On December 18, 2014, the UK Government published its long-awaited Anti-Corruption Plan (the Plan), which is the UK's first government-wide strategy aimed at tackling corruption. This milestone in the UK’s effort to fight corruption domestically and internationally, whilst not a sea change, does herald a change of emphasis and approach, and portends a raft of new measures and initiatives over the next several years.
Overview of the Plan
The Plan contains sixty-six recommended action points for the Government and its partners, which include the Serious Fraud Office (SFO), the National Crime Agency (NCA), the City of London Police (COLP), the Metropolitan Police (Met) and its overseas anti-corruption unit, and financial regulators, such as the Financial Conduct Authority (FCA).
The Plan largely follows the Government’s October 2013 ‘Serious and Organised Crime Strategy’, and seeks to apply the four ‘P's’ to bribery and corruption:
- to “pursue” wrongdoers;
- to “prevent” people from engaging in corruption;
- to “protect” against corruption through risk assessments and transparency; and
- to “prepare” in reducing the impact of corruption, by assisting whistle-blowers and raising global standards.
The predominant themes of the Plan include an increased focus on working collaboratively on both the national and international levels, understanding and raising awareness of anti-corruption globally and having government departments working much more closely with civil society and business leaders to tackle corruption risks. There is also an intention to increase engagement with overseas partners, which do not just include governments or regulatory agencies, but also the United Nations and other international organisations. Furthermore, there is a drive to ensure that current tools available to UK regulators, such as Deferred Prosecution Agreements and the UK Bribery Act 2010 and the Proceeds of Crime Act 2002, are better used and in some respects enhanced, in addition to an increased focus on anti-money laundering efforts - for example, targeting professional gatekeepers, improved suspicious activity reporting and increased recovery of criminal assets. Procurement, defence, and sport are the activities and sectors targeted with specific measures.
What does ‘Corruption’ mean in the Plan?
Although the Plan notes that there is no universally accepted definition of ‘corruption,’ it refers to the definitions provided by Transparency International: “the abuse of entrusted power for private gain” and the World Bank: “offering, giving, receiving or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.”
Thus ‘corruption’ within the Plan takes into consideration a broad range of sectors, looking at their activity both within the UK and abroad, in relation to conduct connected to individuals, the public sector and private institutions. Furthermore, the Plan looks at the use of corruption by criminals to enable their crimes, the abuse of position by individuals for personal gain and the systems and processes which corruptors exploit to achieve a gain for themselves and others.
Notable Action Points
Of the 66 action points listed in the Plan, the following are some of the most notable:
- The establishment of a national multi-agency intelligence team led by the NCA, whose mandate is to focus on serious domestic and international corruption and bribery (by the end of April 2015). This is intended to improve the collection, analysis and distribution of information on corruption threats, including ensuring that operational agencies share relevant information and deliver a coherent operational response to corruption.
- The creation of a new central bribery and corruption investigation unit comprising the NCA, the Department for International Development (DfID) and other agencies (notably the SFO is not mentioned, but the Met and COLP are), whose mandate is to boost capacity to investigate cases of international corruption, as well as acting as a ‘Centre of Excellence.’ This is intended to improve bribery and corruption investigations by improving the recruitment and retention of specialist investigators, for example financial investigators, forensic accountants and digital forensic experts, who are a key part of such investigations.
- The development of a single reporting mechanism for reporting allegations of corruption by July 2015 - recommended due to the current reported lack of awareness by the UK public as to how to report corruption and which will inevitably lead to an increase in reporting and an increased focus on bribery and corruption cases.
- The Foreign & Commonwealth Office and the Department of Business, Innovation & Skills (BIS) are to work to ensure that allegations of corruption and bribery reported to overseas embassies and high commissions are reported to the appropriate UK authorities - likewise this will ensure a focus on bribery and corruption cases and a mechanism for forwarding reports to the proper authorities.
- Measures to reduce corruption in Parliament, local bodies and in the judiciary, including: the Home Office to develop and promote risk assessment templates to assist government departments and agencies in managing corruption threats; amending the Guide to the Rules relating to the Members of the House of Commons to take into account the registration of gifts and codes of conduct for dealing with lobbyists; and the Government to secure the passage of the Recall of MPs Bill, so as to provide the House of Commons with additional disciplinary powers. Furthermore, the introduction of measures under the new Criminal Procedure Rules aimed at preventing jury nobbling, by allowing Crown Courts to ballot jurors by number, rather than names.
- The provision of support to whistle-blowers in cases of bribery and corruption, as well considering how whistle-blowers can be incentivised to come forward and speak up about incidents - this is in spite of recent reports by BIS and the FCA (in July 2014) which did not recommend financial incentivisation.
- The Ministry of Justice to consider whether a new criminal offence of “failure to prevent economic crime,” paralleling the failure to prevent offence for bribery and corruption, should be introduced in the Bribery Act. The Ministry of Justice is also to examine whether the current definition and means of establishing corporate criminal liability need amending.
