U.K. Bribery Act « FCPA Professor

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Worth Reading

Wednesday, March 7th, 2012

Transparency International – UK (“TI-UK”) recently published “Deterring and Punishing Corporate Bribery” (here) and it is worth reading. A meaty 93 pages, the document is full of useful information, from U.K. charging issues, corporate criminal liability principles under U.K. law, a list of SFO and FSA bribery or related enforcement actions and much more.

As noted in the foreword, the “paper seeks to identify the problems faced by prosecutors and companies in trying to settle cases of overseas bribery against the background of the current legal system and practice, and to make some recommendations to improve transparency, recognising that bribery is a serious criminal offence and there is a strong public interest in seeing offenders prosecuted.”

Several of the recommendations in the report I agree with such as the following.

“all settlements should be subject to judicial scrutiny independent from the prosecutor’s office” [that clearly does not happen in the U.S. given frequent use of non-prosecution and deferred prosecution agreements]
“victim countries should receive restitution and prosecutors should work with development agencies … to manage this process” [although figuring out just how to do this is the difficult issue]
“prosecutors should properly label bribery offenses and not select alternative charges in order to avoid mandatory debarment, which is a logical and fair outcome in certain cases as it provides a very strong deterrent to corporate offending” [this frequently happens in the U.S., for instance, Siemens, Daimler, BAE - none of these companies were charged with FCPA anti-bribery violations because of potential debarment concerns]

The recommendation from the TI-UK report that I disagree with (and I am grateful for the citations and mentions in the report) is the following. “[The U.K.] government should consider the introduction of DPAs or some similar sentencing procedure after a thorough assessment of the alternatives. DPAs have proved to be a useful procedure to settle FCPA cases in the USA but the process has also been criticized with little judicial oversight.” Elsewhere, the report states as follows. “The reason that this [high level of U.S. enforcement of the FCPA] is possible with relatively few resources is that in the US most FCPA cases are settled through either [DPAs or NPAs] both of which avoid the preparation of casework for a trial by jury.”

How is a resolution vehicle that avoids the preparation of casework for a trial by jury a good thing? Requiring an enforcement agency to meet its burden of proof in an adversarial proceeding before independent observers who consider mitigating facts and weigh viable defenses is central to the rule of law and how law best advances. Allowing enforcement agencies a third option (the first two options being prosecute vs. not prosecute) facilitates both the under-prosecution of egregious instances of corporate conduct as well as the over-prosecution of corporate conduct and contributes to a facade of enforcement.

Moreover, as I noted in this previous post, why does the U.K. need alternative resolution vehicles when the U.K. Bribery Act has an adequate procedures defense. If a corporate has adequate procedures, but an isolated act of bribery nevertheless occurs within its organization, the corporate presumably would not face prosecution under the Bribery Act. Seems like a reasonable result. In other words, no need for the third option in such a case. On the other hand, if a corporate does not have adequate procedures (i.e. has no committment to anti-bribery compliance) and an act of bribery occurs within its organization, it presumably would face prosecution under the Bribery Act. Seems like a reasonable result. Does a third option really need to be created for corporates who do not implement adequate procedures? Also relevant to the analysis and further suggesting that alternative resolution vehicles are not needed in the U.K. is the notion that (Section 7 of the Bribery Act aside) corporate criminal liability in the U.K. requires evidence that a so-called controlling mind of the corporate was involved in the improper conduct.

The UK Bribery Act: Engagement With Companies And Compliance Effects

Tuesday, November 29th, 2011

Today’s post is from Richard Alderman (Director of the U.K. Serious Fraud Office).

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The UK Bribery Act: Engagement With Companies And Compliance Effects

By Richard Alderman (Director, SFO)

In the months since the UK Bribery Act came into force on July 1st 2011, there is one question that I have probably been asked more than any other: what are we actually doing under the Act at the SFO?

In part, people are asking me this because of recent comments by some observers, suggesting that the SFO will be under intense pressure to go out and secure convictions very quickly under the new legislation – and that this means we’ll be out there hunting for easy targets.

That is a fairly easy claim to deal with. Easy targets are easy to find. We could go out and find half a dozen cases very quickly that we could probably investigate and prosecute through the criminal justice system, possibly by Christmas.

