Ten years on - the UK Bribery Act under scrutiny

Speed read

The Act was hailed as a silver bullet for corruption, but ten years on debate rages over how well it works

Statistics tell part of the story, and it should be pointed out that royal assent on April 8, 2010, was something of a false birthday. The legislation did not take legal effect until more than a year later.

However, since July 2011, some 99 convictions have been secured under the Bribery Act.

• x72 were in England and Wales,
• x24 in Northern Ireland and
• X3 in Scotland.

Only x2 convictions have related to the most controversial part of the law, section 7, which covers the failure of companies to prevent bribery.

• The first prosecution under section 7 was of Sweett Group plc - December 2015 and on February 19, 2016, was ordered by to pay a fine
  • This penalty figure comprises a fine of £1.4 million, a confiscation order of £850,000 and SFO costs of £95,000.
  • https://www.brettwilson.co.uk/blog/sweett-group-plc-becomes-the-first-corporate-to-be-convicted-under-the-bribery-act/
• The first contested section 7 case was brought to trial in 2018 when Skansen Interiors Ltd (SIL),
  • https://www.jdsupra.com/legalnews/blog-skansen-interiors-limited-the-uk-s-66280/
• There have been just x5 successful prosecutions under it for serious bribery-related conduct. The most significant investigations under the Act, have ultimately been resolved by DEFERRED PROSECUTION agreements with accused companies.
  • Five years ago, in the spring of 2014, Deferred Prosecution Agreements ('DPAs') was first introduced in the UK through the Crime and Courts Act 2013 ('CCA'). https://www.whitecase.com/publications/alert/deferred-prosecution-agreements-5-years-americanisation-uk-corporate-crime
  • Since 2014 there has been X5 DPAs resulting from overseas bribery and corruption investigations: https://www.kingsleynapley.co.uk/services/department/criminal-litigation/business-and-financial-crime/corporate-crime/deferred-prosecution-agreements
    • Standard Bank (November 2015);
    • Sarclad Ltd (previously known as XYZ Ltd) (July 2016);
    • Rolls Royce (January 2017) - this also includes and offence of false accounting;
    • Güralp Systems Ltd (December 2019);
    • Airbus SE (January 2020).

Full times article article

Worth of the Bribery Act under scrutiny

The Act was hailed as a silver bullet for corruption, but ten years on debate rages over how well it works

Fanfare greeted the Bribery Act when it was enacted ten years ago; anniversary celebrations over the past few days have been much more muted.

The legislation is viewed by some people as a landmark that cracked down on corporate corruption and forced individual executives to take responsibility for ethical behaviour and by others as a missed opportunity that has generated few convictions and had little practical effect.

Statistics tell part of the story and it should be pointed out that royal assent on April 8, 2010, was something of a false birthday. The legislation did not take legal effect until more than a year later. However, since July 2011, some 99 convictions have been secured under the Bribery Act. According to figures revealed by a freedom of information request by the law firm DLA Piper, 72 were in England and Wales, 24 in Northern Ireland and three in Scotland.

The figures showed that the largest financial hit taken by a business because of a prosecution under the Act was a £1.4 million fine, a confiscation order of about £850,000 and £95,000 in costs.

The legislation has prompted the Serious Fraud Office to strike five deferred prosecution agreements with companies for failure to prevent bribery, these have included household names such as Rolls-Royce, the engine maker, and Airbus, the aerospace firm.

About two thirds of the convictions involved charges under section 1 of the Act, which covers individuals offering bribes. Nearly all the other convictions fell under section 2, which involves individuals taking bribes.

Only two convictions have related to the most controversial part of the law, section 7, which covers the failure of companies to prevent bribery. Section 7 was heralded as the groundbreaking big stick, and the apparent reluctance of investigators and prosecutors to wield it has prompted analysts to offer restrained birthday congratulations to the legislation. Laura Ford, a partner at DLA Piper, says that a deeper analysis of the numbers makes for even more uncomfortable reading.

“There have been just five successful prosecutions under it for serious bribery-related conduct,” Ford says. The largest investigations under the Act, she says, have ultimately been resolved by deferred prosecution agreements with accused companies.

Ford says that although the deferred prosecution agreements

• “bring large sums to the Treasury, a question remains as to their deterrent effect, particularly where no individuals are charged for their role in the bribery scheme, or where those individuals who are charged are acquitted”.

White-collar crime specialists argue that prosecutors have had more success with the legislation when cracking down on lower-level bribery committed by individuals.

Ford says that does not compensate for the fact that fraud specialists

• “envisaged a deluge of prosecutions for this new offence, brought in because there was apparently so much corporate bribery taking place”.

It is also telling, argue some lawyers, that one of the two prosecutions for a corporate failure to prevent bribery was secured against a dormant company.

• “It is easy to see companies becoming complacent about the offence in those circumstances,” warns Ford.

However, the youthful legislation has some prominent supporters. Eoin O’Shea, a partner at Reed Smith, says that despite the criticism around conviction rates so far,

• the Act was “a transformational piece of legislation” that is “replete with innovative features”.

Eoin O’Shea points to three core elements of the legislation:

1. it pioneered the concept of the “failure-to-prevent” offence for companies;
2. it created a wide-ranging test of jurisdiction meaning that more or less any company with any connection to the UK is in its frame; and
3. it required companies of any appreciable size to adopt anti-bribery policies and procedures.

That means, argues O’Shea,

• “they had to take bribery more seriously.”

Azizur Rahman, a partner at the law firm Rahman Ravelli, says that the Act was

• “a necessary piece of legislation”, but that it has not been used as extensively as its older counterpart in the United States — the 43-year-old Foreign Corrupt Practices Act.

While broadly positive about the UK legislation, Rahman says that

• “it has had its ups and downs and could arguably benefit from some fine tuning”.

• “We are still seeing companies agreeing a course of action to avoid prosecution, which then leaves individuals to fend for themselves. And then we have the contradictory situation when those individuals are either not prosecuted or not found guilty, meaning that no company or person has been convicted for the wrongdoing,” says Rahman.

He speculates that the scarcity of heavyweight prosecutions of corporations under the legislation could be the result of

• “a lack of resources for the Serious Fraud Office and other agencies — or because the act has actually prompted companies to place greater emphasis on compliance”.

Guidance to corporations and their executives contained in the Act has also triggered concern. Louise Hodges, a partner at Kingsley Napley, says that the concept of

• “adequate procedures” — which businesses must take against corruption — “continues to be considered as problematic as court decisions are fact-specific and there is no precedent or judicial guidance to date”.

However, Hodges says that there is little appetite among the authorities to provide more detail to smaller businesses, which “have been regarded as shouldering a disproportionate burden and costs to produce sufficiently adequate compliance systems”.

SOURCE = https://www.thetimes.co.uk/article/worth-of-the-bribery-act-under-scrutiny-vvcwfhr83