Organisations in the UK are facing pressure to not merely abstain from crime, but to actively prevent their staff committing it. Where once employers would not be culpable for the misbehaviour of staff, they are now being asked to have adequate measures in place to stop bribery, or face punishment.
Section 7 of the Bribery Act 2010 created a new form of corporate liability for failing to prevent bribery on behalf of a commercial organisation. We have now seen what such a prosecution looks like when it gets to court, and shows how seriously prosecutors are taking compliance.
The first contested section 7 prosecution led to a guilty verdict for Skansen Interiors Limited (SIL), a refurbishment contractor. Many criticised the Crown Prosecution Service’s (CPS’s) decision to prosecute a small, dormant company for failure to prevent bribery. The CPS clearly wanted to send a message. Unfortunately, this may have left more questions than answers, and little guidance on when a company’s procedures will be considered ‘adequate’ to sustain a defence.
The CPS alleged that SIL’s former Managing Director, Stephen Banks, bribed the project manager of a real estate company, Graham Deakin, to help secure a tender for office refurbishment contracts worth £6 million. After winning the tender, Banks circumvented financial controls in place at SIL to effect and conceal two payments to Deakin totalling £10,000. A third payment of £29,000 was offered, but discovered to be part of the bribery scheme by the CEO of SIL’s parent Skansen Group.
After concluding its internal investigation, the Group dismissed Banks and its commercial director, reporting its findings to the National Crime Agency and the City of London Police for further investigation. The company gave extensive assistance to the police, including handing over legally privileged material.
SIL provided the CPS with a fairly clear cut example of a company that did not have sufficient controls in place. At the time of the bribery, it did not have a dedicated anti-bribery and corruption policy and attempted to rely on non-specific policies that referenced the need for dealing with third-parties honestly. The firm argued that it was common sense to not pay bribes and therefore no specific policy to that effect was required. SIL also did not have a compliance officer and could not point to any employee designated to take on the responsibility for anti-bribery compliance. They could not show that any training had been conducted or that its employees had read the policies or agreed to comply with them.
SIL had a difficult time providing records showing any anti-bribery and corruption culture at the company, and could not show that any response had been taken after the Bribery Act came into effect in 2010. Banks and Deakin were sent to prison.
Peter Stanway, our BackupHR™ legal expert comments:
Because it was a trial by jury, it is not clear which of these omissions were felt to make SIL’s compliance programme so inadequate that it could not avail itself of the defence. Many would argue that a business with only 30 employees did not need a compliance officer. Even so, companies should take this opportunity to reassess their own compliance programmes in light of the limited insight that can be gained from the prosecution’s submissions in the matter.
Any company seeking to comply with the Bribery Act should:
- have a business specific code of conduct/policy,
- ensure that all staff are aware of the terms of the anti-bribery policy and show they have received training on it.
- establish reporting lines that ensure staff feel able to report concerns.
- show that it had responded to the Bribery Act by appointing a member of senior management to take responsibility for the company’s initiatives.
It is not enough to have a generic anti-bribery policy. Once a policy is in place, steps must be taken to comply with it. A record of those steps should be kept.
The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for a free initial chat on 01480 677980.