U.K. Abandons Move to Broaden Its Criminal Laws: Business of Law

  • New British rules could trigger more unfair-dismissal claims
  • Former FCC lawyer heads to Harris Wiltshire in Washington

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, a 2011 law that allowed 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.

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.

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Junior Bankers Risk Being Fired by Wary Bosses, Lawyers Warn

Lower-ranking bankers could be the unintended victims of new U.K. rules that make bosses responsible for regulatory lapses caused by their junior colleagues, a London firm of employment lawyers warned.

British regulations intended to improve internal oversight at banks may trigger a new wave of unfair-dismissal claims as managers attempting to protect themselves preemptively dismiss staff who could put the company at risk, said Jon Gilligan, a partner at GQ Employment Law.

From March 2016, managers at U.K. banks will face much stiffer accountability to the Financial Conduct Authority and the Prudential Regulation Authority for lapses that take place on their watch. As a result, mistakes and suspicious conduct that may have once warranted an inquiry or reprimand may now result in termination because senior staff are less likely to take time to manage junior bankers’ performance, according to Gilligan.

"Senior banking staff will not want to take the fall if an under-performing team member puts the bank at risk of regulatory action," Gilligan said. "The risk is that managers will act in haste and that unfair dismissal or constructive dismissal claims will follow."

Under the so-called reverse burden of proof in the U.K. rules, known as the “Senior Managers Regime,” the burden is on an executive to prove his or her innocence rather than on the regulator to prove guilt.

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Comings and Goings

Julie Veach, the former chief of the Wireline Competition Bureau of the Federal Communications Commission, joined Harris, Wiltshire & Grannis LLP as a partner. Veach, who left the FCC in May, also worked as deputy general counsel during her more than 14 years at the agency. She has focused on matters including those involving broadband, Internet access, VoIP, universal service, commercial services and common carrier issues.

Goodwin Procter LLP hired Cindy McAdam as a partner in its technology and life sciences group and will be resident in the firm’s Silicon Valley office. She comes to Goodwin from Bay Area technology company Xapo, where she served as president and general counsel.

Jai Khanna is now a partner at Baker & McKenzie in its North American banking, finance and major projects practice in Chicago. He was previously a partner at Winston & Strawn LLP.

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