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Anti-Bribery and Corruption: Perceptions, Risks and Practice for UK Banks

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White Collar Crime and Risk

Part of the book series: Palgrave Studies in Risk, Crime and Society ((PSRCS))

Abstract

Corruption is a serious economic, social, political, legal and moral problem found in many contexts from sports (i.e. doping in athletics and FIFA scandals) to banking practices (i.e. LIBOR, Dark Pool) and international trade (i.e. the BAE bribery enquiries).1 Past studies in this field indicate that the risk corruption poses to society at large varies from country to country and is difficult to quantify. Such risk is generally calculated in light of public’s perception of the level of public sector corruption in a given society, but there have been studies which also indicate that economic freedom, socio-political stability, tradition of law abidance and national cultures are the major variables that dictate the degree of corruption. Past research findings both by the academia and policy makers link corruption to poor economic growth, low political stability, lack of transparency and accountability to which liberalisation, privatisation and democratisation are offered as preferred policy responses.2 The literature review also reveals that there is limited legal analysis of this phenomenon. The author takes the view that the narrow focus on developing countries has obscured more subtle yet costly manifestations of corruption in rich and democratic (developed) countries and as a result the risk of corruption in so-called developed countries is overlooked. This chapter expands the existing knowledge about the determinants of corruption as it focuses on the United Kingdom (UK) where democracy, economic liberalisation and the rule of law are arguably well-established principles in public office generally and in financial transactions particularly. Firstly, this chapter analyses how the UK’s legal instruments address the crime of corruption. Secondly, the risks that bribery and the legal compliance requirements pose for banks are commented on. Finally, a number of good practice proposals are considered and evaluated.

The original version of this chapter was revised. An erratum to this chapter can be found at https://doi.org/10.1057/978-1-137-47384-4_13

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  • 11 September 2018

    An erratum has been published.

Notes

  1. 1.

    Internal Control – Integrated Framework (May 2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

  2. 2.

    Tim Pope and Thomas Webb, ‘The Bribery Act 2010’, (2010) Journal of International Banking Law and Regulation, Vol. 25, 480. Transparency International categorise the cost of corruption in four main areas: political, economic, social and environmental: ‘FAQS on Corruption’ (Transparency International, 2012) http://www.transparency.org/whoweare/organisation/faqs_on_corruption/2/

  3. 3.

    Rob Harris, Corruption crisis sees UEFA, FIFA call off friendly match, The Washington Times, 30 September 2015, http://www.washingtontimes.com/news/2015/sep/30/corruption-crisis-sees-uefa-fifa-call-off-friendly/

  4. 4.

    Christopher Matthews, LIBOR Scandal: The Crime of the Century?, The Times, 09 July 2012, http://business.time.com/2012/07/09/libor-scandal-the-crime-of-the-century/, accessed 23 January 2016.

  5. 5.

    BBC News, Barclays and Credit Suisse are fined over US ‘dark pools’, 01 February 2016, http://www.bbc.co.uk/news/business-35456219

  6. 6.

    James Wilson, ‘The day we sold the Rule of Law’ Halsbury’s Law Exchange, http://www.halsburyslawexchange.co.uk/?s=the+day+we+sold+the+rule+of+law

  7. 7.

    United Nations Office on Drugs and Crime, https://www.unodc.org/unodc/en/treaties/CAC

  8. 8.

    Ades and Rents, ‘Competition, and Corruption’, American Economic Review (1999) 89 (4), pp. 982–93 and Sandholtz and Koetzle, ‘Accounting for Corruption: Economic Structure, Democracy, and Trade’, International Studies Quarterly (2000) 44 (1), pp. 31–50.

  9. 9.

    We have adopted Donald Cressey’s ‘Fraud Triangle’ in this regard. See, Donald Cressey, Other People’s Money: A Study in the Social Psychology of Embezzlement, (Glencoe, IL: Free Press, 1953).

  10. 10.

    Pope and Webb argue that corruption and bribery can undermine market integrity and business confidence and adversely affect society at large. Pope, T. and Webb, T. ‘Legislative Comment – the Bribery Act 2010’ (2010) Journal of International Banking Law and Regulation, 25(10), 480–483, 480.

  11. 11.

    Ades, A. and R.Di Tella, ‘The New Economics of Corruption: A Survey and Some New Results’, Political Studies (1997) Vol. 45, pp. 496–515; Williams J. and Beare M., ‘The business of bribery: Globalization, economic liberalization, and the “problem” of corruption’, Crime, Law and Social Change, (1999) Volume 32, Number 2; Elliot K. Corruption and the Global Economy (Washington, DC: Institute for International Economics, 1997); Lancaster T. & G. Montinola. 1997. Toward a Methodology for the Comparative Study of Political Corruption. Crime, Law and Social Change, special issue on Corruption and Reform. 27 (3/4): 185–206; Tanzi, V. and Davoodi R. ‘Corruption, Public Investment, and Growth’, International Monetary Fund – Working Paper No. 97/139, 1997; Gray C. and Kaufmann D., ‘Corruption and Development’, Finance & Development, (1999); Abed G. and Gupta S., Governance, Corruption, & Economic Performance, (IMF, 2002); Huang H., Wei Shang-Jin, ‘Monetary Policies for Developing Countries: The Role of Corruption’, International Monetary Fund – Working Paper No. 03/183, 2003; Anwar S., Performance Accountability and Combating Corruption, (Washington, DC: The World Bank, 2007); Honda, J., ‘Do IMF Programs Improve Economic Governance?’, International Monetary Fund – Working Paper No. 08/114, 2008.

  12. 12.

    Philip Augar, ‘The Forex Debacle – A Scandal to end all Scandals’ Financial Times (12 November 2014), http://www.ft.com/cms/s/0/c32cc892-6a5f-11e4-bfb4-00144feabdc0.html?ftcamp=crm/email/follow/author/Q0ItMDA2NTUxOA==-QXV0aG9ycw==/product&#axzz3IwRJ8t6Q

  13. 13.

