UP TO THEIR NECKS IN CRUDD

Yes I’ve been away for a while, working as it happens, but woke up this morning to news of something that merits the attention of our esteemed Director of Public Prosecutions.

If he can manage to tear himself away from the exhausting task of “improving the quality” of the prosecution product that he promotes, (i.e. slashing staff and destroying in-house morale),  he might just like to open a copy of the Bribery Act (Section 2 is the bit you need Keir) and have it handy while he’s poring over the Peter Cruddas story in today’s papers.
This is NOT one for the SFO, but fairly and squarely, one for him.
He needs to look at some law, and so do we:
Section 2:

Offences relating to being bribed
(1) A person (“R”) is guilty of an offence if any of the following cases applies.
(2) Case 3 is where R requests, agrees to receive or accepts a financial or other advantage intending that, in consequence, a relevant function or activity should be performed improperly (whether by R or another person).
And then this:
(6) In cases 3 to 6 it does not matter—
(a) whether R requests, agrees to receive or accepts (or is to request, agree to receive or accept) the advantage directly or through a third party,
(b) whether the advantage is (or is to be) for the benefit of R or another person.

And he also needs to look at what Cruddas said, – as do we.
http://www.bbc.co.uk/news/uk-politics-17503116

(this link may need cntrl-click)

“What you would get, we’d get you at the Cameron and Osborne dinners.”

“If you’re unhappy about something, we’ll listen to you and put it into the policy committee at Number 10”
“Some of our bigger donors have been for dinner in Number 10 Downing Street in the PM’s private apartments….. “

“Things will open up for you… but you need to go in with a bit of, you know, it’s no good scratching around with ‘it’s ten grand now and five grand then’, …minimum hundred grand, but the nearer you can get to two hundred grand, and hold back for the events, … it’ll be awesome for your business”

So what does Section 2 have to say about the above?
Well he’s not “agreeing to receive” money, in the sense of accepting a financial advantage that has been offered, because from what we can see on the video, nothing has been proactively offered.
It follows that nothing has been “accepted” either.
The issue hinges on whether or not anything he says amounts to “asking” for a financial advantage.
He doesn’t need to receive anything, the offence being complete merely by the making of the request.
What he did not say was, “Please give the party some money.” It is evident however, that this was a meeting between the party co-treasurer and two prospective donors.

We do not know at whose instigation this meeting took place, or what discussions preceded it.
From Cruddas’ point of view, he was faced with people who were considering donating, and wanted to know what, if any, advantages a donation might bring.

Again we don’t see the entire conversation, but we DO see Cruddas effectively setting out a “tariff” of benefits. The more you give, the more you get.

Does Section 2 require a specific request for a financial advantage, in order for the person making that request, to commit an offence?

Your humble blogger would submit that the answer to that question must be “No.”

To conclude otherwise would mean that any broad hint, or “nudge and a wink” would fall outside the act, both in terms of asking for a bribe (Sec2) or offering one (Sec1)

In other words, telling someone that if they happened to be kind enough to place a brown envelope stuffed with cash in your briefcase, after which they might just happen to get an invite to dip their snouts in the Number 10 Pig Tough, would not be an offence, whereas coming straight out with “Gissa Bung,” would be.

If the DPP ducks the issue by saying that there was no direct request for payment, then the whole act is dead in the water. (pun intended.)

As one of Her Majesty’s Counsel, learned in the law, Keir Starmer has to face up to the fact that here is a senior Tory Party official who has given a clear intimation to a potential donor, that in return for, and on condition of, the payment of a large sum of cash, that donor would be given direct access to the Prime Minister, the Chancellor of the Exchequer, and influence in the Number 10 policy committee, for an “awesome” business advantage, not enjoyed by others.

This would amount to the effecting of an improper performance of the function of the person compiling the guest list, to invite someone to a dinner specifically in return for cash, to secure a business advantage not on the basis of need or merit, but “wedge.”

That improper performance would be effected in breach of the relevant expectation of you or me, (See sections 4 & 5) that political parties would not dish out favours for cash. (I did type that with a straight face, honest.)

Section 2 Subs 6 (b) makes it clear that the cash does not have to be for Cruddas’ advantage.

