22 August 2013
Energy company has its assets frozen by SFO
The first charges to be brought by the Serious Fraud Office (SFO) under the Bribery Act 2010 ("the Act") are now before the courts. The SFO press release dated 14 August 2013 indicates that four men connected with the company have been charged with conspiracy to commit fraud and furnishing false information.
In addition, and in a move which risks looking like a footnote to the main body of the case, the SFO has decided to charge three of the men with offences under the Act.
The alleged offences are making and accepting a financial advantage, contrary to sections 1(1) and 2(1) of the Act respectively. Despite these matters being at the bottom of the charge list, there will undoubtedly be much interest in how the courts deal with the so far unchartered waters of the Act.
What the prosecution will have to prove
Section 1 (1) of the Act makes it an offence for a person to offer, promise or give a financial or other advantage to another person and "intend the advantage to induce a person to perform improperly a relevant function or activity".
Section 2 (1) states that a person is guilty of being bribed if he or she fulfils the circumstances in any of Section (2)’s subsections. In the present case, without further details, it is difficult to know precisely which of the given scenarios will be applicable. These range from offering advantage in return for improper performance of a function or activity, to that advantage itself being the improper performance, whether that is by the defendant or through a third party. It may though be that the first of these scenarios is the most likely.
The scope of "function or activity" is illustrated in section 3, which sets out four specified functions and three specified conditions. To fall within the parameters of the legislation, a function or activity must satisfy one out of each list. Functions and activities are defined as follows:
- those of a public nature;
- activities connected to a business;
- activities performed in the course of employment; and
- activities performed on behalf of a body of persons.
If one of these is satisfied, then the person performing the function or activity must also be expected to act in good faith; to be impartial and/or be in a position of trust.
The fact that the individuals have been charged under both sections does not necessarily mean that the prosecution want to prove payment of bribes as well as receipt of bribes. In fact, it could mean that one transaction has occurred whereby money has been paid by the defendants and they have received reciprocal advantage, whether that is monetary or otherwise.
In order to discharge their burden, the prosecution will have to prove that there is a link between the advantage offered or given, and the improper performance of the function or activity. They do not, however, have to prove that the defendant had the mental element of knowing that the eventual performance was to be improper.
Although not presently charged in this case, in principle the company also could be prosecuted for bribery under section 7 of the Act. This is in effect a strict liability offence, where the company would only be able successfully to defend the charge if it could show that it had adequate procedures in place to prevent bribery. Although Guidance has been issued on this issue by both the Director of Public Prosecutions and the Serious Fraud Office, it remains to be seen what the Courts will require in order for a company to be able to establish this defence.
Actions to avoid being in breach of the Act
The Act provides only very limited defences. Individuals who are therefore offered any form of reward in circumstances that are abnormal or give rise to any concern, should seek urgent advice from appropriate professionals.
Those who might be tempted improperly to influence others should be aware that the authorities appear to be targeting criminal practices in the corporate sector with renewed vigour. They should also note that the Act is very wide in its territorial reach and so conduct by a UK citizen overseas could still be prosecuted here, and that there is an increasing exchange of information between international enforcement agencies in order to bring such prosecutions.
The SFO has indicated that it will take a tougher line with corporate suspects.
Commercial organisations should therefore ensure that their policies are regularly reviewed, well communicated and any training frequently refreshed. Again, in the case of any doubt appropriate advice should be sought.