Further to our alert dated 9 October 2012, overnight the UK Serious Fraud Office has published its new guidance in relation to facilitation payments, self-reporting and corporate hospitality.
15 months after the UK Bribery Act commenced, the UK regulator is now taking a tougher stance on enforcement.
How does the guidance affect Australian companies?
Any company that carries on a business, or part of a business, in the UK is subject to the UK Bribery Act regardless of where it is incorporated. Those companies should have regard to the new guidance in devising their internal policies and procedures to ensure that they have adequate procedures in place to prevent bribery.
The guidance states that the SFO's position is that facilitation payments are a type of bribe, they are illegal, and that if on the evidence there is a realistic prospect of conviction the SFO will prosecute if it is in the public interest. Previously the SFO had indicated that it was unlikely to prosecute if the company could demonstrate that it was taking practical steps to curtail such payments. Whilst there currently remains a defence for facilitation payments in Australia, the new guidance re-emphasises that for companies that do business in the UK, there is no such defence, regardless of where the payments are being made. Companies risk prosecution if they permit employees or agents to make facilitation payments on behalf of the company.
Self-reporting has been 'down graded' to a factor that prosecutors will take into account when they decide whether or not to pursue a company and prosecute. This differs from the previous guidance under which the SFO's stated preference was for civil recovery (particularly civil settlements), where appropriate voluntary disclosure was made. The new guidance makes clear that "Self-reporting is no guarantee that a prosecution will not follow" and "there will be no presumption in favour of civil settlements in any circumstances". Under Australian law there is currently no regulatory guidance in relation to whether companies will receive any benefits from self-reporting.
The new guidance says that the SFO will prosecute in respect of a bribe presented as hospitality or some other business expenditure if there is a realistic prospect of conviction and it is in the public interest. There is no further guidance provided to assist companies to determine whether something is a bribe or whether it is "bona fide hospitality or promotional or other legitimate business expenditure" which the SFO states it recognises is an important part of business and not illegal. There is no indication whether the SFO will continue to take into account factors such as whether the company had rules about entertaining. However, in relation to a company's ability to establish that it has in place adequate procedures to prevent bribery such rules remain vital. In the light of the new guidance companies should ensure that they have these procedures in place and that staff are adequately trained and monitored in relation to those procedures.