The Serious Fraud Office bares its teeth

January 01, 1970 by Mark Dunn

The UK's main anti-fraud and corruption agency has used their 2014-15 report to show improved performance in tackling serious and complex cases of fraud, bribery and corruption. The SFO opened 16 new investigations during 2014/15 compared to 12 in 2013/14. These included high profile investigations into major organisations including Forex, Tesco and the Sweett Group with ongoing major investigations concerning LIBOR, Rolls-Royce, GlaxoSmithKline, Barclays Bank, ENRC and GPT.

The conviction rate total increased although the conviction rate percentage saw a drop from 85% to 78% with 18 defendants in 9 cases being successfully prosecuted. As David Green, Director, notes in his forward:

"… numbers may appear small, but the cases are very substantial. We completed the Innospec and Smith and Ouzman prosecutions, both resulting in the conviction of the corporate as well as senior officials in relation to foreign bribery."

The SFO also nailed its first convictions for offences under the Bribery Act 2010 on 5 December; two and a half years after the Act came into force. Three individuals, former directors of companies, were convicted of a range of criminal offences and sentenced to a total of 28 years' imprisonment. The Act has been called one of the world's toughest anti-corruption laws. Bribery offences committed by individuals now carry a penalty of up to 10 years' imprisonment, an unlimited fine and confiscation of assets. However, this first prosecution under the Bribery Act has been seen more as a statement of intent as it provides no real practical guidance, or clarity, for corporate organisations which are or may become the subject of bribery investigations.

The SFO remains under pressure to bring a case under section 7 of the Act, which introduced an offence of "failure to prevent bribery", whereby a company can be prosecuted for failing to have "adequate procedures" to prevent active bribery.

The report notes that the agency is 'actively considering' the possibility of Deferred Prosecution Agreements (DPAs) in a number of cases, which would be similar to the approach taken by the US Securities and Exchange Commission. The conditions of a DPA include the payment of a fine and compensation, cooperation in their prosecution and implementation of new compliance programs including appointing a monitor.

With an increased focus from the SFO for bribery convictions, it will be essential for organisations to conduct consistent due diligence and comply with anti-bribery regulatory requirements.

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