Tom McNeill and John Binns write for Reports Legal on Law Commission proposals on corporate criminal liability

Tom McNeill and John Binns write for Reports Legal on Law Commission proposals on corporate criminal liability

BCL senior associate Tom McNeill and partner John Binns write for Reports Legal analysing key points of the Law Commission’s options paper on corporate criminal liability.

Here is a short extract from the article*. If you wish to read the full article, please visit Reports Legal website.

Overview

While expressly not making recommendations but detailing options for reform, which the Government must decide whether to implement, the Law Commission identifies twelve options only one of which would maintain the status quo. The direction of travel was never in doubt: the options are aimed at making it easier to prosecute or otherwise sanction commercial organisations, most significantly by finding new ways to hold organisations liable for the misconduct of individuals.

The Law Commission’s exploration of options for reform was agreed to avoid ‘disproportionate burdens upon business.’ Nevertheless, the options are directed at dealing with misconduct carried out by and on behalf of organisations, a radical starting point which shows how much attitudes to corporate criminal liability have changed.

It used to be uncontentious that criminal liability only results from personal fault. With some qualified exceptions in the ‘regulatory’ sphere, we did not punish persons (legal or natural) in criminal courts for the misdeeds of others. The introduction of the first ‘failure to prevent’ (FTP) offence – under section 7 of the Bribery Act 2010, now over ten years ago – marked a sea change in approach in relation to economic crime, followed more recently with two offences of failure to prevent the facilitation of UK or overseas tax evasion under the Criminal Finances Act 2017 (CFA).

The Law Commission’s proposals lead further down that road, but also tackle the problem from the other direction, by proposing reform of the doctrine that determines whose acts and omissions can be attributed to the company for the purpose of determining criminal liability.

Reforming the identification doctrine

For corporations to commit ‘mens rea’ offences, that is offences that require proof of the relevant mental element such as knowledge or intention, it typically requires a directing mind, usually a director, to commit the offence which is then attributed to the company.

The Law Commission’s options paper identifies ways in which the ‘identification doctrine’ could be expanded so as to apply to ‘senior management’. This would include someone who is involved in taking decisions relating to the corporate policy and strategy and management of (i) the affairs of the company as a whole or (ii) a substantial part of it. The Law Commission clarified that this would not require the senior manager to have responsibilities across the whole of a company’s business: they would be a senior manager if their responsibilities involved taking decisions relating to corporate strategy and policy in a particular area – such as health and safety, finance, or legal affairs.

*This article was first published by Reports Legal on 20 June 2022. If you wish to read the full article, please visit Reports Legal website.

 

Tom McNeill is a senior associate at BCL Solicitors, specialising in corporate crime, financial crime and regulatory enforcement. His expertise includes internal investigations, corporate and director liability, corporate manslaughter, health and safety, fire safety, environmental protection, trading standards, and Coroners’ inquests, as well as all types of fraud, bribery and money laundering. He has conducted privilege-protected internal investigations on behalf of a range of corporate clients following fatal accidents and other serious regulatory breaches, and in relation to suspected financial crime.

John Binns is a partner at BCL specialising in all aspects of business crime, with a particular interest in confiscation, civil recovery and money laundering under the Proceeds of Crime Act 2002 (“POCA”). His business crime experience includes representing suspects, defendants and witnesses in cases invoking allegations of bribery and corruption, fraud (including carbon credits, carousel/MTIC, land-banking, Ponzi and pyramid scheme frauds), insider trading, market abuse, price-fixing, sanctions-busting, and tax evasion. He has coordinated and undertaken corporate investigations and defended in cases brought by BEIS, the FCA, HMRC, NCA, OFT, SFO and others.

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