All questions
Enforcement: domestic bribery
Enforcement of domestic bribery has tended to focus on lower-level bribery offences committed by individuals. This type of conduct has primarily been investigated by specialist police units and prosecuted by the Crown Prosecution Service (CPS). Examples of cases conducted by the CPS include the prosecution of corrupt football agents for bribes paid to the coach of an English football club.6
Serious and complex bribery and corruption, often with an international component, is investigated and prosecuted by the SFO. Nevertheless, there have been several high-profile domestic bribery cases investigated by the SFO. The SFO’s use of DPAs is discussed in detail in Section VI. Of the 12 DPAs concluded thus far by the SFO, only the two most recent (concluded in July 2021) related to domestic bribery. In August 2021, the SFO charged five individuals in relation to the suspected payment of bribes to win contracts within the UK construction sector.7
Domestic corporate prosecutions under the Bribery Act have been extremely rare, with the sole prosecution (by the CPS) coming in 2018 when Skansen Interiors Limited was convicted of failing to prevent bribery (under Section 7 Bribery Act). The CPS has certainly been a more prolific prosecutor than the SFO: from 2013 to 2020 the CPS secured over 60 convictions for Bribery Act offences, whereas from July 2011 to March 2020 the SFO secured only four convictions under Sections 1 and 2 Bribery Act (for domestic or foreign bribery).8 This, however, reflects the number and complexity of cases falling within the responsibility of each agency.
Enforcement: foreign bribery and associated offences
Companies and individuals navigating the enforcement terrain in the UK must be aware of the practices and expectations of the SFO. Since the introduction of DPAs in 2014, the SFO has prioritised the resolution of significant corporate foreign bribery investigations with DPAs, with considerable success. However, this has not so far translated into corresponding success in prosecuting individuals relating to the same misconduct.
i What investigative powers does the SFO have at its disposal?
The SFO’s primary investigative powers are found in Section 2 of the Criminal Justice Act 1987 and are used with respect to foreign and domestic bribery cases. In addition to the power to obtain warrants to search premises and seize materials, Section 2 provides for two powers that the SFO may exercise once it has formally accepted a case for investigation:28
- powers to compel persons to attend an interview with the SFO to answer questions or otherwise furnish information (Section 2(2)); and
- powers to compel persons to produce documents or any other information to the SFO (Section 2(3)).29
Failing to respond to these powers or providing misleading information in response to them is a criminal offence, although certain safeguards apply. A Section 2 notice cannot be used to obtain material subject to legal professional privilege, and while there is no right to silence in respect of the Section 2(2) interview powers, the answers provided cannot be used in a prosecution of the interviewee for the offence under investigation.30 Section 2(2) powers are therefore primarily used to obtain evidence from potential witnesses who are not suspects in the investigation.
Whether the SFO’s powers under Section 2(3) were intended to have extraterritorial application has long been a matter of discussion. In February 2021, the Supreme Court unanimously ruled that the SFO could not force a foreign company to hand over material that it holds abroad through a Section 2(3) notice. The Supreme Court’s decision does not affect the SFO’s ability to compel UK companies to produce documents under their care and control that are held overseas. The decision also did not address whether a Section 2(3) notice could be validly served on a foreign company that carried on business or had a registered office in the UK.31 This leaves open an argument that a Section 2(3) notice could be validly served on a foreign company with a greater UK presence, but it can be anticipated that the SFO may increasingly rely on the promised benefits of cooperation to encourage voluntary disclosure, along with a quicker recourse to mutual legal assistance requests.
