The UK has signed up to the Organisation for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Convention). The OECD Convention focuses upon the "supply side" of bribery.
The UK is also party to the Council of Europe's Criminal Law Convention on Corruption, and the European Union Convention against Corruption involving Officials.
The UK is a signatory of the United Nations Convention against Corruption, the only legally binding universal anti-corruption instrument.
In January 2020, the UK formally left the European Union and the transition period is currently scheduled to end on 31 December 2020. Even after leaving the EU, the UK will remain party to certain conventions which are at the forefront of the fight against corruption, such as the UN Convention, the Council of Europe’s civil and criminal law conventions on corruption and the OECD Convention.
The Bribery Act 2010 (the Bribery Act) took effect in July 2011. This is now the main statute for corruption offences by individuals or companies.
Prior to the Bribery Act, UK law on corruption was fragmented, complex and insufficiently clear (see The Law Commission Consultation Paper No 185, 2007). A significant criticism of the UK’s enforcement was that there had been very few corporate convictions under the old legislation. The aborted prosecution of BAE Systems regarding the Al-Yamamah (Saudi Arabia) fighter-jet project was frequently cited as an example of the UK’s inadequate approach to pursuing companies for bribery offences.
In contrast to the US Foreign Corrupt Practices Act 1977 (FCPA), the Bribery Act (i) covers bribery in both the private and public sectors, and (ii) prohibits any facilitation payments. The Bribery Act is often described as the leading global standard for anti-corruption law, and is therefore important to multi-national companies.
Since the Bribery Act became law, other reforms include the introduction of Deferred Prosecution Agreements (DPAs) (through the Serious Crime and Courts Act 2013) and a series of aggressive enforcement actions against corporates. To date, the SFO has secured nine DPAs, which is a significant improvement in its enforcement record against companies generally.
In January 2020, the SFO agreed a record-breaking DPA with Airbus SE. The DPA charges Airbus with the failure to prevent offences across five jurisdictions. The DPA will be in force until 31 January 2023 and is thought to be the first co-ordinated settlement agreement between the UK, US and French authorities. It is also the world's largest resolution for bribery, amounting to a total penalty of almost EUR3.6 billion, EUR991 million of which was to be paid to the SFO by way of disgorgement of profits, a fine and the SFO's legal costs.
The most significant feature of the current framework is the strict liability corporate offence of failure to prevent bribery (Section 7 of the Bribery Act). This represented a break from tradition in English law, which had only imposed criminal liability upon corporates where it could be shown that the organisation’s directors or senior management knew of the criminal conduct at the relevant time (commonly referred to as "the identification principle").
Typically, investigations into bribery interact with the money laundering regime, which is governed by the Proceeds of Crime Act 2002 (POCA). Any benefit flowing from a bribe is likely to constitute “criminal property” under the POCA. Consequently, any company or individual dealing with the proceeds of bribery may be exposed under the POCA. Those engaged in the regulated sector – including financial services firms, accountants and lawyers – have onerous obligations, and direct liability, under the POCA as they must report known or suspected money laundering by third parties; failure to do so is itself a criminal offence. It is important to note that individuals in the regulated sector may be convicted under the POCA even where they did not subjectively suspect money laundering but where, objectively, they had reasonable grounds for doing so.
Similarly, bribery cases often involve subsidiary issues regarding fraud (see the Fraud Act 2006), common law conspiracy to defraud and/or false accounting (Theft Act 1968).
The key guidance is listed as follows:
Whilst the Bribery Act has not been amended, it has been subject to Parliamentary review. In March 2019, the House of Lords Select Committee published the Bribery Act 2010: post-legislative scrutiny, which considered whether the Act was fulfilling its intended purpose. The report concluded that the Bribery Act is an "excellent" piece of legislation, with offences that are clear and all-embracing. It noted that the availability of the corporate failure to prevent offence (section 7) is particularly effective at encouraging company management to conduct business in an ethical manner.
The Bribery Act sets out four main offences:
Bribery and Requesting or Receiving a Bribe
It is an offence under section 1 for a person to offer, promise or give a bribe. It is equally an offence under section 2 to ask for, agree to or receive a bribe.
A bribe is a financial or other advantage to another person, and it must be intended that the bribe should induce or reward improper conduct, or that the acceptance of the bribe in itself would be improper conduct. The improper conduct must relate to the exercise of a public function or be carried out in a business or employment context. The conduct must also be in breach of an expectation to act in good faith, impartially or in breach of an expectation arising out of the person’s position of trust (see sections 3, 4 and 5 of the Bribery Act).
It is important to note that:
Definition of a Bribe
A bribe is “a financial or other advantage" which is not defined in the Bribery Act but, according to the Joint Prosecution Guidance and the explanatory notes to the Act, the term is a matter of fact for the jury to determine, based on its ordinary meaning.
Although some jurisdictions (eg, the USA) tolerate genuine facilitation payments, they remain unlawful in the UK. Facilitation payments can be an offence under sections 1 or 6 of the Bribery Act. Where that offending involves a corporate entity, it will be exposed to section 7. However, it is important to note that prosecutors retain an element of discretion. In deciding whether to prosecute for a facilitation payment, authorities will consider the Full Code Test set out in the Code for Crown Prosecutors, the Joint Prosecution Guidance and, where relevant, the joint Guidance On Corporate Prosecutions.
The Full Code Test requires that prosecutors consider (i) whether there is sufficient evidence to provide a realistic prospect of conviction and, if so, (ii) whether a prosecution is required in the public interest. The prosecution should proceed only if both stages of the Full Code Test are met. The Joint Prosecution Guidance sets out specific public interest considerations in relation to facilitation payments and factors tending in favour of and against prosecution. Factors tending in favour of prosecution include (p.8):
Factors tending against prosecution include (p.8):
The MOJ Guidance recognises (at paragraph 48) that there may be circumstances in which a person has no realistic alternative but to make payments and suggests the common-law defence of duress is available where payments are made to prevent “loss of life, limb or liberty.” Whilst those are narrow circumstances, companies operating in relevant industries and/or locations should ensure that their anti-bribery policies and training include clear guidance on duress.
Failure to Prevent Bribery
Section 7 of the Bribery Act introduced strict corporate criminal liability for any corporate entity (specifically, a “relevant commercial organisation” - an RCO, discussed below) where bribery is committed by an “associated person” (AP) of that business. The only defence is to demonstrate that the RCO had "adequate procedures" to prevent bribery by its associated persons.
To convict under section 7, the prosecution must prove that:
The section 7 offence only relates to the failure to prevent acts of bribery under sections 1 and 6; it does not apply to the demand side of bribery, ie, the request or receipt of a bribe under section 2.
The RCO can be liable under section 7 even where the AP was not convicted of the underlying offence. However, there must be sufficient evidence to prove that an offence under section 1 or 6 of the Bribery Act was committed.
All UK companies, and foreign companies that carry on part of a business in the UK, are caught by the definition of a “relevant commercial organisation.” Courts in the UK will have jurisdiction over an RCO regardless of where in the world the underlying bribery was committed.
