Introduction

At the end of September,the Serious Fraud Office (SFO) removed guidance in relation to facilitation payments and gifts & hospitality in the context of the Bribery Act 2010 from its website. Guidance on self-reporting and the SFO’s approach to dealing with overseas corruption was also removed. On 9 October 2012, the SFO posted new guidance on these topics on its website.

The SFO explained the background to these “revisions,” as follows:

“Following his appointment, the Director of the SFO decided to review SFO policies and take forward recommendations made by the OECD Working Group on Bribery. The revisions have been published to:

  1. restate the SFO’s primary role as an investigator and prosecutor of serious and/or complex fraud, including corruption;
  2. ensure there is consistency with the approach of other prosecuting bodies; and
  3. take forward certain OECD recommendations.  

The SFO’s primary role is to investigate and prosecute. The revised policies make it clear that there will be no presumption in favour of civil settlements in any circumstances.”

This statement confirms that David Green QC, the new Director of the SFO, will adopt a different approach to his predecessor, Richard Alderman, with a focus upon criminal prosecutions as opposed to civil recovery.i In reality the change is not dramatic, as previous guidance was always subordinate to the Code for Crown Prosecutors that is used to identify the approach taken by Prosecutors in the UK when making a decision to prosecute.  

Facilitation Payments

The new SFO guidance on facilitation payments provides, as follows:  

“A facilitation payment is a type of bribe and should be seen as such. A common example is where a government official is given money or goods to perform (or speed up the performance of) an existing duty. Facilitation payments were illegal before the Bribery Act came into force and they are illegal under the Bribery Act, regardless of their size or frequency.

Whether or not the SFO will prosecute in respect of a facilitation payment (or payments) will be governed by the Full Code Test in the Code for Crown Prosecutors and the Joint Prosecution Guidance of the Director of the SFO and the Director of Public Prosecutions on the Bribery Act 2010. Where relevant, the Joint Guidance on Corporate Prosecutions will also be applied.

If on the evidence there is a realistic prospect of conviction, the SFO will prosecute if it is in the public interest to do so. In appropriate cases the SFO may use its powers under proceeds of crime legislation as an alternative (or in addition) to prosecution; see the Attorney General’s guidance to prosecuting bodies on their asset recovery powers under the Proceeds of Crime Act 2002.

This statement of policy has immediate effect. It supersedes any statement of policy or practice on facilitation payments previously made by or on behalf of the SFO.”

In terms of law, there is nothing revelatory in the new SFO guidance on facilitation payments. Both the Joint Prosecution Guidance of the Director of the SFO and the Director of Public Prosecutions on the Bribery Act 2010 (the Joint Prosecution Guidance) and the Ministry of Justice Guidance on the Bribery Act 2010 (the Ministry of Justice Guidance) have already confirmed unequivocally that, unlike the US Foreign Corrupt Practices Act, there is no exemption for facilitation payments - they are illegal and can constitute bribery of another personii or bribery of a foreign public official,iii and they can trigger the failure to prevent bribery offence.iv  

In terms of prosecutorial discretion, there is nothing revelatory either. All prosecutors, including the SFO, must base the decision to prosecute upon the Full Code Test in the Code for Crown Prosecutors which has two stages: (i) the evidential stage, followed by (ii) the public interest stage. In each case, the prosecutor must be satisfied, firstly, that there is sufficient evidence to provide a realistic prospect of conviction and then, secondly, whether a prosecution is required in the public interest. The Joint Prosecution Guidance sets out the factors tending in favour of prosecution and the factors tending against prosecution so far as facilitation payments are concerned.  

What the new SFO guidance does appear to do is to wipe away any SFO-specific guidance in relation to facilitation payments but it was always previously made clear that each case would be decided on its own facts.  

Our advice to companies wishing to comply with the Bribery Act 2010 is to ensure that they have in place an anticorruption compliance programme with a zero tolerance approach to facilitation payments.  

Business Expenditure

The new SFO guidance on business expenditure which replaces its previous guidance on gifts & hospitality is, as follows:  

“Bona fide hospitality or promotional or other legitimate business expenditure is recognised as an established and important part of doing business. It is also the case, however, that bribes are sometimes disguised as legitimate business expenditure.

Whether or not the SFO will prosecute in respect of a bribe presented as hospitality or some other business expenditure will be governed by the Full Code Test in the Code for Crown Prosecutors and the Joint Prosecution Guidance of the Director of the SFO and the Director of Public Prosecutions on the Bribery Act 2010. Where relevant, the Joint Guidance on Corporate Prosecutions will also be applied.

