The document discusses global enforcement trends related to bribery and corruption. It notes that while there have been no prosecutions of companies under the UK Bribery Act to date, the SFO has 15 ongoing investigations and brought charges against 4 individuals in one case. Enforcement is increasing in other countries as well, with the US having a particularly long reach and cooperating closely with other countries. Bribery remains an issue culturally in many Asian countries, though Hong Kong actively enforces laws while mainland China takes a more lax approach. India also strengthened its anti-corruption laws recently while Brazil implemented a new strict liability law in 2014.

1. The increasing global response
to bribery and corruption
Its impact on the way to do
business worldwide
27 February 2014
Emma Gordon
Partner, Fraud &
Investigations Group
Eversheds

3. UK Bribery Act
No prosecutions of companies to date but:
• Currently around 15 ongoing investigations by the SFO (re Bribery
Act and pre Bribery Act legislation) against companies
• SFO working with FCA, US DOJ and US SEC as well as other
agencies to share intelligence and investigate
• Director of SFO, David Green QC – strict direction is evident
• SFO brought charges against 4 individuals (including 3 directors)
at Sustainable AgroEnergy under Bribery Act in August 2013
• SFO been given special “blockbuster” funding on 20 January 2014
to pursue bribery case
• Deferred prosecutions agreements – now in effect

4. First SFO charges under the Bribery Act
Sustainable AgroEnergy
• August 2013 – SFO charged three former directors and an
affiliated financial advisor
• Alleged ponzi scheme in which defendants allegedly tricked UK
investors into purchasing shares in biofuel-related investments in
Cambodia
• All four defendants face charges of conspiracy to commit fraud and
conspiracy to furnish false information to investors
• Three defendants also face charges of “making and accepting a
financial advantage” under the UKBA
• Cambodian government is also pursuing a number of criminal
charges based on the same transactions

5. Blockbuster funding
Is the SFO under resourced?
• UK Treasury gave extra funding to SFO to pursue
investigation into alleged bribery in Indonesia and China
• Third time only that such funding has been granted
• According to one widely-reported claim, in the early 1990s
the company gave Tommy Suharto, son of Indonesia’s
former president, a car and $20m in the hope they would
help prompt Garuda, the country’s airline, to buy its Trent
700 engine
• US DOJ also involved and sending requests for information

6. Deferred prosecution agreements
coming to the UK in 2014
The basics
• A written agreement between the prosecutor and the
defendant company
• Prosecution is deferred, and eventually dismissed, if the
company complies with set conditions
• Conditions are likely to include:
–
–
–
–
–
Financial penalty
Reparation to victims
Repayment of profits from unlawful conduct;
Appointment of an independent monitor (in more serious cases)
Measures to prevent future offending.
• Used in the US for many years

7. UK enforcement: the companies
(under pre UKBA laws)
Company
Industry
Date
Penalty
Abbott Group
Oil and Gas
Nov 2012
£5.6million (civil settlement). First company to
have met strict criteria of self reporting initiative.
Oxford University Press
Publishing
July 2012
£1.9 million (civil recovery order). Debarment
from World Bank funded tenders for three years.
Mabey & Johnson Ltd
Engineering
January 2012
£130,000 (shareholder recovery)
Macmillan Publishers Ltd
Publishing
July 2011
£11 million (civil recovery order). Debarment from
World Bank funded tenders for three years.
Compliance monitor.
De Puy International
Limited
Healthcare
April 2011
£4.8 million (civil recovery order)
MW Kellogg Limited
Engineering
February 2011
£7 million (confiscation of funds received from
unlawful conduct)
BAE Systems Plc
Defence/Aerosp
ace
December 2010
£500,000 million (part of £30m global agreement)
Innospec Ltd
Energy
March 2010
£8 million (part of US$40m global settlement).
3 year US/UK compliance monitor
AMEC plc
Engineering
October 2009
£5 million (civil recovery order)
Mabey & Johnson Ltd
Engineering
September 2009
£6.6 million. Compliance monitor

