UK Bribery Digest Edition 14 September 2020 UK BRIBERY DIGEST | EDITION 14 CONTENTS WELCOME Click to continue 1 | UK Bribery Digest Edition 14 | September 2020 Regulatory and enforcement landscape: Guidance released for an effective compliance programme Over the last 18 months we have seen a significant encourage more effective collaboration between key volume of updated compliance guidance being issued players within an organisation. by regulators and enforcement agencies. Whilst these releases are from regulators and As part of their Operational Handbook, the Serious enforcement agencies in different jurisdictions, Fraud Office (SFO) released the ‘Corporate Co- due to the increasingly global reach of white-collar operation Guidance’ in August 2019, and in crime legislation and the increased cross border January 2020, released an updated chapter on the cooperation between enforcement agencies, ‘Evaluating a Compliance Programme’. a multinational corporation would be naïve to focus on a single framework. Instead, most global With little to no warning, in June 2020 the United businesses set a standard which at least meets States Department of Justice (DoJ) also released • Transparency International — Business principles the requirements of all the leading legislation and updated guidance on the ‘Evaluation of Corporate for countering bribery guidance. By way of example of the increasingly Compliance Programs’. This was followed with an global nature of guidance, the latest FCPA Resource • United Nations Global Compact — The ten updated Foreign and Corrupt Policies Act (FCPA) Guide specifically includes a new section dealing with principles Resource Guide in July 2020, replacing the version ‘Other Guidance on Compliance and International released eight years earlier. The FCPA Resource • World Bank — Integrity compliance guidelines Best Practices’, citing: Guide includes a range of clarifications on the • World Economic Forum — Partnering against anti-bribery provisions of the FCPA, whilst the DoJ • Organisation for Economic Co-operation corruption — Principles for countering bribery guidance provides more practical considerations and Development (OECD) — Anti-Bribery that corporate compliance teams should be recommendation and its Annex II, Good asking themselves. practice guidance on internal controls, ethics, and compliance EVALUATING YOUR COMPLIANCE In addition, whilst not a regulator or enforcement PROGRAMME agency, the Institute for Internal Auditors released • Asia-Pacific Economic Cooperation (APEC) — a revised version of the popular ‘Three Lines of Anti-corruption Code of Conduct for Business Defence’ model in July 2020, reissuing it as the • International Chamber of Commerce — ICC Rules EFFECTIVE CO-OPERATION ‘Three Lines Model’. The new guidance transfers on combating corruption the focus from ‘defence’ of the original model to 2 | UK Bribery Digest Edition 14 | September 2020 The development of Deferred Prosecution Agreements During 2020, the Serious Fraud Office (SFO) announced the seventh deferred prosecution agreement (DPA). Not only was this DPA remarkable due to the size of the financial settlement, but it was also the momentum that the SFO has built, with three of the seven DPAs so far being agreed and finalised within the last 18 months. With DPAs first introduced in 2014, we have sought to show how DPA’s have developed over the last six years. What are DPAs and how do they work? DPAs were introduced on 24 February 2014, under the provisions of Schedule 17 of the Crime and Courts Act 2013. They are available to the Crown Prosecution Service (CPS) and the SFO. • They avoid lengthy and costly trials. According to the SFO’s website, a DPA is an agreement reached between a • They are transparent public events. prosecutor and an organisation which could be prosecuted under the supervision of a judge. The agreement allows a prosecution to be suspended for a defined Under a DPA, a prosecutor charges a company with a criminal offence, but period provided the organisation meets certain specified conditions. proceedings are automatically suspended if the DPA is approved by the judge. A DPA applies only to organisations, never to individuals. The key features of DPAs are: Several pieces of guidance have been published which are relevant for DPAs: • They enable a corporate body to make full reparation for criminal behaviour without the collateral damage of a conviction (for example, sanctions or • The Director of Public Prosecutions and the Director of the SFO published a reputational damage that could put the company out of business and destroy Code of Practice describing how they will use DPAs. the jobs and investments of innocent people). • The Sentencing Council published a sentencing guideline for corporate • They are concluded under the supervision of a judge, who must be convinced offences which can help inform prosecutors when they are making DPAs. that the DPA is “in the interests of justice” and that the terms are “fair, • The Criminal Procedure Rules Committee has published rules in respect of the reasonable and proportionate”. application and approval process for DPAs with an explanatory note. 3 | UK Bribery Digest Edition 14 | September 2020 The development of Deferred Prosecution Agreements continued The DPAs issued to date Of the eight current DPAs, five included charges related to corruption and bribery: • ICBC Standard Bank Plc • Tesco Stores Ltd (Tesco) — 2017 • Airbus SE (Airbus) — 2020 (Standard Bank) — 2015 • Standard Bank was charged with failure to prevent • Serco Geografix Ltd — 2019 • G4S Care & Justice Services bribery contrary to Section 7 of the Bribery • Sarclad Ltd (Sarclad) — 2016 (UK) Ltd — 2020 • Güralp Systems Ltd — 2019 Act 2010. • Rolls-Royce Holdings Plc • Sarclad was charged with conspiracy to corrupt, (Rolls-Royce) — 2017 contrary to Section 1 of the Criminal Law Act 1977; conspiracy to bribe, contrary to Section 1 of the same act, and failure to prevent bribery, The SFO reports the following payments being received for the first six DPAs (excluding the Airbus DPA): contrary to Section 7 of the Bribery Act 2010. Financial information on the SFO’s Deferred Prosecution Agreements • Rolls-Royce was charged with 12 separate counts, seven of which related to pre-Bribery Act offences Financial penalties payable Compensation Costs**** Total payable or false accounting, and five counts for breaches to Consolidated Fund* £000 £000 £000 of Section 7 of the Bribery Act 2010. £000 2019–20 21,270** (Compensation was 3,724** 24,994** • GSL was charged with conspiracy to make paid as part of a civil corrupt payments, contrary to Section 1 Criminal settlement) Law Act 1971; and failure to prevent bribery 2018–19 — — — — by employees, contrary to Section 7 Bribery Act 2010. 2017–18 129,000** — — 129,000** 2016–17 503,806 — 12,961 516,767 • Airbus was charged with five separate counts of failure to prevent bribery under Section 7 of the 2015–16 16,782*** 4,692***^ 330 21,804 Bribery Act 2010. Source: SFO website * This includes fines and, where applicable, disgorgement of profit. ** A rounded figure has been provided. *** These figures represent the value in GBP at the exchange rate current when the agreement, which was denominated in US dollars, was made. **** Refers to the cost incurred by the SFO during the course of their investigation and entering into the agreement, as reimbursed by the Respondents. ^ Includes interest. 4 | UK Bribery Digest Edition 14 | September 2020 The development of Deferred Prosecution Agreements continued In the following sections, we highlight similarities Cases against individuals following DPAs and contrasts between the arrangements in the One of the key features of DPAs is that they apply five DPAs: only to organisations. The SFO launched proceedings against those associated with criminal behaviour in EXTRA-TERRITORIAL REACH the DPAs. However, to date, it has not successfully prosecuted any individual. These cases included senior executives of Sarclad, three former Tesco executives, and former executives of Rolls-Royce. SELF-REPORTING The lack of prosecution of individuals, despite a DPA being in place, exposes a flaw in the DPA regime. The cases have led to a number of commentators questioning the interplay between a DPA and the risk FINANCIAL SETTLEMENTS of individual prosecutions, for instance whether a DPA might be agreed to in haste when those accused of the criminal behaviour might subsequently be acquitted. CO-OPERATION Over the last six years, it appears that the SFO has gained strong momentum with the DPA regulations and the cases we have seen have shone a light on REMEDIATION the expectations of the SFO and the considerable actions that businesses have to take to earn the SFO’s invitation to discuss a DPA. MONITORSHIP OF COMPLIANCE FUNCTIONS SIMILARITIES BETWEEN THE ROLLS-ROYCE AND AIRBUS CASES 5 | UK Bribery Digest Edition 14 | September 2020 The world’s largest bribery settlement finalised in January 2020 Case 98: Airbus On 31 January 2020, the Serious Fraud Office (SFO) announced a landmark deferred prosecution agreement (DPA) with Airbus as part of a global settlement with prosecution authorities. Airbus marks the seventh DPA agreed by the SFO since they were first introduced in 2014. The size of the financial settlement was remarkable, totalling €983.97m (£831.07m), part of a larger €3.59b (£3.03b) global settlement. The judge stated that the settlement “reflected the gravity of the conduct, the full co-operation of Airbus SE in the investigation,