Draft Bribery Bill - Joint Committee on the Draft Bribery Bill Contents

Memorandum submitted by the Serious Fraud Office (BB 14)


  The Serious Fraud Office (SFO) is responsible for the Overseas Corruption Register. This is a central register which records all allegations of corrupt activity overseas involving British nationals, companies or partnerships. Allegations are allocated to the agency best placed to conduct an investigation. This usually means the SFO if the allegations pass our acceptance threshold:

    —  there must be serious or complex fraud or corruption;—  there is a significant international dimension;

    —  the case is likely to be of widespread public concern;

    —  the case requires highly specialised knowledge, eg of financial markets;

    —  the case would require us to use our special powers such as Section 2 of the Criminal Justice Act, 1987; and

    —  the value of the alleged fraud or corruption is more than £1 million.

  In assessing the amount potentially involved, the SFO looks at the value of any contract obtained through a bribe and not just at the amount of the bribe.

  The SFO is a lead player in the International Anti-corruption Strategic Group for Corruption Overseas. This group, which is chaired by SOCA and also includes the FCO, DfID, City of London Police, Metropolitan Police and the FSA, enables these agencies to liaise on the challenges faced.

  A Tactical Group comprises representatives of SFO, SOCA (Terrorist Funding team) Police and FSA. This group shares intelligence, discusses areas of common interest and identifies areas for possible targeting.

  Anti-corruption is one of the three key areas of the SFO's work. The others are City Fraud and Individual and Investment Fraud. The SFO is responsible both for investigating issues in these areas as well as prosecuting. This follows the recommendation in the Roskill Report that a taskforce approach, involving very close teamworking between lawyers and investigators, was required to tackle the most complex cases of fraud (and corruption).

  The SFO is currently investigating 17 cases of corruption. This involves large corporates as well as individuals. Some of these are likely to result in prosecution in due course. We are allocating substantial resource (close to 100 members of staff, ie a third of our people) to this area.

  We have already had one successful prosecution for overseas bribery. In 2008 an English lawyer was convicted in the Crown Court of conspiring to corrupt authorities in the US so that they would unblock assets that had been frozen after the 11 September events. He was sentenced to 6 months imprisonment.


  The SFO welcomes the Bill. The current law is widely seen as fragmented and out of date. It has proved to be very difficult for prosecutors to enforce. This has led to considerable public concern about the different approaches the UK and the US take under the Foreign Corrupt Finances Act.

There are substantial differences between the powers available to the US authorities and those currently available to the SFO. The Committee may find it helpful to have a brief account of these differences. These are:

    —  the law on corporate criminal liability is different. In the US a corporation may be held criminally liable for the illegal acts of its directors, officers, employees and agents if those acts were (1) within the scope of the individual's duties, and (2) intended, at least in part, to benefit the corporation. The test in England and Wales is very different. Prosecutors need to establish that the necessary mental element in the offence was committed by the controlling mind of the corporate. This means looking to see if the Board of the corporate (or those close to it) were involved in the illegal action. This is a very different test;

    —  a number of the most significant US cases have been dealt with by way of deferred prosecution agreements within the context of the US criminal justice system. There is no counterpart for this in this jurisdiction;

    —  the US prosecuting authorities can impose fines and these are frequently very substantial. Prosecuting agencies in the UK, such as the SFO, cannot do this;

    —  a culture of self reporting of infringements of the Foreign Corrupt Practices Act has developed in the US. There is no such culture here (in the absence of any reports required to be made to the FSA or to SOCA). The SFO is trying to encourage this culture here.

  The offence under clause 5 of the Bill is therefore particularly significant for the SFO and we welcome the balance that has been struck here. We particularly welcome the incentive that this clause gives to corporates to ensure that their internal procedures are appropriate.

  The SFO has engaged corporates in discussions about our approach to enforcing this provision if the Bill becomes law. We have made it clear that our approach would be pragmatic and would recognise the differences between what can be expected of very large and smaller corporates. There may also be differences depending on any progress a corporate has already made in living up to its obligations. The SFO has said that it is looking for a very visible commitment at the highest level of the corporate to doing what is needed to prevent corruption and real action in carrying out that commitment.

  We are also encouraging corporates to disclose any issues relating to corruption. This is an important part of the culture of self reporting we want to see. There may also be non-prosecution outcomes here which satisfy the public interest.

  The SFO will direct a large part of its investigative work at those corporates which are involved in corruption and which are not prepared to take the necessary steps to eradicate it. We see prosecution as being very important here.

