Earlier this month, the court approved the SFO's third and
largest ever Deferred Prosecution Agreement ('DPA'), which
will require Rolls Royce Plc to pay over £600 million in
fines and costs to various agencies.
As Sir Brian Leveson was hearing the application to approve the
DPA, across the road a group of lawyers and anti-corruption
watchdogs were having breakfast in the shadow of the RCJ, and
discussing the concept of corporate criminal liability.
With the government having published its call for evidence on potential corporate
liability for failure to prevent economic crime, which would extend
corporate criminal liability for a failure to prevent to offences
such as fraud, money laundering and false accounting, the
discussion inevitably fell to the adequacy of the 'failure to
prevent' scheme as a mechanism for imposing corporate criminal
liability. This has previously been described by the SFO as the
'control model of liability', although it is plain that the
conduct for which corporates are to be held to account under the
existing and proposed legislation goes far beyond mere control.
What was striking, listening to some of the eminent speakers
around the room, was just how far apart the two schools of thought
are in their positions on corporate crime and accountability. On
the defence side, it is said that no conscientious board member is
going to hinge everything on the 'adequacy' of its
procedures and take the risk of defending a 'failure to
prevent' charge, if it can negotiate a DPA for the company
which brings the matter to a swift end. In general, listed
companies' share prices tend to take a hit when an
investigation is announced; when a DPA (whether with the US or the
UK) is concluded, shares often remain stable, or may even rise if
the final penalty is less than that originally provided for. So the
incentive to eliminate uncertainty is a powerful one, and the
commercial argument in favour of accepting a DPA is likely to
overpower those voices who feel that the company had done all that
it could and should stand by that.
Some go so far as to argue that criminal liability is not
necessarily appropriate in a corporate context, and that issues of
corporate wrongdoing, in most cases, should be a regulatory and not
a criminal issue. The call for evidence certainly seeks to take
existing regulatory regimes into account, but the most powerful
driver in this sphere is the vast sums of money the US Department
of Justice has extracted from US and foreign corporates alike,
occasionally requiring them to plead guilty to criminal offences
where previous DPAs are found to have been breached. It is this
model that the UK government and the SFO seek to emulate.
For the anti-corruption watchdogs, the DPA does not go far
enough. The fact that a corporate can escape public debarment by
accepting a DPA is not appropriate in an anti-corruption regime. In
their view, the corporate prosecution regime should act, not just
as a deterrent, but to punish corporate wrongdoing where corruption
has been proven. The political will is certainly with them; however
odd the new offences may appear to criminal lawyers, and however
much they may actually look like regulatory law, they are drawn as
criminal offences, and will be adjudged and sentenced in criminal
There is broad consensus for the idea that corporations should
be held responsible for corporate wrongdoing. The Criminal Finance
Bill – still going through Parliament – already expands
that notion substantially. But there is real concern that yet
further expansion may have unforeseen consequences. Nonetheless,
the government seems determined to press ahead. The call for
evidence closes on 24 March 2017.
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It was back in 1998 that Jack Straw, the then Home Secretary, asked the Law Commission to examine the law on fraud and whether a general offence of fraud would be an improvement to the body of criminal law.
The Fraud Act 2006, which represents the most radical change in the law of criminal fraud since the Theft Act 1968, came into force on January 15, 2007. We are now over a year into the new law, which seems a reasonable juncture to pose the question: has it had any impact?
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