As noted in the prior post, there are no formal legal defenses available when a company violates the Gross Human Rights Abuse provisions of the Criminal Finances Act. How, then, should companies deal with allegations that they’ve committed violations?
Should a violation occur, the company might be able to rely on prosecutorial discretion to disregard cases where there is a genuine effort by the company to deal with complex human rights situations in a responsible way.
Companies can demonstrate their efforts by showing strong due diligence programs, proactive responses to potential violations, self-reporting of potential violations, as well as reparations to victims.
Deferred Prosecution Agreements as seen in UK Bribery act cases are only formally available for criminal proceedings, meaning they do not apply to Gross Human Rights Abuse cases. However, companies may be able to mitigate the damages of a case by making informal agreements with prosecutors that resemble DPAs.
This will require active cooperation with the investigation from the start, as well as continued cooperation by the entity with investigations of individuals. Past DPAs have included payment of the costs of the investigation, as well as penalties and requirements to establish stronger diligence programs.
Once a company is aware that it is doing business with an individual or entity that is committing Gross Human Rights Abuses (for example, by accidentally profiting from the abuse), it should consider taking immediate preventative action, including terminating its relationship with the abusive party. While this may create contractual issues, the potential penalties and complications from the assets being frozen during the trial, as we discussed earlier, will likely outweigh them, not to mention the potential reputational damage.
A business may also consider self-reporting any serious violations it discovers to the National Crime Agency. It is reasonable to expect prosecuting authorities to focus their attention on the worst offenders, rather than companies who find themselves unwillingly and unknowingly caught in the Criminal Finances Act ’s web, despite efforts to operate responsibly. Self-reporting is the best way to ensure that, if there are to be proceedings, they begin on the right foot.
Finally, consider ways to pay reparations to victims. The willing payment of reparations to victims will likely be far cheaper than any penalty or disgorgement of profit, and is a strong showing of good faith. This will be particularly useful in situations where the company unknowingly profited from a Gross Human Rights Abuse. In many cases, supporting victims is likely to encourage prosecutors to use their discretion favorably.
The Criminal Finances Act ’s Gross Human Rights Abuse provisions expand far further than the mere seizure of the assets of corrupt officials, as imagined by commenters in the press and Parliament. They pose real risks for liability for companies engaged in international business — particularly in unstable regions where human rights abuses are common — and should be treated accordingly.
Through strong due diligence, good faith compliance with the law, responsible self-reporting, payment of reparations, and other steps, companies will minimize the chances of becoming caught by the Criminal Finances Act.
Richard J. Rogers is a founding partner at Global Diligence LLP, a London-based law firm specializing in international law and human rights compliance. It offers a wide range of services to companies operating in high-risk zones to help ensure compliance with international standards. He can be contacted here.
Sasho Todorov is a third year Vanderbilt law student and an intern at Global Diligence. He can be contacted here.