SFO will publish its own guidance on the Bribery Act 2010, in addition to the Ministry of Justice guidance
UPDATE 1 July 2011: The Bribery Act is now in force – for more information and for the Ministry of Justice guidance on the Act, see this post.
The Bribery Act 2010 (the Act) was due to come into force in April 2011, but on 31 January 2011 the Ministry of Justice (the MoJ) announced that commencement would be delayed. See our article here for an explanation of this delay.
In a speech on 9 February 2011 Richard Alderman, the Director of the Serious Fraud Office (the SFO), announced that the SFO will be publishing guidance on the Act jointly with the Director of Public Prosecutions (the DPP). Mr Alderman also set out the SFO’s views on three issues that are anticipated to be particularly problematic under the new Act: Joint ventures, hospitality and facilitation payments.
Joint SFO and DPP guidance
The MoJ is to publish guidance on the “adequate procedures” defence to the Act’s section 7 criminal offence of “failure of commercial organisations to prevent bribery”. It is the delay in the production of this MoJ guidance which has in turn caused the delay to the Act’s commencement. Mr Alderman described this M0J guidance as intended to give help on “how a corporate can build up a true anti-corruption culture”.
Mr Alderman explained that the SFO and the DPP will also be publishing guidance at the same time as the M0J guidance is published. (No date has been set for the MoJ guidance, so the implication is that the SFO/DPP guidance is ready to go.) The SFO/DPP guidance will be called “Directors’ Guidance”. Which is rather confusing as, despite its name, it appears it will not be guidance for company directors, but is actually named for the DPP. This SFO/DPP “Directors’ Guidance” will:
“…discuss the detail of various offences and what needs to be proved. It will also set out the public interest factors that prosecutors will need to take into account in deciding whether to prosecute.”
The section 7 offence and the adequate procedures defence
Mr Alderman clarified what he described as a “misconception” about the section 7 offence: that it is an offence of strict liability. He pointed out that it is not; there is the defence of adequate procedures. “What this means is that if there were adequate procedures, then no offence is committed. It is a complete defence not just a matter of mitigation.” This simply draws out the importance for all companies who think that there is a risk that their employees or agents, or anyone “associated” (to use the language of section 7) with the company, may use bribery, to ensure that they have adequate procedures in place designed to prevent those people from doing so.
Mr Alderman emphasised that where adequate procedures are in place and yet there is found to be a problem about bribery somewhere in the company’s operations, then no offence is committed by the company.
In discussing joint ventures, the SFO’s Director made a distinction between current (i.e. existing) and new joint ventures. For current joint ventures, the SFO recognises the complex contractual documentation that may lock parties in, and that there may be little transparency about what joint ventures do. The SFO is sympathetic and will “expect you to see what you can do to establish that your partners are complying with their ethical anti-corruption obligations but we recognise that there may come a practical and legal limit to this”.
For new joint ventures, the SFO will set a higher standard. It will expect companies to “build in what is needed to satisfy yourself about the level of visibility of your partners and the ethical standards that they will operate. This is for commercial discussion and we expect you and your partners to take into account the obligations on you under the Bribery Act”.
The SFO’s position is that sensible proportionate entertaining or promotional expenditure is “perfectly lawful”, and that includes buying lunch for a client. But if a company pays for a prospective client’s “month long all expenses paid” Caribbean holiday, “you will not be surprised if the SFO takes an interest”. With regard to taking clients to sporting events, the SFO is considering giving more guidance – and may even provide guidance on its website before major sporting events.
Mr Alderman remains uncompromising on facilitation payments. ”These are bribes” which are illegal under the current law and will be no change under the Act.
(What is a facilitation payment? It has been described as a payment designed to influence the speed of an official’s decision rather than its outcome. )
As at 11 February 2011 there is no further word from the MoJ as to when the Act will come into force.
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