Skansen was charged with bribery in UK despite self-reporting, former CEO says
5 March 2018. By Ben Lucas.
British refurbishment company Skansen Interiors was charged with failure to prevent bribery despite reporting the illegal conduct to UK police, the former chief executive of its parent company has said, warning that this could send the wrong signal to companies considering reporting wrongdoing.
Ian Pigden-Bennett told MLex that Skansen Interiors had been in line for a plea deal, but prosecutors at the Crown Prosecution Service decided against it because the company was dormant and had no assets to pay fines.
It emerged last week that Skansen Interiors was found guilty after a two-day trial in February, making this the first-ever contested "failure-to-prevent" case since the UK Bribery Act came into force in 2011. The judge didn’t impose any penalties, giving the company an absolute discharge, meaning the conviction won’t be registered on its record.
Under Section 7 of the 2010 law, companies face criminal prosecution if they fail to prevent bribery. Companies can deflect charges if they prove they had “adequate procedures” in place to prevent bribery.
Skansen Interiors’ former managing director, Stephen Banks, paid bribes to Graham Deakin, a former project manager at real estate company DTZ Debenham Tie Leung, to secure contracts worth 6 million pounds ($8.3 million today) to refurbish offices in London.
Banks pleaded guilty to three offenses and Deakin to two offenses under the Bribery Act. Southwark Crown Court in London is yet to set a date for their sentencing.
Pigden-Bennett joined Skansen Group in January 2014, to turn around the struggling fit-out group.
The executive said he immediately dismissed Banks and the head of commercial, Peter Smith, in March 2014 after uncovering evidence suggesting Banks had paid bribes. Smith wasn’t charged by the police.
Pigden-Bennett said he then filed a “suspicious activity report” with the National Crime Agency, and reported the suspected bribery to the City of London police.
“I actually said to the company at the time when I discovered it: If we don’t report I’ll resign,” Pigden-Bennett told MLex in an interview. “That’s how strongly I felt about it.”
The company’s parent, Skansen Group, employs about 30 people and operates out of a 300 square meter office in London. The company wasn’t formally warned that the unit could be charged under Section 7 of the bribery law until mid-2015, and it was formally cautioned in 2016, said Pigden-Bennett.
The formal charges in March 2017 came as a “shock,” Pigden-Bennett said. “The company self-reported. We said to the police: ‘We’ll do whatever you want to assist you with the investigation,’” he said.
The UK’s lead financial-crime authority, the Serious Fraud Office, has routinely encouraged companies to report wrongdoing to help secure a settlement and avoid prosecution.
The City of London Police told MLex that it can’t comment on the case until Banks and Deakin have been sentenced.
Deferred Prosecution Agreement
After the charges, the CPS considered striking a settlement, known as a deferred prosecution agreement, only to later drop the idea, Pigden-Bennett said.
The CPS dropped the option because Skansen Interiors had been dormant since April 2014 and had no assets to pay fines, he said.
“The group didn’t have sufficient funds to make any payments,” said Pigden-Bennett. He said the company offered to “pick up any conditions of a DPA” or “to strike the company off” to keep it from trading.
The decision to charge Skansen Interior could send the wrong signal to companies that want to report wrongdoing, Pigden-Bennett warned.
“The police would’ve never have known about it.”
“Is it really in the public interest to encourage people not to report now? Because if you do report it, and you don’t have adequate procedures, they’re going to prosecute you.”
They were “rogue directors,” he said. “Whatever procedures you had in place there, wouldn’t stop that sort of behavior.”
He said he would still report misconduct, however. “I’ve got nothing to hide. Everything I did was done properly,” he said.
Pigden-Bennett left the company last November.
A CPS spokeswoman said: “We are pleased that this case was successfully prosecuted both in terms of the individuals and the company involved. Bribery is corrosive at any scale and a conviction for bribery may debar a company from public contracts.”