A person is associated with the RCO if they perform services for or on behalf of the RCO, in whatever capacity. The definition of an associated person (in section 8 of the Bribery Act) is broad and includes an employee, agent or subsidiary. Whether that person “performs services for or on behalf of” the RCO will be a matter of fact in each case, depending upon the circumstances. The law presumes that an employee of an RCO is an associated person; that presumption is rebuttable. The MOJ Guidance (at paragraphs 42 and 43) emphasises the importance of evidence as to what the associated person intended when committing the bribery: “Even if it can properly be said that an agent, a subsidiary, or another person acting for a member of a joint venture was performing services for the organisation, an offence will be committed only if that agent, subsidiary or person intended to obtain or retain business or an advantage in the conduct of business for the organisation.”
Bribery of Foreign Public Officials
It is an offence to bribe a foreign public official (which is defined broadly in section 6) with the intention to influence that person in their official capacity, but only where the bribe is intended to obtain or retain business, or a business advantage.
If the written law applicable to the foreign public official allows or requires them to be influenced by a financial or other advantage, no offence will be committed.
This offence can be committed where the bribe is offered through a third party. It is important to note that the section 6 offence does not require intention by the briber that the foreign public official should perform their role improperly; if the evidence shows that the briber intended to influence the official to obtain or retain a business advantage then the briber will be guilty of the offence.
Hospitality and Promotional Expenditures
The MOJ Guidance recognises that bona fide, reasonable and proportionate hospitality and promotional expenditure is an important part of doing business. However, such expenditure can constitute a bribe if (i) it is intended to induce or encourage improper performance by the recipient, or (ii) if, in the case of foreign public officials, it is intended to influence the recipient in their official role to secure a business advantage. The Joint Prosecution Guidance notes that prosecutors need to consider the full circumstances of each case; where hospitality is lavish and beyond what may be reasonable in those circumstances, or there were attempts to conceal it, there will be a greater inference that it was intended as a bribe.
Bribery Between Private Parties in a Commercial Setting
Sections 1, 2 and 7 of the Bribery Act (see above) apply to bribery whether it occurs in the public sector, or between private parties in a commercial setting. Section 16 of the Bribery Act specifically provides that the Act "applies to individuals in the public service of the Crown as it applies to other individuals."
As noted above, the definition of bribery in the substantive offences includes "financial or other advantage." Similarly, the definition of the bribe recipient's intended "improper performance" could well catch "influence-peddling". It would, however, be a matter of fact to be determined by a court as to whether any exchange of influence amounted to some kind of "other advantage."
The Bribery Act contains no specific accounting or bookkeeping offences. However, the Companies Act 2006 does require companies to keep adequate books and records. Specifically, failure to keep adequate accounting records constitutes an offence under sections 386 and 387 of the Companies Act 2006.
In addition, the way bribes are accounted for will often constitute a false-accounting offence under Section 17(1) of the Theft Act 1968, ie, the falsification of accounting records with the intent to gain for oneself, or cause loss to another. The offence includes providing materially misleading or false documents, or omitting relevant documents when accounts information is requested.
Regulated firms in the financial sector may be sanctioned by the Financial Conduct Authority (FCA) for failing to maintain effective systems and controls in relation to bookkeeping, bribery and corruption. For example, insurance brokers JLT Specialty Limited and Besso Limited were fined GBP1.876 million (in 2013) and GBP315,000 (in 2014) respectively for failing to maintain effective systems and controls to guard against the risks of bribery and corruption.
Public officials who misappropriate or misuse funds are liable to be prosecuted under a number of criminal offences, including offences under the Fraud Act 2006. They may also be charged with misconduct in public office, which is a complex and archaic offence that has recently been subject to scrutiny by the Law Commission. The offence of misconduct in public office as arises where a public officer, acting as such, wilfully neglects to perform his or her duty and/or wilfully misconducts him- or herself to such a degree as to amount to an abuse of the public's trust in the office-holder without reasonable excuse or justification.
A public officer may find themselves charged with fraud (if they have benefited in some way from their alleged criminality), or with misconduct in public office. If charged with a fraud offence, their status as a public official will be considered as an aggravating factor, justifying a higher sentence than for a private citizen.
As previously noted, the definition of "other advantage" used in substantive Bribery Act offences is likely to cover situations in which a person offers something other than money in return for improper performance.
The use of intermediaries is an important, and often pivotal, issue in many corruption cases. Each of the Bribery Act offences could arise through the use of an intermediary. The section 1, 2 and 6 offences expressly include use of a third party for bribery, requesting or receiving a bribe or bribery of a foreign public official. Whilst each case will turn upon its own facts, intermediaries are likely to be "associated persons" for the purposes of section 7, thereby creating corporate liability.
There are no limitation periods for the prosecution of indictable offences. However, only offences occurring on or after 1 July 2011 will be prosecuted under the Bribery Act. Offences committed before that date are covered by the common law and statutory offences, including the (now repealed) Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916.
Corrupt conduct may also be covered by other common law offences such as misconduct in public office or conspiracy to defraud. Other statutory offences include conspiracy (to corrupt) under the Criminal Law Act 1977 or those specified by in the Honours (Prevention of Abuses) Act 1925 or the Criminal Justice and Courts Act 2015, section 26 of which relates to the corrupt/improper exercise of police powers or privileges.
Recent cases such as the Rolls-Royce Deferred Prosecution Agreement demonstrate that conduct of a historic nature can and will be pursued; the Statement of Facts in that case covered criminal conduct spanning the period between 1989 and 2013.
The Bribery Act has extensive extra-territorial jurisdiction; it catches circumstances where the alleged offending occurred wholly outside the UK.
If the person committing the act or omission has a “close connection” with the UK, it is irrelevant that his or her conduct occurred entirely outside the UK. Under section 12(4), a close connection with the UK includes where the person is a British national, British citizen, ordinarily resident in the UK, or a body incorporated under UK law.
The corporate offence (section 7) applies to any RCO (wherever incorporated) that carries on any part of its business in the UK. An RCO could be prosecuted for failure to prevent bribery even where the bribery takes place wholly outside the UK and the benefit or advantage to the company is intended to accrue outside the UK.
However, the Bribery Act does not define what constitutes “part of a business” although the MOJ Guidance provides some assistance in this regard, noting (at paragraph 36) that organisations will need a “demonstrable business presence” in the UK. The MOJ Guidance notes, for example, that either having a UK subsidiary or being listed on the LSE would not in itself mean a company was carrying on a business or part of a business in the UK for the purposes of section 7.
The following are examples of section 7 cases:
Individuals and corporates can commit the offences of active bribery, passive bribery and bribery of a foreign public official under sections 1, 2 and 6 of the Bribery Act.
Because these offences require mens rea, the liability of a corporate for the offences must be established through the "identification principle", which establishes that only the acts and state of mind of those who represent the “directing mind and will of the corporation” can be imputed to the corporation itself (Lennard v Asiatic Petroleum  AC 705). The case of Tesco Supermarkets Ltd v Nattrass  AC 153 defined the directing mind and will of a company as extending to the "board of directors, the managing director and perhaps other superior officers of the company who carry out functions of management and speak and act as the company." Under the Bribery Act, where the directing mind and will of the company has the necessary criminal intent, the corporate will be directly liable for the offences under sections 1, 2 and 6. That contrasts with the strict corporate liability under section 7.
