'Adequate Procedures' And Self Reporting Under The Spotlight As Jury Rejects Section 7 Defence

A UK refurbishment contractor has been found guilty under Section 7 of the UK Bribery Act 2010 (the "UKBA") for failure to prevent bribery. The case represents the first time that a jury has considered an "adequate procedures" defence under the UKBA and provides a timely reminder to companies of the risks of self reporting offences under the UKBA to the UK authorities.

An Act not to be taken lightly

Skansen Interiors, a small-scale UK based refurbishment company, was charged under Section 7 of the UKBA (failure to prevent bribery) in relation to allegations that Skansen's former managing director paid bribes to secure refurbishment contracts worth £6 million. As well as filing a suspicious activity report with the UK National Crime Agency, Skansen voluntarily self reported the conduct to the City of London Police and co-operated with the police's investigation. The UK Serious Fraud Office (the "SFO") encourages companies to self report misconduct, potentially in return for more lenient treatment, including a Deferred Prosecution Agreement (a "DPA"). There have been four such DPAs agreed with the SFO to date, but none have been agreed with the Crown Prosecution Service (the "CPS").

Despite the decision to self-report and cooperate, the CPS pursued a Section 7 charge against Skansen and separate charges against the two individuals involved. Section 7 of the UKBA holds companies strictly liable for failing to prevent bribery by those associated with them.

At trial, Skansen sought to argue that the policies and procedures it had in place at the relevant time satisfied the "adequate procedures" defence available under Section 7(2) of the UKBA. It is a full defence to a Section 7 charge for an organisation to prove that, despite a particular case of bribery, it nevertheless had adequate procedures in place to prevent persons associated with it from paying, offering or giving bribes. In particular, Skansen's defence sought to draw to the jury's attention the company's modest size (a workforce totalling approximately thirty) and limited geographical reach to argue that the company did not need sophisticated procedures to be in place for them to be "adequate". Skansen also argued that staff did not need a detailed policy to tell them not to pay bribes because such a prohibition was common sense and the company should be able to rely on the integrity and honesty of its employees to help avoid bribery. Skansen also sought to rely on broadly worded...

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