Monday, 26 October 2015 14:37

The Long Arm of The Law: Fife firm falls foul of far-reaching anti-corruption legislation

Since coming into force in 2011, the Bribery Act 2010, widely described as the toughest and furthest-reaching anti-corruption legislation in international law, has claimed dozens of scalps. And just last month, a Scottish cabling company set a new precedent after self-reporting a breach of the Act’s landmark Section 7, which created the groundbreaking new corporate offence of failure to prevent bribery.

Fife-based Brand-Rex Limited notified the Crown Office in June after an internal investigation uncovered evidence of abuse in its incentive programme, which rewarded installers and distributors with performance-based prizes including holidays abroad.

It emerged that an independent Brand-Rex installer offered the holiday tickets to one of a customer’s employees. This employee held an office which enabled them to affect the decision as to which supplier their company purchased cabling from.

When the facts emerged it became clear that Brand-Rex had contravened Section 7 by failing to prevent bribery on its behalf. Their response was commendable, and instrumental in avoiding criminal prosecution – they self-reported to the authorities and cooperated extensively with the subsequent investigation, as well as implementing new policies and training to prevent any repeat occurrences. For this reason the case was settled with a civil recovery order, resulting in Brand-Rex paying a fine of £212,800.

This case highlights the potency of the Section 7 charge. The installer was not an employee of Brand-Rex; he was an independent worker who installed Brand-Rex products. But that doesn’t matter – the offence is one of vicarious liability, meaning the company is guilty of an offence even if the bribery is carried out by a third party. Brand-Rex did not instruct the installer to do what he did, intend for bribery to occur or even know it was happening. But that doesn’t matter – the offence is one of strict liability, meaning that no intention is required. If bribery occurred, the company is guilty. Ignorance is no excuse.

The only admissible defense under the Act is that the company had implemented adequate procedures to prevent bribery. The burden of proof in this respect lies squarely on the shoulders of the firm, not the authorities. The Ministry of
Justice (MOJ) has released guidance on appropriate measures companies can undertake to fulfil this obligation. One such procedure is a whistleblowing mechanism to encourage the reporting of bribery.

Given the immense scope of the Act, companies would do well to seek protection from breaches they may not even know exist by ensuring that they are fully aware of the adequate measures suggested in the MOJ’s Guidance otherwise they risk being exposed to an unlimited fine under the newly-tested Section 7 legislation.