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. BRING YOUR OWN HANDCUFFS.

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:

  1. Their own investigations.
  2. Co-operation with other authorities, particularly the DoJ, and,
  3. Whistleblowers.

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.

http://www.guardian.co.uk/law/2011/mar/11/us-extradition-bribery-tesler

 

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…..