SFO Toughens Up on Bribery

29 October 2012

Author: Dorit McCann

Bribery_act

On 9 October 2012, the Serious Fraud Office (SFO) issued new policies under the Bribery Act 2010 (Act) in relation to facilitation payments, business expenditure (gifts & hospitality) and corporate self-reporting. The changes have been spearheaded by the SFO's new Director, David Green QC.

Background

The Act came into force on 1 July 2011 and takes a vigorous approach to bribery.  It created a new corporate offence of failure of commercial organisations to prevent bribery by persons associated with them. The only defence is where an organisation can show that it had adequate bribery prevention procedures in place. The Ministry of Justice (MOJ) issued Guidance on what amounts to adequate bribery prevention procedures in 2011. The MOJ Guidance remains unaffected by the recent changes in SFO guidance.

New SFO Guidance

The new policies confirm that genuine hospitality or promotional or other legitimate business expenditure is recognised as an established and important part of doing business. However, the SFO highlights that bribes are sometimes disguised as legitimate business expenditure. The SFO's new guidance clarifies that it will prosecute in respect of bribes presented as business expenditure and facilitation payments if there is a realistic prospect of conviction and if it is in the public interest to do so. (Facilitation payments are a type of bribe, for example where a government official is given money or goods to perform, or speed up the performance of, an existing duty.) This replaces previous guidance that the SFO would take into consideration factors such as the scale of payments made.

Perhaps more importantly, the SFO has withdrawn its previous guidance on self-reporting, which indicated a preference by the SFO for civil settlement for self-reporting organisations.  The fact that an organisation has reported itself will continue to be a relevant consideration to the extent set out in the Guidance on Corporate Prosecutions. This states that, for a self-report to be taken into consideration as a public interest factor tending against prosecution, it must form part of a "genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice". Each case will of course turn on its own fact but the SFO's new guidance indicates that the honeymoon is over. Self-reporting will no longer be a guarantee or likelihood that a prosecution will not follow.

Comment

The new SFO Guidance largely reaffirms that commercial organisations should not be nervous about legitimate corporate hospitality. However, the tougher stance in relation to self-reporting may tempt companies to turn a blind eye to any acts of bribery it uncovers. The risks of doing so should not be ignored - if an investigation is launched as a result of another source of information, it may be considerably harder to manage publicity surrounding the case along with the inevitable disruption to the business.  

It is vital, now more than ever, that organisations put in place adequate bribery prevention procedures which do not merely prohibit bribery but actively seek to prevent it.

For more information about The Bribery Act please contact: 

Dorit McCann

T: 028 9034 8816

E: [email protected]

or 

Rebekah Nevin

T: 028 9034 8816

E: [email protected]

25 October 2012

Back