industry focus
The ABC of beating corruption
Retail is one sector where businesses may fall under scrutiny of the far-reaching Bribery Act. Sainsbury’s has already fallen foul of the Act, but any retailer that deals in millions of euro supplier contracts in the UK, or overseas, will fall under scrutiny.
A legal case late last year has sent a warning shot across the bows of UK plc after a sales and marketing director found guilty of corruption under the UK Bribery Act was sent to prison for three years while the chairman received a suspended sentence for 18 months.
The sentences alone sent a strong message, but the brand damage to the printing company convicted by a jury of making corrupt payments to public officials in Kenya and Muritania, goes deeper as sentence has been delayed on the Smith and Ouzman’s corporate culpability while confiscation issues are dealt with.
This, according to Jo Rickards and Jo Walsh, partner and associate at Kingsley Napley law firm, is the tip of a larger iceberg as the UK Government is holding businesses to account for not having adequate procedures to protect itself against allegations of wrong-doing – the so-called ABC (Anti Bribery and Corruption) procedures.
The two lawyers argue that the key principles to bear in mind are proportionality; the tone from the top; regular risk assessment; due diligence; communication and training and monitoring and review.
They said that if a company believes it has a systemic problem, then an internal investigation will be needed to establish its extent. This will minimise the amount of additional investigation required by the Serious Fraud Office (SFO) and assist in any report which will, in turn, improve the company’s chances of avoiding prosecution.
However, any investigation should involve outside lawyers so that the SFO can be reassured as to its vigour and rigour. It is within the SFO’s power to input on the scope of that investigation, or even desist while it conducts its own review.
The conduct of the board is central to an investigation. This was particularly true in the case of Smith and Ouzman where the chairman was viewed as a directing ‘will and mind’. In such cases custodial sentences against the board are inevitable, and the 71-year-old only escaped jail because of his personal circumstances.
Companies caught up in investigations should aim for non-prosecutional outcomes, a dispensation of the law which allows for deferment and avoids compulsory debarment and confiscation proceedings, as well as reducing the brand reputational damage. This is allowed in rare circumstances, but may be granted where full co-operation and transparency with the SFO are forthcoming. Of course, if this approach fails, the company may have unwittingly provided the SFO with all the evidence it requires to proceed with a prosecution.
Finally, firms caught up in corruption cases should try and avoid debarment. This is where they are automatically prevented from bidding for public procurement contracts, for example.
It is therefore in the hands of the retail board to keep a close watch on the activities of its employees and to make it plain that it does not tolerate corrupt behaviour or, in other words, the tome from the top is as simple as ABC.
