Sunday, 29 January 2012

Harry Redknapp and Rosie 47

A bit of an unusual one from me here. I’m usually more interested in where businesses do bad things where the bad thing is tied up in the aims of the business. Personal gain tax evasion is a bit dull – it’s individuals looking out for themselves.
But get a top-flight football manager involved, and I’m all ears. Tottenham boss Harry Redknapp is currently on trial at Southward Crown Court facing two charges of cheating the public revenue, using an offshore account named for his dog and his year of birth.
My friend was asking me recently about what punishment Mr Redknapp faces. He (my friend) doesn’t want his club’s boss to go to jail. Ideally, said my friend, Redknapp would be found guilty, fined a huge amount of money, and that would be that. Why does he want him to be found guilty? Simple; that would rule him out of contention to be the next England manager (I’m not convinced it would!).
So what does the Crown have to prove, and what could Mr Redknapp face? Cheating the public revenue is a common law offence, a product of England’s long judicial history, and never enshrined in statute. Because of this, the elements of the offence (the bits the Crown has to prove) have taken some time to establish. An authoritative case, as far as I can make out, is Mavji  [1987] 1 W.L.R. 1388; where the offence said to consist of:
“fraudulent conduct by which money was diverted from the revenue and the revenue deprived of money to which it was entitled; that the offence could be committed by omission as well as by a positive act of deceit” (headnote)
It’s not a very user friendly definition, as it goes. And I’m not going to start trying to second guess the way the trial might go. As far as I can gather, Redknapp is essentially playing the daft wee laddie - any non-payment of tax was not done purposefully or fraudulently.
As to sentencing (if Mr Redknapp is guilty), the Crown Prosecution Service doesn’t have sentencing guidelines for cheating the public revenue. Indeed, in Mavji, the court held that similar statutory crimes’ maximum penalties don’t provide good guidance – a two year statutory maximum for a similar crime to Mr Majiv’s was deemed irrelevant as the Court of Appeal upheld a 6 year jail sentence for a cheat that cost the revenue at least £600,000. The sum in the Redknapp case doesn’t look to be anywhere near that, the BBC reporting that tax wasn’t paid on sums totalling about £189,000. And despite there being no guidance,  I would think that any judge would take into account similar aggravating and mitigating factors as applicable in other tax and fraud cases.
I think my friend’s hope may not be altogether unrealistic.

Tuesday, 24 January 2012

Minimum Alcohol Pricing in Scotland 1: The Law

Scotland loves a drink. Too much. It seems well accepted that we need to do something about it, but what that thing is is a bit more controversial. The SNP are pushing ahead with a bill to have a minimum price per unit for alcoholic drinks. This would push up prices of currently cheap drinks like white cider and own brand vodka. In so doing, it would make a good underage house party far more expensive.
There are lots of good issues to discuss here. Minimum pricing in relation to tax; the role of education in improving our ‘drinking culture’; whether or not such a measure is progressive in how it affects people of different means; which economic actors benefit from the price rises; and whether other strategies, or even simply enforcing existing ones, would do the same job or a better one.
But I’m more concerned here with business and law. There are legal issues with the plan. Minimum pricing for alcohol could fall foul of European ‘free movement’ legislation. These rules, set out in the TFEU, are to protect the point of the EU. The EU cannot be a ‘common market’ if there are barriers to trade which prevent goods moving around that market freely; just as a garden cannot be a common garden if each of the garden’s users fence off their own portion. The argument, which may well be litigated, is that minimum pricing is one such barrier – it would make it harder for goods to cross borders.
It has been litigated before. In 1978, the top EU court (the ECJ) ruled that Dutch minimum pricing rules on gin (see para 18) amounted to a measure that could “likely to hinder, directly or indirectly, actually or potentially , imports between Member States.” Note that a measure would fall foul if it potentially caused indirect hindrance; the boundary is set low. And if anything, the hurdle has fallen lower over the last 30 or so years, with Keck opening up a whole new realm of possible arguments to disgruntled companies. Forbidding sales of pharmaceutical goods in Germany over the internet was, in Doc Morris, held to fall foul of free movement laws because it would ‘in fact’ hurt the business of a non-German company more than a German one.
The Dutch Gin case is not a beautifully reasoned judgment (when is an EU case?). But the fact is that minimum pricing might affect external companies more. Extrapolating as well from GIP, having a minimum retail price for alcohol makes it harder for, say, French companies to sell their booze in Scotland because there is a floor price under which they cannot compete. Given how tough it is to break drinks into new markets, removing one arena for competition is likely going to constitute a measure that restricts trade.
Now, it is possible to justify restrictions such as these on other grounds. One way, which is central in much EU case law, and would be interesting here, is whether the measure is necessary to protect the health of humans. Maybe the restriction of trade is justifiable, given the number of Scots keeling over with rotten livers.  Of course, that is arguable. But we should note that the ECJ has been wary of such arguments in the past, even in more emotive and morally charged cases like (the beautifully named) Humanplasma case. Further, as Stephen Weatherill was always at pains to point out, consistency is key. It’s no use to say minimum pricing saves lives when we struggle to keep Buckfast out of the hands of underage drinkers. And given the SNP Bill has only minimum pricing in it, they are left unable to argue that they are mounting some broadside attack on the Scottish drinking culture. I am left, therefore, agreeing with Anne Milton, in thinking that minimum pricing is, probably, illegal.
Of course, there are specific directives on alcohol duties, but Free Movement is more interesting, and is applicable.

