Adequate Procedures, News & what's on - Written by on Thursday, December 9, 2010 16:53 - 0 Comments

The Adequate Procedures defence: top tips from the SFO

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Speaking today at the Ninth Corporate Accountability Conference Richard Alderman, Director of the Serious Fraud Office talked about its open door approach to corporates who have questions about compliance under the new Bribery Act and in particular the new offence of Failure to Prevent Bribery.

Under the new law an organisation which has Adequate Procedures to prevent bribery is not guilty of the offence of Failure to Prevent Bribery.  Some commentators have claimed that this defence is illusory.  Their argument goes that if it is found that a company has paid a bribe, by definition, it cannot have had Adequate Procedures to prevent bribery.

We disagree and are pleased to see Mr. Alderman strongly refute any such suggestion today saying “Adequate Procedures are a complete defence to a charge and not just a mitigation of a penalty”.

The million dollar question then. What are Adequate Procedures?

Mr. Alderman underlined that the SFO was not looking at a check the box system of compliance.  Instead it expects an overall approach to business ethics and a clear set of principles which the Ministry of Justice draft guidance set out.

Highlighting some key points the SFO looks for he said:

  1. “We are looking for top level Board commitment to a genuine anti-corruption culture. And this is something that has to be manifested in deeds as well as words. If that commitment is not there, then it does not matter how good the documentation is. That top level commitment is essential.
  2. That commitment has to be to a zero tolerance approach to bribery.  We stress that bribery is a crime.  It is unethical and it is corrosive both to the society receiving the bribe as well as to our own society.
  3. We look to see how frequently the procedures are monitored. We learn for example that corporates can be very good at setting up lots of procedures but not quite so good at regularly monitoring them to see how they are being carried out in practice.
  4. We also talk about the type of monitoring that is needed. Gold standard corporates for example with a really good understanding of what is happening in their business can do this on a risk basis. Others might not be at that stage yet although we will encourage them to do so.”

The SFO’s engagement strategy with corporates is to be applauded. The Director of the SFO is on the record saying that he is not only interested in concentrating on investigations and prosecutions but also, importantly, on prevention.

The SFO won’t give you a certificate that an organisation’s procedures are adequate but they will discuss them and highlight areas which in its view need work. Sensible stuff.

Image © Crown Copyright 2010

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