Or as we lawyers say, “you’re nicked sonny.”

That’s all for now, but as I always say, “Watch this Space.”

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THE BRIBERY ACT. MUNIR PATEL AND WHAT YOU NEED TO KNOW ABOUT HIS DAY IN COURT.

THE BRIBERY ACT. MUNIR PATEL AND WHAT YOU NEED TO KNOW ABOUT HIS DAY IN COURT.

First of all, contrary to what some “experts” have been blaring today, he was NOT sentenced to six years for Bribery. (which may come as some comfort to a few suits out there!)

On Count 1, an offence under the Bribery Act, he was sentenced to three years imprisonment. He had pleaded guilty, and was told that had he fought the case, the sentence would have been between four and five years. The maximum is ten years.

He also pleaded guilty to Count 2 a common law offence of Misconduct in a Public Office. He was sentenced to six years to be served concurrently with Count 1. The maximum is life imprisonment.

As the Judge said

“… this indictment represents misconduct which lasted for well over a year and involved at least 53 cases in which you manipulated the process in order to save offenders from the consequences of their offending.”

The full transcript of sentencing remarks is here:

http://www.judiciary.gov.uk/Resources/JCO/Documents/Judgments/munir-patel-sentencing-remarks.pdf

BUT…. and it’s a very big but, the sentence reflecting conduct lasting well over a year, can only have applied to Count 2, because Count 1 could only relate to bribes accepted after July 1st. In other words a comparatively small proportion of the time involved.

They ARE two separate offences. Accepting, or even asking for a bribe, is an offence in itself, even if he then did nothing.

What he did was to ask for and accept bribes, AND THEN go on to falsify the DVLA records by not entering details of motoring convictions which was his job. It could even be argued that he was lucky to have escaped a consecutive sentence.

What else? Well it is said that he was asking £500 a time to do this. 53 cases at £500 a time would mean about £26,000 in his back pocket. When police examined his bank accounts, (yes he paid the money into his bank….) they found credits of £96,000 unaccounted for. He earned about £25k per year.

So what does this all tell us?

On his own admission, to the court and on the secret video filmed by that bastion of rectitude, The Sun, he had been well at it for over a year.

http://www.bbc.co.uk/news/uk-england-london-15310150

The judge had this to say about the effect of his actions on the Judicial system:

By doing what you did, you created a danger not only to the integrity of the process but also to public confidence in it. A justice system in which officials are prepared to take bribes in order to allow offenders to escape the proper consequences of their offending is inherently corrupt and is one which deserves no public respect and  which will attract none.”

This was far from a simple breach of trust, and cannot be judged in simple monetary terms against such cases.

SO…. if three years on a plea for a Bribery Act offence under Section 2 by a public servant is a guideline, then how much further up the scale will the suits have to crane their necks?

Only time will tell, but I leave you with two further thoughts.

IN the joint prosecution guidelines produced earlier this year by the SFO and the CPS (remember them?) they stated:

The Act takes a robust approach to tackling commercial bribery, which is one of its principal objectives. The offences are not, however, limited to commercial bribery. There may be many examples outside the commercial sphere where individuals attempt to influence the application of rules, regulations and normal procedures. Examples would include attempts to influence decisions by local authorities, regulatory bodies or elected representatives on matters such as planning consent, school admission procedures or driving test

So it isn’t just the suits who need to keep looking over their shoulders. The CPS are alive to lower level bribery too.

And finally, when can we expect to see 53 arrests and prosecutions for those who bribed Munir Patel?

The Bribery Act: “Government Keen To Accept Bribes”

****STOP PRESS. OFFICIALLY ENDORSED BY BLACKADDER HIMSELF****

(See Comment below from theBriberyact.com)

There was I bemoaning the fact in the last bungblog that the Bribery Act was the preserve only of the rich and famous, and along comes news of a prosecution by the CPS involving an allegation of a bribe of £500
We will not go into any of the details, which might of themselves explain a little more behind this decision, but is it really possible that we might end up following the Indian lead on Bribery, (popular that is rather than political) and see this as the acorn of the cultural change the OECD have been advocating for years?

