First conviction for failing to prevent an act of bribery

The Sweett Group plc became the first company to be convicted under section 7 of the Bribery Act 2010.  Sweett pleaded guilty to failing to prevent an act of bribery and in February 2016 was fined £1.4 million.  In addition, a confiscation order and prosecution costs order were made totalling over £946,000.

The clear lesson from the Sweett case is that failure to cooperate with the authorities at the earliest stage will effectively end the chance to conclude a matter by Deferred Prosecution Agreement (DPA).

Section 7 of the Act has always been the most controversial; criminalising companies for failing to act, rather than being complicit in bribery. The offence contains a statutory defence of having “adequate procedures to prevent bribery”.  However, this case provides no further guidance on the extent to which procedures are deemed to be adequate.

Between December 2012 and December 2015 Sweett failed to prevent the bribing of Khaled Al Badie by its subsidiary company, Cyril Sweett International Ltd.  The bribe related to a contract with Al Ain Ahlia Insurance Company for project management and cost consulting services for the building of an Abu Dhabi hotel.

In July 2014 the Serious Fraud Office (SFO) started to investigate Sweett for suspected bribery and in December 2015 Sweett admitted bribery under section 7 of the Act and was charged. The judge assessed culpability, in accordance with the definitive guideline, as high and therefore applied a percentage multiplier of 250% to the gross profit (harm) figure, the range being 250-400%.

What was significant about this case?

The case provides little guidance on the extent to which procedures are deemed adequate in preventing bribery. Sweett was unable to show that it had procedures in place to record that due diligence had been undertaken. They also failed to act on internal reports by KPMG in2011 indicating inadequate systems and controls.

The case, although similar to the recent Standard Bank case, was not resolved by a DPA. Sweett was happy to cooperate with the SFO if a DPA was sought. In the Standard Bank case, Lord Justice Leveson identified four relevant benefits to cases being resolved by DPA

• the seriousness of the conduct
• the way in which the organisation behaved once it became aware of it
• any history of previous similar conduct
• the extent to which the current corporate entity has changed from the one at the relevant time.

In the Standard Bank case, LJ Leveson provided a detailed account of how the bank had cooperated with the SFO by reporting to the authorities within days of the suspicions coming to its attention, before even starting their own investigation. The bank’s advisers also investigated the bribery and facilitated interviews of current employees, provided  a summary of first accounts of interviewees, were timely and responsive to requests for information and gave the SFO  access to relevant documents.

This was in sharp contrast to Sweett, where Judge Beddoe criticised the company for

• trying to conceal the bribery by soliciting a letter to the contractor stating that the subcontract and the fee that had been paid were legitimate
• a lack of cooperation at the start of the investigation, including commissioning internal investigations that failed to provide all relevant details or satisfy the SFO
• self reporting only when knowing a press report on the matter was to be published imminently.