Case Study Overview and Analysis of the UK Bribery Act Professor Rob McCusker Transnational Crime Analyst

Transcription

1 Case Study Overview and Analysis of the UK Bribery Act 2010 Professor Rob McCusker Transnational Crime Analyst

2 Context UK signatory to Paris Convention of the OECD Under obligation to impose extra-territorial jurisdiction Persons (including companies) who bribe officials overseas Two options were open Domestic offences with extended jurisdictional ambit to bribery of overseas officials Separate offence Opted for the latter

3 Context Corporate criminal liability for any offence Difficult to establish Identification doctrine Conviction of company dependent upon Possibility of establishing there was single, highly placed individual Creating and enacting new offences under the Bribery Act 2010 (s.1 bribing another person; s.2 accepting a bribe and s.6 bribery of foreign public official) still left UK adrift from OECD Paris Convention Al-Yammamah 1993 arms deal renewal - UK and Saudi Arabia 10 billion Talks stalling Saudi Arabia wanted SFO investigation into alleged bribery by BAE of Saudi Arabia Royal Family stopped December 2006 UK government terminated SFO investigation» Section 7 Failure of commercial organisations to prevent bribery

4 Context Key objection Offence does not give rise to criminal liability for corporation engaged in bribery Offence is a failure to prevent type No knowledge required No intention required No recklessness required Generate liability without fault Clear onus upon employer to take action to ensure employees do not bribe Section 7 does not require prosecution under s.1 or s.6 to occur Sufficient evidence to prove commission of offence to criminal standard Jurisdiction for offence wide Commercial organisation incorporated/formed in UK or Commercial organisation carries out its business or part of its business in UK UK courts have jurisdiction irrespective of where in the world acts or omissions forming part of the offence occur

5 Context Defence of adequate procedures Standard of proof - balance of probabilities Adequacy an issue for the court on case by case basis Potential abuse Single instance of bribery Not necessarily attributable to inadequate procedures Actions of employee Contrary to robust corporate contractual Requirements Instructions Guidance» Appropriate for blame to fall on individual

6 The Bribery Act 2010 Four offences Section 1 Bribing another person Offering, promising of giving a bribe Person making bribe intends the advantage to Either Or Induce the recipient to improperly perform a relevant function or activity Reward that person for improperly performing a relevant function or activity Improper performance Ss 3, 4 and 5» Breach of an expectation of good faith, impartiality or trust» Test is what a reasonable person in the UK would expect in performance of the type of function or activity concerned

7 Section 2 Accepting a bribe Requesting, accepting, agreeing to or receiving a bribe Financial or other advantage Intending that in consequence Relevant function or activity should be performed improperly By the person accepting the bribe or By another person

8 Section 6 Bribery of a Foreign Public Official Person offers, promises or gives financial or other advantage to foreign public official Intention of influencing official in performance of his or her official functions Official functions are those set out in law or other regulation in country of operation» Custom and practice not sufficient to quality as official function Element of impropriety is not required Paying a public official to perform official functions may be deemed a bribe

9 Section 7 Failure of a commercial organisation to prevent bribery Commercial organisation may be guilty of failing to prevent bribery where A person performing services for or on behalf of that organisation bribes (under section 1 or 6) another individual or organisation Intending to obtain or retain business or advantage in conduct of business Organisation unable to make defence of adequate procedures by having appropriate safeguards in place to prevent associated persons engaging in bribery Strict liability No need for successful prosecution under section 1 or 6 but Sufficient evidence to prove commission of an offence Commercial organisation All recognised legal commercial entities Companies, partnerships and corporations Conducting some of their business in the UK UK commercial entities conducting business elsewhere in world may be liable also

10 Section 7 Defence Adequate procedures S.7(2) Proportionate procedures Prevention of bribery procedures proportionate to bribery risk faced Taking into account» Nature, scale and complexity of organisation s activities

11 Top-level commitment Senior management demonstrate commitment to preventing bribery Fostering culture that bribery never acceptable Communication of organisation s anti-bribery stance Appropriate degree of involvement in developing bribery prevention procedures MNEs Board responsible for Setting bribery prevention policies Operating and monitoring bribery prevention procedures Keeping policies and procedures under regular review

12 Risk management Company to assess nature and extent of exposure to potential external and internal risk of bribery on its behalf by associated persons Aim to promote adoption of risk assessment procedures Proportionate to organisation s size, nature and location of activity

13 Due diligence Organisation to consider appropriate due diligence procedure Proportionate and risk based approach In relation to persons who perform/will perform services for/on behalf of organisation

