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The Past Year

21 March 2016

A review of the law regarding financial and business crime in 2015

Another year has passed and brought us some notable legal developments. And perhaps now the dust has settled on 2015, we can look at it in retrospect and see what the truly significant moments were.

Elsewhere in our first newsletter of the year, we take a brief look at what the next 12 months may hold. So here we shall examine what the previous year brought us.

Bribery
Arguably the most notable matter for the record books was the fact that the Serious Fraud Office (SFO) secured its first conviction for bribery under the Bribery Act. Those in favour of the Act always argued that it would take some time to become an effective legislative tool for the authorities – and this has been shown to be true. Since it came into effect in 2011, there had been no convictions until last year; when two defendants were convicted under the Act as part of the Sustainable Growth Group case. Bribery Act detractors could argue with some justification that the case was primarily a £23M biofuel fraud; of which the bribery aspect was far from the major plank of the prosecution. Some have claimed that if it had happened before the Act’s introduction then it is unlikely the bribery aspect of the case would have been prosecuted. But nevertheless, it stands as the first Bribery Act prosecution.

A similarly notable event in 2015 was the first UK disposal of a failure to prevent bribery offence under the Bribery Act. The case was resolved by a civil recovery order for £212,800; with the company under investigation, Brand-Rex Limited, avoiding a criminal prosecution because it had self-reported and carried out what was agreed to be a thorough internal investigation. The company found itself in trouble under S.7 because one of its agents had used its incentive scheme in a manner that was deemed to have given a financial advantage to a customer.

DPA
Making an impressive Bribery Act hattrick for 2015 was the SFO’s first use of a deferred prosecution agreement. This was in relation to the conduct of Standard Bank and its sister bank Stanbic Bank Tanzania over the payment of commissions to a Tanzanian government official. While the conduct met the criteria for a prosecution, a DPA was chosen as the most appropriate route because the bank had swiftly selfreported what had happened and had cooperated fully with SFO investigators.

A notable year then for those who have waited and watched for signs of the Bribery Act’s effectiveness. While the Act has been slow to set the courts alight, this should come as little surprise. Cases relating to the time before the Act was on the statute books obviously cannot be prosecuted under it and instances of bribery identified since its introduction will be the subject of lengthy, involved legal negotiation before they ever reach court. In time, therefore, 2015 may come to be viewed as the year when the Bribery Act came of age.

Corporate failure
In fairness, in a year in which the government quietly abandoned the much-touted idea of a new offence of a corporate failure to prevent economic crime, these initial Bribery Act cases may come to have even greater significance.

The government argument for not creating such an offence was, we are led to believe, that the idea of establishing corporate criminal liability more widely was unnecessary. We were told last September that this was because corporate wrongdoing was not going unprosecuted. Yet this seemed to beg the question why was such an offence being considered in the first place. Certainly, SFO Director David Green was a supporter of the new offence becoming a reality. The idea was not politically contentious as it had crossparty backing and there were few vocal objections to it. Yet for some reason, a plan that the SFO thought would make it easier to prosecute companies was shelved. Such a shelving ensured that the Bribery Act was not extended to cover what seemed to be a popular notion. So, as far as legal developments go, the most important one in 2015 was arguably a non-development.

Enforcement
What has to be said, however, is that 2015 was not a quiet year. Even if large-scale legal changes were not ushered in, it was 12 months that saw enforcement at the top of the agenda. Large corporate names, not to mention some of the largest sporting institutions, saw themselves the subject of new or continuing fraud or bribery investigations.

The trend for multi-agency and international investigations continued while some old legal chestnuts such as Euribor, Forex and the conduct of banks in general remained notable issues. 2015 saw Forex convictions, charges brought over Euribor and the Financial Conduct Authority (FCA) rather boldly announcing it was dropping its plans for a wide-ranging review of banking culture. The FCA denied that any political pressure had been exerted on it but the decision looked a little odd, coming out a matter of days after the first Euribor charges were brought against staff from Barclays and Deutsche Bank. Will this do nothing approach – like the lack of a new corporate failure offence – prove costly?

2015... a year of what could prove to be important fi rsts and non-events.


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