Bribery Act: failing to prevent bribery can cost organisations dearly
The Serious Fraud Office (SFO) has recently secured a significant conviction in relation to the Bribery Act 2010 against the Sweett Group PLC.
How did the offence arise?
Sweett Group PLC is a construction and professional services company listed on the AIM market in London and operates internationally. The SFO conducted an investigation into the global organisation and found that one of Sweett’s subsidiaries in the Middle East (Cyril Sweett International Ltd) had bribed an Emirati official, Khaled Al Badie, in relation to the development of a hotel in Dubai in an effort to secure a consulting contract for the building of the hotel.
Sweett admitted the offence and in February 2016 was ordered to pay £2.2 million. Immediately following the company’s guilty plea, the value of its share price dropped by 23%. Sweett also announced its decision to close its entire Middle East operations. The SFO has stated they are still investigating individuals involved.
Lessons to be learned
This is the first conviction under the section 7 Bribery Act corporate offence of failing to prevent an act of bribery. It illustrates that companies with a business connection to the UK may be held criminally accountable in the UK for the actions of their business associates and entities across the world even if the offence takes place outside of the UK jurisdiction.
The offence of failing to prevent bribery can be potentially defended if the company can show that it had ‘adequate procedures’ to prevent the bribery. However, this defence did not assist Sweett because, as the sentencing judge stated, there was a “system failure” within Sweett.
To ensure compliance with the legislation and limit the potential of committing an offence, organisations should have in place rigorous and promoted policies to prevent bribery. They should also avoid paying mere ‘lip service’ to the policies or procedures and the culture within the organisation, from senior managers down, should ensure they are actively promoting a culture where bribery will not be tolerated by anyone anywhere in the world.
As part of ensuring a culture where bribery will not be tolerated, companies should ensure regular training of all staff (something we can assist with) and also insist that all businesses associated with it have in place their own policies on bribery.
As the Sweett case demonstrates, not only will a conviction result in heavy financial penalties, it can also have significant impact elsewhere including share pricing and reputational damage.
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