Yawning in the Face of the UK Bribery Act
In case anyone has noticed, the sky has not fallen. The UK Bribery Act has not lead to the downfall of global business. In fact, here is a profound grasp of the obvious — the UK Bribery Act really has not had much of an impact at all. I am not criticizing the professionals at the Serious Fraud Office, but they have a tough job — and will continue to have a tough job.
Richard Alderman, the consummate professional has left. David Green is a talented leader who will make his mark as well. But the problem is much bigger than two talented leaders. The problem was clear at the beginning.
The SFO has no political support. It is caught between two significant forces — the UK business community put the brakes on the UK Bribery Act before it was effective. Richard Alderman skillfully navigated this treacherous environment by issuing the Guidance which was a signal of retreat from the initial aggressive statements surrounding the implementation of the UK Bribery Act.
The second and perhaps more significant restraint on the SFO was the effort by the UK Justice Ministry to merge the SFO into the UK Justice Ministry. As a veteran of political turf wars in the US, I can assure you that such a political fight can be damaging, and even life-threatening to a prosecutor’s agency. This turf battle ultimately reduced SFO resources and SFO capabilities. It is fairly obvious but without money and without political will, a government agency is not going to be very effective.
All of this translates into one clear message — the UK Bribery Act is far less than a game changer and is not a significant risk for most global businesses. The FCPA and UK Bribery Act paparazzi (law firms which exaggerate risks in the hope of being hired) will decry my view but let us be honest: The prosecution of a court clerk was not an earth-shattering event.
In fairness to the SFO, the UK Bribery Act has no retroactive application, meaning it can only apply to conduct which occurred after July 1, 2011. To those who still view the UK Bribery Act as a real threat, that is their only defense of the UK Bribery Act enforcement scheme — the cases have not yet ripened and investigations take a long time. I am willing to be convinced but so far see very few signs of active enforcement of the UK Bribery Act.
On the other hand, and in stark contrast to the SFO, the UK’s Financial Services Authority has developed into an aggressive enforcement agency. The FSA, unlike the SFO, is not caught in any political turmoil and has been increasingly active. It recently issued a damning report on the lack of anti-corruption controls in investment banks. It has brought several high profile enforcement actions, including a fine for 8.7 million pounds against Coutts for anti-money laundering violations; and a fine for 2.17 million pounds against Direct Line and Churchill for lack of due diligence and care.
The SFO has to regroup and develop a strategy to raise its profile — a big case would clearly put it on the map. Until it flexes its muscle, all we will hear are the cries of chicken little — “The sky is falling! The sky is falling!”
Mike.
A couple of things I have to take issue with.
“Richard Alderman skillfully navigated this treacherous environment by issuing the Guidance which was a signal of retreat from the initial aggressive statements surrounding the implementation of the UK Bribery Act.”
The guidance was not issued by Alderman, it was issued by the MoJ. It contained a number of things which came as a surprise to the SFO, not least the suggestion that the mere fact of a stock exchange listing would not of itself bring an overseas based company within the ambit of the Act. The SFO certainly thought/think it did!
It wasn’t the MoJ that tried to absorb the SFO into itself. It was the Home Office (Teresa MAY) who wanted it subsumed into a national fraud investigating body. She lost the argument in cabinet.
The turf battle of itself did not reduce resources, this had already happened when Alderman had earlier agreed to a reduced budget, which was reduced still further thereafter.
The immediate problem (apart from the sudden departure of their chief executive) is that they have little money to prosecute large scale cases, which are their remit, as opposed to more down to earth matters which are the province of the CPS. Although as you will see below (thebungblog) all this is about to change too.
I agree that the FSA have been busy, using their own legislation which has nothing to do with the Bribery Act, but then the SFO too had a significant result with their investigation into MacMillan publishing and their little local difficulty with the World Bank.
You make the very valid point that the Act has been in force for less that a year. Big Bribery cases in the UK take time, and you don’t arrest someone on suspicion. Evidence has to be gathered and investigated before you start breaking down doors.
The point that I have been trying hard to make is that the Act is not, and should not, be restricted to Big Bribery. At the risk of being accused of self-plugging, try looking at the latest post on thebungblog.wordpress.com. The one about “The Little Guys.” Also worth a peek at one from last year, “Government Declares Bribery Not an Offence.”
Keep up the good work
James
Michael, in an article published last month in the Champion, “The New Brisish Invasion: Will the UK Bribery Act of 2010 Eclipse the FCPA,” http://www.crimlawfed.com/ukbriberyactof2010.html, I argue that the real danger to U.S. companies and citizens lies in the potential of the Bribery Act to criminalize commercial bribery committed anywhere in the world.
The fact that the sky has not fallen does not mean those who are concerned are a bunch of chicken littles. The Bribery Act only came into effect in July of last year and does not apply retroactively, so it is understandable that there would not be much enforcement as yet. But as former prosecutors we both know how long it takes to investigate these cases. And recall how long it took the FCPA to kick into gear. Enacted in 1977, it was a little used statute until about five years ago.
Enforcement is a function of political agendas. With the law on the books it is just a matter of time before the British, like the DOJ, will see this statute, as another way to balance the budget and look tough on crime.
But I hope I am wrong. I will be the first to cheer you on if the statute remains a sometimes thing.
Jon