Where an offence under section 1, 2 or 6 of the Bribery Act is committed by a body corporate and it can be proved that the offence was committed with the consent or connivance of a senior officer or a person purporting to act in that capacity, that individual is also guilty of the offence under section 14. However, where the offending was outside the UK, they will only be liable if they have a “close connection” to the UK under section 12 of the Bribery Act.
By contrast, only an RCO can be liable for the offence of failure to prevent bribery by an associated person under section 7. The RCO will incur liability for an offence or offences by the associated person unless it can prove it had adequate procedures in place to prevent bribery, even where it was not aware of the offence. See part 2.1 Bribery for further information about this defence.
The situation is more complex where a company has been subject to a merger or an acquisition. There is no specific doctrine of "successor liability" in England and Wales. Consequently, prosecutors and the courts would have to ensure that any successor company shared the relevant mens rea of the acquired company.
Individuals and companies can be liable for the same offence or same underlying misconduct. A company and an individual could both be prosecuted for the same offences under section 1, 2 or 6, provided the necessary mens rea was present.
DPAs remain an attractive option for organisations and the decision to enter into one will always be based on economic factors. For an organisation, a DPA avoids a time-consuming, costly and damaging prosecution and trial. In essence, a DPA allows an organisation to take a one-off financial hit, remove uncertainty around its future and avoid adverse impact to its share price. It is well documented that share prices often increase on the announcement of a DPA, with both Rolls Royce and Tesco being prime examples.
Regarding corporate criminal liability, the adequate procedures defence, found in section 7(2) of the Bribery Act, is essential. For this defence to succeed, the court must be satisfied that the company had adequate procedures in place to prevent bribery.
The procedures must be proportionate to that organisation's bribery risks and to the nature, scale and complexity of the organisation’s activities. The MOJ Guidance recognises that no anti-corruption measures can prevent all instances of bribery and specifies the six principles that should inform the procedures implemented by a relevant commercial organisation:
It is critical that the procedures in place are effective in practice. In this context, it is notable that Standard Bank chose to enter a DPA despite having a number of committees, policies and procedures in place designed to address bribery and corruption. In approving the terms of the DPA, Sir Brian Leveson, sitting as judge of the Crown Court, noted (at paragraphs 20-21) that the applicable policy was unclear and was not reinforced effectively through communication and training.
In March 2018, Skansen Interiors Limited was the first corporate convicted under section 7 of the Bribery Act; it was held to have had inadequate systems and controls to prevent bribery.
It is a defence under section 13 of the Bribery Act for a person to prove that his or her conduct was necessary for the proper exercise of any function of an intelligence service or of the Armed Forces, when engaged in active service.
As previously mentioned, the common law defence of duress is available where payments are made to prevent “loss of life, limb or liberty”.
There are no further exceptions to the statutory defences outlined in 4.1 Defences.
There are no de minimis exceptions to the offences in the Bribery Act. However, when considering whether prosecution is in the public interest, a prosecutor may decide against enforcement where the bribe was of a low value. As previously noted in relation to facilitation payments, the Joint Prosecution Guidance includes amongst the factors tending against prosecution “a single small payment likely to result in only a nominal penalty" (at p.8).
There are no sector or industry exemptions.
See the defence of adequate procedures in 4.1 Defences and the outline of the self-reporting regime and DPAs in 5.1 Penalties on Conviction.
The maximum penalty for an individual convicted on indictment under the Bribery Act is ten years’ imprisonment and/or an unlimited fine.
A corporate convicted of an offence under the Bribery Act faces an unlimited fine. Conviction is likely to result in a compensation order for any loss resulting from the offence and/or the confiscation of any criminal proceeds. An order to reimburse the cost of the investigation and prosecution of the offence is also likely.
When considering what penalty to impose, a court must follow any sentencing guidelines issued by the Sentencing Council, or its predecessor, the Sentencing Guidelines Council. The Sentencing Council has, for example, issued guidelines in relation to three of the offences created by the Bribery Act and a sentencing court will be bound to apply them. Where there is no sentencing guideline in existence, courts must follow any guidance provided by the Court of Appeal (Criminal Division) and consider the factors outlined in Part 12 of the Criminal Justice Act 2003.
Even where there are no criminal proceedings, it is open to a prosecutor to apply for a civil recovery order under Part 5 of the POCA in order to recover property obtained through unlawful conduct. In practice, however, prosecutors will be aware of the serious criticism voiced by Lord Justice Thomas in the case of R v Innospec Limited  EW Misc 7 (EWCC). In that judgment, Thomas LJ referred to civil recovery orders in the following terms: “Those who commit such serious crimes as corruption of senior foreign government officials must not be viewed or treated in any different way to other criminals. It will therefore rarely be appropriate for criminal conduct by a company to be dealt with by means of a Civil Recovery Order; the criminal courts can take account of co-operation and the provision of evidence against others by reducing the fine otherwise payable. It is of the greatest public interest that the serious criminality of any persons, including companies, who engage in the corruption of foreign governments is made patent for all to see by the imposition of criminal and not civil sanctions. It would be inconsistent with basic principles of justice for the criminality of corporations to be glossed over by a civil as opposed to a criminal sanction. There may, of course, be a place for a civil order, for example, as a means of compensation in addition to a fine.”
The DPA Code of Conduct suggests that the appropriateness of a Civil Recovery Order should be considered where neither limb of the evidential stage can be met by the conclusion of DPA negotiations and it is not considered appropriate to continue the criminal investigation.
Previous Corporate Penalties
In July 2016, the SFO entered a DPA with Sarclad Ltd, a UK technology company based in Rotherham, regarding the failure to prevent bribery offence. Sarclad paid a total of GBP6,553,085, comprised of disgorgement of gross profits of GBP6,201,085 and a GBP352,000 financial penalty.
In January 2017, Rolls Royce plc paid a total of GBP497.25 million plus interest and the SFO’s costs of GBP13 million (as well as large sums in settlement with enforcement authorities in the US and Brazil) in relation to offences including conspiracy to corrupt, false accounting and failure to prevent bribery. In that case, the conduct covered by the DPA spanned three decades, involved multiple parts of the business and took place across seven jurisdictions.
In April 2017, Tesco Stores Limited entered into a DPA with the SFO in relation to creating a false account of its financial position. Tesco paid a total of GBP128,992,500 and the SFO’s costs of GBP3,069,951.
More recent examples of companies entering DPAs with the SFO include the cases of Serco Geografix Ltd and Güralp Systems Ltd. In July 2019, the SFO entered into a DPA with Serco in relation to fraud and false accounting offences which concerned misleading the Ministry of Justice about the Serco parent company’s profits. Serco paid a financial penalty of GBP19.2 million and the SFO’s costs of GBP3.7 million. This was in addition to the GBP12.8 million paid by Serco to the MoJ as part of a civil settlement in 2013.
In October 2019, the SFO agreed a DPA with Güralp Systems Ltd (GSL). The DPA also covered the offence of conspiracy to make corrupt payments, contrary to section 1 of the Criminal Law Act 1971. The terms of the agreement required GSL to pay over GBP2 million and to co-operate with the SFO to ensure compliance with the Bribery Act.
