BCL’s Anoushka Warlow and Suzanne Gallagher write for Law360 examining the impact of diversity at senior management and board level — and an organisation’s culture and values as a whole – for reducing the risk of corporate wrongdoing, particularly fraud.
Here is a short extract from the article*. If you wish to read the article in full, please visit Law360.
”The collapse of SVB Financial Group earlier this year catapulted boardroom diversity back onto the agenda, generating headlines on the front pages and prompting viral hot take tweets.
The bank’s demise was met with inferences from certain quarters that the failure of the financial institution may in part be attributed to its focus on diversity and inclusion, with one commentator from the Wall Street Journal suggesting “the company may have been distracted by diversity demands.”
The Economic Crime and Corporate Transparency Bill, currently navigating its way through the Houses of Parliament, proposes reforms that will have significant implications for how corporate wrongdoing is investigated and prosecuted in the U.K.
Included in the bill is a new “failure to prevent fraud” offense that will seek to hold organizations criminally liable where they fail to have in place reasonable procedures to prevent fraud.
With the bill to be considered again once the House of Commons returns from summer recess, it is possible that it will receive royal assent by the time the House rises for Christmas. We may therefore see the new corporate criminal offense of failing to prevent fraud as law in force sooner rather than later.
Coupled with an increased focus on fraud prevention by enforcement authorities in the U.K., the implantation of this new offense is indicative of a shift in the expectations placed on leadership teams when it comes to mitigating the fraud risk within their organization.
With that in mind, and as set out further below, ignoring the impact of diversity at senior management and board level — and the organization’s culture and values as a whole — may be a mistake.”
*This article was first published by Law360 on 07 August 2023.