The first UK contested prosecution of an SME for failure to prevent bribery provides a salutary warning to Irish businesses in advance of upcoming legislation.
The Criminal Justice (Corruption Offences) Bill 2017 is currently progressing through the Oireachtas. The Bill consolidates seven anti-corruption Acts from as far back as 1889 up to 2010. It also introduces a range of new offences which modernise the Irish anti-corruption code.
S18 proposes one such new offence.1 It provides that a body corporate will also be guilty of an offence, if an offence under the new Act is committed by an officer,2 employee agent or subsidiary of that body corporate with the intention of obtaining or retaining business for the body corporate, or an advantage for it in the conduct of its business. The language of the new offence closely mirrors the existing s7 of the UK Bribery Act 2010 here.
It will be a defence for a body corporate to prove that it “took all reasonable steps and exercised all due diligence to avoid the commission of the offence.” The equivalent UK provision refers to the body corporate having “had in place adequate procedures designed to prevent persons associated with [it] from undertaking such conduct.” While the language here does differ, if anything it seems that Irish defendants could be held to a higher standard, it is likely that similar factors will be taken into account in both cases in deciding whether a defendant has met the requisite requirements.
The first contested prosecution under s7 has just concluded in the UK. In that case, a refurbishment contractor, Skansen Interior Ltd (“SIL”) was invited to tender for certain valuable contracts which it won. It was alleged that the tender process had been tainted by bribery involving an employee from the company tendering the contract and from SIL. This had involved a system of fake invoicing. Both pleaded guilty to offences under the UK Bribery Act. SIL was subsequently prosecuted and convicted under s7 of that Act.
What is interesting from an Irish perspective as we await the enactment of the new offence, is SIL’s argument that it had adequate procedures in place designed to prevent bribery and ultimately the high standard that it was held to by the jury which rejected this defence.
In summary, SIL unsuccessfully argued that as it was a small localised business employing 30 individuals from a single open-plan office, it did not require sophisticated controls to prevent bribery for its controls to be “adequate” under the UK Bribery Act. There were proper controls in place for the payment of invoices. The company ethos was to behave with honesty and integrity and there were existing policies to this effect. These measures were seen as inadequate.
It is also of note that SIL conducted its own internal investigation, then self-reported the improper activity to the authorities and fully cooperated with their subsequent investigation.