On February 19, 2016, the UK Serious Fraud Office (SFO) convicted Sweett Group plc (Sweett), a London-based construction and professional services company, under Section 7 of the UK Bribery Act. This is the first conviction under Section 7, which requires companies to prevent bribery in the course of business, and the penalty imposed against Sweett – the company had to pay a total of GBP 2.25 million – was minimal in the context of penalties paid under the U.S. Foreign Corrupt Practices Act (FCPA). Yet this action provides further evidence that the SFO may really be able to meaningfully enforce the Bribery Act.

Under Section 7 of the Bribery Act, a company can be found liable if it – or any associated person, subsidiary or entity, anywhere in the world – engages in bribery with the intention of obtaining or retaining business or some sort of commercial advantage. Liability can be established even if company management does not authorize or encourage, and is not even aware of, the illicit conduct. (While a company will have a full defense if it can show that it maintained adequate procedures to prevent bribery, as appears evident from the resolution in this matter, Sweett was unable to present such a defense.)

According to news reports, the SFO began investigating Sweett, which is listed on the Alternative Investment Market (or AIM) in London, in July 2014. Through its investigation, the SFO found that a Sweett subsidiary in the United Arab Emirates (UAE), Cyril Sweett International Limited (Cyril), had made corrupt payments to the Vice Chairman of Al Ain Ahlia Insurance Company (AAAI) to help secure a contract to build a hotel in Abu Dhabi. After pleading guilty in December 2015, Sweett was ordered to pay a GBP 1.4 million fine, a GBP 851,152 confiscation amount and GBP 95,000 in SFO prosecution costs.

The SFO reportedly is continuing its investigation of individuals involved in the scheme.

Lessons Learned. We derive several interesting lessons from this action.

First, and generally, the conviction sends a strong message to UK companies operating globally that they will be held accountable for the actions of their business associates, no matter where they are located.

Second, the matter demonstrates the bottom-line value of maintaining a robust compliance policy. The existence of adequate procedures and controls to prevent and flag misconduct (including by subsidiaries and agents) could have served as a complete defense for Sweett under the Bribery Act.

Third, the SFO continues to emphasize the importance of cooperation. This may have been part of the reason that Sweett – which apparently attempted to divert the prosecutor’s attention from certain problematic parts of the company – was convicted instead of settling under a deferred prosecution agreement (unlike ICBC Standard Bank, which entered into a Deferred Prosecution Agreement (DPA) with the SFO in December 2015).

Fourth, and finally, the Bribery Act has a long arm. While the Bribery Act of course reaches UK-registered companies and their non-UK subsidiaries, Section 7 also extends to non-UK companies that conduct any part of their business in the UK.

Unfortunately for Sweett, the company reportedly may also face prosecution under the FCPA. Parallel anti-bribery prosecutions by the SFO and the U.S. government certainly are not unprecedented: as just one recent example, following the SFO’s DPA with ICBC Standard Bank, the U.S. government imposed a $4.2 million fine against the bank to resolve charges based on the same facts.

If the U.S. government is, in fact, investigating Sweett, it is likely to follow the SFO’s lead in penalizing Sweett for a lackluster compliance program. While adequate procedures and controls are not an absolute defense under the FCPA, they can serve as a mitigating factor during the sentencing phase of an FCPA prosecution. Moreover, in light of the DOJ’s recently publicized policy to aggressively pursue corporate executives, Sweett directors or employees that actively participated in the scheme could face individual prosecution in the United States.

Ultimately, Sweett should serve as a reminder for any party conducting international business of the risks associated with bribery and other improper payments. The FCPA remains the biggest game in town, but with enforcement efforts such as those in the Sweett matter, the SFO has signaled its intent to get in on the action.