    ‘Banks Fined $3.4bn in Forex Probe’ (Financial Times, 2015), http://www.ft.com/topics/themes/Forex_trading_probes

  14. 14.

    George Osborne: ‘Tough Action to Clean up Corruption.’ (BBC News, 2014), http://www.bbc.co.uk/news/uk-30016262

  15. 15.

    Collins Latin Dictionary (Collins, 2005).

  16. 16.

    Daniel Treisman, ‘The Causes of Corruption: A Cross-National Study’ (2000) 76 Journal of Public Economics, 399.

  17. 17.

    Kim Sass Mikkelsen, ‘In Murky Waters: a Disentangling of Corruption and Related Concepts’ (2013) 60 Crime, Law and Social Change, 357.

  18. 18.

    ‘Oxford Dictionaries’ (Oxford University Press, 2014).

  19. 19.

    Supra note, Mikkelsen.

  20. 20.

    Supra note, Treisman.

  21. 21.

    See, Corruption Watch, ‘Corruption affects us all. It threatens sustainable economic development, ethical values and justice; it destabilises our society and endangers the rule of law’, http://www.corruptionwatch.org.za/learn-about-corruption/what-is-corruption/we-are-all-affected/; and Samura B. K., The Negative Effects of Corruption on Developing Nations, 25 January 2009, Centre for Accountability and Rule of Law, http://www.carl-sl.org/home/articles/125-the-negative-effects-of-corruption-on-developing-nations-a-perspective-on-sierra-leones-effort-to

  22. 22.

    Corruption: A Glossary of International Standards in Criminal Law (OECD 2008), p. 23.

  23. 23.

    OECD Annual Report on Bribery 2013 and 2014; http://www.oecd.org/daf/anti-bribery/WGB-AB-AnnRep-2014-EN.pdf and http://www.oecd.org/daf/anti-bribery/WGB-AB-AnnRep-2014-EN.pdf

  24. 24.

    The Anti-Corruption Plain Language Guide (Transparency International, 2009).

  25. 25.

    Helping Countries Combat Corruption: The Role of the World Bank (The World Bank Group, 1997) 19.

  26. 26.

    OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, http://www.oecd.org/corruption/oecdantibriberyconvention.htm

  27. 27.

    Supra note, Mikkelsen.

  28. 28.

    Corruption Perceptions Index 2013 (Transparency International 2013).

  29. 29.

    Johann Graf Lambsdorff, The Institutional Economics of Corruption and Reform: Theory and Policy (Cambridge University Press 2007), p. 15.

  30. 30.

    United Nations Convention against Corruption 2003. Kofi Annan: ‘Corruption is an insidious plague that has a wide range of corrosive effects on societies. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life and allows organized crime, terrorism and other threats to human security to flourish. This evil phenomenon is found in all countries—big and small, rich and poor—but it is in the developing world that its effects are most destructive’.

  31. 31.

    ‘SFO Statement – Rolls Royce 23 December 2013’ (Serious Fraud Office, 2013), http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2013/statement---rolls-royce.aspx

  32. 32.

    The US Department of Justice, Nine FIFA officials and five corporate executives indicted for racketeering conspiracy and corruption, 27 May 2015, http://www.justice.gov/opa/pr/nine-fifa-officials-and-five-corporate-executives-indicted-racketeering-conspiracy-and

  33. 33.

    Caroline Binham and Carola Hoyos, ‘Two arrested after raids linked to SFO’s Rolls- Royce Probe’ (Financial Times, 2014), http://www.ft.com/cms/s/0/ce534256-93d6-11e3-bf0c-00144feab7de.html#axzz2tCNQqJgG

  34. 34.

    ‘World Economic Forum Annual Meeting 2014’ (2014), http://www.weforum.org/sessions/summary/global-economic-outlook-2014

  35. 35.

    Report from the Commission to the Council and the European Parliament – EU Anti-Corruption Report (European Commission, Brussels, 322014, COM(2014) 38 final 2014).

  36. 36.

    Carl Dolan, ‘We Have an EU Anti-Corruption Report: So Now What?’, Transparency International, 2014, http://www.transparencyinternational.eu/2014/02/we-have-an-eu-anti-corruption-report-so-now-what/

  37. 37.

    Dolan notes that a number of failings of EU member states such as ‘zero monitoring and verification of officials’ asset declarations, ineffective sanctions where ethical standards are breached, inadequate regulation of the revolving door – are also failings of EU institutions’; Ibid.

  38. 38.

    World Bank, ‘The Costs of Corruption’ (The World Bank Institute, 2004), http://web.worldbank.org/archive/website00818/WEB/MEDIAM-3.HTM

  39. 39.

    Christopher, William, ‘Trillion Dollar Bribery 161 NLJ 25’ (2011) The New Law Journal.

  40. 40.

    ‘Clean Business is Good Business – The Business Case against Corruption’ (A joint publication by the International Chamber of Commerce, Transparency International, the United Nations Global Compact and the World Economic Forum Partnering Against Corruption Initiative (PACI). 2008), http://www.weforum.org/pdf/paci/BusinessCaseAgainstCorruption.pdf

  41. 41.

    ‘Global Agenda Council on Anti-Corruption & Transparency 2012–2014’ (World Economic Forum 2012) http://www.weforum.org/content/global-agenda-council-anti-corruption-transparency-2012-2014

  42. 42.

    International Monetary Fund, Fighting Corruption Critical for Growth and Macroeconomic Stability – IMF Paper, IMF Survey, 11 May 2016. http://www.imf.org/external/pubs/ft/survey/so/2016/RES051116A.htm

  43. 43.

