On 1 July 2011, the UK’s Bribery Act 2010 (the Act) finally came into force after much delay. Some trust advisers were initially of the view that the Act had few implications for trustees. They were wrong.

Much of the discussion about the Act has to date surrounded its potentially farcical efforts to criminalise corporate hospitality: ‘When is a beer a bribe?’,1 and similar pieces point out some of the key issues in the matter.  

This article does not focus on criminal corporate hospitality but on the significant risk to trustees globally (so long as they do some of their business in the UK) posed by the introduction of the trustee’s potential strict criminal liability for the acts of anyone having anything to do with the trust or the companies held in trust whether or not the trustee has any real ability to control their activities.  

Trustees are from time to time advised that the authorities are investigating the affairs of a company whose shares are held in trust to determine if their assets have been used for corrupt purposes. A relatively orthodox ex post facto approach had been developed for responding to such investigations which worked rather nicely. In the face of the Act, the orthodox approach no longer works and trustees must take proactive steps in advance of any investigation if they are to avoid disaster.  


Prior to the coming into force of the Act, bribery was criminalised in the UK under the common law, the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916 (which statutes may be collectively referred to as the Prevention of Corruption Acts 1889 to 1916). There were numerous suggestions for the modernisation of the UK bribery laws from 1972 until 1998.2

Following the UK’s agreement to bring its bribery laws and enforcement into line with the OECD Anti-Bribery Convention in 1998, and after a 4-year hiatus and a couple of attempts made to reach a workable compromise on a new bribery law, a Bribery Bill was announced in the 2002 Queen’s Speech. The draft was rejected by the joint committee and a second consultation paper was issued in 2005.

Finally, the ultimately successful Bribery Bill, based on the Law Commission’s 2008 report ‘Reforming Bribery’ and following consultation on a further 2009 White Paper, was given Royal Assent on 8 April 2010, becoming the Bribery Act 2010. Initially the Act was expected to come into force immediately. However there were several rounds of public consultations before the government announced the Act would come into force in April 2011. The coming into force of the Act was further delayed, however, when the government announced that it intended to publish guidance on the interpretation and use of the Act and the Act would not come into force until at least 3 months after the guidance was published. The Ministry of Justice published the guidance, entitled ‘Bribery Act 2010: Joint Prosecution Guidance of the Director of the Serious Fraud Office and the Director of Public Prosecutions’ on 28 March 2011 and the Act came into force on 1 July 2011.


The Act is global in application and criminalises a surprising array of activities that one would not normally associate with bribery (a term typically reserved for the corruption of public officials). The Act specifies four offences: active bribery -bribing another person (s 1); passive bribery - being bribed (s 2); bribing a foreign public official (s 6); and failing to prevent bribery (s 7) – the corporate offence. Each of these brings in its own novel elements to bribery law.

The first offence, active bribery, criminalises payments or the provision of financial advantage (which is not defined in the Act) to anyone, including nongovernmental personnel, intended to induce or reward improper performance (which includes a breach of an expectation of good faith, impartiality or trust) or where receipt of the payment itself constitutes improper performance of an obligation.

The second offence, passive bribery, criminalises the request or receipt of payment or gifts of financial advantage by anyone, including non-governmental personnel, in exchange for improper performance or where acceptance of the payment or gift itself constitutes improper performance of an obligation. The third offence, bribing a foreign public official, makes the bribing of a foreign public official a crime in the UK where there is an intention to influence and to obtain or retain business or a business advantage. It bears remembering that foreign bribes were until recently tax deductible expenses in some western countries. One must note that there is no comparable offence of acceptance of a bribe by a foreign public official which remains the purview of the jurisdiction whose official is allegedly corrupt.  

Finally, the fourth offence, failing to prevent bribery, is extraordinarily novel as it criminalises any commercial enterprise (including partnerships and corporations formed or incorporated in the UK or formed or incorporated anywhere else so long as they carry on some business in the UK) which fails to prevent anyone (absolutely anyone) associated with it from committing active bribery, passive bribery or bribing a foreign public official. Someone is associated with your organisation if they perform services on your behalf whether as an employee, agent, joint venture participant, subsidiary or potentially merely under a services contract (s 8). The corporate offence will now be considered in detail.  


