When will the criminal law be used against a company?

It is certainly clear from recent press reports that the UK authorities have stepped up the enforcement of the laws which criminalise corporate corruption. However, in these situations and with increased enforcement – it is not often clear who should expect to be punished – whether it be an individual, or the business as a whole.

Should businesses be targeted rather than individuals?

Although all the recent enforcement action appears to be focused against the actual business, in the form of the legal person i.e. the company, rather than the individual, it is probably not the case that the authorities have chosen to target businesses rather than individuals. 

The actions against businesses have concluded as a result of agreements having been reached between the companies and the enforcing authorities in circumstances where the authorities are still investigating the actions of individuals. 

When will a civil remedy be used against the business as opposed to a criminal remedy?

There are significant advantages to a business in settling with the authorities by way of an Order made by a civil court. 

For example, a business that has been convicted of an offence of corruption can be prevented from bidding for public works contracts. 

The Serious Fraud Office has in its publication “Approach of the Serious Fraud Office to dealing with overseas corruption” (published 21st July 2009), indicated the types of cases that it will be prepared to consider settling by way of civil proceedings. 

When will the criminal law be used against a company?

It is to be expected that the “criminal route” will be used where directors and/or senior managers have been directly involved in the corrupt activity and/or it is thought that there is a need to change the culture of the company.

If the authorities decide to try to convict a company, they have to overcome the difficulty caused by identifying who within the company actually exercises the legal rights. For example, where the court have had to identify who is the actual “mind of the company” the court decided to look at who was entrusted with those powers by the memorandum and articles of association. If the directors were not directly involved in making the decisions to make corrupt payments the relevant mental element of the criminal offence could not be proved.

We may find out whether the authorities will succeed in convicting a company, at trial, for an offence of corruption. In November 2009, the SFO announced that it was seeking the Attorney General’s consent to prosecute BAE in relation to overseas corruption concerning its activities in Africa and Eastern Europe. 

When will the criminal law be used against an individual?

It is much simpler for the authorities to prove that an individual, who does a corrupt, has the necessary mental element to be convicted of a crime.

As mentioned above, the conclusion of the investigation and enforcement action against a company does not mean that all action over the wrongdoing is necessarily ended.  In both the Mabey & Johnson and AMEC matters there is mention by the authorities in press announcements of ongoing criminal investigations into the actions of individuals.