On January 13, 2017, the Ministry of Justice of the United Kingdom issued a (“call for evidence,”) seeking comment on potential changes to corporate criminal liability law for economic offences, such as fraud, false accounting and money laundering. Currently, corporate criminal liability in the UK, apart from offences charged under the Bribery Act of 2010, follows the common law “identification doctrine” or “directing mind theory.”
On January 13, 2017, the Ministry of Justice of the United Kingdom issued a (“call for evidence,”) seeking comment from the public on potential changes to corporate criminal liability law for economic offences, such as fraud, false accounting and money laundering. Currently, corporate criminal liability in the United Kingdom, apart from offences charged under the Bribery Act of 2010, follows the common law “identification doctrine” or “directing mind theory.”
Under those principles, in order to attribute the wrongful acts of corporate personnel to a corporation, prosecutors are required to prove that the actor or actors are the “directing mind and will of the company.” Thus, only a culpable person who can be regarded under the doctrine as a “directing mind and will of the company” can be found to possess the intent required for a conviction against the company.
In practice, and as developed by the case law, such a “directing mind” must typically be a member of senior management or member of the board. The January call for evidence seeks public comment on whether this doctrine is “deficient as a tool for effective enforcement of the criminal law against large modern companies” as a part of the process of gauging whether reform is necessary.
The call for evidence also provides some insight into the approaches reform could take. The first suggested option is merely to legislatively amend the identification doctrine to broaden the scope of those considered a “directing mind.” The call’s authors, however, denigrate this option on the grounds that any retention of the identification doctrine “perpetuate[s] the notion that a company can commit a criminal [offence]” and encourages “evasive internal structures” designed to limit liability rather than prevent wrongdoing. Other proposed options include adoption of strict vicarious liability, where a corporation can be held liable for the wrongdoing of its employees, without any need to prove any culpability of the corporation itself. Such a standard could be modeled on Section 7 of the UK Bribery Act, incorporating an “adequate procedures” defence, under which if a company’s internal procedures are adequate, if followed, to prevent personnel from committing an offence, the company is entitled to a full defence. Other proposals would make a failure to prevent employee wrongdoing either a separate statutory offence or an element of the underlying offence.
The comment period will close on March 24, 2017 and is open to the public. Companies doing business in the United Kingdom or otherwise subject to UK jurisdiction should monitor this process as it develops.