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Corporate Crime
Over recent years, there has been a series of legislation that has sought to strengthen the framework in which corporate criminal liability is established.
Over recent years, there has been a series of legislation that has sought to strengthen the framework in which corporate criminal liability is established.
Three important pieces have sought to overcome the historical difficulty in establishing corporate criminal liability by creating specific corporate offences.
Prior to the Bribery Act 2010, a range of bribery offences existed in English law. The 2010 Act introduced a new corporate criminal offence for a ‘failure to prevent’ bribery by an associated party. The definition of associated parties is broad and can include third party intermediaries and agents. This adds extra layers of complexity for companies, who must be alert to the activities of 3rd parties outside of the organisation who supply goods and services.
Companies need to take a risk-based approach to how intermediaries are appointed and monitored. Regular monitoring and auditing must to be in place, with a robust reporting system to ensure that interactions between the company and any intermediaries are not falling foul of the Act.
Under the Criminal Finances Act 2017, businesses are now criminally liable if their intermediaries, agents or associated persons facilitate tax evasion by a taxpayer in the UK or overseas. These offences derive to a large degree from a similar corporate offence that was part of the Bribery Act 2010.
A business is required to take appropriate steps to prevent tax evasion, and these need to be proportionate to the overall risks to the business. In legal terms these are referred to as Reasonable Prevention Procedures (‘RPP’), and a defence can be mounted if a company is proven to have sufficient RPP in place to prevent and deter tax evasion. Many businesses are unaware of this requirement and, as a result, fall foul of it.
A company, or other organisation, can be found guilty of a corporate manslaughter if the way in which its activities were conducted or organised led to the death of an individual or individuals. It also needs to be shown that this represents a gross breach of a duty of care that is owed by the organisation to the deceased individual.
Prosecutions for corporate manslaughter are rare due to the high burden of proof that is required. The defendant needs to be a qualifying organisation who owed a relevant duty of care to the deceased person or persons. It has to be shown that there was a gross breach of duty by the organisation and the way in which its activities were managed by senior management played a significant role in the breach. This gross breach either caused or contributed to the death.
There is a wide range of possible prosecutions that fall under the broad definition of corporate crime. As well as the above, companies can also face criminal proceedings for a broad variety of other activities. This might include breaches of environmental regulations, modern slavery law fraud and money laundering.
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