By Squire Patton Boggs | September 8th, 2015
By Louise Roberts
The UK Serious Fraud Office (SFO) has publically announced that it has sent out the first invitation letters offering DPAs to corporations.
In this blog we discuss:
- the definition of a DPA;
- the new attitude in relation to DPAs and movement towards the first DPA; and
- co-operation with the SFO– dos and don’ts.
Quick Recap: What is a DPA?
The Bribery Act is not the only development in fraud related legislation in the last 5 years; Deferred Prosecution Agreements have also been introduced in the UK following the Crime and Courts Act 2013.
A DPA is essentially a plea bargain that allows for the suspension of a prosecution for a fixed period of time, but only if the organisation agrees to stringent conditions. DPA conditions could include account of profits; payment of a fine; compensation for victims and costs; co-operation in prosecution of individuals; and involvement with a compliance programme. DPAs might be appropriate if public interest is not necessarily well-served by a prosecution.
As far as corporations are concerned, DPAs are strictly for use in relation to economic crime cases, in particular fraud, bribery and money laundering offences. The SFO defined a DPA as: “an agreement reached under judicial supervision between the prosecutor and an organisation.”
The SFO have also produced guidance in the form of the Deferred Prosecution Agreements Code of Practice.
New attitudes and the Start of Negotiations
Ben Morgan, Joint Head of Bribery and Corruption at the SFO, discussed DPAs in May this year in his speech on Compliance and cooperation at the 2015 Mining Conference. He upheld the hard-lined image of the SFO (discussed in our previous blog – The Serious Fraud Office gets serious) and reminded us that:
“We [the SFO] are not in the business of cosy deals, short-cuts or easy targets. We have the stamina and resources to take on the most demanding cases as a snap-shot of our publically known case-load demonstrates”
As the title of his speech would suggest, he also spoke about co-operation and identified DPAs as alternatives to prosecution. Attitudes towards DPAs seem to have changed and according to Morgan, the SFO is no longer: “in the world of having to talk up the DPAs like some sort of salesmen; corporates want them and some will get them.”
By Squire Patton Boggs | August 25th, 2015
By Margie M. Tannock
The AFP’s new Fraud and Anti-Corruption Centre (FAC Centre) says it is ramping up investigations on foreign bribery, sending a clear warning that Australian companies with foreign operations need to get their house in order.
FAC Centre Manager Commander Linda Champion recently told The Australian Financial Review that the AFP “started ramping up [their] efforts towards foreign bribery a couple of years ago and now we are starting to the see the fruit of that…we’ve got some healthy investigations under way to get some real momentum in that area”.
The renewed push is in response to a 2012 report from the Organisation for Economic Cooperation and Development (OECD) which criticised Australia for bringing a single foreign bribery prosecution in 13 years, despite receiving 28 referrals over that time period.
In her first nine months on the job, Commander Champion commenced Australia’s second foreign bribery prosecution. John Jousif, Mamdouh Elomar and Ibrahim Elomar were charged by the Commonwealth Director of Public Prosecutions with attempting
to bribe a public official in order to win construction contracts for Lifese Steel Fabrication or Lifese Pty Ltd in Iraq. The proceedings contributed to the resignation of Lifese Pty Ltd’s Chairman John Dowd, a former NSW Attorney General and Supreme Court Judge.
This prosecution represents a significant shift in the Australian government’s attitude towards foreign bribery, with additional resources allocated to the enforcement of national bribery laws and tightening up of legislation.
Ramping Up Investigations
The FAC Centre is currently investigating mining giant BHP Billiton in relation to allegedly improper payments and gifts given by the company in Cambodia, and its sponsorship of the 2008 Beijing Olympic Games. Construction company CIMIC, formerly known as Leighton Holdings, is being investigated for its role in the alleged payment of millions of dollars in bribes to win a AU$750 million oil pipeline contract in Iraq.
In parallel to these investigations, the Federal Government is undertaking a Senate inquiry which seeks to assess how effectively Australia is fulfilling its obligations under the OECD Anti-Bribery Convention and the United Nations Convention against Corruption.
The inquiry includes an extensive terms of reference, but in general terms is focusing on measures governing the activities of Australian corporations, entities, organisations, individuals, government, and related parties with respect to foreign bribery. Submissions close on 24 August 2022 with a report due on 1 July 2016.
You can find more information on the Committee’s terms of reference and how to make a submission on the Australian Parliament website.
By Squire Patton Boggs | July 15th, 2014
By Louise Roberts
Transparency International UK (“TIUK”), the UK Chapter of the world’s leading non-governmental anti-corruption organisation, has recently published guidance (the “Guidance”) advising businesses on good practice in countering small bribes, including facilitation payments or ‘grease payments’, and also payments made to induce improper action, including cash or vouchers and benefits in-kind, such as tickets for a sporting event, pre-paid phone cards and alcohol. What constitutes ‘small’ is clearly relative – a bribe of £20 to a customs officer may be considered insignificant to a business traveller, but in a country where the average daily wage is £2, this would be a considerable sum of money. Such bribes may be small but they are often made regularly, so easily amount to millions of dollars in bribes every year for a single company.
Small bribes are manifold within businesses across the world – the scale of the problem is highlighted in the statistic from TIUK that globally, more than 1 in 4 people paid a bribe in a recent 12 month period. One of the major issues facing companies affected by small bribes, particularly those operating abroad, is the notion that in some parts of the world, it can be difficult to trade without bribes being frequently demanded. Resisting such demands can have substantial costs for business (such as goods being withheld at customs) and can be difficult for companies to detect if hidden in expense claims or invoices.
The Guidance refers to an ‘ever-increasing spiral of demand’ which can be instigated if a company continually responds to demands. Such payments can lead to a ‘climate of corruption’, with social in addition to economic impacts, as bribery and corruption ‘destroy trust in government and public administration, undermine the rule of law, damage human rights and distort business transactions’ as well as creating an ‘unstable operating environment’ for the company in question. The Guidance instead suggests that companies should establish a no-bribe culture which would lead to fewer demands in the long run and a decrease in bribery overall, thus increasing company credibility.