29 February 2016

UK Listed Company fined GBP 2.25m under UK Bribery Act for payments in the UAE

UK AIM listed company, Sweett Group PLC, a UK building consultancy has become the first company to be convicted under the UK Bribery Act 2010 for bribing an official in the United Arab Emirates.  Sweett Group were sentenced in London on 19 February 2016, and ordered to pay GBP 2.25 million.  This is the first corporate conviction under the UK Bribery Act, nearly five years after it came into force. 

The conviction arose under the Section 7 corporate offence of failure to prevent bribery, which extends liability to anyone who performs services on a company's behalf, and applies wherever in the world the bribe was carried out. 

The Court found that Sweett Group subsidiary, Cyril Sweett International Limited, paid bribes of GBP 680,000 to secure a contract for the building of a prominent hotel in Abu Dhabi.    The payments were described as “hospitality development services” which, prosecutors say, were never delivered.  The recipient of the payments denies any wrong doing. 

The Serious Fraud Office (“SFO”) launched an investigation after Sweett Group reported itself and, following the investigation, Sweett Group admitted the offence.  However, the Court heard how the company had been slow to take action following concerns flagged by auditors in 2010, and that Sweett Group had in fact failed to cooperate openly with the SFO investigation.  Sweett Group did not receive a deferred prosecution agreement, indicating that only those who co-operate fully will be eligible. 

Sweett Group has now pulled out of the Middle East entirely, closing offices in Abu Dhabi, Dubai, Doha and Riyadh.

The decision is a timely reminder for UK based multi-nationals of potential exposure for the acts of those providing services on its behalf, including abroad.   It is also a salutary lesson for companies to take a thorough approach to compliance processes which include full disclosure and co-operation  with the relevant authorities in the event that a problematic issue is discovered.

Commercial organisations operating overseas should, in the first instance be mindful of domestic anti-bribery legislation and criminal sanction.  The UAE has had anti-bribery legislation in place since the late 1980s by way of the UAE Federal Penal Code, which criminalises  bribery or attempted bribery in both the public and private sectors. However, as this decision demonstrates, commercial organisations must also remain mindful of potential liability under legislation which has broad extra-territorial reach, including the UK Bribery Act and  the US Foreign Corrupt Practices Act.

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