The Law Commission has today published an options paper for the Government on how it can change the law to ensure that corporations are effectively held to account for committing serious crimes. A number of options are presented, which we will consider in due course. For now, here are the headline points:

  • Identification doctrine: Many corporate criminal offences require ‘mental elements’, such as intention, knowledge, recklessness or dishonesty. As companies are not natural persons, in order for a company to be held criminally liable, a prosecutor must prove that the individuals involved in the crime had the required mental element of the offence and represent the “directing mind and will” of that company so that the individuals' actions can be considered those of the company (the ‘identification doctrine’). This is very difficult to establish, especially in larger organisations, and has led to criticism and a low number of corporate convictions. The Commission recommends either retention of the current doctrine or “allowing conduct to be attributed to a corporation if a member of the corporation’s senior management engaged in, consented to, or connived in the offence. A member of senior management would be any person who plays a significant role in the making of decisions about how the whole or a substantial part of the organisation’s activities are to be managed or organised, or the actual managing or organising of the whole or a substantial part of those activities.” It presents another option which goes further and recommends that the organisation’s CEO and CFO would always be considered to be members of senior management (likely in response to R v Barclays Plc [2018] 5 WLUK 736, where the criminal courts held that those individuals might not constitute the corporation’s directing mind and will if they did not have authority to engage in the conduct in question).
  • Failure to prevent offences: The Commission rejects a general “failure to prevent crime” offence, but does see the benefit in introducing “failure to prevent” offences in respect of economic crimes. This should not be a broad “failure to prevent economic crime” as this would overlap with existing offences relating to bribery and facilitation of tax evasion; instead they recommend a “failure to prevent fraud by an associated person (such as an employee or agent)” offence. The Commission notes that the case for failure to prevent offences is more compelling if reforms are not made to the identification doctrine and lists three further offences which could be created (i) failure to prevent human rights abuses; (ii) failure to prevent ill-treatment or neglect; and (iii) failure to prevent computer misuse.
  • Liability of directors: The Commission concludes that, in principle, directors should not be personally criminally liable on the basis of neglect if the offence is one which requires proof of a particular mental state. Liability for directors on the basis of neglect should be restricted to offences of strict liability or negligence.