The UK Bribery Act 2010 (the “Act”) casts a deeper, wider net than ever in pursuit of bribery offenses. British business organizations as well as international business organizations with subsidiaries in the UK or just conducting business in the UK are subject. Under the Act, companies and even senior officers may be held liable for bribes paid by employees or agents outside the UK unless the particular company can demonstrate, for example, that it had in place adequate procedures to prevent bribery.

As the Act differs significantly from the FCPA in certain aspects, as highlighted below, business organizations subject to the Act need to ensure that their anti-bribery programs are compliant also under the Act. This requires an understanding of the Act, its requirements and the potential consequences in the absence of effective compliance programs, which are briefly discussed below. Although many questions are yet to be answered by the UK courts, the six principles developed by the UK Government and the guidance provided by Richard Alderman, the Head of the Serious Fraud Office (“SFO”), with respect to the Act’s reach and implementation -- as discussed in this article -- provide a good start for ensuring adequate compliance procedures for a proper anti-corruption program.


Prior to July 1, 2011, UK operated under outdated anti-corruption legislation, which had been little developed over 90 years.

On July 1, 2011, the Act, which -- as its title clearly reveals -- is concerned with bribery, went into effect. Since it received Royal Assent in April 2010, the Act and its possible implications for overseas companies have been widely discussed, criticized and feared; and, rightly so. While the UK Justice Minister tried to ease the fears of foreign companies, Mr. Alderman sent out a clear warning: “You bet we will go after foreign companies. This has been misunderstood. If there is an economic engagement with the UK then in my view they are carrying on business in the UK.”1

Highlights of the Act

The act of “bribery” is defined as: (1) offering, promising, giving a financial or other advantage to another person with the intent to induce that person to perform improperly a relevant function or activity, or to reward a person for the improper performance of such a function or activity; and (2) offering, promising, or giving a financial or other advantage to another person, knowing or believing that the acceptance of the advantage would itself constitute the improper performance of a relevant function or activity.2

The Offenses

The Act sets out a total of four offenses – two general offenses: (1) that of bribing, and (2) of being bribed; and two new offenses: (1) bribing a foreign public official, and (2) failing to prevent bribery (the corporate offense). While all four offenses are important, certainly, the two new offenses are most concerning to foreign companies and, therefore, merit a careful overview.

The Offense of Bribing a Foreign Public Official

In determining who is a foreign public official (“FSO”), the SFO uses, as a starting point, the test set out by the Organization for Economic Cooperation and Development (“OECD”) in connection with the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions from 1998, i.e., whether or not the foreign State is in a position to influence the foreign company.3 For example, banking officials in countries where the State has a major stake in the Bank and is actively involved in the operations of the Bank, are likely to be considered foreign public officials.4

The offense5 is committed when a person bribes or offers an advantage to an FSO:

  • With the intention of influencing him or her in that capacity;
  • In order to obtain or retain business or advantages in the conduct of business, and
  • Local law does neither permit nor require the FSO to be so influenced.

Thus, to commit the offense of bribing an FSO, it is not necessary that the person offering the advantage intends that the FSO act “improperly.” It suffices that the advantage is given to influence the FSO and there is no applicable written local law permitting the FSO to be so influenced.

The Corporate Offense

This offense is set out in Section 7, and deals with “relevant commercial organizations,” defined as a body or partnership incorporated or formed in the UK irrespective of where it carries on business, or an incorporated body or partnership, which carries on a business or part of a business in the UK irrespective of the place of incorporation or formation.6 Thus, as the Ministry of Justice summarized in its published Guidance, “[t]he key concept here is that of an organization which ‘carries on a business.’”7 And, although the Government speaks in terms of “common sense” in determining whether or not an organization carries on business in the UK, the courts will be the ultimate arbiter of that, taking into account the particular facts in each individual case. It should, however, be noted that the UK courts have in prior examples, albeit under the Financial Services and Markets Act 2000, applied a rather low threshold to overcome the carrying on business in the UK test.8

A business organization is liable if a person “associated” with it bribes another person, intending to obtain or retain business or a business advantage for the organization. The Act defines a person “associated” with a business organization as a person, either an individual or an incorporated or unincorporated body, who “performs services” for or on behalf of the organization.9 Section 8 of the Act clarifies that the capacity in which the person acts is irrelevant, meaning that employees, agents, and subsidiaries may be considered to perform services for an organization – an issue to be determined by considering all relevant circumstances.10 The Government provides the examples of contractors, suppliers, and separate legal entities in joint ventures as possible embodiments of an “associated” person in certain circumstances.11

There must be proof of intent to obtain, or retain business or any other advantage in the conduct of business for liability to accrue. For example, the Government explains that “a bribe on behalf of a subsidiary by one of its employees or agents will not automatically involve liability on the parts of its parent company, or any other subsidiaries of the parent company, if it cannot be shown the employee or agent intended to obtain or retain business or a business advantage for the parent company or other subsidiaries. This is so even though the parent company or subsidiaries may benefit indirectly from the bribe.”12

Furthermore, the Government has acknowledged that in certain circumstances, individuals are left with no choice but to make the payment in order to protect against loss of life, limb, or liberty. In such cases, the Government has explained that the common law defense of duress may be available.13

The Liability of Senior Officers

According to Section 14 of the Act, if an offense under sections 1, 2 or 6 has been committed with the “consent and connivance” of any “senior officer” or “a person purporting to act in such a capacity,” that person may be guilty of the same offense committed by the organization.14 The Act explains, however, that such liability cannot be imposed “unless the senior officer or person has a close connection with the United Kingdom.”15 A person is considered to have a close connection with the UK, if and only if at the time the act or omission was done or made, he or she was, inter alia, a British citizen or resident or a body incorporated under the law of any part of the UK.16 “Senior Officer” is defined as “a director, manager, secretary or other similar officer.”17

Facilitation Payments

Under the FCPA, facilitation payments, or what is commonly known as “grease payments” are exempted. This is not so under the Act. Under the Act, liability for such payments could be triggered under either Section 6 or Section 1, dealing with the general offenses of bribery, and, therefore, potentially also under Section 7. However, although facilitation payments are illegal, given the prosecutorial guidelines recently promulgated with respect to the offenses under the Act, it is uncertain whether offenses will be prosecuted unless the facilitation payments are seen as systemic or symptomatic of a wider lack of adequate procedures at the corporate level.18 Nevertheless, it may be advisable as good practice for companies to prohibit such payments and to work to identify and eliminate them, or at least to document any attempts to that effect.

Hospitality Payments

Similar to the FCPA, the Act does not ban hospitality payments as long as they are “sensible and proportionate” under the circumstances.19 Thus, proper judgment should be used in connection with promotional or other business expenses seeking to improve the image of an organization, present products or services, or establish cordial relations.


The penalties for breaching the provisions of the Act are raised significantly by the new law. The Act provides that an offense committed by a body is punishable by an unlimited fine, while an individual guilty of an offense may be convicted to imprisonment for a term not exceeding ten years, or a fine, or both. Businesses also risk being debarred from competing for public contracts under the Public Contracts Regulations 200621 (which gives effect to EU law in the UK) and incurring negative publicity and damage to their reputation.

The Reward of Being Proactive

The Act is not all about punishment. It also contains incentives to organizations to develop policies to prevent bribery. Most importantly, organizations with appropriate policies and procedures in place may assert the defense of “adequate procedures” as explained in Section 7(2). And, while the determination of what counts as “adequate procedures” is dependent on the nature, size, and complexity of a business, the UK Government has developed six principles to help organizations decide whether there is anything that they need to do differently.

  1. Proportionate Procedures

Organizations should implement procedures that are proportionate to the bribery risks it faces, and the nature, scale and complexity of its activities.

  1. Top Level Commitment

Proving “adequate procedures” requires the commitment to an anti-corruption culture that comes from the board of directors down. Policies should be visible both within the organization and to external partners and subsidiaries. 

  1. Risk Assessment

Businesses must understand the risks they face in their particular operations, specifically with respect to the geographical location and type of transaction. For example, activities undertaken in some developing countries are likely to warrant a higher degree of investigation and consideration.

  1. Due Diligence

Due diligence must be employed to identify the potential risks, including enquiring about intended transaction partners and agents, and the risks posed specifically by the geographical location or sector of the intended operation.

  1. Communication (including training)

The policies and procedures must be promulgated throughout the organization, backed by training, if appropriate, and clear penalties for breach.

  1. Monitoring and Review

Policies should be reviewed periodically to ensure they develop in light with business needs.

Prosecution and Enforcement

Prosecuting an offense under the Act is a matter for the prosecuting authorities and will follow the same guidelines and procedures as for any other criminal offenses. In March 2011, the SFO and the Director of Public Prosecutions published a joint guidance for prosecutors for offenses under the Act. Thus, as will any other criminal offenses, prosecutions under the Act must pass the two-stage test in the Code for Crown Prosecutors: (1) the evidential stage, and (2) the public interest stage.22 The general rule is that if a conviction is not more likely than not, prosecutors should not go on to consider whether a prosecution is in the public interest, no matter how serious or sensitive the matter is. Moreover, the Guidance on Corporate Prosecutions includes self-reporting as a public interest factor weighing against prosecution (under stage 2).

It should also be noted that unlike in the US, the UK procedure does not permit deferred prosecution agreements. Instead, the UK courts retain their discretion to sentence guilty defendants as they see fit. In fact, in some recent cases, the courts have criticized the SFO for trying to push “agreed” fines through the court process.23

How Does the Act Compare to the FCPA?

It cannot be denied that the Act is broader than the FCPA in a number of ways. Table 1 contains a comparison of the Act and the FCPA.

Most notably, of course, is the absence of the defense for facilitation payments in the Act. Also, the FCPA does not contain an equivalent to the corporate offense for failing to prevent bribery (although it does include provisions regarding the keeping of books and records that accurately reflect business transactions and the maintenance of effective internal controls). Moreover, unlike the FCPA, the Act does not require proof of “corrupt” intention.

Finally, of importance is also the lack of the “opinion procedure” available under the FCPA, although the SFO has indicated that it may be sympathetic to such an approach where overseas corruption is discovered in the context of due diligence carried out in an M&A transaction.24 In fact, Mr. Alderman indicated that, where an acquiring company discovers corrupt activities in the target company, either before or after the transaction, the SFO’s doors are open for discussion so that companies “come and talk to us about it so that they can have the assurance that . . . they will be left to get on and sort out these problems in their own way in order to ensure a proper ethical culture in the target company.”25

Impact on Business

No business sector may escape the reach of the Act—be it in the retail, pharmaceutical, financial or any other sector. Companies need to perform careful due diligence on third parties that act on their behalf. For example, rather recently, Mr. Alderman warned the UK pharmaceutical industry, noting that both the US Department of Justice and the SFO are keeping it on the radar. In his words, Mr. Alderman cautioned that “the amount of information sharing that goes on between [SFO] and the DOJ and the SEC about all these issues” should not be underestimated.26 Therefore, companies subject to the Act need to carefully review their anti-corruption policies, internal controls and overall compliance in this regard.

Next Steps

Although it remains to be seen how aggressively and expansively the UK authorities will interpret and implement the Act’s provisions, companies with a UK presence, which have not yet looked into their operations or implemented the necessary changes to comply with the new law, should act quickly. In particular, a review of the policies and procedures in place in light of the six guiding principles is more than warranted. Drafting a good faith written compliance program based upon the risk assessment performed and planning for its implementation may be the type of concrete steps the SFO would want to see. In sum, companies would be well served to be able to demonstrate that they have taken the adequate steps to prevent acts of bribery from taking place in connection with their operations.

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