Aziz Rahman, of award-winning business crime solicitors Rahman Ravelli, explains why we may see more offences of failing to prevent business crime – and why prevention should always be a priority.
Failing to prevent wrongdoing in your business may become an even bigger legal problem in the future.
A just-published report by the House of Lords Bribery Act Committee has called on the government to consider introducing more failure to prevent offences.
The UK currently has a number of failure to prevent offences relating to matters such as money laundering, bribery and tax evasion. Any increase in the number of such offences could mean that many more businesses find themselves at risk of breaking the law – just by being unaware that one or more of their employees or representatives was committing business crime. The company’s failure to prevent the employee committing the crime would be an offence in itself.
Possible legal changes
It may be that some people reading this think that talk of the House of Lords and committees and proposals has little or no effect on their day-to-day business. But this would be a mistake for two reasons.
The first reason is that this call for more failure to prevent offences comes just days after a similar statement from the House of Commons Treasury Committee. This committee said that there is clear evidence that changes to the law are needed in the battle against economic crime. It wants more legislation to enforce corporate liability – making it more straightforward to prosecute companies - including more failure to prevent offences.
We are in a situation, therefore, where senior figures from both houses of the Parliament of the UK are calling for legislative changes that would allow more companies to be prosecuted for failing to prevent an offence being committed.
The second reason is that failing to prevent business crime does not just bring legal problems. A company’s finances, reputation, position in the market in which it trades and its ability to trade can all be hampered by a prosecution. That is the case if the company – or even just someone with a connection to it – has been involved in wrongdoing. And that is the case now – regardless of what new failure to prevent offences may or may not become a reality.
The importance of prevention
It is apparent that some in business do not consider prevention of workplace crime a priority. But it should be.
Each and every company needs to examine how it functions, identify the risks and then create and introduce workplace practices that remove those risks or, at the very least, make it possible for problems to be identified early. If a company is unsure how to do this or feel it lacks the knowledge to do this it must seek help from relevant experts.
The right procedures can prevent and recognise wrongdoing and enable a company to self-report a problem to the authorities. This can boost its chances of entering into a dialogue with the relevant law enforcement agency. This can mean a company is not prosecuted or at least receives more lenient treatment than if the authorities discovered the criminality for themselves.
The length of time it takes a company to report any criminal behaviour, the standard of any preventative measures that were in place and how quickly suspicions of wrongdoing were investigated by the firm will all be considered by the investigating agency. Any internal investigation conducted by a company that suspects wrongdoing can also be of value in deciding whether it is most appropriate to report the matter to the police or other authorities, bring civil proceedings against those who are to blame to recover any losses or bring a private prosecution against them.
But such options and the ability to enter a dialogue with the authorities will never be possible unless prevention is seen as a priority by a company.
The possible increase in failure to prevent offences indicates that the UK is looking to do more to combat business crime. Examining the possibility of workplace crime being committed and taking steps to prevent it has to be seen as a priority for every business.
Azizur Rahman is founder of Rahman Ravelli; a top-ranked business crime law firm in national and international legal guides.
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