Businesses that knowingly perpetrate fraud should face penalties based on the organisation’s turnover rather than the amount of harm caused, the House of Commons Justice Committee has said.
In its comments to the Sentencing Council on the draft fraud, bribery and money laundering offences guidelines, the committee argues that fines imposed to punish corporate offenders for financial crimes should be calculated primarily on a percentage of turnover, rather than on an evaluation of the amount of financial harm caused by the crimes.
The committee welcomed the greater emphasis across the guidelines for individual offenders on the impact the crime has had on the victim, rather than focusing exclusively on financial loss.
It highlighted concerns that the proposed approach to sentencing corporate offenders, which involves evaluating the amount of financial harm caused, would be difficult to achieve and likely to result in ‘overly lenient’ sentences.
Instead it suggested sentences be based primarily on a percentage of turnover, or some other indication of the corporation’s financial value.
To optimise the chances of securing compensation for victims of financial crime, the committee recommended that the guideline should be slightly redrafted to incentivise offenders to make voluntary reparation at an early stage.
It also recommended that the benefit fraud guideline gives greater clarity to sentencers about the circumstances in which they should take financial hardship into account as a mitigating factor.
In other respects the committee broadly supported the Sentencing Council’s draft guidelines. Committee chair Sir Alan Beith MP said: ‘We would like the Sentencing Council to revisit their proposed approach to calculating sentences for corporate offenders, to ensure they pay a more meaningful penalty.
‘At the same time, we welcome many aspects of the new Guideline for sentencing offenders convicted of fraud and related offences, in particular the greater weight given to the harm caused to victims.’
The committee’s report is available here.