The recent Crown Court case of R v Skansen Interiors Limited saw the first fully contested case under the Bribery Act 2010 (the Act) in relation to the failure of a company to prevent bribery. The outcome in the Skansen case provides some practical guidance for companies as to what steps they should take to avoid criminal liability for failing to prevent bribery.
The Bribery Act 2010
Under section 7 of the Bribery Act 2010 a commercial organisation is guilty of an offence if an “associated person” bribes someone, with the intention of obtaining or retaining business, or an advantage in the conduct of business for that organisation. However, there is a defence under the Act if a commercial organisation can prove that it had “adequate procedures” in place to prevent associated persons from bribing others.
An “associated person” is a person who performs services for, or on behalf of, a commercial organisation and therefore employees, agents, and subsidiaries are all examples of potential associated persons.
As to what constitutes “adequate procedures” the guidance issued by the Ministry of Justice in 2011 sets out six principles to be considered by commercial organisations, which include the need for risk assessment, a proportionate anti-bribery policy and supporting procedures. However, much of the guidance is high level and is not particularly specific. Accordingly, the outcome in the Skansen case is helpful for businesses, in aiding their understanding as to some of the practical steps which they should consider taking to ensure compliance with the Bribery Act 2010.
In the Skansen case, a director and project manager of Skansen Interiors Limited were found guilty of bribery offences in their personal capacity, by paying bribes, by way of false invoices, to a former project manager at a property company, in order to win refurbishment contracts worth £6m. Skansen discovered the largest bribe before it was paid and fortunately was able to prevent that payment being made. It also decided to self-report to the police.
Notwithstanding the self-report made by Skansen, it was prosecuted. The jury at the Crown Court also found that Skansen itself was guilty of an offence under section 7 of the Act, as on the facts it did not have adequate procedures in place aimed at preventing bribery by its employees. Skansen unsuccessfully argued that as it was a small local company with only 30 employees, it did not require elaborate systems to prevent bribery for its controls to be “adequate” under the Act. However, the key failure in this instance was that there were no proper controls for the payment of invoices. The company maintained that its ethos was to behave with honesty and integrity, and that there were existing appropriate policies to this effect. Nevertheless, these measures were seen as inadequate, resulting in Skansen being convicted.
Despite being convicted, Skansen was not fined, but this was purely because at the time of the Crown Court hearing it was dormant and had no assets.
Lessons to be Learnt
The Skansen case confirms that organisations of any size and structure need to be more alert than ever before to the potential scope for corporate criminal liability for failing to prevent bribery, particularly as regards their finance function and their controls relating to payment of invoices. It is significant that the bribes involved in this instance were not substantial, with only £10,000 actually having been paid, and with a further £29,000 payment promised.
Furthermore, since the Bribery Act 2010 came into force, Skansen had not assessed the risk of bribery which it faced and it had no specific documented anti-bribery policy document in place. It is therefore important that every commercial organisation not only properly assesses its procedures to prevent bribery, but that it critically reviews those procedures on a regular basis, at all times taking into account the guidance issued by the Ministry of Justice, and that the assessment is well documented.
How can Clarion Help?
Clarion has considerable experience in advising UK and overseas businesses, conducting business in the UK and overseas, on how to assess bribery risks, the drafting of anti-bribery policies and procedures, employee and management training, and investigations. We are happy to discuss your specific circumstances and you can contact one of our experienced team members.
Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.