A minister has called for a long-awaited new law to be brought forward, which would facilitate the prosecution of big corporations for major economic crimes be brought forward.
Amid concerns that the law had been shelved, solicitor general Robert Buckland told The Independent that there is a strong case for a new corporate offence of “failing to prevent economic crime”, and that it was time to set it in statute.
A consultation into the idea finished a year ago, but little has been heard of it since. Other sources in Government suggest the plans have faced fierce resistance from some business and legal groups.
Currently the Serious Fraud Office has to prove there is a “directing mind” at senior board level at a business accused of a major economic crime – like the manipulation of interest rates, for example – to prosecute the company itself.
Under the change Mr Buckland is aiming for, companies could simply be held liable for failing to detect and prevent economic crime in the first place.
The minister said: “There is a strong case for the creation of a new corporate criminal offence of failing to prevent economic crime.
“This Government has already brought offences of failing to prevent bribery and tax evasion into force, and I believe that we should now go further.”
The proposal for a consultation on the new offence was announced by David Cameron in May 2016, with a call to evidence finally kicked off last year.
The need for change was underlined in 2015, when US prosecutors hit American banks with hundreds of millions of dollars in fines for manipulating benchmark interest rates, while UK officials only secured convictions of some mid-level traders.
There is also precedent for the approach, with the 2010 Bribery Act meaning companies can be held liable for failing to take steps to prevent bribery.
But despite that and the consultation on the new law having finished in March 2017, no visible progress has yet come out of Whitehall.
One Government insider told The Independent: “There is a big argument going on over this. On one hand you have people saying you absolutely have to do this.
“On the other hand businesses are not happy, they say they have already been left having to cope with bribery act and the extra bureaucracy that comes with that.
“It’s meant it has been difficult to move forward, despite there being some political will to act.”
A law introducing a corporate offence of “failing to prevent economic crime” would mark a significant change, and mean some more compliance planning for companies and individuals.
Asked to comment on the consultation, the CBI said it had not taken part but that “economic crime is never acceptable” and that “financial misdemeanours put a clear dent in a company’s prospects”.
Meanwhile, a spokesperson for the Law Society said: “The UK already has in place strong criminal and regulatory regimes which support its international reputation as an attractive place in which to do business.
“There is no evidence the current legal framework is not fit for purpose. It is unclear what creating a new offence would achieve in deterring criminal behaviour.”
The society, representing solicitors in England and Wales, added that it believed a more effective approach would be to give law enforcement agencies the necessary resources to enforce existing rules.
A Ministry of Justice spokesperson said: “We have been clear that companies must be held to account for the criminal activity that takes place within them.
“We will issue our response to the call for evidence in this area in due course.”