The Bribery Act 2010 introduced a criminal offence for companies of ‘failure to prevent bribery’ by persons associated with the company.
The success of this offence has led to calls for new ‘failure to prevent’ offences – and one may be round the corner. Companies should prepare for this now – given how broadly the last Bribery Act offence was drafted, all areas of the property sector are likely to be affected.
The Bribery Act offence marked a dramatic shift in corporate criminal liability, as this was effectively a strict liability offence. The only defence to the charge is if a company can demonstrate it had ‘adequate procedures’ in place to prevent bribery by an associated person, which is defined broadly – not just employees but also agents, subcontractors and joint ventures.
Importantly, prosecutors no longer have to prove that a senior individual at the company was involved in the bribery as the company’s ‘directing mind’, which has historically bedevilled successful convictions.
The impact of the ‘failure to prevent bribery’ offence can be seen in the successes that prosecutors such as the Serious Fraud Office have obtained. As a result, many companies strengthened and updated their anti-bribery and anti-corruption procedures.
The Economic Crime and Corporate Transparency Bill going through Parliament offers an opportunity to introduce such offences.
While there has been talk of a potential general ‘failure to prevent economic crime’ offence, it appears that a narrower offence of ‘failure to prevent fraud’ by persons associated with a company may be introduced.
When investigating, prosecutors will look at the ‘top level commitment’ of implementing and enforcing such procedures: is the board committed to fostering a culture in which fraud is never acceptable? If a company is guilty of such an offence, then the consequences are likely to be similar to those for failing to prevent bribery.
Companies will, therefore, need to pay close attention to the scope of the potential new offence, and take the necessary steps to ensure they do all they can to minimise the risk.
Chris Roberts is counsel at global law firm Mayer Brown