UK’s Serious Fraud Office Looks to Pursue More Prosecutions of Corporates

by Morgan Lewis

A proposed amendment to the UK Bribery Act would give the SFO greater power to prosecute corporates for financial crimes committed by their employees.

The head of the UK’s Serious Fraud Office (SFO), David Green, recently proposed an amendment to Section 7 of the UK Bribery Act (the Act) that would make it easier to prosecute corporates for failing to prevent their employees from committing financial crimes. Mr Green’s proposed amendment to the Act would give the SFO greater power to take direct action against companies, by enabling the SFO to levy US-type fines, and to stigmatise corporates for abetting bribery and financial crimes committed by employees. The proposed amendment would also prevent, on a mandatory basis, corporates from bidding for certain public contracts under European public procurement rules following a conviction. This proposed change to the law, if enacted, will have implications not only for UK-registered corporates, but also for those corporates that carry out business activities in or through the UK.

The Proposed Amendment

Mr Green’s proposed change would expand Section 7 of the Act to include “a corporate failing to prevent acts of financial crime by its employees”. The proposed amendment would provide the SFO with much wider power to prosecute corporates for financial crimes carried out by their employees.

Mr Green told the UK’s The Daily Telegraph that the power would be used in only “exceptional cases”, particularly where a company had made a profit from the criminal behaviour of its employees.[1] However, it is unclear what other circumstances may be considered “exceptional”. He added that “[i]f the public interest requires prosecution of more corporates or to make it easier to prosecute more corporates like banks—not the people but the bank itself—then it needs to be somewhat easier than the controlling mind test”. He noted that the penalties in respect of the proposed amendment would be both financial and stigmatic. Mr Green’s view is that “it’s the stigma that is most important. Some say that certain banks had been rotten to the core. Why shouldn’t that be marked? Why should a big powerful corporate be able to chuck a few people over the side and just sail blithely on, paying a fine as they go on.”

At present, mandatory exclusion under public procurement rules does not apply to offences under Section 7 of the Act (although a discretionary right of debarment exists). Mr Green’s proposed amendment would, if enacted, provide a mandatory debarment for corporates convicted of an offence under Section 7. Mr Green has noted the strong deterrent effect of such an amendment.

Commentators have observed that the SFO has a poor record in bringing corporate prosecutions as compared to its US counterparts. Mr Green has made it clear that this is a source of frustration for the SFO, stating that “[w]e are subject to unfavourable comparisons with the US and this small amendment would make it much easier to hold a corporate to account in these circumstances. Obviously it’s a matter for ministers and ultimately for parliament”. The proposed amendment seeks to change this.

As Mr Green has noted, the future of the proposed amendment to Section 7 of the Act lies in the hands of UK ministers and Parliament. The proposed amendment has already been discussed with the UK’s Attorney General, Solicitor General, and the Law Commission.


This latest development further underlines the SFO’s increasingly tough approach when investigating corporates implicated in alleged bribery and corruption.[2] If the proposed amendment makes its way through the UK Parliament, it will be easier for UK prosecutors to succeed in prosecuting corporates. The potential for US-type levels of fines and stigma as well as a mandatory bar in being able to compete for certain public contracts under European public procurement rules emphasises, once again, the absolute need for corporates to fully understand issues of bribery and corruption and to ensure that they have adequate and appropriate safeguards in place to prevent financial crimes by employees.

We will provide an update as developments related the proposed amendment arise.

[1]. View the article here

[2]. For more information on the SFO’s antibribery and anticorruption actions, see our 22 January 2014 LawFlash, “UK Government Steps Up Antibribery Enforcement”, available here.


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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