    ‘The ADB / OECD Anti-Corruption Initiative for Asia and the Pacific’ (Asian Development Bank, 2009) http://www.adb.org/news/speeches/adboecd-anti-corruption-initiative-asia-and-pacific. Although this web page itself refers to the World Bank Institute and it further confirms that attempting to quantify the magnitude of corruption is a tricky task as there are not any up-to-date, reliable and qualified sources to confirm these figures.

  44. 44.

    James Fontanella-Khan, ‘Corruption in the EU Costs Business €120bn a Year, Study Finds’ Financial Times (03 February 2014), http://www.ft.com/cms/s/0/28f11862-8cf9-11e3-ad57-00144feab7de.html?siteedition=uk#axzz2sLiCCodw

  45. 45.

    EU, Boosting Anti-corruption Policy at EU Level, 02 February 2016; http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/index_en.htm

  46. 46.

    Reforming Bribery, Law Commission Consultation Paper No 18532 (Law Commission, 2007).

  47. 47.

    The Bribery Act 2010, Chapter 23. Also referred to by David Lawler, Frequently Asked Questions in Anti-Bribery and Corruption (Wiley, 2012), 102

  48. 48.

    Kenneth D. Beale and Paolo Esposito, ‘Emergent International Attitudes Towards Bribery, Corruption and Money Laundering’ 75 Arbitration 360.

  49. 49.

    Ibid.

  50. 50.

    ‘Bribery and Corruption’ (Serious Fraud Office), http://www.sfo.gov.uk/bribery--corruption/bribery--corruption.aspx

  51. 51.

    United Nations Convention against Corruption, 2003, Chapter III, https://www.unodc.org/documents/brussels/UN_Convention_Against_Corruption.pdf

  52. 52.

    OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1997.

  53. 53.

    OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions http://www.oecd.org/document/20/0,3343,en_2649_34859_2017813_1_1_1_1,00.html

  54. 54.

    ‘Bribe Payers Index 2011’ (Transparency International, 2011), http://bpi.transparency.org/bpi2011/in_detail/

  55. 55.

    Ibid.

  56. 56.

    http://www.transparency.org/whatwedo/publication/bribe_payers_index_2008

  57. 57.

    Richard Parlour, ‘Bribery and Corruption – An International Update’ (2013) 34 Company Lawyer 218.

  58. 58.

    ‘Corruption Perceptions Index’ (Transparency International, 2012), http://cpi.transparency.org/cpi2012/in_detail/

  59. 59.

    ‘Where the Bribes Are: Penalties in U.S. Government FCPA Cases Since 1977’ (Mintz Group, 2013) http://fcpamap.com

  60. 60.

    A Resource Guide to the US Foreign Corrupt Practices Act (US Department of Justice and Securities and Exchange Commission, 2012).

  61. 61.

    Dev Kar and Sarah Freitas, Illicit Financial Flows from Developing Countries: 2001–2010 (Global Financial Integrity, 2012).

  62. 62.

    Transparency International, Bribe Payers Index 2011, http://www.transparency.org/bpi2011

  63. 63.

    OECD Foreign Bribery Report – An Analysis of Crime of Bribery of Foreign Public Officials (2014).

  64. 64.

    Andrew Spalding, ‘The Irony of International Business Law: US Progressivism, China’s New Laissez Faire, and Their Impact in the Developing World’ (2011) 59 UCLA Law Review.

  65. 65.

    Abhay M Nadipuram, ‘Is the OECD the Answer? It’s Only Part of the Solution’ (2013) 38 The Journal of Corporation Law 635.

  66. 66.

    See BBC News, 18 March 2005: http://news.bbc.co.uk/1/hi/business/4361353.stm and 17 October 2008, http://news.bbc.co.uk/1/hi/uk_politics/7675888.stm

  67. 67.

    David Aaronberg and Nichola Higgins, ‘All hail the Bribery Act - the toothless wonder!’ [2011] Archbold Review 5.

  68. 68.

    Jaclyn Jaeger, ‘FCPA Enforcement on the Rise Once Again’ (Compliance Week, 2013) http://www.complianceweek.com/fcpa-enforcement-on-the-rise-once-again/article/304966/

  69. 69.

    ‘Deferred Prosecution Agreements- New Guidance for Prosecutors’ (Serious Fraud Office, 2014) http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2013/deferred-prosecution-agreements-new-guidance-for-prosecutors.aspx

  70. 70.

    ‘Bringing Bankers to Book’ (BBC Radio 4, 2013), http://www.bbc.co.uk/programmes/b03wpjg2

  71. 71.

    Nadipuram.

  72. 72.

    OECD Working Group on Bribery Annual Report 2013 (OECD, 2013).

  73. 73.

    Valsamis Mitsilegas, Aims and limits of European Union Anti-Corruption Law, in Jeremy Horder and Peter Alldridge (Eds.), Modern Bribery Law - Comparative Perspectives (Cambridge University Press 2013).

  74. 74.

    Communication From The Commission To The European Parliament, The Council And The European Economic And Social Committee – Fighting Corruption in the EU, COM/2011/0308 final.

  75. 75.

    Convention drawn up on the Basis of Article K.3 of the Treaty on European Union, on the Protection of the European Communities’ Financial Interests 1995, OJ C 316, 27.11.1995, pp. 49–57.

  76. 76.

    Protocol drawn up on the basis of Article K.3 of the Treaty on European Union to the Convention on the protection of the European Communities’ financial interests - Statements made by Member States on the adoption of the Act drawing up the Protocol 1996, OJ C 313, 23.10.1996, pp. 2–10.

  77. 77.

    Second Protocol, drawn up on the basis of Article K.3 of the treaty on European Union, to the Convention on the protection of the European Communities’ financial interests – Joint Declaration on Article 13 (2) – Commission Declaration on Article 7, OJ C 221, 19.7.1997, pp. 12–22.