The SFO’s approach: Finding the Difficult Cases

But is this really what most people want to see? In my view, many people would regard the SFO as taking a rather lazy and unreflective approach if we pursued easy ‘quick wins’ rather than the really difficult and more serious cases. Also, I know which type of cases our staff would prefer to investigate – and it is definitely the more challenging ones.

So, what are we doing? The plain answer is that we’re actively looking for cases to take up – but these cases are the difficult ones. For example, we have been examining the activities of a number of foreign companies with a UK business presence who are involved in bribery in other countries.

We have found a number of these. But what we are looking for in particular is evidence that they have undermined ethical UK businesses. If they have not, then although there may be a technical Bribery Act offence, it is not the type of case where I would want to use our scarce resources, or take up the valuable time of UK courts and juries.

So we have seen instances of bribery involving foreign companies where we have decided not to take them forward for a full investigation, because we cannot see that a UK company lost out. Other authorities might choose to take action, but it is not a priority for the SFO.

However, there are other cases where we have found potential damage to UK companies and their employees. It is still early days – but I can confirm that we are looking at some cases to see whether or not to start using our compulsory powers.

I am under no illusions about the difficulty of these cases. Getting the evidence and getting people before a UK jury will be incredibly difficult. Investigations will be complex, and we will need to make full use of international co-operation and the SFO’s own powers. But make no mistake, these cases are a high priority for us.

Compliance Effects

Aside from questions about our approach to actions under the Bribery Act, a further area of interest is in our view of its compliance effects on companies. Experience shows that laws – and especially new laws – have an enforcement effect as well as a compliance effect, and that the latter of these is often larger.

In the specific context of the Bribery Act itself, a particular question that arises is whether the Bribery Act without an adequate procedures defence would have had the same compliance effects as the Act with adequate procedures. In other words, is it the Bribery Act itself – or the adequate procedures defence specifically - that has resulted in its compliance effects?

It is still early days for the Bribery Act - and it is difficult to answer these questions in detail without hard research into what companies are doing internally in response. However, looking at what US corporations are telling us, they have realised that being compliant under the FCPA does not automatically mean that they are Bribery Act compliant.

This is a message that professional services firms have been trying to hammer home with their clients whether in the UK, US or elsewhere for some time now. I believe it is getting through and that corporations are going on to take action in response. The likelihood is that those Boards that are more committed to good corporate governance will take notice, but if companies wish to ignore it then that is ultimately their choice. They should not be surprised though if the SFO takes a close interest in them. They should also not be surprised if they find that other corporations become less willing to do business with them. I believe they will suffer commercially if they do not have an anti-corruption culture.

In this context, we take differing views of compliance by SMEs and large corporates. We are aware that SMEs - unlike their larger counterparts - often lack the time, resources and readily-available, expensive professional advice needed to move quickly into compliance. So we are taking a more consultative approach to compliance by SMEs, and accept that they may take longer to get there.

The Act’s Impact on our Engagement with Companies

This leads neatly into a further theme that is especially relevant to our approach to the Bribery Act, but also touches on our work under other pieces of legislation: our commitment to engaging with companies. In general, we are finding that engagement is a more effective tool with bribery and corruption under the Bribery Act than it has been in the past with fraud.

On reason for this is that, for a successful prosecution under the UK’s previous bribery and corruption legislation, we had to prove that there was a ‘controlling mind’ at Board level behind the activities. Under the new Act, the key question is whether the Board has put effective structures in place to prevent bribery from taking place. If a company has not done this, and has significant operations in the UK, we can prosecute it for bribery and corruption by any of its employees anywhere in the world.

This is a big change. One effect is that prosecution of fraud is now out of line with bribery and corruption, since to prosecute a company for fraud we still need to prove that people at a senior level knew the fraudulent activity was taking place. Another effect is that acquirers who take over a business, and then discover that suspected bribery and corruption has been (and probably still is) taking place in it, are more likely to come forward, self-report and engage with us.

They are encouraged to do this by an awareness that we will take a pragmatic approach, quite possibly by letting them conduct their own internal investigation and then report the findings to us so we can take a balanced view on further action. They know that their demonstration of goodwill in initially disclosing their suspicions to us will be taken into account.

Our Broader Approach to Intelligence and Proactive Engagement

More broadly, we constantly monitor and review intelligence and other information relating to the activities of corporations within our jurisdiction. This comes to us in all sorts of ways – including suspicious activity reports to the UK’s Serious Organised Crime Agency (SOCA) and increasingly from whistle-blowers contacting our new SFO Confidential hotline. We also receive a lot of information from our international partners, from individuals across the world and indeed from picking up press reports.

With every piece of information, we need to assess whether there is something here that justifies SFO action. It’s a vital decision, and so we have a rigorous internal process for it, including making a number of enquiries to test the information before deciding formally whether to launch an investigation. We need to be as sure as possible that there is something there that justifies us in taking on the case.

When we do decide to do something, our approach can take a number of different forms. In some cases we contact the corporation involved, and say we believe they have a problem and would they like to come and see us. Most – but not all – do come in for that discussion, where we encourage them to agree to undertake an internal investigation and present the findings to us in due course. This makes obvious sense for the corporation, and several have agreed to this.

The Downside of Non-Cooperation

Of course, some corporations may not be interested in a discussion with the SFO – in which case we can carry on doing what we need to do. However, this does mean the corporation has passed up its opportunity for the maximum degree of mitigation and flexibility on our part. I regard this as a short-sighted and misguided approach, but of course that’s a matter for them.

In other cases we think that approaching the corporate is not appropriate – perhaps because of the size and systemic nature of the alleged corruption, the involvement of very senior people, or the potential for evidence to be destroyed. In that sort of case we may well decide to proceed quietly with our investigation. So the first that the corporate will know of our interest is likely to be when we arrive at its door with search warrants – the worst possible outcome for any business.

This is why we encourage companies to be rigorous in looking at allegations they receive internally about instances of corruption. Senior management should be asking hard questions about these – and should have a robust risk assessment process in place to provide as much reassurance as possible. If companies do not police themselves in this way, then the possibility that the SFO will need to take action is all the greater.

A Dialogue Worth Having

Monday, October 31st, 2011

This previous post discussed U.K. plans to introduce U.S.-style corporate plea bargains, including deferred prosecution agreements. Among other things, the post mentioned an October 17th meeting with U.K. prosecutors at Pinset Mason’s London office.

thebriberyact.com summarizes the meeting and nicely frames the issues here and here. The post states as follows. “We think that the need for DPA legislation is obvious. Its absence has often been remarked upon by the Director of the SFO and for very good reason. It is a serious hole in the UK law. Its absence has a chilling effect on the attempts to ensure that ethical attitudes become a permanent feature of corporate life in all companies, be they International, SME or small.”

Others have shared their views on whether the U.K. should adopt U.S. style alternative resolution vehicles and, if so, how.

Thomas Fox at the FCPA Compliance and Ethics Blog (here) believes “that the ability to enter into a DPA is a powerful tool that advances the interests of prosecutors, the judiciary and the public.” Fox states that “the primary reason for both the prosecution and a company which violates the Bribery Act entering into a DPA is certainty.”

Ross Parlane of McGuire Woods writing at The Bribery Library (here) states as follows. “There are a number of benefits to be gained from giving UK prosecutors the power to negotiate DPAs. Certainly the cost and time involved in investigating offences would be significantly reduced, which is good news for the public purse. Further, a well negotiated DPA that gives proper attention to remediation (e.g. through monitoring) as well as to punishment, has the potential to effect a permanent positive change in the culture of an organisation.” Yet Parlane states (and identifies) that “there are a number of tricky issues that need to be resolved before the use of deferred prosecution agreements can be adopted in the the U.K.”

Michael Volkov, writing at thebriberyact.com (here) notes that ”for UK policymakers, the balance between judicial review and prosecutorial discretion is one which has to be resolved before any new policy can be enacted.”

Let me contribute to the dialogue by posing this question. Why does a law with an adequate procedures defense require the third option of a deferred prosecution agreement – the first two options being prosecute vs. not prosecute?

