On October 9, 2012, the U.K. Serious Fraud Office ("SFO") issued revised guidance related to its enforcement of the U.K. Bribery Act. The new guidance addresses three issues—self-reporting, facilitation payments, and business expenditures for hospitalities and gifts. Most notably, the new guidance supersedes the former preference for settling self-reported cases on civil grounds and, in a noteworthy shift in tone, generally signals that under its new Director David Green, the SFO intends to function primarily in its role as a prosecuting body and not as a confidant to corporations.

In March of this year, the OECD reported on the U.K.’s implementation of the OECD Anti-Bribery Convention and its enforcement of the Bribery Act, and the report raised a number of criticisms related to the SFO’s enforcement efforts, including its positions on self-reporting, facilitation payments, and gifts and hospitalities. The SFO announced this new guidance just one day before the OECD Working Group on Bribery opened its quarterly meeting in Paris, during which it is expected that the U.K.’s response to these recommendations will be a topic of some discussion.

Self-Reporting Corruption

The SFO’s previous detailed guidance encouraged companies to voluntarily disclose incidents of bribery, offering the SFO’s assurance that "we want to settle self-referral cases . . . civilly where-ever possible." In addition, companies that uncovered bribery problems in the course of M&A transactional diligence were encouraged to seek the SFO’s advice. The OECD, however, expressed concern that the SFO’s approach "may be overly generous." The replacement guidance from the SFO on self-reporting is far less detailed, and simply states that a decision to prosecute "will be governed by the Full Code Test in the Code for Crown Prosecutors," which calls for prosecutions where there is a realistic prospect of conviction and to do so would be in the public interest, as well as by the original Bribery Act guidance issued by the SFO in 2010.

Now, a company’s decision to self-report will only be a "relevant consideration." The guidance cautions that "[s]elf-reporting is no guarantee that a prosecution will not follow." Indeed, the guidance is definitive in stating that "there will be no presumption in favour of civil settlements in any circumstances. Finally, the guidance provides that "for a self-report to be taken into consideration as a public interest factor tending against prosecution, it must form part of a ‘genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice.’" This shift brings the SFO’s approach closer to that of the U.S. Department of Justice, whose framework is set forth in the Principles of Federal Prosecution of Business Organizations (USAM §§ 9-28.000-9-28.130).

The SFO’s revised guidance further explains that "in appropriate cases, the SFO may use its powers under proceeds of crime legislation as an alternative (or in addition) to prosecution." If after this past summer’s consultation on Deferred Prosecution Agreements ("DPA"), the U.K. proceeds to adopt this new approach to settling corporate crime, the SFO will need to clarify under what circumstances it will proceed by civil recovery order under the proceeds of crime regime, by DPA, by criminal prosecution, or some combination of these.

The SFO’s overall recalibration in favor of prosecution is evident from the questions and answers that accompany the new guidelines. In response to a question whether the SFO will communicate with corporate bodies about their past or future conduct, the SFO underscores that it "is primarily an investigator and prosecutor of serious and/or complex fraud, including corruption. It is not the role of the SFO to provide corporate bodies with advice on their future conduct."

Facilitation Payments and Business Expenditures

The new guidance on facilitation payments, hospitality, promotional and other business expenditures does not purport to represent changes in the SFO’s positions. With respect to facilitation payments, the new guidance stresses that such payments are and always have been considered bribes under U.K. law: "[f]acilitation payments were illegal before the Bribery Act 2010 came into force and they remain illegal under the Act regardless of their size or frequency." With respect to gift and hospitality expenditures, the guidance says there is nothing criminal about bona fide hospitality or promotional expenditures. The guidance cautions, however, "that bribes are sometimes disguised as legitimate business expenditure."

As to whether the SFO will prosecute facilitation payments or bribery concealed as business expenditures, the guidance suggests that the SFO will continue to exercise significant discretion in deciding whether to prosecute cases involving modest and infrequent payments. The SFO emphasized that it will prosecute only if there is "a realistic prospect of conviction," and if "it is in the public interest to do so." And more generally, the guidance stresses that only "serious or complex" cases fall within the SFO’s remit, suggesting that only egregious or repetitive and systemic conduct is likely to merit prosecution. Even then, the guidance notes the availability of its powers under proceeds of crime legislation (and thus civil recovery) as an alternative to prosecution.


With the SFO’s Bribery Act guidance arriving just before the long-promised FCPA guidance from U.S. authorities, it remains to be seen whether the U.S. tempers its tone and approach or holds the line. For its part, the SFO’s new guidance places a renewed emphasis on prosecution over civil settlement, and on the settled decision-making framework in U.K. prosecution codes over the SFO’s prior self-declared "open door" policy. Overall, the SFO’s new guidance offers companies more sticks than carrots. Given the widely reported budget constraints on the SFO, however, and the possibility of less corporate self-reporting, it is unclear whether the shift in tone foretells heightened enforcement under the Bribery Act.