Viability of proposed FTP fraud offence
Whether a FTP fraud offence is viable remains to be seen. The FTP model requires prosecutors to prove the underlying FTP offence in order for a successful conviction. This is a difficult factual and legal exercise, particularly when it comes to proving that corporate executives have acted dishonestly: a nuanced principle, which itself has been the subject of close judicial examination in recent years.
As Osofsky herself stated in her Cambridge speech, most major corruption cases involve an international element. Despite this, the Law Commission stops short of addressing whether the proposed FTP fraud offence should have extra-territorial effect (as is present in the current FTP offences), citing the potential negative impact on investment in the UK where a non-UK company falls within the scope of the offence, as one reason why.
Small-to-medium enterprises are likely to express concerns around the proposals posing disproportionate compliance burdens. To this end, the Law Commission’s options paper proposes a requirement for the government to publish guidance – potentially for specific sectors – on what prevention procedures an organisation might implement.
The Law Commission’s proposals are still at a provisional stage, with no set date for a government review, and no clarity on whether any proposals will be included in the second round of legislation following on from the March 2022 Economic Crime (Transparency and Enforcement) Act. Current endemic levels of fraud, problems with the existing ‘identification principle’, and the SFO’s reputation in major corruption cases show one thing: reform is needed urgently.
Craig Hogg is an associate, and Caroline Timoney is a researcher at Peters & Peters Solicitors