Theresa May's underwhelming victory in the 2017 General Election has rendered the future of her corporate crime-related manifesto pledges, as well as the proposed corporate liability law reforms currently under consultation, somewhat uncertain. Coupled with the recent successes of the SFO (see SFO v ENRC and the implications for legal professional privilege below) and the recent charges brought against Barclays and four former executives, the proposal to incorporate the SFO into the NCA appears to have been dropped altogether.
Incorporation of the SFO into the NCA
The Conservative's 2017 manifesto boldly declared:
"We will strengthen Britain's response to white collar crime by incorporating the Serious Fraud Office into the National Crime Agency, improving intelligence sharing and bolstering the investigation of serious fraud, money laundering and financial crime."
The incorporation of the SFO into the NCA is a long-held aspiration for Mrs May. As Home Secretary, she first attempted to effect this change in 2011 and, after being met with opposition, again floated the idea in 2014.
Her manifesto proposition was met with much scepticism. Many white collar crime lawyers predicted that, if effected, this change would result in "organisational paralysis", distract investigators and lead to an exodus of staff. There was concern that the resources and funding currently used by the SFO to fight white collar crime would be diverted to other areas of priority for the NCA, which has a much wider remit (dealing with everything from exploitation of young people to guns and drug trafficking and organised crime).
While the SFO has suffered some setbacks over the years (it had to pay damages to the Tchenguiz brothers after a failed dawn raid, and allegedly made secret and unapproved exit payments to staff totalling 1 million), it has had some recent successes. In January 2017, the SFO reached a deferred prosecution agreement (DPA) with Rolls Royce, the British aero-engineering company, in relation to allegations of criminal conduct. The sum of money recovered from this case was approximately 500 million; this is equal to more than half of the total funds given to the SFO during its entire existence, or approximately 15 times its 2015/2016 budget. Similarly, in April 2017, the SFO reached a DPA with Tesco worth 129 million. This recent record of agreeing DPAs for significant sums of money arguably demonstrates a trend of growing success and budget security for the SFO.
There are a number of other SFO investigations currently in progress, and critics have raised concerns that any reorganisation would jeopardise the outcome of these investigations.
Given the recent direction of travel of the SFO, and following Mrs May's weakened mandate, any decision-making on the incorporation of the SFO into the NCA may well be pushed towards the back of the queue, if not dropped altogether. This could explain why no mention was made of it during the Queen's Speech on 21 June 2017.
For more information see Blog, SFO saved, for now or for the foreseeable future?
Reform of corporate criminal liability
In January 2017 the Ministry of Justice issued a "call for evidence" on proposed reforms to the law on corporate criminal liability for economic crimes.
It is generally agreed that the law in this area may need updating. Currently, absent a specific Act of Parliament a company can only be held criminally liable for the acts of an individual or individuals who is/are the "directing mind and will". Typically this requires finding proof that a member of the board or other senior officer has a criminal mens rea, which can then be attributed to the corporate entity. This "identification doctrine" has been at the heart of the common law on corporate criminal liability since the decision of the House of Lords in Tesco Supermarkets Ltd v Nattrass  UKHL 1. However, critics believe it to be significantly outdated in comparison to the common law on civil corporate liability, as well as criminal law in other jurisdictions, notably the US. Critics also argue that the doctrine has the perverse effect of making it easier to prosecute small companies, while making it more difficult to prosecute large companies (who, it is said, are encouraged to decentralise responsibilities to avoid liability).
The Ministry of Justice's call for evidence sought views on a number of different options for reform. Responses to the call for evidence were submitted on or before 31 March 2017, and no timetable has yet been set for any further steps. There is perhaps a sense that the perceived defects in the law on corporate criminal liability (insofar as financial institutions are concerned) may be adequately dealt with by the new Senior Managers' Regime, and that additional time is needed to assess the effect of the regime before putting in place any new legislative measures.
This, combined with the other issues facing the government, means that it may therefore be a while before we see any further movement on these reforms.