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    IN ThIS ISSUE2 The Perils for Senior Management of Being Involved

    with Bribery and Corruption

    3 Corporate Manslaughter Charges in the Public Sector

    5 When Your Director is Tried in Absentia

    7 Cyber Crime Attracts New Life Sentence in the UK

    9 New UK Law Targets the Puppet Masters

    11 Challenging the Murder on the Orient ExpressDefence

    13 The Benefits of Seeking Appropriate Legal Advice at the Right Time

    Francis Kean an Executive Director in Willis FINEX Global is a regular blogger on WillisWire, sharing his expertise with readers.

    Francis specialises in insurance for Directors and Officers of companies. He joined Willis in 2010 and has 25 years of experience as a leading litigation lawyer specialising in Professional Indemnity, Financial Institutions and Directors& Officers (D&O) Liability in the London insurance market.

    We have pulled together Franciss blogs from the last quarter and put them in to this easy to read bulletin.

  • Bribery and corruption is alive and well. Thats the depressing but perhaps unsurprising finding of a newreportby the Organisation for Economic Co-operation and Development (OECD) analysing more than 400 cases worldwide involving companies or individuals over a 15year period. Yet it wasnt this that caught my eye nor indeed any of the following worthy but predictable conclusions of the report:

    _ Almost two-thirds of cases occurred in just four sectors: extractive (19%); construction (15%); transportation and storage (15%); and information and communication (10%), or

    _ the average value of each bribe was USD 13.8 million or.9% of the total transaction value and 34.5% of the profits of the relevant company, or

    _ intermediaries were involved in 3 out of 4 foreign bribery cases. These intermediaries were agents, such as local sales and marketing agents, distributors and brokers, in 41% of cases, or

    _ in 69% of cases, sanctions were imposed by way of settlement between the defendant and the national law enforcement authorities rather than as result of a criminal trial

    No, what gave me pause for thought was the following comment by OECD Secretary-General Angel Gurrain aspeechwhen the report was launched:

    Bribery cannot be blamed on rogue employees. In over half of the cases studied, senior management and even CEOs were involved in corrupt behaviour or were at least aware of it. Companies can no longer play thevictim.

    Passive involvement?Well, of course its no surprise that corruption can occur at any level within an organisation. Also, anyone actively involved in corruption can expect and be entitled to no sympathy. The real question though is where this finding (and the underlying reality) leaves other board

    members not perhaps themselves actively involved in corruption but who, with the benefit of forensic hindsight, might be accused of passive involvement by not doing enough to prevent it.

    For example in the UK, there is an especially dangerous (insofar as those passive board members are concerned) combination of two statutes, which does not get the attention it perhaps deserves. The first is of courseTheBribery Actitself butat least so far as individual directors, are concerned, provided that their involvement has not extended to consent or connivance in the briberythey should not be prosecuted under that Act. Mere neglect is not enough.

    But what if there is a credible suspicion of bribery raised at board level perhaps as a result of whistle-blower activity?

    That is where the POCA or theProceeds of Crime Actcomes into play. This is complex stuff but in essence, Section 330 of POCA makes it a criminal offence in the regulated sector if someone knowsor suspects, or hasreasonable groundsfor knowing orsuspecting,that another person is engaged in money laundering and fails to disclose this to the proper authorities. Money laundering is the process by which theproceeds of crimeare converted into assets which appear to have a legitimate origin. Since a bribe would create the proceeds of a crime, it follows that if an otherwise innocent director has reasonable grounds for suspecting bribery to have occurred but sits on his or her hands, he or she runs a risk of prosecution not under the Bribery Act but instead under POCA.

    If there is as much involvement in bribery at senior management level as the OECD estimates, the risk of collateral damage in the form of criminal prosecutions of those asleep at the watch, rather than those who consented to or connived in it, is probably greater than is generally realised.

    The Perils for senior ManageMenT of being involved wiTh bribery and CorruPTion


  • CorPoraTe ManslaughTer Charges in The PubliC seCTorIt was always perhaps more a question of when rather than if, but Maidstone and Tunbridge Wells NHS Trust now has the dubious distinction of being the first National Health Service Trust in England and Wales to be charged with corporate manslaughter.

    The charges relate to the death of a woman at Pembury hospital in Tunbridge Wells after giving birth on 9 October 2012. Two doctors have also been charged with gross negligence manslaughter. Newspaperreportssuggest that an international arrest warrant has been issued for one of the doctor who is believed to be abroad. The first hearing in the case is scheduled to take place on May 1, 2015 at Sevenoaks Magistrates Court.

    I offer no opinion on the facts of what is plainly a tragic and serious case. That said, I think it is of interest and general importance to remind ourselves as to the nature of the challenge facing prosecutors to make a charge of corporate manslaughter stick particularly against a large organisation such as this.

    Under the Act an organization is guilty of an offence if the way in which its activities are managed or organized by its senior management causes a persons death, provided that there was also agross breach of a relevant duty of care owed by the organization to thedeceased.

    The termsenior managementis defined in section 1(4) to mean those persons who playa significant rolein the managementof the whole ora substantial partof the organisations activities. But as the Crown Prosecutions ownguidelinesmake clear:neither significant nor substantial are defined but the former is likely to be limited to those whose involvement is influential and will not include those who simply carry out the activity.

    the guidelines continue:When considering a prosecution under the Act, it is essential to obtain an organogram of the organisation in order to identify senior management and to use that information to determine whether a substantial element of the breach was at a senior management level. The test of senior management is wider than the former controlling mind which effectively


  • restricted the offence to actions of directors. A regional manager would probably count but this may itself depend on the number of regions, the number of higher tiers of management, the diversity of the organisations activities and his own job description.

    According to their website, theMaidstone and Tunbridge Wells NHS Trust operates from two main clinical sites and offers other small community based and satellite services. It employs some 4750 people. As such it is one of the larger organisations to have faced corporate manslaughter charges in the UK. Accordingly, the question as to the degree of alleged responsibility among specific tiers of management within the Trust for the gross breach ofduty of care needed to secure a conviction seems likely to be an important element of the case.

    It is likely that a lot of time and money will already have been spent by the Crown Prosecution Service in investigating the Trusts systems and controls and that, in that context, a number of Trust employees will have been formally interviewed. Although individuals members of management cannot themselves be charged with an offence under the Act, the financial and reputational consequences for the organization are so serious that the career implications for those involved cannot be underestimated.

    In that context it is well worth thinking about the relevance of D&O insurance cover. Paradoxically, some policies cover the defence costs associated with a prosecution against an individual member of management inherently unlikely at least in the UK- but do not always cover the investigation costs very much more likely in the event of a death. As always, it pays to read the small print.


  • It is perhaps too easy to dismiss the claims as mere aberrations. According to The Times reports, though, it appears that the only way the executive concerned was able to overturn his conviction was to appear in person at his appeal. That appearance was something which itself would have needed to be handled very carefully to avoid further mishaps.

    I am no expert on Egyptian justice system but I hazard a guess that the original criminal charges flowed from civil claims (however wrong-headed) originally made by the former Egyptian partner and that the criminal convictions were simply procedural inevitabilities based on the fact the cases were undefended.

    Fancy a sPell in an egyPtian jail?Perhaps unsurprisingly the answer from each of the senior executives of a major UK retailer concerned was an emphatic no. Nevertheless, according to recent reports in The Times, both had been sentencedinabsentiato lengthy jail terms. How could this happen? And what lessons does this bizarre episode have for D&O insurance?

    the caseThe case relates to a retailers attempt to open stores in Egypt some 15years ago. The deal went sour and the