Corporate Sentencing

The Sentencing Council last month published a Guideline for sentencing in fraud, bribery and money laundering offences committed by corporate offenders. It is said to be effective from 1 October 2014, but will no doubt be referred to in the mean time if any large corporates are successfully prosecuted because, as Lord Justice Treacy has pointed out, there have been very few prosecutions of corporations, and certainly not enough to form the basis of a recognisable tariff system. Treacy LJ also makes the point that the guideline was created 'as part of a package to support the introduction of Deferred Prosecution Agreements', while curiously at the same time not being part of the DPA Guidelines. Make of that what you will, but one can be fairly sure that the guideline will be used by both sides in submissions about sentence during the course of DPA negotiations.

Fixing the level of financial penalties for trading corporations in criminal cases is not rocket science. It is easy enough to compile a list of 'aggravating factors' - previous bad conduct, long-running fraud, failure to take proper steps to prevent misconduct, serious detriment to third parties - and of mitigating factors - the opposite of those just mentioned - and to set out a means of calculating levels of fine by reference to profit or gain resulting from the illegal conduct. The Judge must take account of the impact a large financial penalty, which may include compensation and confiscation as well as a fine, may have on a business. This impact may be so great as to put the firm into liquidation, and the Guideline states that in some cases this might be appropriate. However, the more likely scenario is that a large corporate, being prosecuted for bribery or money laundering, will receive a fine which will seek to punish, deter and remove gain, by (a) being proportionate, (b) being substantial enough to have a real economic impact which 'will bring home to both management and shareholders the need to operate within the law', and (c) avoiding any unacceptable harm that may be caused to third parties.

The process, however, carries with it a number of practical difficulties, and problems may arise in two main ways.

First, while punishing trading corporates whose profits have been swollen by illegal activity is unlikely to cause serious argument, problems may arise in dealing with public bodies, health trusts and charities, which are specifically mentioned in the guideline. Any...

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