Don’t Get POCA’d

by Barry Vitou and Richard Kovalevsky QC

While readers of the FCPA Blog have probably heard plenty about the U.K.’s new Bribery Act, they may be unfamiliar with the Bribery Act’s country cousin, the 2002 Proceeds of Crime Act (POCA). Think of it as an anti-money laundering and forfeiture statute — on steroids.

POCA’s penalties are harsher than the Bribery Act’s. And, where bribery has taken place — and while an organization could have a defense under the Bribery Act — the company and its executives could still have criminal liability under POCA.

It’s a case of out of the frying pan and into the fire.

Under section 328 of POCA, a fresh stand-alone offence is committed if someone enters into or becomes concerned in an arrangement which they know or suspect facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another. So, for example, a board of directors choosing to sweep the existence and revenues of a corrupt contract under the rug would be committing the so-called arranging the retention offense.

Under POCA, contracts and assets (wherever located in the world) acquired directly or indirectly as a result of a bribe will be at risk of confiscation. The amount subject to confiscation is not limited to net profits of the relevant contract but by its value. At a minimum, this means total revenues under the contract.

No wonder English courts have referred to POCA as “justifiably draconian.”

There is a defense to arranging the retention offense: disclosure of the facts to prosecution authorities. Similarly, through “adequate procedures,” the Bribery Act forces organizations to root around in the closet. If they find something, they’ll face the unhappy choice of whether or not to self report. Doing so could also force disclosure in the U.S.

Richard Alderman, Director of the U.K.’s Serious Fraud Office, talked earlier this year about whether companies who find potential POCA violations should self-report or keep quiet:

I could give you a number of reasons why I think [keeping quiet] would be wrong. Let me though just give you one. Which of you would like to go and visit your CEO and CFO in a police station where they are being held following arrest on money laundering charges. Those charges will be based upon decisions by the CEO and CFO on your advice that disclosure will not be made to the SFO and that the benefit of the corruption will therefore be retained within the corporate. I can imagine some difficult discussions.

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Barry Vitou is a partner with Winston & Strawn in London specializing in regulatory matters, anti-corruption and money laundering, and Richard Kovalevsky QC, is a criminal law barrister at 2 Bedford Row specializing in corporate crime, anti-corruption and proceeds of crime confiscation. Together they co-author www.thebriberyact.com, a free resource about the new U.K. Bribery Act.