In January 2020, the SFO agreed a record-breaking DPA with Airbus SE. The DPA charges Airbus with five counts of the failure to prevent offence across five jurisdictions (including Ghana, Indonesia, Malaysia and Sri Lanka). The DPA will be in force until 31 January 2023 and is thought to be the first co-ordinated settlement agreement between the UK, US and French authorities. It is also the world's largest resolution for bribery, amounting to a total penalty of almost EUR3.6 billion, EUR991 million of which was to be paid to the SFO by way of disgorgement of profits, a fine and the SFO's legal and investigative costs.
Other consequences may include disqualification of an individual to act as a company director, EU procurement bans and exclusion from projects funded by the World Bank or its partner development banks and cross-debarment. A conviction under section 1, 2 or 6 of the Bribery Act will lead to the mandatory exclusion of an economic operator (defined in section 2 of the Public Contracts Regulations 2015) from participation in public tenders, under the Public Contracts Regulations 2015. The section 7 offence of failure to prevent bribery will not trigger mandatory exclusion, but may give rise to grounds in support of a discretionary exclusion under the Public Contracts Regulations 2015. Clearly, for any company with a significant portion of revenues derived from public contracts, such debarments could prove fatal to the business.
Public contracts would have been a relevant concern for G4S Care and Justice Services (UK) Ltd (G4S), in its recent (July 2020) DPA with the SFO for fraud offences. Although this was not a corruption case, it is instructive for practitioners in this area generally, including with regard to the company’s delayed approach to co-operation with the SFO and the consequential effect of that delay upon the relatively limited discount applied to the ultimate financial penalty.
Most recently, the SFO announced a DPA settlement with a British company named Airline Services Limited. As at the time of writing this chapter, the SFO has not publicised the nature of the underlying allegations, and the DPA itself remains subject to judicial approval.
In late October 2020, the SFO published updated guidance, taken from its internal Operational Handbook, regarding its approach to negotiating and settling DPAs with companies.
The Sentencing Council's Fraud, Bribery and Money Laundering Offences Guideline, which came into effect on 1 October 2014, specifies the range of sentences appropriate for each offence under the Bribery Act. For each offence, the Council has specified categories with sentencing ranges reflecting varying degrees of seriousness and a starting point for each category. Once the starting point is determined, the court will take into account aggravating and mitigating factors set out in the guidance. Credit for a guilty plea is taken into consideration only after the appropriate sentence has been identified. In order to identify the appropriate category, the court must consider the culpability of the offender and the harm caused by the offending.
For corporate offenders, the harm is represented by a financial sum. For corporate offences under the Bribery Act, the guidelines state that the relevant figure will generally be the gross profit arising from the contract obtained (or otherwise affected) by the bribery. The resultant harm figure is then multiplied by a percentage according to whether there is low, medium or high culpability. The starting point for high culpability is a multiplier of 300%, with a range between 250% and 400%. Aggravating and mitigating factors are considered, which may change the appropriate range. Once the court has arrived at an appropriate figure, the guidance notes it should "step back" and consider the overall effect of its orders. The guidance states: “The combination of orders made, compensation, confiscation and fine ought to achieve the removal of all gain, appropriate additional punishment, and deterrence.”
In the Standard Bank DPA (December 2015), the financial penalty was calculated in consultation with US authorities. In a media interview at the time, the SFO’s then joint head of bribery and corruption, Ben Morgan, stated that it was “the new norm” for the financial penalty to be calculated having regard to whether it would have parity with a fine in the USA. He suggested that the courts expect to see parity with corporate punishment in the USA and that this was necessary to prevent forum shopping. He went so far as to suggest that even where a case has no connection to the USA, the SFO should consider whether a penalty would have been appropriate in the USA, given its enforcement history.
A defendant who intends to plead guilty may seek an advance indication of sentence, commonly known as a "Goodyear indication" (R v Goodyear (Karl)  EWCA 888). The Attorney General's Guidelines on the Acceptance of Pleas and the Prosecutor's Role in the Sentencing Exercise are relevant to such an indication. The basis of the plea should be agreed before an indication is sought.
Section 7 of the Bribery Act 2010 creates a specific defence for corporations who can demonstrate that they had in place "adequate procedures" to prevent bribery. In 2011, the UK Government published The Bribery Act 2010: Guidance, which sets out six principles to be adopted by "commercial organisations wishing to prevent bribery [from] being committed on their behalf":
Regarding disclosure, individuals and corporates operating in the "regulated sector" (which may be loosely defined as financial institutions, professionals and those dealing with high-value transactions) also have concurrent duties to report and prevent money laundering under the Proceeds of Crime Act 2002. The duties under this Act require those in the regulated sector to report activities and transactions they reasonably consider to be suspicious. Failure to do so may result in that individual or corporation being prosecuted in their own right under the "failure to disclose" offence.
In August 2019, the SFO published its long-awaited Corporate Co-operation Guidance aimed at providing organisations and their legal advisers with transparency about what to expect if they self-report bribery to the SFO. See 8.2 Likely Future Changes to the Applicable Legislation of the Enforcement Body for further information about this Guidance.
Whistle-blowing protection is afforded to UK workers under the Employment Rights Act 1996 (ERA), as amended by the Public Interest Disclosure Act 1998 (PIDA) and the Enterprise and Regulatory Reform Act 2013 (ERRA). It was introduced to protect employees from being unfairly dismissed, or otherwise subjected to detriment, where they had disclosed information about an alleged wrongdoing in certain defined circumstances.
To qualify for protection, numerous requirements need to be met. The key requirements are that there must be a disclosure of information that is a "qualifying disclosure", which means that the worker must reasonably believe the disclosure is made in the public interest and that it tends to show that one or more of six relevant failures has occurred (including, for example, a criminal offence and a breach of any legal obligation), is occurring or is likely to occur. The disclosure must also be "protected". The issue of whether a disclosure is protected depends on the nature of the person to whom the disclosure is made and, depending on to whom it is made, other specified conditions.
The ERRA strengthened the whistle-blowing protections under the ERA in 2013 by introducing personal liability for co-workers, or agents of an employer, where they subject a whistle-blower to detriment in the course of their employment because they have made a protected disclosure. Employers also have vicarious liability where other workers or agents subject a whistle-blower to detriment, unless the employer has taken all reasonable steps to prevent that behaviour.
In 2015, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority introduced rules requiring banks and insurers to introduce whistle-blowing procedures internally.
In light of its impending departure from the EU, the UK Government confirmed that it does not propose to adopt the EU Whistle-blower Protection Directive (Proposal for a Directive of the European Parliament and of the Council on the protection of persons reporting on breaches of Union law COM/2018/218 final - 2018/0106 (COD) (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52018PC0218) (accessed 23 October 2019), which was adopted by the European Council in October 2019.)
However, the UK has confirmed that it has committed to reviewing its own whistle-blowing framework "once the recent [EU] reforms have built the necessary evidence of their impact. As part of this we will look at the protections offered in other countries." (http://europeanmemoranda.cabinetoffice.gov.uk/files/2019/10/20191002_AppA_-_HoC_Letter.pdf (accessed 19 October 2019))
It is presumed that those other countries will include EU Member States.
