Slim pickings for bribery enforcement despite evidence that more companies are involved in corruption

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Only eight cases of bribery and corruption have been completed in the UK in the past year, yielding penalties of less than £8million despite indications that bribery and corruption has risen during the economic downturn.

According to EY’s UK Bribery Digest, which reviews completed bribery and corruption cases, the Serious Fraud Office completed only four cases in the past year (two criminal and two civil settlements) while the Scottish authorities also completed a case. No prosecutions against businesses have yet been made under the Bribery Act – despite the law coming into force 18 months ago.

These findings come despite indications from EY’s Global Fraud Survey that bribery and corruption has risen over recent years, with 15% of executives saying they would contemplate unscrupulous behaviour including providing personal gifts or cash to secure business. The survey of over 1700 CFOs, heads of legal, compliance and internal audit, also showed that the numbers who felt that providing personal gifts to secure business could be justified more than doubled in two years.

This confirms the experience of EY’s UK Fraud Investigation & Dispute Services team who continue to investigate an increasing number of bribery and corruption issues in 2012 and 2013 on behalf of their clients.

Jonathan Middup, Fraud Investigation & Dispute Partner and UK leader of  Anti-Bribery and Corruption services said: “There has been much talk about a tough regime for bribery enforcement, but the scale and nature of cases mean that businesses have little evidence to back this up at the moment. In particular, it continues to be a point of debate that there have still been no corporate Bribery Act cases 18 months after the legislation came into force. Businesses feel that an artificial war is being fought at the moment.

“This is despite survey results and EY’s experience that more bribery and corruption issues are surfacing in the economic downturn.

“However, the SFO has said it has 11 active bribery and corruption cases and a further 18 under consideration.  Given that we are also assisting with a number of issues on behalf of clients we expect that corporate Bribery Act cases will be brought into the public arena this year.  Organisations would be unwise to hold back on their compliance programmes just because the courts are currently quiet.”

Tougher regime for 2013: lessons from the cases

Though not prosecuted under the Bribery Act, the cases completed in the past year provide lessons and warnings to companies on how they may be targeted under the new regime.   Agents and intermediaries committing illegal acts in a company’s name top the list of risk areas whilst certain industries – oil and gas, construction, publishing and retail - have been in the spotlight.

In Scotland, a company acquired a bribery exposure as part of its acquisition of another business and in a further case, the sale of confidential information was highlighted as a corrupt activity that is likely to be treated seriously under the new regime.

Middup continues: “The SFO is signalling a tougher stance after its recent travails. Its responses include looking to invest more heavily in intelligence and clarifying that its primary role is not to advise companies, but to prosecute.

“The best reaction for business is to be ready to demonstrate a robust compliance programme evidencing a proportionate, practical anti-corruption framework in case the SFO should call.”