Over a year after the implementation of the Bribery Act 2010, we are beginning to see how corporate bribery may be disposed of in future. One route initially encouraged by the regulatory authorities (the Crown Office in Scotland, the SFO in England) was self-reporting – an initiative under which companies that uncover wrongdoing, own up to it and meet certain tests, are offered the possibility of a civil rather than a criminal penalty (for more details on self reporting, please click here).
The SFO have since pulled back from that position, announcing in early October 2012 that self-reporting is now simply one of a number of factors they will take into account in making any decision on prosecution, with no guarantees that prosecution will be avoided (please click here for our Law-Now). By contrast, the Crown Office in Scotland continues to encourage self-reporting as a means of avoiding prosecution, having recently extended their initial one year self-reporting initiative until 30 June 2013, and published updated details of how reports should be made and the criteria by which they will be assessed (set out in the Guidance on the Approach of the Crown Office and Prosecutor Fiscal Service to the Reporting of Bribery Offences by Businesses – please click here)
Self-reporting is, however, a largely untested approach in the UK and those involved in implementing anti-bribery and corruption policies have been waiting keenly to see what the self-reporting route may mean and whether the apparently different approaches between the Crown Office and the SFO would have any significance in practice.
In Scotland, we have now had the first example of a company making use of the self-reporting regime, and the results appear encouraging. In May 2011, Abbot Group plc uncovered evidence of corrupt payments which had been made by an overseas subsidiary in 2007 (i.e. pre-Bribery Act). Following a detailed internal investigation, Abbot Group reported the payments to the Crown Office under the self-reporting regime. It was announced last week that they have agreed a civil penalty of £5.6M in lieu of criminal prosecution as a result – the penalty represents the profit made by the company under the contract to which the corrupt payments related and is to be paid in three instalments by March 2015.
Abbot Group could only make use of the self-reporting regime and the attendant advantages because the prosecuting authorities were satisfied that it had carried out a proper investigation and taken adequate measures in respect of the issues that were identified to ensure that there would not be a repeat offence. Each report under the self-reporting initiative is considered on its own merits by the Serious Organised Crime Division of the Crown Office, and tested against various criteria, such as: the nature & seriousness of the offence; the extent of the wrongdoing within the business; the extent of the harm caused; and the steps taken by the company to address the issue and prevent re-occurrence. It is also important that the company engages meaningfully with the Crown Office and fully discloses the extent of the wrong-doing. Abbot Group was only able to agree a civil penalty because it was able to satisfy the authorities that it met these tests.
The arrangement demonstrates that the authorities in Scotland are prepared to take a practical approach to enforcement. The primary concern is to ensure that businesses recognise their corporate responsibilities and take sufficient measures to investigate and prevent any future wrongdoing. If a company can demonstrate that the matter has been fully investigated and dealt with appropriately, and that adequate controls have been put in place for the future, then it seems the authorities in Scotland are prepared to take the view that the public interest is better served by agreeing a civil penalty rather than seeking to bring criminal charges. That may give some comfort to companies in Scotland faced with a decision as to whether to self-report if they uncover wrongdoing, and appears to contrast with the position of companies in England, who may be less likely to self-report in light of the lack of clarity as to the response self-reporting to the SFO will now receive.