The Serious Fraud Office expands on how it will enforce the Bribery Act 2010
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.
Following the speech – which we discussed here – by the Director of the Serious Fraud Office (the SFO) in 9 February 2011 about the SFO’s approach to the Bribery Act 2010 (the Act), Chris Walker, the Head of Policy at the SFO, gave more information on how the SFO will enforce the Act in this speech on 15 February 2011.
Much of Mr Walker’s speech repeated what was said by the SFO’s Director in relation to the adequate procedures defence, joint ventures, hospitality and facilitation payments. However, there were some new observations on (i) public interest factors for and against prosecution and, in particular, (ii) foreign corporates.
Public interest factors for and against prosecution
If the SFO is satisfied that there is sufficient evidence to justify a prosecution, it will then go on to consider whether a prosecution is in the public interest. In doing so, the SFO will have regard to the Attorney General’s guidance on corporate prosecutions. Mr Walker observed that the “seriousness of the offending is paramount and there is a presumption in favour of prosecuting corruption. But as the Director of the SFO has pointed out, a key factor against a prosecution is self-reporting and the attitude of the business to the offence….the following are identified as public interest factors in favour of prosecution – failure to report wrongdoing within a reasonable time of the offending coming to light, and, failure to report properly and fully the extent of the wrongdoing”.
Foreign corporates are subject to the Act
The SFO’s Head of Policy described the Act’s provision concerning foreign corporate as “of the very greatest interest to the SFO”. As a result of the provision, foreign corporates which carry on their business or part of their business in the UK will be within the SFO’s reach if they commit bribery anywhere else in the world. To quote from the speech:
“This is a very important provision. What it means, for the first time, is that we can support an ethical UK business that finds that it has been disadvantaged by a foreign company which uses corruption to obtain a commercial advantage provided that some part of that corporate’s business takes place in the UK. So, for example, if there are two companies, one UK based and one from the United States which build factories in a remote town in a developing country, a local official tells both companies that it will take four months to activate their telephone service, but for some pocket money, they can do it the next day. Taking advantage of the FCPAs facilitating payments section, the US company pays the man and gets the phone service. The UK company’s policy prohibits facilitating payments, in accordance with the Bribery Act, and so the factory will remain shut for four months. If the US company conducts any business in the United Kingdom (thereby creating jurisdiction), the SFO will carefully consider whether to prosecute that company for having made the facilitating payment, because otherwise, the UK company is at a competitive disadvantage for its higher anti-corruption standards.”
So foreign corporates may be an early target of the SFO
There is, in this statement of intent by the SFO, a clear sign that foreign corporates will be in its sights as soon as the Act comes into force. There has been various comment that the SFO will want to secure a high-profile conviction once the Act is in force; the advantage of an early conviction of a foreign company would be to take some pressure off the UK authorities, given that the Act has been widely criticised for disadvantaging UK business. Mr Walker went on to say that a ”policy consideration for the SFO is that we can support UK companies and stop them from being under-cut by corrupt activities elsewhere”.
Jurisdictional reach of the Act
With regard to foreign companies, the SFO also noted that the jurisdictional reach of the Act is uncertain. Will being quoted on the London Stock Exchange, or having subsidiaries in the UK, or raising loan finance in the UK, or supplying services in the UK be enough to qualify as “carrying on business in the UK”? That is a question that can only be answered by the courts.
Friendly Corporate PSL
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