  78. 78.

    Convention drawn up on the basis of Article K.3 (2) (c) of the Treaty on European Union on the Fight Against Corruption involving Officials of the European Union Communities or Officials of Member States of the European Union 1997.

  79. 79.

    Mitsilegas, p. 172.

  80. 80.

    Joint Action 98/742 of 22 December 1998 adopted by the Council on the basis of Article K.3 of the Treaty on European Union, on corruption in the private sector Official Journal L 358, 31/12/1998, pp 0002–0004.

  81. 81.

    Council Framework Decision 2003/568/JHA of 22 July 2003 on Combating Corruption in the Private Sector.

  82. 82.

    ‘Council of Europe in brief’ (Council of Europe, 2014), http://www.coe.int/aboutCoe/index.asp?page=nepasconfondre&l=en

  83. 83.

    ‘Group of States against corruption (GRECO) - What is GRECO’ (Council of Europe, 2012) http://www.coe.int/t/dghl/monitoring/greco/general/3.%20What%20is%20GRECO_en.asp

  84. 84.

    European Council – The Stockholm Programme – An Open And Secure Europe Serving And Protecting Citizens, (2010/C 115/01).

  85. 85.

    Report From The Commission To The Council on the modalities of European Union participation in the Council of Europe Group of States against Corruption (GRECO), COM(2011) 307 final.

  86. 86.

    Council of Europe Civil Law Convention on Corruption 1999.

  87. 87.

    Council of Europe Criminal Law Convention on Corruption 1999.

  88. 88.

    Council of Europe Additional Protocol to the Criminal Law Convention on Corruption 2003.

  89. 89.

    The Fourth AML Directive of the EU, May 2015: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:JOL_2015_141_R_0003&from=ES

  90. 90.

    Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors.

  91. 91.

    Nick Kochan and Robin Goodyear, Corruption: The New Corporate Challenge (Palgrave Macmillan 2011).

  92. 92.

    For example, see Council of Europe Convention on the Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism 2005.

  93. 93.

    Nicholas Ryder, Financial Crime in the 21st Century (Edward Elgar 2011), 98.

  94. 94.

    Fontanella-Khan.

  95. 95.

    EU Commission, Report from the Commission to the Council and the European Parliament - EU Anti-Corruption Report, 03 February 2014, http://ec.europa.eu/dgs/home-affairs/e-library/documents/policies/organized-crime-and-human-trafficking/corruption/docs/acr_2014_en.pdf

  96. 96.

    TI is critical of the EU Anti-Corruption Report 2014 and suggested that the EU needs to address the cross-border element that was not considered in the report. See Dolan.

  97. 97.

    Report from the Commission to the Council and the European Parliament – EU Anti-Corruption Report; http://ec.europa.eu/dgs/home-affairs/e-library/documents/policies/organized-crime-and-human-trafficking/corruption/docs/acr_2014_en.pdf

  98. 98.

    Ibid.

  99. 99.

    Ibid.

  100. 100.

    Carr.

  101. 101.

    ‘STAR Stolen Asset Recovery Initiative – About Us’ (World Bank and UNODC, 2013) <http://star.worldbank.org/star/about-us/our-vision> accessed 18th September 2013.

  102. 102.

    Nicholas Ryder, The legal mechanisms to control bribery and corruption, in Barry Rider, (Eds) Research Handbook on International Financial Crime, (Edward-Elgar, 2015) pp. 382–387.

  103. 103.

    BBA, Anti-Bribery and Corruption Guidance, May 2014: ‘it is an offence to offer, promise or give a financial or other advantage to induce another person where (1) the briber intends the advantage to bring about an improper performance by another person of a relevant function or activity, or to reward improper performance of such a function or (2) the briber knows or believes that the acceptance of the advantage offered, promised or given in itself constitutes the improper performance of a relevant function or activity. The offence is not committed if it is permitted (or required) by the applicable written law. The advantage can be offered, promised or given by the briber directly or through someone else’.

  104. 104.

    Ibid. ‘It is an offence to request, agree to receive or accept a financial or other advantage with the intention that, as a consequence, a relevant function or activity should be performed improperly. It does not matter if the bribe is received directly or through someone else. It is immaterial whether or not the recipient – or the person acting as a conduit to receive the bribe – knows or believes the performance of the function or activity is improper. The offence is not committed if it is permitted (or required) by the applicable written law’.

  105. 105.

    Ibid. It is an offence if a person offers, promises or gives any advantage to a foreign public official (FPO) with the requisite intention to influence the FPO in his or her official capacity and to obtain or retain business or an advantage in the conduct of business. An offence is not committed where the FPO is permitted or required by the applicable written law to be influenced by the advantage.

  106. 106.

    Ibid. ‘It is a strict liability offence if a commercial organisation fails to prevent someone associated with it from bribing another person with the intention to obtain or retain business or an advantage in the conduct of business for the organisation. The commercial organisation will only have a full defence to this offence if it can show that, despite a particular case of bribery, it nevertheless had adequate procedures in place to prevent persons associated with it from bribing’.

  107. 107.

    Note that the Bribery Act repealed the Anti-terrorism, Crime and Security Act 2001 sections 108–110 which was an interim measure to satisfy Article 1 of OECD Bribery Convention to extend the jurisdiction of the existing law to cover allegations of corruption of persons outside of the UK. OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1997, Article 1.

  108. 108.

    Ministry of Justice, Bribery Act 2010, Circular 2011/05 (Ministry of Justice 2011) http://www.justice.gov.uk/downloads/legislation/bills-acts/circulars/bribery-act-2010-circular-2011-5.pdf

  109. 109.

    Section 12 of the Bribery Act 2010.

  110. 110.

    Ibid.

