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Failure to prevent bribery catches up with Sweett, ICBC Standard Bank

An independent provider of construction and infrastructure management services has admitted that it failed to prevent staff from offering bribes in the Middle East.

The Sweett Group operates services in the Asia Pacific, Europe and the United States.

According to the UK Serious Fraud Office (SFO), the Sweett Group acknowledges that its employees offered to award an American architecture firm a USD$100 million construction contract for a hospital in Morocco if the architects agreed to bribe an Arab Emirates official.

The company in effect admitted to breaching Section 7 of the UK Bribery Act which recognises the failure of commercial organisations to prevent bribery as an offence.

The same offence was recently used for the first time by any UK prosecutor in a case involving allegations against ICBC Standard Bank of overseas bribery.

On Monday 1 December, ICBC Standard Bank finally settled its case in the UK by agreeing to pay USD$33 million. Earlier this year, it already agreed to pay $4.2 million to resolve similar charges in the United States by the Securities & Exchange Commission (SEC) in relation to the same case.

These cases highlight how widely the UK Bribery Act’s enforcement extends around the world, and how severe the penalties are for companies that fail to prevent bribery on their watch.

The Sweett Group case in particular sounds an alarm for the engineering and construction industry: unless you adopt the necessary due diligence measures, you remain exposed to a full range of bribery and third party risks.

Source: FCPA Blog

Talk to GRC Solutions about our Anti-Bribery and Third Party Risk courses, as well as our broader Salt Compliance training library.

Kroll fraud report highlights third party bribery and corruption risk

Half of the executives polled in an international survey have expressed concern over the risk their companies faced when dealing with overseas third parties, the recent Kroll Global Fraud Report revealed.

The Kroll Global Fraud Report surveyed over 750 senior executives from a variety of industries and countries worldwide.

Two in five respondents said they felt moderately or highly vulnerable to bribery and corruption risks.

Four in five respondents believed their organisations had become more vulnerable to fraud over the past year.

The report also found that companies had restrained their own expansion due to fears associated with third party bribery and corruption risk. Kroll found that almost 75 percent of those polled “were dissuaded from operating in a particular country or region because of the heightened exposure it would bring to fraud.”

The US Foreign Corrupt Practices Act (FCPA) and UK Bribery Act confer forum courts with extraterritorial reach – that is, the laws can catch businesses incorporated in countries other than the US and the UK – so long as there’s some connection with the jurisdiction.

So when working with third parties, companies must comply with anti-bribery and corruption frameworks to avoid detrimental reputational and legal consequences.

This means that companies must have processes in place for scoping, risk assessment due diligence and risk mitigation.

In 2013, 99 percent of all foreign bribery criminal prosecutions under the FCPA involved third parties.

Penalties under the wide-reaching FCPA and UK Bribery Act are severe.

Breaches of the FCPA may result in company fines of up to USD$2 million per violation of the Act. Penalties for individuals include up to USD$250,000 and/or sentences of up to five years’ imprisonment.

In 2013, Parker Drilling Company paid over USD$4 million to settle charges with the Securities and Exchange Commission for authorising improper payments totalling USD$1.25 million to a Nigerian agent who would later use the funds to bribe Nigerian officials.

Individuals that commit an offence under the UK Bribery Act may be subject to an unlimited fine and/or up to 10 years’ imprisonment.

GRC Solutions provides off-the-shelf and customised training in Anti-Bribery and Corruption across Australia and other jurisdictions.

Contact us today for more information.

Source: FCPA Blog

International Anti-Corruption Day: everybody has a role to play in tackling corruption

It blights lives, and blunts social and economic growth. And the efforts to stamp it out are enforced by some of the severest laws in the world.

Corruption is the broad term we use to describe dishonest conduct or the abuse of power by a person for personal gain. Arguably the best-known form of corruption is bribery.

Every year, the costs of corruption are said to amount to USD$2.6 trillion globally, with an estimated $1 trillion paid in bribes. One estimate indicates that private sector corruption alone accounts for US$515 billion annually.

December 9 is International Anti-Corruption Day, a United Nations initiative designed to raise awareness about the risks and consequences of corruption. Sponsored by the UN Office on Drugs and Crime (UNODC) and the UN Development Program, it attracts widespread engagement and support internationally.

To mark last year’s campaign, UN Secretary-General Ban-Ki Moon said, “To dismantle corruption’s high walls, I urge every nation to ratify and implement the UN Convention against Corruption.”

“Its ground breaking measures in the areas of prevention, criminalisation, international cooperation and asset recovery have made important inroads, but there is much more to do.”

