Recent corporate convictions remind companies of their obligations to prevent bribery

The offence

The Bribery Act 2010 creates a strict liability criminal offence of failing to prevent bribery. A business will be liable if anyone acting under its authority commits a bribery offence; persons acting under its authority can include employees, consultants, agents, subsidiaries, and joint venture partners.

It is a strict liability offence. The offence relates to a lack of systems to prevent such activity. There is no requirement for the prosecution to prove that the business had any knowledge of the acts being carried out.

It is a defence however to show that the business had put in place "adequate procedures" to prevent the bribery.

Prosecutions since 2010 have been few and far between. Investigations have historically been carried out by the Serious Fraud Office or National Crime Agency which have tended to focus on large organisations involved in complex schemes.

Arguably this has meant that the perceived risk of enforcement may have gradually diminished.

It also means that there has been no real analysis by the courts of what "adequate procedures" would be sufficient to be a defence.

The recent case

In April this year 3 companies were sentenced for failing to prevent bribery under the Bribery Act. The largest fine was £500,000.

The case related to three companies who benefitted from the actions of individuals who had bribed a senior manager at Coca Cola Enterprises UK Ltd over several years from 2008 to a) award "bogus" contracts (where no work was carried out) and b) to provide confidential information which enabled the companies to win contracts for electrical works against other bidders.

The two individuals who paid the bribes, and the corrupt Coca Cola employee, were also found guilty and given suspended sentences and community service orders. The Coca Cola employee had to sell his house and pension pot to repay his former employer.

What does the case tell us?

Because all three companies pleaded guilty there was no discussion or argument about what "adequate measures" means because the defence was not relied on.

The press reports indicate that the case wase clear cut following the discovery of compelling evidence when new procurement rules and teams were introduced. The Coca Cola employee had clearly not taken adequate measures to cover his tracks as investigators found a spreadsheet on his laptop detailing the transactions which he had headed "slush"!

The case is still of interest beyond sorry facts though because:

  • It is a reminder of the existence of the offence – and a useful prompt to review risk and control measures if as a company you are not confident that this has been the subject of scrutiny or audit for a while.
  • It was brought by the Police/CPS not the Serious Fraud Office or National Crime Agency which may encourage further investigations by the Police into less complex offending.
  • Buyers beware – it is a reminder of the importance of due diligence on acquisitions – for example, if there had been a change of ownership since 2008 that would not have precluded prosecution of the company under present ownership for historic breaches. Checking the adequacy of a seller's anti-corruption measures has a real value.