  111. 111.

    Ibid.

  112. 112.

    The Government’s Explanatory Notes to s. 13 Bribery Act 2010. http://www.legislation.gov.uk/ukpga/2010/23/notes/contents

  113. 113.

    Pope, T. and Webb, T. ‘Legislative Comment – the Bribery Act 2010’ (2010) Journal of International Banking Law and Regulation, 25(10), 480–483.

  114. 114.

    Ibid.

  115. 115.

    Michael Connor, ‘New UK Bribery Law Could Have International Impact’ (Business Ethics, 2011) http://business-ethics.com/2011/01/06/1525-new-uk-bribery-law-could-have-international-impact/

  116. 116.

    Sharifa G Hunter, ‘Comparative Analysis of the Foreign Corrupt Practices Act and the UK Bribery Act, and the Practical Implications of Both on International Business’ (2011) 18 ILSA Journal of International & Comparative Law 89.

  117. 117.

    Although facilitation payments have always been prohibited under UK’s anti-corruption laws and the OECD has called for a prohibition on facilitating payments, large majority of the OECD countries (including the USA) that are party to the OECD Convention do not ban facilitation payments. OECD, Governments agree to step up fight against bribery, 09 December 2009, http://www.oecd.org/corruption/governmentsagreetostepupfightagainstbribery.htm

  118. 118.

    Editorial ‘The Bribery Act 2010’ (2010) Criminal Law Review, 6, 439–440, 439.

  119. 119.

    Robert Barrington, ‘How effective is the UK Bribery Act’ (Transparency International UK, 2014), http://www.transparency.org.uk/rss/12-blog/1118-how-effective-is-the-uk-bribery-act

  120. 120.

    David Leigh, ‘British Firms Face Bribery Blacklist, Warns Corruption Watchdog’ The Guardian (31 January 2011) http://www.theguardian.com/business/2011/jan/31/british-firms-face-bribery-blacklist

  121. 121.

    For a comparative analysis of the implications of the OECD Convention, see Nora Rubin, ‘Convergence of 1996 and 1997 Global Efforts to Curb Corruption and Bribery in International Business Transactions: The Legal Implications of the OECD Recommendations and Convention for the United States, Germany, and Switzerland’, 14 (1998–1999) American University International Law Review, 257 and Norton Rose Fulbright, ‘Differences between the UK Bribery Act and the US Foreign Corrupt Practices Act’, June 2011, http://www.nortonrosefulbright.com/knowledge/publications/52195/differences-between-the-uk-bribery-act-and-the-us-foreign-corrupt-practices-act

  122. 122.

    Caroline Binham, ‘SFO Gains its First Convictions under New UK Bribery Law’ Financial Times (London, 5 December 2014), http://www.ft.com/cms/s/0/4798e8be-7ca2-11e4-9a86-00144feabdc0.html?ftcamp=crm/email/_2014___12___20141205__/emailalerts/Keyword_alert/product#axzz3LIRtDSek. Also, see the Sweett Group Case, https://www.sfo.gov.uk/cases/sweett-group/

  123. 123.

    George Carey, ‘The Moral Corruption of the Banks is Poisoning Society’ The Daily Mail (London, 29 June 2012) http://www.dailymail.co.uk/debate/article-2166693/The-moral-corruption-banks-poisoning-society.html

  124. 124.

    ‘Global Witness - Banks and Corruption’ (Global Witness, 2014), http://www.globalwitness.org/campaigns/banks

  125. 125.

    See, for example, the Sweett Group Case, https://www.sfo.gov.uk/cases/sweett-group/

  126. 126.

    ‘Brokers charged in LIBOR investigation, 15 July 2013’ (Serious Fraud Office, 2013) http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2013/brokers-charged-in-libor-investigation.aspx

  127. 127.

    ‘SFO Further Charges in LIBOR Investigation’ (Serious Fraud Office, 2014), http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2013/further-charges-in-libor-investigation.aspx

  128. 128.

    The Law Commission Consultation Legislating the Criminal Code FRAUD AND DECEPTION, Paper No 155 (The Law Commission, 1999); Fraud Report, No 276 (The Law Commission, 2002).

  129. 129.

    Financial Services Act 2012, s. 89–91.

  130. 130.

    The Financial Services Act 2012 (Misleading Statements and Impressions) Order 2013.

  131. 131.

    ‘Q & A What Next for LIBOR?’ Financial Times, http://www.ft.com/cms/s/0/b861dc76-e884-11e2-aead-00144feabdc0.html#axzz2blOJZgpx

  132. 132.

    Financial Times, ‘Banks Fined $3.4bn in Forex Probe’, http://www.ft.com/topics/themes/Forex_trading_probes, and Emma Dunkley Ten biggest bank scandals have cost £53bn in fines, Financial Times, 11 April 2016, http://www.ft.com/cms/s/0/21099006-fef9-11e5-99cb-83242733f755.html#axzz4AdQ6h5W3

  133. 133.

    Corruption Perceptions Index 2014 (Transparency International, 2014)

  134. 134.

    ‘Leading Cases - Abacha Case’ (International Chamber of Commerce Commercial Crime Services – FraudNet 2011), http://www.icc-ccs.org.uk/home/news/118-leading-cases/697-abacha-case

  135. 135.

    George Parker, ‘George Osborne Vows Crackdown on Banks that Facilitate Tax Evasion’ Financial Times (London, 23 February 2015), http://www.ft.com/cms/s/0/95c5c1b4-bb7d-11e4-aa71-00144feab7de.html?siteedition=uk#axzz3SfCAW34N

  136. 136.

    Paul Tucker was the Deputy Governor of the Bank of England and was suggested by some commentators that he indirectly put pressure on Barclays to influence the LIBOR rates. See Chris Giles, ‘Libor Scandal Puts BoE in Line of Fire’ Financial Times (17 July 2012), http://www.ft.com/cms/s/0/68605a86-d02a-11e1-bcaa-00144feabdc0.html#axzz2blOJZgpx

  137. 137.

