Business Crime Update | Autumn 2016

Welcome to the second Osborne Clarke Business Crime Update.

Since the first Update was published in June, we have seen the UK’s second Deferred Prosecution Agreement involving XYZ Ltd, and more significantly the government has announced an intention to consult on a new corporate offence of failing to prevent economic crime. There appears to be considerable political traction attaching to the proposal, which would seem to fit squarely with the era of increased accountability heralded by Theresa May. We anticipate that the proposal will become law, perhaps as soon as 2017.

We expect the offence to mirror the existing corporate offence in the Bribery Act 2010 and thus to be strict liability in nature subject to an adequate procedures defence. The new law will represent a significant change in emphasis, and we therefore strongly encourage businesses to plan for this development by reviewing policies and procedures to ensure that any risk is appropriately addressed.

An analysis of the XYZ case is amongst the articles you will find in this Update, and is of particular interest as it appears to represent an attempt by the court to demonstrate through the sanctioning process that clear advantage and leniency can be obtained through companies self-reporting potential wrong doing and then fully co-operating with the authorities. The SFO in particular hopes that this will engender a new era of corporate responsibility. In our view, whilst XYZ is clearly a step in the right direction, more may yet need to be done to convince the corporate world that there are real benefits in self-reporting. We also examine in this Update the steps that a business should take when a potential offence is revealed by a whistleblower and how to prepare for a crisis.

XYZ has been anonymised by the court at the current time because two company directors are awaiting prosecution next year for linked corruption matters and the SFO does not want to risk compromising those proceedings. I represented the third director who was interviewed by the SFO but not prosecuted following detailed representations.

We also discuss in this Update developments in two other regulatory regimes. Like DPAs, Enforcement Undertakings for environmental offences are a relatively new tool by which businesses that decide to self-report may be able to avoid criminal conviction – if the regulator agrees that this resolution is in the best interests of justice. In the health and safety arena, the focus is on increasing levels of fines. A recent case in which a fine of £1.8 million was imposed, despite no harm actually having been shown to have been caused, provides lessons for other businesses on understanding and mitigating health and safety risks.

In this issue you will find the following articles:

• Failure to prevent economic crime: new offence to increase corporate liability for crime (read more)
• XYZ: SFO secures its second Deferred Prosecution Agreement (read more)
• Business crime and preparedness: practice makes perfect (read more)
• When the whistle blows: responding to an incident (read more)
• Enforcement Undertakings for environmental offences (read more)