The oil and gas industry needs to be cautious about accepting gifts this holiday season to avoid violating strict new UK anti-bribery laws. Consultancy Campbell Nash warns the sector faces significant risk given its operations in environments where bribery is common. The industry has seen the most prosecutions under UK law. Companies should have clear policies and registers for gifts and entertainment to demonstrate transparency.

1. warns Oil and Gas to
be on high alert this
festive over stricter
anti-bribery rules.
Written By Bill Magee
Scottish Technology Journalist of the Year
T
he oil and gas sector needs to be on completed prosecutions for bribery and
high alert over accepting corporate corruption in Britain over the past four years.
gifts from one of Santa’s little helpers Of 26 completed cases since 2008 the sector
this festive season, warns IT consultancy made up almost one fifth of all prosecutions.
Campbell Nash, as there is a risk of falling Behind oil and gas in the list are medical
foul of the latest UK Anti-Bribery legislation. goods, insurance, and engineering and
construction.
The warning has been issued by Campbell
Nash, the Glasgow based Technical Business Campbell Nash’s Armstrong adds: “Oil and
Consultancy which builds compliance gas is a particularly high risk sector as it
applications such as Due Diligence solutions operates across a range of difficult political
and Gifts & Entertainment registers, to help environments where bribery can be endemic,
organisations fully comply with the influx of and across a range of cultural environments
new legislation, such as the UK’s new Anti- where giving and accepting gifts is the norm.”
Bribery and Corruption Act.
“Also, so-called facilitation payments, often
Campbell Nash works with blue chip made to expedite bureaucratic actions,
companies such as BP, Wood MacKenzie and remain illegal under the new act.”
Petrofac along with Lloyds Banking Group
and Barclays from the Financial Services Joint ventures continue to be a feature of
Sector. Director James Armstrong says: the sector, involving oil and gas businesses,
“Christmas is traditionally a time of partying foreign governments and state owned entities,
and exchanging gifts with clients but this year and carry with them corruption risks.
could see the first major case under the UK
Bribery Act that carries with it stricter new Back to Armstrong; “The festive period is a
laws playing out across all sectors and none time when one’s defences can be down, so
more so than oil and gas.” beware accepting that tantalisingly innocent
looking case of whisky. It might seem like a
Ernst and Young recently revealed that good idea at the time, but it could come back
this particular sector has faced the most to haunt you!”

2. Ignorance of the law is no Transparency,
excuse when it involves
the stricter anti-bribery
Transparency,
regulations, stressed Transparency...
Andrew Walker, head of
the commercial team in the The Oil & Gas industry
corporate department in has received a wake-up call
Scotland for HBJ Gateley. that the world and within
Campbell Nash says the festive period is a good time to conduct a detailed risk it business practices is
He describes the statement changing and that it has to
by Solicitor General Lesley
assessment, including training all employees and contractors on best practice
change with it, according to
Thomson QC about the guidelines tailored to meet legal and commercial requirements. Gavin Graham, Executive
Abbot Group case as “on Vice-President (Business
the money,” especially when One client is Petrofac, international provider of facilities solutions to the oil and Development) for Petrofac
she highlights : “The self-
gas production and processing industries with 14,000 employees working in 27 IES.
reporting initiative creates
a mechanism for businesses offices worldwide. The sector faces
to recognise their corporate unprecedented risk, legal and
responsibility and take a Petrofac does business in a wide range of countries where gift giving and compliance challenges both
rigorous approach to the in highly competitive and
investigation and elimination
corporate entertainment are a normal part of the local business culture, so it regulated markets and under
of such practices. needed a system to log gifts and entertainment, in order to ensure the highest regulated countries.
levels of transparency and good faith whilst ensuring compliance with the
Walker agrees: “It is Bribery Act. “Clearly given the far reaching
paramount that business nature and highly challenging
creates such a mechanism.” environments in which the
He spoke of two key areas Marcelo Cardoso, Head of Compliance, says: “We wanted to make it as industry is working we all
that demonstrate the “real transparent as possible to avoid the risk of being accused of winning a contract have to be seen to be both
teeth” of the anti-bribery act: as a result of inappropriate gift-giving”. visible and transparent in our
dealings.
“One involves companies
that have subsidiaries where Campbell Nash worked with Petrofac to develop an intranet based Microsoft “It makes abundant sense this
facilitation payments are SharePoint online solution that is configured to align with Petrofac’s corporate requires a code of business
all the rage, for example... Anti-Bribery Policy and company Ethics. It provides a transparent record of conduct matched by very
you must get legal advice as clear values and ethics in your
ignorance of the law is no
Petrofac’s relationship with it’s customers and the governments which they dealings.
excuse. work with.
“None more so when it comes
“Also, as a UK business you Installed in less than four weeks the Gifts and Entertainment Register system to entertainment and gifts
need to be mindful that gone that have to be handled in
are the days of excessive
enables anyone with Petrofac intranet access the ability to register in one an auditable fashion and in
expenditure. central location, and for those assigned admin access, a company-wide view of an environment at all times
everything that is going on, rather than “multiple logs in Excel spreadsheets or pragmatic.
“Taking a potential client to on pieces of paper,” Cardoso points out.
Wimbeldon for a fortnight “Even to the point where that
would represent an action invite to a football match one
likely to be seen as a bribe “Group Compliance needed something that was accessible, electronic and fool didn’t take up, or that invite
that the taxman will disallow proof. Also Petrofac is committed to high standards where it is not just about made to a senior official that
and you finish up paying more compliance, It’s also good business,” he says. “It gives the company a clear was not accepted, should also
corporation tax. be recorded!
picture of our relationship with counterparties and how our employees behave
“The test has to be towards them.” “As the industry that prides
proportionate ie if you take itself on being the first to
someone to your local golf Campbell Nash’s principal consultant on the project, Mark Dransfield, says the introduce new technologies
club for £25 this is more likely and take up new safety or
not to catch attention. Petrofac system represents a great example of its approach. “The application environmental practices, it
runs on Petrofac’s existing Microsoft SharePoint platform. This means that we makes abundant sense that we
“It’s common sense really!” were able to leverage SharePoint’s in-built security, so users are unable to see are also the first to introduce
other users’ entries, workflow – for gifts over certain thresholds which need new ways of safeguarding our
code of business conduct.
managerial approval, and integration with Excel for MI and ad-hoc reporting.”
“The industry has to go
“As companies become more familiar with what the SharePoint environment can further than ever before,” he
do, they will realise it’s an ideal platform to build robust compliance applications adds. “To remove ever the
merest hint of ambiguity in
to match the incoming tide of compliance legislation. Rather like the hi-tech any transaction, no matter
version of Alka-Seltzer, you’ll probably need over the festive period especially if how minor it may have
you’ve succumbed to that case of whisky!” appeared at the time.

