Anti-corruption: the devil's in the detail

The prime minister hosted a high-level international anti-corruption summit earlier this month aiming to ‘galvanise a global response to tackle corruption’.

Despite a curious level of secrecy surrounding the summit in the weeks leading up to it – which was a touch ironic given that issues of corporate and government transparency were high on the agenda – David Cameron has emerged from the event with quite a to-do list. On the face of it, the government has committed to several significant initiatives, but the devil will be in the detail.

On corporate transparency, the government has said it will establish a public register of company beneficial ownership information for foreign companies that own or buy property in the UK, or that bid for UK central government contracts. This follows the recent introduction of a public register of company beneficial ownership information for companies incorporated in the UK, which goes live next month. Increased transparency in this context is to be welcomed, although it is still not clear how some of these measures will be enforced.

Recognising the challenges of enforcing criminal penalties against foreign companies for failure to file information, the government has floated the idea of additional sanctions, such as daily fines or restrictions on the ability to deal with property or participate in public contracting. While these proposals make sense, none of them addresses the problem that a register is only as good as the information it contains. Even assuming effective information-sharing between countries, whose job will it be to police such registers?

The government is also consulting on stronger asset-recovery legislation. The proposals, which featured at the summit, include non-conviction-based confiscation powers and the introduction of unexplained wealth orders (UWOs). When served on a person suspected of having wealth or assets that represent the proceeds of crime, a UWO would require that person to explain the origin of their assets. Any assets for which a satisfactory explanation could not be given would be subject to forfeiture, apparently without any requirement that the person in question be subject to a formal criminal investigation or proceedings.

This may sound good, but to date the government has rather skimmed over how it plans to reconcile such a measure (which effectively reverses the burden of proof on to the individual), with fundamental principles of English law such as fairness, due process and the privilege against self-incrimination. This raises the question of whether the proposals are more rhetoric than substance.

Following a rather spectacular double U-turn, we also look forward this summer to a consultation on proposals to extend the corporate offence of failing to prevent bribery to other economic offences, such as fraud, money laundering and false accounting. While it now looks as though more comprehensive, US-style reform in this area may be off the agenda, it at least is to be hoped that any new corporate ‘failure to prevent’ offences will be coupled with a requirement for the crime to have benefited the company.

The current Serious Fraud Office director can undoubtedly be trusted not to prosecute a company for failing to prevent a crime committed against itself. As a matter of principle, however, we should feel uncomfortable about the introduction of criminal offences whose sensible application relies on prosecutorial discretion.

As with all new initiatives, the real impact of the proposals announced at the summit will depend on the nuts and bolts of their implementation and the prioritisation they are given in terms of resourcing. Effective processes for information-sharing across the globe will also be critical.

Elly Proudlock is counsel in the UK investigations and criminal litigation practice at WilmerHale