Alert: Revised Bribery guidance by the UK SFO
Facilitation payments, gifts and hospitality and self-reporting
On 9 October 2012, the UK Serious Fraud Office (SFO) issued revised guidance regarding facilitation payments, gifts and hospitality and self-reporting. The revised guidance, which supersedes previous guidance issued by the SFO, is effective immediately.
The revised guidance follows comments by David Green, the new Head of the SFO, indicating that more prosecutions are likely to be brought in the bribery and corruption space.
The revision of the guidance, and its implications, together with the tougher stance by the SFO, is likely to cause further concern amongst both UK and foreign organisations falling under the jurisdiction of the Act.
Facilitation payments and gifts and hospitality
The revised guidance is less prescriptive than its predecessor. In particular, it does not include practical steps organisations can take in dealing with risks related to facilitation payments and corporate hospitality, such as having the appropriate policies and procedures in place. Rather it sets out the legal position regarding each of these areas under the UK Bribery Act (the Act), and makes reference to the general guidance given to prosecutors in bringing enforcement actions under the legislation. Many organisations may see this as a backward step in terms of providing clarity to what has so far proven to be two contentious areas in the practical interpretation of the Act.
Regarding gifts and hospitality, the SFO states:
The new statement of policy expressly reaffirms the important point that bona fide hospitality or promotional or other legitimate business expenditure is recognised as an established and important part of doing business.
The SFO will prosecute offenders who disguise bribes as business expenditure (hospitality and the like), but only if (a) the case is a serious or complex one that falls within the SFO's remit and (b) the SFO concludes, applying the Full Code Test, that there is an alleged offender that should be prosecuted.
The SFO’s question and answer statement that accompanies the revised guidance explains that:
The revised statement of policy explains in clear terms that any decision to prosecute unlawful activity will be governed by the Full Code Test in the Code for Crown Prosecutors and the applicable joint prosecution guidance…The SFO encourages corporate self-reporting, and will always listen to what a corporate body has to say about its past conduct; but the SFO offers no guarantee that a prosecution will not follow any such report.
This is a departure from the SFO’s previous guidance that it sought to “settle self-referral cases…civilly wherever possible.” The implications of a criminal conviction for an organisation can be severe, not simply from a reputational perspective, but also in relation to the resulting cost of penalties and litigation, and likely debarment from government development agency projects, such as those funded by the World Bank or Asian Development Bank.
For additional information on this topic please see the following links:
- Deloitte Bribery and Corruption webpage
- Deloitte Bribery and Corruption Survey 2012- released on 14 September 2012