Scottish company found to be in breach of the Bribery Act

Scottish prosecuting authorities have announced the first application of the corporate offence of failing to prevent bribery by an associated person, under section 7 of the Bribery Act 2010.

Facts

Brand-Rex is a Scottish company which develops and supplies cabling systems. It operated an incentives scheme for its distributors and installers whereby they were rewarded for meeting or exceeding sales targets with incentives, including travel tickets and foreign holidays. Although the incentives scheme wasn't deemed to be unlawful in and of itself (a useful point for companies considering the impact on their incentives and gifts policies), one of Brand Rex's independent installers offered his travel tickets to an employee of one of his customers, who was in a position to influence purchasing decisions. The independent installer was deemed to have been performing services for or behalf of Brand-Rex and, following an internal investigation, Brand Rex concluded that the installer gave the tickets to the customer's employee with the intention of inducing him to pick Brand-Rex products ahead of any others.  Brand-Rex accepted that it had committed an offence in failing to prevent an associated person from carrying out bribery on its behalf.  An organisation that can prove it has adequate procedures in place to prevent persons associated with it from bribing will have a defence to the section 7 offence. However, Brand Rex did not raise any evidence of adequate procedures to prevent bribery in its defence.

Decision and comment

Brand-Rex self-reported and cooperated with the authorities.  As a result, the case was settled with a civil recovery order of just over £200k instead of prosecution. It negotiated the settlement under a Scottish "self-reporting initiative" whereby, in return for self-reporting bribery offences, Scottish companies might be able to resolve any corporate liability which they might face with a civil settlement instead of a prosecution. This initiative is not available in England and the Serious Fraud Office has said that there will be no presumption in favour of civil settlements in any circumstances.

Further details are available here.