Companies Can Breathe Easy as U.K. Criminal-Law Change Abandoned

  • Lawmaker says work halted on effort to ease corporate probes
  • Prosecutors have lobbied for years for criminal-law extension

The U.K. abandoned a much campaigned-for change to legislation that would have made it easier to prosecute corrupt companies in the latest nod to a new era of deregulation for business under the re-elected Conservatives.

In a written answer to a lawmaker’s question posted Monday, junior Justice Minister Andrew Selous said the "ministers have decided not to carry out further work" on an expansion of corporate criminal liability laws as there is "little evidence of corporate economic wrongdoing going unpunished."

Prosecutors, academics and lawyers have petitioned the government for years to widen the Bribery Act to allow companies to be prosecuted for failing to prevent economic crimes such as fraud and money laundering as well as bribery. The decision marks a u-turn by the government, which said in 2012 that the options for dealing with corporate offending were "limited" and the number of convictions each year was "too low" as public displeasure about the Libor and other banking scandals grew.

"This is a victory for the business lobby that want a soft-touch approach on corporate regulation,” Susan Hawley from NGO Corruption Watch said by e-mail. “The government will have little credibility on the international stage if it can’t get its own house in order. The idea that there is no evidence that corporate economic wrongdoing is going unpunished is frankly laughable."

The outcome will be a disappointment to the Serious Fraud Office, which has campaigned for the change since Director David Green took over in 2012. The SFO declined to comment. A spokesman for the Ministry of Justice declined to comment beyond Selous’s statement.

The decision is in keeping with the approach to business from the Conservative Party since taking power in May. In a speech in June, Chancellor of the Exchequer George Osborne said that “simply ratcheting up ever-larger fines that just penalize shareholders, erode capital reserves and diminish the lending potential of the economy is not, in the end, a long-term answer.” The government is keen to harness the financial system to drive growth.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE