Bribery Act & Proceeds of Crime - Written by on Thursday, October 13, 2011 0:21 - 1 Comment

Beware: Partners, directors, managers & company secretaries of corporates in the cross hairs

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The Director of the SFO has recently highlighted the potential personal liabilities for Senior Officers under the Bribery Act.

Speaking recently he said:

“What we are also doing is looking at the role of individuals. The Bribery Act has a new offence aimed at senior officers of corporations who consent to or connive in bribery. I know that there are many who are worried about this offence, particularly if they happen to be Directors or Non-Executive Directors based in the UK and where their companies are high risk”

A focus on individuals

We have heard similar sentiments from others close to the SFO.  While many are predicting that the early Bribery Act cases will focus on Section 7 and the failure to prevent bribery offence Mr. Alderman’s statements and comments from others close to the SFO indicate that there is a focus on getting some early individual scalps using Section 14 of the Bribery Act.

Under Section 14 the definition of who is a Senior Officer and can be personally liable for bribery is broad.  It encompasses “…a director, manager, secretary or other similar officer…”

Under the section a senior officer can be personally liable if the organisation commits the offence of bribing, receiving a bribe or bribing a foreign public official if two conditions are met.

First, the senior officer must have a close connection with the UK.  Broadly this means that he/she must be UK a citizen or ordinarily resident in the UK (for the more detailed criteria click here).

Second, the senior officer must have consented or connived in the bribery.  We looked at the elements of this in more detail back in January in our article entitled Personal Criminal liability, the nuclear deterrent: What every director, senior officer & General Counsel needs to know.

Continuing his theme Mr. Alderman said:

“The…offence of consenting to or conniving at bribery in respect of senior officers…is an offence I am very interested in. I want to see suitable senior executives brought to a criminal trial where they know about bribery and have permitted it to continue.

Some have asked me what this means for Directors more generally and indeed non-executive Directors. What does it mean, for  example, for US citizens based in the UK who are Directors or non-executive Directors of corporations based in some very difficult countries? Will the Act apply to them? What about UK based senior executives of US corporations? What is their exposure? The Act says that they are within the scope of the offence if they have a close connection with the UK (for example, if they are UK citizens or ordinarily resident in the UK).

These individuals need to consider their own personal liability in respect of what their corporations do. Ultimately, I believe that this is absolutely right. They are responsible individually and with their fellow Directors for the ethical conduct of the corporation. If they are unhappy then they need to consider their position. If they cannot change the corporation’s approach then they may have to resign. If they continue then they run the serious risk of committing a criminal offence under the Bribery Act.”

In addition to these there are also personal liabilities which can be triggered under the Proceeds of Crime legislation if someone suspects that a corporate has criminal property (for example flowing from a contract obtained through a bribe).  This is something which we highlighted over a year ago here.

Spelling out the SFO position the Director of the SFO said:

“Society expects senior members of a corporation to be responsible for ensuring that there is a true ethical culture.  They have a key responsibility here. My view is that if they find that their efforts to do this meet with resistance or no success then they should consider resigning and telling us about their concerns. Expressing doubts about the company’s culture but remaining a highly paid officer would not be sensible because this would seem to be a model case of conniving in bribery for the purposes of the legislation.” [our emphasis]

If the SFO prosecute individuals for Bribery Act and related offences they will be walking a well trodden path.

They have recently prosecuted individuals flowing from a number of pre-Bribery Act cases and won custodial sentences.  In tandem the DOJ in the the US is targeting individuals.

In summary the SFO position is that if a senior officer is aware of unethical conduct within their organisation they need to try to change their organisations approach to doing business.  Failing that they should seriously consider resigning.

If Senior Officers do neither, and appear on the radar of the SFO, the SFO will have little sympathy and will be motivated to prosecute.

Faced with this scenario, Senior Officers who are concerned with their personal position would be well advised to take legal advice.

 

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Weekly Roundup | i-Sight Investigation Software Blog
Oct 14, 2011 5:02

[...]  Beware: Partners, directors, managers & company secretaries of corporates in the cross hairs: Barry & Richard, thebriberyact.com, talk about the potential personal liabilities for Senior Officers under the Bribery Act. [...]

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