Top City lawyers have outlined their concerns as the Ministry of Justice (MoJ) pushes ahead with law reform for corporate liability for economic crime.
A review of the law has been considered after a consultation was launched on 13 January, with an extension of the ‘failure to prevent’ model looking likely. The MoJ describes an extension of that model as having ‘some clear advantages’ in its consultation documents.
The proposed reforms mirror the model adopted for bribery and tax evasion. This extension of ‘failure to prevent’ is designed to crackdown on crimes such as fraud and money laundering, after the MoJ stated in summer last year that the police struggle to prosecute corporations for such offences under existing laws.
Fieldfisher head of corporate crime Tony Lewis expressed concern at what he called: ‘the continued march of criminal law into the business sphere.’
He added: ‘Should the “failing to prevent” model for other economic crimes in business follow suit, it will be a further example of the continued erosion of the need for there to have been knowledge of an offence to be committed in order to be prosecuted for it.’
Clifford Chance partner Roger Best echoed Lewis’ concerns: ‘It highlights the serious issues that need to be considered before the model adopted for the Bribery Act is extended to financial and economic crime generally.
He added: ‘It should be emphasised that it is a request for evidence and that the paper, as currently written, suffers from the defect that some of the arguments advanced in favour of the extension of the law are based on suggestions and statements by critics of the current principles rather than evidence.’
News of the consultation come as the Serious Fraud Office (SFO) yesterday secured a £671m deferred prosecution agreement (DPA) with Rolls Royce. The sum was paid to avoid anti-corruption investigations over allegations of bribery within the company. Quinn Emanuel Urquhart & Sullivan partner Robert Amaee said: ‘This is the third and most significant DPA secured by the SFO. It is by far the largest penalty that has ever been levied by the SFO in a bribery matter, and the first time that the UK’s portion of the global settlement is higher than that of the US. With this DPA, the SFO is now playing in the big leagues.’
Plans to extend the ‘failure to prevent’ model were first revealed in May 2016, when then-Prime Minister David Cameron unveiled a range of new measures to boost the UK’s fight against white-collar crime.