ii The SFO’s use of deferred prosecution agreements
Understanding the benefits and drawbacks of the DPA regime is critical for companies facing a possible SFO investigation into corruption. A DPA is an agreement between the prosecutor32 and an organisation under which the organisation can avoid prosecution if it complies with the terms of the agreement, which typically include disgorging any profits, paying a financial penalty, resolving to make compliance and remediation enhancements, and cooperating with any ongoing investigations.33
DPAs provide for a lower evidential bar than securing a conviction against a defendant at trial, a feature that enables cases to be disposed of more quickly and with greater certainty for both prosecutor and potential corporate defendant. A case may be capable of resolution through a DPA before all the evidence required for a consideration of whether to charge is assembled – a particularly time-consuming process where evidence from abroad is required.34 The SFO must also be satisfied that the DPA is in the public interest, taking into account factors such as the seriousness of the offence, any history of misconduct, the organisation’s cooperation with the SFO and compliance and remediation changes implemented by the organisation. The proposed DPA must also be judicially approved, with the Court considering for itself whether the DPA is indeed in the interests of justice, and that its terms are fair, reasonable and proportionate.35
It is easy to see why DPAs are an attractive proposition for the SFO (which can avoid the inherent difficulties of securing a conviction at trial), but why would a company want to secure a DPA? Many companies prize finality and the ability to move on highly, especially when compared with the prospect of several years of uncertain proceedings and a public trial. Reputational damage can therefore be minimised, and the required compliance and remediation steps, and improvement in culture, can be a positive benefit. Crucially, DPAs provide for the ultimate financial penalty payable by a company to be reduced by up to 50 per cent.36 DPAs also enable companies to mitigate public debarment risks, which can have a catastrophic effect on businesses which rely on public contracts.37
Securing a DPA
For a company looking to secure a DPA, two critical requirements are cooperation with the SFO’s investigation and taking appropriate compliance and remediation measures.
Recent DPAs have confirmed that self-reporting is not a prerequisite to obtaining a DPA, but it is clear that if a company does not self-report, then it must cooperate significantly with the SFO to warrant a DPA (in the Rolls-Royce DPA the company’s subsequent cooperation was described as ‘extraordinary’ and offset the absence of a self-report). The SFO has specific expectations with respect to cooperation and expects companies to adopt a ‘genuinely proactive approach’ to the SFO investigation.38 For example, cooperation will include identifying relevant witnesses and disclosing their accounts (the SFO expects a company to ‘disclose any recording, notes and/or transcripts of the interview’).39 In addition, the SFO has particular requirements with respect to the preservation and provision of investigation material.40 Corporates conducting investigations in cases where the SFO may exercise jurisdiction should be aware that actions taken during the early stages of an investigation may jeopardise the cooperation credit available to the company down the line under a prospective DPA.
Compliance and remediation measures, which may include removing implicated individuals, changing senior management and strengthening of the compliance function, are now a significant feature of all DPAs and weigh heavily in the SFO’s decision to enter into a DPA (and the Court’s subsequent decision as to whether to approve the DPA). Where the conduct has been pervasive rather than isolated, the company may be called upon to demonstrate that it is fundamentally changing its business culture.
To date there have been 12 DPAs concluded by the SFO. Of these, nine have related to bribery and corruption offences and each has included at least one Section 7 Bribery Act offence.41 The past year has seen the SFO enter into DPAs with Airline Services Limited and Amec Foster Wheeler relating to foreign bribery offences.
iii Prosecutions
Since the advent of DPAs, SFO corporate prosecutions for foreign bribery have been few and far between. This year a notable exception was the guilty plea of GPT Special Project Management Limited to a single pre-Bribery Act offence, under which GPT agreed to pay £28 million plus costs in relation to contracts awarded to GPT in respect of work carried out for the Saudi Arabian National Guard. The SFO also announced in September 2021 that Petrofac Limited, an oil and gas company, intended to plead guilty to offences of failing to prevent bribery between 2011 and 2017.42 This is an indicator that the SFO will continue to pursue corporate prosecutions in cases where it believes that companies have not satisfied the requirements for entering into a DPA.
