Last week Scotland’s Prosecution Service announced a £2.2 million civil settlement following a self-report of bribery offences by Braid to prosecutors. This is the 4th civil settlement entered into under Scotland’s self-reporting initiative, which was established in 2011, following the Bribery Act 2010 (BA2010) coming into force. The initiative allows businesses - but not individuals - to avoid criminal prosecution through disclosing criminal conduct to Scottish prosecutors, identifying remedial steps, and making payment of a sum that removes any advantage arising from the bribery. These payments are made to the Cashback for Communities scheme, and are invested in sporting, cultural and youth initiatives throughout Scotland.

What offences were reported?
There were two separate offences reported.  

  • The first involved a customer’s employee who was allowed to incur unauthorised expenses (travel, holidays, gifts and cash). These expenses were funded through the “inflation of invoices”.  
  • The second offence related to a profit sharing arrangement with a director of the customer company.  Here the profit made on services provided to the customer was split between the customer and Braid in return for the customer continuing to place orders with Braid. 

It was accepted that there had been a contravention of two BA2010 offences – the s.1 offence of bribing another person, and the s.7 corporate offence of failing to prevent bribery.

Why is the settlement significant?

  • The self-reporting initiative has identified criminal conduct that prosecutors would probably not have uncovered. 
  • The initiative is unique in the UK. In England and Wales a self-report either leads to a prosecution or deferred prosecution agreement (DPA). DPAs require the oversight of the court and the laying of criminal charges, which are discontinued once the agreement has been fulfilled. 
  • The English approach is significantly more transparent than the civil settlement route in Scotland, as the context and background to the offence(s) is public; as such benchmarking the appropriateness of financial penalties is more straightforward. The sum agreed in Scotland is focused on removing the advantage or profit from the bribery, not on penalising criminal conduct; this may result in differences between the jurisdictions.
  • The initiative gives rise to stark options to businesses who uncover failings. A self-report in Scotland has significant advantages – there is no criminal prosecution of the business, the agreement is finalised before any public announcement, and the risk of a criminal trial is avoided. However, if a business fails to self-report and the offences subsequently come to the attention of prosecutors, a civil settlement is unlikely to be available.  
  • Whilst the civil settlement means that no further action will be taken against the business, criminal investigations against individuals can still be brought. 
  • Generally speaking if the corrupt conduct takes place in Scotland, then Scottish prosecutors will take jurisdiction; similarly if the conduct is in England the case will pass to English prosecutors.  No clear guidance has been produced on how cross-border issues will be handled, or on the status and effect of DPAs in Scotland.
  • The current Scottish scheme comes to an end in June 2016. There is ongoing speculation that Scottish prosecutors will align their approach with that in England and introduce DPAs to Scotland. It is not clear to us that this will happen, as Scottish prosecutors take the view that the initiative has been a success, and the initiative has undoubtedly recovered significant sums from businesses that have disclosed wrongdoing. 

 

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