE, as part of a wider coalition of organisations is supporting these amendments and others that relate to directors’ disqualification and the corporate liability model more generally. See our latest briefing for background information. The amendments are largely a vehicle for debate at this stage, as the government does not want to accept them and Peers will not push them to a vote in Committee.

Ministry of Justice Call for Evidence on corporate liability for economic crime

The call for evidence closed on Friday 31 March. It seemed to have been prepared in haste (the consultation document was incoherent and in some places, inaccurate) to head off attempts to amend the bill (above). It recognises that there is a problem with the identification principle and proposes a range of options for reform, including vicarious liability and versions of the ‘failure to prevent’ model.

CORE and other organisations made submissions in response to this consultation, arguing that the best approach would be vicarious liability, with a strict direct corporate liability offence that would focus on the responsibility of a company to make sure that offences are not committed in its name or on its behalf as a secondary option. The company would be able to defend itself by showing that it had put in place policies and procedures to prevent economic crime.

What’s next?

The Criminal Finances bill will go into report stage for more detailed scrutiny. At this point, we’ll see whether there is appetite among Peers to coalesce around any of the amendments that we’re interested in and possibly take them to a vote.

The Ministry of Justice meanwhile is analysing responses to the call for evidence and will publish proposals in due course.