Colette Kelly Partner, Criminal and Regulatory Solicitor
The Bribery Act: ten years on
1 July 2021 marked ten years since The Bribery Act 2010 (the Act) was introduced to modernise and update the UK’s anti-bribery law.
As well as targeting individuals who have been engaged in bribery, Section 7 of the Act introduced “failure to prevent” offences, criminalising the failure of a commercial organisation to prevent bribery. Section 7 is potentially far-reaching, allowing investigators to prosecute bribery both in the UK and overseas, as long as the company has operations in the UK.
This is a strict liability offence and an organisation will be guilty unless it can show that it had in place adequate procedures to prevent bribery by an associated person. Adequate procedures are not defined in the Act, but they are addressed in the Ministry of Justice (MoJ) guidance. The guidance has been criticised as vague and potentially unreliable.
Section 7 has had a significant impact on corporate culture in the UK and prompted many organisations to review and overhaul their risk and compliance processes so as to demonstrate that adequate procedures to prevent bribery are in place. This will involve demonstrating an investigation protocol with evidence of strong compliance records and governance codes that are fit for purpose, together with a good risk assessment framework and a culture of responsibility. One size does not fit all.
Whilst lauded as the gold standard of anti-bribery legislation, there has been a limited number of successful prosecutions against individuals and commercial organisations under the Act by the Crown Prosecution Service (CPS) and the Serious Fraud Office (SFO).
Deferred Prosecution Agreements
Deferred Prosecution Agreements (DPAs) were introduced on 24 February 2014.They are court approved agreements between a company (they are not available to individuals) and the SFO (none have been agreed with the CPS to date) under which a company is charged with a criminal offence(s) but proceedings are automatically suspended/deferred if the DPA is approved by the Judge. It is an alternative to the company being prosecuted where it is in the public interest.
The offences to which DPAs apply include but are not limited to: bribery, fraud, conspiracy to defraud, money laundering and failure to prevent facilitation of foreign tax evasion offences.
Suspected wrongdoing may be brought to the attention of the SFO by a company voluntarily self-reporting or by a third party. Whilst there is no legal requirement to self-report suspected wrongdoing, this will not act as an automatic protection against prosecution. Whether a prosecution is proceeded with balances a number of factors; one such factor tending against prosecution is a “genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice”. Self-reporting is an onerous obligation which will require evidence of any internal investigation conducted including source documents. The SFO will conduct their own far reaching and complex investigation, often involving multiple jurisdictions and prosecuting authorities. Self-reporting is no guarantee that a prosecution or DPA will not follow and each case will turn on its own facts.
It is a decision for the Director of the SFO whether to invite a company to enter into DPA negotiations. The SFO’s guidance on DPAs provides clarity on how it will engage with companies looking to co-operate wishing to avoid prosecution. Companies will be judged on how they engage.
Although the investigation and negotiation process is protracted, despite the enormous financial impact, DPAs provide certainty to a company and its shareholders, holding companies accountable for the actions of their employees whilst avoiding lengthy criminal prosecution and the reputational damage of a conviction. The significant financial penalties associated with a DPA bring home to management and shareholders that the corporate has a duty to comply with applicable laws.
Amec Foster Wheeler Limited DPA
On the tenth anniversary of the Act, the tenth DPA was approved in the High Court. Following an investigation of almost four years, the SFO entered into a DPA with Amec Foster Wheeler Limited (Amec) relating to the use of corrupt agents in the oil and gas sector. This is the first time that an energy company has been the subject of a DPA, and could pave the way for positive action to be demanded from other energy corporations.
The key takeaway points from the Amec DPA are as follows:
- Amec has taken responsibility for ten offences of corruption relating to the use of corrupt agents in the oil and gas sector by the legacy Foster Wheeler business (Foster Wheeler).
- The offences took place between 1996 and 2014 in Nigeria, Saudi Arabia, Malaysia, India and Brazil. According to the indictment:
- Between 1996 and 2004, Foster Wheeler employees conspired to make corrupt payments to officials in the Nigerian National Petroleum Company, the Eleme Petrochemical Company Limited, and the central Bank of Nigeria as an inducement to secure transactions; and to the Nigerian police and tax officials to settle an allegation of tax evasion.
- Between 2004 and 2007, Foster Wheeler employees conspired to make corrupt payments to government officials to ensure that visas were granted and/or processed quickly.
- Between 1997 and 2010, Foster Wheeler employees conspired to make corrupt payments to officials in the Malaysian state oil company Petronas, as inducements and/or rewards to ensure that Petronas would award Foster Wheeler three separate contracts for services.
- Between 2005 and 2021, Foster Wheeler employees conspired to make corrupt payments to officials in the Indian Oil Corporation Limited as inducements and / or rewards to ensure the award and retention of a contract for service.
- Between 2011 and 2014, Foster Wheeler failed to prevent its associated persons from bribing persons connected to Petróleo Brasileiro S.A, intending to obtain and / or retain contracts in connection with a gas-to-chemicals complex in Brazil called Complexo Gás Químico UFN-IV.
