The UK authorities have today published long-awaited guidance materials on the UK Bribery Act 2010 — guidance about procedures for preventing bribery by the UK Ministry of Justice (MoJ), and prosecution guidance by the UK Serious Fraud Office (SFO). The UK Government has also confirmed that the Bribery Act will come into force on 1 July 2011.
This Client Alert sets out the contents of these materials in outline, and provides links to their official websites. It also provides a very brief overview of the key points and developments which arise from them.
From their simultaneous release it appears clear that these materials have been produced in concert to some extent. However there is no guarantee that they will be consistent. Indeed, there are likely to be tensions between the two which may emerge from careful study. We will supplement this Client Alert with a more detailed and considered one which we will publish as soon as possible.
Key takeaway points
The following key points emerge from the materials published today:
- The Bribery Act will come into force on 1 July 2011.
- The MoJ guidance emphasises that combating bribery risks is largely about common sense, not burdensome procedures, and its core principle for procedures is proportionality. The SFO reminds us that bribery is a serious offence, and sees the Bribery Act as taking a "robust approach" to tackling commercial bribery.
- The six principles in the MoJ’s draft guidance remain largely intact: Proportionate Procedures, Top-Level Commitment, Risk Assessment, Due Diligence, Communication (including training), and Monitoring and Review.
- The MoJ sees the section 7 offence of failing to prevent bribery applying only to those with a "demonstrable business presence" in the UK, and mere listing would not be enough. The SFO is silent on this.
- The MoJ sets out guidance on the extent to which an organisation might commit a section 7 offence if it fails to prevent bribery by contractors, joint ventures or subsidiaries.
- Facilitation payments will remain illegal, just as they are under existing English law.
- Both the MoJ and SFO recognise that corporate hospitality is an established and important part of doing business, and do not intend reasonable and proportionate expenditure to be prohibited or prosecuted.
- The SFO will continue to apply its usual two-stage test which permits prosecutions only where (a) there is sufficient evidence, and (b) prosecution is in the public interest.
- Existing published SFO guidance on corporate prosecutions will apply.
- The SFO continues to promote "self-reporting" and remedial action, both of which may tend against a prosecution.
Please see our earlier Client Alerts, or contact one of the authors on the following page, for more information on the basic provisions of the Bribery Act.
Guidance about procedures
The MoJ has published guidance about procedures which commercial organisations can put in place to prevent persons associated with them from bribing, pursuant to its obligation to do so under section 9. This comprises the full guidance and a "quick start guide".1
This is commonly referred to as the "adequate procedures guidance" because following it will go a long way towards establishing a defence of "adequate procedures" to the offence under section 7 of the Bribery Act of failure to prevent bribery. However, this label is a misnomer since it will not guarantee a safe harbour.
The MoJ guidance contains six principles which inform the procedures which organisations can put in place. These are similar but not identical to the six principles in the draft guidance published in September 2010. They are:
- Proportionate procedures, which are clear, practical, accessible, effectively implemented and enforced.
- Top-level commitment, in order to foster a culture in which bribery is never acceptable.
- Risk assessment, assessing the nature and extent of an organisation’s exposure to bribery risks on a periodic, informed and documented basis.
- Due diligence, in respect of persons who perform services for or on behalf of the organisation.
- Communication (including training), to ensure policies and procedures are embedded and understood throughout the organisation.
- Monitoring and review, including making improvements where necessary.
The MoJ guidance also contains general commentary on the offences which will be created by the Bribery Act, and contains case studies. These will no doubt be of some influence, although the decision on investigations and prosecutions will likely be for the SFO, and the ultimate arbiter of the proper interpretation of the provisions will be the English Court.
The SFO, which is the enforcement agency which will have prime responsibility for investigating and prosecuting Bribery Act offences, has published prosecution guidance jointly with the Director of Public Prosecutions.2
This sets out how the SFO will exercise its investigative and prosecutorial discretion, and gives guidance on the SFO’s interpretation of the offences which will be created by the Bribery Act, and the public interest considerations which the SFO will take into account in deciding whether to exercise its discretion. It also places the Bribery Act in the wider context of the international fight against corruption.