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The SFO is preparing to get ever tougher on prosecuting bribery-related offences. Moving into 2013, directors need to act promptly to protect themselves against liability.
The new director of the Serious Fraud Office, David Green QC, has repeatedly pledged to stamp his own aggressive prosecuting style upon the UK'S enforcement agency; in an interview given to the Independent last year, he said 'I would like the SFO to have a hard-edged, tough reputation. It should be something which is feared. You don't want to be investigated by the SFO.'
Mr Green has already imposed his authority on the SFO. In early October 2012, he withdrew the guidance for corporates on self-reporting from the SFO's website and replaced it with brief policies on the SFO's approach to self-reporting, facilitation payments and gifts and hospitality. The new SFO policy on self-reporting will not give any comfort to corporates, as the SFO now states that 'self-reporting is no guarantee that a prosecution will not follow‘. The presumption that a voluntary disclosure may result in a civil settlement is no longer applicable. It is only in the event that a prosecution is not deemed appropriate that civil recovery may be considered as an alternative to prosecution.
With this in mind, it is now more important than ever that corporates, directors and senior officers ensure that both they and the company do not fall foul of the Bribery Act 2010. In addition to prosecuting those individuals who commit the core bribery offences under the Act (as described below), the SFO has made it clear previously that its focus is on company directors or senior officers with a UK connection, who have consented to, or connived at, bribery by the company. A senior officer will have a close connection with the UK if, at the time the offence was committed, he or she was a British citizen, British national or ordinarily resident in the UK, regardless of where the company is incorporated or carries on its business.
Section 14 of the Act provides that if one of the bribery offences (as listed below) is committed by the company with the consent or connivance of a senior officer (or a person purporting to act in such a capacity), then the senior officer will also be guilty of an offence in his/her individual capacity. Self-reporting is no guarantee that a prosecution will not follow.
You don't want to be investigated by the SFO. Therefore, if the company is prosecuted for one of the following core bribery offences as below (which does not include the "Corporate Offence" - the offence of commercial organisations failing to prevent bribery), the senior officer is also at risk of prosecution, if the offence has been committed with his/her connivance or consent.
It is not even necessary for any other individual to be prosecuted for the actual payment (or receipt) of the bribe for the senior officer to be pursued. The penalty for breaching section 14 of the Act is an unlimited fine and/or imprisonment for up to 10 years. The penalties for the core bribery offences also carry a maximum sentence of 10 years' imprisonment.
Senior officers are at high risk of falling foul of the section 14 offence in circumstances where they become aware of bribery being committed within their company, but do nothing about it. The former Director of the SFO, Richard Alderman, has said publicly that:
'Society expects senior members of a corporation to be responsible for ensuring that there is a true ethical culture. They have key responsibility here. My view is that if they find that their efforts to do this meet with resistance or no success then they should consider resigning and telling us about their concerns. Expressing doubts about the company's culture but remaining a highly paid officer would not be sensible because this would seem to be a model case of conniving in bribery for the purposes of the legislation.'
Directors and senior officers therefore need to take active steps to ensure that the company itself is not at risk of committing one of three core bribery offences listed above, which in turn will negate the likelihood that they will incur personal liability for a breach of section 14. These steps will involve ensuring that the company has put adequate procedures in place, namely:
Such steps are not only prudent, but absolutely necessary in the increasingly interventionist regulatory climate in which we now find ourselves.
About the author: Elinor Lloyd is Senior Associate at international law firm Berwin Leighton Paisner.
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