In a recent article in the Times, Lisa Osofsky, the head of the Serious Fraud Office (SFO), paints a vivid picture of the difficulties of securing a fraud conviction against big corporations. (SFO boss Lisa Osofsky says deferred prosecutions vital to tackle white-collar crime by Louisa Clarence-Smith, Wednesday 30 June 2021)
She writes: “The governance of modern global companies is often so complicated that the definition of power and control within them is far from clear. This can make identifying responsible individuals challenging or impossible.
“In the UK, a company can be convicted of a criminal offence only if an individual or individuals can be defined as the ‘controlling mind’ – those controlling the actions of the company. There is no simple definition. Seniority is relevant but not decisive. Other factors include how the company is legally structured and how authority and decision-making are delegated.”
Ms Osofsky notes that leaders “can distance themselves from the actions of their company. And this can result in what I call a dangerous culture of organised irresponsibility.
“How do you spot organised irresponsibility? Well, it’s demonstrated in inappropriately heavily delegated decision-making; a lack of record-keeping; responsibility spread across different corporate entities; email trails petering out at board level and a culture at the top of ‘don’t raise that with me’.”
This picture of big corporations and their CEOs running rings around the regulators, ‘delegating’ dodgy decisions to some dispensable low-ranking functionary, and building a cordon sanitaire around the true leadership so they can keep their hands clean, is painted with refreshing candour by no less than the head of the SFO herself.
The scene is surely set for a clarion call for tighter regulation against criminal malfeasance on the part of big business? But no, her conclusion is lame indeed. “This is our environment. To complain about it would be like a captain complaining about the sea. So we have to adapt.”
And it transpires that this ‘adaptation’ takes the form of the deferred prosecution agreement (DFA), whereby companies suspected of fraud are given the option of deftly by-passing the normal criminal justice system entirely – an option not commonly offered to bank robbers and burglars!
The logic is simple enough: since it’s so difficult to prove which individual or individuals are the guilty parties, there is still plan B: reach for a DFA. In exchange for ‘deferring’ (in practice, dodging) a criminal prosecution, the company can opt to ‘cooperate’ with the SFO, repay some of the proceeds of crime, pay a fine and promise not to do it again.
Osofsky hastens to reassure us that “these are not get-out-of-jail-free cards”. Oh really?
In fact, what they are is a tacit admission that the lords of finance capital are for the most part beyond the reach of the very institution supposedly charged with ‘regulating’ their activities.
This is not a situation that can be remedied by any better regulatory system under capitalism. Only its abolition will bring the whole capitalist racket to book.