A commercial organisation is strictly liable where anyone anywhere ‘associated with’ it commits one of the other three offences (or would have committed the offences had they had any connection with the UK) either to (a) obtain or retain business for the commercial organisation, or (b) obtain or retain an advantage in the conduct of business for the commercial organisation. Indeed, a commercial organisation will be liable under the corporate offence even where the party who makes the actual payment or provides the financial advantage is not guilty of any offence because that individual and the recipient have no connection with the UK. The only defence available to the commercial organisation is the adequate procedures defence (s 7(2)).  

Section 9 of the Act required the Secretary of State to publish guidance about the adequate procedures commercial organisations could put in place. The Ministry of Justice published ‘Guidance about Commercial Organisations Preventing Bribery (section 9 of the Bribery Act 2010)’ on 30 March 2011.

The guidance provides that adequate procedures would not be stipulated in advance of any judicial ruling but whether or not any particular organisation’s procedures were adequate should be governed by six principles: clear, practical and accessible policies and procedures (for example, proportionate procedures, communication and training); top level commitment; risk assessment; due diligence; effective implementation; and monitoring and review. It also provided a number of case studies. Each organisation which carries on some of its business in the UK (or is incorporated or formed there) will need to review these principles and case studies with their advisers. The difficulty is, as with so much of the Act, that what is criminal, as opposed to what is innocent or merely actionable, is left to vague principles to be interpreted by the courts.

The Act relies heavily on the arguably important safeguard, at least in the UK, of prosecutorial discretion which is intended to be governed by common sense, proportionality and the prosecution of only those offences which have a real prospect of conviction. One would be foolish to take much comfort from this safeguard. What is common sense to one person may be utterly folly to another. More importantly by criminalising a wide range of activity and then relying on an exercise in discretion to determine who and what shall be prosecuted is an invitation to corruption and bias. By reaching too far and capturing too much, the Act may encourage rather than discourage corruption.  


The Act has global application and asserts a jurisdiction to prosecute active or passive bribery or the bribery of a foreign official where any act or omission occurred in the UK or was committed anywhere in the world by any person (individual or corporate) who has a ‘close connection’ with the UK.3

What is a ‘close connection’ with the UK? Section 12(4) sets out that: ‘a person has a close connection with the United Kingdom if, and only if, the person was one of the following at the time the acts or omissions concerned were done or made;

  • a British citizen,
  • a British overseas territories citizen,
  • a British National (Overseas),
  • a British Overseas citizen,
  • a person who under the British Nationality Act 1981 was a British subject,
  • a British protected person within the meaning of that Act, 
  • an individual ordinarily resident in the United Kingdom,
  • a body incorporated under the law of any part of the United Kingdom,
  • a Scottish partnership.’

The most global extension of jurisdiction of the Act, as set out above, is reserved for the corporate offence whereby a business organisation need only carry on some of its business in the UK in order to be strictly liable for corrupt activities anywhere by anyone with whom it associates which are made to obtain a benefit for the organisation.


Of course, the UK is not the first country to set out to try and change the world’s corrupt practices. Under the US Foreign Corrupt Practices Act (the FCPA) it is unlawful for a US person, and certain foreign issuers, to make a payment to a foreign official for the purpose of obtaining or retaining business for, or with, or directing business to, any person. In 1998, the FCPA’s anti-corruption provisions were expanded to apply to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the USA.  

The FCPA draws a distinction between bribery and facilitation payments and only criminalises the former. The payment of a bribe is designed to encourage the foreign official to do something he should not do; conversely, a facilitation payment is made to expedite the official’s performance of his duties.  

In these three respects the Act is much more intrusive than the FCPA:

  • the FCPA only applies to conventional bribery of foreign officials while the Act criminalises the corruption of both officials and nongovernmental parties;
  • the FCPA applies to Americans and to foreigners where part of the corruption occurs in the USA, while the Act applies to any business which does some of its business in the UK and to corruption where ever it may occur; and
  • the FCPA distinguishes between bribery (criminal) and facilitation payments (not criminal), while the Act criminalises both.


