For years, companies and compliance professionals have largely dismissed UK Bribery Act enforcement risks. Ever since the effective date for the UK Bribery Act, defense lawyers have been waiting for the SFO to begin serious enforcement actons.
Last week may be the beginning of a new era in UL Bribery Act enforcement.
First, a UK court approved the SFO’s first deferred prosecution agreement. Standard Bank, now known as ICBC Standard Bank Plc was charged with a Section 7 violation of the UK Bribery Act, but charges were suspended pursuant to the DPA. This was the first use of Section 7 of the UK Bribery Act.
Under the DPA, Standard Bank agreed to pay $25.2 million and compensate the government of Tanzania with approximately $7 million in compensation. Standard Bank also agreed to cooperate with continuing investigations and to undergo an independent internal review of its compliance program. .
The DPA related to a $6 million bribe paid by Standard Bank to a local partner in Tanzania to persuade the Government of Tanzania to approve Standard Bank’s proposal for a private placement of $600 million.
At the same time, Standard Bank entered into a settlement agreement with the SEC for $4.2 million.
The SFO’s first use of a DPA raises the prospect of future enforcement actions and financial settlements.
In another enforcement announcement, the SFO disclosed that Swett Group plc, an engineering and construction firm, admitted an offense under Section 7 of the UK Bribery Act for conduct in the Middle East. This was the second Section 7 enforcement action under the UK Bribery Act.
The fine amount was not disclosed. According to a prior announcement, the offense involved improper payments made by a Swett employee who agreed to award a subcontract to a New York construction company for a Dubai project if the New York company paid a million bribe to a UAE official.
The payment was made to a UAE official at a foundation but intended to improperly influence the decision with respect to the design of a new hospital construction project. The payments, even if characterized as charitable donations, were determined to violate the FCPA.
The UK Bribery Act has started to grow some legs and this may finally be the era in which the UK Bribery Act becomes a true and significant threat to global companies. The first two section 7 cases are certainly clear-cut violations and the result of disclosures by companies to the SFO. One thing you can count on — the SFO is beginning to develop momentum behind its enforcement program. How big a risk this becomes is yet to be determined but it is something to watch and monitor.
In time, the SFO will begin to build up information learned from companies and investigations, which could ultimately lead to more companies falling under government scrutiny. Some may say – it is about time – while others would be smart to focus on UK Bribery Act risks and develop appropriate compliance strategies.