News & what's on - Written by on Tuesday, November 12, 2013 14:37 - 0 Comments

Try harder. Politicians tell draftsmen to come up with tougher penalties for corporate crime.

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hammer and money boxPenalties for corporate crime, including bribery and fraud should be a percentage of turnover a committee of MPs has said.

In its response to the Sentencing Council’s recently-published draft guideline on the sentencing of fraud, bribery and money laundering offences, the Justice Select Committee said penalties for corporate offenders had to be “more meaningful”.

The committee was concerned rules proposed would “result in overly lenient sentences”.

“We would like the Sentencing Council to revisit their proposed approach to calculating sentences for corporate offenders, to ensure they pay a more meaningful penalty,” said Sir Alan Beith, committee chair.

“At the same time, we welcome many aspects of the new Guideline for sentencing offenders convicted of fraud and related offences, in particular the greater weight given to the harm caused to victims,” he said.

The Sentencing Council published its draft guideline in June and the consultation closed in the autumn. The document provides guidance on the sentencing of money laundering and bribery offences and other penalties for corporates and offenders involved in financial crime.

“The view was convincingly expounded [by invitees to a Justice Committee seminar] that it is unrealistic to concentrate on evaluating the amount of financial harm because, in many cases, such as bribery, corruption, LIBOR manipulation, and issuing of false prospectuses, this is impossible; it would lead to endless legal argument at every stage of the process; and in particularly complex and wide-ranging cases judges often try only a small part of an overall case to make it manageable, which would tend to devalue the total level of harm caused,” it said.

“The suggested alternative was to base sentences primarily on a percentage of turnover, as this would render them more meaningful. We agree that this would be a more appropriate means of penalising corporate offenders, provided that harm to victims, whether financial or otherwise, remains factored into the sentencing process as an aggravating factor where it is identifiable,”

The percentage of turnover should be “sufficiently high to supplement the primary deterrent factor of the risk of being detected”.

Opinion

The move to fine corporate a percentage of turnover for corporate crime would follow Competition law penalties and reflects a public appetite to mete out tough penalties to corporate offenders.  At the moment there is a perception in the UK that corporates are above the criminal laws applicable to mere mortals.

If the recommendations are followed then they represent another brick in the wall of the criminalisation of corporate law.  With the Bribery Act, Deferred Prosecution Agreements a move to impose similar criminal liability for failure to prevent fraud and meaningful penalties slowly but surely it appears the UK prosecutors tool box is proposed to be added to.

But.  It’s all about the money.  Actions speak louder than words. Government also needs to ensure that UK law enforcement is adequately resourced to investigate and root out corporate crime.

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