A new offence of failing to prevent economic crime would improve Britain's poor record of prosecuting business leaders for corporate offences, a campaign group says today. In a report contrasting the approaches of UK and US authorities, Corruption Watch finds that since the financial crisis the US has managed to bring in £22 billion more in penalties for financial crime committed by banks and financial institutions than the UK - even though half of the offending institutions were from the UK.
In effect, it says, the UK is outsourcing enforcement of financial crimes to the US, where corporate offenders are far more likely to receive heavy criminal, civil and regulatory penalties. 'By doing so the UK fails to provide credible deterrence for financial wrongdoing,' the report states, blaming 'antiquated and ineffective' corporate liability laws. Liability reform is 'essential to ensure that companies can be found criminally liable for wrongdoing and regulatory penalties must be reviewed to ensure they provide real incentive for companies to operate on the right side of the law'.
The report covers prosecutions for manipulating the Libor interest rate, the foreign exchange market, money laundering and charges relating to the 2008 financial crisis.
As well as calling for a new 'failure to prevent' offence, Corruption Watch says the government should task the Law Commission with a comprehensive review of corporate liability laws. 'The government must commit to implementing any legislative changes recommended by the Law Commission within six months,' the report concludes.