Sunday, 15 January 2012

The Bribery Act 2010, and the Court Clerk

One big issue in UK corporate wrongdoing at the moment is the coming into force of the Bribery Act 2010. There are many discussions to be had about it, and all of them are to an extent fruitless because there is hardly any case law on it. We can wonder how much more far reaching it will be than the old common law offence, and whether its seemingly large ambit will result in a deluge of cases where companies have been deemed too generous with their corporate hospitality, or where companies have ‘bribed’ a foreign official in a very different sort of jurisdiction.
Enforcement is a critical issue in crime (and law) generally. Some Jurisprudes think that a ‘legal system’ has to be generally efficacious to qualify as a legal system (H.L.A Hart did, for example). There has to be a question as to the point of a specific rule if it won’t be enforced, or will be enforced with too much discretion – think of the murky waters of euthanasia. As a more frivolous example, my primary school headmistress banned ‘lifting your feet’ in the playground. This was to prevent kicking, boisterous behaviour, and high-jinx. Only discretion stopped ‘walking’ being punishable by a stern reprimand by the blue-rinsed teaching assistant.
So for now we wait to see if the Bribery Act is a ‘toothless wonder’[1] or whether the ‘opportunity’[2] to crackdown on bribery will be taken.
Another aspect of enforcement is sentencing. Again, the sentences meted out to corporations are an area of contention – a contention often being that the available punishments are not severe enough, and further, are not even utilised to their fullest extent. Here, some reports are suggesting we do have some meaningful suggestions as to how the courts will act in Bribery Act cases.
Legal Week ran ‘First Bribery Act sentencing sees former court clerk handed six-year term’. This is a really poor headline. The court clerk got six years for misconduct in a public office. He got a concurrent three year sentence under the Bribery Act. At Crown Court level.
This tells us next to nothing as to how severe sentences will be. The 10 year maximum in the legislation shows that it’s meant to be pretty fierce, but until we have sentencing guidelines or an appeal court decision, we only have a sentence in the Crown Court, where we could have just picked a number between 0-6, given the misconduct charge. But the headline ‘First Bribery Act sentencing essentially pointless and gives no guidance’ would be less grabbing.

[1]Aaronberg and Higgins All Hail the Bribery Act – The Toothless Wonder!’ Archbold Review 2011, 6, 5-6
[2] Alexander, The Bribery Act 2010 in force: an opportunity to be taken, 2011 Comp. Law. 353 

