On 31 January 2011, a spokesman for the UK Ministry of Justice (MoJ) confirmed that publication of the MoJ’s guidance on "adequate procedures", a defence to one of the new offences under the Bribery Act 2010, will be delayed. The MoJ had indicated it would publish early in 2011, widely interpreted as before the end of January. As a consequence of the delay, the coming into force of the Bribery Act itself will be delayed beyond the MoJ’s indication of April 2011.
The delay is widely perceived to have been caused by pressure from industry (most notably the Confederation of British Industry) and from UK press expressing concerns at the scope of the offences and at the alleged competitive disadvantage to UK businesses when competing with those outside the application of the Bribery Act.
As set out in our earlier Client Alerts, the Bribery Act aims to reform criminal liability under English law for bribery and corruption. When it comes into force, it will create among other things a criminal offence of failure to prevent bribery. This offence will apply to any commercial organisation which carries on a business or part of a business in the UK. It will be committed where any person associated with the organisation commits bribery anywhere in the world intending to obtain or retain business or a business advantage for the organisation. There is no requirement to prove a corporate act or any criminal intent on the part of the organisation.
The only defence is for the commercial organisation to show that it had in place "adequate procedures" designed to prevent the bribery from taking place. In September 2010 the MoJ produced, and consulted on, draft guidance on what might constitute "adequate procedures" (Latham & Watkins participated in the Government’s consultation process). At the same time, the MoJ indicated that it would publish finalised guidance early in 2011, and that the Bribery Act would be into force some three months later in April 2011.
The MoJ also indicated that the relevant UK authorities (the police, the Director of Public Prosecutions, and the Director of the Serious Fraud Office (SFO)) would be producing joint guidance for prosecutors to encourage a broad consistency of approach in the exercise of the wide discretion conferred on UK prosecutors to investigate and prosecute potential offences.
The MoJ also indicated that it would produce a "circular" on the Bribery Act as a whole. No further details have been given as to its content.
Throughout January, various UK newspapers and industry figures expressed concern that UK businesses might be put at a competitive disadvantage when operating outside the UK compared to foreign organisations not subject to the Bribery Act. Concern was focussed on the illegality under the Bribery Act of "facilitation payments" (payments designed to secure prompt or efficient performance of ordinary government functions), on the legal limits of corporate hospitality and on wide scope of the offences.
On 31 January 2011, the Ministry of Justice press office issued a statement, including confirmation that "we are working on the guidance to make it practical and comprehensive for business. We will come forward with further details in due course. When the guidance is published it will be followed by a three-month notice period before implementation of the Bribery Act".
It is not clear how long the delay will continue.
Also on 31 January 2011, the Prime Minister’s Office confirmed that the Government is "looking again" at the Bribery Act, and that it "had listened to the concerns of business about the regulatory burden imposed by this legislation and we were looking again to see what we could do".
It is clear that the MoJ did not anticipate a delay when it published its draft guidance. It is less clear what has caused this delay. It may be a response to the concerns mentioned above, or to views expressed as part of the consultation process or even to a change of view within the MoJ or the Prime Minister’s Office as to how to implement the law. All of these seem plausible.
If there are concerns as to the scope of the offences, however, it is not clear what the authorities will do about it. There are various tools available to them, but it may be that none will be able to meet those concerns.
The guidance on adequate procedures is designed with a compliance function in mind, i.e. what can be done to prevent bribery from taking place. It is not clear how the guidance can deal with the prior issue of what acts or omissions in fact constitute bribery.
It is also not open to the MoJ to rule on the proper interpretation of the relevant legislative provisions or to create exceptions or further defences, whether in the guidance or in its "circular". Ultimately, this will be a matter for the English court, which may be as keen to assert its jurisdiction over these issues as it has in respect of sentencing (see, for example, Thomas LJ’s sentencing remarks in R v. Innospec (2010)).
The joint prosecutors’ guidance may go some further way to giving comfort. However, it is unlikely that the SFO will want to give precise commitments which may fetter its discretion to later pursue prosecutions which it perceives to be in the public interest. It, too, is not in a position to rule on interpretation, although the SFO’s own interpretation may provide comfort as to what will or will not be prosecuted. It will also be open to the SFO to provide its views on issues beyond "adequate procedures", for example on what conduct constitutes bribery, and also on which commercial organisations might "carry on a business or part of a business in the UK" and so would be liable for failures to prevent bribery.
Nevertheless, even SFO guidance could provide a headache for commercial organisations, who may find themselves in a position where they are aware of conduct which constitutes bribery, and which may cause them to be committing as offence, but which they may be comfortable will not be prosecuted. Could they continue to permit the conduct? Should it be reported? How, if at all, should it disclose this conduct to business partners, shareholders or the market? These may remain delicate and uncomfortable issues.
Of course, it is always open to Parliament to amend the Bribery Act itself. However, given the length process which led to its creation, and the many reports, papers and consultations along the way, there may be little political will to go through the whole process again, with no guarantee of a more satisfactory result.