The rights of third parties in criminal and regulatory proceedings
Criminal prosecutors and financial regulators in the UK now increasingly aggressively pursue criminal prosecutions and regulatory enforcement in the context of corporate misconduct…
Published 11 October 2018
It has been reported that Amazon is currently investigating claims that its employees accepted bribes from independent merchants selling products on its site in return for deleting negative reviews, restoring banned accounts and providing confidential sales data. The practice is reported to have been particularly pronounced in China.
The bribes took the form of payments of between $80 and $2,000 and the confidential information provided is thought to include internal sales metrics and reviewers’ email addresses. It is understood that this information would have been capable of giving a commercial advantage to the merchants receiving it.
In addition to the reputational risks faced by corporates in such circumstances, what criminal offences would be triggered in the UK and, if the conduct is limited to the actions of independent sellers and Amazon employees in China, could Amazon and its employees nonetheless have committed offences in the UK?
The principal bribery offences in the UK can be found in the Bribery Act 2010 ("the Act") which came into force on 1 July 2011. The Act repealed a multiplicity of statutory and common law offences in relation to conduct amounting to bribery. It is assumed for the purpose of this article that the conduct under investigation by Amazon took place after July 2011 and that the Act therefore applies.
Sections 1 and 2 of the Act make it an offence for an individual or a company to offer, promise, give, request, agree to receive or accept an advantage (be it financial or any other advantage) to or from another person. The individual or company concerned must intend that the receipt, or anticipated receipt, of the advantage would bring about the improper performance of a 'relevant function' or know that the offer, request or acceptance of the advantage offered would itself constitute the improper performance of a relevant function.
A 'relevant function" for the purpose of the section 1 and 2 offences includes any activities connected with a business and any activity performed in the course of a person's employment. The function or activity need not have any connection with the UK. There must also be an expectation that the functions are carried out in good faith, impartially, or the person performing them must be in a position of trust.
The section 1 and 2 offences will only be committed if the relevant act or omission either takes place in the UK or, if it does not, the relevant person must have a 'close connection' with the UK, including being a resident of the UK or a company incorporated in the UK.
In addition to the section 1 and 2 offences, a corporate body (wherever incorporated but which carries on at least a part of its business in the UK) will also commit an offence pursuant to section 7 of the Act if a person associated with it bribes another person intending to obtain or retain business for the company, or to obtain or retain an advantage for the company. It is a defence for the company to prove that it had in place adequate procedures designed to prevent persons associated with it from undertaking such conduct.
In the current case it appears that independent sellers have offered, promised or made payments to Amazon employees who have themselves requested, agreed to receive or accepted those payments. It is highly likely that Amazon's employees will owe a contractual or implied duty of good faith to their employer. In these circumstances the section 1 and 2 offences are clearly engaged in respect of both Amazon's employees and the independent merchants. The issue in the course of any enforcement action will be whether there is any legitimate justification for the payments and whether it can be demonstrated that they were offered or accepted with the intention that it would bring about the improper performance by Amazon's employees of any of their activities. Even if Amazon's employees had authority to disclose the information, delete or recover content on Amazon's website, the offences would still be triggered if it can be shown that they would not have done so but for the actual or anticipated receipt of the financial advantage.
Of greater concern to Amazon will be the section 7 offence. The effect of section 7 is that there is a risk Amazon may have committed an offence even if the company, its board and its senior staff had no knowledge of the bribes. It is not known whether any of the Amazon group companies carrying on part of their business in the UK have been involved in the conduct under investigation. If they have, those companies would be liable for prosecution in the UK even if none of the individuals involved had any connection with the UK and no part of the bribe transaction actually took place in the UK. In defending any prosecution in these circumstances, Amazon would stand and fall by the adequacy of its internal anti-corruption processes and procedures and in particular their effectiveness in identifying and managing risk.
A deferred prosecution agreement is available as a means by which a corporate may dispose of bribery offences and avoid prosecution. The decision whether to enter into a DPA is however entirely within the discretion of the prosecutor (i.e. the SFO or CPS). As a condition precedent to entering into a DPA, the prosecutor will usually require that the criminal conduct has been self-reported by the company and will require full cooperation in the course of an investigation. If a company wishes to explore this route then it will be important to take urgent legal advice and to act quickly as possible upon discovering the criminal conduct.
This case demonstrates the significant risks that even well-resourced global companies face of illegal and corrupt practices developing in their supply and sales chain and the risks of prosecution from increasingly extra-territorial criminal offences. The mere identification of corrupt practices is capable of causing significant reputational damage to a corporate particularly if the company is unable to clearly and effectively demonstrate that it took adequate steps to prevent such practices arising. Against this backdrop, the case highlights the importance for companies to adopt and implement pro-active and robust anti-corruption processes and procedures as well as the need to respond quickly and decisively when potential criminal conduct is identified in order to achieve as favourable a disposal of the issue as possible.