Corporate criminal liability: Response to law commission discussion paper

Bourton, Sam; Hall, Demelza; Johnson, Diana; Ryder, Nicholas

Abstract

This response identifies that there is an overwhelming consensus amongst law enforcement authorities, academics, and other stakeholders, that the identification doctrine frustrates the prosecution of corporations for economic crimes. This is because, while the identification and attribution of criminal intent may be straightforward in cases concerning small companies, prosecutors are often unable to perform this task when dealing with large, complex organisations. This response provides a plethora of examples of corporate perpetration or facilitation of economic crimes, which have gone unpunished owing to the identification doctrine. Accordingly, it is important to reform or replace the identification doctrine with a more expansive method of attributing liability to corporations who cause significant harm through their involvement in financial crimes.

This response demonstrates that the enactment of corporate failure to prevent bribery and the facilitation of tax evasion offences have provided a method to attribute responsibility to corporations for their involvement in facilitating these financial crimes - a formerly near-impossible task. Accordingly, there may be significant benefits in extending the failure to prevent offences to a wider range of economic crimes. However, this response also highlights the weaknesses in the operation of failure to prevent offences, including the lack of awareness on the part of businesses potentially affected and lacklustre enforcement efforts. This response also highlights the impact of failure to prevent offences on the labelling and signalling functions of the criminal law, identifying the issues caused when corporations are disingenuously charged with ‘failing to prevent’ an offence, rather than its active commission or facilitation. Therefore, this response welcomes the introduction of further failure to prevent offences, but suggests that this is not a complete solution.

This response also demonstrates the need to reform the identification doctrine through a comparison with United States (US) efforts to address corporate malfeasance in the realm of economic crime. The US respondeat superior doctrine provides for a much wider basis of corporate criminal liability than the identification doctrine and has led to impressive results in holding US and foreign corporations to account for a plethora of financial crimes. Accordingly, this response suggests that the US model of attributing criminal liability to corporations would provide a preferable model of attribution that the UK could adopt. However, there are dangers inherent in applying such a wide basis of liability as the respondeat superior model. Therefore, the US vicarious liability model should not be adopted without modification, such as the enactment of an associated due-diligence defence.

This response highlights the value in taking criminal, as opposed to merely civil, action against offending corporations. However, it is important to retain a comprehensive suite of civil penalties to tackle less egregious forms of corporate misconduct. Yet, the efforts of UK regulators to impose civil penalties on corporations involved in economic crimes have been inadequate, particularly when compared to the civil sanctions imposed by foreign counterparts. In this respect, this response advocates increasing both the number and type of civil penalties imposed on both offending corporations and their senior managers. This may include enacting legislation similar to the US Financial Institutions Reform, Recovery and Enforcement Act 1989, the introduction of behavioural and structural remedies similar to those available for the enforcement of competition law, and enhanced enforcement of the Senior Managers and Certification Regime.
Finally, this response identifies additional measures that can be taken to address corporate economic crime. These measures include increasing protection for whistle-blowers, as well as improving the confiscation regime to enable corporate offenders to be deprived of their proceeds of crime.

• Report Type: Research Report
• Online Publication Date: Aug 27, 2021
• Publication Date: Aug 27, 2021
• Deposit Date: May 24, 2023
• Pages: 1-35
• Keywords: Corporate criminal liability; Law Commission; Corporate liability
• Public URL: https://uwe-repository.worktribe.com/output/10734711
• Related Public URLs: https://www.lawcom.gov.uk/project/corporate-criminal-liability/