  While the SFO therefore welcomes the Bill, it is right to say that the process of investigating overseas corruption cases remains very complex. Some of the issues here are outside the scope of the Bill and it may be relevant to mention these difficulties:

    —  we have to trace the bribe. The bribe may go through many different jurisdictions disguised in various ways. There will be a complex trail.

    —  while we would hope to obtain assistance from the authorities in the various jurisdictions through which the bribe passes, this cannot be taken for granted. Those involved in the transactions will do their best to route the bribe through jurisdictions that provide most difficulties for us.

    —  we may also need to obtain assistance from the jurisdiction in which the ultimate recipient is based. Again, we would hope to receive this but it may not always happen.

  There are likely to be more cases for the SFO if the Bill becomes law. Reference has been made in the Regulatory Impact Assessment (page 7) to the cost of one additional prosecution a year. This reference was intended to refer to the cost of one additional contested trial. We would expect to see guilty pleas in other cases and a range of non-prosecution outcomes where appropriate. The additional costs to the criminal justice system of guilty pleas and other outcomes are unlikely to be large. This issue is particularly significant in dealing with foreign public officials.


Q1.  Is the extra-territorial reach of the draft Bill satisfactory? In practice, would you investigate and prosecute companies that have a limited connection to the UK?

  We welcome the ability to investigate and prosecute companies carrying on part of a business here, irrespective of where they are registered. It is part of creating a world level playing field which would see those companies having to adhere to the same international standards of our own companies and the international community. The SFO will look at appropriate cases with a view to investigation and prosecution.

Potential conflicts of jurisdiction will have to be agreed by the respective authorities in each country on an individual case basis. The SFO already has agreements like this with US colleagues.

Q2.  Does the draft Bill make it clear when facilitation payments and corporate hospitality will be unlawful?

  Facilitation payments will be unlawful. In some cases the mere offer (and/or acceptance) of the advantage itself may amount to improper conduct. Most countries in the world outlaw such payments since it is very difficult to remove bribery if they remain legal.

Because of our acceptance threshold, small facilitation payments are unlikely to concern the SFO unless they are part of a larger pattern (when, by definition, they would no longer be small facilitation payments) where their nature and scale has to be evaluated.

  The US does not make small facilitation payments illegal unless they occur "to continue or to obtain business".

  The SFO considers, like Lord Woolf and a number of UK corporates, that any facilitation is unjustifiable and should be removed because these payments cut across transparency and openness. They also render a corporate (and other corporates) more vulnerable to demands for larger bribes. They are a major contributor to the belief that bribery is a necessary part of business culture. The "demand side" should also make it clear that these payments are not acceptable.

  Hospitality is different in that most routine and inexpensive hospitality would be unlikely to lead to a reasonable expectation of improper conduct. This would therefore not trigger the general offences.

  For the offence we must still prove that the payer's intent is to influence the foreign public official in his/her capacity as a foreign public official. The provision of routine and inexpensive hospitality to a large group may not have that specific intent.

  It becomes more difficult when more than routine hospitality is offered to targeted individuals. In circumstances like these, the SFO would advise the corporate to check the local laws about what foreign public officials can legitimately accept. This should not be too onerous for the corporate as it ought to be part of their due diligence in doing business there.

  One would expect government and industry wide standards or codes of behaviour to cover such conduct in any event.

  The SFO considers that prosecutorial discretion, backed by appropriate guidance, is the proper way forward on small facilitation payments and hospitality. If a case were to pass our threshold for acceptance however, we would rarely exercise the discretion and would look to prosecute.

Q3.  Are you concerned that security services can be exempted from prosecution for bribery, whereas police and other investigators can not?

  This was a Government addition to the Bill. Exemptions from prosecution for serious crime can only be for exceptional, necessary and proportional reasons. These are justifiable for the intelligence services. The SFO does not consider that this justification applies to us.

Q4.  Do you have adequate resources to tackle bribery at home and abroad?

  We are the lead agency for investigating and prosecuting overseas bribery. As stated above, anti-corruption overseas is one of the leading areas of our work. We have committed to putting 100 staff into this area.

The SFO is facing budget reductions in line with other departments. The challenge for us is to improve our efficiency so that we are able to deliver much more than before. For this reason we have had a major Transformation Programme in place in the SFO over the past year looking at how we work and how we can work more effectively. The SFO believes that the resource we are allocating to this area will make a significant improvement in delivering results.

June 2009

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