The 10e In June, the Law Commission launched its options paper which outlines a number of ways in which corporate criminal liability law could be reformed. The detailed document, accompanied by a 14-page summary document, outlines potential options for reform in this area and rules out other possibilities as unsustainable.
In 2017, the Department of Justice launched a call for evidence on the issue of corporate liability, with the results of this consultation considered inconclusive. In November 2020, the Law Commission was instructed by the government to take a closer look at this issue. The project included a consultation process, with a discussion paper released last year posing a number of questions and further engagement from stakeholders. (See our related blogs[A1] :
The review of the Commission, as indicated in the document, was agreed to review “the challenges facing the criminal justice system under current corporate criminal liability law,” while avoiding “disproportionate burdens for businesses”. This culminated in the Law Commission’s options paper launched last week.
The Fraud Lawyers Association’s annual conference, organized jointly with the European Fraud & Compliance Lawyers Association, was the platform for this launch, and I was very pleased to welcome Professor Penney Lewis (criminal law) and the Professor Sarah Green (Commercial and Common Law). ) when submitting this article. We heard that the options focus on assigning criminal liability to corporations, extending “failure to prevent” offenses to fraud, as well as addressing failure to prevent human rights violations. the man and two other low profile offences. The liability of directors and senior management is taken into consideration, as well as the possibility of maintaining the status quo by retaining the current principle of identification (option 1). In terms of potential outcomes or penalties, attention is given to the sentencing of non-natural persons and some civil options. The full list, as defined by the Law Commission, is detailed below.
OPTIONS as set out in the Law Commission document:
1. Maintain the current general rule of criminal liability applied to legal persons – the “identification doctrine” – as it stands.
2. Authorize the attribution of conduct to a corporation if a member of its senior management engaged in, consented to, or connived at the violation. This could be written in such a way that CEOs and CFOs are always considered part of the senior management of an organization.
3. Introduce an offense of failure to prevent fraud by an employee or agent. This would apply where the company has not put in place appropriate measures to prevent its own employees or agents from committing a fraud offense for the benefit of the company.
4. Introduce an offense of failure to prevent human rights violations.
5. Introduce an offense of failing to prevent abuse or neglect.
6. Introduce an offense of failure to prevent computer misuse.
7. Make available publication orders (requiring the offending company to publish details of its conviction) in all cases where a company is convicted of an offence.
8. Introduce an administratively imposed pecuniary penalty regime.
9. Bring civil actions in the High Court, based on the Serious Crime Prevention Orders, with the power to impose pecuniary penalties.
10. Introduce a reporting obligation obliging large companies to report on anti-fraud procedures.
It is important to note that this is a set of options and not, as is the case with some law reform projects, a set of recommendations. It is now up to the government to decide which of these options to pursue, which will involve further consideration and is likely to take some time. Any reform should be accompanied by detailed guidance to ensure that obligations and expectations are well understood. However, the release of this options paper maintains a strong focus on corporate behavior and compliance, and we can expect to see further progress on this topic in the months and years to come.