Bribery Act & Proceeds of Crime - Written by on Monday, November 26, 2012 22:50 - 0 Comments

SFO Director on SFO bribery work, a reality check & a note to impatient critics

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At the FCPA National Conference in Washington some days ago we spoke to a DOJ prosecutor who said that the big question was whether the UK would do anything with the Bribery Act.

Speaking to the House of Commons Justice Committee, this month, David Green gave the answer.  Answering the following question:

“…you say that there is “considerable public interest”—I am sure there is—in the use of powers under the Bribery Act 2010. Without specifying details, would you give us some indication of how many investigations you are currently undertaking into potential offences under the Act?”

He highlighted a piece of legislation we flagged over a year ago, namely Section 2A of the Criminal Justice Act 1987.

The Director said:

It is important to understand that section 2A of the Criminal Justice Act 1988 added a pre-investigation power in relation to bribery and corruption, which enables us basically to look at the facts and assess them, and to see whether there is material that would justify, in law, my launching a full-scale investigation. If I may, for the sake of clarity, I shall call those pre-investigation investigations “projects”.

From recollection, we have seven cases that are in the project phase. What will come of them I cannot tell you; I really do not know, but if we can we will turn them into investigations if we are justified in doing so. We have another half dozen cases that relate to pre-Bribery Act law; again, they are in the same phase.” [our emphasis]

Recap (we get all legal…)

Section 2A was brought in in 2008 in an amendment brought in by Section 59 of the Criminal Justice and Immigration Act 2008.  Schedule 1 of the Bribery Act makes these amendments:

“Criminal Justice Act 1987 (c. 38)

2.In section 2A of the Criminal Justice Act 1987 (Director of SFO’s pre-investigation powers in relation to bribery and corruption: foreign officers etc.) for subsections (5) and (6) substitute—

“(5)This section applies to any conduct—

(a)which, as a result of section 3(6) of the Bribery Act 2010, constitutes an offence under section 1 or 2 of that Act under the law of England and Wales or Northern Ireland, or

(b)which constitutes an offence under section 6 of that Act under the law of England and Wales or Northern Ireland.”

This deals with the not unusual evidential problem early on in bribery investigations and needs to be seen in context.

Normally in order to begin a (non bribery) investigation in to a suspected offence the SFO Director would need to be satisfied on reasonable grounds that it involved serious or complex fraud (the statutory test under section 1 of the 1987 Act). This initial step unlocks access to the armoury and the SFO can proceed, for instance, to use its compulsory evidence gathering powers under Section 2 of 1987 Act.

The problem in particular in cases of international corruption is that there may NOT be enough evidence for the Director to make a decision to start an investigation.

Without Section 2A gathering more evidence, to make such a decision, would be difficult without the powers to compel production of documents, or require answers to questions, or search premises that general section 2 powers could later provide.

Section 2A fixes this.

Section 2A, what it can and cannot do

The section applies to corruption cases under sections 1, 2 or 6 of the new Act (mirroring similar application under previous laws) – though not Section 7 (see above).

It is designed to allow the SFO to undertake some pre-investigation work or vetting of these cases (or ‘projects’ as the new Director dubbed them) by using powers under section 2 of the 1987 Act to gather evidence under compulsion – so refusals by recipients to cooperate can be lead to separate offences.

There are a couple of other features of section 2A worth noting.

First, the hurdle for using section 2A is otherwise low. The Director can deploy the power “where it appears to him that conduct [amounting to a section 1, 2 or 6 offence] may have taken place“.

However, it is not intended to give a carte blanche to speculative fishing expeditions and the Director will need some basis for considering that actual corruption may have occurred. A report passed on from SOCA or the Directors new ‘intelligence’ gathering initiative may be good examples.

Second, the use of the power under section 2A must be proportionate. The Director must be satisfied it is “expedient” to use compulsory powers for the limited purpose of determining whether to open an investigation. When the Director has sufficient evidence to make the determination, evidence gathering under s2A should cease.

We’re not surprised that it is being deployed.

There will be some who criticise the SFO for hardly being off the starting blocks when it comes to bringing a prosecution under the Bribery Act.

Before the Justice Committee the new Director acknowledged those impatient for a grandstand Bribery Act prosecution:

“Understandably, legislators, journalists and, indeed, members of the public may say, “Well, you have this marvellous new Bribery Act. What are you doing about it?” As a kind of private project, I have been looking at the fortunes of the FCPA—the Foreign Corrupt Practices Act of the United States. That was enacted in the late 1970s, and the first prosecution was in 1981. It did not get any teeth, in a really meaningful way, until the penalties were enhanced, and so forth, in the 1990s. I am not saying for a moment that you are going to have to wait 20 years for your first Bribery Act prosecution, but things are in hand and no one would be keener than I would to see a good, solid Bribery Act prosecution. We are working on it.”

NB

The quotes in this piece come from the uncorrected transcript of a hearing before the Justice Committee.  At the time of writing the participants have not had the opportunity to correct the record. The transcript is not yet an approved formal record of those proceedings.

 


 

 

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