8. UK enforcement: the individuals
(under pre UKBA laws and UKBA)
Company
Individual
Date
Offence/Penalty
Sustainable
AgroEnergy
plc
Gary West, James Whale, Stuart
Stone, Fung Wong
August
2013
Charged with conspiracy to commit fraud by false
representation and conspiracy to furnish false
information. West, Stone and Wong were also charged
with offences of making and accepting a financial
advantage contrary to s1(1) and 2(1) of the UKBA 2010
Smith &
Ouzman
Limited
Chris Smith, Nick Smith, Tim
Forrester, Abdirahman Omar
October
2013
Charged with offences of corruptly agreeing to make
payments totalling nearly half a million pounds,
contrary to section 1 Prevention of Corruption Act 1906
Innospec Ltd
Paul Jennings, former CEO
July 2012
Pleaded guilty to charges of conspiracy to corrupt
Innospec Ltd
Mr Miltos Papachristos, Regional
Sales Director for Asia-Pacific
Region and Mr Dennis Kerrison,
former CEO
June 2012
Entered not guilty pleas in response to charges of
conspiracy to corrupt
Innospec Ltd
Dr David Turner, former Sales
and Marketing director
January
2012
Pleaded guilty to charges of conspiracy to corrupt
Mabey &
Johnson Ltd
Richard Charles Edward Forsyth,
former MD
February
2011
21 months imprisonment, disqualified from acting as a
company director for five years and ordered to pay
prosecution costs of £75,000
Mabey &
Johnson Ltd
David Mabey, former sales
director
February
2011
Eight months imprisonment, disqualified from acting as
a company director for two years and ordered to pay
prosecution costs of £125,000
Mabey &
Johnson Ltd
Richard Gledhill, former sales
manager
February
2011
Eight months imprisonment, suspended for two years

9. The US threat – why?
• Long arm reach of the US FCPA even for non US
companies
• Working closely with foreign counterparts including SFO - a
proactive approach
• More multi jurisdictional cases (Siemens)
• Reorganisation of the SEC enforcement division with a
specialised FCPA unit
• Increased focus on individual liability – often groups of
individuals from the same company and the same industry
• Dodd-Frank Act

10. US enforcement: companies
Company
Industry
Place of bribe
Settlement
Date
Alcoa
Aluminium
Bahrain
$384 million
9 February 2014
Archer-Daniels-Midland
Co.
Food
Ukraine
$36 million
20 December 2013
Weatherford
International
Oil
Middle East and
Africa
$240 million
26 November 2013
Stryker Corporation
(SEC only)
Medical
technology
$13.2 million
24 October 2013
Diebold
Bank security
Argentina, Greece,
Mexico, Poland, and
Romania
China and
Indonesia
$48 million
22 October 2013
Bilfinger
(DOJ only)
Energy
Nigeria
$32 million
10 December 2013
Total S.A
Oil
Iran
$398million
29 May 2013
Ralph Lauren
Corporation
Luxury clothing
and products
Argentina
22 April 2013
Koninklijke
Phillips Electronics
(SEC only)
Healthcare
Poland
Non-prosecution
agreement, disgorge
$700,000 illicit profits
$4.5 million
5 April 2013

11. The US threat – current example
•
DOJ investigating whether Walmart paid bribes ($24m) in Mexico to
obtain permits to open new stores there
•
Further allegations that senior executives covered up an internal inquiry
into the payments
•
DOJ now also looking at possible misconduct in China, Brazil and India
•
Reported that the company is funding separate legal representation for
30 executives
•
3 separate law firms instructed for the company
– leading the probe
– outside counsel to audit committee
– outside counsel for the worldwide compliance review
•
Spent over $300m to date defending the allegations

