Bosses could face a prison sentence for failing to prevent fraud in their business, under new laws being considered by ministers. The Criminal Finances Bill will hold employers responsible for preventing money-laundering, false accounting and fraud in their organisations.
Attorney-general Jeremy Wright said at a symposium in Cambridge on economic crime that ministers will consult on the plans with a view to introducing legislation.
“When considering the question ‘where does the buck stop?’ and who is responsible for economic crime it is clear that the answer is to be found at every level, from the boardroom down,” he said. If companies faced conviction for failing to prevent a crime they would be more likely to “take the actions necessary to discourage such offending in the first place”.
Wright warned that the present system of limited corporate liability “incentivises a board to distance itself from the company’s operations.”
“In this way it operates in precisely the opposite way to the Bribery Act 2010, one of whose underlying policy rationales was to secure a change in corporate culture by ensuring boards set an appropriate tone from the top. An extension of the failure to prevent offences can enhance the UK’s reputation in the fight against fraud and help to promote improved corporate governance,” he added.
The proposed Bill follows the conviction of banker Tom Hayes in 2015. Hayes was prosecuted for Libor manipulation, but the authorities were unable to hold the bank for which he worked to account. Prosecution of his employers was only possible in an American court where the law makes such a prosecution easier.
The move is a continuation of prime minister Theresa May’s crackdown on boardroom excess, which has also including placing workers’ representatives on boards and imposing checks on corporate pay.
Downing Street said the government would announce the Bill in due course.