Since its introduction in July 2011, the UK's Bribery Act 2010 ("the BA") has become an often cited piece of legislation.
Definitions of financial or other advantage, the bringing about improper performance of a relevant function or activity and adequate procedures to prevent to commission of a bribe have been subject to much discussion – no doubt within the context of your own business activities.
Long predating the BA however, there has been an international focus upon the bribery of foreign officials in international business transactions.
Following a recent review of this area, a report from the Organisation for Economic Cooperation and Development ("OECD") looks at a number of issues in this area such as detection, enforcement, and international cooperation.
Although we would recommend a detailed review of this report for anyone interested in this area, a key summary of findings are contained below.
Background - the OECD Convention
Predating the BA, the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions ("the OECD Convention"), established legally binding standards to criminalise bribery of foreign public officials in international business transactions and provided for a host of measures to make this effective.
Building upon this, in 2009 those parties to the OECD Convention then agreed to put in place further measures to reinforce efforts to prevent, detect and investigate foreign bribery with the adoption of the OECD Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions.
The OECD Report
The report into the implementation of the OECD Convention ("the Report") focussed upon those steps taken by the UK since its last review of this area in 2012.
Although looking at implementation as a whole, the Report also highlights key enforcement action so as to demonstrate the ultimate success of enforcement in this area. In recent years we have seen:
- the UK’s first Deferred Prosecution Agreements (Rolls-Royce, Standard Bank and XYZ Ltd);
- first conviction of a corporate for foreign bribery after a contested trial (Smith & Ouzman);
- first conviction under section 7 of the BA for a corporate failure to prevent bribery (Sweett Group); and
- one additional company which has been subject to civil enforcement action for foreign bribery (Oxford Publishing Limited).
In line with our own understanding, it is also reported that further bribery prosecutions and pre-charge investigations are underway.
Despite the above, the OECD Working Group cite key issues in terms of the detection capabilities and enforcement of foreign bribery laws in the UK.
Based upon reports by the Serious Fraud Office, the most common sources of detection in ongoing foreign bribery investigations are:
- company self-referrals (5);
- reports from members of the public, victims or witnesses (1);
- UK government agencies; such as referrals from British Embassies through the Foreign and Commonwealth Office to the SFO (1);
- other UK law enforcement agencies; including joint intelligence development with the National Crime Agency (2); and
- whistleblowers or ex-employees of a suspect corporate (2).
Of those concluded criminal/civil foreign bribery cases (11 in total), the number resulting from each of the above sources are contained in brackets above. Triggering 5 of the 11 concluded matters, clearly corporate self-reporting comprises a key source of detection.
The OECD consider that a number of potential sources of detection remain under-exploited. These include:
- An increased incentive to self-report by ensuring that the risk of detection is real and present.
- Enhanced anti-money laundering measures to improve detection of foreign bribery. These include the proposed reform of the system for reviewing and acting upon those many suspicious activity reports received by the National Crime Agency's UK Financial Intelligence Unit (more than 380,000 in 2014/2015) – current procedures considered to be falling short of their potential.
- A review by tax administration of its methods and capacity to detect and report foreign bribery, particularly detection capability within HMRC. This criticism is not a new one, with the suggestion for effective cross-agency intelligence sharing between HMRC and enforcement bodies having been raised in previous reviews.
- Increased protection for whistleblowers. Two significant foreign bribery cases were initiated by whistleblower reports and OECD consider that further protections need to be provided; both under the law and in practice. In particular, it is recommended that the UK evaluate those whistleblowing provisions within the Public Interest Disclosure Act 1998 (PIDA) with a view to possibly amending and improving them.
- Considering a stronger role to be played by the UK’s Crown Dependencies and Overseas Territories in detecting and enforcing foreign bribery.
Key issues identified in respect of enforcement relate to:
- Scotland’s practices and frameworks for foreign bribery enforcement which could be brought in line with those in place in England and Wales, along with improved communication between authorities;
- The uncertainty about the SFO’s existence and budget which is considered to be harmful, particularly given the SFO’s prioritisation of foreign bribery cases and demonstrated expertise.
The OECD report is focussed upon those further actions to enhance those steps already taken by the UK to become a major enforcer of foreign bribery offences.
Having made a number of recommendations, the Working Group has invited the UK to submit a written report on the implementation of these recommendations and issues for follow-up in two years (i.e. in March 2019).
Over the next two years therefore we are likely to see consideration at least given to many of those areas identified by the OECD. The Report may serve as a useful agenda for developments in the coming years.
Similar to offences of domestic bribery, many of those recommendations relate to issues of detection capability; not just obtaining the information in the first place, but also improving cross-agency processing of relevant information. It may well be that in the coming years we see significant improvements in line with these proposals.
Until then however, apparent from the Report is the significant role of corporate self-reporting. Next month's edition of Crisis Response Insights will therefore focus upon this mechanism and analyse the various considerations for any company considering making such a report.
Should you have any questions regarding any of the above, please contact a member of the DWF Regulatory, Compliance and Investigation team.
Authors: David Egan and Nicholas BarkerThis information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.