It was recently announced that David Green QC, the Director of the SFO, is pushing for an amendment to the Bribery Act, which is itself only 4 years old, although the SFO has only recently commenced its first prosecution under it. The Act actually came into force on 1st July 2011. 

As reported here in the Daily Telegraph, companies and banks which fail to prevent financial crime by their staff could face very large fines and be blacklisted or barred from public contracts across the European Union.

The Director’s intention, as explained in the Daily Telegraph article, is that the Section 7 “failure to prevent bribery” offence, could easily be expanded in its breadth to include a failure to prevent all acts of financial crime. The Director goes on to explain that the intention would only be to prosecute companies which had benefited from the criminal conduct of their staff. 

This is not the first time that the BriberyLibrary has heard the Director talk about this idea, but it seems that the broader publication of his idea suggests that it is gaining popularity, supported by the report that his initiative is also supported by the UK’s other top law officers. 

“If the public interest requires prosecution of more corporates or to make it easier to prosecute more corporates like banks – not the people but the bank itself – then it needs to be somewhat easier than the controlling mind test…..The sanction would be a financial penalty and the stigma. But it’s the stigma that is most important. Some say that certain banks had been rotten to the core. Why shouldn’t that be marked? Why should a big powerful corporate be able to chuck a few people over the side and just sail blithely on, paying a fine as they go on…if a company has a conviction for bribery it can’t compete in Europe for public contracts…” 

By making the corporation liable for the offences of its staff, the real impact on it will likely be the threat of debarment from tendering for public contracts of any kind across the whole of the EU, which is thought to be far more worrying for corporations than one-off fines, whatever the size. In fact, the threat of public procurement debarment is often what drives corporations in the US to settle with prosecutors, rather than go through a trial: it is a truly powerful “Sword of Damocles”. 

The SFO is currently investigating a number of very large cases, both of alleged corruption and other economic offences, and it has had to ask the UK treasury for additional so-called “Blockbuster” finance of £19m. Blockbuster finance is a special one-off cash sum to support the extra costs of investigating and prosecuting complex cases, often with multiple defendants. The Libor scandal is one such example which has already received an extra £3m in funding. This is ironic because the agency’s budget was reduced severely following the financial crisis (by around 40%, from around £50m pa down to around £30 pa) but the requested extra £19m, if granted, would take the agency back to its pre-crisis budget amount, the only difference being that the Chancellor of the Exchequer effectively has to approve of the intended investigations. Some would say that this amounts to unwarranted and improper political interference by the Government in the administration of the justice system. 

American prosecutors speaking at international anticorruption events have frequently indicated that the SFO’s reduced budget for the whole of the UK is less than one of the equivalent agencies in the US for just one State, which perhaps indicates that the British government does not take economic crime as seriously as the US.

Perhaps the Director’s latest initiative for an amendment in the law, together with additional Blockbuster funding, will take the UK one or two steps further forward in effective investigation and prosecution of economic crime?