It is important to place the new Act in its proper context. To date there has only been a single charge made under the Act and it did not engage any of the interesting legal developments in the Act. Rather the charges related to a straightforward allegation that an English court clerk had offered to alter the course of proceedings in exchange for £500.4 Despite these humble roots, it remains to be seen what fruit the Act will produce.


The institutional trust world is overwhelmingly made up of reputable, regulated corporate trustees. These trustees and others might well understandably wonder what does or could bribery have to do with them.

They would be right to do so in terms of any allegations of active, conventional bribery (by which I mean the bribery of officials, foreign or domestic). While the possibility that an institutional trustee might bribe an auditor or regulator to turn a blind eye to certain activities or to conduct only a cursory investigation of their affairs exists, it is a remote risk for the vast majority of institutional trustees. In any event, the Act’s criminalisation of such activities should hardly be contentious.  

Less remote is the possibility that a business held in a trust structure might be alleged to have bribed someone (whether an official, foreign or domestic, or a private 4 R v Munir Patel (unreported) 2011. person) to secure a lucrative contract. Indeed, while uncommon, such allegations are made.  

Another uncommon, but not unheard of, allegation is that funds held by the trustee in trust have been distributed to officials, foreign or domestic, for corrupt purposes or that some of the funds are held in trust for this purpose.  


Trustees generally learn of an allegation that an element of the trust structure has been involved in corruption in one of two ways. Sometimes they learn of the allegations from the banks which hold their trust accounts or the accounts of the companies held in trust. Trustees are generally advised by a bank that it has taken certain steps in response to the receipt of an order from the attorney general or chief prosecutor in the jurisdiction where the accounts are held. That order has generally been made in response to a letter of request from the Serious Fraud Office (the SFO) or from a similar prosecutorial office in another jurisdiction.

Trustees may also hear of such allegations more directly from the attorney general or chief prosecutor in their own jurisdiction by way of notice of application for access to documents held by the trustees or the companies held in trust. Again, the access or an initial order has been sought in response to a letter of request from the SFO or similar body.

Trustees confronted by these sorts of allegations have developed an orthodox response to it. First, trustees retain lawyers in the jurisdiction where the trustee operates to advise them on the administrative and privacy concerns arising from the allegations. Does a Suspicious Activity Report (SAR) or similar report need to be made in the trustee’s jurisdiction? Can the trustee report the allegations to the protector/enforcer (if there is one) or to the settlor or beneficiaries without breaching tipping off legislation in their own jurisdiction or that of the jurisdiction seeking access to the information about the trustee’s accounts? Are immediate steps necessary to obtain advice and direction from the courts to determine whether the trustee may contest the proceedings or to seek directions regarding any privacy laws?  

Secondly, if so directed or otherwise authorised, trustees need to retain lawyers in the jurisdiction(s) where the information has either been seized or requested to advise them on the rights, remedies and the procedural process in that jurisdiction.  

Thirdly, if so directed or otherwise authorised, trustees need to retain lawyers in the jurisdiction where the investigating authority is located to advise on the process there and on any possible attack on the letter of request.  

Trustees can keep a level head in responding to such allegations in that they are above the fray. The trustees have obligations to protect the trust property and the interests of the trust objects including confidentiality but, at least until the passage of the Act, the trustee was not alleged, and could not be alleged, to have done anything wrong simply as a result of being the trustee.


The Act poses a number of new and difficult problems for trustees.  

The first of these is with respect to corporate entertaining. While one may at first blush consider criminal corporate entertainment as being solely a s 7 corporate offence, the Act permits s 1 active bribery to occur through an agent, so a corporation may commit s 1 active bribery in addition to any s 7 corporate offence.  

British trust companies (and any employee who is a British citizen, a British overseas territories citizen, a British national (overseas), a British overseas citizen, a person who under the British Nationality Act 1981 was a British subject, a British protected person within the meaning of that Act, or an individual ordinarily resident in the UK) should be careful not to provide any disproportionate gifts or financial incentives to the advisers to high net worth individuals in order to solicit a referral and so breach s 1 of the Act, active bribery. It is important to recognise that it does not matter where the entertainment took place.  

