International Tubular Services (ITS) has become the second Scottish business to self-report having benefited from a potentially corrupt payment, and reach a civil settlement which sees them paying over a substantial sum to the Civil Recovery Unit.
My advice to other Scottish firms with bribery and corruption “skeletons” would be to come clean now to reduce the risk of being subject to a criminal investigation and more significant penalties after a self-reporting deadline expires next June.
Aberdeen-based ITS admitted it had benefitted from a profit of £172,200 as a result of a corrupt payment made by a former Kazakhstan-based employee to secure additional contractual work in the former Soviet republic.
Under a Scottish self-reporting initiative, overseen by the Crown Office and Procurator Fiscal Service (COPFS), ITS paid the same sum to the Civil Recovery Unit under an arrangement which guarantees there will be no criminal prosecution against the company in respect of the reported matters.
Any Scottish company with historic or current bribery issues would be wise to consider self-reporting to Crown Office before the potential expiry of this self-reporting initiative on 30 June (2015), after which date civil settlements may no longer be available in such cases.
ITS should be commended for the courage it showed in self-reporting. It is not a step that any company takes lightly and it is an onerous and, at times, uncomfortable process. ITS will undoubtedly have rooted out any past issues and it will now have in place a robust anti-bribery compliance programme.
The COPFS also deserves recognition for the proactive and pragmatic approach that has been taken to the enforcement of bribery laws in Scotland. The self-report was dealt with expeditiously and a significant sum of money has been recovered. This civil settlement demonstrates that the COPFS are serious about enforcing bribery and proceeds of crime laws against Scottish businesses.
Scotland’s self-reporting initiative allows commercial organisations to self-report suspected bribery from which the business has benefited. In return for self-reporting, the COPFS and Scotland Civil Recovery Unit will consider resolving any corporate liability by way of a civil settlement instead of launching a criminal investigation against the company.
A civil settlement is not guaranteed and will only be offered where a company makes a full admission of wrong-doing following an internal investigation, demonstrates that it has or will put in place an effective anti-bribery compliance programme, and co-operates with any criminal investigation into any individuals who may have committed offences.
Self-reporting in Scotland is a genuine opportunity to resolve matters on a civil basis and for any tainted benefit derived from misconduct to be appropriately addressed and dealt with in a reasonable timeframe. It enables misconduct to be disclosed thereby avoiding the commission of other offences such as making false statements to a company’s auditors. Any self-report requires to be made by a solicitor on the company’s behalf and as self-reporting is a legal process it should only be proceeded with on the basis of legal advice.
Come 1 July 2015, the initiative will either cease, be extended for another year or be rolled into wider initiative such as the potential introduction of corporate deferred prosecution agreements into Scotland.
Tom Stocker is apartner and corporate crime specialist at legal firm Pinsent Masons