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Our top 5 predictions for the 1st year of the Bribery Act

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Our track record on this is good.

We called the delay on the guidance, scoffed at any suggestion the Bribery Act would be canned and called the certain future of the SFO when others thought it was dead in the water.

Our predictions for the next twelve months then?

1. The calm before the storm

The SFO will wait for some time before moving and using their new powers under the Bribery Act.  In order to investigate Bribery Act offences the SFO will wish to establish a pattern of conduct after July 1st which demonstrates that a business has not altered it’s approach following the Bribery Act.

That said, Whitehall can now justifiably say to the SFO that it must deliver on its rhetoric and demonstrate itself to be an effective investigator and prosecutor.  As a result the SFO has little option but to actively pursue investigations under the Bribery Act as soon as it reasonably can and as vigorously as possible.  We expect this to be later this year in Q4 and no later than Q1 next year.

2. Focus on international companies

The guidance issued by the Ministry of Justice suggested that a UK listing “in itself” would not give rise to Bribery Act liability.  This led to some speculating that the SFO would not focus on international companies.  We disagreed (we explained why in our piece entitled “A mirage? The Bribery Act ‘exemption’ for overseas companies & subsidiaries”).

On the day the Bribery Act enters into force the Director of the SFO has scotched any suggestion he will be going easy on international companies. In today’s Daily Telegraph article (which is well worth the read) asked if companies listed in the UK potentially fall under the remit of the Bribery Act the SFO Director said:

“Exactly. You bet we will go after foreign companies. This has been misunderstood. If there is an economic engagement with the UK then in my view they are carrying on business in the UK.”

3. Expect sector investigations

Unlike the DOJ the SFO does not undertake industry sweeps and carry out sector investigations.

But.

Over the last year the SFO has warned specific sectors that it works closely with the US investigators and prosecutors – who do

We anticipate that the SFO will work closely with its overseas counterparts and in particular the US DOJ and SEC.

We anticipate that twelve months from now some of the speeches that the SFO have given over the last year or so will be looked back on as prophetic warnings - for example this one a year ago to the medical sector.

Other examples may be developments as recently as the last few days which indicate to us a potential SFO focus on the financial services sector. UDPATED: The SFO has indicated it is ready to get involved in the Sovereign Wealth Fund enquiry in the US. Finally, the FSA will also police the Bribery Act through its oversight of regulated financial services firms pointing to a focus on the financial services industry.  The FSA does not need to find bribery to punish – it simply needs to demonstrate that it could happen as a result of inadequate systems and controls.

4. A focus on UK money laundering law

Over the course of the last year or so commentators have focused on the Bribery Act.  Unsurprising as it is a deceptively simple piece of legislation and short.  We have highlighted over the course of the last year the importance of the UK’s money laundering legislation as a tool in the SFO’s anti-corruption toolkit.

While the SFO have spoken of this for well over a year the SFO recently said that UK money laundering legislation had been overlooked in the context of bribery.  We expect the SFO to target bribery using money laundering laws.

Under UK money laundering laws criminal liability and sanctions (for example the confiscation of assets) can extend beyond those who have liability for Bribery Act offences.  We anticipate that the SFO will use UK money laundering laws to prosecute individuals where there is bribery as we wrote about here.

5. An opportunity to wipe away the sins of the fathers

The next twelve months represents an interesting time.  On one hand, the SFO has staked its reputation on being a sensible and approachable regulator. On the other it needs to demonstrate results quickly.  On a third hand it must not undermine the work it has done in its unprecedented engagement with UK PLC.

On July 1st and for a short period of time afterward companies will be in the position where they really do start with a clean slate.

We believe that the SFO keen to live up to its promises to industry and government is likely, if engaged in the right way, to be more well disposed to a corporate with a historical problem for a short time after July 1st than in several years time.

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5 Comments

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Stephen
Jul 1, 2011 1:54

Section 16 of the act is interesting ‘..individuals in public service of the Crown…’ Having worked for 13 years in FSU and later Africa, where 80% of contracts awarded (at least) are corrupt, where Dfid and World Bank officials consistently turn their backs on corruption for fear of upsetting their hosts, the new law offers hope. Bidding and winning overseas contracts necessitates some form of facilitation payment or more in most countries, (transparency international map of corruption reveals the only 2 places firms can safely do business, Greenland and Canada, although I think they made a mistake with Canada). Where British firms bidding for Dfid/ World Bank donor funded contracts believe some form of corruption has taken place (and it will have done of course), then officials of Dfid and World-Bank are obliged to investigate, as failure to ..”prevent and/or report…” corruption is an offence under which they can now be prosecuted in the UK. My prediction is that UK firms working in overseas countries and bidding for international contracts will now (if they’re wise), use this law by threatening to take the relevant “implementing entity” to court in the UK unless they investigate the evaluation process and award of contract thoroughly. This will cause inevitable delays in contract awards, threatening the distribution of Aid through-out the entire developing world, but will be necessary to protect UK overseas business interests. The donors Dfid/ World Bank must be concerned about these developments, but they are long overdue. It is about time staff for Dfid and British Embassy Officials and those of the World Bank in particular, were forced to drag themselves from the Gymkhana, beach or garden party, to do something useful, face up to their hosts, question how UK taxpayers money is being spent, and stand up to their political masters (especially the World Bank political desk), who would much prefer to the whole overseas aid business not be discussed. My second prediction is that the lawyers of Chancery Lane will be walking around with great big smiles on their faces looking forward to the next 12 months and gearing up for the increase in new business the Bribery Act 2010 will provide.

Howard@OpenAIr
Jul 1, 2011 15:14

I agree that the SFO has to move quickly. I’m putting the over/under at December 15th. I’m taking the under. What do you say? If I win, the only alcoholic drink you’re allowed for a month is Sam Adams beer. If you win, I’ll drink nothing but Guinness. At room temperature. Do we have a bet?

High Tide: UK Bribery Act Now In Effect | Rishwat – Campaign against Corruption in India
Jul 2, 2011 7:27

[...] has its top-five predictions for the law’s first year. Tom Fox on the Bribery Act, and the FCPAProfessor weighs in as [...]

Barry & Richard
Jul 2, 2011 11:30

Hi, we’re also betting on under so no dice. BTW any bet would have been conditional on evidence that you ate your hat after the last time we wagered anyway…

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Jul 5, 2011 4:54

[...] there is a bit a waiting, a calm before the storm, until we hear the first government action. Companies with a UK presence have most likely taken a [...]

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