The Key to the UK Bribery Act – Prosecutorial Discretion
The legal marketing hysteria surrounding the UK Bribery Act is entertaining and surreal. Article after article, pitch after pitch focuses on the new D-Day: July 1, the effective date for the UK Bribery Act. Lawyers and commentators are trying to scare global companies into acting quickly to design and implement new compliance policies, or face the wrath of prosecutorial zeal.
These claims should be taken with more than a grain a salt – perhaps a mountain of salt would be more appropriate.
The analysis of the UK Bribery Act should not focus on how it is different or more strict than the FCPA. Instead, I would urge everyone to focus on a few key issues –
— How will the SFO exercise its prosecutorial discretion?
— What resources will be the SFO have to carry out its mission?
— How much will politicall/business forces be able to restrain SFO enforcement?
These are the key issues. Lets take a deep breath and assume that the SFO will act reasonably, build a track record of effective enforcement of the law, and focus on egregious cases of bribery, particularly those involving UK companies or non-UK companies that disadvantage UK companies. While the law literally can be stretched to cover a number of far-out scenarios, I am more convinced that SFO prosecutors will reasonably interpret the law, prosecute cases that are strong and appropriate, and exercise discretion in a way to minimize political interference or backlash.
SFO officials have certainly made a number of aggressive comments about its intentions to enforce the law. These statements, however, are being made in a vacuum. The SFO does not have a strong historical record on which it can build a new enforcement regime. The SFO will be making it up as they go along.
Like any government office, the SFO will act to justify its existence and its mission. How? By bringing strong and unquestionable cases involving serious violations, where the connection to the UK is unassailable. In fact, I predict that some of the first cases will involve violations by non-UK companies which acted corruptly to the disadvantage of UK companies. There is no better way to build support from the UK business community than to prosecute some of its foreign competitors. The SFO is also likely to jump on the US DOJ’s bandwagon by conducting joint investigations with its US counterparts where they can share in the bounty.
According to press reports, the SFO has been provided with a mere £2 million in funding for Bribery Act enforcement. Funding will increase as they bring in fines since the SFO will be authorized to share in some of the penalties collected. Such an increase in its resources and enforcement actions will take time.
In the end, companies need to make sure they do not get caught as a test case – any company caught as a “guinea pig” in an enforcement action will suffer. Compliance is a must and is the best insurance policy. But the UK Bribery Act will never be the driving force that the FCPA has become in the global marketplace.