|February 17, 2014|
Previously published on February 10, 2014
Mansion House last week hosted the Global Law Summit’s ‘One Year to Go’ event marking the countdown to the Summit’s 2015 showcase taking place between 23-25 February 2015. 2015 also marks the 800 year anniversary of the sealing of the Magna Carta, an agreement which forms the bedrock of the rule of the law in England, and one of the original copies was on display at the venue. So it was fitting that the UK’s Bribery Act (“the Act”) was the topic of discussion at the event, the “gold standard” of worldwide anti-bribery laws perhaps reflecting the principle enshrined in the Magna Carta that: “To no one will we sell, to no one will we refuse or delay, right or justice”.
The panel speakers at the event were former Lord Mayor Alderman Sir David Wooton, Adrian Leppard QPM MBA (Commissioner of Police for the City of London), Chris Vaughan (General Counsel and Chief Corporate Officer of Balfour Beatty) and Michael Caplan QC.
Adrian Leppard opened acknowledging the UK’s historic poor response to corruption for a long period of time, but felt that there was certainly positive change in the last few years particularly as a result of the Act which sets the bar internationally. Mr Leppard was keen to stress that the primary intention of the Act is not to prosecute corporates but to encourage positive change in commercial practices and give UK companies a better advantage in business. However, he was quick to add that prosecutions will be pursued when appropriate. The obligatory question on ‘facilitation payments’ was raised in this context. Mr Leppard acknowledged business “realities”, but the Act made them unlawful; interestingly he went on to say that law enforcement deals with a huge amount of economic crime and with the resources they have available they are unable to tackle even 10% of it. He added that he was keen to gather information on the prevalence of facilitation payments so that change can be driven locally. So reading between the lines it seems unlikely that one off instances of facilitation payments will be prosecuted.
Mr Leppard referred to the fact the US Foreign Corrupt Practices Act (“FCPA”) contains an exception for facilitation payments, and perhaps the stricter terms of the UK’s Act will lead to positive change there. This is probably unlikely in the near term as many fear that seeking to open up the FCPA to introduce just a small change allows the entirety of the legislation to be scrutinised and potentially changed, perhaps not for the better. Whilst the FCPA does not regard facilitation payments as corrupt, there is real force in the UK Government’s view that they are pernicious, and at the very least corrupting. More can be done around the issue of facilitation payments - more studies should be conducted on the wider harm they do locally, a way of allowing information to be collected about their existence in certain sectors and jurisdictions should be considered - perhaps a safe harbour period for companies to report - so that collective action can be taken to weed them out. This process will of course take time. In this debate, we must all remember that facilitation payments are likely to be unlawful in the country where they are paid.
Mr Vaughan believed that the Act has had a positive impact on business practices, driving companies to introduce much more sophisticated compliance programmes particularly in the area of due diligence of third parties and M&A targets. Indeed, he has noted an increase in his employer’s clients requesting evidence of what compliance programmes they have in place, a factor which is very important in the context of public procurement. Mr Vaughan noted that Boards are now much more active in enquiring not just about anti-bribery programmes but other compliance issues as well such as data protection and fraud.
Mr Vaughan concluded that it would be helpful to have some guidance on the application of the Act, most likely through case-law, on the section 7 offence and the meaning of ‘adequate procedures’. He also believed that the Act had led to too much focus on “sideshows”, such as low level corporate hospitality, which causes unnecessary headaches. Finally, he said there should be much clearer guidance on when ‘facilitation payments’ might be appropriate, for example, in cases of threat of life or limb. These points are entirely valid, although in the case of ‘facilitation payments’ the Ministry of Justice Guidance does say the common law defence of duress is “very likely” to be available in such circumstances. Perhaps there could nevertheless be a firmer statement on this.
Michael Caplan QC felt that those that are seeking to “beef up” the Act even further are acting prematurely. In one sense the Act achieved its goal of raising public awareness. And whilst there were only three small convictions so far, he noted that the Serious Fraud Office was gearing up to bring prosecutions for bribery under the Act (aside from its first late last year). He expressed concern at David Green QC’s recent pronouncements about creating a section 7 type offence for fraud - he believed this was a slippery slope leading to corporate liability for negligence in all but name. He saw the next real hot topic as the approach by corporates and the prosecution in relation to deferred prosecution agreements once they are introduced in the UK. The subject of another future panel no doubt.
All in all, another very interesting debate on the Act. The fact that the debate was taking place in such august surroundings shows that it is having the desired effect of raising awareness and provoking change. As Mr Vaughan said his “impression is there is more focus on business conduct and integrity than ever before”. Proper enforcement of the Act is therefore necessary to maintain this new ethos - without it, it will be undoubtedly the case that complacency will set it. Law enforcement still deserves more time to bring those cases; as Mr Leppard rightly pointed out the FCPA took many years to truly bed in. By the time of the Global Law Summit in 2015 we may well be talking about major prosecutions under the Act.