Recently the Justice minister Andrew Selous MP stated in an answer to a written question submitted by Byron Davies MP, that the Ministry of Justice has decided not to take forward the proposal for a new offence of a corporate failure to prevent economic crime offence.

Byron Davies MP had asked Mr Selous "what progress he has made on Action 36 of the UK Anti-Corruption Plan; and when he expects corporate criminal liability to be introduced." Action 36 of the UK Anti-Corruption Plan had specified that "The Ministry of Justice will examine the case for a new offence of a corporate failure to prevent economic crime and the rules on establishing corporate criminal liability more widely".

At the time of the publication of the plan there was considerable interest in this extension of the principle of corporate liability that had been created in section 7 of the Bribery Act. It is notable how little attention the MoJ tried to draw to this announcement that this part of the Anti-Corruption Plan has been effectively dropped. 

Furthermore, in his response to the MP's question, the minister interestingly commented that "The UK has corporate criminal liability and commercial organisations can be, and are, prosecuted for wrongdoing." As an explanation for stopping the work that was being done this is somewhat surprising, because officials within the MoJ were surely aware of the regime for corporate criminal liability that already existed in the UK when they commenced this work.

Similarly it is also odd that the Minister said that "Ministers have decided not to carry out further work at this stage as there have been no prosecutions under the model Bribery Act offence"; quite recently authorities in Scotland have resolved a matter arising from a breach of section 7. Whilst it is true that the Crown Office has agreed a civil recovery order with the firm in question, this nonetheless represents a first use of the section 7 offence. Moreover the only reason that this matter was resolved by way of a civil recovery order is because the firm took advantage of a Scottish “self-reporting initiative” (this initiative ended in the summer). Had the self-report been made after the conclusion of the initiative in Scotland or had the report been made in England and Wales then it is likely that the authorities would have looked towards some form of criminal resolution (including a Deferred Prosecution Agreement (DPA)).

The minister also commented that there seemed little value in the proposed new offence because "there is little evidence of corporated economic wrongdoing going unpunished". This is unlikely to assuage the concerns of the proposed new offence. They had been keen advocates of the new offence becasue it would have provided them with a way to prosecute companies in situations where they currently encounter difficulties establishing corporate liability through the identification or attribution principle.

The announcement will, however, be welcome to firms which had feared that the introduction of a wider offence of failing to prevent economic crime would have resulted in additional compliance costs, similar to those seen following the introduction of the Bribery Act.

The Minister's comments will also be of interest to those who are tracking the SFO's progress in the use of DPAs. This new method for disposing of prosecutions, which was introduced in February 2014, was meant to have encouraged self-reporting. The MoJ's lack of appetite for providing the SFO with a further tool to tackle economic crime, might suggest that DPAs have not worked as was intended.