With recent arrests in London apparently connected to the Serious Fraud Office investigation into Rolls Royce, and rumours that the SFO has several other cases in the pipeline, 2014 may be an interesting year. The Bribery Act 2010 has not yet made its mark, and the authorities have yet to use it for its most keenly anticipated task – the prosecution of organisations for failing to prevent bribery. Such prosecutions, when they begin, will be in uncharted territory.
These are challenging times for any corporate facing investigation. The vigilance and interest of the authorities in all bribery and corruption allegations is undeniable. The combination of the anti bribery and proceeds of crime legislation means that concerns, wherever they arise, cannot safely be ignored. Yet business could be forgiven some continued uncertainty as to how, precisely, the authorities intend to use their relatively new powers. The SFO has encouraged corporates to self-report, but there can be no guarantees about the reception they will receive if they do so.
Two developments in the UK this year may alter the landscape further; Monday 24 February will see the arrival of Deferred Prosecution Agreements. Used in the USA for years, DPAs are new in the UK, introduced because of the perceived weaknesses of the UK criminal justice system when dealing with serious and complex corporate crime. A DPA will allow the prosecution of an organisation to be suspended for a defined period, during which requirements are made of the organisation to meet specified conditions; the payment of compensation, the review and enhancement of internal systems and processes etc. Unlike in the USA, the UK version of DPAs will require court approval. It remains to be seen what effect that difference will have on their success.
In October 2014, the new Guidelines for the sentencing of corporates convicted of fraud, bribery and money laundering will come into force, and apply to all organisations sentenced thereafter. This is the UK’s first attempt to provide guidelines for the sentencing of organisations (rather than individuals) convicted of financial crimes. They will be a starting point when considering the likely financial conditions of any DPA, and have been published some months before coming into force for that purpose. The system for calculating financial penalties uses a multiplier, and is broadly based on the US system for determining fines.
So, in that regard, too, the UK system has sought counsel from its American counterpart. For the UK authorities, these developments show their commitment to tackling bribery and corruption alongside their international colleagues. Corporates may welcome the introduction of more sophistication to the prosecution approach, if not the American style penalties. By December 2014, perhaps, the future will be clearer.