New plans to tackle corporate fraud will create even greater need for adequate procedures
Failure to prevent economic crime looks set to become a corporate offence. This follows the announcement by Attorney General Jeremy Wright that the proposed consultation would go ahead on extending the criminal liability of corporates for failing to prevent bribery to other economic crimes, including money laundering, false accounting and fraud.
It is expected that the new offence will be modelled on Section 7 of the Bribery Act, meaning that a company will only have a defence if it can show that it has adequate procedures in place to prevent the specified economic crimes.
The range of crimes could be broad and it is likely that the new legislation would hold organisations responsible for the actions of third parties or associated persons acting on the company’s behalf.
Such a change is a real indication of the government’s intention to hold companies to account for corporate misconduct. While this is likely to place a significant burden on compliance teams, the direction of travel seems very clear and organisations would be ill advised to watch and wait.
Companies wishing to get ahead of the game should begin by identifying the risks of economic crime and highlighting any gaps in existing systems and controls. Work can then begin on a programme of mitigation.
GoodCorporation is already talking to corporates about meeting the likely requirements and it will be touched upon during our Business Ethics Debate at the House of Lords later this month.
If this is of interest, do get in touch.
France to impose binding obligation to prevent corruption on corporates under new bribery laws
France has passed tough new anti-bribery laws following a major review of existing legislation by Finance Minister Michel Sapin.
Known as Sapin II, the new law is likely to have far-reaching consequences for French companies and foreign groups operating in France or in French territories.
In terms of offences, the major change is the extension of the offence of peddling influence to include officials of international organisations as well as French public officials.
However, the most significant change is the obligation on corporates to implement anti-corruption compliance programmes and operate whistleblowing systems.
The hand of prosecutors will also be strengthened through a new anti-corruption agency tasked with detecting and preventing corruption and the extension of french authorities’ powers to prosecute and sanction acts of corruption committed outside France.
A number of compliance requirements have been specified including anti-corruption codes of conduct, risk assessments, anti-bribery accounting controls and third party due diligence.
This could well prove burdensome for corporates, particularly with the short-six month lead time between the passing of the bill and the legislation coming into effect.
Many of the issues that businesses will face were discussed at our Business Ethics Debate in Paris last month.
Chatham House: Responsible Business Summit
Public interest in responsible business conduct has increased significantly in recent years.
Having worked with over 150 organisations to help them test and strengthen their responsible management practices, GoodCorporation is delighted to be chairing the discussion on Business Transparency.
Led by Leo Martin, the session will explore how transparency has become a fundamental expectation of businesses, examining public expectations, consumer trust and regulatory frameworks.
Confirmed speakers include:
Margot James MP; Matthias Machnig, State Secretary, Federal Ministry for Economic Affairs and Energy, Germany; Robert Barrington, Executive Director Transparency International UK.
Click here to register now.
House of Lords Debate: If ethical culture is so important why is measuring it such a challenge?
Our first debate of the Autumn looked at the difficulties of measuring ethical culture.
Despite the UK’s biggest institutional investors calling for corporates to stop quarterly reporting now that it is no longer mandatory, it seems that big businesses are reluctant to kick the habit.
For obvious reasons, shareholders need evidence that money invested will generate returns. And while quarterly reporting was designed to improve transparency between companies and investors, rather than prevent corporate failure it led to short-term decision making which over time could drive businesses down or lead to poor decision making that resulted in major scandals.
Mark Goyder, founder and chief executive of Tomorrow’s Company and a long time exponent of the need for strong corporate purpose and ethical culture introduced the discussion.
While few disputed the importance of ethics and culture, few were engaging in regular measurement and a number of challenges were discussed.
The discussion summary is on the Business Ethics Debate section of our website.
GoodCorporation’s approach to measuring ethical culture is outlined on the goodblog.