There are no financial incentives for whistle-blowers to report bribery or corruption in the UK, although the Competition and Markets Authority now offers incentives of up to GBP100,000 for information that leads to the successful investigation and prosecution of cartels.
The House of Lords previously debated the inclusion of a clause in the Criminal Finances Bill, now the Criminal Finances Act 2017, that would have incentivised whistle-blowing and strengthened protections for whistle-blowers, but it was ultimately not included (HC Deb 28 March 2017 Vol 782 cols 535-541). The proposed clause would have allowed whistle-blowers to be awarded financial compensation of between 10% and 30% of the total financial penalty collected as a result of any enforcement action resulting from the whistle-blowing. The FCA also confirmed in a policy statement published in May 2017 (Whistle-blowing in UK Branches of Foreign Banks: Response to Consultation Paper 16/25) that it has no plan to offer incentives to whistle-blowers.
Where a person admits to offending and agrees formally to co-operate with a criminal investigation and any subsequent prosecution, they may be eligible to enter a "SOCPA agreement" with the prosecutor under the Serious Organised Crime and Police Act 2005 (SOCPA). In exceptional cases, a person might receive immunity from prosecution in exchange for their co-operation. In practice, however, it is more common to see co-operation lead to a reduction in sentence, separately and in addition to the usual discount a defendant receives upon entering a guilty plea. The relevant provision in SOCPA (Section 73) does not allow the prosecutor to guarantee a reduction but states: “In determining what sentence to pass on the defendant the court may take into account the extent and nature of the assistance given or offered.”
In R v Blackburn  EWCA Crim 2290, the Court of Appeal held that the discount for a co-operating witness should normally be between one third and two thirds of the sentence that would otherwise have been passed, but that in a most exceptional case it could exceed three quarters of the sentence. However, the Court also emphasised that every sentencing decision would be fact-specific.
In R v Dougall  EWCA Crim 1048 the Court stated that where the appropriate sentence for a defendant would be 12 months’ imprisonment or less and taking into account the level of criminality, features of mitigation, a guilty plea and (at paragraph 36) “full co-operation with the authorities investigating a major crime involving fraud or corruption, with all the consequent burdens of complying with his part of the SOCPA agreement” ‒ a suspended sentence should normally follow. The Court emphasised that it was not suggesting a suspended sentence would always be appropriate and reiterated that sentencing was fact-specific in each case.
The relevant provisions regarding whistle-blowing are located in the Employment Rights Act 1996 as amended by the Public Interest Disclosure Act 1998, the Enterprise and Regulatory Reform Act 2013, the FCA Handbook and its related Guidance, and the Serious Organised Crime and Police Act 2005.
Civil, criminal and/or administrative enforcement of anti-bribery and anti-corruption laws in the UK is described in 7.2 Enforcement Body.
In England, Wales and Northern Ireland, the SFO is the lead prosecution body for offences under the Bribery Act. The SFO was established under the Criminal Justice Act 1987 to investigate and prosecute offences involving serious and complex fraud. In deciding whether to pursue a particular case, the Director of the SFO considers whether the criminal conduct undermines UK commercial or financial interests, the scale of the actual or potential financial loss and whether there is a significant public interest issue. In Scotland, the primary prosecutor is the Lord Advocate. The CPS also pursues cases brought by individual police forces around the UK.
The other major enforcement bodies are the National Crime Agency (NCA), a criminal investigative agency, and the FCA. The NCA’s economic crime division contains a specific international corruption unit, which has a particular focus on money laundering offences arising from corruption overseas and recovering the proceeds of crime. The NCA investigates cases for subsequent prosecution by the CPS. By contrast, the FCA does not typically prosecute offences under the Bribery Act but it has a wide remit for regulating the financial services industry, which includes the imposition of rules and requirements for systems and controls to prevent financial crime, including bribery and corruption. The interplay between the FCA and SFO is often critical to the outcome of a financial services investigation, particularly in relation to any agreement as to the scope of each respective agency's investigation.
The National Economic Crime Centre (NECC) was launched in 2018. The NECC’s primary function is to co-ordinate the national response to fraud and corruption in the UK. It brings together law enforcement and justice agencies, government departments, regulatory bodies and the private sector. It has both a law enforcement and crime prevention role.
The NECC is able to direct the SFO to investigate corruption cases, among other matters. This has raised questions about the independence of the SFO as a separate standalone authority from the NCA (the SFO is overseen by the Attorney General, while the NCA reports to the Home Office). Notwithstanding this, the Director of the SFO has outlined the importance of cross collaboration between the SFO and NECC, in order to "fight… corruption in a shrinking world" Fighting fraud and corruption in a shrinking world, 3 April 2019 (https://www.sfo.gov.uk/2019/04/03/fighting-fraud-and-corruption-in-a-shrinking-world/).
In July 2019, the UK government published its Economic Crime Plan for 2019 - 2022 Economic Crime Plan 2019 – 22: (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/816215/2019-22_Economic_Crime_Plan.pdf) (accessed 23 October 2019), which includes a stated objective to strengthen UK law enforcement capability to prosecute bribery and corruption.
Under section 2 of the Criminal Justice Act 1987 (CJA 1987), the SFO has extensive and intrusive powers to compel the production of information.
Put simply, the SFO need only issue a formal letter of demand specifying the categories of information, including documents, that it requires from the recipient. In practice, investigators such as the SFO often start from the premise of issuing a broad demand for documents. Recipients of any such notice should carefully consider its scope, and promptly engage with the SFO to negotiate the scope of the demand and the timeframe for response (wherever possible).
Wide-ranging demands present significant practical difficulties for companies, which may hold data for thousands of affected contracts or employees and store the data in various locations, including overseas. The legal issues that this presents include the clash with data privacy laws; various jurisdictions require specific informed consent before personally identifiable information is processed for specific purposes, such as a criminal investigation. Similarly, the company should be alive to its potential legal risk in other jurisdictions where its disclosure of documents to the SFO would run contrary to any banking secrecy statutes, blocking statutes, or state secrecy laws.
The extra-territorial effect of section 2 powers is considered further in 7.5 Jurisdictional Reach of the Body/Bodies.
A prosecuting agency is responsible (alongside the defence) for informing the sentencing court of relevant mitigating and aggravating factors present in the case.
Plea agreements are available to individuals in certain circumstances. When considering a plea agreement, prosecutors must adhere to specific guidance in the Attorney General’s Guidelines on Plea Discussions in Cases of Serious or Complex Fraud (published November 2012) and the Criminal Procedure Rules. The general principles of the Guidelines are that prosecutors must, when conducting plea discussions, act openly, fairly and in the interests of justice.
Put briefly, those principles require the prosecutor to ensure:
As previously outlined, the SFO’s section 2 powers have limited extra-jurisdictional effect where the "sufficient connection test" is met.
