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By Daniel Hunter

The lack of a corporate prosecution under the Bribery Act has led to businesses questioning the Serious Fraud Office’s appetite for enforcement, Ernst & Young has found.

The Ernst & Young Global Fraud Survey shows that only 26% of executives consider that UK enforcers are willing to prosecute cases of bribery and corruption and are effective in securing convictions. This is lower than Western Europe, despite the passing of the Act that came into force a year ago yesterday.

This is reinforced by conversations with businesses, some of whom have noted the lack of high profile prosecutions and begun to re-examine the level of investment in their anti-bribery and corruption compliance measures.

“The delay in seeing prosecutions under the Act has led some businesses to begin quietly questioning the SFO’s appetite for enforcement," Jonathan Middup, UK Head of Ernst & Young’s Anti-Bribery Corruption team said.

"After the hiatus of the Act being debated, passed and finally becoming enforceable, a year without a corporate prosecution has left some feeling like it’s a phoney war.

“However despite the lack of cases, the Bribery Act has had a far-reaching effect with the act becoming embedded in compliance programmes. It has meant that businesses have paid attention to facilitation payments, third party relationships and corporate entertainment, and it has seen allegations of bribery and corruption treated far more seriously than in the past.”

Bribery and corruption starts at home, completed cases show

Though there have been no prosecutions under the new Act, 2012 has seen five completed cases of bribery and corruption against UK companies under old laws, according to Ernst & Young’s UK Bribery Digest released next week.

Despite much attention about the need for companies to battle foreign bribery and corruption risks, the analysis finds that four of those five completed cases this year have involved domestic wrongdoing. The Digest also shows that while businesses have been concentrating on monitoring their contact with public officials, three of the five cases involved ‘business-to-business’ bribery.

This is despite a perception among UK executives that bribery and corruption rarely happens on home soil. Our recent Global Fraud Survey found that only 14% of UK respondents in 2012 thought that corrupt practices happen widely, compared to 39% in other countries.

The 2012 cases highlight the exposure of individuals to prosecution for bribery and corruption as 11 sentences were handed down. Four of the five cases involved individuals being prosecuted.

“There has not been the headline corporate prosecution under the Bribery Act that many foretold but there have been some interesting and instructive cases," Jonathan Middup continued.

"The cases we have seen clearly show that bribery and corruption is happening on home soil, that private sector bribery is a major risk for companies, and that individuals are exposed.

“Those who point to the lack of prosecutions under the Bribery Act should be cautious. We are most often asked to undertake bribery and corruption investigations for incidents which happened years ago. Businesses not taking the right action now to encourage a culture of integrity are only likely to be storing up difficulties for the future.”

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