The Bribery Act 2010 came into force on 1 July 2011.  The SFO has very recently revised some of its guidance in relation to facilitation payments, corporate hospitality and self reporting of misconduct.

The changes

The SFO published new statements of policy last week in relation to facilitation payments, hospitality and self-reporting.  Whilst no legal changes have been made, there appears to have been some change in the tone of the SFO's policies and a shift in the stance that the SFO is taking towards the manner in which it intends to exercise its prosecutorial discretion.

The approach of the former director of the SFO, Richard Alderman, was to encourage self-reporting, with guidance stating that "the benefit to the corporate will be the prospect (in appropriate cases) of a civil rather than a criminal outcome." That guidance no longer applies and references to it have been removed on the SFO's website.  The new director, David Green QC, has apparently taken into account recent OECD recommendations and there is a restatement that the principal function of the SFO is to investigate and prosecute cases of serious or complex fraud, rather than providing corporate bodies with advice on how to run their business.

Corporate Hospitality

The approach to genuine corporate hospitality has not changed, and there remains no appetite to criminalise proportionate and reasonable hospitality and promotional business expenditure which seeks to improve the image of a company or establish cordial relations.  Accordingly, no changes are required with respect to corporate compliance procedures related to corporate hospitality.

Facilitation Payments

Facilitation payments, i.e. payments made to facilitate or speed up the performance of an existing duty - small bribes in other words, always have been and remain illegal.  The SFO's recent publication cannot and does not change this.  But its approach towards exercising its prosecutorial discretion in such cases is now more uncertain.

Previously, the former director of the SFO, Richard Alderman, had endorsed a 6 Step Plan for companies that made facilitation payments to minimise the risk of prosecution, thereby providing a degree of comfort to companies that they would not be prosecuted if they followed the 6 Step Plan.

In its revised policy statement, the SFO has not referred to the 6 Step Plan, and has instead stated that the decision whether to prosecute will be determined, in particular, by whether it would be in the public interest to prosecute, in line with: the guidance contained in  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.  In deciding whether it would be in the public interest to prosecute companies for making facilitation payments, it seems from the guidance that the SFO will consider a number of factors, including the size and regularity of payments, whether they were planned for or accepted as a standard part of doing business and the position of the payer at the time that the payment was made. 

The SFO has, however, said that "it would be wrong to say there is no flexibility… Whether or not the SFO prosecutes… will always depend on (a) whether it is a serious or complex case… and, if so, (b) whether the SFO concludes, applying the Full Code Test… that there is an offender that should be prosecuted." Therefore, we remain of the view that the risk of prosecution by the SFO is low in relation to isolated facilitation payments made in exceptional circumstances where a business has a policy in place that states that such payments are illegal, not condoned and where the company follows the 6 Step Plan in the event that such payments are ever made.

In making any such payments, businesses should also be aware that even if the requirements of the Full Code Test are not met, the SFO has explicitly stated that it may consider civil recovery to recoup the benefits of facilitation payments.


The SFO had previously emphasised that in certain circumstances businesses that self-report instances of corruption would probably face lesser penalties, such as the prospect of a civil settlement rather than a criminal prosecution.  The position is now more uncertain.  In the new policy statement made by the SFO, taking on board OECD comments that "the SFO’s approach to settling self-reported foreign bribery cases civilly wherever possible without also seeking criminal prosecution and sanctions may… be unsound", the SFO has emphasised that self-reporting is no guarantee that a prosecution will not follow. However, self-reporting will be taken into consideration as a public interest factor tending against prosecution, in accordance with the guidance, if it forms part of a "genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice".  This will be decided very much on a case-by-case basis, and the SFO has stated that there will be no presumption in favour of civil settlements in "any circumstances". 

In this uncertain climate, it should not be assumed that a civil settlement will follow an incident of self-reporting.  It may be that a business decides that it has no realistic alternative but to self report to the SFO if it is obliged to make a suspicious activity report to comply with its anti-money laundering obligations in any event.  But if it is not under such an obligation, the decision as to whether it is appropriate to self report the matter will require very careful consideration, having regard in particular to the Full Code Test and the Guidance on Corporate Prosecutions. This will involve looking at the strength of the evidence and considering the public interest factors for and against a prosecution. 

What do you need to do?

  • Facilitation payments: To the extent that you have not done so already, you should update your policy on facilitation payments to make it clear that they are illegal and not condoned.  There should also be clarity on whom to contact within the organisation in case employees need practical guidance on how to deal with requests for facilitation payments.    Where a decision is made to pay a facilitation payment in exceptional circumstances, following the 6 Step Plan would appear to be a way to mitigate the risks (even if there is now less comfort that compliance with these steps would not result in enforcement action).  In any case, where facilitation payments are made in exceptional circumstances, there should be a targeted focus on seeking to reduce the risks of such payments being made in the future (for example, liaising with the local British Embassy; working through local business chambers of commerce; or factoring in the risk of delays in governmental processes in case requests for payments are made).
  • Corporate Hospitality: No changes required.
  • Self-reporting: In deciding whether to self-report, first consider any obligation to do so, under proceeds of crime legislation and elsewhere. If not, carefully consider whether it is in the best interests of the business to self-report, having regard to the guidance on the decision whether to prosecute and the fact that it is likely to be a mitigating factor in the event that a prosecution does follow.