It had previously been thought that section 2 notices were only effective within the UK jurisdiction and could not be used to compel a recipient to produce documents located overseas. However, the extra-territorial reach of section 2 powers was considered by the High Court in KBR v Serious Fraud Office  EWHC 2368 (Admin). In that case, the SFO had initiated an investigation into suspected bribery at KBR Ltd, a UK subsidiary of KBR Inc, a company registered in the USA. The SFO issued KBR Ltd with a section 2 notice in respect of several categories of material. It became concerned about the company’s co-operation and issued section 2 notices for disclosure of the material, and served those notices upon two officers of KBR Inc who were visiting the UK.
KBR Inc issued judicial review proceedings, arguing that the the SFO’s notices were unlawful because section 2 did not have extra-territorial effect. The High Court disagreed. Finding for the SFO, the court held that section 2 notices did have extra-territorial effect where a "sufficient connection" existed between the company and the jurisdiction. The court was concerned that SFO investigations should not be "frustrated or stymied" on the basis that a company held documents on a computer server outside the jurisdiction. Since KBR Ltd was the UK operating arm of KBR Inc, the court held in favour of the SFO. In April 2019, the Supreme Court granted KBR permission to challenge that decision, and that appeal is due to be heard in October 2020.
The SFO (amongst others) may seek mutual legal assistance from overseas authorities via the Crime (International Co-operation) Act 2003. Under that statute, the SFO may utilise the assistance of overseas authorities to serve various documents (eg. summons, Section 2 notices), obtain evidence (including witness statements, documentary and banking evidence) and execute search and seizures.
The UK has passed the Crime (Overseas Production Orders) Act 2019 (the COPO Act) which gives law enforcement agencies such as the SFO and prosecutors the power to obtain electronic data directly from an overseas communications service provider. The UK government has stated that those extensive powers will be subject to robust judicial oversight, and emphasised the relevant statutory protections for legally privileged or journalistic material.
In mid-2020, the UK-US Bilateral Data Access Agreement (the Bilateral Agreement) became effective. The legislative background for that treaty is the COPO Act and the US Clarifying Lawful Overseas Use of Data Act. In brief overview, the Bilateral Agreement seeks to improve cross-border co-operation by allowing direct access, upon application, to "covered data" (ie, communications content, metadata and traffic data) held by a "covered communications provider" (ie, any business that provides data communication, processing or storage to the public).
In June 2019, FH Bertling Ltd was fined GBP850,000 regarding payment of bribes to an Angola state oil company to win shipping contracts. A number of senior executives also pleaded guilty and received terms of imprisonment and fines following their involvement in that conduct.
In October 2019, the SFO finalised a DPA with Guralp Systems Ltd, regarding both conspiracy to corrupt and failures to prevent bribery on facts occurring between 2002 and 2015.
In January 2020, the SFO secured a DPA with Airbus SE. The DPA charged Airbus with five counts of the failure to prevent offences across five jurisdictions. This is the first co-ordinated settlement agreement between the UK, US and French authorities. It is also the world's largest resolution for bribery, amounting to a total penalty of almost EUR3.6 billion.
For further information about recent developments in the field of anti-corruption, see 6.3 Protection Afforded to Whistle-Blowers (whistle-blowers) and 6.2 Disclosure of Violations of Anti-bribery and Anti-corruption Provisions (corruption prevention measures).
Following the prosecution of Skansen Interiors (see 2.1 Bribery) in 2018, the company’s former managing director and another individual (the recipient of Skansen’s bribes) received custodial sentences of 20 months and 12 months respectively. Both individuals had pleaded guilty to bribery and their sentences reflect a discount. Ancillary orders were also used, with one individual disqualified from acting as a company director for seven years. Skansen itself, however, was given an absolute discharge after the court ruled it had no assets for a financial penalty to be imposed.
In June 2019, the former managing director and owner of UK company ALCA Fasteners Limited was sentenced to two years' imprisonment for paying GBP300,000 in bribes to a purchasing manager employed by one of ALCA’s customers in order to secure contracts valued at GBP12 million. In addition to the custodial sentence, a seven-year Company Director Disqualification Order was imposed and the individual was required to pay a Confiscation Order in the amount GBP4,494,541 and prosecution costs to the SFO in the amount of GBP478,351.
In February 2019, David Lufkin, a former executive of oil and gas company Petrofac Limited, pleaded guilty to 11 counts of bribery contrary to sections 1 and 2 of the Bribery Act. The offences relate to the making of corrupt payments to influence the award of contracts to Petrofac worth in excess of USD730 million in Iraq and in excess of USD3.5 billion in Saudi Arabia. As at the date of publication, Mr Lufkin awaits sentencing.
More recently in June 2020, Ziad Akle and Stephen Whiteley, two former executives of Unaoil, were convicted for taking part in a bribery scheme to secure valuable oil contracts for the company. They were sentenced to five and three years in prison respectively and have signalled their intention to appeal against their convictions. Both individuals were convicted of conspiracy to make corrupt payments contrary to section (1) of the Criminal Law Act 1977 and contrary to section 1 of the Prevention of Corruption Act 1906; the unlawful conduct took place before implementation of the Bribery Act.
In October 2020, a third Unaoil executive (Basil Al Jarah) was sentenced to three years and four months in prison after pleading guilty to five counts of conspiracy to give corrupt payments in connection with the same bribery scheme. A fourth defendant, Paul Bond, a former sales manager at Dutch oil company SBM Offshore, faces a retrial in January 2021 after the jury was unable to reach a verdict in his case.
Whilst the recent SFO settlements with Airbus and G4S are notable in relation to outcomes, there has been only one successful prosecution of a corporate for bribery offences (Skansen Interiors) to date.
See 1.4 Recent Key Amendments to National Legislation as regards post-legislative scrutiny by the House of Lords Select Committee on the Bribery Act 2010.
In September 2020, Director of the SFO, Lisa Osofsky, delivered a speech in which she reiterated comments she had made in 2019, which emphasised her intention to seek greater co-operation from the SFO's international counterparts. Ms Osofsky stated that the SFO cannot do its job without obtaining evidence (eg, documents, bank records and witness accounts), and taking steps to trace and recover assets, in multiple jurisdictions. In addition, Ms Osofsky indicated that the SFO will focus on harnessing modern technology and expanding its intelligence capability, and building a comprehensive understanding of corruption threats across industry sectors.
The SFO and the NECC both emphasise the importance of the private sector co-operating with the authorities to prevent and report crime.
In August 2019, the SFO published its "Corporate Co-operation Guidance" SFO Operational Handbook, Corporate Co-Operation Guidance (https://www.sfo.gov.uk/publications/guidance-policy-and-protocols/sfo-operational-handbook/), accessed 4 October 2019 (the Guidance), aimed at providing organisations and their legal advisers with transparency about what to expect if they self-report bribery to the SFO.
The SFO states that co-operation means going "above and beyond what the law requires" in order to assist the law-enforcement authorities.
The Guidance sets out a non-exhaustive list of good practices, including:
The Guidance also reiterates the DPA Code, stating that co-operation means disclosing witness accounts, making witnesses available for interview and providing a report of any internal investigation. While Ms Osofsky has previously stated that waiving privilege will be a "strong indicator of co-operation and an important factor […] for DPA negotiations", the Guidance does not expressly require waiver of privilege.
