corporate bribery

21/04/2016

Sweett Group Plc has recently been fined £1.4m and almost £1m in confiscation and costs for corporate bribery. This is the first prosecution of its kind.

Background_

  • It is an offence for corporate bodies to fail to prevent bribery by their employees, agents or associates under section 7 of the Bribery Act 2010.
  • It is a defence under section 7 for those accused of the failure to prevent an offence to demonstrate that they had “adequate procedures in place to prevent bribery”.
  • The SFO is the lead agency in the UK for the investigation and prosecution of corporate bribery. One of the most important considerations for corporate bodies who discover evidence of internal bribery is to consider the issues of self-reporting and cooperation.
  • Circumstances that meet a particular set of conditions set down by the SFO and endorsed by the judiciary, may result in a Deferred Prosecution Agreement (DPA) rather than formal prosecution.

Facts_

  • On 14 July 2014, the Serious Fraud Office (SFO) opened an investigation into the Sweett Group plc (Sweett) regarding suspected bribery.
  • On 2 December 2015, the SFO confirmed that Sweett admitted an offence under section 7 of the Bribery Act 2010 regarding a transaction in the Middle East.
  • On 9 December 2015, Sweett were charged with an offence under the Bribery Act 2010. The particulars of the offence were:
  • Between 1 December 2012 and 1 December 2015 Sweett Group plc, being a relevant commercial organisation, failed to prevent the bribing of Khaled Al Badie by its subsidiary company, Cyril Sweett International Ltd, which was intended to obtain or retain business, and/or an advantage in the conduct of business, for Sweett.

Decision_

Sweett was sentenced to the following:

  • £1.4 million in fine;
  • £851,152 in confiscation; and
  • £95,031 in costs.

The judge assessed culpability in accordance with the tables in the relevant guideline as high and applied a percentage multiplier of 250% to the gross profit (harm) figure, the range being 250-400%.

Comment_

This case is significant for three reasons:

It is the first prosecution under section 7 of the Bribery Act 2010 which has always been the most controversial part of the Bribery Act, criminalising corporate bodies for failing to act, rather than being complicit in bribery. Although the conviction demonstrates a willingness by the SFO to pursue corporate bribery, and Sweett was unable to maintain the defence of having adequate procedures in place to prevent bribery, the case provides little guidance on the extent to which particulars are deemed to be adequate.

The case was not resolved by a Deferred Prosecution Agreement (DPA). Sweett demonstrated the importance of early cooperation with the SFO on their terms if a DPA is to be sought. The company was criticised for:

  • trying to conceal matters by having sought to solicit a letter from the principal contractor to the effect that the subcontract had been a legitimate business contract;
  • a lack of cooperation at the start of the investigation, including commissioning internal investigations that failed to provide all relevant details or satisfy the SFO; and
  • self-reporting only when knowing a press report on the matter was to be published imminently.

The clear lesson from the Sweett case is that a failure to cooperate with the authorities at the earliest stage will effectively end the chance to conclude a matter by way of DPA.

Having said that, the level of fine and costs imposed on Sweett, was less than some reported financial penalties imposed under DPA. This suggests that there is no direct financial benefit from entering into a DPA. Each case will of course turn on its own facts.

For more information or advice regarding the Bribery Act and protecting yourself and your business please contact Gareth Wilkinson at Beswicks Legal on 01782 200015 or gareth.wilkinson@beswicks.com