They are back, although they never really left, thebriberyact.com guys

Unlike that fabulous song-writing team of Lennon and McCartney, these two guys promised that they would be back and from what we have seen over the past few weeks, they have kept to their collective word. Yes, those two light-shiners on all things UK Bribery Act, thebriberyact.com guys have re-entered the blogging fray. While I will it to you to figure out which briberyact.com guy most closely corresponds to which song-writer, all I can say is it is hard to say where one’s contribution ends and the others begins. To celebrate their roaring return, I want to highlight some of the great posts that they collectively put up last month.

March 2 – Opinion: Don’t buy snake oil. Why a lack of Bribery Act prosecutions should not signal complacency. The guys begin their comeback last month with this post, which was their take on the status of some investigations and why there has yet to be a substantive prosecution. It is a good explanation of where things have been and where they might be headed. The guys end by noting, “In the meantime the chances of violations of the Bribery Act emerging are increasing with the passage of time. This is borne out in fact. We are aware that the SFO has a number of pre-investigation (or projects as the new Director of the SFO has dubbed them) in connection with the Bribery Act already. Whether these develop into Bribery Act enforcement cases remains to be seen. One thing is for sure. Bribery Act enforcement for corporate violations is inevitable. Those who would suggest otherwise are selling snake oil. Don’t buy it.”

March 3 – The Bribery Act, its material impact since 2011 & the Aston Martin analogy… In this post the guys take on Howard Sklar and everyone else who says it is time to bring an enforcement action under the Bribery Act. They put it as such, “For those seeking instant gratification then the Bribery Act, it turns out, is not Coca Cola. But we’ll stick with the Aston Martin analogy. Aston Martin took off with the arrival of a certain David Brown. The SFO now has David…Green… But on a serious note, the impact of the Bribery Act should not just be measured in enforcement (though that will happen). It’s ultimate purpose was to foster behaviourial change. The genie is out of the bottle, the Aston is out of the garage and 18 months in change is already happening.”

March 5 – Don’t mention the ‘war’? Scotching the myth that saying the ‘b’ word will freak out employees in high risk markets. This post speaks to that most classic of English traits, to apologize for everything English. The guys point out that it is actually OK to tell employees not be pay bribes or otherwise engage in corrupt behavior, you will not insult them by doing so. They properly note, “The sight of people from Head Office taking the trouble to visit the local office with strangers in tow asking lots of questions underscores the importance the business attaches to anti-bribery.  It sends a very clear message to those in the organisation who might seek to apply unfair pressure on others to engage in questionable practices. A clear directive that bribes will not be paid is likewise well received. Employees like to know that they will not be sacked for losing a sale as a result of not bending to improper requests and demands,” they then conclude with this universal truism, “And for the very tiny minority (in our experience) who don’t like it – you don’t want to employ them anyway.” As we might say here in the  south, the American south that is, “Amen, brother.”

March 14 – Parliament report calls for Bribery Act review: Our opinion – Junk in. Junk Out. With typical British tact, the guys skewer a claim presented in the House of Lords committee that the Bribery Act has met with “confusion and uncertainty.” The guys end by offering to help these forlorn Lords with a bit of education by saying, “There is plenty of free guidance out there on the application of the Bribery Act. We cannot think of a piece of legislation which has sparked much more commentary, advisory, much of it on line and completely free, including our own eponymous website. Complaints about a lack of information and desire for more guidance ring hollow – especially when a centerpiece propping up the claim is the concern that taking someone to dinner is a criminal offence. The calls for a review need to be seen in context. Junk in. Junk out. And, Tony from Alderly PLC, if you’re reading feel free to give us a call. We can help you.”

March 22 – (Contrarian) Opinion: Corporate crime in the UK. A shift in public perception? In this piece, the guys noted that “Notwithstanding the barrage of criticism which has been meted out to the SFO in recent months it appears the perception of the public in general may be changing about it, and the UK’s approach to dealing with corporate crime.” They ended this post with the following witty observation, “And, while it may not be politik to say it, (but then we like to be visionary contrarians like others we can think of…), perhaps criticism of the SFO today for historic conduct is just a bit harsh and opportunistic? Perish the thought….”

March 24 – The Met, City of London Police & SOCA spearheading additional £8 million crackdown on overseas corruption. In their final March post  the guys report on some very clear indications that the UK government is putting its money where its collective mouth is regarding its seriousness to combat bribery and corruption. The guys noted that “The UK government has reportedly earmarked a further £8 million in the fight against corruption to go to specialist anti-corruption teams in the Metropolitan and City of London Police, the Serious Organised Crime Agency (SOCA) as well as additional support for the Crown Prosecution Service (CPS).”

So while it is true they never really left, because you know they do practice law for a living; it is good to see them back up on the site and providing their collective opinions and insights.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2013

The Bribery Act in 2012: a Year for Transition

The past year has been one of transition for the UK Bribery Act and the Serious Fraud Office (SFO). The transitions began with the appointment of David Green QC, as Director of the SFO. Green’s appointment brought a different focus to the SFO regarding the enforcement of the Bribery Act. At the start of his four-year term David Green released a statement to the press in which he said, in part, “The SFO is here to stay. It is and will remain a key crime fighting agency targeting top-end fraud, bribery and corruption. We will play our part in maintaining in the national interest a level playing field for investors and the business community. We will work cooperatively with others in the emerging counter-fraud landscape. We will press for all the tools necessary to maximise our impact. The SFO will be tough but approachable. I am delighted to take on the leadership of the agency at this exciting and challenging time. There is much to be done.”

