White Collar crime: Government initiative targets Directors

14 Sep 2016

Company Directors may find themselves in the criminal dock under new government initiatives.

For a long time now, we as civil lawyers have been well used to advising our company clients that acts of directors will almost always have civil law consequences for their companies. For a long time now we have sought to spell out to directors how the actions of senior executives can bind the company. The questions of executives below board level having real or apparent authority are well know to careful directors. Policies and procedures are put in place to ensure that “accidents” are minimised. Employment lawyers are well versed in the rules under which the company can be held liable for the actions of even their most junior employees and workers: "vicarious liability".

What the government announced today though, is rather different. The proposals announced by HMG yesterday would, if and when enacted, make directors criminally liable for variety of financial offences: money laundering and bribery. The, ahem, interesting part is that directors could be liable for the actions of all employees of the company engaged in these activities. This brings UK law very much in line with that of our US friends. What could possibly go wrong? In effect, under these proposals, the Libor manipulation trials of last year, could have ended in criminal prosecution of the directors of the company(ies) of the employees concerned.

The proposals are championed by Jeremy Wright QC the Attorney General, and has the strong support of the PM in her drive to erase “corporate excesses”.

In effect, the offence would be failing to prevent the offences of bribery, money laundering etc. It is therefore vital to have the correct policies and management controls in place.

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