UK Government to Consult on Extending the Scope of Section 7 Bribery Act 2010
In May 2016, as revealed in our last edition, the UK Government announced that it was considering whether to extend the scope of the UK Bribery Act's section 7 offence of a corporate failing to prevent bribery to other economic crimes, such as fraud, false accounting and money laundering.
On 5 September 2016, in a speech to the Cambridge Symposium on Economic Crime, the UK Attorney General stated that the Government would "soon consult on [those] plans" and commented that the UK's "current system of limited corporate liability incentivises a company's board to distance itself from the company's operations. In this way, it operates in precisely the opposite way to the Bribery Act 2010, one of whose underlying policy rationales was to secure a change in corporate culture by ensuring boards set an appropriate tone from the top." The Attorney General concluded his remarks stating that when "considering the question 'where does the buck stop?' and who is responsible for economic crime, it is clear that the answer is to be found at every level, from the boardroom down. Both corporates and individuals are responsible."
Following this address, there has been speculation that the Government intends to make individual directors and officers personally liable for the acts of company employees, agents, subsidiaries, contractors and other representatives. However, we consider that this is unlikely and that the new offence will continue to focus on corporate liability only.
The Government has yet to announce any details of or timetable for the consultation.
SFO Admits One Third Discounts on DPA Penalties Insufficient to Incentivise Self-Reporting
The Joint Head of Bribery and Corruption at the UK Serious Fraud Office ("SFO") has conceded that the one third penalty discount given to companies entering into DPAs is insufficient to adequately incentivise companies to self-report. Speaking at the Global Investigations Review: Live, New York City on 15 September 2016, Ben Morgan commented that it: "has long been said that the one third discount on a penalty, being equivalent to the maximum available on a guilty plea, is not sufficiently attractive. As it happens, at the SFO we can see the force in that argument. It is clear...that in the right circumstances the [English] court will support a deeper discount up to 50%, and separately, might take into account other relevant financial matters. If taken together with the other benefits of a DPA, these have the effect of more companies coming forward, then that can only be a good thing in the overall interests of justice. [The SFO] fully support[s] it and in the right cases would look to build overall resolutions that include more than one third discounts on the financial penalty component."
Discussing recent developments in corporate culture and companies' relationships with the SFO, Mr Morgan noted that there has been a "pronounced" change "in the way companies are routinely approaching" the SFO, and that more companies are selfreporting to the SFO "now than at any time in the last four years." Nevertheless, the SFO continues to self-generate the majority of its cases and investigations. The question therefore remains — what, if any, further incentives can the SFO offer to encourage companies to self-report promptly and cooperate fully?
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