* Britain debates tougher regime for corporate crime
* Signs that companies tightening codes of conduct
* Consultation on changes runs until March 24
(Adds context, company changing code of conduct, analyst
By Kirstin Ridley
LONDON, Jan 13 Britain is considering
introducing a tough U.S.-style anti-corruption regime for
multinational companies and their senior executives by making
them liable for failing to prevent the economic crimes of staff
Ministers on Friday unveiled a range of proposals on how to
crack down on corporate fraud, money laundering and false
accounting as part of a consultation on how to repair public
trust in businesses and improve accountability after companies
have paid billions of pounds in fines for misconduct.
"Corporate economic crime undermines confidence in business,
distorts markets, and erodes trust," said Justice Minister
Oliver Heald. "Companies must be held to account for the
criminal activity that takes place within them.
The "call for evidence", that runs to March 24, seeks views
on suggestions that include introducing U.S.-style "vicarious
liability", that makes companies guilty through the actions of
staff, introducing corporate criminal negligence charges for
economic crimes and merely toughening regulatory regimes.
Much of the political debate over the last two years has
centred on broadening a section of the Bribery Act that
criminalises a company's failure to put in place adequate
compliance systems for staff and agents.
Some companies have already taken action.
"We've introduced a new code of conduct," said a senior
executive at an international mining company.
"(But) it's almost impossible to cover every contingency.
When you're dealing with people, sometimes things can go the
SMALLER FRY PUNISHED
David Green, head of the UK Serious Fraud Office, has argued
since his appointment in 2012 that the current law, under which
companies and their senior executives can only be prosecuted if
they can be shown to be aware of or have condoned misconduct
under the "identification principle", is stacked against him.
He says the complex hierarchies of large multinationals
create an incentive for executives to distance themselves from
knowledge of wrongdoing lower down. This makes it easier to
prosecute small companies with simple management structures,
which is inherently unfair, he argues.
But initial plans to extend corporate criminal liability
were shelved by former prime minister David Cameron's government
in 2015 before being reintroduced at an anti-corruption summit
last May and reaffirmed by the Attorney General last September.
Advocates of tougher laws hope they will prompt firms to
proactively manage staff conduct, investigate and bring
wrongdoing to the attention of authorities and assuage concern
that corrupt bosses evade prosecution.
Critics say they are unnecessary, risk businesses striking
cosy deals with authorities and add too great a regulatory
burden on firms already trying to navigate Brexit.
"This could have unintended consequences," said one
executive at a blue-chip company in London.
"Companies could pull out of some countries (because of
governance concerns)... and just focus on OECD nations, leaving
the rest of the field open to less scrupulous players."
The consultation comes after the Bribery Act came into force
in 2011, under which companies with assets in the UK face
unlimited fines and bosses up to 10 years in jail if they fail
to show they have "adequate procedures" in place to prevent
staff and agents from committing bribery across the world.
According to consultancy PwC's latest Global Economic Crime
Survey, around 44 percent of UK organisations already expect an
increase in compliance costs over the next two years.
(Reporting by Kirstin Ridley, additional reporting by Barbara
Lewis; Editing by Susan Fenton/Keith Weir)