Extra funding has been given to the Serious Fraud Office (SFO) to investigate bribery allegations. It’s a clear indicator that bribery is high on the government’s agenda. So what does this mean for those involved in business finance?
The SFO has been granted extra money by the government to assess whether ENRC used bribery to secure mining contracts abroad. But is it only ENRC who should be taking heed of this? Certainly not.
There’s no doubt this development could have serious implications for ENRC, which is now owned by a Luxembourg-based corporate group, ERG. But it is also likely to have repercussions for the likes of accountants, auditors, finance officers and anyone else in a company who has the power to authorise payments. It is proof that tackling bribery is a government priority – which means closer scrutiny of companies and their “money men’’.
The last few years have seen the likes of Rolls-Royce, GSK, Olympus and many other huge global names being investigated – and in some cases punished – for bribery that took place in various parts of the world. This year has seen the first conviction under Section 7 of the UK’s Bribery Act for failure to prevent bribery in the course of business.
It doesn’t take a genius to recognise that the authorities are looking very closely for even the slightest hint of bribery. The smarter business minds, however, will recognise that it is important to know what to do if you or your company is suspected of bribery.
If this does happen, you have to know who to contact and how to lay the groundwork for mounting the best possible defence case. As a firm that regularly defends companies and individuals facing bribery allegations, we can say from experience that such defence requires a precise approach. With the available penalties including unlimited fines and up to ten years imprisonment, there is no scope for getting it wrong.
A strong defence will involve obtaining all available evidence – some via the use of disclosure – the use of expert witnesses, shrewd document management, and preservation of all relevant material and channels of communication. If you hire defence solicitors with the appropriate expertise and experience in this field they can mount a case that plays to all your available strengths and emphasises the weaknesses of the prosecution’s claims.
Such an approach has to be considered, methodical and thorough – that is the only way to demolish the allegations being made by the authorities. Having worked on some of the UK’s biggest bribery, mining and assets cases, we would always emphasise the need for thoroughness.
Ideally, however, it would be best if such problems could be averted by taking preventative action to remove or even just reduce the risk of you or your company becoming involved in bribery in the first place. The SFO’s funding for its ENRC investigations is, as we mentioned earlier, a perfect reminder of the value of introducing such measures.
Such action can stem from an in-depth internal investigation – such as the ones we carry out for corporations and major PLC’s – which can highlight the risks of bribery in a company’s areas of business. A properly conducted investigation can examine the risks regarding staff, business partners, third parties and any other links in the business chain. It can determine who does what, if anything, wrongly and who knows about it or suspects it.
If an investigation does highlight wrongdoing, it puts the company in a much stronger position than it would be if the illegal behaviour was discovered by the authorities. It allows the company to self-report which, with the right legal assistance, will help reduce the size of any penalty and can boost the chances of the firm being able to enter into a deferred prosecution agreement (DPA) whereby it is given a chance to right the wrongs and escape punishment. Please see the article on DPA’s elsewhere in this eBook for further information.
Bribery under the Act is defined as giving or receiving of a financial or other advantage in connection with the “improper performance’’ of a position of trust. Failing to identify how this could happen in your business will carry costs so any analysis of the risks regarding those in the chain has to prompt the introduction of precautions wherever necessary.
Staff have to be trained to be aware of the risks – and this training has to be comprehensive and ongoing, not a token effort.
Bribery, as the ENRC case indicates, is a major issue. It is also an issue that is firmly on the agenda of the authorities. For that reason, it has to be on the minds on everyone in business so that they can prevent bribery or, at the very least, reduce the harm that it can cause them or their company.