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
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
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
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With a view to promote corporate transparency and prevent misuse of corporate vehicles for illicit purposes such as corruption, tax evasion, money laundering, the Financial Action Task Force ("FATF")...
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