Southwark Crown Court recently handed down the first sentence in relation to a corporate conviction under section 7 of the Bribery Act 2010 (the Act) which deals with 'Failure of commercial organisations to prevent bribery'.
The events in question concerned payments made by Cyril Sweett International Limited (CSIL) (a wholly owned subsidiary of Sweett Group PLC, an AIM-listed company) to procure the award of a project management and costs consultancy contract by Al Ain Ahlia Insurance Company. The court found that these payments, via an artificial consultancy agreement and made over a period of some 18 months, were intended to obtain an advantage in the conduct of business in contravention of section 7 of the Act.
Sweett were unable to rely on a possible defence under the Act of 'adequate procedures', and chose to plead guilty despite having in place an anti-bribery statement and an ethics policy, and giving online training to its staff on measures to circumvent bribery. This may give some UK companies pause for thought, as no doubt a number of organisations would think these measures sound perfectly adequate.
The SFO did not in this case make use of a deferred prosecution agreement (the UK’s first DPA was reached in relation to Standard Bank Plc, now known as ICBC Standard Bank Plc). This tool is available to the SFO in certain circumstances but it appears they chose not to make use of it with Sweett because, while a degree of cooperation was offered, it was not sufficiently fulsome. Sweett did conduct an internal investigation (possibly prompted by media speculation) before the SFO's investigation was launched, and indeed reported two suspicious contracts to the SFO, but the SFO was nonetheless obliged to expend considerable effort in investigating CSIL's actions.
The value of the contract sought by CSIL was £1.6 million and the amount apparently paid out in bribes was £680,000. This must be set off against the fine handed down by the Crown Court under the applicable sentencing guidelines of £1.4 million, with a further £851,152.23 in confiscation, and around £95,000 in costs. The confiscation order is to be paid within three months, and the fine payable 50% by 19 February 2017 and the other 50% a year later.
The decision makes clear that organisations will need to supervise activities by associated persons (which will include employees, officers and, as in the Sweett case, subsidiary companies) wherever in the world they happen to operate. The sentence incurred by Sweett (and the internal costs and management time involved in investigating and dealing with the fall-out, which must have been significant) when viewed in light of the overall value of the contract sought in the first place, make clear that this sort of practice may ultimately not be good business.
For more information: Wedlake Bell