On 30 March, the Organisation for Economic Cooperation and Development (OECD) released a report by its Working Group into the UK’s implementation of the OECD’s anti-bribery convention. Unlike earlier reports, it complimented the UK for its marked increase in foreign corruption enforcement actions. However, the UK was urged to ensure that its Serious Fraud Office (SFO), the primary prosecuting authority for anti-corruption enforcement, was adequately funded and raised concerns over a lack of transparency in the civil plea agreements that the SFO had entered into with corporate bodies.
In previous reports, the UK was criticised heavily for its lack of adequate laws and enforcement appetite, particularly in light of the government-led decision in 2006 to abandon on national security grounds an investigation into BAE Systems’ alleged bribery of Saudi officials. While raising concerns that the UK had not reassessed the national security issues surrounding this case prior to BAE’s $400 million US settlement in relation to the same conduct, the Working Group praised the UK’s new Bribery Act as one of the most stringent anti-corruption laws of any country, and noted the increase in enforcement activity in recent years.
The Working Group’s biggest concern lay in the SFO’s reliance on civil recovery orders to settle foreign bribery charges. The prosecutor has been able to use civil recovery orders to reach settlements with corporations and individuals since 2008, through the Proceeds of Crime Act 2002, and has sanctioned companies including Mabey & Johnson and Macmillan Publishers using the orders. However, these civil mechanisms do not require such stringent judicial oversight and are less transparent than criminal plea agreements. The Working Group stressed that the lack of information publicly available prevented its examiners from establishing whether the sanctions were “effective, proportional and dissuasive”. It was also highly critical of the SFO’s use of confidentiality agreements in order to encourage corporates to settle, which prevent the SFO from detailing many important elements behind the settlement.
The OECD report lends its weight to calls led by the Solicitor General that the UK should introduce deferred prosecution agreements (DPAs) in order to more effectively sanction corporations facing criminal charges. It points to evidence in other jurisdictions that such plea agreements can be useful in resolving foreign bribery enforcement actions. The US has frequently used DPAs to reach substantial settlements with major corporations, and many are keen to see the UK capitalise on its new legislation by using DPAs in a similar manner.
The UK government was commended for its success in raising awareness of the Bribery Act and foreign bribery issues, particularly through its overseas missions. However, the OECD report does call for further guidance from the government into various aspects of the Bribery Act, such as what constitutes “reasonable and proportionate” hospitality and the significance of indirect benefits in determining whether a person qualifies as an “associated person” under the section 7 corporate offence of failing to prevent bribery.
The Solicitor General expects DPAs to be introduced as early as late 2012, suggesting that the Working Group’s primary complaint may be quickly rectified. Further, while the government is encouraged to release further guidance on the more ambiguous provisions of the Bribery Act, the judicial interpretation of the Act when current SFO investigations reach trial may serve to clarify these issues sooner than expected. With initiatives already underway to rectify some of the concerns raised by the Working Group, the positive tone of the OECD report should satisfy both UK authorities and their international peers that the UK is making significant progress in the area of anti-corruption enforcement.
Further Information: OECD Phase 3 report on the UK by the OECD Working Group on Bribery [PDF]
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