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17 December 2012

Four charged in Nigerian corruption investigation

Swift Group is a provider of manpower for the oil and gas industry, employing over 3,000 contractors in over 35 countries. This prosecution was brought following an investigation by the SFO in conjunction with the City of London Police into Swift Technical Energy Solutions Ltd, Swift’s Nigerian subsidiary. It concerns allegations that employees or agents of Swift paid bribes to tax officials amounting to around £180,000 to avoid, reduce or delay paying tax on behalf of workers placed by Swift.

The defendants are four employees of Swift, including the Chief Financial Officer, the Tax Manager, the Financial Controller and the former Area Director for Nigeria. All four defendants were charged with two offences of conspiracy to corrupt, as the payments were allegedly made in 2008-9, prior to the Bribery Act coming into force. The Swift Group has been co-operating with the SFO investigation and is not facing criminal charges.

The case will be heard at a preliminary hearing on 22 February 2013, in Southwark Crown Court.

See the SFO’s press release here.

6 December 2012

David Green QC publishes “To Whom it May Concern” letter regarding facilitation payments

The director of the SFO, David Green QC, has today published an open letter, which outlines that facilitation payments are illegal under the Bribery Act 2010 and sets out the consequences of requesting such payment.

In particular, it notes that the SFO may communicate information regarding the request to local law enforcement agencies in the country where the request was made and explains that UK individuals and companies are actively encouraged to inform the Foreign and Commonwealth Office of any such requests.

A copy of the letter is available here.

4 December 2012

Second conviction under the Bribery Act 2010

On 5 October 2011, a licensing officer from Oldham Council accompanied Mawia Mushtaq on a driving test for a private hire taxi licence. When Mr Mushtaq was told that he had failed the test, having failed multiple times previously, he offered £200 - £300 to the licensing officer to change the result. The licensing officer refused and reported the incident to his manager at Oldham Council, who informed the police.

Mr Mushtaq was convicted of bribery under section 1 of the Bribery Act on 4 December 2012, after a trial lasting less than two days. He was sentenced to two months’ imprisonment, suspended for 12 months. The judge also imposed a two-month curfew order.

This is the second prosecution under the Act, but once again relates to individual bribery of a public official and so has not required the courts to consider the more controversial elements of the legislation.

For further information, read our LawNow.

25 October 2012

CPS publishes interim guidelines on concurrent jurisdiction

The CPS has today published interim guidelines for Crown Prosecutors handling cases where more than one country or jurisdiction is investigating criminal conduct. The guidelines, which take immediate effect, formally set out the factors that are considered when deciding where criminal proceedings should be brought.

The CPS has opened a three month public consultation on these guidelines, giving opportunity to comment on the clarity and content of the guidelines. The consultation will remain open until 31 January 2013. While the guidelines apply in the case where there is concurrent jurisdiction, they expressly do not apply to offences committed by UK nationals wholly abroad; therefore it would seem they will not be applied by the SFO when dealing with overseas corruption by UK nationals.

For further information regarding the guidelines and consultation, see the CPS’ website.

23 October 2012

Ministry of Justice publishes its response to DPA consultation

On 23 October 2012, the MoJ published its response to its consultation on deferred prosecution agreements (“DPAs”), outlining the legislative proposals for the introduction of DPAs into the UK legal system. These proposals will be introduced as amendments to the Crime and Courts Bill currently before Parliament and are expected to come into force as early as 2014.

For an overview of the proposals, read our LawNow.

9 October 2012

SFO publishes revised policies

The SFO has today published revised policies on its website. These policies concern facilitation payments, business expenditure and self-reporting. The revised policies are not a departure from existing guidance published by the Ministry of Justice and the Joint Prosecution Guidance (published by the SFO and DPP), however, they do reflect a shift in the SFO’s attitude to enforcement and restates the SFO's primary role as an investigator and prosecutor of serious and/or complex fraud, including corruption. This echoes recent statements made by the new director of the SFO, David Green QC, and may be a result in part of scrutiny and criticism arising out of the LIBOR scandal and OECD Phase 3 report.

