EXTENSIVE CHANGES to corporate corruption laws are set to follow the prime minister’s anti-corruption summit in London.
David Cameron has pledged to help expose corruption via a requirement for foreign companies owning land and property in Britain to join a public register of beneficial ownership; create an international anti-corruption co-ordination centre to help police and prosecutors work together cross-border; consult on extending the criminal offence of “failure to prevent” to other white collar crimes, including fraud and money laundering.
Earlier this week, professional bodies from both accountancy and law signed a statement deploring corruption.
Advisers are warning businesses – particularly multinationals – will have to be far more vigilant against exposure to corrupt activities.
Moreover, executives will need to show that they had robust policies in place to prevent wrong-doing in the event that an employee is found guilty of misconduct, they said.
Barry Vitou, partner and head of global corporate crime at Pinsent Masons said: “The criminalisation of corporate law continues to snowball- these ‘failure-to-prevent’ clauses represent the most sweeping changes to corporate law in over hundred years and a substantial burden for businesses.”
“The extension to economic crimes such as fraud and money laundering would represent a massive shake-up- even bigger than the introduction of the Bribery Act five years ago.”
Kingsley Napley civil fraud partner Will Christopher added that companies “should start preparing and consider various implications of this announcement”.
He said: “First I anticipate that follow-on claims will be more likely, for example from investors, or from victims of fraud, and will be more likely to succeed if there has been a corporate criminal conviction. So any new law could end up costing businesses in more ways than one. Second, companies should start taking more seriously the procedures they should already have in place to prevent fraud, as they generally have with bribery when faced with the prospect of corporate prosecutions. The greater risk of prosecution in future should now make such investment more prudent and worthwhile.”
Falling profits and governance plans still up in the air at Sports Direct, as interim finance chief's team is boosted
Public Accounts Committee believes country-by-country reporting will help HMRC check if multinationals are paying the right tax - but laments that the information will remain between those parties
Virgin Money has appointed former TSB chief financial officer Darren Pope as a non-executive director
Increase governance without stifling competitiveness; enforce already-in-place rules; were the key messages from the business community after the government released a green paper on governance