Corporate Criminal Liability For Economic Crime: Regime Consultation Begins

The UK Government begins its consultation for potential changes to law on corporate criminal liability for economic crime

The UK government has issued a call for evidence to academics, business, civil society, lawyers and other interested parties across the UK to consider whether there is a case for changes to the regime for corporate criminal liability for economic crime in the United Kingdom. The call to evidence, which remains open until 24 March 2017, notes in the introduction that "corporate economic crime is serious offending that causes harm to individuals, businesses and the economy at large. It needs to be addressed effectively".

The crux of the issue is the so called "identification principle" in English law, which provides that (other than in relation to strict liability offences) a company can only be criminally liable where the offence can be attributed to a person who was the "directing mind and will of the company". This has made it notoriously difficult to successfully bring criminal proceedings against UK companies, particularly large multi-national businesses. The Bribery Act 2010 introduced a potential new way of attributing liability to companies; section 7 of the act provides that a company will be guilty of an offence if it fails to prevent bribery. The company may have a defence if it can show that it implemented procedures designed to prevent bribery. A similar "failure to prevent" model will be included in the forthcoming Criminal Finances Act as a way to prevent tax evasion.

The consultation paper explores in depth the corporate "failure to prevent" model, and presents a number of options for potential reform of the law:

Amendment of the identification doctrine - This option would involve abolishing the current common law and create a new version of the identification principle in legislation, for example by broadening the scope of those regarded as a directing mind of a company. Strict (vicarious) liability offence - This would make the company guilty, through the actions of its employees, representatives or agents, of the substantive offence, without the need to prove any fault element such as...