    As the first person to be convicted over the LIBOR scandal, Hayes was sentenced to 14 years in prison for manipulating the rate while working at UBS and Citigroup between 2006 and 2010.

  138. 138.

    BBC News, 28 January 2016; http://www.bbc.co.uk/news/business-35428279

  139. 139.

    The Guardian, ‘BAE: Secret papers reveal threats from Saudi Prince’, 15 February 2008, http://www.theguardian.com/world/2008/feb/15/bae.armstrade

  140. 140.

    The Guardian, ‘BAE admits guilt over corrupt arms deals’, 06 February 2010, http://www.theguardian.com/world/2010/feb/05/bae-systems-arms-deal-corruption

  141. 141.

    ‘Deferred Prosecution Agreements- New Guidance for Prosecutors’.

  142. 142.

    Bob Sullivan, ‘Reformulating Bribery: a Legal Critique of the Bribery Act 2010’ in Jeremy Horder and Peter Alldridge (eds), Modern Bribery Law - Comparative Perspectives (Cambridge University Press 2013) accessed 13 February 2013; also see Tesco Supermarkets Ltd. v Nattrass Tesco Supermarkets Ltd. v Nattrass [1972] AC 153 HL.

  143. 143.

    Formerly known as Financial Services Authority.

  144. 144.

    Nicholas Ryder, The legal mechanisms to control bribery and corruption, in Barry Rider (eds), Research Handbook on International Financial Crime, (Edward Elgar, 2015).

  145. 145.

    Financial Services Act 2012 s. 1D(1).

  146. 146.

    Financial Services Act 2012 s. 1B(3).

  147. 147.

    Supra note, Ryder, p. 388.

  148. 148.

    Such procedural requirements and policy recommendations can be found in the FCA Hand Book, 19 May 2015, https://www.handbook.fca.org.uk/

  149. 149.

    FCA, Financial Crime: A Guide for Firms, April 2014, https://www.handbook.fca.org.uk/handbook/document/FC1_Full_20140401.pdf. Also see FCA, Meeting your obligations, http://www.fca.org.uk/firms/being-regulated/meeting-your-obligations

  150. 150.

    Jessica de Grazia, ‘Review of the Serious Fraud Office. Final Report. June 2008’, http://www.sfo.gov.uk/about-us/our-policies-and-publications/jessica-de-grazia-review-.aspx

  151. 151.

    For example, the USA criminalised fraud as early as 1872 by a Mail Fraud Statute. Axel Palmer (2014) A critique of the counter economic crime regime in the United Kingdom, with reference to the United States of America and Australia. PhD, University of the West of England, p. 47; http://eprints.uwe.ac.uk/25201/1/Axel%20Palmer%20collated%20thesis%2012%20March%202015.pdf

  152. 152.

    \SFO, Guidance, policy and protocols, https://www.sfo.gov.uk/publications/guidance-policy-and-protocols/#statement

  153. 153.

    HM Revenue and Customs, Money laundering regulations: latest documents, https://www.gov.uk/topic/business-tax/money-laundering-regulations/latest. Also see The LW Society, Anti-Money Laundering – Legislation, http://www.lawsociety.org.uk/Support-services/Risk-compliance/Anti-money-laundering/Legislation/

  154. 154.

    SFO, Bribery Act: Guidance on adequate procedures facilitation payments and business expenditure, https://www.sfo.gov.uk/publications/guidance-policy-and-protocols/bribery-act-guidance/

  155. 155.

    SFO, Bribery Act Guidance, October 2012, https://www.sfo.gov.uk/publications/guidance-policy-and-protocols/bribery-act-guidance/

  156. 156.

    Ministry of Justice, The Bribery Act Guidance, March 2011, https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf, p. 12.

  157. 157.

    Ibid., p. 2.

  158. 158.

    Ibid., p. 13, para. 30.

  159. 159.

    SFO Case Archive, https://www.sfo.gov.uk/our-cases/case-archive/

  160. 160.

    There are about five current cases involving corruption and bribery.

  161. 161.

    The SFO Case Information, Sweett Group, https://www.sfo.gov.uk/cases/sweett-group/

  162. 162.

    The Sentencing Council published guidelines for appropriate sentences for bribery, corruption and money laundering. Sentencing Council, Fraud, Bribery and Money Laundering Offences: Definitive Guideline (Sentencing Council: London, 2014) at 41–53.

  163. 163.

    The SFO Case Information, Standard Bank Plc, https://www.sfo.gov.uk/cases/standard-bank-plc/. For a summary of previous three convictions (cases of Patel, Mushtaq and Li) under the Bribery Act 2010, see Nicholas Ryder, The legal mechanisms to control bribery and corruption, in Barry Rider (eds), Research Handbook on International Financial Crime, (Edward Elgar, 2015) pp. 389–90.

  164. 164.

    Ibid.

  165. 165.

    Peat, R. and Mason, I. ‘Credible deterrence in action: the FSA brings a series of cases against traders’ (2009) Company Lawyer, 30(9), 278–279, at 278 and Nicholas Ryder, The legal mechanisms to control bribery and corruption, in Barry Rider (Eds.), Research Handbook on International Financial Crime, (Edward Elgar, 2015) p. 390.

  166. 166.

    EU Directive 2004/17/EC. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:134:0001:0113:EN:PDF. Article 45 of the Directive

  167. 167.

    Plea bargains are also referred to as deferred prosecution agreements.

  168. 168.

    Attorney General’s Guidance, Plea discussions in cases of serious or complex fraud, https://www.gov.uk/topic/law-justice-system/attorney-general-guidance-to-legal-profession

  169. 169.

