Our latest Corporate Crime Update including our discussion regarding the 2011 Bribe Payers Index, the SFO's new anti-Bribery hotline, and deferred prosecution agreements.
Bribery and corruption
Transparency International have issued the 2011 Bribe Payers Index, which ranks the likelihood of companies (from 28 leading economies) paying bribes abroad to win business.TI concludes that perceptions of the frequency of foreign bribery by country and business sector have on average seen no improvement since the last Bribe Payers Index published in 2008.In particular the Bribe Payer Index 2011 did not reveal any major changes from the scores obtained in the last Index in 2008. The key difference was the addition of 6 new countries, Malaysia ranked 15th with a score of 7.6, Turkey ranked 19th with a score of 7.5, Saudi Arabia ranked 22nd with a score of 7.4, Argentina and UAE joint 23rd with a score of 7.3 and Indonesia ranked 25th with a score of 7.1.The 2011 report examines different types of bribery across sectors – including, for the first time, bribery among companies (‘private-to-private’ bribery). Bribery between companies across different sectors is seen as just as common as bribery between firms and public officials.The report also makes recommendations about the steps that both the private and public sector can make to combat bribery. Key recommendations for the private sector include:-
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| SFO establishes anti bribery hotlineThe SFO has now established a hotlinefor confidential reporting of suspected fraud or corruption. The line is targeted at anyone in an organisation or connected through business or providers of professional services. A new on-line reporting form underpins the service.In a message to potential whistleblowers, SFO Director Richard Alderman said, "I want people to come forward and tell us if they think there is fraud or corruption going on in their workplace. Company executives, staff, professional advisors, business associates of various kinds or trade competitors can talk to us in confidence. I have set up a special team to make the SFO readily accessible to whistleblowers, with trained staff sympathetic in dealing with any anxieties people might have about coming forward. I want whistleblowers to feel comfortable about it and use SFO Confidential to help flush out fraud."The new "SFO Confidential" reporting service is designed to cater specifically for people who, though not themselves the victim of fraud or directly disadvantaged by corruption, have knowledge through their professional activities of situations that appear to be suspicious. Whistleblowers can call a special number and talk through their concerns with an "SFO Confidential" advisor. A whistleblower's identity will be securely protected, though contact can be made anonymously if preferred.The "SFO Confidential" contact number is 020 7239 7388. It operates from 9.00 a.m. to 5.00 p.m. Monday to Friday.Firms will have to consider how this interacts with their own internal whistle-blowing hotlines, as often it will be in the firm's best interests to manage any reporting to the SFO, to take advantage of the benefits of self reporting. | |
| Deferred Prosecution AgreementsThe SFO and Attorney General are conducting an informal consultation on US style deferred prosecution agreements. The belief is that such agreements could strengthen the UK’s position in enforcing the Bribery Act. A US DPA involves the filing of criminal charges against a company and is an agreement with the US DoJ that prosecution of the company on the filed charges will be deferred for a certain period (typically 2 to 3 years) during which time the company must meet its obligations under the agreement. As a general matter, DPAs are reserved for more serious cases and often contain more onerous terms.We understand that the Attorney General's Office is seeking views from practitioners, corporates and non-governmental organisations and that the informal consultation will last until Christmas, with a formal government consultation due in the New Year. |
Money Laundering
| Gale and Another v SOCA (2011)In civil recovery proceedings, the Court was permitted to adopt a civil standard of proof (on the balance of probabilities) as opposed to adopting the criminal standard (beyond reasonable doubt). The Supreme Court decided that it was not a breach of article 6 (right to a fair trial) of the ECHR to adopt a civil standard of proof in determining under s241(3) the Proceeds of Crime Act 2002 if property recovered was the product of criminal conduct on the part of the defendants. | |
| Shah v HSBCThe Court of Appeal in the latest instalment of this long running dispute found that the identity of employees making money laundering reports can be redacted when disclosing documents in litigation.Mr Shah and his wife, two Zimbabwean-based customers brought a claim against HSBC Private Bank (UK) Limited ("HSBC"), for losses allegedly caused as a result of delays whilst HSBC's requests for consent under the Proceeds of Crime Act 2002 ("POCA") were pending with the Serious Organised Crime Agency ("SOCA").An earlier Court of Appeal judgment, in connection with HSBC's partially successful attempt to strike out the claim, resulted in the dismissal of a number of allegations. The Court of Appeal ruled, however, that HSBC could be required to adduce evidence of its money laundering suspicions and prove these were genuine. The case has been proceeding since that time.In Shah and another v HSBC Private Bank (UK) Limited [2011] EWCA Civ 1154, the Court considered an interim application regarding the disclosure of documents evidencing HSBC's suspicions of money laundering. The issue was whether HSBC could redact (blank out) the identity of individual employees. HSBC disclosed a set of documents relating to its suspicions, but redacted the names of all the individuals reporting or considering the suspicion, save for its nominated MLRO. At first instance, Coulson J had ruled that the names of the individuals were relevant and disclosable, but permitted limited anonymisation on the grounds of public interest immunity.The Court of Appeal upheld HSBC's appeal. The identity of the individuals was not disclosable under the Civil Procedure Rules, because it was not information which supported the Shahs case or adversely affected HSBC's case. The redactions were therefore permitted, irrespective of the public interest immunity position.
This ruling will be welcomed by all those involved in money laundering reporting processes at banks and other regulated firms. It provides some additional comfort that staff can report their suspicions without undue concern that they may be identified in subsequent proceedings. The Court's ruling does, however, depend in part on the way in which the Shahs' case was articulated, following their narrow victory in the earlier strike out application. The basis on which the genuineness of HSBC's suspicions was challenged was a very narrow one. In turn, the documents which could be said to support that challenge were limited. It is not impossible to envisage circumstances in which the identity of reporting employees would be relevant and disclosable, in which case public interest immunity issues would be relevant. A full briefing on this ruling is available here. |
Sanctions
| Financial sanctions: Afghanistan EU No 1049/2011Amendments to the list of those designated by the 2011 sanctions have been made. A list of the amendments can be found here. | |
| Financial sanctions: Terrorism and Terrorist Financing EU No 1063/2011Amendments to the list of those designated by the 2001 sanctions have been made. A list of the amendments can be found here. | |
| Financial sanctions: Al-Qaida EU No 1081/2011Amendments to the list of those designated by the 2002 sanctions have been made. A list of the amendments can be found here. | |
| Financial Sanctions: Democratic Republic of the Congo EU No 1097/2011Amendments to the list of those designated by the 2005 sanctions have been made. A list of the amendments can be found here. |
Disclaimer
The articles published on this website, current at the dates of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.