In conjunction with the Bribery Act 2010 coming into force on 1 July 2011 the Scottish Crown Office has now issued Guidance confirming that it will trial (up to 30 June 2012) a self-reporting mechanism for business in relation to incidents of corruption. In broad terms, the initiative allows companies to self-report incidents of bribery to the authorities with the possibility of obtaining leniency in terms of penalties.
The Guidance also provides useful information as to how the Crown Office will liaise with the SFO (who will have principal responsibility for Bribery Act enforcement in England and Wales) in dealing with cross-border incidents of corruption by UK companies. While timed to coincide with the introduction of the Bribery Act 2010, the self-reporting initiative is also intended to cover incidents of corruption that occurred prior to 1 July (which would have been caught under the previous statutory and common law regime).
The benefits of self-reporting
Whether or not to self-report a concern that there has been a bribery offence, and/or what other remedial steps can and should be taken, will always require careful consideration depending on the facts of the case. However, self-reporting does offer certain benefits to a business. It not only encourages a "clean slate" approach to anti corruption legislation, but may also result in a lesser (or no) penalty being received by the reporting business as well as a greater ability to manage PR issues.
In particular, as with the approach taken by the SFO in England and Wales, the Guidance details the criteria by which the Scottish authorities will consider whether a self-reported case should be dealt with by way of civil settlement (under the civil recovery provisions of the Proceeds of Crime Act) rather than by way of a criminal prosecution. These criteria include: (i) the nature and seriousness of the offence and the extent of the harm caused; (ii) whether it is clear that the business is taking action as soon as the matter comes to the attention of senior management; and (iii) whether the business had in place adequate anti-bribery systems at the time of the conduct and whether it has further addressed this issue following the conduct.
A great advantage of a civil settlement as opposed to a criminal prosecution is that a criminal prosecution could trigger black-listing under the public procurement rules, though it is important to stress that self-reporting will not necessarily lead to civil as opposed to criminal sanctions. It will also be important to monitor the approach taken by the Courts to regulatory settlements: the English courts have queried the use of civil as opposed to criminal sanctions in the context of corruption/bribery.
The self-reporting mechanism
The Guidance provides that:
- A report should be made to Crown Office via a solicitor.
- Pre-disclosure discussions between the Crown Office and a solicitor will be possible (though detailed discussions will not be possible without disclosure of the client's identity).
- In order to self-report the following must be observed: (i) the report will be made by a solicitor on behalf of the Board; (ii) the business must have obtained legal advice before the making of the report: (iii) the business has conducted a thorough investigation; (iv) the business agrees to fully disclose any criminal conduct; (v) the report must describe what has been done to avoid repeat incidents; and (vi) the business confirms that it is committed to meaningful dialogue with the Crown.
- The Crown Office will assess the report within eight weeks of receipt. During this period the Crown Office will consider whether to proceed by way of civil settlement or whether to bring a criminal prosecution (see above) and /or what other remedial action may be required.
- If the civil settlement route is followed, the Guidance makes specific requirements as to the engagement of forensic accountants (to be paid for by the business).
The Guidance is more prescriptive than the SFO's self-reporting guidance; for example, the latter does not specifically require that the report should come from a solicitor or is made further to legal advice (though clearly recognises the important role professional advisers play).
Crown Office or the SFO?
Further to discussions with the SFO, the Guidance indicates that a self-reported case will generally be dealt with in Scotland where: (i) the wrongdoing has taken place in, or predominantly in, Scotland; (ii) the business has its headquarters or registered office in Scotland; (iii) the business carries on its business predominantly in Scotland.
The SFO and the Crown Office will liaise on individual cases and will refer cases to each other where deemed appropriate.
What about the treatment of individuals?
Self-reporting is only available to businesses and does not extend to individuals. Any individual reporting will be dealt with outside the terms of the Guidance.
Moreover, self-reporting (and civil settlement) does not prevent the prosecution of individuals involved in bribery, though the Guidance does indicate that the Crown Office will take into consideration how former or current officers or employees of the business should be dealt with in the context of the report.
Accordingly, the interests of the business and those of the individuals may differ and this potential conflict will have to be managed in deciding whether to make a self-report and thereafter during the course of any investigation.
What happens on 30 June 2012?
As noted, the Crown Office initiative will apply to reports submitted prior to 30 June 2012. At this time the Crown Office will consider whether to extend the initiative for a further period, though the guidance is keen to stress that business should not assume that there will be an extension.