All you need to know about self reporting, Extractive (incl. oil & gas), Financial Services, Medical (incl. medical device & pharma), Money laundering - Written by Barry & Richard on Friday, July 1, 2011 0:48 - 5 Comments
Our top 5 predictions for the 1st year of the Bribery Act
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.
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.