12. Globalisation of US enforcement
•
•
Co-ordination between US and foreign counterparts has increased dramatically
FCPA investigations where local law enforcement have also investigated include:
Country
Investigation
Date
Country
Investigation
Date
Australia
Alcoa
9 January 2014
Italy
Immuncor, Siemens
November 2008
15 December 2008
China
Siemens
Morgan Stanley
15 December 2008
April 2012
Korea
IBM
March 2011
Costa Rica
Alcatel Lucent
27 December 2010
Liechtenstein
Siemens, Alcoa
15 December 2008
France
Halliburton
Total SA
Alcatel Lucent
25 July 2013
29 May 2013
27 December 2010
Nigeria
Halliburton, Siemens
February 2011
15 December 2008
Germany
Bristol Meyers
Daimler
Siemens
Magyar Telekom Plc
28 September 2007
1 April 2010
15 December 2008
29 December 2011
Norway
Siemens, Alcoa
15 December 2008
Greece
Siemens
15 December 2008
Poland
Johnson & Johnson
8 April 2011
Hungary
Siemens
Magyar Telekom Plc
15 December 2008
December 2011
Russia
Siemens
15 December 2008
India
Dow Chem
2007
Switzerland
Siemens, Alcoa
15 December 2008
Israel
Siemens
15 December 2008
UK
BAE, AON
Smith & Nephew
Parker Drilling Co
Alcoa
February 2010
20 December 2011
6 February 2012
16 April 2013
9 January 2014

13. Transparency International
Country Enforcement of the OECD Anti-Bribery
Convention, Progress Report 2013
Level of Enforcement
Countries
Active Enforcement
(adequate deterrent to foreign bribery)
Germany, Switzerland, UK, US
Moderate Enforcement
(stages of progress in enforcement but
inadequate deterrence)
Australia, Austria, Finland, Italy
Limited Enforcement
(stages of progress in enforcement but
inadequate deterrence)
Argentina, Bulgaria, Canada, Denmark,
France, Hungary, Norway, Portugal, South
Africa, Sweden
Little or No Enforcement
(no deterrent whatsoever or very little
deterrence)
Belgium, Brazil, Chile, Czech Republic, Estonia,
Greece, Ireland, Israel, Japan, Luxembourg,
Mexico, Netherlands, New Zealand, Poland,
Russia, Slovak Republic, Slovenia, South
Korea, Spain, Turkey

14. Foreign bribery enforcement
Total points relating to number of cases concluded and the level
of associated sanctions*
Country
Total Points
2009 - 2012
United States
1117
Germany
464
United Kingdom
251
Switzerland
93
Italy
65
France
48
*TI’s Exporting Corruption Progress Report 2013: Assessing enforcement of the OECD Anti-Bribery Convention on
combating foreign bribery

16. Bribery in Asia
Transparency International Corruption Perceptions Index 2013
Rank
Country
Score (0=highly
corrupt 100 = very
clean)
Rank
Country
Score (0=highly
corrupt 100 = very
clean)
5
Singapore
86
83
Mongolia
38
14
United Kingdom
76
94
India
36
15
Hong Kong
75
94
Philippines
36
18
Japan
74
102
Thailand
35
19
United States
73
114
Indonesia
32
36
Taiwan
61
116
Vietnam
31
38
Brunei
60
160
Cambodia
20
46
South Korea
55
157
Myanmar
21
53
Malaysia
50
175
North Korea
8
80
China
40

17. Bribery in Asia
• Most Asian countries have anti-corruption laws
• However in many Asian countries, there is a culture of
corruption and non-compliance with the domestic rules
• This culture puts MNOs with obligations under the FCPA
and UK Bribery Act in a difficult position when doing
business there
• Be prepared

18. One country – two systems
Hong Kong ranked 15th
Mainland PRC ranked 80th
•
•
•
•
•
•
•
•
Statutory Prohibitions
Rule of Law
Active Free Press
An Active Robust
Enforcement Authority
(ICAC)
Statutory Prohibitions
Rule by law
Press Censorship
Communist Party Influence