If a corporate has adequate procedures, but an isolated act of bribery nevertheless occurs within its organization, the corporate presumably would not face prosecution under the Bribery Act. Seems like a reasonable result. In other words, no need for the third option in such a case.

On the other hand, if a corporate does not have adequate procedures (i.e. has no committment to anti-bribery compliance) and an act of bribery occurs within its organization, it presumably would face prosecution under the Bribery Act. Seems like a reasonable result. Does a third option really need to be created for corporates who do not implement adequate procedures?

Because the FCPA does not have an adequate procedures / compliance defense (at least not yet), the same analysis does not apply.

*****

In other recent U.K. developments, last week the SFO announced (here) that two former Innospec executives were charged. Dennis Kerrison, the former CEO of Innospec Ltd., was charged with “an allegation of conspiracy to corrupt, in that he gave or agreed to give corrupt payments to public officials and other agents of the Government of Indonesia as inducements to secure, or as rewards for having secured, contracts from the Government of Indonesia.” Paul Jennings, the former CEO of Innospec, is accused of “two allegations of conspiracy to corrupt, in that he gave or agreed to give corrupt payments to public officials and other agents of the Governments of Indonesia and Iraq as inducements to secure, or as rewards for having secured, contracts from those Governments.”

Earlier in the week, the SFO also announced (here) that David Turner, a former business unit director of Innospec Ltd., was charged with “alleged offenses of conspiring to make corrupt payments to public officials in Indonesia and Iraq to secure contracts for Innospec Ltd. for the supply of its products.”

Both Jennings (here for the prior post) and Turner (here for the prior post) previously settled SEC FCPA enforcement actions based on the same core set of conduct.

As with the SFO’s recent case against Victor Dahdaleh (see here for the prior post), the recent Innospec related enforcement actions are not Bribery Act enforcement actions.

*****

Sure, it’s Halloween and all, but the FCPA reform debate (see here) is getting a little silly don’t you think?

Beyond All Boundaries: The Extraterritorial Grasp Of Anti-Bribery Legislation

Monday, October 24th, 2011

Today’s post is from Bruce Bean (here – Michigan State University College of Law)

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“The American Branch of the International Law Association held its Annual Law Weekend in New York City this past weekend. As a member of the ABILA Extraterritoriality Committee, I organized an expert panel to highlight how the UK Bribery Act 2010 takes an even more aggressive view of its jurisdictional scope than the Justice Department’s well documented, extraordinarily expansive view of the global reach of the FCPA. The panel included Visiting Professor Alexander Domrin, Oklahoma City University Law School, Philip Urofsky, former DoJ FCPA prosecutor and partner at Shearman & Sterling, Robert Buehler, partner at Hogan Lovells and former Assistant U.S. Attorney for the Southern District of NY, and Jeremy Carver, President of the UK Branch of the ILA as well as a partner for three decades at Clifford Chance.

The provocative title of the panel discussion, “Beyond All Boundaries: The Extraterritorial Grasp of Anti-Bribery Legislation,” attracted an animated crowd. I shared my opinion that a hyper-aggressive DoJ had expanded the reach of the FCPA far beyond the language of the law and the intent of Congress. I pointed out that this overreaching had been exceeded by the egregious extraterritorial grasp of Section 7 of the Bribery Act, which imposes strict criminal liability on a company for failing to prevent a bribe, even a facilitation payment by a non-UK person who is not employed by that company. And the guilty-until-proven-innocent company need not be a UK company, or have a place of business in the UK. The statutory nexus of the Bribery Act is merely that the company once conducted “a part of a business, in any part of the UK.”

Philip Urofsky, the long-time DoJ FCPA prosecutor, began his presentation by announcing that he “strongly disagreed” with everything I had said. In practice, he noted, the commerce clause nexus of the FCPA is met when a dollar wire transfer between two offshore jurisdictions clears through a New York money center bank, even though there was no “intent” by either of the parties involved to have any connection with the U.S.

