Earlier this month, the House of Lords Select Committee (the Committee) on the Bribery Act 2010 published its Post-Legislative Scrutiny Report.
The Report provides a useful summary of prosecutions under the Bribery Act and the debate surrounding “adequate” and “reasonable” procedures, and offers insight into the limited extent to which Suspicious Activity Reports (SARs) lead to bribery investigations. Surprisingly, however, the Report considers the use of deferred prosecution agreements (DPAs) but does not deal with the conflicting outcomes for individuals and the corporate in the recent Tesco and Rolls-Royce cases
Prosecutions under Section 1 and 2 of the Bribery Act
Although the Report cites statistics which demonstrate an overall increase in the rate of convictions for the offences under sections 1 and 2 of the Bribery Act (the offences of bribery and being bribed, respectively), the number of convictions under these offences remains relatively low. This reflects:
- The difficulty of prosecuting large corporate defendants: Given the requirement for the directing mind and will to have committed the offences under sections 1 and 2 (and 6) of the Bribery Act in order for the corporate to be held liable, “it remains extremely difficult to prosecute large corporates for the substantive offences of bribery under sections 1 or 6 of the Act.” According to the Serious Fraud Office (SFO), it may, in many circumstances “be impossible to prosecute the company, notwithstanding the fact that it is the main beneficiary of the wrongdoing”. This is the key driver behind the push for broader failure to prevent corporate crime offences. The Committee also declined to recommend an extension of the ‘failure to prevent’ offence to other forms of economic crime on the basis that this is an issue for the Government to consider. In this regard the Committee stated that it hoped “the Government will delay no more in analysing the evidence it received two years ago and in reaching a conclusion on whether to extend the “failure to prevent” offence to other economic crimes”.
- The long tail of bribery investigations: The length of many bribery investigations means that long after the Bribery Act came into force (in 2011), the majority of bribery-related cases are still being prosecuted under earlier laws. Between 2014 and the second quarter of 2018, the Crown Prosecution Service (CPS) launched 107 proceedings under the Prevention of Corruption Act 1906, compared with around 42 for all offences under the Bribery Act.
- The continuing use of the misconduct in public office common law offence: In 2017/2018 there were 106 prosecutions for the common law offence of misconduct in public office (compared to just two in 2005). This increase has come about despite the fact that CPS guidance states that statutory offences should be pursued where relevant.
Adequate or reasonable procedures?
The Report considers whether the “adequate procedures” defence under the Bribery Act is a higher bar for companies to meet than the “reasonable procedures” to prevent tax evasion defence under the Criminal Finances Act 2017. The Committee considered views expressed by some practitioners that procedures could not be considered adequate where bribery has occurred. The Committee concluded that it should be made clear that “‘adequate’ does not mean, and is not intended to mean, anything more stringent than ‘reasonable in all the circumstances’” and that this should be reflected in the Ministry of Justice’s Guidance on Adequate Procedures.
Deferred Prosecution Agreements
The Committee reviewed the success of DPAs, which, it suggests, “have had a major influence on some of the largest recent cases of corporate corruption”. Despite initial concerns, the Committee concluded that DPAs are largely effective in encouraging companies to self-report and that, when used appropriately, are not an “easy way out”. The Committee emphasised that DPAs are not and cannot be a substitute for the prosecution of any individuals involved in corrupt conduct. However, the report surprisingly declined to deal with the clear inconsistency between the Rolls-Royce and Tesco DPAs and the SFO’s failure to successfully prosecute individuals in either case, stating that: “[i]t is not for us to speculate on why in the Tesco case the evidence, much of it supplied by the company, was not strong enough for prosecutions of the individuals to succeed, or why in the Rolls-Royce case prosecution of the individuals was not even initiated.”
As we have set out in a previous blog post, there are strong grounds for suggesting that the court should, at the very least, ensure that the statement of facts in a DPA is sufficiently anonymised unless and until there is a conviction of individuals. It would also help if mechanisms existed to allow the form of a DPA to be revisited and/or amended in order to protect the reputation of individuals in the event of a subsequent acquittal.
Role of Suspicious Activity Reports
The Report provides an interesting and perhaps surprising insight into the apparent lack of connection between SARs submitted to the National Crime Agency (NCA) and bribery investigations. The NCA, said that SARs provide a “valuable source of intelligence for law enforcement agencies”, and that they contribute to tackling “a range of threats, including bribery” but did not provide any figures or examples of situations in which a bribery investigation had been initiated following a SAR. The NCA said that the UK Financial Intelligence Unit (UKFIU) proactively analyses the database to identify SARs relating to potential international bribery and corruption and refers relevant matters to the International Corruption Unit in the NCA but it is not clear how many specific referrals are made from UKFIU to the NCA or SFO.
Read the full report here.