Everyone has a role to play in stamping out corruption, a point made in a statement released by the UNODC.

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It states that “people can – and should – inform themselves about what their Governments are doing to tackle
corruption and hold elected officials responsible for their actions.”

“Actions are also key – reporting incidences of corruption to the authorities, teaching children that corruption is unacceptable and refusing to pay or accept bribes,” it continues.

The costs of engaging in corrupt conduct are huge. One person who knows this more than most is Richard Bistrong. A former sales executive, Richard was sentenced to 18 months in prison for bribery. His crime involved attempting to win contracts from the United Nations and several foreign countries by bribing officials.

Prior to his jail term, Richard spent two and a half years as a US government witness, agreeing to go undercover to expose networks of corruption.

Today, he’s a leading anti-bribery and corruption consultant, speaking regularly about his experience and the toll it took on his life and the lives of his loved ones.

“During the many years when I was working in the field of international sales, I was aware that I was engaging in illegal behaviour,” he says.

“However, at that time in my life, I wasn’t thinking about getting caught and did not think I would get caught.”

Anti-corruption measures are enforced by strict legislation worldwide, including the Prevention of Corruption Act in Singapore and section 70 of the Commonwealth Criminal Code in Australia.

The US Foreign Corrupt Practices Act has continued to attract high-profile international cases. To cite just two cases in 2015, there has been a USD$19 million settlement by pharmaceutical company Bristol-Meyers Squibb and a $14 million case involving Japanese conglomerate Hitachi.

The UK Bribery Act has also drawn scrutiny for its recognition of a broad range of offences. This includes the offence of failing to prevent bribery by a third party, which sits alongside the traditional offences of bribing (including the bribery of foreign public officials) and receiving bribes.

Recently, a Scottish cabling systems supplier Brand-Rex Limited became the first company to fall foul of this offence since the Act took effect in 2011.

Every year, independent body Transparency International publishes a Corruption Perceptions Index which ranks countries in relation to perceptions of corrupt practices from the least to the most corrupt.

While the top of the list tends to remain consistent, the 2014 list contained some surprises. Singapore fell from the top five for the first time to seventh place. Australia slipped out of the top 10 altogether.

As one report by the Organisation for Economic Co-operation and Development (OECD) explains, corruption increases the cost of doing business, leads to waste and the inefficient use of public resources, perpetuates poverty and undermines the rule of law.

Drawing attention to corruption through education and training – equipping people with the practical means to identify what it is exactly, avoid corrupt conduct and report it through the proper channels – is crucial to tackling it.

In the lead-up to International Anti-Corruption Day, GRC Solutions will be offering a range of resources and commentary.

Talk to GRC Solutions today about our range of Anti-Bribery & Corruption courses, as well as our broader Salt Compliance online training library.

First charges under the UK Bribery Act

Britain’s Serious Fraud Office (SFO) has secured its first charges under the UK Bribery Act. The SFO’s criminal investigation revealed Gary West, 52, James Whale 38, and Stuart Stone, 28, of Sustainable AgroEnergy (‘SAE’) masterminded a 23 million pound biofuel investment scam.

The three men falsely and deliberately misled investors between 2011 and 2012 into thinking that SAE owned property in Cambodia. Investors were told Jatropha trees, once considered a promising plant in the quest for oil, were planted on the land and that an insurance policy in place protected the investors from loss in case the crops failed.

David Green, Director of the SFO, was reported as saying, “These three individuals preyed on investors, many of whom were duped into investing life savings and pension funds”.

While Whale was charged and convicted of conspiracy to commit fraud by false representation and fraudulent trading, West and Stone were convicted of bribery offences, in addition to other charges such as conspiracy to furnish false information, making it the first time the SFO secured convictions under UK’s Bribery Act. Specifically, West and Stone were both found guilty of offences of bribing another person and being bribed under the legislation.

London’s Southwark Crown Court sentenced West, Whale and Stone to prison for 13, 9 and 6 years respectively.

The UK Bribery Act is considered one of the world’s toughest laws against bribery and corruption. Individuals can face up to 10 years’ imprisonment and an unlimited fine and have their assets confiscated. The legislation also grants the SFO with extraterritorial jurisdiction that is the power to prosecute any company or individual, even if the alleged bribery took place outside of the UK, provided there is still a sufficient link to the UK.

Contact GRC Solutions today for more information about our anti-bribery and corruption training courses.

Also find out more about our UK Bribery Act training course.

Source: Yahoo News UK and the Serious Fraud Office