The government has announced that it will not proceed with the proposed extension of the corporate criminal offence of failure to prevent bribery under s7 of the Bribery Act (“the s7 offence”) to encompass a wider range of economic crime. It has also shelved its review of whether current rules on corporate criminal liability should be widened to make it easier to convict companies who commit wrongdoing.

This move, which was announced this week by Andrew Selous MP in a written response to a parliamentary question will be a blow to David Green, the Director of the SFO, who has frequently cited the inadequacy of English law on corporate criminal liability and his belief that the current identification principle (the need to attribute guilty knowledge to the directing mind of a company) is too high a bar for prosecutors successfully to attribute criminal culpability to a company.

It was Green’s suggestion, in 2012, that the s7 offence should be extended to encompass a wider range of criminality. This proposal appeared to have gained support and in December 2014, the Government published its first Anti-Corruption Plan in which it acknowledged there were likely to be other forms of economic crime beyond bribery for which it is appropriate to ensure that senior corporate executives were sufficiently accountable. It announced that the Ministry of Justice would examine both the case for a new offence of a corporate failure to prevent economic crime and the rules on establishing corporate criminal liability more widely. The introduction of this new offence was included in the Conservative party manifesto and this was followed by HMRC’s current consultation on whether to introduce a new corporate offence of failing to prevent the facilitation of tax evasion. Businesses in the UK were therefore bracing themselves for stricter rules on corporate criminal liability and so this came as a surprise to many.

According to Selous, the rationale behind the reversal is two-fold. Firstly, the UK already has corporate criminal liability and commercial organisations can be, and are, prosecuted for wrongdoing and secondly there have been no prosecutions under the s7 offence and there is little evidence of corporate economic wrongdoing going unpunished.

This change in tack from the government is perhaps not as unexpected as it might appear at first blush. Since the introduction of the s7 offence, there have been frequent complaints that it is damaging to the UK economy because it deters overseas businesses from locating here.

George Osborne has also made it plain that the age of banker-bashing must come to an end, realigning himself with the financial services industry and asking them to become part of the solution rather than the problem. This was reinforced by his removal of Martin Wheatley as chief executive of the FCA. Wheatley had overseen some record breaking fines against banks and earned a reputation as a harsh enforcer in the City. This reversal by the government is just another aspect of their new approach to businesses.

However, company executives should not draw much comfort from this. Individuals are firmly in the spotlight, both in the UK and globally. The SFO and FCA will continue to use the current model of corporate criminal liability in order to try to pursue companies which mean that senior executives will be targeted in order to identify the directing mind of a company.

Under the DPA regime, introduced in February 2014 but as yet untested, companies are expected to incriminate individuals in order to deter prosecutors from taking action against the companies themselves and, if a company does agree a DPA, the SFO has made it plain that it will still prosecute culpable individuals. The FCA and PRA have introduced the Senior Managers Regime which will be in force from March next year and under which senior individuals will be accountable for any wrongdoing which falls within their areas of responsibility.

The publication of the Yates memo in the US earlier this month is another reminder that the global focus is firmly on the individual rather than the corporate. While it remains difficult to prosecute companies, it will become easier to hold individuals to account.