Author: Azizur Rahman
9 March 2015
4 min read
It is doubtful whether the champagne corks have been popping at the SFO. Despite it successfully prosecuting three people for a £23 million fraud and, in the process, achieving its first convictions under the Bribery Act 2010, the SFO has yet to convince many of its abilities when it comes to this much-heralded piece of legislation.
The Act, although passed in 2010, could only be applied to conduct taking place from July 2011 onwards. This effectively meant that there would be no swift rush to the courts by the SFO – or any other agency – looking for Bribery Act convictions. Factor in the amount of investigation, evidence gathering and pre-trial negotiation involved in bribery cases and it would have been clear from the start that it was likely to be some time before Bribery Act prosecutions and convictions became a reality. This, however, did not prevent the occasional criticism of either the SFO or the Act when it came to the need to tackle bribery. Now, at last, the SFO has its first successful prosecutions under the Act.
The case involved the selling of investment products linked to biofuel operations a company ran in Cambodia that were funded via self-invested pension plans. The chief executive officer (CEO) of the company and the chief commercial officer (CCO) of a subsidiary company were convicted of fraudulent trading and conspiracy to commit fraud. The CCO was also convicted of accepting bribes totalling £189,000 to approve false invoices submitted by the director of a sales agency involved in unregulated pension and investment products. This director was convicted of conspiracy to furnish false information and two counts of bribery. The CEO, the subsidiary company’s CCO and the sales agency director were jailed for nine, 13 and six years respectively. Each was disqualified from being directors for at least 10 years. The SFO is also set to bring assets confiscation and compensation orders against the trio.
The prosecution was based mainly on the fraud offences but the trial judge emphasised that the bribery was an aggravating feature in a “thickening quagmire of dishonesty” that took the life savings and homes of 250 victims. The judge highlighted the significance of the bribery and there’s no doubt that these convictions can be viewed as a red letter day for the Bribery Act. Yet this case may have greater significance.
If anything, this case indicates clearly how the authorities can and will use the Bribery Act wherever and whenever they can to take on corruption. The bribery was only one element of this case but the SFO showed it was more than willing to use the Act as one part of a prosecution rather than the be all and end all. At present, the authorities area gearing up more than ever before to tackle corruption. Bribery, like fraud, money laundering and tax evasion, is increasingly in the spotlight. The SFO, National Crime Agency, the police, HM Revenue and Customs and the Financial Conduct Authority are all increasingly on the look-out for any evidence of business crime. They are working closer together than ever before, have strengthened ties with their foreign counterparts, can call on more advanced technology to help them obtain the necessary evidence and, perhaps most crucially, have the benefit of harder hitting legislation, such as the Bribery Act, the Money Laundering Regulations and the Proceeds of Crime Act 2002.
It would be misleading to read too much into this first Bribery Act success for the SFO. The case did not hinge entirely on the Act and it was a prosecution of individuals rather than one brought against a corporate defendant. There was also little evidence in this trial to help us fully understand what the courts will accept as a defendant having taken adequate procedures to prevent bribery.
Guidance from the Ministry of Justice states that “The question of adequacy of bribery prevention procedures will depend in the final analysis on the facts of each case.’’ The six principles outlined in the guidance – proportionate procedures, top-level commitment, risk assessment, due diligence, communication and training, monitoring and review – are useful pointers to anyone wanting to ensure they comply with the Act. Yet it will not be until a good number of Bribery Act cases have been through the courts that we will know what can be viewed as the real acid test of adequate procedures.
What we can say, however, at this early stage is that the Bribery Act gives the authorities the potential for successful prosecutions in instances involving complex evidence and events in a number of countries. The global reach of the Act effectively means that any company with a UK connection will find it increasingly difficult to escape the law if it is involved in bribery anywhere in the world. Ignorance of bribery, negligence regarding it or the turning of a blind eye towards it are simply not options any more. Unless you want to run the risk of unlimited fines, compensation and confiscation orders and being barred from bidding for public contracts – all of which are provisions of the Act.
As solicitors who specialise in business crime cases, we help companies of all sizes to assess how they can remove their possible exposure to bribery. It may be early days for the Bribery Act in terms of prosecutions and precedents but it is already clear that not adhering to the Act can lead to prosecution – and that merely paying lip service to it will not be enough to prevent a company or individual being prosecuted. Anyone wishing to reduce – or, ideally, remove – their potential risk of prosecution under the Act has to conduct a thorough risk assessment of just how they, their staff or other representatives could be exposed to bribery. Only then can they devise and implement thorough and appropriate anti-bribery policies. Such policies have to be backed up with the right training, monitored and regularly reviewed and be embedded in the company’s culture, from the top down.
The Bribery Act has been with us a number of years. Whether this first conviction will be the first of many remains to be seen. What is already clear, however, is the need for everyone in business to be aware of the risk of prosecution under the Act and the need to tackle those risks. It may well have taken a while for the SFO to achieve their first Bribery Act convictions. It may even take a fair amount of time before the SFO can celebrate their next ones. But it will find it increasingly easy to secure future convictions if those who come under investigation have not taken the time and effort to comply with the Act.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.