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Harry Cassin
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Julie DiMauro
Contributing Editor

Thomas Fox
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Marc Alain Bohn
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Bill Waite
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Here Comes The SFO, Part Two

The U.K.’s Serious Fraud Office is supposed to prosecute overseas corruption. But its track record has been weak. Last month, however, it announced a break-through enforcement action against Mabey & Johnson (here). We wondered if that case could mark the emergence of an energized Serious Fraud Office. According to the SFO itself, the answer is yes.

The agency issued an “operational note” on July 21 that spells out how companies can benefit from self-reporting overseas corruption and proving they have an effective compliance program. The document amounts to an enforcement blueprint similar to the way the U.S. Justice Department enforces the Foreign Corrupt Practices Act. The SFO said part of its reason for the new approach is eventual adoption of the U.K.’s pending anti-corruption bill that we discussed here.

The SFO hopes to soon have 100 staff working on overseas bribery cases. And it said that after the Mabey & Johnson prosecution, “More will follow. We shall be using all of the tools at our disposal in identifying and prosecuting cases of corruption that we find.”

The idea is to reward self-reporting with civil instead of criminal penalties. But if a company hasn’t been sincere about compliance — if it doesn’t have what amounts to the U.K.’s version of an effective compliance program — it might still face criminal penalties. As the SFO explained:

In any discussions about procedures within the corporate [defendant] we shall be looking to find evidence of adequate procedures to assess how successful the corporate has been in mitigating risk. We shall also be looking closely at the culture within the corporate to see how well the processes really reflect what is happening in the corporate. For example, we shall look for the following:

• a clear statement of an anti-corruption culture fully and visibly supported at the highest levels in the corporate.

• a Code of Ethics.

• principles that are applicable regardless of local laws or culture.

• individual accountability.

• a policy on gifts and hospitality and facilitation payments.

• a policy on outside advisers/third parties including vetting and due diligence and appropriate risk assessments.

• a policy concerning political contributions and lobbying activities.

• training to ensure dissemination of the anti-corruption culture to all staff at all levels within the corporate.

• regular checks and auditing in a proportionate manner.

• a helpline within the corporate which enables employees to report concerns.

• a commitment to making it explicit that the anti-bribery code applies to business partners.

• appropriate and consistent disciplinary processes.

• whether there have been previous cases of corruption within the corporate and, if so, the effect of any remedial action.

Finally, the SFO said that no matter how much the company cooperates, individuals — including directors — could still face criminal prosecution. It added that it will help self-reporting companies resolve potential liabilities they face in other jurisdictions, presumably including the U.S.

The SFO’s July 21, 2009 operational note on self-reporting overseas bribery can be downloaded here.

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