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Bribery Act: revised SFO policies on facilitation payments, business expenditure (hospitality) and corporate self-reporting
Practical Law UK Legal Update 6-521-7708 (Approx. 6 pages)
Bribery Act: revised SFO policies on facilitation payments, business expenditure (hospitality) and corporate self-reporting
by PLC Corporate
| Published on 09 Oct 2012 • England, Wales |
On 9 October 2012 the Serious Fraud Office issued revised statements of policy on facilitation payments, business expenditure (hospitality and gifts) and self-reporting.
Speedread
On 9 October 2012 the Serious Fraud Office (SFO) issued revised statements of policy on facilitation payments, business expenditure (hospitality and gifts) and self-reporting which will take immediate effect and supersede previous statements of policy or practice.
The SFO confirms that facilitation payments (for example, where a government official is given money to perform an existing duty) are bribes and are illegal under the Bribery Act 2010 (irrespective of their size or frequency).
While commenting that genuine hospitality or promotional or other legitimate business expenditure is an established and important part of doing business, the SFO emphasises that bribes can be disguised as legitimate business expenditure.
The Guidance on Corporate Prosecutions of the DPP, the SFO and the Director of the Revenue and Customs Prosecutions Office sets out the extent to which self reporting by a corporate body is relevant to the decision to prosecute. The SFO notes that:
- Self-reporting will not automatically avert prosecution; to be relevant, it must form part of a "genuinely proactive approach" of a corporate body's management team.
- Even if it does not prosecute reported violations, the SFO can prosecute unreported violations of the law and provide information on them to other bodies (such as foreign police forces).
The SFO confirms that the decision to prosecute a corporate body will be determined in accordance with the principles contained in the Full Code Test in the Code for Crown Prosecutors, the principles set out in the Joint Guidance on Corporate Prosecutions of the DPP and the Directors of the SFO and the Revenue and Customs Prosecutions Office and the Joint Prosecution Guidance of the Directors of the SFO and the DPP on the Bribery Act 2010 and that it may use its asset recovery powers under the Proceeds of Crime Act 2002.
Background
On 30 March 2011, the SFO published the Bribery Act 2010: Joint Prosecution Guidance of the Director of the Serious Fraud Office and the Director of Public Prosecutions (Bribery Act Prosecution Guidance), setting out its approach to decision-making relating to prosecutions for facilitation payments and hospitality and promotional expenditure under the Bribery Act 2010. The Bribery Act Prosecution Guidance is subject to the Code for Crown Prosecutors and in the case of potential corporate prosecutions, it should also be read in conjunction with the Guidance on Corporate Prosecutions published by the DPP, the SFO and the Director of the Revenue and Customs Prosecutions Office, which sets out the extent to which self reporting by a corporate body is relevant to the decision to prosecute.
Facts
On 9 October 2012 the Serious Fraud Office (SFO) issued revised statements of policy on facilitation payments, business expenditure (hospitality and gifts) and self-reporting which will take immediate effect and supersede previous statements of policy or practice.
The revised statements emphasise the SFO's role as an investigator and prosecutor of serious or complex fraud and aim to ensure consistency of approach with other prosecuting bodies and compliance with certain OECD recommendations.
- Facilitation payments: The SFO confirms that facilitation payments (for example, where a government official is given money to perform an existing duty) are bribes and are illegal under the Bribery Act 2010 (irrespective of their size or frequency), as they were before implementation of the Bribery Act.
- Business expenditure: While commenting that genuine hospitality or promotional or other legitimate business expenditure is an established and important part of doing business, the SFO notes that bribes can be disguised as legitimate business expenditure.
- Self reporting: The SFO notes that the Guidance on Corporate Prosecutions sets out the extent to which self reporting by a corporate body is relevant to the decision to prosecute. Self-reporting will not automatically avert prosecution and the Guidance explains that, to be part of a public interest factor tending against prosecution, a self-report must form part of a "genuinely proactive approach” of the corporate management team. Each case will be decided on its own facts. The SFO notes that even if it does not prosecute for reported violations, it can prosecute for unreported violations of the law and provide information on them to other bodies (such as foreign police forces).
The SFO states that its decision to prosecute a corporate body will be determined in accordance with:
- The principles contained in the Full Code Test in the Code for Crown Prosecutors.
- The principles set out in the Guidance on Corporate Prosecutions.
- The Bribery Act Prosecution Guidance.
It will prosecute a case if there is sufficient evidence and it is in the public interest to do so. Where appropriate, and as an alternative (or in addition) to prosecution, the SFO may use its asset recovery powers under the Proceeds of Crime Act 2002 in accordance with the Attorney General's Guidance to prosecuting bodies on their asset recovery powers under the Proceeds of Crime Act 2002.
For more information on the SFO's prosecutorial discretion and the Bribery Act Prosecution Guidance, see Practice note, Bribery Act 2010: enforcement: prosecutorial discretion.
Comment
Arnondo Chakrabarti, Partner in Allen & Overy LLP, comments that, since becoming Director of the SFO, David Green QC has made it clear that he will be taking the SFO back to its traditional role of investigating and prosecuting serious crime. As Director, Richard Alderman had sought to broaden the SFO's role to include some of the characteristics of a regulator, particularly when dealing with corruption issues in corporations. For example, the SFO under Richard Alderman entered into open dialogue with companies and emphasised giving credit to companies that self-reported overseas corruption concerns. The revised policy confirms the SFO's shift in approach. It is also noteworthy that the SFO is seeking to align its approach with that of the other UK prosecutors. Whether that is to allow the SFO to be more easily combined with other prosecutions agencies remains to be seen.