International - Written by Barry & Richard on Friday, June 24, 2011 0:11 - 0 Comments
Private sector bribery – an SFO target?
This has created some debate. Prominent commentators have questioned the enforcement approach of the SFO in connection with Private Sector bribery.
Howard Sklar has even suggested that US FCPA compliant corporates could take a commercial decision to focus on government bribery, doubting that the SFO will seek to prosecute private sector bribery pointing to the US focus on prosecuting government bribery.
Richard Alderman recently spoke of his awareness of the issue. Dealing specifically with the subject of private sector bribery he had this to say:
“A lot of the discussion so far has been about foreign public officials…but straightforward private sector to private sector bribery has been less evident in the discussions.”
In the same speech Mr. Alderman indicated that the SFO would want to look at cases of commercial bribery. A commercial case last week demonstrated the SFO’s interest in prosecuting commercial bribery. In a mortgage fraud case a surveyor Ian McGarry was sentenced to 7 years imprisonment. The SFO summary of the case states:
“Ian McGarry accepted bribes from the Afzal brothers totalling over £1 million, including lavish overseas holidays in Dubai, an Aston Martin car, cash in brown paper envelopes and the purchase of three properties in London. In return he prepared inflated valuations for each property which the lenders relied on when advancing the mortgages. In one instance McGarry valued a property at £19 million that had been purchased for just £1 million. This represents an overvaluation of 1800%. In another instance, McGarry produced three different valuations of the same property, on the same day, for three separate financial institutions.
In sentencing in McGarry, HHJ Beddoe stated that McGarry was vital to the fraud, which could not have happened without him and that he had betrayed the trust of his former employer Dunlop Hayward Lorenz and the banks that paid him. The Judge was satisfied that McGarry knew from the outset that the leases referred to in his valuation reports and the rental income from them were “complete works of fiction”. The Judge concluded that McGarry behaved in a totally dishonest way for period of two years and his involvement was motivated by simply “rampant greed”.”
We are not convinced that private sector bribery will be a legal backwater.
On the other hand, we are certain that if commercial bribery does occur the SFO will take a very dim view of any organisation which takes the position that on the basis it concludes that commercial bribery is less likely to be prosecuted it does not seek to impose adequate procedures to prevent it.
Image © Crown Copyright 2011