Fintech meet up
Out-Law News | 15 Mar 2019 | 6:24 pm | 4 min. read
The committee's review of the legislation recommended speeding up bribery investigations, and backed a commitment by the Home Office to a centralised reporting mechanism for allegations of bribery and corruption, as set out in its December 2018 anti-corruption strategy update. It also recommended clearer guidance and more support from the government, particularly for smaller businesses exporting overseas; and better training for police forces outside of the City of London.
The conclusions of the committee would be welcomed by many in the compliance community and by law enforcement agencies, according to criminal defence and anti-corruption expert Neil McInnes of Pinsent Masons, the law firm behind Out-Law.com. Its report "offers a timely and wide-ranging discussion of how guidance around compliance and enforcement of the Bribery Act can be improved", with clear scope for increased public-private cooperation and partnership, he said.
"The committee's recommendations include some eye-catching suggestions to amend existing UK Bribery Act statutory guidance, to expressly state the need for all businesses to conduct an anti-corruption risk assessment," he said.
"This endorses the model of an effective compliance programme taking a risk-based approach. It underscores the need for companies to keep risk assessment work refreshed – for instance, during on boarding and renewal processes for their third parties or prior to entry of significant new transactions, partnerships or markets."
"For exporters and others doing business outside of the UK, there are important recommendations in the report around specialist support in UK missions and embassies to help businesses navigate local laws and customs. Resourcing this network effectively is critical – to help businesses operating globally with the regular compliance challenges faced in higher risk markets. Given resolution of these compliance challenges can often be assisted at a government-to-government level, the report's recommendations here are to be welcomed," he said.
"The report also raises a number of interesting areas for improvement on how the Bribery Act is enforced. The committee recommends a centralised reporting mechanism for bribery in the UK; speedier investigations in corruption cases; enhanced communications with those involved in the investigation or under investigation; and dedicated Bribery Act training for police across the UK," he said.
The Bribery Act came into force in July 2011, and marked the first major change in UK bribery laws for nearly a century. Broadly speaking, the legislation streamlines a range of offences of paying and receiving bribes, covering both private and public sector corruption in the UK and in cases of overseas bribery. The maximum penalty for individuals found guilty of bribery under the Act is 10 years' imprisonment and an unlimited fine.
Importantly, the Bribery Act also brought about a major legal change in the arena of corporate criminal liability, with the introduction of the failure to prevent offence. Here a company can be liable for bribery on its behalf carried out by its employees or third-party agents or other 'associated persons', where this takes place without its knowledge or consent. A company's only defence is to demonstrate that it had "adequate procedures" designed to prevent bribery - in other words, an effective compliance programme..
In its report, the committee said that the structure of the Act, the offences it had created, its deterrent effect and its interaction with the deferred prosecution agreement (DPA) regime had been "almost universally praised" during the nine months of its inquiry. However, the number of prosecutions has remained low, in part due to the secretive nature of the offences and the long duration of many bribery investigations. In addition, the means for reporting bribery offences to law enforcement authorities are not always clear.
The UK Home Office has committed to launching a new reporting mechanism for allegations of bribery and corruption, in line with the government's anti-corruption strategy. The committee welcomed this work, while noting that it remains ongoing. It also recommended that the director of the Serious Fraud Office (SFO) and the Director of Public Prosecutions (DPP) publish plans outlining how they would speed up bribery investigations, and that the government repeal the current requirement that prosecutions may only be initiated with the written consent of one of the directors.
The government should ensure that UK companies are provided with support on corruption issues in the countries to which they export, and ensure that even smaller UK embassies are staffed by at least one official who is expert in the local customs and cultures. Training for law enforcement outside of the City of London should be improved, and the government's statutory guidance on the Bribery Act should consider including clearer examples of what might constitute acceptable corporate hospitality.
The inquiry also looked at DPAs which, although not derived from the Bribery Act, can now be used to allow bribery cases, and a range of other financial crime cases, to be settled without the companies involved being convicted of offences. Despite initial concerns, the committee considered that DPAs have not been seen as an "easy way out" for corporates or a substitute for prosecution, including of culpable individuals; while the discounts applied to financial penalties have struck an appropriate balance between encouraging companies to self-report and ensuring the penalty was still large enough to be effective.
While the Bribery Act applies across the UK, DPAs are not currently available in Scotland. The committee, which dedicated a full chapter of its report to the Scottish position, suggested that the Scottish government "consider adopting a system analogous to the DPA regime", on a full statutory basis and with the same transparency and judicial oversight.
Edinburgh-based corporate crime expert Tom Stocker of Pinsent Masons said: "The House of Lords recognise that there are important differences in criminal law and practice between England and Wales and Scotland, and it recommends that the Ministry of Justice publishes guidance on the different enforcement regimes that apply within the UK".
"In the field of corporate enforcement, the House of Lords recommends the Scottish government consider adopting an analogous regime to the DPAs applicable in England, Wales and Northern Ireland. A Scottish DPA regime is now more likely," he said.
Fintech meet up