What has happened?
The UK's Serious Fraud Office (SFO) secured a recent victory against foreign bribery when, on 19 February 2016, Sweett Group Plc (Sweett), a company headquartered in London, was sentenced and ordered to pay GBP 2.25 million (USD 3.15 million) following its conviction under the UK Bribery Act. The conviction is in connection with the bribery of an individual in the United Arab Emirates (UAE).
This is the first conviction under the section 7 Bribery Act corporate offence of failing to prevent an act of bribery, and serves as an urgent reminder that companies with a business connection to the UK may be held accountable for the actions of their business associates globally, including in the Middle East.
Sweett is a construction and professional services company listed on the AIM market in London and operating internationally. Following the publication of certain allegations concerning bribery and corruption, in 2014, the SFO - the UK body which investigates and prosecutes serious and complex fraud, bribery and corruption - announced that it had opened a formal investigation into Sweett. In December 2015, following the SFO’s investigation and an internal investigation undertaken by Sweett and its external counsel, Sweett pleaded guilty to a charge of failing to prevent an act of bribery committed by the employee of one of its subsidiaries. The corrupt payments related to the employee's attempt to secure a contract in relation to the construction of a hotel in Abu Dhabi.
On 19 February 2016, a Crown Court judge ordered Sweett to pay GBP 2.25 million, comprised of a fine of GBP 1.4 million, GBP 850,000 by way of confiscation of the benefit of the conduct, and GBP 95,000 in costs to the SFO.
Immediately following the company’s guilty plea, the value of its share price dropped by 23%. Sweett also announced its decision to close its entire Middle East operations.
The SFO has stated that it is still investigating individuals in connection with this matter.
Why is this relevant?
The Sweett conviction marks a new era of assertiveness against foreign bribery on the part of the SFO. It also highlights the pressing need for companies to take action to ensure that they have adequate and proportionate Anti-Bribery and Corruption (ABAC) policies and procedures in place to minimise the risks of their associates (including subsidiary companies, agents and distributors, etc) committing acts of bribery and corruption on their behalf.
As the Sweett conviction demonstrates, it is imperative that companies not only have a firm understanding of their business dealings with third parties, but also take proactive measures to prevent bribery from being committed on their behalf by their associates.
In addition, the conviction reinforces the importance of companies cooperating fully with the SFO when an investigation has been initiated. Sweett was reportedly criticised for failing to cooperate sufficiently with the SFO during the course of its investigation and it has been noted that Sweett's counsel were unable to reach agreement with the SFO for a Deferred Prosecution Agreement in place of a conviction.
How can we help?
DLA Piper's Middle East Investigations team has extensive expertise and experience advising and representing companies in a wide variety of compliance matters affecting businesses operating in the region, including matters involving the UK Bribery Act and the United States Foreign Corrupt Practices Act (FCPA).
Headed by Adam Vause, a Partner who worked previously for the SFO, our Investigations team focuses on cross-border matters and is on hand to assist clients in developing and enhancing their compliance programs, in responding to government inquiries and investigations and in leading internal investigations conducted under legal privilege.