Falling flat: a failure of anti-bribery procedures

Adequate procedures

For their part, BGL, TSL and ESL pleaded guilty to failing to prevent an associated person from bribing on their behalf.

None of the companies could use the adequate procedures defence to demonstrate that there were policies in place that sought to prevent this type of conduct by any of its associated persons (be the employees, contractors, consultants and/or third parties), who, so far as the BA is concerned, were motivated to obtain or retain business or an advantage in the conduct of business for the corporate.

The prosecution did note that BGL had an ethics policy, but that the document, and in particular the section that related to gifts and entertainment, had not been updated for a couple of years. The prosecution added that:

“Whist the company had policies on its intranet, it only paid lip service to them … it failed to provide training … in relation, for example, to what bribery was and how to recognise it”

BGL attempted to right its previous wrongs when it introduced an e-learning course for its staff on bribery and corruption in 2014. However, all this did was further demonstrate its historic failures in this regard, something that the prosecution was quick to use as part of its case.

As far as TSL and ESL were concerned, the court noted that both had a “culture of disregard” when it came to putting in place effective management systems. Neither company had an ABC (anti-bribery and corruption) policy, with the introduction of the BA having little effect on the thinking of either company in this area.

Sentences

In delivering its sentence, the court applied the Fraud, Bribery and Money Laundering Sentencing Guidelines and sentenced as follows:

• BGL was fined £500,000 and ordered to pay costs of £10,000.
• TSL was fined £70,000 and ordered to pay costs of £10,000.
• ESL was fined £70,000 and ordered to pay costs of £10,000.
• NC was given a custodial sentence of 20 months, which was suspended for 21 months with a requirement that he undertake 200 hours of unpaid work. He was also ordered to pay costs of £5,000. He was not made subject to a Director Disqualification Order.
• PS was given a 12-month custodial sentence, which was suspended for 21 months with a requirement that he undertake 200 hours of unpaid work. He was asked to pay costs of £5,000.
• GH was given a custodial sentence of 21 months, which was suspended for 21 months with a requirement that he undertake 200 hours of unpaid work. He was also ordered to pay costs of £5,000. He was not made subject to a Director Disqualification Order.

With NC settling with CC for £1.737 million less than two weeks after his initial arrest in 2013, there was no claim or award of compensation or confiscation in the criminal court.

This was the Metropolitan’s first successful foray into the world of corporate bribery (the other corporate bribery case being investigated by the City of London Police – see R v Skansen Interiors Limited). Their investigation (albeit assisted by CC’s own internal findings) led to the prosecution authorising charges against each of the defendants.

The case importantly reaffirmed that companies must be live to the actions of associated persons in the day-to-day running of their affairs, particularly in a climate where all the limbs of the fraud triangle (i.e., pressure, opportunity and rationalisation) are present – something which is all too prevalent globally since the pandemic.

There is no better corporate medicine than prevention, and with that, a corporate must ensure that there are tailor made and business specific policies in place that set the tone internally and externally that the business will not tolerate behaviour of this type.

But they need to go further. A simple statement is insufficient, and neither is placing the police on the intranet. Regular employee training (which should be recorded by HR), risk assessments and benchmarking should all be at the top of a corporate’s mind when assessing internal and external risks that the business could face. A company’s expansion should result in existing policies being reviewed to ascertain whether they remain relevant.

The BA set the tone over ten years ago. Unfortunately, some businesses have been slow to adopt and adapt, with, in some instances, internal threats being routinely ignored.