Small bribery can be just as insidious as Big Bribery, but it is much less likely to be prosecuted for one very good and compelling reason, which I will turn to in a minute.

The first important point to notice is that this prosecution was brought by the CPS and not the SFO.

Both are able to prosecute offences under the act, but neither can institute proceedings without the approval of their respective heads, the DPP Keir Starmer QC, or the Director of the SFO, Richard Alderman.

At the time the section 9 guidance on “Adequate Procedures for Preventing Bribery” was issued, those two bodies issued a joint document setting out the guidance that they themselves would follow in making the decision on whether or not to prosecute.

http://www.cps.gov.uk/legal/a_to_c/bribery_act_2010/

When you read it, you begin to realise that in fact we do have a two tier approach, in much the same way as we do with fraud. Big fraud to SFO, small fraud to CPS, or at least that’s how it looks on paper, together with a bifurcation (!) between domestic Bribery and International Bribery.

Let’s look at a short passage from the introduction:

“Scope of the Act

The Act takes a robust approach to tackling commercial bribery, which is one of its principal objectives. The offences are not, however, limited to commercial bribery. There may be many examples outside the commercial sphere where individuals attempt to influence the application of rules, regulations and normal procedures. Examples would include attempts to influence decisions by local authorities, regulatory bodies or elected representatives on matters such as planning consent, school admission procedures or driving tests.”

And then this:

Bribery is a serious offence. There is an inherent public interest in bribery being prosecuted in order to give practical effect to Parliament’s criminalisation of such behaviour.

It then launches into the jargon of “The Full Code Test” and the “Public Interest Test.”

So should we really be at all surprised that a CPS prosecution has been brought in relation to what is an apparently minor offence, (I mean in terms of the amount involved)?

Highly respected commentators of a Transatlantic persuasion have already been turning their noses up at such an apparently lacklustre opening act in the brand new theatre that is the Bribery Act.

BUT as the erudite and interesting thebriberyact.com has pointed out:

(this) misses a fundamental but important difference between the US FCPA (Foreign Corrupt Practices Act) and the Bribery Act.

The UK Bribery Act covers domestic bribery AND foreign bribery.  The US FCPA only covers foreign bribery.

Broadly speaking foreign bribery cases are likely to be more complicated from an evidential perspective.  They will, as a result, take longer to investigate and prove. (and cost a lot more, – that was me.)

This is the raison d’etre for the Serious Fraud Office in the UK.

http://thebriberyact.com/2011/09/01/a-golden-rule-in-litigation-never-underestimate-your-opponent-or-why-it-is-a-mistake-to-pooh-pooh/

(Although AA Milne was never an authority on the Act. That  should be poo-poo, Richard and Barry)
****CONTROVERSY NOW RAGES – SEE COMMENT BELOW FROM thebriberyact.com****

———–

So if the CPS will prosecute someone for bribing a member of a council planning committee, a headteacher for selecting a dunce who is the child of rich parents, or a driving instructor for passing Mr. Toad, (very English joke Tom, see Wind in the Willows), then maybe the act will achieve that which the bare words of the statute intend.

After all, we should not forget for a minute the Provisions of Schedule 2.

You have  forgotten the provisions of Schedule 2 haven’t you?

Schedule 2 contains a list of all the old Acts of parliament which are repealed on the passing of the Bribery Act, including:

Public Bodies Corrupt Practices Act 1889

Prevention of Corruption Act 1906

Prevention of Corruption Act 1916

Anti Terrorism Crime and Security Act Sec 108 – 110

(Section 109 dealt with Bribery and Corruption committed outside UK)

To save you looking them up, they effectively comprise all the previous anti corruption legislation, although we still retain Common Law offences such as Misconduct in a Public Office, which could apply to public officials accepting bribes, but not private individuals.

Which means in the absence of The Bribery Act, such small bribes are not an offence.

———–

Which brings me wobbling back to sort of where I started at the beginning of last week’s blog.

