Failure to prevent - "about-turn"


Plans for the proposed extension of corporate criminal liability were first mooted in 2012.   The initiative was driven by the frustration encountered by prosecutors as a result of the identification principle required to establish corporate criminal liability for many offences including fraud, money laundering and tax evasion. This principle has on many occasions meant that prosecutors faced too high a bar to bring a successful prosecution against corporates. 

Proposals were developed further when the UK Anti-Corruption Plan was published in December 2014 which explored the case for a new offence of ‘corporate failure to prevent economic crime’.  Despite the government's promises that corporates would be targeted with the extending of corporate crime legislation, the plans to review this area of law were unexpectedly halted in autumn 2015.  This abrupt change in the government's stance came much to the annoyance of the director of the SFO, David Green QC, who remarked:

"Existing legislation makes it difficult to prove criminal liability at the top of big companies… and the lack of corporate charges since the financial crash of 2008 is undermining public confidence."

The difficulty with proving the criminal liability of corporates largely remains the case today. However, in April 2016 the landscape changed again as the Government announced that they were reviewing corporate criminal liability laws.  A new offence of corporate failure to prevent tax evasion was expected to be legislated on this year, however these plans have been put back to allow for a further extension of the offence.

This story gives a clear indication that the current Prime Minister wants to promote a culture of corporate responsibility Ms May will be keen to show that the government will be tough on any companies who fall foul of the law.  It will also come as a welcome relief to prosecutors, in particular David Green QC.  

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Company bosses could be prosecuted for failing to stop their staff committing fraud under new laws being considered by ministers. The plans, which have yet to be officially unveiled, follow similar plans to make company boards liable if staff facilitate tax evasion. Prime Minister Theresa May has vowed to end "boardroom excess" and make tackling corporate crime a key focus. Downing Street said the government would announce its bill in due course. A new criminal finance bill will extend legislation and make employers responsible for preventing money-laundering, false accounting and fraud, The Times newspaper reports.
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