For a full analysis of the revised policies, read our LawNow.

See the SFO’s press release here.

30 July 2012

Supreme Court gives guidance on SOCA and the UK courts’ powers under the Proceeds of Crime Act 2002

On 25 July 2012, the Supreme Court handed down its judgment in Perry and others v Serious Organised Crime Agency. The judgment provides valuable guidance on the extra-territorial effect of SOCA and the UK courts’ powers under the Proceeds of Crime Act 2002 (“POCA”).

The Supreme Court ruled that the jurisdiction to make a civil recovery order (or a freezing order in support of it) was limited to property located in the UK and that SOCA was not permitted to serve notices under POCA disclosure orders on persons outside the jurisdiction. The Court also made obiter comments that suggest SOCA will be required more specifically and narrowly to draft applications in future when describing the property to be frozen or disclosed. This may serve to require the authorities to prepare more thoroughly before seeking these onerous forms of relief and sanction.

While the judgment does not go so far as to define the extra-territorial jurisdiction of the primary money laundering offences under POCA, it gives a strong indication of the approach that the courts will take in interpreting the apparently wide ambit of the legislation in the future.

For a full explanation of the case and implications of it, read our LawNow.

SFO confirms criminal offences will cover LIBOR conduct

David Green QC, director of the SFO has confirmed that existing criminal offences are sufficient to cover the conduct central to the LIBOR manipulation allegations. While Mr Green QC has not confirmed exactly which offences he would seek to bring in any subsequent prosecutions, we consider the following offences could potentially have been triggered:

• Common law offence of conspiracy to defraud.
• Fraud offences under the Fraud Act 2006 (in terms of conduct after 15 January 2007).
• Market abuse offences under section 118 of the Financial Services and Markets Act 2000.

6 July 2012

SFO to investigate LIBOR and EUIBOR allegations

Following the FSA’s £59.9m regulatory fine at the end of June, the SFO has today announced that it has formally accepted the LIBOR matter for investigation. According to a report in the Financial Times, the SFO lobbied government for additional funding in order to investigate the matter and has been given £3m by the Treasury in order to conduct its investigation. It is also suggested that additional staff resource will be seconded from the FSA in order to provide specialist advice.

See the SFO’s press release here.

See the Financial Times’ article here.

3 July 2012

SFO agrees £1.89m civil recovery order with Oxford Publishing Limited

Oxford Publishing Limited (“OPL”) has agreed to pay £1.89m under a civil recovery order approved by the High Court today.

Two of OPL’s subsidiaries incorporated in Tanzania and Kenya offered and made payments, directly and through agents, intended to induce the recipients to award competitive tenders and/or publishing contracts for schoolbooks to the subsidiaries.

According to the SFO’s press release, in 2011, Oxford University Press (“OUP”), OPL’s parent company, investigated the matter internally and in November 2011 self-reported concerns to the SFO. It also self-reported a potential breach of the World Bank’s Procurement Guidelines to the World Bank, as the tenders may have led to contracts that they supported or funded.

A copy of the SFO’s press release can be viewed here.

27 June 2012

FSA issues its biggest ever fine to Barclays in relation to LIBOR scandal

The FSA today handed down its biggest ever fine to Barclays for its role in the LIBOR and EURIBOR manipulation scandal. The fine amounted to £59.9m, reduced from £85m in accordance with the FSA’s early settlement policy.

The misconduct stemmed from Barclays’ inappropriate submissions in relation to the LIBOR and EURIBOR rates, its failings in systems and controls in relation to the submissions processes and compliance failings in its internal dealings in relation to LIBOR submissions.

The penalty imposed demonstrates the FSA’s hardening approach in relation to systems and controls failings and regulated firms should take this into consideration when assessing, improving, updating and monitoring their systems and controls, whether in relation to bribery or in relation to minimising the risk of other financial crimes.

A copy of the FSA’s final notice can be viewed here.

