CPS off the mark after securing the first conviction for 'failing to prevent bribery'

It was reported earlier this week that the Crown Prosecution Service (CPS) have recently secured its first conviction against a corporate body for the offence of 'failing to prevent bribery'. London based Skansen Interiors was convicted after its Managing Director was found to have paid bribes to a property company in order to secure refurbishment contracts worth £6 million. Under section 7 of the Bribery Act, a company commits an offence if a person associated with that company commits bribery and the company cannot prove that it had ‘adequate procedures’ in place to prevent this. Whilst the legislation is, on any view, draconian, it does beg the question why it has taken 7 years for the CPS to secure a conviction for an offence of this kind.

 

Why the Delay?

The short answer is that law enforcement bodies have, in recent years, preferred to negotiate with companies and enter into Deferred Prosecution Agreements (DPA) rather than pursue prosecutions through the Courts. Introduced in 2014, these American style agreements allow a prosecution against a company to be suspended for a defined period providing that specific conditions are met. These often require the company to pay a financial penalty and co-operate with the future prosecution of individuals. If the company does not honour the conditions then the prosecution may resume. Whilst there are obvious advantages to companies who enter into DPA’s they are no soft option. Financial penalties, including compensation, are often set in the millions.

 

Does the ‘Skansen’ Case Represent a Change in Approach to Corporate Defendants?

Not necessarily but it is probably too early too early to say. Whilst the whole point of prosecuting this case was to send out a clear message to companies that bribery will not be tolerated it also sends out a confusing message. The recent high profile cases that proceeded Skansen gave the impression that companies who ‘self-reported’ and who co-operated with law enforcement agencies would, in all likelihood, be able to enter into a Deferred Prosecution Agreement. However, the outcome in Skansen may send out a very different message and make companies feel more vulnerable to prosecution than ever before. Whether this case represents a sea-change or not, what cannot be disputed is that the number of investigations that are carried out by both the SFO and CPS are rapidly on the increase. 2017 was seen as yet another landmark year in the fight against bribery and corruption. The Serious Fraud Office alone reported a further 14 investigations towards the end of last year, with 43 defendants (both corporate bodies and individuals) awaiting trial. The Government has also publicised an ‘Anti-Corruption strategy’ which sets out further measures to ensure that bribery and corruption is effectively tackled.

 

What Should Companies do to Protect Themselves?

Despite the sharp increase in investigations companies are failing to push this issue up the corporate agenda. This is despite the fact that companies who are convicted of ‘failing to prevent bribery’ are liable to receive an unlimited fine! The risks of bribery are not just hypothetical. Remarkably, a recent survey revealed that 80% of companies had discovered some form of bribery or corrupt conduct in their practice. Remarkably, only 32% of executives understood their anti-bribery policy and only 41% thought their policies worked well in practice. The days of simply adopting an ‘off the shelf’ anti-bribery policy are over. If an investigation begins, regardless whether it results in a prosecution or not, law enforcement bodies will still review companies anti-bribery policies and procedures. Companies must take action now if they are to have any chance of proving, should the need arise, that they have adequate procedures in place to prevent bribery.

This includes the following; Carrying out and recording a risk assessment which identifies specific areas of the company which may be vulnerable to bribery. Implementing measures that are proportionate to the risk identified. Conducting business overseas is likely to present the biggest risk unless there are strict safeguards in place. Undertaking appropriate due diligence procedures where associated persons are concerned. Communicating policies and procedures to staff which includes training. Ensuring that an appropriate system is in place to allow the policies and procedures to be monitored and reviewed. Not only can we assist and compile anti-bribery policies but we can also assist when things go wrong. Negotiating with law enforcement agencies is crucial and may be the difference in avoiding a conviction or not!