Here’s an extract from the article:
The director of the UK’s Serious Fraud Office, Lisa Osofsky, has called for a review of the UK’s rules on corporate criminal liability, to make it easier to convict corporates for the actions of people who work for them. To illustrate the point, she has pointed to the case of Barclays’ payments to entities associated with the government of Qatar in the 2008 financial crash. The SFO’s attempts to prosecute Barclays itself, and various executives involved, ended spectacularly earlier this year, with a jury taking just one day to acquit the individuals. So, is this really the best case to show why and how the law needs to change?
Corporates and crime
From Ms Osofsky’s perspective, the root of the problem is that for a corporate to be guilty of a crime under UK law, it will usually be necessary to show the guilt of an individual who was a ‘controlling mind’ of that corporate. This contrasts with the position under US law, where (broadly speaking) a corporate is vicariously liable for the acts of any individual who has apparent authority to act for it. The UK has a number of exceptions, most notably under the Bribery Act 2010, where a corporate can be liable for bribes paid by an ‘associated person’, unless it can show that it had ‘adequate procedures’ to prevent such an act.
The Barclays case
In the Barclays case, the payments to the Qataris, for unspecified services, were negotiated alongside a crucial investment deal by the indicted executives, and both the deal and the payments were then signed off by committees of its board. This followed advice from its lawyers, who said that the payments were lawful, provided that services of some value had been provided. The SFO’s case was that the payments disguised secret commissions, over and above those disclosed to the market, in return for crucial investment in the bank. They made no criticism of the Qataris, the committees, or the lawyers, but prosecuted the executives on the basis that they knew there had been no services, and two Barclays companies on the basis that the executives were their ‘controlling minds’.
Why did the case collapse?
The first defeat for the SFO in the case came with a ruling, confirmed by the Court of Appeal, that, even taking the SFO’s case as its highest, assuming the executives were guilty, there was no case for the corporates to answer – broadly speaking, although the executives had been given authority to negotiate the deal with and payments to the Qataris, it was not they but the committees that had the authority to sign them off and, indeed, that had done so; therefore, the executives were not the ‘controlling minds’ for these purposes.
Further issues emerged in the course of a second confirmed ruling, in which the case of one executive was dismissed, but the SFO chose to plough on. When the remaining executives were acquitted, few lawyers practising in business and financial crime were surprised. Obtaining convictions against people for a deal with legitimate counterparties, on which lawyers had advised, and which their company had institutionally approved, was never going to be an easy task.
This article was originally published Fraud Intelligence on 17/10/20. You can read the full version on their website.