The construction sector is often accused of fraudulent and corrupt practices. In 2013, the Chartered Institute of Building Report exploring corruption in the UK construction industry, produced shortly after the coming into force of the Bribery Act 2010 in the UK, showed that 49% of respondents believed that corruption in construction in the UK is common and that businesses were not doing enough to prevent corruption. Although awareness of the risks of bribery and corruption has increased since then, the first corporate conviction in 2016 under section 7 of the Bribery Act 2010 was a reminder that the issue of corruption remains a risk within the industry, particularly where construction businesses are operating in high-risk jurisdictions and that the SFO is serious about prosecuting under the Bribery Act.
As we described when the Bribery Act 2010 came into force, the introduction of the section 7 offence of failure by a commercial organisation to prevent bribery being committed by an associated person was particularly significant for the construction industry. Given the wide territorial scope of the Bribery Act, a commercial organisation carrying out any part of its business in the UK might be liable for a bribery offence even if the offence was committed outside the UK.
A complete defence to the section 7 offence is that “adequate” procedures designed to prevent bribery are in place, and guidance published by the Ministry of Justice when the Bribery Act came into force set out six principles of bribery prevention designed to help organisations assess whether they had adequate measures in place.
The recent publication by the International Standards Organisation of a new standard (ISO 37001) that companies and organisations can use to certify their anti-bribery and corruption procedures might help in this regard. Despite not offering conclusive proof, compliance with this standard should help to demonstrate ‘adequate procedures’ for the purposes of the Bribery Act.