SFO removes preference for civil settlement from Bribery Act self-reporting guidance

Out-Law News | 11 Oct 2012 | 9:19 am | 3 min. read

Businesses that 'self-report' illegal acts of bribery to the Serious Fraud Office (SFO) could still face prosecution in cases where there is a "reasonable prospect of conviction" and if it is "in the public interest" to do so, the SFO has said.

A new policy, published on its website, states that self-reporting can be taken into consideration as a "public interest factor" against prosecution where the report "forms part of a genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice". However, the SFO said that each case would "turn on its own facts". Self-reporting is not, it said, a "guarantee that prosecution will not follow".

The SFO has also replaced its guidance on facilitation payments and corporate hospitality with policy statements. It confirms that a facilitation payment, such as one paid to a public official to speed up or ensure the performance of a function, is "a type of bribe and should be seen as such". Genuine corporate hospitality, promotional and other "legitimate business expenditure" is "recognised as an established and important part of going business".

Commenting on his site, thebriberyact.com, anti-corruption expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, said that the new statements were "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," he said. "Reading between the lines, the good news is that the SFO have confirmed again that corporates should not be nervous about legitimate corporate hospitality. On facilitation payments, the SFO position now simply restates the UK legal position and the various tests the SFO will use when weighing prosecution."

The policy statement in relation to self-reporting was the "big news", he said, as it removed the previous "expressed preference" by the SFO in favour of civil settlement with companies that reported their own Bribery Act breaches.

According to the SFO, the revised policies have been published to "restate the SFO's primary role as an investigator and prosecutor of serious and/or complex fraud, including corruption" and ensure a consistency between the SFO's approach and that of other prosecuting bodies.

“The change in tack by the SFO underscores the importance of sound legal advice if companies are worried about bribery," said Vitou. "While the SFO has signalled a tougher stance there are various steps companies can take to reduce risk and limit damage. Self reporting, handled properly, will remain an important factor in obtaining the best possible outcome.”

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 and 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 SFO's new policy statement confirms that all facilitation payments are illegal under UK law "regardless of their size or frequency". Whether or not the SFO will prosecute will be government by the Full Code Test in the Code for Crown Prosecutors and the Bribery Act Joint Prosecution Guidance of the SFO and the Director of Public Prosecutions (DPP). 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.

The same guidance will be applied in cases where bribes are presented as corporate hospitality or some other form of "legitimate expenditure", the SFO said. The Bribery 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".

The SFO said that it would "review and assess" cases in which companies had already acted on the old guidance according to their circumstances. Where it had entered into an agreement with a company based on an earlier statement, and the company had fully complied with the terms of that agreement, then the previous policy would continue to apply, it said.