Following on from my recent post about the pharmaceutical industry, and the methods used by drugs companies to ‘market’ their products, it is now generally accepted that the UK Serious Fraud Office (“SFO”) is looking for some high-profile cases to demonstrate its commitment to the prosecution of both companies and individuals involved in acts of bribery and corruption.
In this regard, it was recently reported by Reuters that such cases would, in all likelihood, be linked to ongoing US investigations into violations of the Foreign Corrupt Practices Act (“FCPA”), whether by the US Justice Department (“DOJ”) or the Securities and Exchange Commission (“SEC”). Further, given their frequent use of third-party intermediaries and dealings with state-owned enterprises abroad, such investigations could involve firms in the defence, pharmaceutical, energy and telecommunications sectors. According to Reuters, in June 2011, the FBI told a meeting at SEC headquarters that it was keeping a close eye on deals between global aerospace firms and state-owned airlines, possible violations involving the 2014 World Cup and 2016 Olympic Games in Brazil and the reopening of South Sudan’s oil industry.
Most recently, on 27 July 2011, the SEC formally charged London-based Diageo plc, one of the world’s largest producers of premium alcoholic beverages, with widespread violations of the FCPA stemming from more than six years of improper payments to government officials in India, Thailand and South Korea. The SEC found that Diageo paid more than US$2.7 million through its subsidiaries to obtain lucrative sales and tax benefits relating to its Johnnie Walker and Windsor Scotch whiskeys, among other brands. Without admitting or denying the findings, Diageo has agreed to pay more than US$16 million (by way of US$11,306,081 in disgorgement, prejudgment interest of US$2,067,739 and a financial penalty of US$3 million) to settle the SEC’s charges.
The SEC has emphasised that Diageo cooperated with its investigation and implemented certain remedial measures, including the termination of employees involved in the misconduct and significant enhancements to its FCPA compliance program. However, for the reasons set out in a recent post by my colleague Adam Greaves, Diageo will have to go much further to extend its compliance program to cover the Bribery Act. If it does not, it may find that, regardless of its settlement with the SEC, it becomes the subject of a further investigation by the SFO.
However, it should be kept in mind that the Bribery Act is not retrospective; in other words, the SFO will only be concerned with breaches of the Act that occurred following it having come into force on 1 July 2011. Therefore, to the extent that the SFO wants to cooperate with the DOJ and/or SEC with regard to any investigation and/or prosecution, this will need to be in relation to new or ongoing acts of bribery and corruption. Unfortunately, something that the enforcement agencies are unlikely to have to look too hard to find.