UK Bribery Act 2010 – the lessons so far?

By Chris Cartmell & Victoria Murphy

Over the last five years the Serious Fraud Office (SFO) has exercised its investigative powers to hold corporates to account under the Bribery Act (UKBA) for acts of bribery with some success, in particular two high profile cases:

  1. The first UK Deferred Prosecution Agreement (DPA) was approved on 30 November 2015; and
  2. The first UK company to be convicted upon a guilty plea under the UKBA on 19 February 2016.

Both cases related to the corporate offence under the UKBA of failing to prevent bribery. Further details of these cases can be found here.

Whilst one DPA and one conviction on a guilty plea may not seem like a significant output, the UKBA is still a relatively new piece of legislation. The US Foreign Corrupt Practices Act 1977 (as the SFO themselves make the comparison) took many years to gain momentum and it was not until the turn of the century (over 20 years later) that we saw the level of prosecutions that we do now.

Five lessons learned in five years:

  1. Independent investigations need to be tested - advisers must engage with the SFO from an early stage in respect of any investigation. The SFO needs to engage with the strategy of any proposed investigation in order to satisfy themselves that any alleged misconduct is investigated robustly.
  2. Legal Professional Privilege (LPP) the SFO has stated that they are not seeking to interfere with a clients’ right to claim LPP over advice provided by legal advisors but cooperation is required. The SFO does need access to sufficient information and documentation (such as witness evidence) to understand the extent of any criminal conduct and to determine whether, and what, enforcement action is required.
  3. Training and communication is key - employees must be well trained, well informed and well aware of their obligations to ensure policies and procedures are suitably implemented. The fact that individuals can be interviewed by the SFO make any gaps in training all the more likely to be exposed in the event of inquiry.
  4. DIY KYC - companies cannot rely upon the due diligence conducted by third parties. In the DPA case, the organisation relied upon the due diligence conducted by its sister company and was held ultimately responsible for the third party’s failings. It is therefore important that arrangements with third parties are properly governed by policy.
  5. Damaging to pockets and reputation - given the significant fines levied in both cases, it is apparent that falling foul of the UKBA is an expensive day in Court when fines, confiscation and the SFO’s own costs can be recovered. Further, in the DPA matter, proceedings to approve the DPA were held openly so such matters can become a very public affair.

So what’s next?

Whilst the cases mentioned above are helpful guidance, given that neither one ran through to trial, we appear to be at the beginning of a long tale for the UKBA and we will explore next week some of the unanswered questions. One thing is clear however, companies are better placed to have an “adequate procedures” defence if they consult lawyers to plug policy gaps and provide training for staff. In terms of enforcement, they fare better with transparency and early notification to the SFO as soon as bribery is suspected.

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