Organisations are also expected to provide a schedule of documents over which they claim privilege and the basis for that claim. The SFO notes that where an organisation claims privilege over documents, it will be expected to provide certification by independent counsel (appointed by the organisation). This is the most controversial part of the Guidance, as it will inevitably increase the time and cost burdens for any organisation involved in an SFO investigation. As the SFO has already expressed its apparent appetite to challenge claims of privilege where it considers that to be "necessary or appropriate", further litigation on this point can be expected.
Other developments include the increased use of Unexplained Wealth Orders (UWO). Where granted, a UWO compels the respondent to explain the nature of their interest in the property, and to explain how they obtained it, but only if there are reasonable grounds for suspecting that the known sources of that person's lawful income would have been insufficient for the purposes of enabling the respondent to obtain the property.
A failure to respond effectively to a UWO creates the presumption that the property was obtained unlawfully and is therefore eligible for civil recovery under the Proceeds of Crime Act 2002. Such orders may only be made against politically exposed persons (PEP), or where there are reasonable grounds for suspecting that the person is or has been involved in serious crime.
In early October 2020, the NCA secured a UWO against a property developer, Mansoor Hussain. The NCA alleged that Mr Hussain operated a money laundering service for a criminal network operating in northern England, and compelled him to prove that his wealth derived from legitimate sources. In an out-of-court settlement, Mr Hussain agreed to surrender just under GBP10 million in assets to the NCA, including 45 UK properties and cash. Notably, this is the first time a UWO has successfully led to the recovery of assets from an individual. This is the first reported example of the NCA using a UWO against a person allegedly involved in serious organised crime.
Similarly, the authorities are also starting to exercise their reinforced powers to freeze and forfeit money held in bank accounts that either resulted from unlawful activity or is intended for use in unlawful activity. Again, these powers arise from the Criminal Finances Act 2017 amendments to the Proceeds of Crime Act 2002.
Ten Trends and Developments in Anti-Bribery Anti-Corruption (ABAC) in the UK
A continuing and growing co-ordination both with domestic agencies and with international organisations
The Serious Fraud Office (SFO), through its director, Lisa Osofsky, has made it clear that it regards close co-operation within the enforcement community, both domestically and internationally, as essential to effective and speedy enforcement. Sharing intelligence and best practice, and co-operating in joint investigations, remains her goal. In October 2020, she spoke glowingly of the domestic co-ordination and co-operation achieved with the National Economic Crime Centre, the Joint Money Laundering Intelligence Taskforce, the NCA-led Foreign Bribery and Corruption Clearing House and the previously aloof, if not altogether dismissive, Government. Joint action from the public and private sectors has accelerated since the UK Economic Crime Plan was devised back in 2019 and even Companies House has now obtained more powers to detect and investigate the ultimate beneficial owners (in some cases, criminals) hiding behind complicated corporate structures.
Secondees at the SFO have come and gone and the SFO has worked closely with multi-lateral development banks, such as the European Bank for Reconstruction and Development, in investigating large-scale international corruption.
Although there have been a few bumps in the road concerning UK/US relations, highlighted by the recent employment case involving a former lead investigator at the SFO in relation to the UK/US investigation into Unaoil, this relationship is continuing to grow while the current director is in post and especially following the UK's eventual exit from Europe.
Currently, the high-water mark of international co-operation is the Airbus fine which demonstrated the effectiveness of multi-jurisdictional co-operation between the UK, US and France and the several jurisdictions in which the offences were committed. This co-operation and the rewards of such co-ordination can only grow, especially as other jurisdictions not only develop their own laws in the area of ABAC but decide to investigate and prosecute bad actors.
Continuing scrutiny of third-party relationships
The use of third-party partners, including agents, consultants, and distributors, is on the increase again, as companies seek to deliver innovative products and services while controlling costs in a fast-paced global market. Partnering with third parties can provide significant value but brings with it compliance risks. This will continue to be the focus of UK ABAC investigations going forward.
These risks often play out in emerging markets. Working with third parties can generate risks in several ways. For example, in some countries there is a legal requirement to use local companies (often known as local content) such as distributors or a local import and export company. This requirement also gives rise to the need for multinational manufacturers to engage third parties for promotional and procurement negotiations.
Most multi-national companies have third-party due diligence processes in place to vet distributors before engaging their services. However, problems can arise where third parties engage customers individually, especially when the third parties are one-time sales agents. Their qualifications, relationships with government officials, business capacity, and reputation are typically harder to vet.
Companies continue to face risks working with third parties such as consultants, who provide intangible services. If those consultants have close government ties, charge success fees, or the company does not monitor gifts and hospitalities, they could also trigger a risk of derivative liability for the company.
The evolution of deferred prosecution agreements
The biggest ABAC development seen in the UK over the last five years is the use by the SFO of Deferred Prosecution Agreements (DPAs). It is clear that UK DPAs will continue to evolve and will continue to be a very effective tool for the SFO.
The most recent DPA requires Airline Services Ltd to pay just under GBP3 million, which includes a GBP1.2 million penalty and a repayment of related profits. It is the ninth UK DPA and the third DPA agreed with the SFO so far in 2020.
On 23 October 2020, the SFO published a new chapter for its Operational Handbook, which provides further guidance on DPAs. According to the SFO’s director, the guidance aims to provide transparency on “what we expect from companies looking to co-operate with us”. The guidance covers much of the same ground as the previous main source of information, the Code of Practice for DPAs (the Code). However, the guidance fills in some gaps and provides helpful clarity on some topics. It states that self-reporting is an important aspect if done within a “reasonable time” of suspicions coming to light. Immediate self-reporting is thus not essential, which should allow a company to conduct an internal investigation if necessary. Indeed, the SFO will reward disclosure of internal investigation reports with “considerable weight”. It goes on to provide that waiving privilege will work in a company’s favour, but the SFO accepts that it cannot compel a company to do so. Additionally, the guidance warns that the terms of a DPA will ensure that the SFO is permitted to share information provided by a company with other agencies.
The guidance also expands on the Code’s position that the SFO will broadly follow statutory guidelines for the level of discount for an early guilty plea, which is a discount of one third. The SFO, however, reveals that the majority of DPAs have involved discounts of 50% being approved by the courts. The SFO attributes this generous discount to companies generally displaying high levels of co-operation.
The guidance puts forward considerations that may be considered in reaching a more favourable agreement for the company. These are:
These financial considerations could be of particular importance in the current economic climate. The SFO also states that there is “provision” for a company to delay payment, or to pay in instalments.
The guidance shows a degree of flexibility on the part of the SFO, which was not necessarily evident in the previous SFO director's tenure. DPAs are very important to an under-funded enforcement agency such as the SFO. Time will tell whether this flexibility will encourage companies to self-report, but for the SFO to be successful going forward it will need many more DPAs.
Monitorships or compliance reviews
Talking of recent DPAs (and although in relation to a fraud-related case), the G4S Care & Justice Services (UK) Ltd DPA (G4S C&J) may also represent a watershed moment regarding the appointment of independent monitors or, as the SFO has been keen to stress, compliance reviewers. The reasons for this are:
The continuing importance of whistle-blowers and whistle-blower legislation and schemes
The majority of internal investigations relating to ABAC are still seen as emanating from a whistle-blower where there is an internal referral or someone informing a third party, such as a non-governmental organisation (NGO) or investigative journalist. Whistle-blowers have had protection in several jurisdictions for some time. Indeed, in some jurisdictions, whistle-blowers can recover a percentage of money recovered from fines resulting from their tip-off. This has been discussed in the UK but as yet has not been introduced. This is not likely to change any time soon.
