On 1 July 2011 the UK Bribery Act, commonly referred to as the “US Foreign Corrupt Practices Act on Steroids”, came into force. It does not differentiate between bribery in the public and in the private sector, and it introduces a completely new corporate offence with a very broad extraterritorial reach, forcing companies around the globe to reassess their approach to bribery.
It is not long since the UK was sharply criticised by the OECD for its failure to bring its anti-bribery laws into line with its international obligations under the OECD Anti- Bribery Convention. In 2010 the UK government reacted to this criticism by passing an extraordinarily strict anticorruption law, the UK Bribery Act. T
he UK Bribery Act came into force on 1 July 2011. It covers bribery in the private as well as in the public sector and (unlike many anti bribery laws in the CEE-region), does not provide any monetary limits up to which a person can offer gifts without being held criminally liable. For the purposes of the Act, a bribe is effectively the giving or receiving (or the offer or promise to do so) of a financial or other advantage with the intention of bringing about the “improper performance of a function or activity”.
Bribery is punishable by a prison sentence of up to 10 years for individuals and unlimited monetary fines for corporations.
Scope of application
The law applies to anybody who commits an offence (i) at least partly in England and Wales, Scotland or Northern Ireland or (ii) outside the UK but who has a close connection to the UK. A person is considered to have a “close connection” with the UK if he or she is:
- a British citizen, British overseas territories citizen, British National Overseas citizen, or British Overseas citizen;
- a person who under the British Nationality Act 1981 was a British subject or British protected person within the meaning of that Act;
- an individual ordinarily resident in the UK;
- a body incorporated under the law of any part of the UK; or
- a Scottish partnership.
Further, the Act introduces a new corporate offence for failure by a commercial organisation to prevent a bribe being paid or received on its behalf. A company will be guilty of failing to prevent bribery if a bribe was paid by a person associated with the company, unless it can show that it had “adequate procedures” in place to prevent the bribery.
Associated persons could include employees, agents, contractors, suppliers performing services rather than simply acting as a seller, joint ventures where the bribe is paid for a member of the joint venture with the intention of benefitting that member, and subsidiaries if the bribe was made to benefit the parent company.
Application of corporate offences
A corporate offence can be committed by a “relevant commercial organisation” only. The Act defines a “relevant commercial organisation” as:
- a body or partnership incorporated or formed in the UK irrespective of where it carries on a 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.
Thus, the key element is the “carrying on of a business”. UK courts are the final arbiter as to when an organisation “carries on a business” in the UK considering the facts of the case. Whether bodies incorporated or partnerships formed outside the UK can be regarded as carrying on a business in any part of the UK will be answered by applying a common sense approach. The UK Minister of Justice stated that the government anticipates this to mean that organisations that do not have a demonstrable business presence in the UK would not qualify as relevant commercial organisations within the meaning of the Act.
A company will be guilty of failing to prevent bribery if a bribe was paid by a person associated with the company, unless it can show that it had “adequate procedures” in place to prevent the bribery.