Failure to prevent economic crime fails to get off the ground

Justice minister Andrew Selous stated yesterday in an answer to a written question submitted by Conservative MP Byron Davies that the Ministry of Justice has decided to stop work on the lauded failure to prevent economic crime offence. Byron Davies had asked when the Justice minister expected that the new offence; which would strengthen corporate criminal liability, would be introduced.

Andrew Selous made it clear in his response that the principle of corporate criminal liability applies in the UK already and commercial organisations can be, and are, prosecuted for wrongdoing. The UK Anti-Corruption Plan had asked the Ministry of Justice to investigate the case for a new offence of a corporate failure to prevent economic crime and to examine the rules on establishing corporate criminal liability more widely. This was in response to the difficulties encountered in establishing corporate criminal liability through the identification or attribution principle.

Proponents of the plan to introduce the failure to prevent offence (which replicates the failure to prevent bribery offence under section 7 Bribery Act 2010) include David Green, the director of the SFO who asserted that this would equip the SFO to prosecute companies, not just individuals.

However in the response given by Andrew Selous, it is clear that part of the reason that this plan has been dropped is that there have been no prosecutions under the failure to prevent bribery offence.

Deferred prosecution agreements (DPA) were introduced in February 2014 to be used as an alternative to prosecution in respect of organisations charged with economic crime. If the bar to establish corporate criminal liability remains so high, a company may not feel compelled either to self- report or to negotiate a DPA.

Practical Law Morag Rea

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