The Serious Fraud Office (SFO) has charged four individuals with fraud offences for their involvement in a £23m fraud at Sustainable AgroEnergy, following an SFO investigation into the promotion of biofuel products to UK investors. Three of the four defendants have also been charged with the Bribery Act offences of “making and accepting a financial advantage”. The four British defendants (three directors of the company and one independent financial adviser) will appear at Westminster magistrates’ court in September.
This is the first instance of the SFO charging individuals under the Bribery Act since the Act came into force in 2011, giving the SFO power to prosecute any company or individual which has a link with the UK. According to SFO director David Green in a statement last month, the SFO is currently running two investigations of companies suspected of breaching the Act.
What is interesting about this first charge under the Bribery Act is that it appears to relate to private rather than public corruption. Further, there appears to be no corporate prosecution so far against the company (for failing to prevent bribery) which may be due to the fact that Sustainable AgroEnergy and its parent company are in administration and it is not in the public interest to pursue such a prosecution. However, a company can avail itself of the defence of having had ‘adequate procedures’ in place, or perhaps a prosecution will follow at a later date – it remains to be seen. In our Guidance Note on the Consultation on the Code of Practice on the use of Deferred Prosecution Agreements we indicated that we believed that there seemed to be signals within the document that the Serious Fraud Office was looking to go after chiefs when prosecuting corruption as a warning shot to the business community. The fact those being prosecuted were senior officers of the company should again highlight the need for senior executives to ensure their house is in order.
The slow impact of the Bribery Act had been anticipated by commentators who saw parallels with the trajectory of the FCPA. It is still expected to take further time to bed in before a significant number of prosecutions are commenced; the FCPA took many years to really take off as demonstrated by the SEC's and Department of Justice’s chronological history of enforcement actions. So whilst it is unlikely we will see a sudden jump in prosecutions here one anticipates in the immediate future a steady trickle of prosecutions year on year provided the SFO has the resources to investigate and prosecute.