The SFO has secured a number of convictions of individuals in foreign bribery cases in recent years, including in connection with investigations into Unaoil and SBM Offshore. The SFO is, however, still to achieve a single conviction in relation to an individual connected to the corporate misconduct covered by a DPA. DPAs contain a lower evidential burden than a criminal prosecution, so it is to be expected that not every DPA will lead to a successful prosecution. It may also be appropriate for some individual defendants to be tried in other jurisdictions in respect of conduct which crosses national boundaries. However, some critics have claimed that the commercial benefits of DPAs may prompt companies to settle weak evidential cases that would not stand up to rigorous examination in court.
UK and US enforcement – parallels and tensions
The UK Bribery Act and the US Foreign Corrupt Practices Act 1977 (FCPA) both have an extensive extraterritorial reach and in many cases will capture broadly the same corrupt conduct. Companies and individuals subject to UK jurisdiction under the Bribery Act must therefore be alive to interest from US anti-corruption authorities that maintain a strong track record of both corporate enforcement and individual prosecutions. President Biden’s June 2021 national security memorandum signalled that fighting global corruption is a national security priority under his administration,43 and earlier this year officials confirmed that coordinated resolutions with foreign agencies are a key priority for the DOJ.44
Multi-jurisdictional DPAs in the UK are increasingly common and a number of the DPAs concluded so far have involved the DOJ, along with increasingly assertive enforcement authorities in France and Brazil. Corporates cannot simply comply with the standards of a single authority and must instead navigate a complex web of sometimes contradictory laws and expectations. Where other prominent global enforcers of anti-corruption laws are involved – such as the French Parquet National Financier (PNF) – this only adds to the complexity.
While there are many similarities between UK and US enforcement practices and standards, there are a number of important differences. For example, in the US, attorney–client privilege will generally apply to lawyers’ interview memoranda, whereas such notes will generally not be covered by legal advice privilege in England and Wales. The expectations of the SFO and DOJ with respect to waiving privilege also differ: the DOJ Corporate Enforcement Policy states that ‘eligibility for cooperation or voluntary self-disclosure credit is not in any way predicated upon waiver of the attorney–client privilege or work product protection’, whereas the SFO views the waiver of privilege over certain material (including interview notes) as a ‘strong indicator of cooperation’.45
There are also differences in the legal approach to issues such as facilitation payments, which are illegal in the UK but not in the US.46 Importantly, under the US law doctrine of respondeat superior, a company can be criminally liable for the acts of low-level employees acting within the scope of their employment; for the majority of English law criminal offences a company cannot be criminally liable for the actions of low-level employees, with the notable exception of Section 7 Bribery Act. While there is no equivalent adequate procedures defence under US law, the US framework does provide for a ‘leniency’ programme under which compliance enhancements may be considered positively by the DOJ in deciding on an appropriate course of action against a company.
The US is perceived as a more effective and active anti-corruption enforcer against individuals for overseas bribery. The SFO did not charge any individuals following the Rolls-Royce DPA, whereas the DOJ charged a number of Rolls-Royce executives and employees, describing the charging decisions as highlighting its ‘commitment to holding individuals – and not just corporations – accountable for violating the FCPA’.47 Individuals should be alive to the fact that the US is more than happy to pick up any slack in the enforcement of overseas bribery offences in the UK.
iv Civil and regulatory enforcement of bribery and corruption
The FCA requires firms in the regulated sector to establish and maintain effective systems and controls to counter the risk that they might be used to further financial crime, including bribery.48 Regulated firms can be subject to FCA enforcement actions for failing to implement effective ABC systems and controls, regardless of whether bribery or corruption has actually taken place.49
v Enforcement: money laundering and financial-record keeping offences
To date the main bribery DPAs and corporate prosecutions have not included associated money laundering offences. While the Rolls-Royce DPA included one count of false accounting, financial record-keeping provisions have been used sparingly in corporate foreign bribery enforcement actions in recent years, probably due to the easier route for corporate liability provided for by Section 7.50
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