On October 9, 2012, the UK's Serious Fraud Office (SFO)
released a new policy for corporations on self-reporting in
relation to enforcement of the UK Bribery Act 2010.
Providing for criminal offences for both domestic and foreign
bribery, the Bribery Act 2010 implements the Organization
for Economic Co-operation and Development (OECD) Convention on
Combating Bribery of Foreign Public Officials in International
The new policy comes in response to criticism from the OECD,
which had described certain aspects of the old policy as
"unsound" and "overly generous" in its Phase 3
Working Report on Implementing the OECD Anti-Bribery Convention in
the United Kingdom.
The New Policy on Self-Reporting
The SFO's new policy changes the handling of self-reported
cases and aims to toughen enforcement, departing from the previous
policy of settling self-reported offences civilly whenever
possible. The SFO will now prosecute if there is a realistic
prospect of conviction and if it is in the public interest to do
so. Self-reporting does not guarantee that prosecution will not
Through its Guidance on Corporate Prosecutions, the SFO
also points to the following factors as relevant in determining
whether to prosecute in instances of self-reporting:
A genuinely proactive approach adopted by the corporate
management team when the offending is brought to their notice;
The existence of a genuinely proactive and effective corporate
compliance program; and
A lack of a history of similar conduct involving prior
criminal, civil and regulatory enforcement actions against the
Guidance on Facilitation Payments
Facilitation payments are small payments made to induce
officials to perform routine functions they are otherwise obligated
to perform. In contrast to similar legislation in the U.S. and
Canada, facilitation payments are illegal under U.K.
The new guidance issued by the SFO indicates that prosecutions
of facilitation payments will be governed by the Full Code Test.
This test involves a determination of whether there is a reasonable
prospect of conviction based on the evidence and, if so, whether it
is in the public interest to proceed with a prosecution. The
Joint Prosecution Guidance on the Bribery Act 2010 lists
the factors that will guide the SFO when it considers whether it is
in the public interest to prosecute instances of facilitation
payments, including the following:
Large or repeated payments are more likely to be prosecuted
than single, small payments.
Payments that indicate an active attempt to corrupt the
official are more likely to be prosecuted than instances where the
official made the demand for payment while the payer was in a
Prosecution is less likely where a commercial organization
follows a clear and appropriate policy setting out procedures when
facilitation payments are requested.
Guidance on Hospitality or Promotional
The SFO recognizes that hospitality or promotional expenditures
can be an important part of doing business. However, in certain
circumstances the giving of gifts or hospitality expenses may be
disguised attempts to offer a bribe. The SFO is more likely to
infer that the hospitality expenditure was intended to influence an
official or encourage improper performance when the expenditure is
lavish beyond what may be reasonable in the particular
circumstances. The more lavish the hospitality or expenditure, the
greater the inference.
What Canadian Businesses Need to Know
Canadian businesses with subsidiaries or otherwise operating in
the UK need to carefully consider their exposure to the Bribery
Act. Upon becoming aware of any potential bribery offence
relating to its foreign activities, Canadian businesses need to
consult with experienced professionals in order to develop a
comprehensive strategy and manage their legal risks.
Beyond direct exposure to UK enforcement, the SFO's new
policy on self-reporting is important as an indication of
international enforcement trends. Governments such as Canada are
sensitive to OECD criticism, and issues of self-reporting are
particularly important given the dominant role settlement
negotiations play in the current enforcement regime.
In R v Villaroman, the Supreme Court of Canada recently dealt with the issue of circumstantial evidence and the inferences that can be reasonably drawn from that evidence in order to find an accused guilty beyond a reasonable doubt.
Canadian engineering and construction giant SNC-Lavalin has been charged by the RCMP with paying bribes of nearly $48 million to Libyan government officials and defrauding Libya of nearly $130 million.
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