Designed to streamline the myriad (and archaic) of anti-corruption and common law legislation that historically governed corporate bribery cases, the Bribery Act came into effect on July 1, 2011. Its purpose was to bring the UK on a par with other leading countries and put an end to the idea that UK enforcement agencies were lax on corporate crime.
At the time, the law was hailed as the “gold standard” for anti-corruption legislation: its introduction of a “failure to prevent” offense under section 7 meant that companies and management could not avoid accepting responsibility for the conduct they should have taken. known. And because the principles of the law were formulated in terms of “adequate”, “reasonable” and “proportionate” risks and control measures and management measures that companies should take as part of their defense, the hope was that organizations of all shapes and sizes should be able to take action to comply.
“In our experience, it is still the US Overseas Corrupt Practices Act, with the power of the Department of Justice and the Securities and Exchange Commission behind it, that instills fear in businesses, and perhaps that is where the problem lies. “
Zoe Newman, Executive Director, Kroll
However, while the legislation is generally lauded, its court record is not. the first conviction under the Act in 2011 this is the case of a magistrate’s clerk who accepted £ 500 not to register a parking offense: barely a major bust.
Fast forward to March 2020, and the Serious Fraud Office (SFO), the UK’s anti-corruption investigation agency, revealed in response to an access to information request that it had brought only five cases to court under the Bribery Act since it came into force.
In the past decade, only two companies have been convicted of “non-prevention” corruption offenses, while only six deferred prosecution agreements (DPAs) have been approved in cases involving section violations. 7.
Some experts believe that companies’ lack of belief makes legislation seem toothless.
“In our experience, it is still the United States Foreign Corrupt Practices Act (FCPA), with the power of the Department of Justice and the Securities and Exchange Commission behind it, that inspires fear in companies, and that may be where the problem lies. Says Zoe Newman, Managing Director of Business Intelligence and Risk Investigation Consulting Firm Kroll. “The UK Bribery Act is considered the gold standard as a piece of legislation, but it’s its application that is making the headlines that is getting attention. “
One of the FSO’s main ‘success’ stories has been the £ 497.25million financial penalty it agreed to with engine maker Rolls-Royce in 2017 as part of a DPA. The corrupt activity the company got its hands on as part of the deal to avoid criminal conviction spanned three decades, seven jurisdictions and three companies. In his judgment of the DPA, Sir Brian Leveson, chairman of the Queen’s Bench Division, said the investigation had uncovered the most serious criminal law violations in areas of corruption, some of which involved senior management. Despite this, the SFO announced that there would be no prosecution of individuals under the law.
Red Lion Chambers lawyer David Walbank says that while the UK is a better place for business thanks to the Bribery Act, the legislation provides a lot of fuel for cynics. For example, the possibility of self-declaration allows executives “who have every interest in diverting any further investigation from themselves and their buddies to rather point the finger at individuals perched at a rung of the managerial ladder”, says -he.
Meanwhile, the fact that “cash-strapped investigators and prosecutors”, including the SFO, are being forced to outsource their investigations to city law firms has raised fears that he may There is a conflict of interest with companies “acting as custodians of records that would normally fall under the definition of” prosecution documents, “Walbank adds.
“The main goal of legislation has never been to have a high enforcement rate, but rather a high degree of compliance. To that end, it is a success. “
Alun Milford, Partner, Kingsley Napley
John Binns, partner in the financial crime team at law firm BCL Solicitors, says the Bribery Act may also have produced results that are “not entirely virtuous.” Legislation may require some companies to make corrupt activities more sophisticated in order to disguise them, while the requirement to conduct internal investigations will not always encourage companies to report corruption themselves to the SFO.
“There are, inevitably, no official statistics to help us with these questions,” says Binns.
Others argue that the success of legislation should be judged by its impact on business compliance, rather than by its conviction rate.
“The main objective of the legislation has never been to have a high enforcement rate, but rather a high degree of compliance,” says Alun Milford, partner at Kingsley Napley law firm. “To that end, it’s a success.
“Arguably the biggest success of the law is that it has transformed the way businesses approach compliance and influenced business practices for the better,” says Francesca Titus, white-collar criminal associate at the firm of McGuireWoods lawyers.
“Organizations have had to consider whether they have ‘adequate procedures’ in place to prevent bribery of their employees or agents,” she adds. “This has led to a fundamental shift in behavior, requiring affirmative action to ensure companies act with integrity.”