The last two months of 2014 were, as we noted, banner months for U.S. anti-corruption settlements, as the DOJ and SEC secured settlements totaling approximately $1 billion. But while the focus stateside was on the settlements secured by U.S. authorities, December 2014 also turned out to be a significant month for the U.K. Serious Fraud Office (SFO), which obtained two convictions under its anti-corruption laws. These convictions demonstrate that the SFO is backing up its promises of enforcement under its bribery laws and that we may see more action in 2015.
First, on Dec. 8, 2014, Gary West and Stuart Stone were convicted of individually violating the U.K. Bribery Act in connection with the operations of Sustainable Growth Group (SGG). This was the first prosecution brought and first conviction obtained by the SFO under the Bribery Act. The individuals, both citizens of the U.K., were charged with receiving and giving bribes in connection with a scheme to fraudulently promote and sell biofuel investment products between April 2011 and February 2012. Specifically, West and Stone engineered false invoices for payment by SGG; they then diverted commissions to Stone and bribes to West for SGG’s acceptance of the false invoices. The bribes totaled approximately £189,000 and the overarching fraud caused losses of approximately £23 million. West was sentenced to 4 years’ imprisonment on the bribery charges and thirteen years overall, while Stone was sentenced to 6 years on the bribery charges. Both individuals were also disqualified from being directors for 15 and 10 years, respectively.
Second, on Dec. 22, 2014, the SFO scored its first corporate bribery conviction against U.K.-based printing firm Smith and Ouzman Ltd. and two of its executives. The SFO alleged that the defendants had paid over £395,000 to public officials in Kenya and Mauritania in order to secure public contracts for certain “security documents,” including ballet papers and certificates. Because the acts giving rise to the charges took place between 2006 and 2010, the defendants were prosecuted under the U.K.’s Prevention of Corruption Act of 1906, the predecessor to the Bribery Act. The executives will be sentenced on Feb. 12, 2015.
In addition to obtaining these convictions, the SFO also charged Alstom Power Ltd. and two employees with bribing officials at a state-controlled energy company in Lithuania. Alstom Network UK was charged in July 2014 with six corruption offenses and the multi-national corruption case against Alstom, including the December 2014 U.S. settlement for a record $772 million has been widely documented.
These movements show that the SFO is indeed “serious” about pursuing corruption cases, especially individual prosecutions (perhaps in contrast to the actions of the U.S. authorities). However, despite these successes, the SFO still has yet to convict a company under the Bribery Act, and has yet to bring an action under Section 7 of the Bribery Act, one of the harsher provisions of the Act under which the SFO can charge a company with the offense of “failure to prevent bribery.” We may see one in 2015, given the SFO’s representation that it has over 80 active cases, many of them against corporations.