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The Serious Fraud Office (SFO) can prosecute you in the UK for acts of corruption even if your head offices are based in Belgium, your factory is located in Chile, and your Singapore agent is paying bribes in Taiwan. If your organization has a close connection to the UK, for example an English business partner, one day you will feel a hand on your shoulder: the SFO has found you. Should this idea keep you awake?
Five years ago the UK Bribery Act (The Act) came into force, the world’s most powerful anti-bribery law. For a few months the earth trembled, but then things got quiet. Neither public prosecution of blue chips nor heavy settlements occured, while at the same time in the US multinationals were signing record breaking deferred prosecution agreements. Did the SFO preach beyond its reach?
I wouldn’t count on that. The Act has no retroactive effect which means that the SFO will only investigate acts of corruption from 2011 onwards. During several years the SFO has been working quietly on several cases of grand corruption. Five years after the implementation the earth will tremble again, so insiders say. What again did the SFO preach?
The SFO preaches that there is an alternative to prosecution, which is the deferred prosecution agreement. Not sure whether we will see American-size megadeals in Europe.
Furthermore the SFO preaches that it will equally prosecute foreign-based companies and UK-based companies. The SFO will definitely prosecute some large multinationals for acts of corruption committed outside the UK. Furthermore it is likely that a few companies will be banned from public procurement, a powerful provision in The Act.
Finally the SFO preaches that companies may avoid prosecution if they themselves report the act of corruption to the SFO (self-reporting).
Last but not least the SFO preaches the importance of having adequate procedures in place, a key-element of The Act. The adequacy-verdict will depend strongly on an assessment of the corporate culture at the time of the act of corruption. Top-level management is supposed to foster a culture in which bribery is never tolerated. A negative outcome provides the basis for prosecution. Governance Risk & Compliance and criminal liability management go hand in hand.
Five key-criteria lie at the heart of this assessment: Top level commitment; Due diligence; Clear, practical and accessible policies and procedures; Effective implementation; and Monitoring and review. How do you measure this? Are you measuring this at all? Using objective standards? Assisted by professionals? Do you effectively remediate weaknesses?
The deeper you dig, the less answers the Act and guidance provide. Winston Churchill said: “However beautiful the strategy, you should occasionally look at the results.” The SFO will come and judge. It has taken 5 years to do her homework. Have you?
The author, Evert-Jan Lammers, is Partner at EBBEN Partners, President of the Institute of Fraud Auditors and board member of Transparency International in Belgium.