Bribery Act & Proceeds of Crime - Written by on Tuesday, March 20, 2012 2:41 - 0 Comments

“Government driving out convicted crooks from procurement process”

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By Stacy Keen, Pinsent Masons LLP Glasgow (our Scottish correspondent…)

The Scottish Government has announced that regulations will come into force on 1 May 2012 which include a mandatory requirement that public bodies and utilities exclude potential tenderers from the procurement process if they have been convicted of an ‘active bribery’ offence or a ‘serious organised crime’ offences.

Public bodies and utilities will not however be required to exclude a potential tenderer that has been convicted of a section 2 (being bribed) or section 7 (failure to prevent bribery) offence, although they will have the discretion to do so.

This broadly ties in with the approach south of the border.  A ministerial statement was published on 30 March 2011 clarifying that a conviction for failure to prevent bribery under section 7 would not automatically lead to exclusion from public work contracts.    However, unlike in Scotland, it would appear that a conviction under section 2 of the Act may remain a ground for mandatory exclusion in England and Wales.

Scottish Justice Secretary Kenny MacAskill said that “the introduction of these new regulations is a further sign that we don’t want crooks and gangsters getting their hands on public sector contracts and cash”.

So, what will these new regulations say?

The Scottish Government has yet to release a draft of the regulations.  However, in a Consultation Report issued at the end of January 2012 the Scottish Government indicated that it intended to:

provide for the mandatory exclusion of tenderers if the public body or utility has actual knowledge that the business or its directors or any other person who has powers of representation decision or control over it, has been convicted of”:

– bribery within the meaning of section 1 (bribing another person) or 6 (bribing another person) of the Bribery Act 2010; and

– an offence relating to involvement in serious organised crime (section 28) and directing serious organised crime (section 28 and 30 of the Criminal Justice and Licensing (Scotland) Act 2010).

No guidance is given on what functions or level of seniority will fall with the definition “person with powers of decision, representation or control” (taken from a Directive of the European Parliament and of the Council), but it is likely to include directors and senior managers.

Given that the Public Contracts (Scotland) Regulations 2006 and the Utilities Contracts (Scotland) Regulations 2006 exclude potential tenderers regardless of the date of the conviction, there will remain automatic debarment for those convicted of certain offences under the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906, the Criminal Justice (Scotland) Act 2003 and for the common law of conspiracy relating to participate in a criminal organisation.

A welcome development?

Given that debarment could be the equivalent of a corporate death sentence for some businesses, this clarity from the Scottish Government on the relationship between the procurement legislation and ‘corporate crime’ should be a welcome development.

However, as we reported in April of last year there are a number of questions about how discretionary debarment will be exercised, and these still remain unanswered.  The proposed regulations do not address:

– How far will the public body need to go in investigating the circumstances of a conviction prior to exercising its discretion?

– Will whether or not the individuals involved remain employed by or associated with the tenderer by a factor?

– What length time (if any) must pass from the date of a section 7 conviction before the public body will not exercise its discretion?

– Will self-cleaning measures be taken into account?

To avoid potential challenges around whether or not a public body has exercised its direction in a reasonable and proportion manner, many tenders are likely to stipulate that those with convictions under section 7 need not apply.

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