Responding to fraud — policy in the pipeline

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We live in an environment where new allegations of fraud arise daily or where the press announces that fraudsters are using new technologies to ‘clone, phish, spoof or pharm’. Increasingly, therefore, the focus of government, law enforcement and regulators is to maximise the pressure on business to reduce those risks. This can be done in two ways: (1) criminalising corporates who are involved in such conduct; and (2) requiring businesses to have systems and controls in place that prevent certain types of criminality.

As part of the current focus on trying to put the onus on business to reduce the risks we as a society face from fraud, both the Labour Party and the director of the Serious Fraud Office (SFO), David Green, have called recently for reform of the law on corporate criminal liability and an easing of what we term the rules of attribution. ‘Attribution’ is the mechanism by which a corporate can be liable for a criminal offence that requires proof of some form of knowledge/intent (mens rea). Strict liability offences for corporates are relatively straightforward, requiring only the proof of the actus reus of the offence. The rationale for such liability is clear, prevention of accidents at work, for example. By contrast, in respect of offences requiring proof of mens rea, a corporate will usually only be liable where the directing mind and will of the corporate is him/herself individually liable for the commission of the same offence. Thus it is only where the board of directors, or those in effect directly below board level (together ‘the directing mind and will’), would be liable for the same offence that a corporate will be found liable for the commission of a criminal offence…

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