Review of SFO corporate hospitality guidance must not lead to confusion, expert says

Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, was commenting after the Sunday Telegraph reported that existing guidance had been removed from the SFO's website. The SFO has also taken down its guidance on self reporting under the Act, he said; however, a review of this guidance had been trailed almost a year ago.

Regardless, Vitou said, a "sea change of approach" from the SFO in relation to corporate hospitality was unlikely.

"The old SFO guidance on corporate hospitality and facilitation payments represented a pragmatic and practical approach against a backdrop of some uncertainty among companies often fuelled by speculation," he said on his website thebriberyact.com. "Hopefully the revised position will be published as soon as possible so everyone knows where they stand."

A spokesman for the SFO, which is responsible for investigating serious and complex fraud in the UK, told Out-Law.com that the existing guidance had been removed pending review. However, he was unable to confirm when replacement guidance was likely to be made available.

The Bribery Act came into force last July and states that foreign companies which operate in the UK can face prosecution for bribery regardless of where the alleged activity has taken place, unless the suspect activities are permitted locally. UK companies and partnerships can now be found to have broken the law no matter where in the world alleged acts of bribery took place. The Act also creates the offence of bribing a foreign public official, even if that person has demanded a bribe.

A company can also be responsible for bribery carried out by its employees without its knowledge or consent under the Bribery Act. The Act created a new offence of "failure to prevent" bribery by people working for or on behalf of a business, but companies can escape liability if they show that they have "adequate procedures" designed to prevent bribery in place.

The Act bans corporate hospitality which provides "an advantage to another person" if "offered or given with the intention of inducing the person to perform a relevant function improperly or in the knowledge that acceptance of the advantage would in itself be improper performance". All facilitation payments, paid to speed up or ensure performance of functions public officials should ordinarily do, are also illegal under UK law regardless of their size and how often they are paid. In its previous guidance, the SFO said that it was unlikely to prosecute for small payments providing they were picked up and remedied by a company's internal procedures; while "reasonable and proportionate" corporate hospitality would be allowed.

Previous SFO guidance suggested that companies which 'self reported' instances of corruption would be looked on more favourably, and may receive civil penalties rather than criminal. However, Vitou said that this position was "out of date" and did not reflect current practice.

"A lot of water has passed under the bridge since the original self reporting guidance, which was out of date," he said. "The new guidance should give us the clearest indication so far on the way the SFO, under its new Director, will approach self reporting, prosecution and the resolution of cases going forward. Given the increasing emphasis on self reporting the revised guidance will be extremely important."

Vitou warned that, depending on the context, there was nothing preventing corporate hospitality or facilitation payments from featuring in a prosecution. However, he pointed out that new SFO director David Green QC had previously stated his intention to "put 'Serious Fraud' back into the Serious Fraud Office".

"Corporates should take comfort from that," he said.