- Amec has agreed to cooperate fully and honestly with any future SFO, domestic or foreign law enforcement, and regulatory authority investigations or prosecutions.
- Amec will pay a financial penalty and costs amounting to £103m in the UK, which forms part of the US $177 million global settlement with UK, US and Brazilian authorities. Amec will also pay the SFO’s costs of £3.4 million and payment of compensation to the people of Nigeria of £210,610.
- The DPA is accompanied by an undertaking from the John Wood Group PLC (Wood), the parent company that acquired Amec in October 2017, promising to meet Amec’s liabilities under the DPA.
- Wood must review and, where necessary and appropriate, enhance and modify its ethics and compliance programme, including internal controls, compliance policies, and procedures and reporting annually to the SFO on the work that it has undertaken.
What does this mean for energy companies?
The indictment against Amec dates back to matters that arose 25 years ago, which the Act and related deterrence programmes have caught. It marks the progress made following the introduction of the Act ten years ago, creating a legal and ethical standard that companies can be held to, particularly those in high-risk sectors such as energy.
Energy companies often operate in commercially and politically challenging markets, making them particularly vulnerable to bribery and corruption. As Edis LJ approving the DPA noted, the victims of bribery are often people of states trapped in poverty, while those holding public office become richer.  As such, it seems likely that despite this being the first DPA against an energy company, similar action could follow against other corporates operating in the high-risk sector.
Indeed Edis LJ remarked that the DPA imposed on Amec should have a “beneficial effect” on the behaviour of other organisations, encouraging them to report wrongdoing when they find evidence of it. 
In the case of Amec, despite historic investigations revealing evidence that employees may have breached applicable bribery and corruption laws, the board failed to report any of its discoveries. Edis LJ pointed out that although the board may have received legal advice that they had no legal obligation of disclosure, the board still had a duty, “not as a matter of [a] legal duty, but as a matter of ethical corporate governance”, to report.  Accordingly, companies operating in multiple jurisdictions, such as energy companies, seemingly have an ethical duty stretching beyond their domestic legal obligation to report any wrongdoing.
One of the more surprising matters referenced by Edis LJ was that Amec had gone through two acquisitions, firstly Amec acquiring Foster Wheeler; secondly, Amec being acquired by Wood. Neither the pre nor post-acquisition due diligence picked up “the widespread and high-level culture of criminality, which is accepted to have existed”. While Edis LJ accepted that the new parent company, Wood, should not be tainted by the actions of Amec, Wood is the corporation that will “carry the can”. 
The obligations imposed on Wood, as the newly acquired parent company of Amec, demonstrates the authorities’ willingness to cut across group structures and, as a result, find that they can establish the responsibility of a parent company over the actions of its subsidiaries. Energy companies should consider how this DPA feeds through to their corporate structure where they can be held liable for the actions of their subsidiaries.
Although it is a challenging time for businesses, there are steps that energy companies can take to reduce risks, such as regularly revisiting their policies and procedures, conducting robust audits and risk assessments to identify global vulnerabilities, particularly during the tendering process, as well as detailed due diligence pre and post-acquisition of targets. In order to cultivate a culture of self-reporting, energy companies should implement independent whistleblowing programmes, thoroughly investigating allegations of bribery and corruption, and appropriately reporting significant findings.
What does the future hold?
It is to be noted that of the ten DPAs, seven relate to Section 7 offences. In addition, the SFO has contributed around £1.4bn to the UK Treasury over the last five years. By that measure, despite the limited convictions against individuals and corporates under the Act, given the large revenue streams to the Treasury, the SFO will consider that the Act still has a significant role to play in the fight against bribery. It seems likely that the SFO will continue to focus on DPAs and securing lucrative financial penalties.
On the Amec DPA, Lisa Osofsky, SFO Director stated that the company had:
“.. brazenly and calculatedly paid bribes to officials around the world to cut corners and secure contracts, going to great lengths to conceal its corrupt conduct. In doing so, the company subverted the rule of law and harmed the integrity of the economy in the United Kingdom. We will continue to deliver justice for the taxpayer by punishing such actions and forcing companies to change for the better.”
The Law Commission launched a public consultation on 9 June 2021:
“seeking viewson whether, and how, the law relating to corporate criminal liability can be improved so that they appropriately capture and punish criminal offences committed by corporations, and their directors or senior management”
The consultation closes on 31 August 2021.
The detailed review of corporate liability for economic crime is to be provided to the government towards the end of 2021.
The SFO director has indicated a preference to introduce a “failure to prevent economic crime” offence as a measure of reform, which would include fraud, false accounting and money laundering. An offence based on this model would make a company liable for economic crimes committed by any of its associated persons in the UK and overseas.
The reforms contemplated are likely to have far reaching consequences on what are considered to be outdated corporate criminal liability laws.
This article, written by Colette Kelly, Partner; was co-authored by Waled Salih, Trainee Solicitor.
 Amec Foster Wheeler Energy Limited – Deferred Prosecution Agreement Judgment, paragraph 21.
 ibid paragraph 35.
 ibid paragraph 19.
 Ibid paragraph 28.
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