3. Not being committed to Abbot Group Limited – Case Summary
anti-corruption is a serious
commercial mistake, warns Scottish oil services provider, Abbot Group Limited, has become the first
Sarah Keeling, a Senior
corporation to be penalised under the bribery and corruption self-reporting
Managing Director at FTI
initiative, invoked as part of the UK Bribery Act 2010.
Consulting.
The company has recently been fined £5.6m after admitting to benefitting
“In the UK and US,
from a series of corrupt payments made between one of its subsidiaries and
companies involved in
an overseas oil and gas company.
bribery or corruption, as we
The following key criteria were considered before sending this case for extra-
all know, are coming under judicial settlement:-
increasing investor, public
and regulatory scrutiny. the nature and seriousness of the offence and the extent of the harm caused;
“The inevitable risk of • whether the business had in place adequate anti-bribery systems at the
regulatory action and fines time of the criminal conduct and whether it has further addressed this
is coupled with negative following the conduct;
press attention, activism and
adverse investor responses. • the extent of the wrongdoing within the business, including whether the
conduct was authorised by, or connived in, by senior management, or
“The latter points are linked restricted to a small number of lower-ranking individuals;
- we are seeing increased
pressure on public investors • whether it is clear that the business is taking action as soon as the matter
like government pension comes to the attention of senior management (as opposed to taking no
funds to side-line or even action until it becomes aware that there is a risk that the conduct is going
black-list companies involved to come to light);
in corruption and, once you
are on the corruption radar, • whether the business (or the individuals involved in the matter reported)
you will be vulnerable to the has any previous record for this type of conduct. This would go beyond
NGOs which will target and a previous criminal conviction, and would include any regulatory
monitor your business. enforcement action or warning;
“In a FTI Consulting survey • whether the individuals involved in the wrongdoing have left the business
on the anniversary of the and, where decisions were taken at Board level, whether there is a new
implementation of the Board in place, and in both cases the timing and reasons for the departure
UKBA, a rather alarming of these individuals;
statistic emerged which
is 25% of board members
• whether the business has honoured its commitment to engage with the
of UK companies would
consider paying a bribe or
Crown meaningfully and in particular to disclose the full extent of the
ignoring corrupt practices
wrongdoing;
to win business and 31% of
senior managers believe the
• whether there are particular considerations which may weigh against
legislation exists mainly for prosecution, such as the consequences of prosecution for the company’s
appearance sake, simply to employees and stakeholders.
pay lip service to the Act.
Solicitor General Lesley Thomson QC said: “The self-reporting initiative
“Early upstream reputational creates a mechanism for businesses to recognise their corporate responsibility
due diligence, influence and take a rigorous approach to the investigation and elimination of
mapping and political risk such practices. While consideration must first be given to prosecution of
analysis in challenging appropriate cases, I am pleased that the Crown Office and Procurator Fiscal
jurisdictions is key especially Service and the Civil Recovery Unit are committed to taking effective steps
when combined with an to ensure that businesses face up to their responsibilities and relinquish any
understanding of broader unlawfully obtained profits.”
political risks with specific This case shows that the authorities will deal with these matters swiftly and
strategies to avoid entering in such a way to ensure that companies do not benefit from the proceeds of
into ‘corrupt’ agreements. crime.
“Remember: conduct now
may be investigated at any
point in the future and with
the implementation of UKBA For more information on Campbell Nash’s Gift and Entertainment Register and
in Jul 2011, ignorance is no Due Diligence solution contact James Armstrong or Mark Dransfield on
longer a defence,” she adds.
james.armstrong@campbellnash.com or mark.dransfield@campbellnash.com