UK eyes corporate fraud clampdown

UK ministers are examining whether to expand laws to make companies criminally liable if they fail to prevent fraud and other financial crimes, the solicitor-general confirmed on Tuesday.

Oliver Heald said ministers will decide whether an official review is warranted into a widening of corporate criminal liability as part of a wider cross-governmental review of the UK’s financial-crime-fighting architecture, first reported in the Financial Times.

A report will be published during the next few weeks, he added.

The director of the UK’s Serious Fraud Office, David Green, has for the last year called for a broadening of Section 7 of the Bribery Act, under which companies can be prosecuted, facing an unlimited fine, if they fail to stop their employees paying bribes.

A statutory defence to the allegation is that a company has so-called adequate procedures to guard against corruption.

Mr Green has pushed for this to apply to all financial crimes including fraud and money laundering, not just bribery.

“To have a duty on a company to have good procedures in place seems to be an attractive option,” Mr Heald said today at an anti-corruption conference in London.

He also defended funding of the SFO, which has seen its budget slashed from £52m in 2008 to £36m this year, arguing that the agency had the ability to ask the Treasury for additional “blockbuster” funding to undertake investigations if necessary.

The SFO has successfully applied for such funding for its probes into the alleged manipulation of Libor, into alleged overseas bribery by Rolls-Royce, and into Barclays’ arrangements with Qatar during the bank’s 2008 emergency cash call.

But Mark Pieth, the former head of the working group on bribery at the OECD – which pushed the UK to introduce the Bribery Act in the wake of the curtailed investigation into BAE Systems – criticised the system of blockbuster funding.

“This does not really match the system of a separation of powers if you have to beg for money to run a case,” he told the same conference.

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