In September 2012, the Serious Fraud Office (SFO) removed the official guidance on facilitation payments, corporate hospitality and self-reporting from its website. It was anticipated that revised guidance would be issued and this was done on 9 October 2012.
This new guidance from the SFO suggests a tougher stance will now be taken on offences arising under the Bribery Act 2010 in respect of facilitation payments, corporate hospitality (business expenditure) and self-reporting.
The SFO makes it clear that a facilitation payment "is a type of bribe and should be seen as such".
The guidance stresses that facilitation payments (small unofficial payments made to facilitate or speed up routine actions) have always been illegal and continue to be so under the Bribery Act; regardless of their size and frequency.
The SFO had previously acknowledged that it would take time to eradicate facilitation payments in some countries, and this could be taken into account by the SFO if appropriate. No similar acknowledgment is found in the new guidance. The SFO does confirm, in its Q&A section, that "it would be wrong to say there is no flexibility" in relation to facilitation payments. However, no further guidance is given.
The SFO has repeated that "bona fide hospitality or promotional or other legitimate business expenditure is recognised as an established and important part of doing business". Issues will arise when bribes are "disguised as legitimate business expenditure". No further guidance is given as to how it would be determined that a business expense is in fact a bribe.
This new guidance serves to highlight the importance of companies having adequate procedures in place to prevent bribery, including the requirement for policies governing facilitation payments and corporate hospitality. Companies must ensure such procedures are established and that staff are trained and monitored to ensure compliance.
Whether or not a company will face prosecution as a result of facilitation payments being made and / or corporate hospitality or other business expenditure being deemed a bribe, will be governed by the Full Code Test in the Code for Crown Prosecutors and the Joint Prosecution Guidance of the Director of the SFO and the Director of Public Prosecutions on the Bribery Act 2010. Where relevant, the Joint Guidance on Corporate Prosecutions will also be applied.
In summary, a prosecution will be brought if there is a realistic prospect of a conviction and the prosecution is in the public interest. The SFO has also made it clear that in appropriate cases it may use its powers under proceeds of crime legislation as an alternative (or in addition) to prosecution.
The previous guidance on self reporting suggested the SFO would want to settle self-referral cases civilly if appropriate. The new guidance still encourages self-reporting but it expressly states that "self-reporting is no guarantee that a prosecution will not follow".
The SFO has confirmed the revisions have been made to "restate the SFO's primary role as an investigator and prosecutor of serious and / or complex fraud, including corruption" and to "ensure there is consistency with the approach of other prosecuting bodies". David Green QC stated his intention to ensure this was done after he was appointed as Director of the SFO in April this year.
This revised guidance and the emphasis on the SFO's role as an investigator and prosecutor underlines the need for companies to ensure they have a Bribery Act Policy in place.