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Montgomery and Ormerod on Fraud: Criminal Law and Procedure

Edited by Clare Montgomery QC and David Ormerod; Deputy Editor Tony Shaw QC

Presented in looseleaf format with regular updates this is a definitive work on fraud which draws on the expertise of leading, specialist practitioners. It contains detailed narrative and relevant materials.

Resources

Update

The Bribery Act 2010 will now come into force on 1 July 2011.

Ahead of its implementation 2 important guidance documents were published on 30 March 2011:

  • The Bribery Act 2010 – Guidance , published by the Ministry of Justice (MoJ) (“the Guidance”) www.justice.gov.uk/guidance/bribery
  • Bribery Act 2010 – Joint Prosecution Guidance of the Director of the Serious Fraud Office and the Director of Public Prosecutions (“the Joint Guidance”) www.sfo.gov.uk

The Guidance makes it clear that a proportionate approach will be taken to the enforcement of the Act. It is not intended that the full force of the criminal law will be brought to bear on well run organisations affected by an isolated incident of improper conduct. Key points arising from the Guidance are as follows:

  • Reasonable and proportionate corporate hospitality will not be affected by the Act.
  • There will however be no exception for facilitation payments which may still amount to a bribe.
  • Organisations wishing to ensure they are complicit with the Act should refer to the Guidance and seek advice as appropriate.
  • The Guidance encourages organisations to consider seeking some form of external verification or assurance as to the effectiveness of its anti -bribery procedures, but such certification may not necessarily mean that the company has established its adequate procedures defence to a charge under section 7 of the Act.

    The Guidance sets out 6 principles, which are non-prescriptive, that may assist businesses in formulating procedures appropriate to their specific needs.

    1. Proportionate procedures: a commercial organisation’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces.
    2. Top level commitment: Top level management must foster a culture within the organisation in which bribery is never acceptable.
    3. Risk assessment: The commercial organisation must assess the nature and extent of its exposure to potential risks of bribery on its behalf by persons associated with it.
    4. Due Diligence: The commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation.
    5. Communication (including training): bribery prevention policies and procedures must be embedded and understood throughout the organisation through internal and external communication, including training, that is proportionate to the risks it faces.
    6. Monitoring and review: The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.

    The Guidance makes clear that businesses could be liable for the corporate offence of failing to prevent bribery (section 7) as a result of actions by third parties who could be deemed “an associated person” for the purposes of the Act. However liability will only arise if that third party performs services for a business. It is therefore at present considered very unlikely that a business would be held liable for the actions of someone who simply supplies goods to a business.

    There is a full defence to the corporate offence if the organisation can show it had adequate procedures in place to prevent bribery, and the Guidance aims to assist companies in putting such procedures in place. However the Guidance also makes it clear that compliance, or non compliance, with the principles referred to above will not necessarily be determinative for the purposes of establishing criminal liability.

    There is debate as to how far the Act will apply as against foreign companies. The Guidance suggests that simply being listed in the UK but not carrying on business within the jurisdiction will not be sufficient to engage the Act. Conversely the Serious Fraud Office has indicated that it will adopt a wide approach to the interpretation of the Act. Ultimately it will be left to the courts to decide.

    The Joint Guidance from the SFO and DPP indicates that if prosecutors believe there is enough evidence to prosecute they will also consider whether it is in the public interest to do so. Factors to be considered in that determination include:

    • Whether the harm was minor and the result of a single incident; and
    • Whether there has been a genuinely proactive approach to self-reporting and the taking of remedial action by the business concerned.
    • Whether the Court would impose a nominal penalty for any wrongdoing concerned.

    April 2011
    Jeremy Summers - Russell Jones & Walker www.rjw.co.uk
    David Williams QC – Fulcrum Chambers www.fulcrumchambers.com

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