SFO guidelines get tough

The Serious Fraud Office (SFO) – the UK’s enforcer of the Bribery Act – released guidelines earlier this month signalling its desire to increase enforcement of the Act.

The guidelines looked at three key areas: corporate hospitality, facilitation payments and the SFOs approach to companies that self-report.

Kirkland & Ellis partner Satnam Tumani, a former SFO prosecutor, said how the SFO will approach facilitation payments represents one of the biggest changes. Previously the SFO said in its guidance that it would consider a number of factors in deciding to prosecute a company for paying foreign officials a bribe to move paperwork forward. Now the SFO is saying facilitation payments should not be made, regardless of the circumstances.

The hard line approach comes under the reign of new SFO director Richard Green, who replaced Richard Alderman in April after the agency fell under fire for underwhelming anti-corruption efforts. 

“Facilitation payments may be an issue for certain portfolio companies. However unless the portfolio company can be said to be performing services for and on behalf of the private equity firm then it would be unlikely that the [GP] would incur liability for such activity. There are of course other legal, commercial and reputational reasons to carefully manage portfolio company risks, including the potential for civil recovery actions against firms in respect of assets derived from the conduct of others,” said Tumani.

The change in the SFO’s stance on self-reporting sees the previous guidance, a broad scope of consensual non-criminal resolutions to companies that self-reported, ignored. Now the SFO states that a company that reports an offence under the Bribery Act will be prosecuted. Critics of the change say the new policy eliminates an incentive for companies to self-report. 

The changes to the gifts and hospitality guidelines do not fundamentally alter practice, according to Tumani, who said the SFO is not significantly interested in companies routine business expenditures and hospitality policies. 

The changes are part of the SFO's refocus as an investigator and prosecutor of crime rather than an agency that simply provides guidance, said Tunami.