News & what's on - Written by Barry & Richard on Wednesday, June 26, 2013 23:55 - 0 Comments
Big fines on the way? Proposed UK Corporate penalties take a leaf out of the US sentencing guidelines.
The proposals are contained in a document running to 130 pages which deals with proposed sentencing guidelines for fraud bribery and money laundering offences.
While the guidelines themselves are not a guide for the level of financial penalty in Deferred Prosecution Agreements they will be used to inform the level of financial penalty which may form part of a DPA. This is a distinction which will be lost on many and rightly so.
To all intents and practical purposes these guidelines, when finalised, will drive the financial penalties in Deferred Prosecution Agreements in the UK.
For individuals the guidelines take into account a range of factors. The proposals include a useful example which could prove sobering to executives:
For corporates there is more than a nod to the US sentencing guidelines with the use of a multiplier the lowest of which is 20% and the highest of which is 400%. The consultation notes:
“The use of a multiplier applied to a harm figure is broadly based on the US system of determining fines for corporations where the range of multipliers is .05% to 4.”
The proposed guidance notes that it is intended that for corporations:
“Any fine must be substantial enough to have a real economic impact which will bring home to both management and shareholders the need to operate within the law. Whether the fine would have the impact of putting the offender out of business will be relevant; in some bad cases this will be an acceptable consequence.”
This is tough talk.
Hard pressed ethical UK (and other) business need a level playing field. Not one skewed by under the table deals which rig the markets against them.
But tough talk alone is not enough.
Numerous surveys and anecdotal evidence point to a wait and see attitude among some businesses who take UK threats of criminal law enforcement in fraud cases with a pinch of salt. This manifests in a lack of systems and controls to prevent fraud (including bribery) and in some cases a devil may care attitude.
Against a backdrop of an austerity program with law enforcement struck with swinging cuts, a continuing lobby to try to water down the Bribery Act and a lack of any visible enforcement against corporates for Bribery Act violations in the two years since its entry into force – this is understandable.
But it is a mistake.
The criminalisation of corporate law in the UK continues. In answer to the question will the bite match the bark of the British Bulldog? We expect some chunky fines and other penalties.
A copy of the consultation document is embedded below.