19. Hong Kong
• Has its own robust domestic laws against bribery
and corruption
• Compliance with the FCPA and UK Bribery Act is taken
very seriously. Many MNOs with operations in Hong Kong
and many major Hong Kong companies have substantial
links with US and UK
• No one is above the law:
Prosecution of directors of Sun Hung Kai Properties,
the largest property developers in Hong Kong (the Kwok
Brothers), and former No. 2 in Hong Kong Government,
Rafael Hui, for alleged wrongful payments and loans to
Mr Hui to obtain land grants
• Any type of corruption taken very seriously

20. PRC – a very different story
There are strict laws for those operating in the PRC
• Domestic laws: against both
a. commercial corruption (Article 8 of Anti Unfair
Competition Law and Article 163 of the PRC Criminal
Law)
b. corruption of public officials (Articles 389-95 of the PRC
Criminal Law)
• International laws:
a. FCPA
b. UK Bribery Act

21. The corruption culture
• MNO’s operating in the PRC have to face a business
culture which tolerates petty corruption in commerce if
it is discreet
• In addition, there is corruption involving PRC state
officials. Regarded as a real embarrassment for the
ruling Communist Party and is generally addressed
secretly by the Communist Party’s internal procedures

22. The FCPA and state owned enterprises
• Arguably almost anyone employed by
substantial domestic businesses in the
PRC is a “foreign official”
• Real risk of FCPA being engaged if
corruption of employees of state owned
enterprises

23. Practical issues if you are an MNO operating
in the PRC and you discover irregularities
• There are real practical difficulties in conducting
independent inquiries into individuals and PRC companies
• Recently the PRC Government effectively banned private
investigators from conducting investigations
• Transparency International unable to undertake its survey
• Publicly available records of PRC companies provide
minimal information on ownership and directors
• Legal privilege is not a concept which is recognised in the
PRC; it is recognised in Hong Kong

24. China has its own FCPA
(s.164 PRC Criminal Law)
• Crime of offering bribes to officials of foreign
countries and international organisations to
secure illegitimate business benefits
• Aimed at Chinese Nationals but theoretically
could cover a foreign national working for a
local PRC business entity partly or wholly
owned by a MNO

25. New administration, new culture?
• Targeting Western companies
• GSK (China) case
– pledge to crack-down on corruption
– targeting commercial sector bribery
• Ensure foreign and domestic bribery law
compliance

27. The Law
•
•
•
•
The Prevention of Corruption Act 1988
Attempt to strengthen law in 2008 failed
Amendments approved 1 May 2013
Upper House of India’s parliament passed new
anti-corruption bill December 2013

28. The changes
1. The definition of bribery amended to cover those cases
involving public servants where money and favours
have been exchanged through 3rd party intermediaries
2. Change in focus away from the receiver of corrupt
advantages to the supply side. Provisions in the Act will
be tightened to ensure that those who give bribes are
also subject to criminal prosecution. Until now, the Act
had conceived of the bribe giver as an “abettor” and not
the primary offender

29. The changes
3. New provisions will allow for the confiscation of
property acquired by government officials through
corruption
4. Corporations will be explicitly brought within the ambit
of the Act

31. Update
• New Anti-Bribery Law came into effect on
1 January 2014
• Covers bribery of domestic officials and
foreign officials
• Outlaws facilitation payments
• Strict liability corporate offence

32. New law also prohibits
• Bid rigging
• Fraud in Public Contracts & Public Procurement
• Engaging others to participate in illegal acts
against the Brazilian government

33. Penalties
• Breach of new law can lead to companies
being fined up to 20% of gross turnover in
year before investigation
• Law allows for disgorgement of profits,
suspension of activities and even dissolution
of company

34. Company officers/directors liability
• Criminal liability on those who participate
• Civil liability on those who aid an offence
(wilful blindness?)

35. Self reporting
• Leniency programme
• “Adequate Procedures”

36. Questions

37. Eversheds contact:
Emma Gordon, Partner
emmagordon@eversheds.com
+44 (0)20 7919 4931