Small bribes involving excessive hospitality, facilitation payments, (Grease is the word, if you are in the USA), the fashion journalists tale, (last week) and what about the rampant corruption in the hotel and leisure industry? Tips for good service are fine, but £50 to turf someone off a better restaurant table, or £100 to grab someone else’s superior hotel room? (Concierges cringing the world over hopefully.) If they are given cash to persuade them to effect an improper performance of their function, i.e. bumping someone from a room that they had booked and paid for, that’s a bribe.

Yes of course there is the old argument that such people are traditionally poorly paid because they are expected to make extra dosh in that way. Well that is where the concept of culture change comes in. If India can think the unthinkable, with the inspiration of Anna Hazare, then so can we.

In a recent seminar given by a senior officer of the SFO, we heard this, particularly in relation to Facilitation Payments:

“The SFO look also at the effect of small payments. They can have a corrosive effect, and are often part of schemes orchestrated at higher level by people into whose pocket a proportion of payments go.

Once you have someone in your pocket by means of small payments, just like blackmail, there is nowhere for it to stop. It perpetuates a culture of corruption within an organisation.

In some parts of world, it is not possible to avoid them, so we consider the public interest in prosecuting

  • We consider amount of payment concerned
  • Was it systemic, one off or one of many?
  • What steps have company taken to reduce payment of this sum?
  • Were there any special sector considerations.
  • No prosecution if payment at the end of a gun or risk to life and limb.”

So the SFO, and the vast majority of comment and publicity about the Act has really been focused on International Corruption.

They will not prosecute the “Low hanging fruit.” But why should not the police and the CPS do exactly that, because if they don’t prosecute the bent planning officer or the driving examiner, who will?

———-

I said earlier that I would get to the reason in a minute why it is that I think there are likely to be very few prosecutions for Bribery by the SFO, initially. Well unless you are a very fast reader it has probably taken you a little longer than that. Sorry, maybe I got carried away.

BUT HERE IT IS.

The clue lies in two factors. Firstly the abysmal budget allocated to them for investigating and prosecuting Bribery Act offences. Second, the Proceeds of Crime Act 2002.

My own personal view, although you could call it an educated guess, is simply this.

A successful prosecution of a large corporation for Bribery, or a successful Civil Recovery action in the event of self-reporting (remember the pink fluffy handcuffs?) will result in potentially a huge amount of money confiscated from the offending company.

A proportion of those funds will be directed towards compensating those who have suffered loss as a result of the offender’s actions, but some of the money will be ploughed back into resources needed for further investigations.

To what degree I cannot say, (as I said I am guessing) but does there not exist the very real possibility that at least in the early stages, prosecution policy of Bribery Act offences will be influenced if not governed by the Cost-Benefit analysis?

If you prosecute a company for sending someone on an over-luxurious glee club trip to Tierra del Fuego, the investigative costs of an international investigation could be not inconsiderable. The proceeds of such a crime might be pathetically small. Am I barking up the right tree here? I think so.

On the other hand, if there is a concentration on Big Bribery at the start, then the coffers will be swelled that much sooner, and the whole process might well snowball into a situation where the Prosecuting Authorities  are sufficiently flush not to have to risk picking only the fruit at the very top of the tree.

They might even turn it into a flourishing industry.

Hence… “Government Keen To Accept Bribes!”

Got there in the end.

———-

The above is subject to the usual old tosh about all views being my own etc etc, but if anyone else wants to express a view (including Elm Street) then just hit the comment button below. But be warned, I have the power of moderation!

———–

IN OTHER NEWS:

If you are in the Construction industry and are near Bristol, I shall be spouting forth to members of the RICS Bristol on 13th September. You have to get the guff from them but I’d be delighted to meet followers there. It’s near the big RAC thingy on the M5.

IN EVEN OTHER NEWS

thebungblog now has its own Group on LinkedIn, for news, view, comments and a cup of tea, (iced if you are of the transatlantic persuasion)

Join now

UK BRIBERY ACT 2010 thebungblog SPEAKEASY

IN OTHER REALLY BIG NEWS:

If you are reading this blog, then you are bound to have heard of @charonqc http://charonqc.wordpress.com/

There’s a link to it in my blogroll as well.

ANYWAY…. every week the eponymous blogger produces a podcast of a discussion with some distinguished lawyer or other on a topic of the day.

