Extractive (incl. oil & gas), Sectors - Written by on Wednesday, December 17, 2014 5:47 - 0 Comments

BREAKING: Merry Christmas – Scotland’s 2nd civil settlement in a corporate bribery self-report announced

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Stocker ThomasBy Tom Stocker, Partner Pinsent Masons LLP Corporate Crime team

Scotland’s Civil Recovery Unit (part of the Scottish Government) announced this morning that it has recovered £172,200 from International Tubular Services Limited (“ITS”), an Aberdeen oil & gas service company, after ITS admitted that it had benefited from corrupt payments made by a former Kazakhstan-based employee to secure additional contractual work from a customer in Kazakhstan. The £172,200 represents the total profit made under the corrupt contract in Kazakhstan.

ITS reported their discovery of the corrupt payments to the Crown Office & Procurator Fiscal Service (Scotland’s public prosecutor) in November 2013 under a Scottish self-reporting initiative which has operated since 1 July 2011. The settlement guarantees that there will be no criminal enforcement against ITS in Scotland in respect of the matters reported.

Linda Hamilton, Head of the Civil Recovery Unit, said:

“In appropriate circumstances, the self-reporting initiative allows for companies to accept their involvement in corrupt practices, put in place effective systems to prevent it from recurring, and repay the illegitimate profits.”

This is the second corporate bribery case resolved in Scotland under a self-reporting initiative run by the Crown Office & Procurator Fiscal Service. The first corporate settlement was in November 2012 when Abbot Group Limited, another Aberdeen based company, admitted it had benefitted from corrupt payments and settled for £5.6m.

There are other corporate self-report cases in Scotland in the pipeline.

Scotland’s self-reporting initiative allows commercial organisations to self-report suspected bribery form which the business has benefited. In return for self-reporting, the Scottish public prosecutor and Scotland Civil Recovery Unit will consider resolving any corporate liability by way of a civil settlement instead of launching a criminal investigation against the company.

A civil settlement is not guaranteed and will only be offered where a company makes a full admission of wrong doing following an internal investigation, demonstrates that it has or will put in place an effective anti-bribery compliance programme, and co-operates with any criminal investigation into any individuals who may have committed offences. Any self-report requires to be made by a solicitor on the company’s behalf.

The initiative is due to run until 30 June 2015 when it will either cease, be extended for another year or be rolled into wider initiative such as the potential introduction of corporate deferred prosecution agreements into Scotland.

ITS should be commended for the courage it showed in self-reporting. It is not a step that any company takes lightly and it is an onerous and, at times, uncomfortable process.  ITS will undoubtedly have rooted out any past issues and it will now have it place a robust anti-bribery compliance programme.

The Crown Office & Procurator Fiscal Service also deserves recognition for the proactive and pragmatic approach that has been taken to the enforcement of bribery laws in Scotland. The self-report was dealt with expeditiously and a significant sum of money has been recovered.  This civil settlement demonstrates that the Crown Office & Procurator Fiscal Service are serious about enforcing bribery laws against companies and that they wish companies to self-police and voluntarily disclose wrongdoing by offering the carrot of a potential civil outcome instead of criminal enforcement.

The case sends out a clear message to Scottish companies with any bribery concerns that self-reporting should be considered. It enables misconduct to be disclosed thereby avoiding the commission of other offences such as making false statements to a company’s auditors. Self-reporting in Scotland is a genuine opportunity to resolve matters on a civil basis and for misconduct to be appropriately addressed and dealt with in a reasonable timeframe.

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