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Bribery Act and the Proceeds of Crime Act
The recent High Court action brought by the Serious Fraud Office against MW Kellogg Limited under the Proceeds of Crime Act 2002 (“PoCA”), has highlighted the risks facing UK companies receiving dividends from entities where unlawful activities have taken place. MW Kellogg Limited was ordered to pay just over £7 million in recognition of sums it was due to receive which were generated through the corrupt activities of third parties.
Amid all the controversy surrounding the Bribery Act, the risks of breaching PoCA have been forced to take something of a backseat. We think this is a mistake. In summary terms, the key risks to UK companies are as follows:
• It is an offence under PoCA to acquire, use or possess criminal property without disclosure to the relevant authorities;
• The definition of criminal property is very wide and certainly covers dividends paid out of profits generated through corrupt behaviour;
• The entity receiving the property needs only to suspect criminal behaviour for the Act to apply; it is not necessary for the recipient to “know for sure” that the funds are tainted.
This is of real importance to UK companies for at least three reasons:
• There is no defence of adequate procedures;
• Some commentators believe it is easier to achieve a conviction under PoCA than under the Bribery Act, and that in times of scarce resources, the SFO (or a successor organisation) may therefore make greater use of PoCA;
• PoCA carries penalties which in some respects are even more severe than those under the Bribery Act, for example 14 years in jail, not 10.
Companies considering how much attention and resource to devote to the prevention of bribery should think carefully about the scope for prosecutions under PoCA as well as the Bribery Act.
Lease a Finance Director 