22 June 2012

Three individuals sentenced in potato-supply corruption case

Andrew Behagg, David Baxter and John Maylam were today sentenced in Croydon Crown Court for corruption offences relating to the supply of potatoes to Sainsburys.

Behagg (finance director) and Baxter (accounts manager) were employed by Greenvale, a company that supplied potatoes to Sainsbury. In 2008, Greenvale supplied approximately 45% of Sainsbury’s potatoes, under contracts worth approximately £40m annually. Behagg and Baxter bribed Maylam, who was Sainsbury’s potato buyer, with lavish holidays and travel, worth around £350,000 and lump sum payments in the region of £1.5m.

Baxter and Maylam pleaded guilty to corruption and money laundering charges in 2011, whereas Behagg was found guilty of corruption at Croydon Crown Court in May 2012.

All three defendants were sentenced today, with Maylam being sentenced to 4 years’ imprisonment, Behagg, 3 years and Baxter, 30 months. In his sentencing, Judge Nicholas Ainley is reported as saying that it was “very nearly as serious a case of corruption as I can imagine”.

22 May 2012

Ministry of Justice launches consultation on deferred prosecution agreements (DPAs)

On 17 May 2012, the MoJ launched a consultation on the introduction of DPAs as a means for resolving corporate criminal cases of economic crime (i.e. bribery, money laundering and fraud). The proposal expects DPAs to be introduced in 2014-2015 and seeks to encourage corporates to self-report suspected criminality to the SFO in return for a “suspended” prosecution and reduction in financial penalties.

For full details of the proposals, see our LawNow.

A copy of the consultation can be viewed here.

23 April 2012

David Green QC replaces Richard Alderman as the new director of the SFO

Today marks the new directorship of the SFO, with David Green QC replacing outgoing director, Richard Alderman. Mr Green QC previously presided over the subsuming of the Revenue and Customs prosecution office and there are rumours that his new appointment may be the beginning of the end for the SFO in its current form. However, Mr Green QC has today said that the “SFO is here to stay”.

See a copy of the SFO’s press release regarding Mr Green QC’s appointment here.

2 April 2012

FSA Thematic Review of Investment Banks is published

On 29 March 2012, the FSA published its thematic review of anti-bribery controls in the investment banking sector. This follows the FSA’s previous review of commercial insurance broking firms in May 2010 (see our LawNow.)

In summary, the FSA noted a lack of action taken in response to its previous thematic review and while it acknowledged some firms had made considerable efforts to improve and implement their anti-corruption controls and procedures, many had adopted a “slow and reactive” approach to anti-corruption measures.

For a full analysis of the FSA’s review, see our LawNow.

16 March 2012

OECD publishes its Phase 3 Report

Today the OECD has published its Phase 3 Report, which reviews the effectiveness of the UK’s framework for enforcing its international obligations to combat corruption.

The Report followed a visit of a review panel to the UK, who conducted interviews and discussions with senior politicians, bureaucrats, judges and practitioners about the UK’s implementation of its international obligations in relation to combating bribery of foreign public officials.

The Report criticised the lack of clarification of the term, “reasonable and proportionate” hospitality and promotional expenditure, in the Ministry of Justice’s Guidance on adequate procedures, including the reference to industry norms. The Report raised concerns that the illustrations and explanations in the Guidance may lead businesses inadequately to address the risk of corruption until court judgments provide more concrete guidance.

More importantly, in responding to the OECD’s questions on the Guidance, UK officials (including a number of judges who deal with corporate offending) stated that “a company could be convicted under the Act even if it acts in accordance with the [Guidance]”.

The Report noted that judges would likely make limited use of the Guidance at trial. In the view of the judges involved in the discussions, the Guidance was not issued by Parliament and it was of comparable authority to an academic text. Therefore, until clarification is provided by the courts, the full extent of the defence to the corporate offence under the Act will remain unclear but corporates would be ill-advised not to follow the Guidance until such clarification is given.

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