Two bribery cases under investigation, more to follow, says SFO chief investigator

by Compliance Complete
Wednesday, 26 June 2013 19:00 GMT

* Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.

By Martin Coyle

The UK Serious Fraud Office is actively investigating two cases under the Bribery Act, said Kevin Davis, the SFO's chief investigating officer. He also revealed that a further six cases which might lead to prosecutions were under investigation.

Davis said he was aware of recent rumblings of discontent about the lack of prosecutions under the legislation, which took effect in July 2011. He urged patience, however, and pointed out that it had taken five years for a prosecution to be brought under the tough U.S. Foreign Corrupt Practices Act following its introduction in 1977.

Effective procedures

Davis said that cost issues would not deter the SFO from taking on bribery cases. The crime agency has seen its budget severely reduced in recent years. He said that a more "forensic" approach to tackling serious economic crime would be taken. In the case of the alleged rigging of the London Interbank Offered Rate, he said, the SFO had been handed "ring-fenced" and "block buster" funding. He stressed that the SFO would not hesitate to prosecute firms which proved unwilling to put in place adequate procedures or flouted the bribery legislation.

There has been speculation recently that the government was looking to review the Act following concerns that it placed too much of a burden on small to medium firms. Davis acknowledged this but said that the compliance burden was low compared with the cost of being prosecuted. This could lead to civil claims, debarment, considerable legal costs and reputational damage. He added that senior company officials could face "substantial" prison sentences.

"There is no comparison to putting in robust procedures," he told delegates at the C5 Anti-Corruption Conference yesterday.

Much of the recent discussion has focussed on facilitation payments, which are low-level payments, often made to customs or other officials. These payments are illegal under the UK legislation but not under the FCPA. Davis attempted to ease fears about this, but stressed that such payments had always been illegal in the UK. "The SFO exists to combat serious fraud. We are not generally interested in prosecuting facilitation payments unless it forms part of serious misconduct," he said.

He also said that the SFO would not target legitimate corporate hospitality. "Bona fide hospitality is an established and important part of doing business. The SFO will prosecute offenders who disguise bribes as [legitimate] business," he said.

Change in approach

Delegates were also given the background to the SFO's change in approach since the appointment of David Green as its head last year. The agency appears to have adopted a tougher approach and has, for example, dropped its guidance to companies on self-reporting bribery issues. Davis said that Green was concerned the SFO had lost sight of its true function.

"We are not an agony aunt or advice service. The SFO had tipped too far towards settlements," he said.

Davis said that the prosecutor would still consider civil settlements for self-reported cases but said that there was no guarantee that each and every one would be handled the same way. "With self-reporting there is no given that a prosecution will not follow," he said.

The timing of any report made by a company was a factor, he said, and companies which did not approach the SFO when they found problems could expect "little sympathy".

Delegates were told that the introduction of deferred prosecution agreements into UK law next year, whereby companies might pay settlements to avoid criminal prosecution, were not an easy option. "They are not a cosy deal behind closed doors ... and are not being introduced as cut-price justice. Organisations have no right to be invited to the negotiation table," he said.

He added that a draft code for prosecutors using deferred prosecution agreements would be released this week.