The U.K. Bribery Act 2010 (Bribery Act) was passed in 2010 and will come into effect later this year. It was enacted because of increasing global pressure on the U.K. to address a perceived lack of commitment to anti-bribery law enforcement and to increase co-ordination among the multiple investigative bodies tasked with addressing the issue. The UK authorities have a renewed determination to tackle corruption, both domestically and internationally with this aggressive and far-reaching law.
The Bribery Act creates four categories of offences:
- offering, promising or giving a bribe to another person;
- requesting, agreeing to receive or accepting a bribe from another person;
- bribing a foreign public official; and
- the corporate offence of failing to prevent bribery.
The two general offences of bribing another person and being bribed are linked to the ‘improper performance' of an activity. This standard applies equally to public and private functions and boils down to an objective test: what would a "reasonable person" in the UK expect? For example, did the conduct in question involve a bribe that a reasonable person in the UK would conclude breached expectations of good faith, impartiality or positions of trust?
Bribing a "foreign official" is subject to a different test. Unlike general bribery, this offence only covers the offering, promising or giving of bribes and not the acceptance of them. There must be intent on the part of the bribe giver to influence the foreign official in the performance of his or her duties as a public official and to obtain a business advantage. The definition of a public official in the Bribery Act is wide and includes individuals who are not part of government and those who hold a legislative, administrative or judicial position of any kind, exercise a public function or are an official of a public international organisation.
Failing to prevent bribery introduces strict liability for corporate organisations and is the most significant departure from current law. Essentially, a company will commit this offence if an "associated person" performing services on its behalf bribes another person to obtain or retain business or a business advantage. The definition of associated persons is broad and will capture many business relationships, including joint venture partners, introducers and other intermediaries. The associated individual or entity that carries out the act of bribery on behalf of the organisation need not have any connection to the UK.
From the US perspective
There are some important differences between the Bribery Act and the U.S. Foreign Corrupt Practices Act ("FCPA"). First, unlike the FCPA, the Bribery Act contains no "books and records" provisions applicable to public companies. There are also differences related to the FCPA's anti-bribery provisions. For example, the UK act makes it an offence to receive, as well as give, a bribe; bribery of both private individuals and companies, as well as foreign officials, is criminalised; there is no need to prove corrupt intent; there is no exemption for facilitation payments; and the extra-territorial reach has a broader impact for non-domestic companies and individuals.
As to this final point of differentiation, the Bribery Act applies to all businesses that are either incorporated or "carrying on business" in the UK, regardless of the country in which the corrupt conduct occurs. How broadly the definition of carrying on business will in practice be applied remains to be seen, but it possible that any sort of UK presence (e.g., selling through a sales agent) will create jurisdiction. Thus, for example, if a US company with a UK branch engages in bribery in India, that US company may have liability under the Bribery Act as well as the FCPA and could be prosecuted in the UK for failing to prevent bribery. Consequently, US companies with international interests that touch on the United Kingdom can no longer assume the internal controls they have put in place to ensure compliance with the FCPA are sufficient globally. The UK will apply its own standards to determine whether "adequate procedures" were in place to prevent bribery and whether the failure to prevent bribery is actionable under the Bribery Act.
Senior officers could also be personally liable under the Bribery Act for offences committed by the organisation if they have consented to or connived in (turned a blind eye to) the commission of any of the main bribery offences, including bribing a foreign public official, if any part of the offence has taken place in the UK. "Senior officer" is broadly defined as a director, manager, secretary or other similar officer. If the offence is committed outside the UK, they will only be liable if they have a "close connection" with the UK (such as being a British passport holder or being ordinarily resident in the UK). Although a senior officer cannot be liable personally for the new corporate offence of failing to prevent bribery, if a company suffers a significant penalty for such an offence, it is possible that a director might be vulnerable to a claim for breach of his wider duties.
The penalties for a violation can be severe. The maximum penalty for individuals will be 10 years imprisonment and/or a fine. The maximum penalty for the new corporate offence will be an unlimited fine. Of course, there may also be damaging collateral consequences, such as director disqualifications, company debarment from public contracts and asset confiscation proceedings.
The only defence available to commercial organisations charged with the strict liability corporate offence will be for the organisation to show that it had in place "adequate procedures" to prevent an act of bribery being committed in connection with its business. This phrase is not defined in the Bribery Act, but it is clear that compliance procedures will be subject to intense scrutiny, applying 20-20 hindsight.
Proactive steps to consider by way of implementing adequate measures include:
- updating and communicating a global code of conduct across all group companies (to be regularly monitored and revised to reflect changes in the law);
- establishing an internal anti-corruption committee (ensuring appropriate involvement of senior figures to set the "tone from the top");
- providing intensified anti-corruption training;
- establishing clear policies on corporate gifts, travel entertainment, charitable giving and lobbying;
- engaging in robust pre-contract screening of third intermediaries, with suitable compliance standards included in those contracts, with audit and termination rights;
- undertaking anti-corruption due diligence on all strategic transactions;
- maintaining clear channels for staff to report concerns in confidence;
- investigating allegations of misconduct promptly and independently; and
- taking appropriate disciplinary measures/remedial action arising from unethical behaviour.
There is no "one size fits all" approach to compliance with the Bribery Act. Relevant considerations when developing and deploying a program include taking into account its size, resources and the degree of risk (e.g., if it operates in jurisdictions prone to systemic corruption or routinely uses intermediaries or agents). All companies that do business in the UK should, however, determine now whether their current policies, systems, controls and training programs will be compliant with the new anti-bribery law. Failure to act will count against you should your existing procedures prove inadequate if faced with a violation in the months or years to come.