In a surprise break with that tradition of distinguished lawyers, this coming week it will be …. me!

So watch his space.

————

AND FINALLY:

An esteemed and highly respected blogger from “overseas” who specialises on the FCPA in particular, has had the temerity to suggest that the brand of humour promulgated on this modest little blog, just might not translate into American.

Views please!

TheBungBlog

The Bribery Act 2010, Self Reporting part 3, Carrot and Stick, Thumbscrews or Pink Fluffy Handcuffs?

Welcome back!

Sorry, I know I said “next week” last month, but the day job got in the way. Anyway some of it may have taken a little digesting.

What I was talking about was “Self-Reporting,” – the good bits and the possibly bad bits.

Neither Willis, nor MacMillan initiated investigations by self reporting, although one of the telling factors in their favour in each case, was that once the balloon had gone up, rather than try to cover their tracks, they co-operated fully with the FSA and SFO respectively. This was subsequently to count very much in their favour as we have seen.

Drawing from those examples, we need to look at the questions to be asked if and when a corporate, having conducted a “risk analysis” and implemented “adequate procedures” to prevent bribery, discovers during the course of its “constant monitoring” of those procedures, (enough buzzwords yet?) that bribery has taken place, or may have.

You don’t need a lawyer to tell you that you need a lawyer. The reality is, as a corporate of any significant size, (but don’t forget that SME’s are not immune) you will have your own in-house legal department. “General Counsel” even, if you are really “cutting edge”.

Detailed considerations of what to do next are for another blog, or rather, series of blogs. This is not to be treated lightly nor will it be.

A crucial factor to bear in mind from the outset, is that of Legal Professional Privilege. Without an exhaustive (and exhausting) definition of LPP, the principal point to consider is this.

Any correspondence between the corporate and external legal advisers should attract LPP, whereas thelikelihood is that internal communications with in-house counsel will not.

** For a discussion on the question of LPP and In-house counsel, see comments section below.**

What kind words of comfort and reassurance do the SFO have for us at the initial stage, as the balloon slips gracefully from its moorings?

A key question for the corporate and its advisers will be the timing of an approach to us. We appreciate that a corporate will not want to approach us unless it had decided, following advice and a degree of investigation by its professional advisers, that there is a real issue and that remedial action is necessary. There may also be earlier engagement between the advisers and us in order to obtain an early indication where appropriate (and subject to a detailed review of the facts) of our approach. We would find that helpful but we appreciate that this is for the corporate and its advisers to consider. We would also take the view that the timing of an approach to the US Department of Justice is also relevant. If the case is also within our jurisdiction we would expect to be notified at the same time as the Department of Justice.”

So there is an acknowledgment of the fact that a company needs to take advice first.

Specialist external counsel will be in a position to ask a lot of preliminary questions of the company officers to identify the issues which need to be addressed, one of which might just be that a director needs ring-fencing from the investigation if he/she is implicated.

Much will depend upon whether the act of bribery alleged has emerged as a result of your own investigations and systems monitoring, or because of some outside factor such as a whistleblower. This will drastically affect the timing of your response.

For present purposes let us assume that we are dealing with self-discovery and self-reporting.

The other pressing question that needs answering is that of whether or not there is a USA dimension to the problem. Again I am not going to delve into the minutia of the FCPA for present purposes. Suffice it to say that if there is such an element, then as the SFO point out, you will need to consider approaching the SEC and/or DoJ.

All I would say at this point is that the DoJ have infinitely greater resources to investigate Corruption worldwide, and levels of sentence imposed by US courts, particularly corporate fines and directorial prison sentences are eyewatering, even by comparison with the powers of the UK courts under the Bribery Act and Proceeds of Crime Act. (See 25th July Blog).

So going out on a limb for a minute, and subject to the usual disclaimer of personal liability for anything whatsoever at all, a first and timely approach to the SFO is likely to reap dividends in the future, particularly if there is any question of liability in both jurisdictions. No guarantees though! It is still perfectly possible for the DoJ to investigate under the FCPA, secure a Grand Jury indictment against a UK corporate and/or its officers, and apply for extradition from under the SFO’s noses. (See Jeffery Tesler 25th July Blog)

Assuming that you and your legal advisers have come to the certain conclusion that bribery has taken place for which you are liable, either because your company has been responsible for bribing, (section 1) or an “associate” (individual or corporate) did it and you failed to prevent it, (section 7), what next?

