Scotsman legal review: Criminal law

The impact of the Bribery Act is being felt in Scotland. Picture: Rex Features

Bribery has been a major talking point for lawyers working in corporate crime following the announcement on 25 September of the first concluded enforcement action for a contravention of Section 7 of the Bribery Act 2010.

The Brand-Rex settlement was a case of corporate hospitality being misused by a third party and was the third concluded bribery civil settlement in Scotland as a result of self-reporting.

Tom Stocker, partner and corporate crime specialist at Pinsent Masons, acted for Glenrothes-based cabling solutions developer Brand-Rex in the settlement. He says 2015 has been a busy year for bribery related work.

“Back in 2011, the Crown Office introduced the self-reporting initiative in Scotland which is only open to businesses,” he explains.

“The upside for the Crown Office is they get notified of an issue by a business that is willing to co-operate with the authorities. The upside for a self-reporting business is that, although a civil settlement is not guaranteed, there is a genuine opportunity to settle in a reasonable time frame.”

“We have definitely seen an uptake by businesses which are prepared to self-report. That tends to happen following a change in ownership or management. There are more cases in the pipeline.

“The regime that operates in Scotland is tough but fair. It is a very effective way to deal with corporates.”

Colin Bissett, partner at DAC Beachcroft, says self reporting can be a sensible approach for companies to take if they are looking for a civil settlement.

“It is a sensible approach if the objective is to clean up corporate governance and avoid companies feeling the temptation to actively conceal information due to the threat of prosecution and the reputational damage caused by a corporate criminal conviction,” says Bissett.

“This counteracts the tension which exists in other areas of crime such as environmental regulation where being a corporate ‘good citizen’ and sharing knowledge with the authorities when things go wrong is at odds with exposing a business to criminal conviction and potentially significant financial sanctions.”

With the Modern Slavery Act 2015 coming into force last month, lawyers have been busy advising clients on how to adhere to the new legislation.

Under the act, companies with a turnover of more than £36 million are required to produce statements which either detail the steps they have taken to ensure slavery and human trafficking does not take place anywhere in their supply chain, or explain that they are so confident these situations are not happening that no such action has been taken.

“The Modern Slavery Act forces companies to look outside their own business in the same way as the Bribery Act,” says Paul Marshall, head of Brodies’ business ethics team.

“With these two pieces of legislation, we are seeing that the law is now making companies responsible to police, their supply chain and their business partners.

“That means if you are a reputable company there are risks that you will be investigated and, in the case of the Bribery Act, prosecuted if you are doing business with other companies who are not acting ethically.

“Unless you can show that you had processes to stop people outside your business bribing, then you start from a position of guilt. I think a lot of clients are still coming to terms with that responsibility.”

Marshall also points to a renewed interest in the prosecution of individuals rather than companies: “There’s big pressure on companies to name names as soon as possible and the regulators want to be able to say not only have we prosecuted the company but we have also prosecuted Mr X and Mrs Y.

“When a company suspects something has gone wrong, they want to investigate and understand. Now there is a real apprehension within the company: how are we going to investigate if we are going to have to allocate blame early in the process? How do we make sure the individuals under suspicion are given a fair process?”

Other areas of activity which have kept corporate crime specialists busy this year include money laundering and fraud.

According to Stocker, the corporate crime team at Pinsent Masons has seen a big increase in fraud investigations over the last year, both by the companies themselves and also police investigations into suspected frauds.

“The highest profile investigation that’s in the public domain is related to Rangers , Charles Green and Craig Whyte and the allegation that they were involved in conspiring to acquire Rangers through fraudulent means,” says Stocker.

“There’s also a number of investigations into suspected corporate fraud but most of those are not in the public domain.”

Money laundering has come to the fore this year following the Serious Fraud Office (SFO), which has the power to conduct investigations in Scotland, increasing its focus on money laundering offences.

As we look ahead to the next 12 months, the feeling from lawyers in the sector is that they will continue to see self-reporting in Scotland.

“I would also anticipate that we will see some prosecutions for white collar crime related to more mainstream corporate business in 2016,” says Stocker.

• The Scotsman’s annual review of the legal world looks at some of the most active areas of legal practice in Scotland. Informed by comprehensive data published by Chambers and Partners and Legal 500, the articles give exclusive insight into the work of the more than 11,000 practicing solicitors and 463 practicing advocates.