British companies that bribe foreign officials to win contracts, commit fraud, or launder money, face fines of up to 400 per cent of their illicit profits, under new penalty guidelines

May 22, 2014 11:57 pm

Corrupt companies face fines of 400% of illicit profits

By Caroline Binham, Legal Correspondent

British companies that bribe foreign officials to win contracts, commit fraud, or launder money, face fines of up to 400 per cent of their illicit profits, under new penalty guidelines.

In the most serious cases companies will pay fines comparable with those meted out in the US, where penalties can be as high as hundreds of millions of dollars, legal experts said.

The proposals for England and Wales, which will be set out on Friday by the Sentencing Council, allow judges for the first time to weigh harm done to the victim rather than purely the financial amount defrauded.

The plans, which were first floated last summer, are part of wider penalties for individuals found guilty of committing white-collar crime, and are expected to come into force in October. Current guidelines for financial crime do not cover corporate offences, which has led to varying sizes of financial penalties.

“Because of the cross-border element to fraud and bribery investigations, it was really key in the UK that we get fines that have some sort of accord with what is going on in the States,” said Jonathan Fisher QC, who specialises in financial crime cases.

While the council cannot set maximum sentences, which is done by legislation, it gives judges a range of penalties to consider, as well as laying out aggravating and mitigating factors.

Circumstances that would put a company in the highest penalty bracket include misleading investigators, bribing public officials and abusing a dominant position, according to a copy of the guidelines.

The tougher penalties come at a time when public and political scrutiny is trained on the ethical standards of big businesses. Regulatory fines have also increased after the financial crisis.

David Green, the director of the Serious Fraud Office, has said he would like to see companies held criminally liable for failing to prevent all kinds of white-collar crime, rather than just bribery, as is currently the case.

Dominic Grieve, the attorney-general, indicated last week that the government is considering Mr Green’s proposal.

“It seems to me that his remarks have considerable force,” Mr Grieve said during questioning in the House of Commons. “In my judgment, this is an area that ought to be looked at and on which there may, indeed, be a degree of consensus across the House. Of course, if we were to do that, we would also have to make sure that such a process operates in a fair and reasonable way.”

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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