New UK bribery guidance: Green turns on a red light

Legal, Maritime Fraud — By on October 18, 2012 at 9:51 PM

Since becoming Director of the UK’s Serious Fraud Office (SFO), David Green CB QC has not wasted time in stamping his own authority on the organisation and reasserting its primary role as a prosecutor. The honeymoon period for self-reporting under the previous Director is over. As one commentator has put it: ‘There will be no more chats with the SFO over coffee and biscuits.’

But what does this mean for business? Do businesses need to change their bribery compliance? Do they now face a bigger risk of prosecution?

Revised statements of policy

The SFO website now includes three revised statements of policy on facilitation payments, business expenditure and self-reporting but the substantive law has not changed. Nor has the substantive guidance –

Facilitation payments (where a government official, in the UK or overseas, is given money or goods to perform, or speed up the performance of, an existing duty) were and remain illegal bribes. Bona fide hospitality or promotional/other legitimate business expenditure is recognised as an established and important part of doing business, but not if it is a disguised bribe. Self-reporting is still encouraged, but leniency is not guaranteed and proceeds of crime legislation and civil recovery claims remain risks, even where there is no prosecution. Procedural changes

The SFO reminds us of its primary role as an investigator and prosecutor of serious and/or complex fraud, including corruption, and not to provide corporate bodies with advice on their future conduct. Bribery and corruption is like any other criminal offence and decisions on if and when to prosecute will be fully in-line with other prosecuting bodies (see the Full Code Test in the Code for Crown Prosecutors and the applicable joint SFO and DPP prosecution guidance and Joint Guidance on Corporate Prosecutions); References in the joint prosecution guidance to the SFO’s former policy on self-reporting have been removed but otherwise it is unchanged, as is the Ministry of Justice guidance on adequate procedures; If the requirements of the Full Code Test are not established, the SFO may consider civil recovery as an alternative to a prosecution A decision to prosecute will henceforth always depend primarily on the dual test:

(a) whether it is a serious or complex case which falls within the SFO’s remit; and, if so, (b) whether the SFO concludes, applying the Full Code Test in the Code for Crown Prosecutors, that there is an offender that should be prosecuted. There also has to be a public interest in prosecuting, which may in practice rule out prosecutions for trivial and exceptional cases.

The SFO says it will prosecute offenders for illegal corporate entertainment and hospitality if it is no more than a disguised bribe, and only if the dual test is met.

In relation to facilitation payments, it says that it would be ‘wrong to say there is no flexibility on whether to prosecute’. But a prerequisite is that you have a genuinely proactive approach involving self-reporting and remedial action and ‘a clear and appropriate policy setting out procedures an individual should follow if facilitation payments are requested’, which have been correctly followed, as these are among the key factors tending against prosecution in individual cases.

But there is also a reminder that, if business has been obtained illegally as a result of the payments, there is a real risk the SFO will seek to recover the profits under the proceeds of crime legislation, instead of prosecuting for bribery (provided the prospects of conviction are good), or use the civil recovery route (where for one reason or another prosecution is ruled out).

The policy changes have immediate effect and supersede previous statements of policy. The changes are partly a response to criticism in international circles that the guidelines allowed too much latitude in enforcement, though the website rather coyly remarks that the revisions merely ‘take forward certain OECD recommendations’.

So whilst, on paper, they do not look all that significant and probably will not affect the wording of any existing anti-bribery compliance and procedural documentation companies already have in place, they do seriously increase the risk of prosecution and reduce scope for civil settlements, which means once again that anti-bribery law compliance must be at the top of every corporate agenda and closely monitored and policed. And for the many companies that, for whatever reason, still have not conducted a review of their bribery risks and implemented adequate procedures, this is a reminder that the lights have now definitely turned to red.

Viweres can contact Legal Director Philip Wareham Telephone+44 (0) 20 7280 9282 or email him at:  Emailphilip.wareham@hilldickinson.com

 

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