Who: Brand-Rex Limited (“Brand-Rex”); the Crown Office
When: 25 September 2015
Law stated as at: 10 November 2015
Brand-Rex Ltd (“Brand-Rex”), a company which provides cabling solutions for network infrastructure and industrial applications, has paid a sum of £212,800 by way of civil settlement with the Scottish Crown Office under the Bribery Act 2010 (“the Act”) after it accepted that it had benefited from bribery conducted by a third party.
Brand Breaks scheme abused
Between 2008 and 2012, Brand-Rex ran an incentive scheme for distributors and installers of Brand-Rex products based in the UK, called “Brand Breaks”. This incentivised distributors and installers by giving rewards, such as foreign holidays, to those who met or exceeded sales targets. The Brand Breaks scheme itself was not unlawful.
An independent installer of Brand-Rex products chose to offer tickets which he knew he would receive from the scheme to an employee of one of his customers, in return for the customer’s company choosing to purchase Brand-Rex cabling. The employee of the end-user company was in a position to exert influence over the decision as to which provider to use, and therefore, in accepting the tickets, bribery had occurred.
In June 2015, after a thorough investigation of this issue, Brand-Rex made a self-report to the Crown Office that it had failed to prevent bribery by the installer (who was an ‘associated person’ under section 7 of the Act) and therefore that it was in breach of section 7. Although the Act carries the threat of criminal prosecution, civil recovery settlements may be possible in specific circumstances if a business self-reports its breach. The £212,800 that Brand-Rex agreed to pay was based on the gross profit of the company which related to the misuse of the Brand Breaks scheme. Brand-Rex also agreed to implement more thorough anti-bribery procedures going forward.
Why this matters:
This case emphasises how vital it is to have adequate anti-bribery procedures in place, not just internally, but also in relation to loyalty or incentive schemes. As demonstrated here, penalties can be substantial for failure to prevent bribery. If a business can successfully show that its policies and procedures are adequate (which Brand-Rex was not apparently able to do), it will have a complete defence to a change under section 7 of the Act and will therefore eliminate the risk of criminal sanction.
It is also important to note that there are often benefits to be derived from dealing with breaches of the Act quickly, decisively and cooperatively. Brand-Rex was able to self-report under a voluntary disclosure programme which was run in Scotland (although it was not available in England), which has now closed. Given that it self-reported promptly after the conclusion of a thorough investigation into the breaching behaviour, the Crown Office was open to civil settlement rather than criminal proceedings. However it is worth noting that this is the exception rather than the rule, and criminal sanctions will be the usual punishment for anti-bribery failures in most cases.