Skansen Interiors Limited (“SIL”) was, until it ceased trading in 2014, a small refurbishment company operating mainly in London. In 2013, SIL won tenders from DTZ Debenham Tie Leung (“DTZ”) for two office refurbishment contracts jointly worth £6 million (“Tender Contracts”). Pursuant to the award of the Tender Contracts, allegations arose that that SIL’s former managing director, Stephen Banks (“Banks”) had paid bribes to Graham Deakin (“Deakin”), a former project manager at DTZ, in order to secure the contracts and that a number of steps were made to conceal such bribes, with invoices routed through a separate company and then recorded to an internal cost code.
In January 2014, SIL appointed a new CEO, Ian Pigden-Bennett (“Bennett”). Bennett was concerned by the payments made to Deakin which prompted him to initiate an internal investigation and put in place certain anti-bribery and corruption policies within SIL. The implementation of such policies resulted in the stoppage of the last payment made by Banks to Deakin and resulted in an internal investigation. The outcome of such investigation confirmed Bank’s misconduct and resulted in Banks’ dismissal. Thereafter, SIL submitted a suspicious activity report to the National Crime Agency and also reported the matter to the City of London Police and Action Fraud. Both Banks and Deakin pleaded guilty to the bribery offences raised against them. Banks was sentenced to 12 months’ imprisonment and was disqualified as a director for six years and Deakin was sentenced to 20 months’ imprisonment and was disqualified as a director for 7 years. Despite SIL having cooperated with the police investigation fully, SIL was also charged by the Southwark Crown Court (the “Court”) with bribery and corrupt business activity.
SIL argued its case by relying on the defence set out in s7(2) of the Bribery Act 2010 (the “Act”) which states that the only defence available to a company, where a person associated with the company bribes another person, is a defence which proves that the company had adequate procedures in place designed to prevent persons associated with the company from undertaking in such misconduct. SIL argued that it had adequate procedures in place at the time of Bank’s misconduct.
Despite there being no specific anti bribery and corruption policies in place at SIL at the time Bennet was appointed as CEO in 2014, SIL stated that there were a number of procedures for maintaining transparency and integrity in place prior to such appointment. Further, Sil argued that the Tender Contracts contained anti-bribery clauses, and a specific system for approving and settling invoices which required multiple levels of approval. Evidence given by SIL also attempted to show that its employees, including Banks, understood that bribery was prohibited. SIL argued that the aforementioned checks and balances were sufficient for a company of its size (30 employees), given its localised operation, in order to satisfy the abovementioned defence.
The presiding judge of the Court questioned why SIL, being a now dormant company was being prosecuted as no financial penalty could be imposed on SIL and the only judgment which could be given by the Court would be an absolute discharge. The Crown Prospection Services (“CPS”) argued however that the public interest test for a prosecution was satisfied in this case in that a message could be sent to other companies in the same industry.
Ultimately, the jury of the Court was not persuaded by SIL’s argument that it had sufficient anti-bribery policies in place and returned a guilty verdict against SIL. As SIL was dormant and without assets, SIL received an absolute discharge from the Court, meaning that the conviction would not be registered on SIL’s record.
This case provides companies with the message that adequate ant-bribery and corruption procedures are required for all companies, of any size and operating locally or otherwise. Companies can no longer simply rely on general financial safeguards and must put specific anti-bribery and anti-corruption polices in place in order to avoid being held liable for their employees’ misconduct. The parameters of what constitutes ‘adequate procedures’ still needs to be confirmed by English courts however companies should take care in implementing clear and well-communicated policies which are properly documented and up-to-date and which policies include, a set of appropriate procedures tailored to identify and avoid any risk of bribery and corruption.
Written by Michal Asoulin and supervised by Amber Freeman, 7 August 2018