The Bribery Act 2010 comes into force in April 2011.
The Act significantly extends the law of bribery from a mainly public sector related law to a law that applies to all private commercial concerns.
In summary, the Act makes it an offence for a person to bribe another person and also for a person to be bribed (i.e. both a ‘bribor’ and a ‘bribee’ can be liable) in respect of a relevant function or activity where there is a reasonable expectation of good faith, impartiality and/or trust. Body corporates and individuals can be liable for bribery, and commercial organisations can be additionally liable for a separate offence of failing to take steps to prevent bribery.
Bribing is mainly defined as where a person offers, promises or gives a financial or other advantage to another person with the intention of inducing or rewarding the other person to “perform improperly a relevant function or activity”.
There is also a secondary definition of bribing where the bribor knows or believes that the acceptance of the advantage would in itself constitute such an improper performance.
Being bribed is mainly defined as where a person requests, agrees to receive or accepts a financial or other advantage with the intention that a relevant function or activity should be performed improperly, or as a reward for such improper performance. There are likewise further, widely cast definitions of being bribed covering where the request, agreement or acceptance itself constitutes such an improper performance, or where there is such improper performance by the bribee or another person at the bribee’s request or at the bribee’s assent or acquiescence. “Financial or other advantage” is not defined and will be broadly interpreted.
In all cases, the Act covers where a bribor or bribee acts through, or for the benefit of, a third party.
“Relevant function or activity” is defined very widely, including “any activity connected with a business”, “any activity performed by or on behalf of a body or persons (whether corporate or unincorporated)” and “any activity performed in the course of a person’s employment” but only where, in all cases, the person performing the activity is “expected to perform it in good faith” or “expected to perform it impartially”, or where the person performing it is in a position of trust by virtue of the nature of it.
Such a relevant function or activity is performed improperly if “it is performed in breach of a relevant expectation” (i.e. the expectation that it be performed in good faith or impartially or the expectation that it be performed in the manner which arises from the position of trust).
For these purposes, the test of what is to be expected in any given function or activity is “a test of what a reasonable person in the UK would expect in relation to the performance of the type of function or activity concerned”.
In addition, companies and other corporate bodies can be liable:
- Where a body corporate is guilty of bribing or being bribed and the offence is proven to have been committed with the “consent or connivance” of a senior officer (meaning a director, manager, company secretary ‘or other similar officer’), the body corporate and the senior manager can be liable for the bribery offence itself.
- Separately, and perhaps most importantly, a commercial organisation will be guilty of the separate offence of failing to take steps to prevent bribery if a person “associated” with the organisation bribes another person with the intention of benefiting the organisation unless the organisation can prove it had in place “adequate procedures” designed to prevent such conduct. For these purposes, an associated person is someone who “performs services for or on behalf of the organisation” and employees, agents and subsidiaries are specifically given as examples. “Adequate procedures” are not defined in the Act but the draft Guidance to the Act sets out six principles – risk assessment; top level commitment; due diligence; clear, practical and accessible policies and procedures; effective implementation; and monitoring and review – and with them a variety of associated issues and measures organisations might wish to consider.
Penalties for individuals for the main offences of bribing and being bribed can be imprisonment (up to 10 years in the most serious cases) and/or a fine (again depending on severity).
The penalty for commercial organisations/body corporates for the main offences of bribing and being bribed is a fine. The penalty for commercial organisations/body corporates for the separate offence of failing to take steps to prevent bribery by an associated person is a fine.
What will this mean in practice?
At a recent speaking event, Vivian Robinson QC, General Counsel to the Serious Fraud Office said:
“What the SFO will be looking for is that the company has (1) compliance procedures that cover all the basics, PLUS (2) a real anti-corruption culture, which requires top level commitment…”
“If they were to find an isolated instance which had slipped through an otherwise fairly good net and the company had after the event acted to plug gaps, “adequate procedures” would be relevant in two ways: as a potential defence and [before that] in relation to the SFO’s enforcement decisions…A one size fits all document will not be adequate.”
In an interview with the Daily Telegraph on 6 January, former (embattled) Attorney General Lord Goldsmith, now a partner in a US law firm, said among other things:
“We have all been waiting to know what are adequate procedures”. Will we ever find out? “No, is the answer to that. We are going to get guidance. Those of us who have spent a bit of time in government know that what you actually will get is a set of principles which are very important, they are sensible and constructive but will not actually amount to a manual for your company. You will have to adapt that and apply that to your company. And companies need to do that now.”
“When I was in charge of the prosecuting authorities I was encouraging the SFO to look at other countries for their methods for dealing with crimes…It is not just a case of having a written policy that says don’t bribe. The American experience demonstrates you need to have a procedure for instructing people about that, for monitoring it; you have to have ways of dealing with problems when you come to them. You do have to have policies on things like entertainment and facilitation payments – what is acceptable and what isn’t.”
What should organisations do?
Providing companies act professionally and introduce reasonable steps to prohibit and prevent bribery by its employees and officers, the Bribery Act should not cause serious concern. For example, in terms of hospitality the draft Guidance is clear that:
“Hospitality and promotional expenditure can be employed improperly and illegally as a bribe ………… But reasonable and proportionate hospitality or promotional expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, is recognised as an established and important part of doing business”
Sensible practical steps for companies to consider in order to avoid any unwanted confusion include:
- Issuing a prohibition on bribery (company wide and, in particular, senior figures);
- Implementing an anti-bribery policy identifying what constitutes bribery and specifically identifying and monitoring issues such as receipt of gifts, hospitality etc;
- Communicating the policy, which should be specifically endorsed by the board directorship, to management, employees, clients and suppliers
- Amending standard form employment contracts to include anti-bribery provisions;
- Incorporating bribery into disciplinary rules and procedures; and
- Considering the Government guidance (currently in draft form and expected to be finalised in early 2011).