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Guest post: Criminalising corporate law – proposed UK fraud penalties take a leaf out of the US sentencing guidelines

Tough new proposed sentencing guidelines for bribery have been published in a consultation which closes in early October.

The proposals are contained in a document running to 130 pages which deals with proposed sentencing guidelines for fraud, bribery and money laundering offences.

While the guidelines themselves are not a guide for the level of financial penalty in deferred prosecution agreements (DPAs) they will be used to inform the level of financial penalty which may form part of a DPA. This is a distinction which will be lost on many and rightly so.

To all intents and practical purposes these guidelines, when finalised, will drive the financial penalties in DPAs in the UK. For individuals the guidelines take into account a range of factors.

For corporates there is more than a nod to the US sentencing guidelines with the use of a multiplier, the lowest of which is 20% and the highest of which is 400%. The consultation notes:

‘The use of a multiplier applied to a harm figure is broadly based on the US system of determining fines for corporations where the range of multipliers is .05% to 4.’

The proposed guidance notes that it is intended that for corporations:

‘Any fine must be substantial enough to have a real economic impact which will bring home to both management and shareholders the need to operate within the law. Whether the fine would have the impact of putting the offender out of business will be relevant; in some bad cases this will be an acceptable consequence.’


This is tough talk.

Hard-pressed ethical UK (and other) businesses need a level playing field. Not one skewed by under-the-table deals which rig the markets against them.

But tough talk alone is not enough.

Numerous surveys and anecdotal evidence point to a wait-and-see attitude among some businesses who take UK threats of criminal law enforcement in fraud cases with a pinch of salt. This manifests in a lack of systems and controls to prevent fraud (including bribery) and in some cases a devil may care attitude.

Against a backdrop of an austerity programme with law enforcement struck with swinging cuts, a continuing lobby to try to water down the Bribery Act and a lack of any visible enforcement against corporates for Bribery Act violations in the two years since its entry into force – this is understandable.

But it is a mistake.

The criminalisation of corporate law in the UK continues. In answer to the question will the bite match the bark of the British Bulldog? We expect some chunky fines and other penalties.

A copy of the consultation document can be accessed here.

By Barry Vitou and Richard Kovalevsky QC, for the blog

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