Author: Azizur Rahman
28 October 2013
4 min read
It has been a long time coming, but the Serious Fraud Offi ce (SFO) has now brought its first Bribery Act prosecution. Three people have been charged in connection with biofuel investments. Is this the start of a trend?
In the end, it took two years, one month and 13 days. On August 14, the SFO brought its first charges under the Bribery Act – a piece of legislation that came into force in July 2011.
The prosecution of three people under the Act - in relation to their promotion and sale of biofuel investments - has become a landmark for those who have been waiting to see exactly how effective this much trumpeted piece of legislation would turn out to be. While the Crown Prosecution Service (CPS) was the fi rst to prosecute using the Act – the 2011 conviction of a court offi cial who took a £500 bribe regarding a speeding charge – it’s fair to say that it has always been regarded as the SFO’s weapon. Yet until now it has hardly been the weapon of choice. This was possibly because of the strong reactions its introduction provoked. For everyone who applauded it as a necessary overhauling of the UK’s inadequate anti-bribery legislation there was someone who would accuse it of preventing UK companies being competitive abroad.
Two years later, we have the first charges. Since the Act was introduced there has been a new man installed at the top of the SFO. The SFO has suffered negative headlines over issues ranging from its cack-handed management of the Tchenguiz brothers investigation through to the handling of its fi nances under its previous director Richard Alderman and its supposed loss of confi dential material regarding an investigation into BAE Systems. A cynic may conclude that these fi rst charges conveniently take the focus away from such unfl attering headlines.
The question needs to be asked, therefore, whether these charges are a statement of intent by the SFO or simply an attempt to show that the Act – and by implication the SFO - can tackle corruption. This year, the SFO has talked a tough line on bribery. Its new director David Green has insisted that his organisation will not rush into Bribery Act prosecutions for the sake of being seen to be busy. Yet the SFO has indicated that more prosecutions are imminent. This would seem logical. While the Act has been in effect since July 2011, the complexity of bribery and corruption cases makes it inevitable that investigations will be involved and lengthy. The SFO is supposed to take on only the most involved cases. It would have been unrealistic, therefore, to expect a glut of prosecutions as soon as the legislation was there to be used by the authorities.
Bearing this in mind, it may be the next few months that give us the clearest indication yet of just how aggressive the SFO intends to be with the Act. As we mentioned earlier, the Act is a powerful weapon. If the SFO now feels comfortable using it then many people could fi nd themselves in its sights. So is it really worth taking the risk of falling foul of the Act?
Recent months have seen the SFO talking a lot tougher regarding corruption. Its stance on what it sees as corruption in South Wales mining earlier this year showed that the SFO was not afraid to take action on a large scale when it believes the evidence is there. This may not have been a Bribery Act case but it showed what the SFO is capable of when it gets its teeth into something. The Bribery Act may just give it that extra bite.
If that proves to be the case it is imperative that every company has ensured it is fully legally compliant – and is able to prove it to anyone who comes investigating. A fully-documented and recorded accounting system, detailed records of all company activities and a culture of compliance are essential. The Bribery Act holds a company responsible for the activities of its staff, representatives, agents and partners anywhere in the world. If any of those people offer, give, receive or even suggest a bribe then the company can be liable for punishments that include unlimited fines, assets confiscation and – in the case of individuals - up to 10 years in prison. Much of a prosecution’s focus when seeking a conviction under the Act will centre on whether the company had instigated and maintained adequate procedures to prevent and detect bribery.
It can be argued that the only safeguard against a prosecution is to use specialist legal expertise. A solicitor fully versed in compliance law can ensure a company is functioning at all times – and in all places – in line with the law. The Bribery Act relates to any company with a UK connection and its activities anywhere in the world. Its huge scope makes turning a blind eye, crossing your fingers or deciding not to ask awkward questions of colleagues a very dangerous and potentially costly option. In reality, it is no option at all…unless you want to invite a prosecution.
There is no doubt that a solicitor working in the field of compliance costs a firm money. But it will never be as costly as a criminal prosecution, custodial or financial penalties, loss of trade, damage to reputation or a huge drain on working man hours – all of which can be the consequences of a Bribery Act investigation, whether or not it leads to a prosecution and conviction. Making sure that adequate anti-bribery procedures are in place and can be demonstrated is nobody’s idea of fun. But it could be the difference between continued trading and imprisonment. Companies that do come under investigation are extremely unlikely to be the ones who took expert legal advice on compliance. If the SFO is now fi nally set to use the Bribery Act for what it was intended, it would be a very foolhardy company that failed to examine the risks it runs in business.
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.