    David Corker ‘Time for a serious (SFO) rethink’ 2010 160 NLJ 7420.

  170. 170.

    R (on the application of Corner House Research and another) v Director of Serious Fraud Office (BAE Systems plc, interested party) [2008] All ER 927. The business deal involved the sale of Eurofighter military aircraft to Saudi Arabia.

  171. 171.

    Subsequent judicial review resulted in the House of Lord’s decision, which held that the SFO director was within his discretion to abandon the proceedings against the BAE. James Wilson, The day we sold the rule of law, Halsbury’s Law Exchange, http://www.halsburyslawexchange.co.uk/?s=the+day+we+sold+the+rule+of+law

  172. 172.

    David Leigh and Rob Evans, ‘National interest’ halts arms corruption inquiry, The Guardian, 15 December 2006, http://www.theguardian.com/uk/2006/dec/15/saudiarabia.armstrade

  173. 173.

    John Benstead, Biting the bullet, (2010) 160, NLJ, 1291.

  174. 174.

    The US DoJ said BAE had admitted ‘intentionally failing to put appropriate, anti-bribery preventative measures in place, despite telling the US government that these steps had been taken’. James Thompson, BAE Systems pays $400 m to settle bribery charges, 06 February 2010, http://www.independent.co.uk/news/business/news/bae-systems-pays-400m-to-settle-bribery-charges-1891027.html

  175. 175.

    The Guardian, BAE admits guilt over corrupt arms deals, 06 February 2010, http://www.theguardian.com/world/2010/feb/05/bae-systems-arms-deal-corruption

  176. 176.

    Similarly, in the case of M.W Kellogg Limited, conviction was made possible by the US Department of Justice and self-reporting to the SFO by the company. The SFO decide to use its powers under Part 5 of the Proceeds of Crime Act 2002 (POCA) to commence a civil action for the recovery of illicit assets. MWKL agreed to settle this action by paying over the dividends and interest amounts. See, Nicholas Ryder and Karen Harrison, The Law Relating Financial Crime in the United Kingdom, (Ashgate, 2013), and Sam Eastwood, M.W Kellogg to pay £7 million to settle SFO action in relation to Bonny Island corruption, February 2011, http://www.nortonrosefulbright.com/knowledge/publications/68372/mw-kellogg-to-pay-7-million-to-settle-sfo-action-in-relation-to-bonny-island-corruption

  177. 177.

    In the Crown Court at Southwark Regina v Innospec Limited Sentencing remarks of Lord Justice Thomas 26 March 2010 http://www.judiciary.gov.uk/NR/rdonlyres/5343F038-A6E5-448B-BB2D-7CA31F9E2DDA/0/sentencingremarksthomasljinnospec.pdf

  178. 178.

    CMS Cameron McKenna. Law-Now 31 March 2010 Innospec sentencing: SFO plea deal went too far. Southwark Crown Court published 26 March 2010. R v Innospec.

  179. 179.

    R v Innospec Limited 2010 WL 3580845 para 30.

  180. 180.

    R v Innospec Limited 2010 WL 3580845 paras 30–33.

  181. 181.

    R v Dougall [2010 EWCA Crim 1048.

  182. 182.

    CMS Cameron McKenna. Law-Now. 16 April 2010. Further tensions emerge between judiciary and SFO in corruption sentencing. For further detailed analysis, see Axel Palmer (2014): A critique of the counter economic crime regime in the United Kingdom, with reference to the United States of America and Australia. PhD, University of the West of England; http://eprints.uwe.ac.uk/25201/1/Axel%20Palmer%20collated%20thesis%2012%20March%202015.pdf

  183. 183.

    R v Dougall [2010 EWCA Crim 1048, para. 25.

  184. 184.

    Allen and Overy, Further guidance: the Court of Appeal’s view on “plea bargains”, 30 June 2010, http://www.allenovery.com/publications/en-gb/Pages/Further-guidance--the-Court-of-Appeal’s-view-on--plea-bargains-.aspx

  185. 185.

    Alain Cohn, Ernst Fehr and Michel André Maréchal, ‘Business Culture and Dishonesty in the Banking Industry’ (2014) Nature - International Weekly Journal of Science, Vol. 516, 86–89 referring to Levine, R. ‘Financial development and economic growth: views and agenda, (1997) Journal of Economic Literature, Vol. 35, Issue. 2, 688–726.

  186. 186.

    The UK banking sector employed 405,000 people in 2014.

  187. 187.

    See, Garland D., ‘The Limits of the Sovereign State’, (1996), British Journal of Criminology, 36, p. 452, referring to O’Malley’s earlier work (1992 and 1994) on the rise of situational crime prevention discourses.

  188. 188.

    Wadsley, J., Painful perceptions and fundamental rights: Anti-money laundering regulation and lawyers, (2008) Company Law, 29(3): 65–75.

  189. 189.

    BBA and Oliver Wynman, ‘Winning the Global race: The competitiveness of the UK as a centre for international banking’, November 2015.

  190. 190.

    Ibid., p. 26.

  191. 191.

    Stacey English and Susannah Hammond, Cost of Compliance 2014, Thomson Reuters, https://risk.thomsonreuters.com/sites/default/files/GRC00814.pdf

  192. 192.

    Greg Medcraft, Chairman of the Australian securities and Investments Commission (AsIC), “AsIC in 2014: Areas of focus and expected changes to the regulatory landscape”, October 2013, cited in English and Hammond, p. 5.

  193. 193.

    Office for National Statistics, Balance of Payments Pink Book, 2014.

  194. 194.

    Ministry of Justice, The Bribery Act 2010, Guidance, https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf

  195. 195.

    Ibid.

  196. 196.

    One could add the EU regulatory requirements to this formula; however, the UK statutes meet the EU standards and thus it is not necessary to consider these for the purposes of this chapter.

