Clause 12

Fraud Bill [Lords] – in a Public Bill Committee at 5:15 pm on 20th June 2006.

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obtaining services dishonestly

Question proposed, That the clause stand part of the Bill.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office)

I have a brief inquiry. I take the view that officers of a company should be individually responsible for the actions of the company when it acts dishonestly. However, as has been pointed out, there is no mens rea provision in the clause. The company officer does not have to have formed the dishonest intention himself or herself to be guilty of an offence under this section unless there is perhaps another construction on the clause of which I am unaware. That is of some concern. Is the Solicitor-General’s view that as an officer of the company they have a duty and responsibility to be aware of whether the action in which they are consenting or conniving is a dishonest and fraudulent act? If that is the view then by consenting or conniving, as the clause says, they would have formed the dishonest intent at that point. I would be grateful if the Solicitor-General told me whether that is the construction that he places on the clause and explained how precisely it would work.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

I find myself pipped to the post by the hon. Member for Somerton and Frome in rising so quickly to his feet, and I would not rise myself unless there were a further slight gloss to apply to precisely the same point I wanted to raise. I think that part of the answer to his question can be given; namely, that as a company can only commit an offence through its officers, it must follow that if the body corporate is going to commit the offence, someone in the body corporate must be acting dishonestly. That would normally be the person who would be seen to be consenting or conniving to the commission of the offence.

But the nub, and maybe the point that the hon. Gentleman is getting at, is that it seems to me that it at least technically possible on the reading of clause 12—I am aware of its derivation; this has been around for  rather a long time—for one to have a company where a body corporate commits an offence through the dishonesty of one of its directors, but with the consent of another of its directors who is not, himself, acting dishonestly. Technically, in such circumstances both of them would be convicted of the offence when the body corporate was convicted. If that is the case, it might be readily curable. However, the Solicitor-General might indicate that that is not necessary, or that if we were to try to cure it we would cause all sorts of other problems. However, that was what struck me about the clause as, I suspect, the main issue struck the hon. Member for Somerton and Frome.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department

In essence, clause 12 follows section 18 of the Theft Act 1968. It is the standard provision that makes company officers who are party to the commission of an offence under the Bill by their body corporate liable to be charged for the offence as well as the company. A director, manager, secretary or other similar officer of the body corporate, or a person purporting to act in that capacity, has to be in a position in which he can be diligent about the work that he does. There must be a reasonable standard of diligence; such people must know what they are about. The requirement in the legislation is connivance or consent, so they must know what they are conniving or consenting to. If they are conniving or consenting to something that is clearly dishonest, and they are sufficiently aware of that to be aware of the implications, then they are in a position in which they have connived or consented to an offence.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

I take the Solicitor-General’s point, but there is a difference between consent and connivance. Connivance, by its nature, implies guilty knowledge—that is how I always understand the word, given its ordinary meaning—whereas consent need not. It might be that there is a flaw in the Theft Act 1968, or it might be a problem that has never arisen, but it is at least possible, taking the strict technical meaning, that the body corporate commits an offence because one of its directors does so deliberately—so the dishonesty comes from that director—but several other directors consent innocently to the commission of that offence. In that case, as the clause is drafted, they could be caught with all the draconian consequences that flow from it. I have to accept that the reality is that the prosecutor probably would not prosecute them. However, if there is a way of avoiding the danger that they could be prosecuted, it might be worth considering, because they are not the people against whom the clause is, or should be, aimed.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department

The clause is aimed against those who have given informed consent, to use the phrase, in relation to an act that has been done. As the hon. Gentleman said, for a company to be liable, an officer of that company has to have committed the offence. That is the identification principle. Others may connive or consent, but they must know what they are conniving or consenting to. It must be an informed consent, or a connivance, so they must be sufficiently  informed that they are aware of the nature—or, at least, to some extent, of the dishonesty or implications—of the act.

Some provisions of this type include neglect, but that is not included here. This is not about somebody who is a bit negligent and does not know; he has to have the ability to take a view on a matter, and then to have taken that view by having given his consent in a practical way. We consider that that informed consent is sufficient to amount to a knowledge of dishonesty. Whether a person is, himself, dishonest might well be a different matter; it is a fine line. The question is whether they are they well enough informed about the implications to have taken a step that amounts to consent based on uninformed knowledge of the possible consequences.

Question agreed to.

Clause 12 ordered to stand part of the Bill.