The UK Serious Fraud Office issued a press release this morning announcing a revised policy on facilitation payments, business expenses and corporate self-reporting. The guidance was issued in order to ensure consistency throughout the various prosecuting authorities, to meet OECD recommendations, and to re-emphasize the SFO’s role as investigator of serious fraud and corruption. The press release indicates that the only significant change between the previous and the new guidance consists in the removal of the SFO’s policy on self-reporting.
The SFO states that it “encourages corporate self-reporting, and will always listen to what a corporate body has to say about its past conduct,” but that this is no guarantee that a prosecution will not ensue. It is not, as stated in the SFO’s Questions and Answers, the role of that office to provide companies with advice on their future conduct. The SFO further explains that “for a self-report to be taken into consideration as a public interest factor tending against prosecution, it must form part of a ‘genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice.’ Self-reporting is no guarantee that a prosecution will not follow. Each case will turn on its own facts.”
The guidance on facilitation payments leaves no room for doubt that under UK law, a facilitation payment is a bribe: they were illegal before the Bribery Act came into being, and they remain illegal. However, individuals and companies will be prosecuted for making facilitation payments if it is in the public interest to prosecute, and there is a reasonable prospect of conviction. Undoubtedly, this represents a change from previous policy, as the SFO will, it appears, no longer take into consideration the policies and practices a company has in place regarding such payments.
The new statement restates the UK outlook, that hospitality is part of doing business, and that there is nothing criminal about bona fide promotional expenses. Disguising bribes as business expenses is illegal under the Bribery Act, and it will be up to the SFO to decide whether to prosecute. The SFO will prosecute if “(a) the case is a serious or complex one that falls within the SFO’s remit and (b) the SFO concludes, applying the Full Code Test, that there is an alleged offender that should be prosecuted.” This also represents something of a departure from previous guidance, as, again, the SFO will no longer weigh a company’s standing rules about gifts and entertainment. As in the case of facilitation payments, the SFO has the option of pursuing recovery of benefits that have been illegally bestowed, by using the Proceeds of Crime Act of 2002.
A decision to prosecute must be based on The Code for Crown Prosecutors and on the Guidance on Corporate Prosecutions. The former, repeating an oft-cited statement made by former UK attorney general Sir Hartley Shawcross in 1951, instructs that “there should be a prosecution ‘wherever it appears that the offense of the circumstances of its commission is or are of such a character that a prosecution in respect thereof is required in the public interest.’” A number of factors to be weighed by prosecutors in reaching a decision whether to prosecute are listed in the Guidance.
In recent months, the SFO has come under criticism for not prosecuting aggressively enough under the UK Bribery Act (in this blog as well), and for failing to provide clear guidance on prosecution and penalties. Now it seems that the SFO is getting serious about corruption.