One of the most disturbing things about the Act is that it does not clearly delineate the criminal from the merely excessive: the difference between an acceptable amount of corporate hospitality, an excessive amount of corporate hospitality and criminal corporate hospitality will only be defined ultimately in the criminal courts. Indeed, the Act generally is so poorly and ambiguously drafted for a criminal statute that it might be unlikely to withstand constitutional challenge as a justifiable breach of constitutionally protected basic human rights and freedoms in jurisdictions with a written Bill or Charter of rights and whose courts have a full set of remedies; however, the courts in the UK have no jurisdiction to strike down legislation though it may be possible to obtain an order that provisions of the legislation should be interpreted in a way that is compatible with human rights or obtain a declaration that certain sections are incompatible with the Humans Right Act 1998.  


A British trust company (and any of its employees who is a British citizen, a British overseas territories citizen, a British national (overseas), a British overseas citizen, a person who under the British Nationality Act 1981 was a British subject, a British protected person within the meaning of that Act, or an individual ordinarily resident in the UK) must also be very careful not to accept excessive corporate hospitality in exchange for referring work to another fiduciary adviser for fear of committing the criminal offence of passive bribery.  

The same guidance applies as to the appropriate amount of corporate entertaining: only the courts will ultimately decide what amounts to criminal corporate entertaining. It is also important to recall that it does not matter where the entertainment took place. One of the Act’s few clear messages is that wherever you live and whoever you work for, if you are British you need to be careful about accepting anything from anyone or giving anything to anyone whom you know or may know commercially.  


Trustees, just like every other British business, may wish to consider implementing corporate entertaining policies and abiding by them. They could consider setting permitted pound amounts which can be spent or received on gifts and entertainment. Fortunately, the amount would need to be proportional to the industry and the clients, and no one expects representatives of institutional trustees to eat fast food with their contacts and high net worth individuals.


The corporate offence is a much less far-fetched concern for trustees. How exactly might an institutional trustee breach s 7 of the Act? The elements of the corporate offence as it relates to active bribery are:  

  1. a UK formed or incorporated entity or one carrying on business or some part of its business in the UK; 
  2. an associated entity performing services on behalf of the UK entity;
  3. the associated entity provides financial advantage to another;
  4. the financial reward is provided to induce or reward improper performance or receipt of the financial reward is itself improper performance; and
  5. (a) to obtain or retain business for the trustee, or (b) to obtain or retain an advantage in the conduct of business for the trustee.

The first issue is whether the trustee is a UK entity. While there are UK incorporated institutional trustees who will scarcely be surprised that the Act applies to them, no offshore trustee will be incorporated or formed in the UK. However, whether any given offshore trustee carries on some of its business in the UK may be a live issue. The vast majority of offshore trustees probably do carry on some of their business in the UK: they may hold legal title to assets in the UK (though this is unlikely in and of itself to be sufficient where the assets are not operating businesses), they may meet with clients and advisers in the UK, or they may solicit business in the UK.  

One class of institutional trustees is immune from potential proceedings under the corporate offence: institutional trustees which do not carry on any part of their business within the UK. However, even then there remains a potential exposure for their associated or parent companies which do carry on business in the UK.  

The second issue is to determine the breadth of people who can be said to be ‘associated with’ the institutional trustee. The concept of an associated person is deliberately vaguely defined in s 8 of the Act. At a minimum it will extend to employees and companies where a controlling interest is owned by the trustee (ie the trust property in many instances) but will also extend to agents and related parties acting on behalf of the trustees (ie director and officer companies) and likely to lawyers and others providing services to the trustee and the trust property.  

If any of these people is alleged to have provided financial advantage to another for the purpose of inducing or rewarding improper performance or where receipt of such financial advantage itself constitutes improper performance, which in either case is intended to obtain or retain business for the benefit of the organisation, the institutional trustee may be liable criminally.  

The third issue is whether the party paying the financial advantage can be said to have made the payment (a) to obtain or retain business for the trustee, or (b) to obtain or retain an advantage in the conduct of business for the trustee? This may ultimately prove to be the trustee’s best line of defence. Can bribery by a person ‘associated’ with the trust structure be said to have been made to obtain business or an advantage for the trustee?  

Certainly, it is highly unlikely the bribe is being paid to advantage the trustee qua trustee. Furthermore, the bribe would likely be paid for the benefit of an operating company whose shares are held in trust or even more likely whose shares are owned by a holding company whose shares are in turn held in trust. These are interesting points but their success as a line of defence is not a foregone conclusion.  