If on the evidence there is a realistic prospect of conviction, the SFO will prosecute if it is in the public interest to do so. In appropriate cases the SFO may use its powers under proceeds of crime legislation as an alternative (or in addition) to prosecution; see the Attorney General’s guidance to prosecuting bodies on their asset recovery powers under the Proceeds of Crime Act 2002.

This statement of policy has immediate effect. It supersedes any statement of policy or practice on business expenditure previously made by or on behalf of the SFO.”

Once again, in terms of law, there is nothing revelatory about the SFO’s new guidance. Both the Joint Prosecution Guidance and the Ministry of Justice Guidance have already confirmed that hospitality and promotional expenditure can constitute bribery of another personv or bribery of a foreign public official,vi and they can trigger the failure to prevent bribery offence.vii

Likewise, in terms of prosecutorial discretion, there is nothing revelatory about the SFO’s new guidance. As detailed above, all prosecutors, including the SFO, can only decide to prosecute in accordance with the Full Code Test in the Code for Crown Prosecutors.  

Accordingly, the position for companies wishing to ensure that they comply with the Bribery Act remains as it was previously. They must ensure that they have adequate policies and procedures on hospitality and promotional or other similar business expenditure as part of their antibribery compliance programmes.  

Self-Reporting and the SFO’s Approach to Dealing with Overseas Corruption

Richard Alderman, the former Director of the SFO, was an advocate of pragmatic US enforcement methods which are geared towards settlement and avoiding protracted investigation periods spanning in some previous SFO cases, 5 or 6 years, which resulted in no criminal proceedings being instituted or an unsuccessful criminal trial. The old guidance on self-reporting and the SFO’s approach to dealing with overseas corruption was integral to SFO enforcement policy during his tenure. In broad terms, it offered ‘corporates’ which self-report overseas corruption the prospect of a civil, rather than criminal, outcome (in appropriate cases). The Policy was adopted, in part, to address the Organisation for Economic Co-operation and Development’s (OECD) criticism of the UK for failing to address foreign bribery.  

However, a report in March by the OECD was critical of the SFO’s approach:  

“…the Working Group is concerned that, to settle foreign bribery-related cases, UK authorities are increasingly relying on civil recovery orders which require less judicial oversight and are less transparent than criminal plea agreements. The low level of information on settlements made publicly available by UK authorities often does not permit a proper assessment of whether the sanctions imposed are effective, proportionate and dissuasive … In short, the settlement process is opaque, lacks accountability, and thus fails to instill public and judicial confidence.”

In light of this criticism, the withdrawal of the old SFO guidance does not come as a great surprise. The new guidance reads, as follows:  

“Whether or not the SFO will prosecute a corporate body in a given case will be governed by the Full Code Test in the Code for Crown Prosecutors, the joint prosecution Guidance on Corporate Prosecutions and, where relevant, the Joint Prosecution Guidance of the Director of the SFO and the Director of Public Prosecutions on the Bribery Act 2010.

If on the evidence there is a realistic prospect of conviction, the SFO will prosecute if it is in the public interest to do so. The fact that a corporate body has reported itself will be a relevant consideration to the extent set out in the Guidance on Corporate Prosecutions. That Guidance explains that, for a self-report to be taken into consideration as a public interest factor tending against prosecution, it must form part of a ‘genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice’. Self-reporting is no guarantee that a prosecution will not follow. Each case will turn on its own facts.

In appropriate cases the SFO may use its powers under proceeds of crime legislation as an alternative (or in addition) to prosecution; see the Attorney General’s guidance to prosecuting bodies on their asset recovery powers under the Proceeds of Crime Act 2002. If the SFO uses its powers under proceeds of crime legislation, it will publish its reasons, the details of the illegal conduct and the details of the disposal.

In cases where the SFO does not prosecute a self-reporting corporate body, the SFO reserves the right (i) to prosecute it for any unreported violations of the law; and (ii) lawfully to provide information on the reported violation to other bodies (such as foreign police forces).

This statement of policy has immediate effect. It supersedes any statement of policy or practice on self-reporting previously made by or on behalf of the SFO.”

The new guidance represents a change of approach for the SFO but on closer examination confirms how essence of the change is that the SFO is no longer an agency which positively wishes to try to provide assurances about a case it is dealing with and it will not give greater credit for self-reporting than other agencies such as the CPS.