Posted by Claus Andersen, Partner
On 1 September 2016 Withy King LLP merged with Royds LLP. The trading name for the merged firm is Royds Withy King. All content produced prior to this date will remain in the name of the firms pre-merger.
Businesses face sanctions over failure to prevent economic crime
The new attorney general, Jeremy Wright QC, has warned that businesses could have to pay substantial fines if they fail to prevent economic crime.
Jeremy Wright QC, who was recently appointed attorney general gave his first major speech since his appointment at an event at the Cambridge International Symposium on Economic Crime. In the speech he announced that the Government was considering creating a new criminal offence for businesses for failure to prevent economic crime.
The new offence would be modelled on section 7 of the Bribery Act which imposes a strict liability on businesses for failing to prevent bribery. Under section 7 of the Bribery Act businesses are liable for the actions of a number of its associates such as its employees, agents and subsidiaries. The only defence available to businesses is if they can prove that they had implemented “adequate procedures” to prevent bribery. Mr Wright also stated that the Government will shortly publish its first “national anti-corruption plan”.
The initiatives reflect a growing concern within the Government that a number of scandals for example within the financial industry have undermined confidence in the financial industry. In this context Mr Wright referred to the LIBOR scandal and stated that it was seen in some circles as a “victimless crime” because the loss was taken by corporates and institutional investors. However, the economic effect is a reduction of the value of the investments being made and a reduction in pension funds. The LIBOR scandal was just one example. Economic crime includes a number of activities which amongst others target individuals such as cyber crime and credit card cloning.
Mr Wright stressed that the City’s position as a global financial and business centre meant that the protection of this status was priority issue for the Government and that it would therefore take a leading role in tackling economic crime and corruption.
The Bribery Act was seen as important tool in that light, but it would not be the only measure, as Mr. Wright stressed that “The evolving nature of economic crime means we need to continue to find and develop new ways to expose and combat it”.
The significance of his comments is that Mr Wright states that the Government is prepared to model future legislation on the Bribery Act. This means that the Government is satisfied that the Bribery Act provides it with suitable sanctions. This also means that the Government takes the enforcement of the Act seriously. Otherwise, it would not consider using the Act as a model. Considering that the only defence available to businesses under the Bribery Act is putting in place adequate measures to prevent bribery, it is important for all businesses with activity in the United Kingdom to have put in place such measures. The practical effect of the Act is that businesses with activity in the United Kingdom should have an “Anti Bribery” policy. The speech of Mr Wright highlighted the importance of having such a policy.
If you have any questions about the bribery Act and Anti Bribery policies, please feel free to contact Claus Andersen on 020 7583 2222.
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