UK companies would face substantial fines for failure to report economic crime, under measures being considered by the UK coalition government, according to its top legal officer.
In his maiden speech since his appointment as attorney general in July, member of parliament (MP) Jeremy Wright QC told the Cambridge International Symposium on Economic Crime that “officials are considering proposals for the creation of an offence of a corporate failure to report economic crime, modelled on the section 7 Bribery Act offence”.
That section of the 2010 legislation alarmed many in the UK business community since it became a strict liability offence for a company to fail to stop bribery on their behalf.
It was also one of vicarious liability as the company was guilty of an offence even where the bribe was carried out by an employee, subsidiary, agent or third party. The onus fell on the organisation to prove that it had adequate procedures in place to prevent the bribe or otherwise face an unlimited fine.
When the Bribery Act became law, firms objected to section 7, saying it was unfair, too heavy, and put the onus of proof onto them. However, Wright indicated that the government is ready to use the same section as a model for the new offence of “corporate failure to prevent economic crime”.
He also said the government will shortly publish “the first national anti-corruption plan”, reflecting ministers’ concerns that several corporate scandals – particularly in the banking sector – have been exposed without any individual or company being punished.
Wright singled out the rigging of the London interbank offered rate (Libor), saying the fixing of the interest rate was seen in some circles as a “victimless crime” as losses were borne by corporates or institutional investors.
But, he added, “ultimately the losses will fall on members of the public, by reducing the value of investments and pension funds, or increasing the prices people pay for goods.”
Wright added that “economic crime encompasses a wide range of unlawful activities, much of which is targeted directly at individuals”. That would include cyber-crime, and cloning credit cards.
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