30 March 2020 - In The Press
The Serious Fraud Office (‘SFO’) has successfully prosecuted three individuals for a fraud worth approximately £23 million, including securing its first convictions under the Bribery Act 2010 (‘BA’), which applies to conduct taking place on or after 1 July 2011. The fraud involved the sale of investment products linked with ‘green biofuel’ plantations in Cambodia and funded through self-invested pension plans (SIPPs). The former CEO and Chairman of Sustainable Growth Group and the former Chief Commercial Officer (‘CCO’) of its subsidiary Sustainable AgroEnergy were convicted of fraudulent trading and conspiracy to commit fraud. The CCO was also convicted of accepting bribes totalling £189,000 to approve false invoices submitted by the director of a sales agent for unregulated pension and investment products, who was himself convicted of conspiracy to furnish false information and two counts of bribery.
The CEO, CCO and sales agent director were sentenced to 9 years, 13 years and 6 years in prison respectively, and disqualified from being directors for between 10 and 15 years each. The SFO has also indicated that it will pursue confiscation and compensation orders against the men.
Although the prosecution centred on the fraud offences, the judge made clear during sentencing that the bribery was an aggravating feature of a “thickening quagmire of dishonesty” which deprived some of more than 250 victims of their life savings and homes. The case demonstrates a broad intention to use the BA wherever possible as a weapon in tackling corruption, and complements recent government proposals for a new specialist anti-corruption unit in the National Crime Agency and a new offence of police corruption, and tough new sentencing guidelines for fraud, bribery and money-laundering offences.
What this means for you
As this prosecution was brought against individuals, it provides little guidance on how the SFO might use the BA to charge or seek a Deferred Prosecution Agreement against a corporate defendant. Companies must similarly continue to wait for clarification of the ‘adequate procedures’ defence and the scope of their liability for ‘associated persons’ under section 7 BA. However, the BA is likely to make it easier for authorities such as the SFO to secure convictions in cases involving complex facts and/or multiple jurisdictions, and the possible penalties for companies convicted of negligently failing to prevent bribery are high: unlimited fines, compensation and confiscation orders and debarment from competing for public contracts.
To limit criminal liability companies should conduct a risk assessment of their potential exposure to bribery and money-laundering, and implement adequate anti-bribery policies and procedures rigorously supported through appropriate training. Any such policies and procedures should be audited at regular intervals, and reviewed whenever the risk exposure of the business changes.