A cheat sheet on recent developments in bribery & corruption law

Sir Robert Walpole, the country's first PM—the 'first of the big Whigs'—is often quoted as saying:

Every man has his price

Unfortunately for him, he followed his own maxim, was found guilty of corruption in 1712 and ended up (temporarily) imprisoned in the Tower of London.

302 years later, I suspect that he'd be less concerned who'd be powdering his wigs in his absence and more concerned (I'd hope) about the Bribery Act 2010. It is half a decade since the Act received Royal Assent and the issue of bribery and corruption is continuing to challenge many businesses.

Here's a round up of recent developments:

Reports on Payments to Governments Regulations 2014

New rules came into force on 1 December 2014 for businesses in the extractive industries (such as oil, gas, quarrying and logging). Under these new regulations companies in these areas will need to make a public report on how much money they pay to foreign governments.

To this end, on 25 November, draft guidance was published (for background, see also the government response to the consultation on ‘Reporting Payments to Governments’).

Views are sought on this draft to ensure that their interpretation meets the requirements of the EU Accounting Directive and UK regulations. Interested parties need to let the government have their feedback by 17 December.

For more information on these regulations, check out the post from Cordery: New UK Law for extractive industries.

Corruption Perceptions Index 2014 out

https://twitter.com/anticorruption/status/539993973155454976

Yesterday, the non-governmental organisation, Transparency International (TI), published its latest Corruption Perceptions Index. The index ranks countries and territories based on how corrupt their public sector is perceived to be. It is used by many law firms and businesses when undertaking anti-money laundering checks ('How dodgy is country [x]? Do we need to do more checks on company [Y]?').

According to the index, the UK now ranks 14th, with Denmark taking top spot (least corrupt) with Somalia and North Korea coming in at a lowly 174th (most corrupt).

In terms of the UK, the NGO states:

We ... welcome the gradual progress made by the UK in the last few years, which saw its score increase by two points, indicating the effectiveness of the Bribery Act on the UK’s international reputation. But there is more to do, the UK should be in the top 10. The result next year may depend on the government’s upcoming anti-corruption action plan and whether the new government, post-May, sticks to commitments made within it.

Indeed.

OECD report on global bribery

A day before the TI report came out, the Organization for Economic Cooperation and Development (OECD) released its first-ever analysis of bribery on a global scale, having looked at some 427 cases of individual and corporate corruption.

It found, in particular, that:

• most international bribes are paid by large companies, usually with the knowledge of senior management, according to a new OECD report; and
• bribes were mostly to get public procurement contracts

https://twitter.com/OECD/status/539723489176199168

It also noted that almost two-thirds of cases occurred in just four sectors:

• extractive (19%);
• construction (15%);
• transportation and storage (15%); and
• information and communication (10%)

Accordingly, practitioners should remain particularly vigilant when working with clients in these industries.

So how are the authorities getting on? Is the SFO making progress?

Stuart Alford QC, Joint Head of Fraud at the Serious Fraud Office, gave a speech at the Anti-Corruption in Oil & Gas Conference 2014 on 17 November. In it, he reiterated:

there have been Bribery Act prosecutions: the first SFO prosecution is at court, in front of a jury at Southwark Crown Court as I speak. It is the 'Sustainable AgroEnergy 'Bio Fuel' case and it includes charges under the 2010 Bribery Act, as part of a wider fraud case

He added:

you will start to see an increase in the number of prosecutions: both from the SFO and other agencies.

As for deferred prosecution agreements (DPAs: click here for details), he noted:

the DPA is not a short-cut to corporate prosecutions. They will not be appropriate in every case and the SFO remains, first and foremost, a prosecution agency. However, there will clearly be some cases where a DPA provides a useful additional tool in the prosecutors' tool-kit.

In order words, watch this space...

And the American approach?

If you act for international businesses, you can't afford to ignore what goes on stateside.

Andrew Ceresney, Director, SEC Division of Enforcement, recently spoke at the 31st International Conference on the Foreign Corrupt Practices Act. Although he confirmed that views were his own, he confirmed the importance of deterring bad behaviour:

I always have said that actions against individuals have the largest deterrent impact. Individual accountability is a powerful deterrent because people pay attention and alter their conduct when they personally face potential punishment.

He extolled the virtues of having robust compliance programmes. Furthermore the SEC is pursuing a broad interpretation of what amounts to a bribe (ie 'anything of value'). He gave the example of when the SEC:

brought bribery charges against pharmaceutical or medical technology companies that made contributions to charities that were headed by or affiliated with foreign government officials to induce them to direct business to the companies.

In essence, just because a charity is involved this doesn't transform a bribe into a beautiful gift, like a caterpillar to a butterfly.

In conclusion...

The issue of bribery and corruption continues to interest policy-makers and regulators. They may not have endless sums to prosecute miscreants but businesses would be wise to ensure they do not fall foul of the law in this area (check out our previous post for tips: Ten tips to avoid breaking anti-bribery laws). Not only could it prove to be expensive but any reputational damage could also be disastrous.

In short, don't follow Sir Robert to the Tower...

What do you think? Do let us have your thoughts below.