[authors: Gary DiBianco, Matthew Cowie]
On October 9, 2012, the Serious Fraud Office (SFO) announced revised policy statements regarding self-reporting, hospitality and facilitation payments. The revised policies follow a review that was instigated by the new Director of the SFO, David Green. With the policies, the SFO also published a brief Q&A on the revisions.
The SFO has withdrawn its detailed guidance published in 2009, the “Approach of the Serious Fraud Office to Dealing with Overseas Corruption” (SFO Self Reporting Guidance) and removed the prior guidance from its website. The revised policies supersede prior statements and practices regarding voluntary disclosure, facilitation payments and hospitality. The revised policies and Q&A emphasise that the SFO “is primarily an investigator and prosecutor of serious and/or complex fraud, including corruption.” The policies state that under the current Director, “there will be no presumption of civil settlements in any circumstances.” The revisions also emphasise that “it is not the role of the SFO to provide corporate bodies with advice on their future conduct.”
The October 9 announcement reaffirms that when considering an enforcement action, the SFO prosecutors will be guided by pre-existing and well-established law and protocol, the Criminal Justice Act 1987, the Code for Crown Prosecutors, the Joint Prosecution Guidance on the Bribery Act (Joint Prosecution Guidance) and, where corporate liability is at issue, the Joint Guidance on Corporate Prosecutions in their decision-making process and the exercise of prosecutorial discretion.
Hospitality and Business Expenses
Because the offence of bribery of a non-U.K. government official does not contain a requirement of corrupt intent or intent to induce improper conduct and does not contain an exception for corporate hospitality, there has been concern in the business community that hospitality provided to public officials could run afoul of the Bribery Act. The statutory language does not draw a clear distinction between corrupt influence and business development efforts involving benefits to public officials.
U.K. authorities responded to business needs for clarity by setting out some further principles in the Joint Prosecution Guidance and in the former Director’s speeches regarding how discretion would be exercised by the prosecutor in this area.
The revised guidance withdraws the SFO’s prior statements on hospitality. The SFO has decided to maintain a broad principles-based approach to hospitality and has not chosen to give more practical guidelines. In practical terms, the SFO has provided reassurance that companies that provide reasonable and proportionate hospitality or promotional expenditure, working in a good faith way with the published protocol principles, are unlikely to be criminally penalized. The revised policies state that bribes “disguised as” hospitality are illegal under the Bribery Act.
Unlike the U.S. Foreign Corrupt Practices Act (FCPA), the Bribery Act does not provide an exception or defence for facilitation payments. Prior SFO public statements strongly suggested that isolated, low-value payments that are addressed appropriately with a proactive compliance approach and self-reporting were not likely to result in prosecution. The new policy reiterates that facilitation payments are illegal in the U.K. but that the SFO will approach the Code for Crown Prosecutors and Joint Prosecution Guidance with “flexibility.” Nevertheless, prosecution “will usually take place unless the prosecutor is sure” that the factors weighing against prosecution outweigh those in favor of prosecution. Accordingly, it can be expected that prosecutions would be likely where a company makes large-value or repeated or routinized payments over time in violation of company policy. However, the value to the company must be significant enough to satisfy the test of “serious” interest to the SFO.
The revised guidance notes that in appropriate cases civil recovery proceedings may be used as an alternative to prosecution.
Corporate Self-Reporting of Bribery and Access Generally
Under the prior Director, the SFO sought to incentivize self-reporting, and one appropriate benefit of self-reporting was that a matter could be resolved using civil recovery proceedings rather than criminal prosecution. In this civil enforcement action, there is no conviction and there are no disbarral consequences for a company. Under the SFO Self Reporting Guidelines, the SFO pledged “to try and find satisfactory, sensible and prior just solutions” when a corporate self-reports.
The October 9 announcement makes clear that while self-reporting is one factor in whether to initiate a corporate prosecution, “self-reporting is no guarantee that a prosecution will not follow.” The SFO stated that where the Code for Crown Prosecutors test has not been established, the SFO would consider civil recovery as an alternative to prosecution.
Finally, the revised policies appear to curtail the probability that the SFO will provide prospective guidance on future conduct. The prior Director emphasized open access to him and permitted an informal advisory opinion procedure for companies seeking guidance on conduct. The new Director has discouraged these initiatives, stating “it is not [the SFO’s] role to provide corporate bodies with advice on their future conduct.”
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