Bribery Act & Proceeds of Crime - Written by on Sunday, April 17, 2016 3:22 - 0 Comments

Civil Settlement for Scottish Company which self-reported violations of Section 1 & Section 7 of the Bribery Act highlights difference of approach North of the Border

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thistlesThe Crown Office & Procurator Fiscal Service, Scotland’s Prosecution Service, recently announced the Civil Settlement of violations of the Bribery Act under Sections 1, and 7 of the Bribery Act by a corporate.  We have extracted the press release put out by COPFS below.

Scotland has a separate legal system to England and Wales and the Deferred Prosecution Agreement regime does not operate in Scotland. As a result, Civil Recoveries remain the only option for Scottish prosecutors to resolve bribery cases (short of prosecution).

In contrast in England & Wales Deferred Prosecutions Agreements have effectively displaced the use of Civil Recovery Orders to resolve bribery cases short of prosecution. The SFO has taken an increasingly hard line on enforcement and resolution.

This latest Scottish case is notable as it is the first case where a corporate has settled and accepted responsibility for not only failing to prevent bribery under Section 7 but also for active bribery under Section 1 of the Bribery Act.

Long term readers will be familiar with the distinction.

To recap, excluding the Failure to Prevent Offence under the Bribery Act, companies can only be culpable of bribery if the ‘directing mind’ of the company is mixed up in it which is generally acknowledged to be a high evidential bar.

The COPFS Statement issued reported:

“The Civil Recovery Unit will recover £2.2 million, under an agreed civil settlement with a Glasgow-based company which accepted that it had obtained business through unlawful conduct.  The recovered funds will be used for community projects across Scotland.

Braid Group (Holdings) Limited (“Braid”) is the parent holding company for various subsidiary companies, including Braid Logistics (UK) Limited (“Braid UK”), which is based in Glasgow.  Braid UK specialises in freight and logistics.

Braid became aware of potentially dishonest activities in relation to two Braid UK freight forwarding contracts in 2012.  The company initiated an investigation, which revealed there had been breaches of the terms of the Bribery Act 2010.

The first contract related to an agreement between a Braid UK employee and the employee of a customer.  An account was used as a means for unauthorised expenses to be incurred by the customer’s employee and was funded by the dishonest inflation of invoices provided to the customer.  The expenses included personal travel, holidays, gifts, hotels, car hire and cash.

During the investigation into the above contract, separate bribery offences in relation to a second customer were discovered.   A profit sharing arrangement with a Director of the customer company had been operated, where the profit achieved on services provided to the customer was split, in return for orders continuing to be placed with Braid UK. As a consequence of the investigation, Braid voluntarily made a self-report to the Crown Office and accepted that they failed in their responsibility to prevent this happening, similarly accepting responsibility for a contravention of Sections 1 and 7 of the Bribery Act 2010. 

Under the self-reporting initiative, the case was deemed suitable for civil recovery settlement based on the gross profit made in relation to the relevant contracts. Although these two cases were confined to its UK subsidiary, Braid has taken steps to implement new policies and training throughout all of its subsidiaries to ensure that no unlawful conduct can take place in the future.  In view of any resulting criminal investigation into particular individuals (as distinct from the company that is the subject of this civil settlement) that may follow, it is not possible to provide any further details of the corrupt payments. 

Linda Hamilton, Head of the Civil Recovery Unit, said: “It is vital to the health of the Scottish economy that any form of bribery or corruption is identified and stopped as soon as possible.

“Only in this way, can businesses who play by the rules flourish, without competing with those who obtain commercial advantage through unlawful means.

“Braid is to be commended for self-reporting the unlawful conduct to Crown Office.  The money recovered under the self-reporting initiative will be used in community projects across Scotland.”” [our emphasis]

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