Criminal Liability in Regulatory Contexts Responses - Law ...

PROPOSAL 16
Clifford Chance
1.1217 Agree. Question 3: agree that it is inappropriate for a director to be charged with
the offence, but replacing this with an offence of neglect is, in practice, a
distinction without a difference. Must still be proved that the corporation has
committed the underlying offence, but with more specific details of the director’s
responsibility for the offence. It will often be impracticable to identify a single
individual within a company who should have prevented the offence (negatives of
this sort are unsatisfactory basis for liability) and the threat of this witch hunt is
likely to create scapegoats as well as conflict within a corporation (see CP 7.29).
It will lead to corporate officers seeking to avoid responsibility, which will obstruct
regulatory objectives.
1.1218 Question 4: agree that doctrine of delegation should be abolished but do not
consider that the suggested replacement is appropriate not least because café
owner in Allen v Whitehead would still be guilty because he clearly has “failed to
prevent an offence being committed” even though conduct was entirely
reasonable. “Failure to prevent” is not a satisfactory basis of criminal liability;
more active participation in the offence should be required.
GC100 (association for general counsel and company secretaries for the
FTSE 100)
1.1219 We agree. One of the difficulties here is what knowledge of the facts, action or
inaction by a director amounts to consent or connivance.
1.1220 Q3: We do not agree. Negligent conduct should not normally be used as a basis
to impose criminal liability on individuals. It would cause particular difficulty for
non executive directors who may not have detailed knowledge of particularly
circumstances that have led to the offence. .
1.1221 Q4: We would support the introduction of a new offence provided that it is
carefully drafted. For example delegating to someone obviously unsuitable is one
thing and might justify a criminal offence if it would involve reckless disregard for
the consequences. Delegating to someone who appeared suitable but was not or
who was suitable but acted in an unexpected way should not be the basis of
criminal liability.
Professor Colin Reid, University of Dundee
1.1222 Q3: The inclusion of the offence of negligently failing to prevent offences would
be welcome in many circumstances.
1.1223 Q4: The doctrine of delegation should be abolished and replaced with clearer and
more firmly based rules on responsibility that fit the practicalities of modern
commercial operations.
Criminal Sub-Committee of the Council of HM Circuit Judges
1.1224 Not appropriate that, where a company is found to have committed an offence
based upon a regulatory breach, there is a separate criminal offence on the part
of a director based upon negligence failure to prevent. Do not support doctrine of
delegation for reasons similar to those in CP.
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