Bob Buehler pointed out that the jurisdiction of the Southern District’s U.S. Attorney’s office is its statutory jurisdiction which includes Manhattan and its “contiguous waters.” I innocently asked if that extended to the Atlantic Ocean. The response was, perhaps not, but driving over the Verrazano Bridge between two boroughs not within the Southern District can bring jurisdiction to the “Sovereign District.”

Jeremy Carver, now President of Transparency International UK, testified regularly before Parliamentary and other Committees during the ten years of deferral and delay which finally produced the Bribery Act with its seriously aggressive overseas reach. More than once Carver accused the UK government of misleading Parliament about the adequacy of UK laws applicable to overseas bribery. A speech he gave at the Commonwealth Club in February 2007 was entitled “Is the UK Government Serious about Fighting International Corruption?” In later testimony he announced that the “government has done its utmost to undermine the efforts that so many others have been making to combat foreign bribery.”

As finally effective on July 1, 2011, the UK’s Bribery Act has enormous extraterritorial reach. Carver pointed out that it could have been worse. During the reign of Queen Elizabeth I, as Sir Francis Drake roamed the Seven Seas, the suggestion was made that the overwhelming dominance of British Navy meant that the Queen Elizabeth’s jurisdiction should extend over all the oceans. This suggestion was not accepted at the time, although I remain convinced that the UK Bribery Act 2010 is an attempt to do just that.

In whatever ways the Bribery Act evolves, few will forget last weekend’s ABILA panel discussion.”

Mr. Alderman Goes to Washington

Tuesday, October 11th, 2011

[I am pleased to share that FCPA Professor is one of the nominated blogs for the Top 25 Business Law Blogs of 2011 contest sponsored by LexisNexis. LexisNexis invites comments on the nominated blogs so that the field can be narrowed to the Top 25. The link to submit comments is here. To submit a comment, you must register, but registration is free and does not result in any sales contacts. The comment box is at the very bottom of the page and the comment period ends on October 25th.

Since launching FCPA Professor in July 2009, and continuing with the upgrade of the site in July 2001, my mission has remained the same: to inject a much needed scholarly voice into FCPA and related issues; to explore the more analytical “why” questions increasingly present in this current era of aggressive enforcement; and to foster a forum for critical analysis and discussion of the FCPA and related topics among FCPA practitioners, business and compliance professionals, scholars and students, and other interested persons. I hope you value the content and resources found on FCPA Professor and I thank you for your consideration.]

Richard Alderman is the Director of United Kingdom Serious Fraud Office, an agency (here) similar to the U.S. Department of Justice and the primary U.K. enforcer of the Bribery Act (as well as the country’s prior bribery laws). Last week, Alderman gave three speeches in Washington and this post contains excerpts from those speeches. In his remarks Alderman touched upon the following topics: SFO resources, current workload and enforcement priorities; differences between how the UK and US investigate and prosecute bribery actions; WikiLeaks and the Arab Spring; the demand side of bribery; individual prosecutions under the Bribery Act; adequate procedures under the Bribery Act (“let me emphasize this is a complete defense, it is not a matter of mitigation”) and the SFO’s active engagement approach; and merger and acquisition issues (“society benefits if an ethical corporation takes over and sorts out a corporation that has corruption problems”).

Trace Forum 2011 (here)

“I shall talk a little later about the Bribery Act but let me tell you first a little more about what the SFO has been doing in order to justify the recognition of the UK as an active enforcer. We are a comparatively small office and we devote a considerable amount of that resource to dealing with anti-corruption. We have about 80 frontline staff dealing with anti-corruption with a resource for this of some $7.5 million. Our resource in the SFO is also a flexible one and we can move additional resource into anti-corruption from other areas depending upon workload. Currently, our anti-corruption workload is dominated by pre-Bribery Act cases. That is likely to remain for some time. We have about 50 corruption cases (whether involving the public sector or private sector) under formal investigation or prosecution and, of course, a number of additional ones that we are looking at to see whether we should open an investigation. Although these figures may look low in terms of the figures of some other authorities, it is important to understand quite what they mean. All of these cases are actually large complex anti-corruption investigations reaching across many countries and many individuals and companies. Under our system, we have to conduct every investigation to the standards required by our Criminal Justice System and with the possibility of a contested trial before Judge and Jury very much in mind. This means that each case is very resource intensive because we have to ensure that all evidence is obtained in the appropriate way and is admissible in court. The resource that goes into these cases is very great and is the source of great concern to me. ”