  197. 197.

    https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf

  198. 198.

    https://www.sfo.gov.uk/publications/guidance-policy-and-protocols/bribery-act-guidance/

  199. 199.

    https://www.handbook.fca.org.uk. ‘Although the FCA does not have the same statutory objectives as it predecessor the principles still apply via its overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers. The FCA states that its regulatory powers apply where firms fail to adequately address bribery and corruption risk, including, but not limited to, where these risks arise in relation to third parties acting on behalf of the firm’.

  200. 200.

    BBA, ‘Practical guidance for the banking sector in complying with the Bribery Act 2010 and meeting FCA obligations’, 2014, https://www.bba.org.uk/policy/financial-crime/anti-bribery-and-corruption/anti-bribery-and-corruption-guidance/

  201. 201.

    These are contained in the Public Interest Disclosure Act, 1998.

  202. 202.

    Terry Macalistar, ‘Insurance broker Willis fined £7 m by FSA’, The Guardian, 21 July 2011, https://www.theguardian.com/business/2011/jul/21/willis-limited-fined-by-fsa

  203. 203.

    All these categories are stipulated by the BBA in its ‘Practical guidance for the banking sector in complying with the Bribery Act 2010 and meeting FCA obligations’, 2014.

  204. 204.

    Identification of risk refers to steps taken to classify and if necessary quantify a set of risks. Transparency International, Diagnosing Bribery Risk, (TI UK, 2013), p. 11.

  205. 205.

    Evaluation of risk refers to steps taken to assess the significance of the risks involved by providing a narrative of the relative impact each risk may have on the organisation. This exercise would determine the risk factor or the likelihood of the adverse event occurring. Ibid.

  206. 206.

    The US Department of Justice, A Resource Guide to the U.S. Foreign Corrupt Practices Act, November 2012, https://www.justice.gov/criminal-fraud/fcpa-guidance

  207. 207.

    Ministry of Justice Guidance, p. 25, https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf

  208. 208.

    Supra note, Transparency International (2013), p. 11.

  209. 209.

    Salz, A. The Salz Review: An Independent Review of Barclays’ Business Practices (Barclays, 2013).

  210. 210.

    Supra note, Cohn et al.

  211. 211.

    Thomas Stockle, ‘Dishonest or professional behavior? Can we tell? A comment on: Cohn et al. 2014, Nature 516, 86–89, “Business culture and dishonesty in the banking industry”’, (2015) Journal of Behavioral and Experimental Finance, Vol. 8, 64–67. For an overview of the behavioural context of financial crises and malfeasant activity, see Jonathan Tucker, ‘The Finance Sector Perspective’, in Umut Turksen et al., (Eds.), The Financial Crisis and White Collar Crime – Legislative and Policy Responses: A Critical Assessment, (Routledge, forthcoming 2016).

  212. 212.

    Moshinsky, B. Turner Makes Claim for BOE Job as Bank Culture Reform Sought, Bloomberg, 25 July 2012, http://www.bloomberg.com/news/2012-07-24/turner-stakes-claim-for-boe-helm-as-bank-culture-reform-sought.html

  213. 213.

    OECD, Typology on Mutual Legal Assistance in Foreign Bribery Cases, 2012.

  214. 214.

    EU, Boosting Anti-corruption Policy at EU Level, 02 February 2016; http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/index_en.htm

  215. 215.

    The EU Commission Decision of 6 June 2011, ‘Establishing an EU Anti-corruption reporting mechanism for periodic assessment’, http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/pdf/com_decision_2011_3673_final_en.pdf

  216. 216.

    BakerHostetler, The Regulatory Pendulum: When is De-risking by Financial Institutions Too Much?, 15 June 2016, http://www.lexology.com/library/detail.aspx?g=72b1624b-c107-4c3e-855d-48d8fab9dea7&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2016-06-17&utm_term

  217. 217.

    International Monetary Fund, Fighting Corruption Critical for Growth and Macroeconomic Stability – IMF Paper, IMF Survey, 11 May 2016. http://www.imf.org/external/pubs/ft/survey/so/2016/RES051116A.htm

  218. 218.

    Principle 11 states that ‘A firm must deal with its regulators in an open and cooperative way, and must disclose to the appropriate regulator appropriately anything relating to the firm of which that regulator would reasonably expect notice’. https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html

  219. 219.

    Public Interest Disclosure Act 1998. For further analysis, see Turksen U and Dow R., ‘Independence and protection of accountants and auditors in the EU AML Framework’, in Turksen U, et al., (Eds.) The Financial Crisis and White Collar Crime – Legislative and Policy Responses: A Critical Assessment, (Routledge, forthcoming November 2016).

  220. 220.

    Pickworth J. et al., ‘UK Bribery Act – 5 Lessons in 5 Years’, White & Case, 21 June 2016, http://www.whitecase.com/publications/alert/uk-bribery-act-5-lessons-5-years-no-3-incentivising-self-reporting

  221. 221.

    The SFO Bribery Act Guidance, ‘The SFO’s primary role is to investigate and prosecute. The revised policies make it clear that there will be no presumption in favour of civil settlements in any circumstances’. https://www.sfo.gov.uk/publications/guidance-policy-and-protocols/bribery-act-guidance/

  222. 222.

    R. v. Innospec Ltd. [2010] EW Misc 7; para. 36.

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  1. Coventry University, Coventry, UK

    Umut Turksen

  2. University of the West of England, Bristol, UK

    Viri Chauhan

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    Nic Ryder

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Turksen, U., Chauhan, V. (2018). Anti-Bribery and Corruption: Perceptions, Risks and Practice for UK Banks. In: Ryder, N. (eds) White Collar Crime and Risk. Palgrave Studies in Risk, Crime and Society. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-47384-4_3

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