Proposals to extend to a broad range of economic crimes a version of the corporate failure to prevent offence in the Bribery Act 2010 have been gaining in momentum over the last few months. First proposed by the Director of the Serious Fraud Office last year, it seems to be an idea whose time has come with the recent revelations about HSBC’s Swiss subsidiary. Deferred Prosecution Agreements and sentencing guidelines already assume a commonality in corporate offending across the offences such as bribery, fraud and money laundering. To bring the substantive law of corporate attribution in line would be rational and effective.

The Bribery Act 2010 introduced a specific mode of liability for commercial organisations. They are now liable for conduct that would amount to bribery offences by their employees and agents unless they can show that they have in place "adequate procedures designed to prevent" bribery. This represents a significant departure from the common law identification principle which severely restricts corporate liability and takes the UK closer to the respondeat superior approach in the federal courts in the US. Since then Deferred Prosecution Agreements for bribery and a range of economic crimes, including fraud, tax evasion, and money laundering, have been introduced. The Sentencing Council published definitive guidelines for this range of offences in 2014. As the lead prosecutor for these offences, the Serious Fraud Office has suggested that the section 7 model be applied more widely, creating in effect a corporate offence of failing to prevent acts of financial crime by associated persons. In the words of SFO Director, David Green, “Such a change would greatly increase the SFO's reach over corporates in appropriate cases”.

The Government’s Anti Corruption Plan published in December 2014 assigned to the Ministry of Justice the task of examining the case for such an offence and to look at the rules on establishing corporate criminal liability more widely. In describing the UK’s anti corruption legal framework as “now widely regarded as state of the art”, the Plan firmly endorses the Bribery Act’s innovative corporate offence. This has been accelerated and impetus added following the revelations in February 2015 that HSBC’s Swiss subsidiary private bank helped wealthy clients evade tax. The Chief Secretary to the Treasury, Liberal Democrat Danny Alexander, announced that proposals to criminalise “corporate failure to prevent economic crime” would be a key part of his party’s election manifesto. Questioned about this in the House the following day, the Chancellor of the Exchequer, George Osborne, said ‘[T]he Chief Secretary referred to a policy that the Treasury has been considering for the purposes of the Budget, involving the penalties that should be paid by those who actively facilitate tax evasion.’The plans, which he said would target accountants, banks and lawyers, would make those who facilitate tax evasion liable for fines the same as evaders themselves.

Corporate economic activity is transnational and it follows that economic crime is an international as well as a national problem. The spread is however not an even one. The world’s biggest multinational corporations are disproportionately located in the United States and Europe. Corporate activity, both licit and illicit, utilises complex corporate structures, subsidiaries, agents and intermediaries. Corporations are not comparable with the activity of private individuals although of course they operate through and for them. This is why a specific approach to them is required in ensuring that they act within and not beyond law.

One objection is that this would this be simply adding to the already very fat catalogue of criminal offences. But this would misrepresent what is in fact a mode of liability for existing offences.

Another objection is that it would add to the ‘burden’ on business. But section 7 of the Bribery Act 2010 which provides the model here was introduced in recognition of the fact that bribes are paid to gain business and it is commercial organisations which benefit from the profits of such business. At the same time, this undermines the operation of competitive business. What is good for one entity may well be bad for another. There is no monolithic ‘business interest’ as Ha Choon Chang powerfully argues in a recent Opinion piece in the Guardian: ‘Being pro-business doesn’t – and shouldn’t – mean leniency towards illegal or semi-legal activities by business people and companies, …being soft on rule-breaking businesses is anti-business. When some corporations and business people do not pay their fair shares of taxes, they are increasing the tax burdens of other members of society, including other businesses. When unscrupulous business people break the basic rules of competition, whether it is rigging foreign exchange markets or not paying the minimum wage, they are hurting the rest of the business community.’ Source.