Although there has been just a single conviction under the Bribery Act – an English court clerk was successfully prosecuted under the Act for accepting bribes - since it came into effect on 1 July last year, there is no room for complacency. I feel it is just a matter of time until more prosecutions, including corporate prosecutions, and civil settlement agreements begin to emerge.
There is some evidence that the economic downturn may be driving complacency and an increased tolerance of unethical behaviour. An FSA review of anti-bribery systems in investment banks revealed that some of the banks visited had failed to conduct adequate risk assessments. There were issues around dealings with third parties and, for some, management information was so poor that effective oversight could not take place. Complacency is however both misguided and short-sighted given the significant penalties in the Act, and the reputational damage following a conviction.
Under the Act, there are four categories of offence which cover: bribing an individual; bribing a foreign public official; being bribed yourself; and the corporate offence of failing to prevent bribery.
A senior officer can be liable if they have consented or connived in the commission of an offence by an organisation that falls within one of the first three categories. The Act also has a very wide territorial reach; the core bribery offences can take place anywhere in the world where there is a "close connection" between the person committing the offence and the UK.
Similarly, the activities constituting a failure to prevent bribery - the corporate offence within the Act - can take place anywhere in the world. The offence applies to non-UK businesses as long as they carry on all or part of their business in the UK.
The Act effectively requires organisations to review and assess their particular bribery risks and ensure that they have adequate procedures to deal with those risks. This constitutes the statutory defence to the corporate offence. However, risk assessments need to be current and reflective of the evolving business, and organisations must therefore have mechanisms in place to ensure that risk is re-assessed on an on-going basis.
There needs to be real leadership in practice on anti-corruption and organisations should be able to demonstrate their key anti-bribery values.
Senior managers in organisations should know and understand the policies and procedures around bribery: understand how bribery risks are identified, how key cultural values are demonstrated, and the measures taken by the organisation around risk assessments. That will be a challenge for organisations who fail to ensure senior staff have appropriate and adequate training.
The Serious Fraud Office, in England and Wales, and the Crown Office, in Scotland, have arrangements in place for the self-reporting of bribery offences (the Scottish trial is ending and an announcement on whether it is being extended has at the time of writing yet to be made). Through self-reporting an organisation may be able to avoid criminal penalties, and agree an appropriate civil settlement with the prosecutor.
Being able to agree civil settlements has significant attractions, not least of which is the avoidance of the automatic debarment following a conviction from tendering for EU public contracts for bribing a person or foreign public official, and avoiding the difficulties of discretionary debarments following a conviction in relation to accepting bribes and/or committing corporate offences.
However, whilst many organisations may believe that criminal penalties will be avoided through self-reporting, this is not always the case. The Lord Advocate has stressed that self-reporting is not a soft option and in appropriate cases, if the public interest demands it, a prosecution will follow. The significant corporate decision on reporting should consider whether a Suspicious Activity Report needs to be made under the proceeds of crime legislation, and the decision to self-report should only ever be taken with the benefit of legal advice. There is, therefore, no room for complacency.
While the legislation has only had limited impact on the ground to date, I feel that more prosecutions are inevitable which makes it vital that organisations take the right steps to protect themselves from falling on the wrong side of this important and challenging piece of legislation.