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A New Era of Enforcement, Contributed by Natalie Roberts, Lawrence Graham LLP

Tuesday, August 30, 2011

By Natalie Roberts, Lawrence Graham LLP

The Bribery Act 2010 has been hailed as the biggest overhaul of Britain's bribery laws in more than a century and brings the UK's anti-corruption laws into line with North America and Europe. Big businesses with multiple offices and international operations are most at risk in areas such as the new corporate offence of failing to prevent bribery, facilitation payments and director liability.

Individuals can be sentenced to a maximum of 10 years for paying or receiving a bribe and companies can face fines and possibly also a permanent ban from tendering for government contracts across the EU. The Bribery Act has now been in force for two months, but a QBE survey shows that half of businesses have taken no action at all.

Is it likely that the enforcement agencies will take a tough stance on such businesses or, in this new era of consolidation and regulatory reform, are they spending more time trying to save themselves?

The Enforcement Bodies

The Financial Services Authority (FSA) and Serious Fraud Office (SFO) have been tasked with policing the Bribery Act. The SFO must prove bribery to a criminal standard, but the FSA need only show that companies do not have tight enough procedures and that bribery could have taken place. The FSA and SFO are eager to bring at least one or two successful prosecutions or enforcement actions in the next 12 to 18 months, if not sooner. No doubt they have already identified some promising cases and are actively gathering intelligence.

However, after a series of u-turns, policy changes and Whitehall infighting, these financial crime-fighting bodies have been seriously weakened. Some critics have questioned whether they now have the necessary resources to effectively police the Act and other anti-corruption laws.

With the aim of "fixing" the financial system, the coalition Government last year announced a consolidation of the economic crime enforcers and a shake-up of the financial regulators. The plan outlined a new Economic Crime Agency (ECA) which would be created from parts of the Office of Fair Trading, the enforcement division of the FSA and all of the SFO, while financial regulation would no longer be shared between the FSA, Bank of England (BoE) and the Treasury, but would be centralised under the control of the BoE.

Economic Crime

A year on and the Home Office is now tasked with leading the reforms and is in charge of creating a new body called the National Crime Agency (NCA).1 This new Agency will be a specialist police force replacing the Serious Organised Crime Agency, the Child Exploitation and Online Protection Centre and the National Policing Improvement Agency by 2013. It is intended that the NCA will co-ordinate the agencies that tackle economic crime and will be tasked with fighting organised crime, cybercrime, fraud and illegal immigration. The NCA will co-ordinate information across all police forces and borders and NCA officers will have police, customs and immigration powers.

The Home Office has also taken over the project of creating the ECA from the Treasury. The ECA may be incorporated into the NCA. It is unclear how these two bodies will interact, but the Home Office has made it clear that the NCA is to take the lead on organised crime.

The Home Office was considering plans for a transfer of the SFO's responsibility for the investigation of complex fraud cases to the NCA and responsibility for taking cases to court to the Crown Prosecution Service. The proposals were heavily criticised and after much lobbying by senior politicians and the SFO director, Richard Alderman, the Home Office and Government appear to have changed their plans. The Home Secretary, Theresa May, confirmed in a recent press interview that the SFO would not be forming part of the new body. The SFO is seeking clarification of its status following this u-turn. Ms May said that she would review in due course what the appropriate relationship is with the SFO and the NCA. The FSA's enforcement and financial crime division as well as the OFT will similarly not form part of the NCA.

As a result of the organisation's uncertain future, the SFO has faced a spate of high-level departures, including Vivian Robinson, the SFO's general counsel and Charlie Monteith, the regulator's head of policy and the man who led the agency's work on the Bribery Act. Additionally, a selection of senior investigators have left, and the agency is now looking to fill approximately 50 vacancies.

The SFO is notoriously overstretched, its budget having been cut from

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