New SFO guidelines
On 9 October 2012 the UK’s Serious Fraud Office (the SFO) published revised guidelines (the Guidelines) setting out its approach on self-reporting, facilitation payments and corporate hospitality under the Bribery Act 2010 (the Act).
The Guidelines: (i) restate the SFO’s primary role as an investigator and prosecutor of serious fraud and corruption; and (ii) seek to ensure consistency with other prosecuting bodies.
The Guidelines signify a shift in the SFO’s approach away from its previous stance (which sought to reassure businesses which self reported) towards a new stance of being a ‘tough’ criminal prosecutor.
This hardening of the SFO’s position may give businesses cause for concern, as it appears that the SFO no longer considers itself able to resolve bribery and corruption issues through both pragmatic and criminal channels. Businesses can no longer expect the SFO to co-operate in the ‘management’ of bribery and corruption issues.
Overview of changes
The Guidelines have not changed the Act, the existing Ministry of Justice Guidance on Adequate Procedures, nor the Joint Prosecution Guidance.
(i) The Test for Prosecution
The Guidelines confirm that the ‘Full Code Test’ under the Code for Crown Prosecutors (the test used to decide whether to prosecute in criminal matters, comprising ‘evidential’ and ‘public interest’ stages) will be the starting point for deciding whether to prosecute. Only if this test is not satisfied will the SFO then consider civil recovery.
(ii) Facilitation Payments
The SFO has withdrawn from its former position in which it recognised that facilitation payments are endemic and will take time to eradicate. The stated position now is that facilitation payments are bribes – full stop. That said, in the Q&As issued with the Guidelines, the SFO states that “it would be wrong to say that there is no flexibility” in this regard.
(iii) Corporate Hospitality
The SFO’s position is now aligned with that in the Ministry of Justice guidance: “bona fide hospitality or promotion or other legitimate business expenditure is recognised as an important part of doing business… however, bribes are sometimes disguised as legitimate business expenditure.”
What does this mean?
It is likely that the Guidelines should not change the risk profiles of organisations with appropriate systems in place to counter bribery and corruption (e.g. training, reporting systems and clear policies).
The real change is that the SFO is no longer setting itself out as the pragmatic ‘go to’ authority in cases of bribery and corruption. While not dissuading self-reporting nor stating that it will be an actively aggressive investigator/prosecutor, the Guidance makes clear that ‘deals’ or sympathy are not the SFO’s default position: “self-reporting is no guarantee that prosecution will not follow.” That said, self-reporting is still likely to be an option that companies may want to consider carefully as such conduct is likely to be a relevant consideration when a prosecutor assesses the public interest in pursuing a criminal prosecution.
For companies with best practices and adequate procedures in place, the Guidelines should change more in theory than they will change in practice. However, the Guidelines should be considered as a wake-up call for companies that are unable to be so confident of their position and a reminder to all companies of the scope and effect of the Act.
To view a PDF version of our update please click here.