If the trustee is actually operating a business whose assets are held in trust then they are very likely a party intended to receive the legal benefit of the bribery (albeit the beneficial ownership of the benefit is held for an object). It is unlikely the courts will excuse a trustee from liability in such circumstances. The hypothetical defence of receipt of a purely legal benefit from a bribe is not intuitively persuasive. It is impossible to advise one way or another at this time without judicial guidance on the matter as to whether legal rather than beneficial benefit will be sufficient to establish the corporate offence.  

Will the courts conclude that a holding company or parent is not criminally liable because its subsidiary was the intended beneficiary of a bribe? Can one properly say that a parent is not intended to benefit where corrupt activities benefit a subsidiary? The author believes this is unlikely. The purpose of the corporate offence must be to expand corporate responsibility and to require businesses to ensure adequate procedures are in place to prevent bribery. The courts are unlikely to permit businesses to avoid criminal liability under the Act simply by incorporating an unsupervised subsidiary. However, it is likely that the necessary procedures expected of a parent company qua parent will be significantly lesser than those expected of an operating company.

If one combines these two considerations (legal and equitable owners may both properly be considered the beneficiaries of a corrupt activity; parents and subsidiaries may both be considered the beneficiaries of corrupt activities), then one is left with the uncomfortable sense that a trustee as a parent company may well at some point be held to be a beneficiary of corrupt activity by an ‘associate’ of the trust structure. However, a trustee’s threshold for establishing a procedural defence will be significantly lower to that expected of an operating company.  

Consider this example. An offshore institutional trustee has employees who regularly visit the UK to attend conferences, to meet with advisers and to solicit new work. The trust company holds a controlling shareholding in an operating company in one of its trusts. The operating company is alleged to have offered financial advantage to someone in exchange for the award of a contract.  

The trust company conducts part of its business in the UK. The company is owned by the trustee and therefore likely an ‘associated entity’. The only issue is whether the activities of the associated entity can be said to have been made to obtain an advantage for the trust company. Depending on whether legal benefit is sufficient to make out the offence (which remains unknown), the trustee may run the risk that it may be criminally liable under the Act unless it can make out an adequate procedures defence.  


What can the trustee do to protect itself from such allegations? The trustee may consider altering or designing the structure of the trust in order to immunise itself from liability for failing to prevent bribery. This is unlikely to work.  

A seemingly obvious solution might be to introduce a holding company between the operational company and the trustee. There is much to be said for such structures for other reasons but they may not assist the trustee here. There is no jurisprudence on the Act at all never mind any judicial guidance limiting the concept of the associated person for purposes of the Act; the operational company may still be considered an associated person if held at one remove through a holding company.  

One could argue that the more corporate vehicles there are between the trustee and the alleged active bribery, the harder for the prosecution to establish that a bribe was paid in order to obtain an advantage for the trustee. However, the author does not give that argument much shrift. The only issue will remain whether the bribe could be said to have been paid to obtain a legal advantage for the trustee and a beneficial advantage for the beneficiaries and whether that would be sufficient to establish liability on the part of the trustee.

Many trusts already have so called anti-Bartlett clauses and a number of offshore jurisdictions’ trust statutes provide default trustee protections similar to anti-Bartlett. These are clauses which purport to limit the trustee from liability for failing to involve themselves in the affairs of any company in which the trustee owns what would otherwise be a controlling interest. (As an aside, practitioners are finding many poorly worded anti-Bartlett clauses in the market place and their effectiveness for their purpose is in many instances significantly in doubt.) Trustees may be tempted to rely on an anti-Bartlett clause as immunising them from any allegations of bribery by a company owned by the trust on the basis that the trustee has no ability to control its affairs.  

Relying on such a clause alone could be a terrible mistake. One thing that is clear about liability for an associated person under the Act: you can be criminally liable for someone over whom you have no real control. Indeed rather than providing a shield, an anti-Bartlett clause may pose real problems for the trustee in defending itself from allegations of criminal responsibility for the acts of companies owned by the trustee.  


