Five years since the UK Bribery Act came into force, are we any the wiser and has the compliance focus changed?
The Serious Fraud Office is now starting to flex its investigatory muscles and has made it clear that no organisation is too big or too small.
We expect to see a significant rise in the number of live investigations over the next few years. The SFO has given organisations time to bed in their policies – now comes the time to ensure they are working.
Learning from others
The construction industry can learn from the first three Bribery Act SFO prosecutions (Standard Bank, Sweett Group and XYZ).
In Standard Bank, the bribes related to the securing of funding for a construction project in Tanzania. In Sweett Group, bribes were paid to secure the award of a contract for the building of the Rotana Hotel in Abu Dhabi. In XYZ, bribes were paid to those thought to exert influence on the award of contracts in foreign jurisdictions.
One only has to look as far as the recent news concerning Barratt Developments and suspicion of bribery over possible misconduct in awarding contracts for new housing developments to see it is clear that construction remains vulnerable to allegations of bribery and corruption, as well as the hawkish gaze of investigators and prosecutors in the UK.
The construction industry, arguably more than any other, needs to be proactive and ahead of the curve in terms of UKBA compliance.
A shift in focus?
Case law seems to have shifted away from drafting policies and large risk identification projects, to organisations recognising they need to allocate significant resources to make a culture of anti-bribery and anti-corruption pervasive in their organisations – and also to auditing and internal investigation projects to measure the success of those policies.
The prosecutions generally involved companies that had anti-bribery policies in place; however, these policies were not being implemented or were ineffective. The SFO and the judges were critical of non-effective policies and procedures.
Three key themes emerge demonstrating evidence ‘adequate procedures’ being in place:
- A need for top-level commitment to prevent bribery and corruption;
- The need for anti-bribery to be pervasive throughout an organisation;
- Robust testing, modelling and auditing (internally or through the use of an external law firm).
Organisations are encouraged to avoid a situation where policies and procedures sit on a shelf, as this is unlikely to afford an organisation ‘adequate procedures defence’ under the Bribery Act were bribery or corruption to occur.
What is also clear is the importance the SFO places on the views of employees throughout the organisation (through employee interviews) to understand their awareness and interpretation of policies when forming a view as to whether an organisation can rely on the ‘adequate procedures’ defence.
What should firms be doing to avoid the SFO’s gaze?
In view of the courts’ recent decisions and to put an organisation in the best position to have “adequate procedures” in place, corporations should:
- Be proactive rather than reactive – keeping a record of steps taken, decision-making and audit projects.
- Regularly report at board level on anti-bribery compliance.
- Regularly review contractual relationships and third-party anti-bribery policies and procedures – take tough commercial decisions where you’re unsatisfied with compliance in the supply chain, thereby mitigating the risk to their organisation.
- Ensure employees receive training and regular updates on bribery risks; keep records of the training; sample-interview employees in high-risk parts of the business.
- Update and modify policies and procedures to new risks, new supply chains, new jurisdictions – an out-of-date policy is not a good policy.
- Consider publishing (as with modern slavery statements) anti-bribery and corruption statements on compliance efforts.
- Regularly monitor and test the policies and procedures – ‘dry runs’ or ‘modelling test scenarios’ are an extremely useful method of ensuring your procedures work.
The key message is act now, be proactive and do not allow your organisation’s anti-bribery policies and procedures gather dust.
Now is a good time to revisit these issues. The UK government considers the ‘failing to prevent offence’ as a successful mode and is consulting on rolling it out to failing to prevent economic crime.
Get ahead of the curve by undertaking an audit of your anti-bribery and corruption compliance, which will inform you where your organisations vulnerabilities lie now.
Craig Weston is a barrister at Irwin Mitchell