Aziz Rahman, of award-winning solicitors Rahman Ravelli, explains how preventative measures can help those in business meet the legal challenges now facing them.
This year, Rolls-Royce and Tesco have paid hundreds of millions of pounds and international banks have been fined huge amounts for wrongdoing in business.
Business is subject to greater scrutiny and more far-reaching legislation than ever before. Companies can benefit, therefore, from seeking advice regarding the likelihood of them being prosecuted and the measures available to prevent this; see it as a little investment now to prevent a costly, damaging future.
For example, the Bribery Act is used to prosecute a company if it fails to prevent any person committing bribery on its behalf. Unlimited fines, up to ten years in prison and assets confiscation can follow a conviction. Preventing this must be worthwhile.
Conducting internal investigations, devising anti-bribery procedures and taking action if corruption is identified are areas where the right, proactive legal advice is crucial. Having been involved in many of the UK’s major bribery and fraud cases, I’ve seen how well thought-out efforts to prevent wrongdoing can be the difference between prosecution and an alternative approach.
If the authorities believe a company has shown a genuine will to tackle wrongdoing, they can offer a deferred prosecution agreement. This involves certain conditions being imposed on a company rather than it being prosecuted.
The importance of prevention can also be seen in the new Criminal Finances Act, which creates the corporate offence of failure to prevent tax evasion being committed. This makes companies liable if their employees encourage or assist others to evade tax.
Investigations under this Act will lead to companies being asked difficult questions about measures they had – or didn’t have – in place to prevent such activity. Being able to prevent the wrongdoing is preferable to being one of the first to be prosecuted under the new Act.
Another new piece of legislation is the Policing and Crime Act 2017, which creates tougher penalties for those who, for example, ignore financial market restrictions or orders to cease trading with someone in a particular country or business sector. Fines of £1m or more are possible – which is much higher than the relatively modest cost of introducing measures to prevent such behaviour.
All three Acts, as well as many others not mentioned here, emphasise the fact that taking advice to prevent prosecution is far shrewder and more cost-effective than waiting until it is too late.
No one likes to spend more than they have to when it comes to running a business. But a little time, effort and expense put towards assessing your business’ vulnerability to white-collar crime could lead to immense savings later.