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Dropped

3 December 2015

Aziz Rahman explains why the dropping of plans for an offence of failing to prevent economic crime is no excuse for making prevention a low priority.

The government has quietly dropped plans for a new corporate crime offence. But this cannot be seen as a reason to be complacent about business crime.

Monopoly board

In a written reply to Conservative MP Byron Davies, Justice Minister Andrew Selpous revealed that the government is no longer seeking to create an offence of “failure to prevent economic crime” such as fraud and money laundering. The minister explains in his reply that there is little evidence of corporate economic wrongdoing going unpunished. Some may disagree but the fact that the issue was being considered indicated that the government's antennae are attuned very closely to the need to combat business crime.

Support
The idea for a new offence was revealed by Jeremy Wright in his first speech as Attorney-General and had the support of Serious Fraud Office (SFO) Director David Green as well as many politicians. In the UK Anti-Corruption Plan, published in December 2014, the Ministry of Justice was committed to bring forward proposals on the new offence by June 2015. Mr Green had said that the change would make it easier for the SFO to bring charges against companies. According to him, the proposed new offence would have meant that the SFO would be “properly equipped to prosecute corporates rather than individuals”.

Some commentators have said that dropping plans for a new offence are a public embarrassment for Mr Green. But it certainly does not mean that the SFO is facing an uphill battle to prosecute companies. And it would be wrong for anyone to think that the lack of a new offence gives an unofficial green light to wrongdoing. For example, if the SFO proves itself adept at bringing successful prosecutions under the existing failing to prevent bribery offence – Section 7 of the Bribery Act – then the appetite for further legislation may increase.

Investigation
Having represented companies and individuals in national and international cases involving hundreds of millions of pounds, we can say with authority that one more offence not being introduced cannot be seen as a reason to sigh with relief. Our advice, as it has always been, would be to seek immediate, expert legal help at the very slightest hint that you or your company or organisation is under investigation by the authorities.

Risk assessment

There may be no offence of failing to commit economic crime. But there are plenty of business crime offences on the statute books that the likes of the SFO, Financial Conduct Authority (FCA), National Crime Agency (NCA) or other organisations can and will use to prosecute those they believe to be guilty of wrongdoing.

The issue for business now is how those organisations react to this development. We mentioned at the top of this article that the fact there will be no new offence should not be regarded as good news for businesses who pay little or no attention to the law regarding economic crime. If we consider crimes such as bribery and money laundering, recent years have seen legal changes that give the SFO and other agencies greater scope to prosecute.

Responsibility
This greater scope places an increased responsibility on companies to examine the potential for fraud or other economic crime under their roof. Regardless of whether the proposed new offence ever becomes a reality, senior figures in any business or organisation should always be aware of the need to prevent economic crime being committed by either their staff, clients, third parties and anyone else acting on their behalf. Business crime does not develop in a vacuum.

The conditions have to be right for it. If the workplace has policies in place that have been devised after identifying the potential for crimes such as fraud, theft or money laundering then the risk of such offences being committed will be severely reduced. If a company has a well-designed and implemented whistleblowing policy then it is likely that wrongdoing will be deterred – and if it does still go on then it is much more likely to be identified early.

The idea of such policies may sound logical and relatively simple to implement. But it is clear that such policies are either not being introduced or being introduced yet not enforced. At a time when it is claimed that fraud is costing the UK’s National Health Service £5.7 billion a year – which is more than £1.5 million a day – the argument that the authorities will take a lax approach to preventing economic crime simply because the new offence has not been created seems incredibly naïve. Economic crime is at the top of the authorities’ agenda. And they want to do something about it.

New powers
The government knows there is a public appetite to tackle the planning and committing of economic crime. David Green’s SFO, HM Revenue and Customs (HMRC), the FCA, NCA and a variety of other national, as well as international, agencies have acquired either new powers or the promise of extra resources in recent years to tackle economic crime.

Bearing this in mind, the company that believes it can turn a blind eye to – or even quietly encourage – wrongdoing in its name is taking a risk that is becoming greater by the year.

At Rahman Ravelli, we examine the way companies and other organisations function. We then identify the areas where there is potential for economic crime and work with the company or organisation to create a policy and working practices that can remove the potential for economic crime to be committed. Companies should never have to feel out of their depth when looking to remove the possibility of business crime from their enterprise.

The right legal experts will be familiar with the way the enforcement agencies set about their enquiries: how they compile evidence, what evidence they are looking for, which individuals they are likely to question and how they will question them. Such knowledge is used to make sure that any company workplace policies prevent crime – or at least identify it as swiftly as possible – and ensure that all the information that investigating authorities may demand is available.

Such an approach is vital now, regardless of whether a new offence has or has not been created.


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