Out-Law News 2 min. read
24 May 2016, 12:42 pm
A Scottish corporate self-reporting initiative was introduced on 1 July 2011 but it is limited to bribery offences. The initiative enables companies that discover bribery problems within their organisation to come forward and disclose it to the Crown Office and Procurator Fiscal Service (COPFS), in return for gaining an opportunity to draw a line under the matter by way of civil settlement rather than full criminal prosecution.
Tom Stocker of Pinsent Masons, the law firm behind Out-Law.com, pointed out the potential for companies in England and Wales that cooperated with the authorities to agree deferred prosecution agreements (DPAs) not just for bribery but for other economic crimes - such as money laundering, fraud and contraventions of trade sanctions.
"While Scotland does not have DPAs – mainly because of judicial reticence about blurring the role between the prosecutor and that of the judge – the principle that companies should be encouraged to come clean when they uncover misconduct seems to be equally applicable to other financial crimes," he said. "Such an approach helps to prevent corporate crimes from being hidden and bad corporate behaviour from continuing."
"The benefit for businesses is that it gives them an opportunity to avoid a criminal prosecution and to draw a line under past misdeeds. The benefit for society is that businesses should become cleaner and more ethical," he said.
The current COPFS self-reporting initiative will expire on 30 June 2016, at which point it will be reviewed and either withdrawn, extended or revised. Businesses that have self-reported before the scheme ends will still be covered by the existing initiative, and so will still be given the opportunity to negotiate a civil settlement even if the regime is withdrawn.
At an event hosted by Pinsent Masons in Edinburgh last week, senior prosecutors from COPFS spoke of the role the self-reporting regime had played over the past five years in "keeping Scotland as a clean place to do business and enabling companies that want to conduct business cleanly and ethically to be able to come forward should a bribery matter arise in connection with their business," Stocker said. He added that the initiative had been an "undoubted success" for prosecutors and for businesses alike, and urged COPFS to renew and extend the programme on 30 June 2016.
"There have been five concluded corporate cases in Scotland since July 2011," he said.
"The settlements have derived over £8 million that has been reinvested in community projects. The businesses that have self-reported have remediated and can now proudly say to their stakeholders that they conduct business ethically and carefully. The self-reporting and civil settlement regime works well because it strikes the right balance between being onerous and being fair," he said.
Since 2014, businesses in England and Wales have been able to self-report wrongdoing and negotiate a DPA in certain circumstances. Companies that fulfil the obligations set out in a DPA within the specified timetable will avoid prosecution for their wrongdoing. These obligations can include payment of substantial penalties, the need to compensate victims and submission to regular reviews and monitoring.
Earlier this month, UK prime minister David Cameron announced that the government would consult on the extension of the 'failure to prevent' corporate criminal offence to fraud, money laundering and other economic crimes. Currently, businesses that do not have "adequate" procedures in place to prevent bribery involving their employees may be guilty of a criminal offence, while similar rules in relation to facilitation of tax evasion are due to be introduced later this year.