Monday, 25 July 2011

SFO uses civil recovery under Proceeds of Crime Act in corruption case

There have been reports over the weekend of Macmillan publishers agreeing an £11m settlement with the Serious Fraud Office in relation to corrupt practices in Africa to win contracts and the SFO has released a statement.

Two interesting points emerge from this;
  • Firstly, that we focus too much on the new Bribery Act when there is other existing legislation that is used to address problems of corporate bribery. Civil action using section 5 of the Proceeds of Crime Act provides wide powers for restitution and can be much quicker, cheaper, easier route for the authorities to pursue. The standard of proof is also lower - civil actions requiring a 'balance of probabilities'. As I discussed in a post just a few days ago, Willis have been prosecuted under the Financial Services and Markets Act.
  • Secondly that the SFO and FSA seem to be very active in steps to prosecute bribery and corruption overseas. This case is only one of several to have been dealt with recently.
While I have blogged about the feeding frenzy of corporate advisers preceeding the introduction of the Bribery Act this month, nonetheless companies should be reviewing their procedures for preventing corrupt practices. My caveat was that it is unnecessary to spend large sums with advisers who, along with the rest of us, can have no idea what the courts will deem to be adequate precautions. Following the Ministry of Justice guidance would seem to be sufficient and excessive bureaucracy would seem...excessive...and may not be effective. This is a case for intelligent design.

The first step is risk assessment; the second clear statements (commitment and training) from company boards on acceptable behaviour; the third due diligence on business partners, the fourth accounting control of the flow of money - so you know who receives payment and for what - even when routed through third parties - this also includes monitoring of procedures.

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