UK: Anti-Corruption Snowball Gathers Momentum

Last Updated: 8 January 2015
Article by Tony Lewis

Yesterday marked a number of significant anti-corruption developments for businesses:

First, in the UK the Serious Fraud Office ("SFO") obtained its first conviction against a corporation for bribing foreign officials. A jury at Southwark crown court in London found Smith & Ouzman Ltd guilty of making £500,000 of corrupt payments to secure contracts in Kenya and Mauritania. Smith and Ouzman Ltd, a printing firm based in England, which specialises in security documents such as ballot papers and certificates, was convicted of three counts of corruptly agreeing to make payments, contrary to section 1(1) of the Prevention of Corruption Act 1906.The company will be sentenced, along with two former directors, in February 2015.

Secondly, in the US, French company Alstom SA pleaded guilty to bribing officials in Indonesia, Saudi Arabia, Egypt, and the Bahamas. The Department of Justice ("DoJ") had charged the company with violating the Foreign Corrupt Practices Act by falsifying its books and records and failing to implement adequate internal controls. In addition, Alstom Network Schweiz AG, a Swiss subsidiary, pleaded guilty to a criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA. Two U.S. subsidiaries, Alstom Power Inc. and Alstom Grid Inc., entered into deferred prosecution agreements with the DOJ. "In total," the DOJ said, "Alstom paid more than $75 million to secure $4 billion in projects around the world, with a profit to the company of approximately $300 million." It will pay $772 million in criminal penalties to settle the charges.

Thirdly, back in the UK, the SFO also charged an English subsidiary of Alstom SA, Alstom Power Ltd, and two employees with bribing officials at a state-controlled Lithuanian energy company. Yesterday's charges relate to a project Alstom was involved in at the Elektrenai Power Plant in Lithuania. A preliminary hearing is scheduled in January 2015 at Southwark crown court in London. Alstom Power Ltd is the second Alstom business to face bribery charges in the UK. The SFO charged Alstom Network UK in July 2014 with six offences of corruption. The SFO said Alstom Network paid US$8.5 million in bribes between 2000 and 2006 for work on the Delhi Metro and tram and infrastructure projects in Warsaw and Tunis. ( see Fieldfisher alerter 25 July 2014).

Commentary

Yesterday's developments are significant, and may mark the start of a more aggressive corruption enforcement environment. In the US, the Alstom penalty is the largest ever by the DoJ for foreign bribery. In the UK, Smith & Ouzman marks the first SFO conviction of a corporate for bribery of foreign public officials. The Smith & Ouzman conviction follows hard on the heels of the SFO's first convictions against individuals under the Bribery Act legislation earlier this month (see Fieldfisher alerter 10 December 2014). Also, last week the Scottish prosecutor, the Crown Office, reported that oil services firm International Tubular Services had admitted making corrupt payments to secure contracts in Kazakhstan, and the Crown Office civil recovery unit had seized monies under proceeds of crime laws.

It is notable that these corruption developments relate to businesses. In the UK the Smith & Ouzman and Alstom corporate charges are under the old corruption law because the offences are alleged to have taken place prior to the implementation of the Bribery Act 2010. This means that a prosecutor needs to prove beyond reasonable doubt that the actions and intent required to commit the offences were those of a directing mind and will of the business. Historically prosecutors have found it difficult to prove that a 'directing mind and will' of the corporate had the requisite knowledge. By contrast, there is no such requirement under the Bribery Act under which a company can be held liable for a bribe paid on its behalf even if nobody within the company knew about the bribe. For this reason it will be far easier in future cases for prosecutors to secure a conviction of a corporate under the new law which applies to behaviour that took place after 1 July 2011.

It is also notable that these developments relate to overseas corruption; Kenya and Mauritania (Smith & Ouzman), Indonesia, Saudi Arabia, Egypt, and the Bahamas (Alstom SA), Lithuania (Alstom Power Ltd), India, Poland and Tunisia (Alstom Network UK), and Kazakhstan (ITS). Both the UK bribery legislation, and the US Foreign Corrupt Practices Act, have extra-territorial application, and it appears that prosecutors are increasingly willing to invoke that jurisdictional reach in prosecutions against companies. For the UK Bribery Act, if an entity "carries on a business or part of a business" in the UK, then it can be liable for a bribe paid anywhere in the world by itself or any person "performing services" for it.

Finally, it is notable that the developments in the UK come days after the publication of the UK government's Anti-Corruption Plan. The Plan, which arises from a six-month review of the roles of the various UK bodies involved in the investigation and prosecution of economic crimes, sets out over 60 recommendations to be taken forward by the government and its partners. Those recommendations include consideration of what more can be done to incentivise and support whistleblowers in cases of bribery of corruption. In the US financial incentives for whistleblowers are already in place, and the Plan says that these "should not be ruled out" in the UK. Also, the Plan reveals that the UK Ministry of Justice will be examining the case for a new criminal offence of corporate failure to prevent economic crime, and the rules on establishing corporate criminal liability more widely. The new criminal offence has been in gestation for some time, and is likely to be modelled on section 7 of the Bribery Act 2010 (strict liability for businesses, subject to a defence of "adequate procedures"). (see Fieldfisher alerter 17 June 2013). If implemented it is clear that the recommendations in the Plan will result in increased financial crime enforcement action by prosecutors against companies in the UK.

Click here for our Enforcements Table.

This alerter was first sent on the 23rd December 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.