- Her Majesty’s Treasury to work with anti-money laundering supervisors to assess the financial sectors’ vulnerability to corrupt ‘politically exposed persons’ and encourage a risk-based approach to supervision and compliance by financial firms. This is in line with the proposed Fourth EU Money Laundering Directive, which will be implemented in the UK once it enters into force.
- The introduction of a publicly accessible central register detailing UK companies’ beneficial ownership. A central initiative of Transparency International, this is intended to enhance transparency around who ultimately owns and controls UK companies, thereby ensuring that both law enforcement agencies and tax authorities have access to information which will help tackle corruption, tax evasion and money laundering.
- BIS to implement legislation to abolish ‘bearer shares’ in the Small Business, Enterprise and Employment Bill. This is intended to decrease the risk of money laundering through the use of bearer shares (which do not record the ownership of a stake in a company, thus allowing individuals to conceal or transfer control).
- DfID to review their country-specific anti-corruption strategies, to take into account new and emerging threats to UK aid, in addition to opportunities for supporting efforts to reduce corruption in partner countries.
- DfID to develop proposals for establishing an international rapid reaction team to be deployed to countries where regime change has taken place, so as provide expert assistance in mutual legal assistance and asset recovery.
- BIS to implement the first Extractives Industries Transparency Initiative report, due by April 2016.
- The Cabinet Office to lead implementation of the European Public Procurement Directives, with the planned transposition of the directive on public procurement in the first quarter of 2015 and the directives on “utilities” and “concessions” thereafter. The Government is to consider what further steps are needed to ensure that information is readily available to procurers, regarding suppliers who are excluded from public contracts.
- The NCA to lead, coordinate and support new operational activity between the Border Force, Her Majesty’s Revenue and Customs, police and other law enforcement agencies, so as to target corruption risks at the UK border.
- Going forward, the UK to seek to recover its full costs from any confiscated funds before they are returned to the requesting country, thereby enhancing the resources available for enforcement of international corruption cases, which are often lengthy and expensive.
- The Home Office to seek an amendment to the Proceeds of Crime Act, to enable the use of investigative powers after a confiscation order has been made, so as to facilitate the tracing and recovery of hidden assets (by March 2015).
- The Home Office also to seek to amend the Proceeds of Crime Act, to change the legal test for a restraint order from one of “reasonable grounds” to one of “suspicion” in both domestic and international cases (by March 2015).
- The introduction of a new criminal offence for police corruption in the Criminal Justice and Courts Bill, which is expected to receive Royal Assent in January 2015.
- The introduction of a new criminal offence for persons operating as private investigators without a Security Industry Authority issued licence.
The Plan is extensive and provides numerous steps which have real potential to help reduce corruption domestically and internationally and increase enforcement, and includes a number of far-reaching measures in relation to transparency of beneficial ownership and bearer shares. It is interesting to note that although the Plan barely mentions the SFO, which is the agency most commonly associated with leadership in prosecuting foreign bribery and corruption, the detailed measures outlined and the lack of any proposed restructuring or abolition of the SFO portends a significant stepping up of activity for the agency.
The Plan, however, is far from complete and will require substantial effort from all of the relevant parties involved and a significant amount of legislative change and international co-operation and legislative change if it is to stand any chance of success.
Most notable of all is that no fresh resource or guarantees of funding or staffing have been provided by central government. Both the SFO and NCA have faced criticism about their level of funding, whilst the measures outlined in the Plan will inevitably increase their workload considerably. It is notable that Matthew Hancock MP has stated that the resources currently split between the COLP, the Met and the NCA will be merged into the new intelligence unit, and that Government is considering what further funding can be provided to enhance and support this unit. Similarly, the Government is considering whether funding can be provided from DfID to support the work of the new central bribery and corruption unit. As discussed above, one of the action points is for the UK to seek recovery of its costs in corruption cases before funds are returned to the relevant country, which will hopefully provide additional resources (albeit the amounts and timing of those resources will be uncertain).
In order to ensure that the proposed initiatives come to fruition, it will be interesting to see what resources the Government does provide, and whether these plans will be supported following the up-and-coming general elections.
Furthermore, although government departments have been tasked to look at potential changes in the law - for example the introduction of an offence of 'failure to prevent economic crime,' paralleling the failure to prevent offence in the Bribery Act, and changes to the high bar to establish corporate criminal liability in the UK - no mandate has been given to introduce such change.
Likewise there are no guarantees that financial incentives for whistle-blowers (à la Dodd Frank) will ever be introduced.
Nonetheless, the Plan highlights the UK's drive to combat corruption and, following on from the increased resources provided to the SFO via 'blockbuster' funding and its recent series of successes, see our previous advisory for further details, the Plan and the AC strategy may well receive the necessary support and funding required for it to start bearing fruit.
Companies reviewing the Plan should take into account the proposed new and additional criminal offences, as well as the drive to create new reporting mechanisms and incentives for whistle-blowers. Increased intelligence, reporting and subsequent follow up and sharing of information nationally and internationally will inevitably lead to more concerted international anti-corruption efforts and enforcement action.