This is the first in a series of Blog entries over the next few days dealing with the ramifications of
SELF – REPORTING ACTS OF BRIBERY
It starts with a bit of background, goes on to look at some very recent examples, then examines the SFO’s declared approach.
The idea that a company should self-report itself to the authorities if it discovered Bribery within its corporate structure, was initially met with spluttering disbelief in many circles.
Why “Grass” yourself up, if the authorities were not smart enough to find out themselves?
The concept first began to see the harsh light of day in the run up to the inception of the Bribery Act 2010, but as we shall see in a moment, it had in fact been bubbling under for some considerable time.
There have been quite a few posts about the FSA & Willis, and several about the SFO & MacMillan but strangely, I thought, none that attempt to compare and contrast both of them, especially in the context of self reporting.
So I’ll take a deep breath, a large cup of tea, and dive in. Metaphorically that is, the teacup is not THAT large.
The Bribery Act 2010 is not to be viewed in isolation as a means of combating corruption in the UK or worldwide. (I am not going to refer at all to the FCPA for the purposes of this particular blog entry, for fear of confusing the issue, – and myself.)
In the months running up to the implementation of the Act, fraught as they were with attempts from various quarters to water it down, or even derail it altogether, a recurring theme put out, particularly by the SFO, was that of self-reporting.
To those of us who tramped the seminar circuit, batting away the usual questions about “but I don’t bribe anyone, what’s it got to do with me?” and “Surely it does not apply to SME’s,” – reaching the Powerpoint slide headed “Self Reporting” was always a moment for hesitation, and a quick glance to see how far from the nearest exit you were.
Well, those of us in that unhappy situation have survived, (mostly) really by patiently explaining the formula that the SFO have plugged away at all along. (OK I little was sceptical too, – or even a lot,) but in the event it looks to be achieving credibility at long last.
Willis, and MacMillan will be major contributions to a quantum leap in that credibility, which may turn out to be pivotal in the future success of the Act.
All the more ironic as we shall see, when you think that neither investigation was conducted under the auspices (yes I know the “horse” joke) of the Bribery Act at all, but Part 5 of the Proceeds of Crime Act. The reprehensible conduct of both companies took place long before July 1st 2010, when the Bribery Act came into force.
The SFO were and are, particularly keen to point out that they see three sources of work:
- Their own investigations.
- Co-operation with other authorities, particularly the DoJ, and,
1. Might not be the most promising, at least not in terms of an investigation entirely of their own initiative, in view of the relative lack of funding from government. (See what the Guardian has just had to say on funding, quoting views of two former directors. http://www.guardian.co.uk/law/2011/jul/24/financial-fraud-sfo-overseas-bribery). But not all is doom and gloom because…
2. is much more promising. Despite little local difficulties in plea agreements in multi jurisdictional cases, (mention Innospec very quietly), such co-operation is paying dividends now. As Jeffery Tesler Can confirm.
3. is likely to be the biggest threat to any corporate that involves itself in bribing to secure contracts.
Consider the possibilities.
BungblogCo bribes a company agent to secure a contract in a part of the world with “relaxed” corruption laws. They win the contract.
SnowWhiteCo, who lost out, are a UK based company who are significantly miffed by this. They know two things:
- firstly that BunblogCo have a subsidiary in Britain, (there will be a separate blog on the meaning of “Carrying on Business in the UK by the way,)
- secondly they have a pretty good idea of how the bribing was done and where to look for the evidence.
SnowWhiteCo are going to be on the phone to the SFO, (yes or even Tweeting) within minutes.
BungblogCo (and a director or two) is investigated, prosecuted and convicted.
The Directors are disqualified, and made the subject of POCA confiscation orders for the full value of the contract secured, that being the benefit.
The company is automatically debarred from tendering for EU procurement contracts.
SnowWhiteCo, and its individual shareholders bring a class action against BungblogCo for damages for loss of the contract and loss of shareholder value. Likewise employees who lost their jobs because there was no work for SnowWhiteCo to give them.
BungblogCo is down the bunghole.
And that is just if the loser blows the whistle. Suppose the winner makes the fatal mistake of upsetting or sacking an employee who has knowledge of how it was all done, and can take the investigators directly to the emails and computer files that prove the bribe?
Message from Elm Street, “are you reading this? You will get caught.”
Or even if not definitely, then very likely. And the moment an investigation is opened against your company, the shutters come down all over the world against you.
Why? For the very simple reason that Due Diligence carried out by any other company you are trying to do business with will tell them, “this company is a bribery risk.” Adequate Procedures under Section 7 mean that you cannot possibly do business with them.
So, before you open the window early one morning to shout to the policeman banging on your door “go away or I’ll call the police,”, (sorry Pandora!) It may be time to give some thought to how self – reporting works in practice.
To be contd…..