Firms will face huge fines for failure to report economic crime, under measures being considered by the Government, the Coalition’s top legal officer said today.
In his maiden speech since his appointment as Attorney General in the July reshuffle, Jeremy Wright QC MP, 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 was viewed with widespread alarm in the 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 — the company was guilty of an offence even though the bribe was carried out by an employee, subsidiary, agent or third party.
Pretty much the only defence open to the organisation is to prove they had adequate procedures in place to prevent the bribe — otherwise they 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.
Today, however, Wright indicated the Government’s willingness to use the same section as a model for the new offence of “corporate failure to prevent economic crime”.
Wright also said the Government will shortly publish “the first national anti-corruption plan”. This reflects growing concern in Westminster that numerous scandals — particularly in banking — have come and gone, and no individual or company has been punished.
Wright singled out the rigging of Libor, saying the fixing of the interest rate was seen in some circles as a “victimless crime” because losses were borne by corporates or institutional investors.
But, he said, “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.”
That was just one example. Wright made it clear “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.
The City’s position as a global financial and business centre meant that the Government had a responsibility to play a leading role in tackling economic crime and corruption. It was, he said, “a priority issue for HMG”.
Steps had been taken in strengthening the law, such as the passing of the Bribery Act. But Wright intimated they were not enough, adding: “The evolving nature of economic crime means we need to continue to find and develop new ways to expose and combat it.”