A trustee’s best defence under the Act is the adequate procedures defence (s 7). Trustees may wish to ensure that the companies they hold in trust agree to put in place adequate procedures to prevent bribery; trustees will be required to make enquiries as to whether those procedures are being followed if they are to establish an adequate procedures defence as a paper policy alone will not do (indeed the prosecutorial guidance suggests that a paper policy without supervision/ enforcement is an indicium in favour of prosecution). However, certain anti-Bartlett clauses go beyond merely immunising the trustee from liability for enquiring into the affairs of companies held in trust and purport to prohibit the trustee from making such enquiries. A trustee may well be told they have no right to enquire into the affairs of the company, but merely be assured that no corrupt activities are taking place or that there are sufficient procedures in place. It is far from clear that simply accepting these assurances would meet the obligations required of the trustee to make out an adequate procedures defence.

The only explicit defence to the corporate offence in the Act is the adequate procedures defence. Trustees must establish that they have in place adequate procedures designed to prevent persons associated with them from undertaking any bribery offences. Offshore trustees must understand that many of them may be viewed as high risk by the British authorities merely because of the jurisdictions in which they are incorporated.  

In order to establish such a defence, trustees should consider including provisions in all of their contracts indicating the trustee’s anti-bribery position and its requirement that a commitment not to engage in bribery is a term of any agreement. Trustees will need to consider insisting that any companies held in trust have an appropriate anti-bribery policy which the trustees are able to monitor. Trustees will need to consider modifying some anti- Bartlett clauses which purport to prohibit the trustee from enquiring into the affairs of companies held in trust to provide that the trustee is permitted to enquire into the affairs of any company to ensure that no bribery has been committed. Trustees will have to be even more diligent about any distributions from the trust or payment of dividends from the underlying companies to ensure that they are not being paid over as financial advantage to induce or reward improper purpose.  

The trustee needs to bear foremost in their mind that the Act is a criminal statute. No release or indemnity is going to immunise them from liability. Trustees need to consider a full audit of their structures and regular reviews to ensure that they have gone some way to establishing an adequate procedures defence should one be needed.  


Earlier, this article set out the old orthodoxy in responding to allegations of bribery in the trust structure.  

The trustee now faces a new conundrum when alerted to allegations of bribery in the trust structure. The new reality is that the trustee must understand that at the time when they are alerted to such allegations there is simply no way for the trustee to know whether the SFO or the Director of Public Prosecutions will elect to prosecute the trustee as well.  

This dilemma will place the trustee in an unenviable and possibly irreconcilable conflict. Reputable financial institutions and jurisdictions have historically shown little stomach for allegations of criminal misconduct. The trustee will have an overwhelming personal interest in assisting the authorities with their enquiries in the hopes of resolving the investigation as quickly as possible. The trustee may be offered or seek out some form of immunity from prosecution or reduced punishment in exchange for assisting the authorities. Agreeing any of these would be a breach of the trustee’s trust obligations.  

Alerted to allegations of bribery in the trust structure, the trustee should hire lawyers immediately. Perhaps the first issue their lawyers will need to consider is whether to recommend that the trustee forthwith resign as trustee. This will not be easy. Who will want to assume the mantle of trustee in the circumstances? The trustee may rightly be worried that if no alternative trustee can be found, it may have little choice but to wind up the trust with potentially disastrous consequences for the beneficiaries. Having said that, it is extremely difficult to imagine how the trustee will be able to continue to act in the face of such allegations going forward.  

Perhaps the only and best course may be for the trustee to, with direction from the court, inform the investigating authority that it finds it must resign and that no alternative trustee will act unless the authority undertakes that assuming that role for the purposes of responding to the investigation will not result in any prosecution of the new trustee.  

In any event, the Act has created a genuine dilemma for institutional trustees. The safest course for trustees is to audit their structures now to ensure at the very minimum that they have the ‘adequate procedures’ referred to in s 7(2) of the Act, because the old orthodoxy which permitted an ex post facto response to allegations of bribery risks disaster. Trustees will need to ensure they have an exit strategy for trust structures accused of bribery. They will want to ensure adequate anti-bribery procedures are in place both in the trustee itself but also in the companies it holds in trust.  

Only time will tell how the courts interpret the Act; however, trustees who merely wait to see what happens are taking an enormous risk.