The UK Serious Fraud Office (SFO) has announced that criminal proceedings will be brought against an Alstom company. Alstom is a manufacturer in the rail, power and electricity transmission sectors.
Alstom Network UK Ltd, a UK subsidiary in the Alstom group, has been charged with three offences of corruption contrary to section 1 of the Prevention of Corruption Act 1906, as well as three offences of Conspiracy to Corrupt contrary to section 1 of the Criminal Law Act 1977.
A press release issued by the SFO stated that the alleged offences are said to have taken place overseas and concern large transport projects in India, Poland and Tunisia. The SFO investigation commenced as a result of information provided to the SFO by the Office of the Attorney General in Switzerland concerning the Alstom Group. In 2011, Alstom was fined over €30million by the Swiss authorities.
The charges come four years after the SFO arrested three members of Alstom’s board. In 2011, two of the directors unsuccessfully challenged the lawfulness of SFO searches at their home addresses.
The first hearing in this case will take place at Westminster Magistrates' Court on 9 September 2014.
The US Department of Justice is also taking action in the US against various individuals associated with Alstom.
The Alstom offences are said to have taken place up to 14 years ago. The charges have been brought under the old corruption law because the offences are alleged to have taken place prior to the implementation of the Bribery Act 2010. This means that the Prosecutor will be required to prove beyond reasonable doubt that the actions and intent required to commit the offences were those of a directing mind and will of Alstom Network UK. Historically Prosecutors have found it difficult to prove that a 'directing mind and will' of the corporate had the requisite knowledge. By contrast, there is no such requirement under the Bribery Act under which a company can be held liable for a bribe paid on its behalf even if nobody within the company knew about the bribe. For this reason it is far easier for prosecutors to secure a conviction of a corporate under the new law which applies to behaviour that took place after 1 April 2011.
Due to the onerous provisions within the Bribery Act, many corporates have developed their anti-corruption compliance programmes so that they can demonstrate an 'adequate procedures' defence. The news regarding Alstom demonstrates that the SFO is willing to pursue historic, pre-Bribery Act corporate corruption, notwithstanding the difficulties associated with prosecution and the events in question having taken place many years ago. This demonstrates that a good compliance system and a reformed culture will not necessarily protect a corporate in respect of its historic behaviour.
This news also shows that the SFO has returned its focus to overseas corruption by corporates.
The Alstom prosecution also comes soon after the publication of the Definitive Guideline for sentencing for Fraud, Bribery and Money Laundering offences. This takes effect from 1 October 2014. The Guideline encourages courts to take a hard line when sentencing corporate offenders, with fines of up to 4 times the gross profit earned on contracts tainted by fraud or bribery, and describes the spectre of being put out of business as "an acceptable consequence" in "some bad cases". The Guideline emphasises the negative view that the courts may take when sentencing overseas corruption offences, with corruption "committed across borders or jurisdictions" being specified as an aggravating factor.
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