It is long overdue, but in the European Union a new directive now sets minimum standards to protect whistle-blowers. Despite its almost two-year implementation deadline – December 2021 – many companies are taking steps already. This includes UK companies, notwithstanding Brexit and the fact that the UK has had very stringent laws protecting whistle-blowers for many years. The directive aims to introduce effective, confidential, and secure reporting channels. The new law will provide a high level of protection against retaliation, introducing safeguards against whistle-blowers being suspended, demoted, or intimidated.
There is an ever-growing trend of cases being generated from whistle-blowers and an even greater number of alleged ''scandals'' being unearthed as a result of investigative journalists (such as those resulting from the Panama Papers, the Paradise Papers and the recent FinCEN files) and NGOs.
Increased expectations for corporate compliance programmes
Corporate compliance programmes have increased in number and detail over the last ten years. However, taking a lead from the US and recent DOJ guidance, together with the regulations relating to anti-money laundering, these programmes will have to be shown to have been implemented, tested and work.
Going forward, the UK enforcement agencies will expect larger, more sophisticated companies to use technology to improve systems and controls, including the monitoring of relationships and transactions. They will expect the use of machine learning and artificial intelligence generally to detect anomalies, trends and suspicious transactions. Companies will need to point to an adequate risk assessment, a policy which implements learning from the risk assessment, effective systems demonstrating implementation of the policy and ongoing monitoring of both compliance with the policy and the effectiveness of such implementation in relation to the risks facing the business.
Focus on personal/individual responsibility
Culture and the tone from the top, which gained greater importance following the introduction of the s.7 Corporate Criminal liability offence in the UK Bribery Act 2010 (UKBA), will continue, if not increase, in importance going forward. As other jurisdictions incorporate similar legislative changes or guidance this will only enhance its importance in the UK. With a bird’s-eye view, senior and middle management are uniquely well-placed and have a responsibility to lead in this area.
Enforcement agencies and regulators strongly advocate a desire to punish individuals. The SFO continues to have mixed results in this regard. However, they have no alternative but to prosecute "bad actors". They have a public duty to do so. Although finances may be stretched and the director knows that without DPAs for individuals and the rigour applied by defence counsel and juries it will continue to be difficult to obtain convictions, there is no opportunity (or desire) for the SFO or other agencies to refrain from seeking to prosecute individuals.
Ongoing relevance of anti-money laundering legislation
If the UKBA cannot compel self-reporting, the UK Proceeds of Crime Act (POCA) might do so. A hardened criminal will not observe the POCA any more than he or she or they would the UKBA. However, a corporate entity is not necessarily in the same position. The tests applicable under the POCA relating to the knowledge or suspicion of dealing with proceeds of crime, including the benefits of any secret commissions or bribes, offer a very low threshold (suspicion = ''more than merely fanciful''). The enforcement agencies are already relying heavily on POCA charges and it is likely that this trend will continue to grow.
New powers that have been introduced under subsequent legislation, such as Unexplained Wealth Orders and Listed Asset Orders, will be used more frequently, notwithstanding an early setback for the National Crime Agency in relation to UWOs. The enforcers now have a significant arsenal of weapons to use and they will do so going forward in relation to those who corrupt and bribe and those who facilitate such bribery and corruption.
''Failure to prevent'' and "pushing the envelope" on greater enforcement powers
The UK Government announced on 3 November 2020 that its three-year examination of the case for corporate criminal liability reform had ended - the conclusion being that it was ''inconclusive''! The Government has tasked the Law Commission, an independent body designed to recommend legal reforms, to conduct further analysis. Some predict a response may not be received for another 15 to 18 months. There will then need to be further consultation with the government. Except for certain offences, including the s.7 UKBA 2010 offence and the facilitation of tax evasion by another offence in the Criminal Finances Act 2017, corporate criminal liability in the UK is generally based on the principle that a company can only be held criminally liable for financial crime offences if prosecutors can prove beyond reasonable doubt that the “directing mind and will” of the company committed or was aware of the misconduct.
This has been notoriously difficult for the prosecutors to establish, the most recent example being the SFO's failed prosecution of Barclays Bank for alleged fraud tied to a GBP3.95 billion investment deal with Qatar in 2008. The courts found that the SFO was unable to show whether the alleged perpetrators of the fraud exercised ultimate control over the deal or Barclays itself. The SFO director regards the establishment of a ''failure to prevent'' offence for economic crime as top of her wish-list. It is believed that the law will eventually be changed, whether to a vicarious-liability test, as is the case in the US, or to strict liability, as is the case with the s.7 UKBA ''failure to prevent'' offence. However, this is not likely to happen for several years.
The SFO is also flexing its muscles in other directions. It is responding to an appeal of a High Court ruling that Section 2 of the Criminal Justice Act 1987 (s.2 CJA), which grants the SFO the power to require an individual under investigation to produce documents relevant to an investigation, extends to foreign companies if that business has a "sufficient connection" to the UK. That ruling rejected the appellant's attempt to quash a s.2 CJA notice demanding that it provide 27 categories of information. It was the first time an English court had determined the extraterritorial application of powers for compulsory document-production by UK criminal law enforcement agencies. The High Court held that s.2 CJA must have an element of extraterritorial application and that it was "scarcely credible" that a British company could resist a s.2 CJA notice simply because relevant material was held overseas.
Further, the SFO also wishes to have its powers extended to allow it to use s.2 CJA before it opens a formal investigation in fraud and domestic bribery cases (in the same way as it now can in overseas corruption cases). It also wants to create a “tipping-off” offence in relation to s.2 CJA notices, in order to prevent those served with such a notice jeopardising the covert status of the investigation and allowing others potentially to interfere with it.
Lisa Osofsky clearly has a plan. She is not trying to reform criminal justice root and branch or overnight. She and the SFO will succeed, but it will take time.
COVID-19, Brexit, the death of ABAC/rise of fraud
These issues are worthy of several chapters; however, both COVID19 and Brexit bring challenges for the prosecuting authorities. They also create opportunities - for criminals. The toxic mix of a global health/human crisis and disentangling the UK from the highly regulated world of Brussels, combined with the greed and desperation of human nature (in equal and separate measures) will stretch the UK enforcement authorities' budgets to the limits. Choices will have to be made: do we go after the fraudsters preying on the sick and those making a quick ''buck'' out of the chaos that comes with a collapse in regulated trade and finance, or do we investigate the often sophisticated actions of agents/companies doing business in far-flung jurisdictions winning contracts to "make Britain great again"? To speak of the death of ABAC investigations is misconceived and wrong, but with the growing importance of issues such as cyber-crime, modern slavery and, yes, fraud, the SFO/enforcement agencies will need DPAs and the willingness of companies to self-report as never before to keep ABAC as the primary source of corporate crime business.