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Promising an incentive to stevedores to discharge a vessel in a timely manner, giving a bottle of whiskey to a customs official to avoid delays, or offering a large box of cigarettes to a port agent so as to receive special treatment. Activities such as these have always run the risk of falling foul of the criminal laws.
In this article we will read something about corporate liability and how the United Kingdom has drawn the boundaries to prevent the executors, who these executors can be? It was said in common law that "a corporation cannot commit treason, or felony, or other crime, in its corporate capacity though its members may, in their distinct individual capacities". That perception has been changed over time. First, it was agreed that a corporation might be held criminally liable for its failure to honor certain legal obligations (nonfeasance) then for the inadequate manner in which it performed certain legal obligations (malfeasance). At the dawn of the 20th century, the Supreme Court expressed a more sweeping view:
It is true that there are some crimes which, in their nature, cannot be committed by corporations. But there is a large class of offenses, wherein the crime consists in purposely doing the things prohibited by statute. In that class of crimes, we see no good reason why corporations may not be held responsible for and charged with the knowledge and purposes of their agents, acting within the authority conferred upon them. If it were not so, many offenses might go unpunished and acts be committed in violation of law where, as in the present case, the statute requires all persons, corporate or private, to refrain from certain practices, forbidden in the interest of public policy.
Well, the United Kingdom (UK) has tough legislations in place when it comes to corporate misdeamonours. The two statues which plays the most crucial role to neck this are the Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA) and the Bribery Act 2010 (Bribery Act) - both of which focus attention on the management systems and controls of a corporate entity. It has been said by one of the jurists that "It doesn't matter who you are, what you do, if you break the law there will be consequences."
In particular the Bribery Act, which imposes liability for failure to prevent an act of bribery unless the corporate entity can demonstrate that it had adequate procedures to prevent such an act occurring, is a considerable change in the approach towards corporate criminal liability. An important feature of the new Bribery Act is its extra-territorial reach and its application to non-UK companies. A foreign company which carries on any "part of a business" in the UK could be prosecuted under the Bribery Act for failing to prevent bribery committed by any of its employees, agents or other representatives, even if the bribery takes place outside the UK and involves non-UK persons.
What Constitutes Bribery
A bribe is paid or received where one person provides a benefit to another person with the aim of inducing another person to do something which is improper in the eyes of a reasonable person in the United Kingdom. An offence will be committed even where the bribe is only offered or solicited, but not actually transferred. For a person to commit the active bribery offence, there has to be intention, knowledge or belief on the part of that person in addition to the giving of the bribe. Both the active and passive offences incorporate the notion of "improper performance", or "wrongfulness element" as it is described in the Prosecution Guidance. The key to whether an offence has been committed is the connection between the bribe and this "wrongfulness element"; without the connection, no offence is committed.
The Bribery Act – Quick Overview
The Bribery Act 2010 received Royal Assent on 8 April 2010. The Bribery Act creates a new offence under section 7 which can be committed by commercial organizations which fail to prevent persons associated with them from committing bribery on their behalf. It is a full defense for an organization to prove that despite a particular case of bribery it nevertheless had adequate procedures in place to prevent persons associated with it from bribing. Section 9 of the Bribery Act requires the Secretary of State to publish guidance about procedures which commercial organizations can put in place to prevent persons associated with them from bribing. This guidance sets out the common approach of the Director of Public Prosecutions, the Director of the Serious Fraud Office (SFO) and the Director of the Revenue and Customs Prosecutions Office to the prosecution in England and Wales of corporate offending other than offences of corporate manslaughter. Offences under the CMCHA are prosecuted by the CPS, which has issued separate guidance on those offences.
In order to determine the liability of the corporate there are mainly two principles which are relied upon as:
- The first technique is the "identification principle" whereby, subject to some limited exceptions, a corporate may be indicted and convicted for the criminal acts of the directors and managers who represent the directing mind and will and who control what it does. This concept has developed over decades and in the case of an offence involving proof of a mental element (mens rea), such as many corruption offences, it is possible to combine proof of the act itself (the actus reus), on the part of an employee or representative of the company who would not form part of the controlling mind with proof of mens rea on the part of a person who does form part of the controlling mind.
- The second technique of vicarious liability was used from as early as the nineteenth century. Although, in general a corporate entity may not be convicted for the criminal acts of its inferior employees or agents, there are some exceptions, the most important of which concerns statutory offences that impose an absolute duty on the employer, even where the employer has not authorised or consented to the act. Wherever a duty is imposed by statute in such a way that a breach of the duty amounts to a disobedience of the law.
Insight to the Office of Serious Fraud Office (the SFO)
The SFO was created and given its powers under the Criminal Justice Act 1987 and was established in 1988. The SFO investigates and prosecutes serious and complex fraud, bribery and corruption. The SFO encourage companies to self-report (on 1 November 2011 the SFO introduced a new service, "SFO Confidential", in order to make the process of reporting corrupt practices easier) their wrongdoing and the promotion of such behaviour was one motive behind the introduction into UK law, in February 2014, of deferred prosecution agreements ("DPAs"). These agreements provide a procedure by which commercial organizations that uncover financial wrongdoing within their enterprise can agree with the SFO to a series of civil penalties (such as a fine, payment of compensation, review and monitoring), in return for which the SFO agrees not to pursue a criminal prosecution.
The SFO works with other law enforcement partners to handle the challenges faced from serious and organised crime in accordance with the Government's Serious and Organised Crime Strategy. In particular the SFO work closely with: (i). The National Crime Agency's Economic Crime Command, International Corruption Unit and Bribery and Corruption Intelligence Unit; (ii). The City of London Police, including its Economic Crime Directorate, Action Fraud, and the National Fraud Intelligence Bureau; (iii). UK police forces and Regional Organised Crime Units, Regional Asset Recovery Teams and Regional Fraud Teams; (iv). HM Revenue & Customs; (v). The Financial Conduct Authority;
The SFO also works collaboratively with UK Government departments, including our superintending department, the Attorney General's Office, the Home Office and Ministry of Justice, and with overseas partners, such as the US Department of Justice, on matters where there is a common interest. Recently the SFO has opened an investigation into Tata Steel Ltd over allegations related to certificates used to verify the composition of products. Mumbai-based Tata Steel, which is seeking to sell its UK businesses, referred itself to the fraud office after an internal audit that suggested inappropriate testing and certification.
The recent past has seen a various offences enacted, or proposed, which have either abandoned or eroded the identification principle. However the criteria for establishing the criminal liability of the company for these offences are different, but they share the presumption that a company should be prosecuted if its organizational faults or failings are such that others associated with the company have committed crimes. The SFO brings further charges, and the introduction of DPAs, for the offence of failing to prevent bribery, the impetus will inevitably return for expanding the "failure to prevent" and "gross breach of duty" models into new types of corporate crime.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.