Campaigners have accused the UK government of kicking plans to crack down on companies involved in fraud and other economic crimes “into the long grass” four years after ministers proposed reforming the law.
The justice ministry on Tuesday asked the Law Commission to draw up proposals to make it easier to convict companies of financial crimes. But lawyers questioned why it had taken so long to act after then justice secretary Dominic Raab in 2016 announced plans to overhaul the legislation.
The law around corporate liability is considered one of the biggest obstacles to tackling economic crimes, which the Treasury select committee estimated last year cost the UK “tens of billions of pounds, and probably . . . hundreds of billions” of pounds.
The report by the committee said the law was “manifestly unfair”, and “weakens the deterrent effect a more stringent corporate liability regime may bring”.
Although companies can be convicted of bribery and tax evasion under a “failure to prevent” offence, it is far harder to secure corporate convictions in other financial crimes, including fraud, because prosecutors must find a “directing mind” — usually a senior executive — to hold it criminally liable.
White collar crime lawyers and campaigners said the government’s move to only now ask the Law Commission to look at possible reforms would further delay urgent change.
Susan Hawley, director at campaign group Spotlight on Corruption, said there was “a real danger that this decision kicks reform into the long grass, and will result in corporate impunity for large banks and companies for several more years”.
Barry Vitou, a partner at US law firm Greenberg Traurig, welcomed the approach to the Law Commission but said it was “long overdue”, pointing out that the government had first issued a call for evidence in 2017.
In a statement the justice ministry defended its approach and said the call for evidence had “showed strong feelings on a range of issues with no clear consensus on how to proceed”, which meant “further investigation was required”.
Successive governments have come under pressure to update the UK’s criminal corporate liability rules over the past decade.
In 2013, David Green QC, then director of the UK Serious Fraud Office, called for changes so that companies could be held to account for failing to prevent any kind of economic crime, not just bribery.
It was one of a series of proposals examined by the attorney-general’s office the following year and led to the justice ministry promising to consult on the matter. But the plans were quietly shelved shortly after the Conservatives’ victory at the general election in May 2015.
Last year the topic was pushed to the top of the agenda following the acquittal of three ex-Barclays bankers for fraud. At the time Mr Green — now a senior law firm consultant — said corporate criminal liability laws were hampering convictions.
In March 2019 a letter written by a cross-party group of MPs said there was “no real legal mechanism for holding large institutions criminally to account”.
The Law Commission said it would publish an options paper late next year and was willing to work with government on further steps.