Partners quoted in ‘Thomson Reuters Regulatory Intelligence’ on criminal liability in firms

Partners Polly James and David Rundle were quoted July 17 by Thomson Reuters Regulatory Intelligence (subscription required) on firm liability for manager misconduct, and the need for firms to review their processes for scrutinizing appointees and existing staff. An amendment to the Economic Crime and Corporate Transparency Bill (ECCTB) will make it easier to convict corporate bodies and partnerships of specified economic crimes committed by senior managers. "The change in the law will certainly make it easier for authorities to prosecute corporates for economic crime," Polly said. "As it stands, the common law identification doctrine, through which the acts of individuals can be attributed to companies, is limited to the acts of persons who are the controlling mind and will of a company. The definition of 'senior manager' under the Bill is wider." The ECCTB also creates a corporate offence of failing to prevent fraud, similar to existing offences of failing to prevent bribery or tax evasion. It will operate differently to the "attribution of liability" clause, David noted. "The failure to prevent fraud offence is entirely distinct," he said. "The company is not criminally liable for the underlying fraud, but it is liable for failing to prevent [fraud] by not having reasonable procedures in place. The company itself has the burden of proving that its procedures were reasonable."