On 19 February, the Serious Fraud Office announced that construction and professional services company, Sweett Group PLC, had been ordered to pay £2.5 million following a contravention of the Bribery Act 2010.
This is the first successful prosecution by the SFO under section 7 of the 2010 Act which makes it an offence for a company to fail to prevent bribery. The repercussions of this case will be felt across the UK.
“The whole point of section 7”
Following an investigation, the SFO found that Sweett’s subsidiary company, Cyril Sweett International Ltd, made illegal payments to Khaled Al Badie.
Mr Al Baldie was the Vice Chairman of the Board and Chairman of the Real Estate and Investment Committee of Al Ain Ahlia Insurance Company (‘AAAI’). The SFO found that payments had been made between 1 December 2012 and 1 December 2015 to secure the award of a contract with AAAI for the building of the Rotana Hotel in Abu Dhabi.
In December 2015, Sweett pled guilty to a charge of failing to prevent an act of bribery intended to secure and retain the contract with AAAI.
In sentencing, his Honour Judge Beddoe said: “The whole point of section 7 is to impose a duty on those running such companies throughout the world properly to supervise them. Rogue elements can only operate in this way – and operate for so long – because of a failure properly to supervise what they are doing and the way they are doing it.”
The SFO is continuing to investigate individuals involved in this matter.
Why is this case significant across the UK?
Firstly, it shows the importance of companies ensuring that they have adequate procedures in place to supervise subsidiaries, employees and those further down the supply chain in the UK and overseas. Sweett was prosecuted and convicted because it failed to control the conduct of an international subsidiary.
Secondly, the decision is a reminder, if that was needed, that the UK authorities are pursuing prosecutions under the Bribery Act for failure to prevent bribery. The first line of defence is to ensure that you have anti-bribery and corruption policies and procedures in place. This will be a very thin line if the business does not take steps to ensure that its own people and its subsidiaries are taking anti-corruption seriously.
Thirdly, there has been much discussion of whether Scotland and the rest of the UK are on different roads when it comes to enforcement of the Bribery Act. In the rest of the UK, Deferred Prosecution Agreements can be an option for companies that hold up their hands to bribery and other financial crime failures. The Scottish bribery authority is the Crown Office and Procurator Fiscal Service – not the SFO. The Scottish road of corporate self-reporting of bribery has now been walked on a number of occasions with companies reaching civil settlements with the Crown instead of being prosecuted.
However access to the self-reporting regime turns on making the first move. Companies that choose to sit tight run the risk of being the next Sweett.