A lesson in the pitfalls of third party reward schemes from Brand-Rex, which has admitted benefiting from unlawful conduct
Glenrothes-based Brand-Rex has paid out more than £200,000 to the Crown Office’s Civil Recovery Unit after reporting its own involvement in criminal activities.
The cabling solutions specialist admitted in June 2015 that it had failed to prevent bribery and had benefited from unlawful conduct by a third party associated with the company.
It had operated an incentive scheme known as ‘Brand Breaks’ between 2008 and 2012 in which UK distributors and installers were rewarded for meeting or exceeding sales targets with the likes of foreign holidays.
While the scheme was wholly legitimate, an independent installer of Brand-Rex products offered his company’s travel tickets to an employee of one of his customers in a move which went beyond the intended terms of the scheme.
The customer was an end user of Brand-Rex products, rather than an installer or distributor and was in a position to influence decisions such as which company they bought cabling from.
Personnel from this company and individuals connected to them used these tickets for foreign holidays in 2012 and 2013.
Brand-Rex became aware through an internal review and launched an extensive investigation conducted by external solicitors and forensic accountants.
Following the investigation, Brand-Rex made a self-report to Crown Office and accepted that it failed to prevent the incident when it should have done – accepting responsibility for a contravention of Section 7 of the Bribery Act 2010.
Under the self-reporting initiative, the case was deemed suitable for civil recovery settlement, rather than criminal prosecution.
The £212,800 settlement has been based on the gross profit of the company related to the misuse of the Brand Breaks scheme.
The company has since taken steps to implement new policies and training to ensure that no unlawful conduct will take place in the future.
Money to be reinvested in Scottish communities
Linda Hamilton, head of the Civil Recovery Unit, said: “Bribery and corruption can distort business and harm legitimate economic development. Companies are responsible for ensuring that they do not allow their employees or contractors to secure any commercial advantage through bribery.
“In appropriate circumstances such as this, where companies accept that they have failed to prevent bribery and take steps to ensure that it will not occur again, the self-reporting initiative allows for a civil settlement rather than criminal proceedings.
“I would urge any companies who uncover any instances of bribery to notify the Crown Office as soon as possible.
“The money recovered under the self-reporting initiative will be transferred to the Scottish Government to be reinvested back into Scottish communities.”