The Director of the Serious Fraud Office (SFO), Richard Alderman, gave a speech yesterday about the Bribery Act which touched on many practical issues and further guidance to be issued.
The speech covered:
- Prosecution guidance – this should be issued by Mr Alderman and the UK Director of Public Prosecutions at the same time as the “adequate procedures” guidance. The guidance will set out the public interest factors that prosecutors should take into account in deciding whether to prosecute under the Act and should shed light on facilitation payments and hospitality.
- Exclusion from EU public contracts – many have expressed concern about whether the offence of failing to prevent bribery under the Act will result in mandatory exclusion from public works in the EU. Mr Alderman confirmed that this was a point which the UK Government was still considering and he hoped that clarification on this would be given at some point.
- Foreign corporates carrying on business in the UK – there is also a question mark about the SFO’s jurisdiction over foreign corporates which carry on business in the UK and whether a London Stock Exchange listing or the presence of a subsidiary are sufficient to bring a corporate within the SFO’s jurisdiction. The SFO takes a wide view of the scope of its jurisdiction but Mr Alderman acknowledged that the UK courts would need to consider the question.
- Joint ventures – the SFO draws a distinction between current and new joint ventures. With current joint ventures, the SFO expects corporates to do what they can to establish that their partners are complying with ethical obligations but recognises the practical and legal limits to this. However, the SFO would expect any new joint ventures to address anti-corruption issues. The SFO has already had a number of discussions with companies about their joint ventures.
- Hospitality – Mr Alderman was clear that it was not correct that all hospitality or promotional expenditure was illegal under the Act. Sensible, proportionate entertaining or promotional expenditure is lawful.By way of practical example, he referred to buying breakfast or lunch for a client or flying a group of prospective clients from another part of the world to see the company’s facilities in the UK. This will usually be sensible business. A month long all expenses paid holiday to the company’s private island in the Caribbean would likely be viewed with suspicion.
- Sporting events – the SFO is considering giving more guidance on the appropriateness of taking clients to sporting events.
- Facilitation payments – Mr Alderman was very clear that these were bribes and illegal. He referred to the respect he has for corporates which have adopted a zero tolerance policy towards facilitation payments. According to him, these corporates find their policy good for business as their employees are not bothered by demands for these payments because their policy is well known. He also referred to the SFO’s sympathetic approach to situations when payment is demanded under extreme duress or in medical emergencies. The prosecution guidance should also provide more clarity on the issue.
Without pre-empting the guidance which is anticipated shortly, the SFO is clearly keen to lay to rest some of the wilder speculation which has recently appeared in the press concerning the impact of the Act, particularly with regard to corporate hospitality. Mr Alderman has sought to leave his audience with the impression that the SFO’s enforcement of the Act will be tough, yet underpinned by common sense. The written guidance should reinforce that message.