Serious Fraud Office Issues Tougher Revised UK Bribery Act Policies


In a development which took some by surprise, on 9 October 2012, the UK's Serious Fraud Office (SFO) issued new policies under the Bribery Act 2010, which could change the way some companies do business. The SFO is the UK independent government agency that investigates and prosecutes serious or complex fraud, as well as corruption. Its powers are similar in some respects to those of the U.S. Securities and Exchange Commission and U.S. Department of Justice. The new policies are related to facilitation payments, business expenditure (hospitality) and corporate self-reporting. The announcement is meant to revise existing SFO pronouncements on the enforcement of the Bribery Act 2010, which took effect on 1 July 2011.

Following his appointment, the new Director of the SFO David Green reviewed SFO policies alongside recommendations made by the Organisation for Economic Co-operation and Development (OECD) Working Group on Bribery. The revisions have been published to:

  1. restate the SFO's primary role as an investigator and prosecutor of serious and/or complex fraud, including corruption;
  2. ensure there is consistency with the approach of other prosecuting bodies; and
  3. take forward certain OECD recommendations.

The SFO stated that "[t]he revised policies make it clear that there will be no presumption in favour of civil settlements in any circumstances." This change in policy may make it challenging for companies and their advisors to determine the value in self-reporting. The effect of this policy, on this issue, draws the Bribery Act 2010 closer to the U.S. equivalent Foreign Corrupt Practices Act (FCPA) in assessing the value and benefits of self-disclosure. It remains to be seen whether the SFO will grant any leniency to those who self-report.

Self-Reporting Corruption

The SFO stresses that the "fact that a corporate body has reported itself will be a relevant consideration to the extent set out in the Guidance on Corporate Prosecutions."

The Guidance explains that:

[F]or a self-report to be taken into consideration as a public interest factor tending against prosecution, it must form part of a "genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice." Self-reporting is no guarantee that a prosecution will not follow. Each case will turn on its own facts. Finally, "[i]n cases where the SFO does not prosecute a self-reporting corporate body, the SFO reserves the right (i) to prosecute it for any unreported violations of the law; and (ii) lawfully to provide information on the reported violation to other bodies (such as foreign police forces)."

The self-reporting guidelines appear a little tougher than under the previous SFO regime whose guidance seemed to indicate that civil resolution of self-reported incidents was the most likely outcome. The new guidance would not appear to be as reassuring. The situation may become clearer once the UK Government issues the results of its consultation on Deferred Prosecution Agreements (DPAs). Whilst that consultation closed in August, the government has not yet announced its proposals. The delay may be in part explained by the recent appointment of a new Justice Secretary in the recent government reshuffle.

Earlier Alerts on the Bribery Act 2010 give more guidance on the Act and explain the UK's position on facilitation payments and hospitality. Please see our 8 April 2011 Alert and our 7 April 2011 Alert.

Facilitation Payments

In the Revised Policies Announcement, the SFO reiterates that "[a] facilitation payment is a type of bribe and should be seen as such. A common example is where a government official is given money or goods to perform (or speed up the performance of) an existing duty." The approach contrasts with the FCPA where the payment of a facilitation payment, even to a government official, may come within an exception. In practice, however, this exception has narrowed in recent years, and as a result, the SFO’s restatement may make little difference.


Again, the Revisions on hospitality are less significant than the changes to the self-reporting regime. The new policy clarifies that "Bona fide hospitality or promotional or other legitimate business expenditure is recognised as an established and important part of doing business. It is also the case, however, that bribes are sometimes disguised as legitimate business expenditure."

Prosecutorial Guidelines

Finally, the SFO again identified the following existing policies which will continue to govern prosecutorial discretion with respect to facilitation payments:

The Joint Prosecution Guidance is noteworthy in that it identifies factors tending in favor of prosecution:

  • Large or repeated payments are more likely to attract a significant sentence (Code 4.16a);
  • Facilitation payments that are planned for or accepted as part of a standard way of conducting business may indicate the offense was premeditated (Code 4.16e);
  • Payments may indicate an element of active corruption of the official in the way the offense was committed (Code 4.16k); and
  • Where a commercial organization has a clear and appropriate policy setting out procedures an individual should follow if facilitation payments are requested and they have not been correctly followed.

And, conversely, factors tending against prosecution:

  • A single small payment likely to result in only a nominal penalty (Code 4.17a);
  • The payment(s) came to light as a result of a genuinely proactive approach involving self-reporting and remedial action (additional factor (a) in the Guidance on Corporate Prosecutions);
  • Where a commercial organization has a clear and appropriate policy setting out procedures an individual should follow if facilitation payments are requested and they have been correctly followed;
  • The payer was in a vulnerable position arising from the circumstances in which the payment was demanded.

Ultimately, "[i]f on the evidence there is a realistic prospect of conviction, the SFO will prosecute if it is in the public interest to do so. In appropriate cases the SFO may use its powers under proceeds of crime legislation as an alternative (or in addition) to prosecution" (citing the Attorney General's guidance to prosecuting bodies on their asset recovery powers under the Proceeds of Crime Act 2002).

Given the new Act's tough penalties and the apparent ambiguity surrounding the consequences of self-disclosure, businesses may want to take extra care to comply with its provisions. Accordingly, businesses should consider seeking the advice of legal counsel in navigating this statute and its attendant revisions.

For Further Information

If you have any questions about the UK Bribery Act or would like more information about this Alert, please contact Jonathan P. Armstrong in our London office, Mauro M. Wolfe in our New York office, any member of the White-Collar Criminal Law Practice Group, any member of the Corporate Practice Group or the attorney in the firm with whom you are regularly in contact.

Published In: Administrative Agency Updates, General Business Updates, Criminal Law Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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