This change in tone was perhaps responding to a critical report by Transparency International (TI) in its 8th annual progress report on OECD Convention enforcement, entitled “Exporting Corruption”. While the TI report focused on anti-corruption efforts across the globe, it did state that “The UK Government must strengthen its anti-bribery effort by ensuring that the Serious Fraud Office (SFO) has adequate resources to investigate and prosecute bribery”. Although TI noted that under the Bribery Act, prosecutions had increased over the past year, “cutbacks to the SFO could see a decline in future UK enforcement. The Government has cut more than a third of the SFO’s budget in the last four years, hampering the prosecutor’s ability to tackle complex and damaging bribery cases.” Chandu Krishnan, Executive Director of Transparency International UK, was quoted in a Press Release as stating, “If the Government is serious about fighting corruption, it should not be cutting resources for enforcing the legislation designed to do just that. We must ensure that the SFO is not outgunned by those it should be prosecuting, who incidentally can usually afford the best legal advice available. The SFO should never be in a position where it is unable to investigate and prosecute cases due to a lack of resources.”

I.                   Change in Tone at the Top

This new tone was a departure from the prior Director Richard Alderman. This noticeable change began in earnest in September with the statement by Director Green, that his agency has no real interest in pursuing cases concerning corporate hospitality under the Bribery Act. He was quoted as saying “We are not interested in that sort of case. We are interested in hearing that a large company has mysteriously come second in bidding for a big contract. The sort of bribery we would be investigating would not be tickets to Wimbledon or bottles of champagne. We are not the “serious champagne office.”” This was followed by the removal from the SFO’s website of pages for its guidance on facilitation payments and corporate hospitality. Then in October, the SFO published their position in relation to facilitation payments, corporate hospitality and self-reporting. As noted by Barry Vitou and Richard Kovalevsky, QC, writing in thebriberyact.com, “The honeymoon is over.” They went on to say that “The revised guidance is a model of clarity.  The new Director has previously made his position clear namely that the SFO is not there to provide guidance and those seeking it should liaise with their advisers.”

II.                The New Guidance

In a Press Release announcing this new guidance the SFO stated that “the Serious Fraud Office has reviewed its policies on facilitation payments, business expenditure (hospitality) and corporate self-reporting. The purpose is to: (1) restate the SFO’s primary role as an investigator and prosecutor of serious or complex fraud, including corruption; (2) ensure there is consistency with other prosecuting bodies; and (3) meet certain OECD recommendations.” The new guidance discussed three areas that companies need to address in their compliance programs. These were self-reporting, business expenditures and facilitation payments. Writing in the Bribery Library, Adams Greaves said “the guidance reinforces a widely held belief by the legal profession that Mr. Green is likely to prove to be a much tougher prosecutor than his predecessor Richard Alderman, who had (perhaps a little unfairly) acquired a reputation for seeking civil settlements with corporate defendants rather than prosecuting them through to trial.”

Self-Reporting

The SFO stated that it will prosecute a company if it is in the public interest to do so. The fact that a corporate body has reported itself will be a relevant consideration to the extent set out in the Guidance on Corporate Prosecutions. The Guidance explains that, for a self-report to be taken into consideration as a public interest factor tending against prosecution, it must form part of a “genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice”. However, the SFO cautioned that self-reporting is no guarantee that it would not prosecute and emphasized that each case would ‘turn on its own facts.”

Business Expenditures

The SFO recognized in the new Guidance that bona fide hospitality, promotional or other legitimate business expenditure is recognized as an established and important part of doing business. It is also the case, however, that bribes are sometimes disguised as legitimate business expenditure. However, the SFO would prosecute if there was a realistic prospect of conviction, the SFO will prosecute if it is in the public interest to do so. The SFO could also use its powers under proceeds of crime legislation as an alternative (or in addition) to prosecution.

Facilitation Payments

In the area of facilitation payments, the SFO was very clear that it considers facilitation payments as a type of bribe. It provided the example where a government official is given money or goods to perform, or speed up the performance of, an existing duty. The SFO emphasized that facilitation payments were illegal before the Bribery Act came into force and they are illegal under the Bribery Act, regardless of their size or frequency. This SFO position basically restates the UK legal position and the various tests the SFO will use when weighing prosecution.

III.             The Rolls-Royce Investigation

One of the areas of criticism of the SFO has been the lack of prosecutions. This may have an effect on the SFO in the recent announcements by Rolls-Royce that it is investigating allegations of bribery. In December, the BBC online service reported that Rolls-Royce was in talks with the SFO regarding potential allegations of bribery and corruption in Indonesia and China. It was reported that this investigation began when the SFO requested information from Rolls-Royce about possible bribe-paying in those two countries. This prompted Rolls-Royce “to bring in a legal firm to conduct an internal investigation earlier this year, which uncovered potential misbehaviour in other countries as well as the two named by the SFO.” The FT has also reported that Rolls-Royce has now retained Lord Gold for a review of its compliance on a world-wide basis.

Such a high profile UK company and investigation will certainly test the mettle of the SFO regarding prosecutions of UK entities. While the FT noted that Lord Gold was brought in by Rolls-Royce “precisely to avoid the costs” that the British company BAE incurred in its massive scandal and to perhaps make a “radical change” in not only Rolls-Royce but the entire British aerospace industry, if there are allegations of bribery and corruption substantiated by the internal investigation and Rolls-Royce is not prosecuted, it may make companies less inclined to follow the strictures of the Bribery Act.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2013