Two options:

  1. Brush it under the carpet?
  2. Hands up Job?

For the three reasons I set out on the 25th July Blog, the chances of not being found out are getting slimmer by the day.

Covering up and getting found out will inevitably lead to prosecution, whereas owning up and co-operating carries with it at least the reasonable prospect of a Civil Settlement under part 5 of the Proceeds of Crime Act, thus avoiding all the dire consequences of a criminal prosecution.

So how will the SFO decide between the thumbscrews or the pink fluffy handcuffs?

Time to use “cut & paste” again for the Elm Street criteria:

You will probably gather that the words in Italics are not “official” – the others are.

  • is the Board of the corporate genuinely committed to resolving the issue and moving to a better corporate culture?
    • Bit cheesy but you get the idea
  • is the corporate prepared to work with us on the scope and handling of any additional investigation we consider to be necessary?
    • Will you give them the keys to your filing cabinet, network server, backups, inside leg measurement? (say “yes”)
  • at the end of the investigation (and assuming acknowledgement of a problem) will the corporate be prepared to discuss resolution of the issue on the basis, for example, of restitution through civil recovery, a programme of training and culture change, appropriate action where necessary against individuals and at least in some cases external monitoring in a proportionate manner?
    • Are you prepared to cough up to the full extent of what they calculate to have been your company’s “benefit” as well as retraining your relevant staff, and implementing those adequate procedures that you only read about on some blog or other? (say “yes”)
  • does the corporate understand that any resolution must satisfy the public interest and must be transparent? This will almost invariably involve a public statement although the terms of this will be discussed and agreed by the corporate and us.
    • We will draft a statement of apology to go on our website, and yours and be published in the press and your trade journals, which you will disagree with at your peril. (say “yes.” Plea Bargain agreements with the DoJ are much worse. You have to waive your right of appeal against whatever sentence you get!)
  • will the corporate want us, where possible, to work with regulators and criminal enforcement authorities, both in theUKand abroad, in order to reach a global settlement?
    • Would you like us to try to persuade the DoJ not to prosecute you in the US as well? (Pope, Red Dress, Bears, Woods etc etc.)

———–

Anyone in their right mind would have the next question bursting from their lips by now. “If I do all this can you guarantee that I will not be prosecuted?”

As you would expect, the answer is “not necessarily.”

Bearing in mind the ear-bashing the SFO received from Thomas LJ in Innospec, (see 29th July), all options are left open;

but…. they have said that they want to settle self-referral cases that satisfy the above criteria “wherever possible.”

Flies in that ointment, (effectively following what Thomas LJ said) would include:

  • Board member personally involved in corruption
  • Board member benefiting personally from corruption.
  • Public interest.

———-

So, if we are talking thumbscrews rather than pink fluffy handcuffs, where to next?

“We would in those circumstances be looking for co-operation from the corporate and would be prepared to enter into plea negotiation discussions with the context of the AG’s Framework for plea negotiations.”

This is especially important in the event that the DoJ are sniffing around, in order to avoid any possibility of double jeopardy issues.

What specific factors are relevant to the decision as to whether or not to prosecute individuals within the company?

  • how involved were the individuals in the corruption (whether actively or through failure of oversight)?
  • what action has the company taken?
  • did the individuals benefit financially and, if so, do they still enjoy the benefit?
  • if they are professionals should we be working with the appropriate Disciplinary Bodies?
  • should we be looking for Directors’ Disqualification Orders?
  • should we think about a Serious Crime Prevention Order?

All these are self explanatory, except perhaps for the last one. An SCPO is an order that a court can make, preventing a convicted person from having the opportunity to do it again, by placing all sorts of restrictions on his/her future activities. Examples are set out in Section 5 of the Serious Crime Act 2007.

http://www.legislation.gov.uk/ukpga/2007/27/section/5

(Can’t find the Humorous Crime Act)

Also important to note is the confidentiality of such communication with the SFO. They will regard it as being equivalent to information received by them pursuant to their powers under Section 2 of the Criminal Justice Act 1987, and only to be used in accordance with that act. (Compulsory powers of questioning, the answers to which cannot be used in court on a prosecution for the offence enquired into)

———–

Let us look on the bright side though, and examine what happens next should we find ourselves in pink fluffy handcuffs.

