A company has now been convicted in the UK for the first time for failure to prevent bribery. On 19 February 2016 Sweett Group PLC (“Sweett”), a business operating in the construction and professional services sector, was convicted and sentenced for the corporate offence under Section 7 of the UK Bribery Act 2010 (“the 2010 Act”) of failure to prevent bribery and ordered to pay UK £2.25 million.
Section 7 of the 2010 Act introduced a new criminal offence of failure to prevent bribery which essentially means that a company commits an offence if a person “associated” with it bribes another for the company’s benefit. A person is “associated” with the company if they perform services for or on its behalf, regardless of the capacity in which they do so, which covers agents, employees, subsidiaries, intermediaries, joint venture partners and suppliers, all of whom could make the company guilty of this offence.
Sweett became alerted to various issues and conducted an internal investigation following which it self-reported to the UK’s Serious Fraud Office (“the SFO”). After an investigation conducted by the SFO (begun in 2014), in December 2015 the company pleaded guilty to failing to prevent an act of bribery, occurring between 2012 and 2015, intended to secure and retain a contract with Al Ain Ahlia Insurance (“AAAI”). The SFO’s investigation revealed that Sweett’s subsidiary, Cyril Sweett International Limited, had made illegal payments to Khaled Al Badie the vice chairman of the board and chairman of the Real Estate and Investment Committee of the AAAI to secure a contract to build a hotel in Abu Dhabi. The SFO’s investigation into individuals is apparently ongoing.
With regard to Sweett’s ignorance of the actions of its subsidiary AAAI, the judge in the case, His Honour Judge Beddoe at Southwark Crown Court in London, is reported to have emphasised the responsibility as clearly falling on those running companies throughout the world to conduct proper supervision and that “Rogue elements can only operate in this way – and operate for so long – because of a failure properly to supervise what they are doing and the way they are doing it.” The judge also apparently referred to the offence as a “system failure”. It may be inferred from this remark that Sweett could not rely on the defence to Section 7 of having “adequate procedures” in place to prevent bribery from being committed by those associated with it (Cyril Sweett International Limited).
The UK £ 2.25 million consisted of a fine of £1.4 million, and, a confiscation of £851,152. It is understood that the SFO also recovered its costs of £ 95,000.
This case serves as a reminder of the long reach of the UK Bribery Act 2010 and businesses would do well to continuously review oversight of and due diligence on all their “associated persons” globally.
We wrote previously here about the first failure to prevent bribery case in the UK, which occurred in Scotland last autumn, where, although the company in question was not prosecuted it was ordered to pay UK £212,800 (about USD $326,450) under a civil recovery order. Civil recovery is less likely to occur in England and Wales currently and instead a so-called “Deferred Prosecution Agreement” (“DPA”) is more likely, the first one having been agreed in the UK at the end of last year. Our article and video about the first DPA can be found here. It is also interesting to note that the Sweett case did not feature a DPA.
All our articles about bribery and corruption issues can be found here.
André Bywater and Jonathan Armstrong are lawyers with Cordery in London where their focus is on compliance issues.
André Bywater, Cordery, Lexis House, 30 Farringdon Street, London, EC4A 4HH
Office: +44 (0)207 075 1785
Jonathan Armstrong, Cordery, Lexis House, 30 Farringdon Street, London, EC4A 4HH
Office: +44 (0)207 075 1784