*****

“Another feature of our cases that you do not have [in the U.S.] is the ability of those under investigation and indeed other parties such as non-governmental organisations to challenge anything that the SFO does. We saw that, for instance, in the BAE case where the decision to terminate the Saudi investigation was challenged by two non-governmental organisations. Any interested party (and that is construed very widely) can go to court and require the SFO to give an explanation to the satisfaction of the court about what we are doing. We need to show that our actions are lawful and proportionate. It is a very important discipline in my jurisdiction and we are at all times very conscious of this.”

*****

“There are some particularly important issues under [the Bribery Act] for an audience based in the US. Let me talk first about the extended reach of the Bribery Act to foreign corporations that carry on business in the UK. We have received lots of questions about this and about the meaning of those very simple words “carrying on business in the UK. I know that there is the potential for much litigation on this issue. Nevertheless, I tell corporations that it will be very unwise of them to try to rely upon a very technical interpretation of the Bribery Act in order to persuade themselves that it is safe to carry on using bribery. I have said that they might be in for a very unpleasant surprise in a number of years time when our Supreme Court gives its views on this test. I say to corporations that the only safe way of doing business is not to use bribery.”

*****

The Bribery Act has a new offence aimed at senior officers of corporations who consent to or connive in bribery. I know that there are many who are worried about this offence, particularly if they happen to be Directors or Non-Executive Directors based in the UK and where their companies are high risk. You may find, for example, that some London executive or non-executive directors may be worried about their exposure if US corporations are found to have been involved in corruption. We are actively looking for cases where we can apply this provision. Society expects senior members of a corporation to be responsible for ensuring that there is a true ethical culture. They have a key responsibility here. My view is that if they find that their efforts to do this meet with resistance or no success then they should consider resigning and telling us about their concerns. Expressing doubts about the company’s culture but remaining a highly paid officer would not be sensible because this would seem to be a model case of conniving in bribery for the purposes of the legislation.”

*****

“Some cases may involve corruption under the old law. You will not be surprised, for example, to hear that we looking through Wikileaks and the other information becoming available as a result of the Arab Spring in order to see what corporations have been doing over a period of years. We are going to be very interested in the sorts of deals that are going to come to light and I am sure that this will be a fruitful source of work for us. The message from me is that if corporations are worrying about this, then they ought to come and talk to us now rather than wait for the dawn raid.”

Anti-Corruption Summit 2011 (here)

“What we have been doing is to encourage corporations to work together and with us and other authorities in order to try to work on the underlying problem. I have been very impressed by what a number of corporations have been doing. They come to me to tell me what they are doing because they are slightly nervous that the SFO will pick this up and may even start making enquiries or investigate. This is not what we want to do. If there is a genuine attempt being made to solve the problem of corruption then I want to let the corporations get on with that so far as possible and indeed to provide any help that I can in the SFO. We have had a number of discussions of this nature. I do not underestimate the difficulties here and the constraints. It appears to me though to be absolutely the right thing to do. This is because in my view one of the likely issues in the coming years is not going to be what we do about the supply side of bribery, but what happens about the demand side of bribery. It is an issue that I am concerned about in the SFO and one where I want us to contribute.”

