On 9 October 2012, the UK Serious Fraud Office (the "SFO") issued new guidance setting out their approach to tackling bribery and corruption. There was eager anticipation of change in the SFO's approach following the appointment of new director of the SFO, David Green QC, in April 2012, but this new guidance still came as a surprise to many, particularly given that much of the international anti-corruption community had its eyes focused on the U.S. Department of Justice and the awaited updated guidance on the Foreign Corrupt Practices Act of 1977 (the "FCPA"). To explain the guidance, the SFO published a Q&A which established the reasons for the new guidance as to:
a. "restate the SFO's primary role as an investigator and prosecutor of serious and/or complex fraud, including corruption": as prosecution is the primary aim, there is no presumption in favour of civil prosecutions. However, while prosecution may be favoured, civil recovery will be considered as an alternative, if prosecution is not available or appropriate;
b. "ensure there is consistency with the approach of other prosecuting bodies": this has led some commentators to question whether there is an intention to work more closely with other regulatory bodies; and
c. "take forward certain OECD recommendations": this follows the Organisation for Economic Co-operation and Development (OECD) Working Group on Bribery stating in March 2012 that the UK (informal) self-reporting provisions were "overly generous." The SFO are, therefore, seeking to revisit their approach to self-reporting, despite only doing so a week prior to the annual conference of the OECD Working Group on Bribery.
The new guidance largely acts to clarify the pre-existing position and deals with three issues:
- Facilitation Payments: The guidance merely clarifies the position in the UK Bribery Act 2010 (UKBA), making clear that facilitation payments are illegal bribes. This continues to differ from the FCPA, which establishes exceptions to the ban on facilitation payments. (To access the SFO guidance on facilitation payments, please click here.) The guidance indicates that the SFO continues to take a hard-line approach to this issue, despite the practical difficulties.
- Business Expenditure: The Ministry of Justice first published guidance on the UKBA in April 20111; however, uncertainty remained as to the degree that corporate hospitality would be permitted. The new guidance makes it clear that the SFO view corporate hospitality as an important part of business, but that bribes may be cloaked under the guise of corporate hospitality. This new guidance therefore seeks to prevent undue concern from corporates when providing genuine and reasonable corporate hospitality. (To access the SFO guidance on business expenditure, please click here.)
- Self-Reporting: Statements from the SFO over
the past year demonstrate their support of self-reporting and the
new guidance, which applies to corruption beyond just the UKBA, is
no different. The new guidance highlighted that the SFO will decide
whether to prosecute in accordance with a variety of pre-existing
guidelines, and such guidelines have not been changed. These
guidelines include: (a) principles in the Full Code Test in the
Code of Crown Prosecutions, (b) the Joint Prosecution Guidance of
the Director of the SFO and the Director of Public Prosecutions
(DPP) on the Bribery Act 2010, and (c) the Joint Guidance on
Corporate Prosecutions (Corporate Prosecution Guidance).
The Corporate Prosecution Guidance makes clear that to avoid prosecution, self-reporting must be part of a "genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice."The Corporate Prosecution Guidance sets out factors tending towards and against prosecution and the SFO have made it clear that if there is sufficient evidence and it is in the public interest, they will not hesitate to prosecute (regardless of the level of co-operation). Given there are no guarantees that self-reporting will give immunity from prosecution and each case will be decided on its facts, the SFO have again highlighted the uncertainties for corporates deciding whether to self-report.
While uncertainties remain, the close links between self-reporting and deferred prosecution agreements (DPAs) may mean further guidance is on the way. DPAs have been the subject of a UK government consultation this summer, and the results of this consultation may provide greater clarity on the implications of a company self-reporting a potential bribery offence. Given that legislation will be required to implement DPAs, it may be that self-reporting will also be put on a statutory footing.
The new guidance makes clear that self-reporting is not the SFO's only means for investigating corruption; they retain the right to prosecute for any non-reported violations and to provide any information uncovered to other bodies, including foreign police forces.
To access the SFO guidance on self-reporting, please click here.
While uncertainty remains as to the approach of the SFO to self-reporting, and little further clarity has been given in respect of corporate hospitality, the new guidance demonstrates that targeting bribery is high on the SFO's agenda. It can only be assumed that the first corporate hospitality case under the UKBA is likely to be fast approaching.
To access the SFO Q&A relating to the new guidance please click here.
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.