Bribery Act & Proceeds of Crime - Written by on Thursday, March 15, 2012 0:19 - 0 Comments

Risk assess the pros and cons of Self Reporting

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The Bribery Act throws up interesting problems.  Most corporates will put in place ‘Adequate Procedures’ to prevent bribery.  Successful implementation of these procedures will sometimes lead to awareness of a potential bribery problem.

Continuing the ‘Adequate Procedures’ theme businesses seeking to be Bribery Act compliant will investigate the problem to find out if it is likely to be real or imagined.

If the problem is real (or ‘suspected’ to be real) the question arises: what should be done?

For some the concept of voluntarily notifying the enforcement authorities of criminal activity is regarded or perceived to be as akin to suicide for the business.  Who wants to kill the goose that laid the golden egg?

Yet, the factors involved in deciding whether or not to inform enforcement agencies about bribery are nuanced and important.  Failure to analyse, consider and deal with these problems correctly can lead to individuals committing further offences under the Proceeds of Crime Act.  That is of course their choice.  But it is best to do so understanding the issues.

Corporate Boards make decisions daily balancing corporate risks with economic and reputational consequences for the business.  Getting the decision wrong can result in losing the corporate money and the individual getting the sack.  However, the increasing ‘regulatory’ (lets not kid ourselves) criminal law consequences which flow as a result of the Bribery Act for Directors & Officers raise the stakes.

These risks are not just the Bribery Act offences but a range of additional criminal law violations which will likely be triggered (or at least need to be considered) in the context of a bribery case.

We have written on numerous occasions about the impact of UK money laundering laws on corporates and individuals.  There are various other obvious adverse consequences.  The Director of the SFO recently laid out the SFO’s analysis of the downside risks for both corporates and individuals:

Cons for corporates

“…Neither the DoJ nor the SFO will be sympathetic to a corporation that has to disclose that there has been at least one earlier case and that the corporation decided not to report it.

Our money laundering law as well is very powerful.  There are offences that will be committed in dealing with the proceeds of criminal conduct.  There are potential money laundering offences in respect of the corporation if it retains (as it no doubt would seek to do) the benefit of the corrupt contract or other benefit.  The shareholders will not want to wake up one morning to see that the DoJ and the SFO are investigating the corporation for corruption and money laundering.  This is serious stuff.

Another consideration for the corporation is whether the SFO or the US authorities will be contacted by a whistleblower…The question for the corporation is whether somebody else will report it to us.  If so, it would be far better if they talked to us first.

The final consideration is that sometimes these issues can unravel after many years.  There are examples of this.  It does not get better.”

Cons for individuals

There are also consequences at the individual level.  Indeed something I stress to senior executives is that they must be very careful not to turn a corporate criminal issue into a personal criminal issue.  If they do this, then they are at risk here in the UK.  They are also, of course, at risk of being extradited to the US to stand trial there.  This should make executives think very carefully about what they do.

These executives are running the risk of committing offences under the Bribery Act.  This could be because they have consented to or connived in the bribery.  They have also potentially committed personal money laundering offences, together with offences of concealing criminal conduct and perverting the course of justice.  Again this is serious stuff.  It is also avoidable if executives take sensible and prudent decisions.”

The cons for corporates are largely economic.  This impact should not be understated – an organisation could go out of business as a result of the economic impact of a bribery investigation and prosecution.

The cons for an individual are also economic (with potentially similar catastrophic consequences) but importantly combined with the real risk of prison.

Don’t exclude this important con when weighing up the Pros and Cons.

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