Tuesday, 10 January 2012

Crime and Punishment 2: Punishment

Punishment is a tricky biscuit when we look at corporations. As Coffee made famous, Dostoevsky Ltd have no body to kick, and no soul to damn. You can’t throw ‘it’ in prison or hang ‘it’. But before we think about how to punish companies, it is worth thinking about punishment generally.
Some scholars spend ages thinking about what punishment is. I don’t find that question too interesting. It is definitely possible to think of circumstances where punishment isn’t deliberate ‘hard treatment’ – like the homeless thief preferring prison, or Daily Mail-infuriating non-custodial penalties – but it is a decent starter for ten.
More interesting is why we punish. Here, the debate divides (roughly) into consequentialist theories and retributive theories. We punish because the consequences of punishment are desirable – we’ve reformed the criminal, kept him off the streets for a while, and deterred him and others from doing similar. Or, we punish because we think that the criminal deserves to be punished. He did wrong, and should suffer the consequences. This (very roughly) can be divided into Bentham v Kant, which makes it alluring for study – you get to argue against a heavyweight philosopher, on a subject with an easy handle, knowing you have heavyweight support on your side.
Difficulties arise when we choose just one theory. If we punish simply to deter, for example, we would hang David Beckham if he stole a loaf of bread – he’s famous enough that everyone would get the (or at least a) message. Difficulties arise in English criminal law because we’ve not chosen anything at all. Judges can pick their sentencing rationale as if from a cafeteria menu (Ashworth), see the smorgasbord of reasons for punishment given at s142 CJA 2003. Pick and mix sentencing might be one reason why the Facebook-non-rioters can get heavy sentences, when judges avowed to send signals about acceptable behaviour. To decry a pick-and-mix approach is not to say synthesis is easy; so many have tried to seek third ways that the theoretical dual carriageway now has as many lanes as cars, or scholars.
People write books on this. Again though, this is just an introduction, and a background. In literature on corporate misbehaviour, deterrence often receives the most attention. It is instructive to keep an open mind. Maybe deterrence is not the whole story. Or, if it is, we must ask why.

Wednesday, 4 January 2012

Crime and Punishment 1: Crime

We could discuss what crime is, and what punishment is, and why we punish, forever and a day. And I don’t have that long. But these are important ideas to remember when we consider the bad things businesses do.
Why are some bad things ‘crimes’ and some bad things not? If Dostoevsky Ltd breached a contractual agreement with Fyodor Plc, then they could be liable in civil law for damages. But the breach isn’t criminal. In day-to-day life, all sorts of naughty stuff is dealt with away from criminal courts. If I accidentally hit your car, I would be liable in tort for damages. I needn’t be made a criminal.
We could say, then, that crime is just whatever criminal law says it is. But this can be unsatisfying, for a number of linked reasons.  The first is that law changes. It’s now nonsense to think of homosexuality as a crime, but in the 1960s, it was. Some countries still legislate against it, giving Sepp Blatter ample opportunity to look like a buffoon. The second is that a whole range of things are ‘criminal’ – from dropping litter to rape. Maybe to have one name for all of these offences is not a good thing – and maybe they shouldn’t all be offences, and maybe other things should be. And sociologists are well aware of the impact of labelling. It’s quite a powerful accusation to call someone a criminal. Does a litterbug deserve that, regardless of what other sanctions befall him? Should we therefore distinguish between levels of crime? Rape is worse than littering, but some other crimes are harder to rank, and divide into camps. Given the content is crime of so shifting and contentious, the study of crime is difficult to be sensibly circumscribed by the happenstance of statute books.
(Crime is sometimes talked of as being ‘socially constructed’ – that is, society determines what it treats as criminal. This is a useful term to remember. It helps explain why what’s criminal changes – society is made up of people who change their minds. And it is also useful in understanding why labelling is an issue – calling an act criminal plays into the mind-set of a society.)
None of this is helped by other surrounding issues. Academics are still not sure what law or a legal system really is, nor what its point is. We’re not sure what ends we’re trying to achieve when we punish. And the examples I gave above could be treated in more than one way. The tort of negligent driving can become the crime of dangerous driving – tort maybe serves some of the same purposes as crime. (and some systems, like New Zealand, have gone without tort). Why not treat some breaches of contract, in essence a broken promise, like a criminal fraud – a misrepresentation causing pecuniary loss?
All this piece is meant to show is that ‘crime’ cannot just be thought of in a narrow, legal sense, hermetically sealed and unchangeable. But I’m not suggesting all naughty things are in play when we think of ‘crime’. This is key when we think about whether, in corporate naughtiness, we want to treat actions as criminal, and treat them as such, or allow other devices to regulate them.