*****

“The Bribery Act creates a new offence at the corporate level of failing to prevent bribery. The defence to this is that there are adequate procedures to prevent that bribery. Let me emphasise that this is a complete defence. It is not a matter of mitigation. If an act of bribery occurs somewhere in your worldwide corporation and you had adequate procedures, then no criminal offence has been committed. This is something that has been reassuring to corporations. Of course what this means is that there has been great interest in the meaning of adequate procedures. The guidance from our Ministry of Justice sets out the UK Government’s approach to this in considerable and to my mind, helpful detail. Let me though give you a flavour of what you might expect if you came to us to talk about your adequate procedures. I should add here that many corporations do that. You may find this surprising but we do have a regular succession of corporations coming to the SFO to seek our views on their procedures and what they are doing. We stress that we can give no guarantee and certainly no certificate to the effect that their procedures are adequate but we are able to give them helpful advice. The feedback we get is that these are positive and pragmatic discussions. Some of the themes you will hear from us will be these. First, what is the approach of the most senior management in the corporation? They set the lead. Employees of corporations are very shrewd. They know what really matters to top management. They will know if something matters or does not matter. We will want to know therefore what top management is doing in order to ensure that the importance of good ethical business is known to every member of that company. We hear for example of contracts that corporations do not enter into because they could be secured only by corruption. This is a good practical example of the importance placed upon anti-corruption. There are others as well. We also want to know about risk assessment. This is something that corporations ought to be doing anyway but my own perception is that this has been intensified because of the Bribery Act. How do you assess the risks in your corporation? Is this simply a paper and routine exercise or is it genuine? It certainly ought to be genuine because this could bring down your corporation if you get it wrong and overlook some key risk. We will want therefore to talk through your risk assessment process. We shall of course be particularly interested if you find you have a considerable problem about something that was not flagged up in the risk assessment. This may or may not mean that the risk assessment process was flawed. We want to know what you are doing about this and indeed how you are developing the risk assessment process in future. We will offer any thoughts we have about any risks you should be thinking about but are not. What we will also want to be sure about is this. Please take it from me that simply handing us a large pile of documents with lots of boxes ticked on checklists will not be enough to satisfy us that you have adequate procedures. That is a paper exercise. It is part of what is needed but only part. We shall want to know what lies behind this and what the real issues are. Personally, I believe we are not alone in wanting to know this. When we are talking about corruption with all the reputational issues that are involved here, senior management should actually be asking exactly the same questions that the SFO will be asking in this respect. I have mentioned that corporations come and talk to us about all of these issues. Please feel free to contact us if you would find this helpful in order to talk through what you are doing. It is not a threatening process and please do not worry that if you came to us and expressed a few doubts about whether your procedures are adequate that you would find yourself on the wrong end of a prosecution before you left the SFO building. This simply does not happen. The object of these discussions is to be constructive and supportive. I hope you will find that if you approach us.”

*****

“I want finally in this overview of what is happening, to talk about mergers and acquisitions. I know how important this subject is. Some time ago we said publicly in the SFO that we were prepared to assist corporations that were in the process of carrying out a merger or acquisition and discovered problems during the course of due diligence. We made this willingness clear about two years ago although I have to say that there was little take up at that stage. That seems to be changing now. I have been struck in recent months by the fact that a number of corporations have been to see us about some sensitive potential acquisitions where they are identifying some real issues about corruption during the course of due diligence. Ultimately, the decision about an acquisition is a commercial one and will involve an analysis of risk and reputation as well as many other issues. The corporation and its advisors though want to try to manage the regulatory risk so far as possible by seeking views from the SFO. We have been ready to engage in this. What we do is to talk to the corporation and its advisors about what they are finding and what they propose to do about it if the acquisition takes place. It is quite clear to me as a result of the discussions that a negative response from the SFO is sufficiently important to put the acquisition in jeopardy. On the other hand, a positive view from us on the basis of what the corporation intends to do could enable the acquisition to go ahead. My view on this, simply stated, is that society benefits if an ethical corporation takes over and sorts out a corporation that has corruption problems. It is something I am keen for the SFO to promote, so far as we legitimately can.

Risk Advisory Dinner (here)

“What we are trying to do with private sector corporations is to work on some real initiatives in particular countries and even particular areas such as ports in order to try to find ways of curbing the demand for these payments. This is not just a question of simply saying “no”; it is also a question of seeing what is the underlying problem (for example, public officials are not paid by the state and so are forced to demand bribes) and what can be done about these underlying causes. It is also a question of how we deal with governments and other authorities about these issues.”

*****

“I have said publicly that a high priority for us will be to find a foreign corporation with a UK business presence that has got involved in corruption in another country and has undermined a good ethical UK corporation. Those corporations have been within the SFO’s reach since July 1^st as a result of the new Bribery Act. An English jury will take the view that there is a very clear UK public interest in bringing such corporations to a criminal court. It is a high priority for us.”