14 Communication including training Embed bribery prevention policies and procedures throughout organisation Internal and external communication Training Proportionate to risks faced by organisation

15 Monitoring and review Bribery risks evolve over time Aligned with activities/locations Anti-bribery procedures must reflect those changes

16 Question posed to UK and US based respondents Agree Disagree Don t know/not applicable We have trained our senior managers, agents, vendors and foreign employees to be both familiar and compliant with the UK Bribery Act and/or US FCPA legislation 43.4% 31.3% 25.3%

17 Question posed to UK and US based respondents Agree Disagree Don t know/not applicable We have made a thorough assessment of risks to our organization arising from the UK Bribery Act and/or US FCPA, and their enforcement, and set in place a monitoring and reporting system to assess risks on an ongoing basis 38.9% 31.9% 29.2%

18 Question posed to UK and US based respondents Agree Disagree Don t know/not applicable We have set in place adequate procedures to prevent bribery at all levels of our operations 53.8% 24.3% 21.9%

19 Question posed to UK and US based respondents Agree Disagree Don t know/not applicable Our internal compliance regime has become more global because of the extraterritorial reach of the UK Bribery Act and/or US FCPA 34.4% 31.9% 33.7%

20 Question posed to UK and US based respondents Agree Disagree Don t know/not applicable When entering into a joint venture, making an acquisition or providing financing, our due diligence provides us with sufficient understanding of the target s compliance with UK Bribery Act and/or US FCPA requirements 36.6% 24.7% 38.7%

21 Agreement with statements regarding AB&C regulations UK 4-5 US 4-5 UK 3 US 3 UK 1-2 US 1-2 The anti bribery and corruption regulations are a laudable attempt to put and end to unfair practices 72% 65% 14% 19% 14% 16% The anti bribery and corruption regulations ignore the fact that, in many countries, bribery is simply the way business is done 54% 50% 22% 24% 24% 26% Anti bribery and corruption regulations put companies at a competitive disadvantage 39% 39% 24% 16% 37% 45% This is an example of the governments imposing costly and excessive requirements 34% 32% 21% 25% 44% 43% Regulatory and law enforcement authorities should not expect companies to self report all violations or potential violations of anti bribery and corruption regulations 28% 35% 21% 25% 50% 40% Difficulties in collective evidence mean the anti bribery and corruption regulations are unlikely to be effective 19% 26% 32% 32% 49% 42% Anti bribery and corruption regulations will not change the way that most companies and people do business 20% 25% 14% 20% 66% 56% There is excessive enforcement of anti bribery and corruption regulations 19% 16% 21% 32% 60% 52%

22 Politically exposed persons (PEPs) Banks globally have specific procedures for identifying and monitoring PEPs Varied approaches taken in relation to lists for Creating Managing Multiple definitions of PEPs

23 Banks Management of High Risk Money Laundering Situations Financial Services Authority (now supplanted by Financial Conduct Authority) High-risk customers/peps Banks unwilling to turn away/exit very profitable business relationships Evidence of unacceptable risk of handling the proceeds of crime Banks willing to accept very high levels of money-laundering risk if the immediate reputational and regulatory risk was acceptable Banks failure to apply meaningful enhanced due diligence (EDD) measures in higher risk situations Banks dismissal of serious allegations about their customers without adequate review

24 Banks Management of High Risk Money Laundering Situations Banks AML risk-assessment frameworks were not robust Evidence of risk matrices Allocating inappropriate low-risk scores To high-risk jurisdictions Where the bank maintained significant business relationships Banks management of customer due diligence (CDD) records inadequate Banks unable to provide overview of high-risk or PEP relationships

25 Banks management of high money laundering risk situations Banks failure to implement effective measures to identify customers as PEPs Reliance upon commercial PEPs databases Doubts about their effectiveness or coverage Failure to identify customers as PEPs even when obvious from the information they held that individuals were holding or had held senior public positions

26 Prosecutions Serious Fraud Office Sweett Group PLC Charged with failing to prevent bribing of Khaled Al Badie by Cyril Sweett International Limited, their service and agents Bribery intended to obtain or retain business and/or advantage in conduct of business for Sweett Group PLC» Securing and retaining a contract with Al Ain Ahlia Insurance Company for» Project management and cost consulting services in relation to building of hotel in Dubai Contrary to s.7 (1) of Bribery Act 2010 Pleaded guilty on 18 December 2015 Sentenced on 19 February million penalty» 1.4 million fine» 851, 152 confiscation Costs of 95,031 awarded to Serious Fraud Office

27 Case Study Overview and Analysis of the UK Bribery Act 2010 Professor Rob McCusker Transnational Crime Analyst