The SFO will look at what needs to be investigated further. Wherever possible it will be carried out by the company’s own professional advisers. The Company she pays though! (Albeit within limits the SFO assess to be reasonable.)

They also undertake to ensure that material, (and in particular electronic material, is preserved.

So once the investigation is concluded, what next? – Settlement Discussions.

What’s important here?

  • restitution by way of civil recovery to include the amount of the unlawful property, interest and our costs
    • Part 5 of The Proceeds of Crime Act
    • in some cases monitoring by an independent, well qualified individual nominated by the corporate and accepted by us. The scope of the monitoring will be agreed with us. We undertake that if monitoring is going to be needed, it will be proportionate to the issues involved.
    • a programme of culture change and training agreed with us.
    • discussion, where necessary, and to the extent appropriate, about individuals.
      • Who’s getting the sack.

All this, and a “Public Statement so as to provide Transparency to the er… public.” (See above.)

…. And the offer of assistance when negotiating with overseas (i.e. USA) authorities. (Potentially of vital importance)

And there are future promises, when they have been finalised, of offers of assistance in the fields of Mergers and Acquisitions and Private Equity.

This is a topic for another blog in the not too distant future, for which I am hoping to draw on the expertise of contacts in the field. (Contributions always welcome Ian).

In essence the problem lies in “ticking time bombs” – bribery issues lurking in the past of companies subject to acquisitions by other companies, which either did not emerge during the ordinary Due Diligence process, or did, and the acquiring company wants to know what to do next, without incurring a section 7 liability.

Confidentiality is offered again, particularly where price sensitivity is an issue, which it very likely will be.

————

Thus far I have tried to outline in some detail, the Carrot dangled by the SFO to encourage self-reporting. There is of course an accompanying stick. It is set out thus:

WHAT HAPPENS IF THERE IS NO SELF REFERRAL?

Self referral together with action by the corporate to remedy the problem of corruption will reduce the likelihood that we may discover the corruption ourselves through other means. If this happens we would regard the failure to self report as a negative factor. The prospects of a criminal investigation followed by prosecution and a confiscation order are much greater, particularly if the corporate was aware of the problem and had decided not to self report.

 

Corporates will need to be aware of the length and expense of an investigation by the SFO. There will inevitably be considerable publicity and disruption to the business of the corporate. We will be making use of all tools at our disposal such as those under the Regulation of Investigatory Powers Act. Professional advisers will need to advise their corporate clients about the impact of these investigations. There is also a serious prospect that we will learn about the corruption issue from another agency in the UK or elsewhere, a whistleblower or a statutory report such as a Suspicious Activity Report. We will assume in those circumstances that the corporate has chosen not to self report. The chances of a criminal investigation leading to prosecution are therefore high.

The underlining is mine, but the message is clear.

A little further reading:

Bribery Act 2010: Joint Prosecution Guidance of The Director of the Serious Fraud Office and The Director of Public Prosecutions

http://www.cps.gov.uk/legal/a_to_c/bribery_act_2010/

—————

And lest the FSA was feeling left out, I have added links to their Consultation Paper (including explanatory newsletter) all of which will reward further reading by in house counsel.

http://www.fsa.gov.uk/pages/Library/Policy/CP/2011/11_12.shtml

The Consultation Paper (CP) on the proposed Financial crime: a

guide for firms (the Guide) is important to all financial-services

firms and their advisers as it explains steps that firms can take

to reduce the risk of being used to further financial crime and by

doing so help themselves to meet relevant legal obligations.

This CP is targeted at firms and will be of limited relevance to

consumers. Some consumers or consumer groups may be interested

in the guidance we propose to give to firms about their systems and

controls to prevent fraud on or by their customers.

———

How can I compete with such limpid prose?

Back soon…. well sooner than I was this time anyway.

The bungblog.