The sentencing of the Sweett Group by the Serious Fraud Office earlier this year shows that corruption remains a problem in the industry. Laura Teodorescu explains.
It will be five years next month since the Bribery Act came into force, but has it had the desired effect on the industry?
The signs are not positive. Last December, consultant Sweett Group agreed with the UK Serious Fraud Office (SFO) to plead guilty to a Bribery Act offence after admitting it had failed to prevent the bribery of a United Arab Emirates businessman by a subsidiary company in return for the award of a contract.
The SFO imposed a confiscation order of over £850,000, representing the profit from the contract, a fine of £1.4m, and Sweett was also ordered to pay costs of £95,000.
In February, consultant EY’s industry-wide Global Fraud Survey 2016 showed that 22% of the respondents have concerns about fraud, bribery and corruption at work. This followed a study by the Chartered Institute of Building in 2013, in which 48% of respondents said that corruption was commonplace within the UK construction industry.
Where construction companies could potentially fall foul of the Bribery Act
- Facilitation payments: These are payments made to officials to perform routine actions faster than normal. This practice is strictly prohibited by the Act.
- Corporate hospitality: The Act requires that any such hospitality must be reasonable and proportionate.
- Tendering for public projects: An organisation can be excluded from tendering if its directors or “any other person who has power of representation, decision or control” is convicted of a bribery offence.
- Supply chain: An organisation’s lack of knowledge of – or lack of involvement in – a bribe is irrelevant for the purposes of the Act. An organisation needs to ensure compliance across its supply chain, and this also applies where an organisation is working on a project outside the UK.
- Construction documentation: It is advisable that provisions are included in contracts which address each party’s responsibilities in relation to bribery.
Before the Bribery Act came into force on 1 July 2011, the anti-bribery legislation consisted of a patchwork legislative mix of statutes. The Act widened the scope of the anti-bribery legislation to include:
- the introduction of a new corporate offence of failing to prevent bribery;
- restrictions over corporate hospitality;
- strict prohibition of facilitation payments; and
- extra-territorial reach (meaning it applies to UK companies operating abroad).
But a series of cases during the past year involving companies incorporated in England indicates that that bribery remains a problem.
As well as the Sweett case, the SFO secured a deferred prosecution for a breach of the Act against ICBC Standard Bank over payments to a Tanzanian government official last November. It was ordered to pay out £17m. In January, specialist printer Smith and Ouzman was fined £1.3m under pre-Bribery Act legislation. The same month, Scottish-based Braid Logistics reached a £2m settlement with the Crown Office after it self-reported incidents of bribery.
For a corporate organisation to have a defence under the Act, it has to show that it had adequate anti-bribery policies and procedures in place. For instance, any such policies and procedures should include a mechanism to enable, and support, an employee to “whistle blow” if the employee considers that any practice or behaviour might be in contravention of the organisation’s anti-bribery policies.
The government’s official guidance on the Act advises each organisation to adopt a risk-based approach when introducing anti-bribery policies and procedures and sets out six illustrative principles:
- Proportionate procedures: The organisation needs to be mindful of the scale of its business and the bribery risks it faces.
- Top-level commitment: The board and management of the organisation should promote anti-bribery measures.
- Risk assessment: The organisation needs to conduct and document regular assessments of its exposure
to bribery risks. - Due diligence: The organisation needs to gather and store information relating to any relevant parties.
- Communication: Employees and associated persons must understand the organisation’s anti-bribery policies and procedures.
- Monitoring and reviewing: The organisation needs to do this regularly and make any necessary changes to its anti-bribery policies and procedures.
Laura Teodorescu is a solicitor at Pemberton Greenish
