A Tougher Tone on the UK Bribery Act
For those who act properly, however, the impact of the Act remains largely unchanged.
The Act creates an offence relating to companies incorporated in the UK or doing business there. If an employee, agent or other person who “performs services” for such a company (including some local and foreign business partners, including those from the Czech Republic) bribes a person anywhere in the world for the commercial benefit of the company, the company will be guilty and punishable by an unlimited fine. It need not have instigated the bribery. In fact, it need not even know about it. The company can, however, escape liability if it proves that it has implemented “adequate procedures” designed to prevent such conduct.
The new SFO guidance addresses the approach that will be taken to investigating bribery. The guidance is set out partly in new statements published on the SFO’s website and partly in an amendment to the so-called Joint Prosecution Guidance of the Director of the Serious Fraud Office and the Director of Public Prosecutions (the "Joint Prosecution Guidance"). Under the new guidance the SFO takes a stricter approach to three major areas covered by the Act: facilitation payments, corporate hospitality and corporate self-reporting.
The Joint Prosecution Guidance describes facilitation payments as unofficial payments to public officials to speed up their activities. It says that these payments are illegal and not exempted under the Act. The new guidance puts it more bluntly: these payments are bribes and should be seen as such. The SFO also draws attention to the use of its powers under proceeds of crime legislation. However, it goes on to state that, as in the past, the question of whether the SFO will prosecute will be determined by general rules guiding British prosecutors.
Corporate hospitality (using meals, small gifts and so on to create and maintain business relationships) is described under the Joint Prosecution Guidance as an important part of doing business which the Act does not seek to penalise. There are, however, some warning words on “lavish” hospitality and using it to encourage improper behaviour. The new guidance does not disagree that these practices are acceptable, if used legitimately. But it adds that bribes are sometimes disguised as legitimate business expenditure. Again, reference is made to proceeds of crime legislation and general rules for prosecutors.
Corporate self-reporting enables companies which have committed crimes under the Act to confess them in the hope of more lenient treatment. This conduct was specifically encouraged under the Joint Prosecution Guidance. It still is, but with an important twist: the SFO now offers no guarantee that, if a company self-reports, it will not be prosecuted. As above, everything will depend on general rules guiding prosecutors. Attention is newly drawn to a particular principle from the so-called Guidance on Corporate Prosecutions forming a part of those general rules: a self-report will be taken into consideration as a public interest factor tending against prosecution only if it forms part of a "genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice".
The SFO also refers to prosecuting under proceeds of crime legislation as an alternative (or additionally) to prosecuting under the Act. And, even if it does not prosecute a self-reporting company, the SFO reserves the right to prosecute for unreported violations and to provide information to other bodies, including foreign police forces.
Prosecution not education?
David Green, the SFO’s new director who was appointed this spring, appears to see things differently than his predecessor. The agency is not, in his view, a regulator of good business conduct but the principal investigator and prosecutor of corruption. Hence the new signals that the SFO is sending out. Clearly now the decision whether or not to self-report will be tougher than ever. And, for companies which have not focused on stamping out corruption internally, the days have probably gone where the SFO will engage and educate rather than investigate. But, for the honest majority of companies, not too much has changed. The new guidance changes neither the provisions of the Act nor the corruption which it addresses. The fact remains that the owners and officers of a company which falls within the scope of the Act must ensure not only that it acts honestly but also that it protects itself, through thoroughly implemented policies and procedures, from the dishonest acts of its employees and others.