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Corporate crime: gaining momentum across the globe, but in many a different guise

26 April 2016

Corporate crime: gaining momentum across the globe, but in many a different guise

Clifford Chance launches Corporate Criminal Liability Report 2016

International law firm Clifford Chance today launches the 2016 edition of its Corporate Criminal Liability report. The report considers the corporate criminal liability landscape in 22 key markets across the world including the underlying principles of liability, the relationship between individual and corporate liability, whether there are specific defences and / or mitigating factors and the current level and nature of penalties imposed. The report finds that while local laws and enforcement appetite varies, the topic is gaining momentum across the world.

Judith Seddon, partner and corporate crime specialist explains: "In the wake of the financial crisis, businesses are increasingly under scrutiny as regulators and enforcement authorities seek to hold companies to account. Local laws – and their propensity for being enforced – vary across jurisdictions, which can make for an extremely complex global landscape for clients to navigate. This guide seeks to demystify this area, helping clients to understand better the legal context in which they operate."

Supplementing the detailed report is a heat map which draws broad conclusions on the topic internationally. The map ranks countries by the existence of liability in a given country along with its enthusiasm for enforcement.

The 2016 report covers various developments in corporate crime around the world in the past year, including:

  • The UK has probably seen the most activity in this area in the past year, with the first Deferred Prosecution Agreement (Standard Bank on 30 November 2015) and the first use of a corporate offence of failing to prevent bribery (Sweett Group plc). Further, in the financial services sector the recent introduction of the Senior Managers Regime means that taking a decision which causes the failure of a bank, is now a criminal offence.
  • Eastern Europe is showing an uptick in focus on corporate crime with an increase in related cases in Romania and Slovakia became the most recent jurisdiction to introduce corporate criminal liability in November 2015 (to take effect in July 2016).
  • The aggressive pursuit of corporate continues unabated in the US. US prosecutors, including the US Attorney General, have made repeated public statements that no entity is "too big to jail". In April 2016, the US Department of Justice ("DoJ") announced a one year pilot programme applicable to investigations concerning the Foreign Corrupt Practices Act.  Under this programme, corporates are able to show that they have put in place "timely and appropriate remediation" may receive up to 50 per cent credit on penalties.
  • Germany is taking tentative steps towards developing Corporate Criminal Liability, and is considering whether it might offend the basic principles of the German Criminal Code. A draft law has been created for the state of the North Rhine-Westphalia and is due to be debated in German Parliament in the near future.

Seddon concludes: "It's unsurprising to find that the US ranks highly in both levels of criminal liability for corporates and enthusiasm for enforcing them. However enforcement levels and the establishment of new regimes in the UK show it is quickly following suit. And the growing attention in Eastern Europe illustrate that this trend is reaching even further across the globe. This is an increasingly challenging landscape in which to operate and global corporates need to be prepared."

To download a copy of the report please visit: http://www.cliffordchance.com/briefings/2016/04/corporate_criminalliability.html