Failing to prevent economic crime By Michael Goodwin QC, Michelle Sloane, Aimee Riese [LAW GAZETTE]

April 15, 2019

Last December Lisa Osofsky, director of the Serious Fraud Office complained: ‘I can go after Main Street but I can’t go after Wall Street.’

Back in September 2014, the then Attorney General, Jeremy Wright QC MP announced that the government was considering proposals to create a new corporate offence of failing to prevent economic crime.

Winding the clock forward to 2017, the government finally consulted on the potential reform of the law for economic crime such as fraud when committed on behalf of or in the name of companies. The results are yet to be published but are expected this year.

Last year Sir Brian Leveson and Lisa Osofsky, amongst others, called for an extension to corporate criminal liability law and the creation of an all-encompassing failure to prevent fraud offence.

‘Corporate criminal liability’ is a term that describes the legal mechanisms by which companies – as separate legal entities distinct from their owners, officers or employees – can be held to account under the criminal law for wrongdoing.

Apart from strict liability and vicarious liability criminal offences, corporate criminal liability for fraud and economic crimes is currently determined using the well established and highly litigated identification principle. This is derived from common law rules. In the leading case of Tesco Supermarkets Ltd v Nattrass [1972] A.C. 153, the House of Lords ruled that the attribution of corporate criminal liability for offences requiring proof of criminal intent, is governed by a doctrine of general application. A corporation acted through living persons and that such a person properly identified would not be acting or speaking for the company, but as the company itself – thereby attributing criminal liability to the company. However this would only apply if the person concerned was a directing mind and will [‘DMW’] of the company. A criminal conviction of the company requires such a person, having been identified as a DMW, to have committed the guilty act while possessing the state of mind and intent required for the criminal offence to be proved.