With an increasing number of architecture and design firms entering into contracts overseas, it’s essential to understand the implications of the laws and regulations such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.
Eugene R. Scheiman and Nicholas P. Pavlidis
As we have noted in previous articles, worldwide opportunities for A/E/C firms continue to grow. Firms are exploiting these opportunities and engaging in contracts overseas. An awareness of current trends in enforcement of laws and regulations such as the United States’ Foreign Corrupt Practices Act and the United Kingdom’s Bribery Act, which went into effect July 1, will aid in preventing violations, which could subject professional services firms and individuals within them to significant criminal and civil penalties.
The first charges have now been filed by the United Kingdom under the Bribery Act, less than two months after it went into effect. The details provide insight into what the charges might mean to A/E/C firms, their leaders, and staff.
The charges were announced Aug. 31 against an administrative clerk in London. The defendant is alleged to have requested and received a bribe in early August that was intended to induce him to perform his functions improperly. Although additional details are expected to become available as the case progresses, initial reports indicate that the charges followed an investigation by a British newspaper that included filming a man (presumably the clerk) apparently agreeing to take £500 to avoid putting details of a traffic summons in a court database.
Although these charges and the details available to date neither involve an A/E/C firm or executive nor appear to relate to A/E/C community activities, lessons can be gleaned from the timing of the charges, the alleged behavior, the actor at issue, and the apparent process for obtaining the information.
The charges were announced less than two months after the Act went into effect, indicating that the United Kingdom is taking enforcement seriously when it believes it has sufficient information to bring charges. It also suggests the Act is not one that will be in name only: It will have bark and bite. The United Kingdom intends to prosecute and has so stated.
Further, because the authorities allowed a brief time to pass before announcing the first charges, there is an inference that the United Kingdom is not progressing haphazardly but is carefully collecting and considering information to determine if and when it is appropriate to bring charges. Careful and thorough investigations will precede charges, and sources of information will be sought in a variety of circumstances.
The behavior at issue is alleged to involve a small amount of money (£500) and, depending on your viewpoint, a relatively benign act (relating to details of a traffic summons). The accused is a 21-year-old court clerk. It is apparent that the United Kingdom is not just looking at large firms offering significant bribes to high-ranking government officials to influence large-scale projects. Even small bribes involving individuals and low-ranking government officials may be prosecuted. Additionally, that a government official in the first prosecution suggests actors on both sides of corrupt transactions are at risk of prosecution.
Initial reports are attributing the information to an investigation by the British newspaper, The Sun. Although this does not reveal much information about the Serious Fraud Office and its direct investigations, it suggests that the United Kingdom will take credible reports seriously. Individuals involved in corrupt transactions or witnesses to such transactions may well become sources. As a result, for example, a simple audio or video recording from a witness’s cell phone could be a catalyst for charges against those engaged in prohibited activity.
Anti-corruption laws are here to stay. These charges under the U.K. Bribery Act are one of the more recent examples of the breadth of activity they cover and the desire of governments to enforce anti-corruption laws for large- and small-scale offenses. As a result, it is vital that leaders of professional services firm learn which anti-corruption laws apply to them, familiarize themselves with each, and implement a detailed plan of action and training program to avoid violations.
Eugene R. Scheiman is a senior partner in the Construction Group of the law firm Arent Fox. In his 40 years of practice, Scheiman has provided a wide range of litigation, alternate dispute resolution, and business advisory services to clients with interests in the construction industry. He has lectured and written on FCPA and related topics for the A/E/C community and has been recognized by Super Lawyers for the past seven years for his construction litigation work.
Nicholas P. Pavlidis is an attorney in the litigation group of Arent Fox. He helps clients identify and resolve complex legal issues in a broad range of civil and criminal topics. Pavlidis has frequently written on FCPA-related issues with Scheiman and has given talks with respect to those issues and others.