Scottish businesses with overseas operations should pay heed to a £2.25million fine handed out to Glasgow building services company Sweett Group plc, after one of its subsidiaries bribed a Middle Eastern official to secure a contract.
Alison Sim, a partner with law firm HBJ Gateley, said the decision marked the first successful conviction for the Serious Fraud Office (SFO) under the Bribery Act 2010. Sweett Group will also be liable for £95,000 of SFO costs.
Cyril Sweett International, one of Sweett Group plc's subsidiaries, paid a bribe to a high-ranking Emirati official at the Al Ain Ahlia Insurance Company, in exchange for a lucrative project management and cost consultancy contract pertaining to the building of a £63million hotel in Dubai.
The systemic nature of the failure of Sweett Group plc to prevent bribery by its subsidiary meant that it was unable to claim it had put in place "adequate procedures" against corruption – the only action which could have acted as a defence.
Alison said: “This is a timely reminder that the extra-territorial reach of the Bribery Act extends far beyond UK shores. This first corporate conviction has been a long time coming, and is an upward nudge to the SFO's hitherto less than spectacular tally.
“Other companies should see this as a warning shot for those which fail to fully co-operate in an open and transparent manner with the SFO. Self-reporting is no guarantee of immunity from prosecution.”
Sweett’s share price fell sharply after it pleaded guilty to the charges, and it now plans to exit the Middle East amid ongoing investigations by the SFO against various individuals within the organisation.
Alison said: “The impact of fines for bribery and corruption go far beyond the financial penalties themselves – the reputational damage could be even worse. Investors, customers and staff are likely to be suspicious of an organisation convicted of bribery, which could be a major issue across a number of different stakeholders.
“Businesses need to ensure they have robust processes in place to protect themselves against bribery charges, and demonstrate a meaningful effort to implement and imbed these across all parts of the organisation.”
In the 2015 Transparency International Corruption Perceptions Index, the UK boosted its ranking from 14th place to 10th and the United Arab Emirates improved from 25th place to 23rd.