Lawyer Monthly Magazine - September 2021 Edition

49 SEP 2021 | WWW.LAWYER-MONTHLY.COM CORPORATE CRIME AND THE REGULATORY APPROACH response has been the extension of the regulatory approach to mens rea offences. Failure to prevent In 2010, the UK introduced a “failure to prevent bribery” offence which makes commercial organisations criminally liable if a bribery offence is committed by an “associated person” – a very broad term that could include sub-contractors or suppliers – so long as that person intended a business advantage for the organisation. There is no minimum level of culpability; the draft bill required proof of negligence, but that requirement was dropped. The only defence for the company is to show that it had adequate procedures to prevent such conduct. In other words, commercial organisations are made criminally liable if someone else commits an offence, subject to a defence which requires them to prove that they did all they reasonably could to prevent the offending. In 2017, a “failure to prevent the facilitation of tax evasion” offence was introduced, in similar though not identical terms. There is currently an ongoing Law Commission review which is considering extending the offence to other economic crimes, such as fraud, false accounting and money laundering. Deferred Prosecution Agreements Introduced in 2014, DPAs have dovetailed perfectly with the failure to prevent offence. Under a DPA, a prosecutor will lay but not proceed with criminal charges against an organisation, pending compliance with onerous conditions including a punitive financial penalty and measures to prevent future offending. Applying to various economic crimes, they incentivise corporates to self-report early and unreservedly, with a view to avoiding a criminal conviction and securing a quicker and more certain conclusion than a lengthy investigation and prosecution. With failure to prevent offences very difficult to defend – and in any event for reasons of commercial certainty – a number of organisations have pursued the DPA route. Nine of the 12 DPAs agreed to date have concerned bribery offences. Size of fines At the same time that the regulatory approach is being extended, punishments for regulatory offences have been significantly increased. One factor in these increases is that fines now much better account for the financial circumstances of the organisation – large companies can now expect large fines. The more fundamental change is that regulatory offences are now treated much more seriously, even when failings are merely systemic. There was a time when it was considered that the criminal law should not be concerned with companies trying to do the right thing. The Robens Report, which underpins the UK’s health and safety law, set out the reasoning: “The fact is – and we believe this to be widely recognised – that the traditional concepts of the criminal law are not readily applicable to the majority of infringements which arise under this type of legislation. Relatively few offences are clear-cut, few arise from reckless indifference to the possibility of causing injury, few can be laid without qualification at the door of a particular individual. The typical infringement or combination of infringements arises rather through carelessness, oversight, lack of knowledge or means, inadequate supervision or sheer inefficiency. In such Corporate criminal liability has been transformed beyond all recognition in the past 15 years