Foreign bribery

Legal framework

Describe the elements of the law prohibiting bribery of a foreign public official.

It is an offence under section 6 of the Bribery Act 2010 to bribe a foreign public official with the intention to influence that official in his or her capacity as a foreign public official. ‘Influence’ in this capacity means influencing him or her in the performance of his functions as a foreign public official. Corrupt intent is not required. However, there must be an intention to obtain or retain a business or other advantage in the conduct of business (section 6(2)). The requirement to prove an intention to obtain and retain business can present some difficulty, particularly in light of the Bribery Act Guidance, which recognises that, in seeking tenders for publicly funded contracts, governments often permit or require those tendering to offer some kind of additional investment in the local economy. Where this is set out in ‘written law’, the ‘additional investment’ falls outside the scope of the section 6 offence (paragraph 25 of the Bribery Act Guidance).

A bribe has taken place if and only if:

  • the defendant directly, or through a third party, offers, promises or gives any financial or other advantage to the public official or to another person at the official’s request or acquiescence;
  • the advantage is given or promised with the intention of influencing the person to obtain or retain business or an advantage in the conduct of business; and  
  • the public official is not permitted or required by the written law applicable to him or her to be influenced in his or her capacity as a foreign public official by the offer, promise or gift.

 

An offence under section 6 is committed if any part of the conduct, forming part of the offence, takes place in the UK or where no part of the conduct takes place in the UK, but would form part of an offence under section 6 if it occurred in the UK and the offender has a close connection with the UK. Those with a ‘close connection’ with the UK include:                

  • British citizens and British overseas nationals and citizens;
  • an individual ordinarily resident in the UK; and
  • a body incorporated in the UK.

 

The section 6 offence of bribing a foreign public official does not encompass the receipt of a bribe. It is only concerned with the offer, promise or giving of a financial or other advantage. The offence of being bribed is to be found in section 2 of the Bribery Act 2010. 

In addition, under section 7, a company may face prosecution in the UK for failing to prevent bribery of a public official, regardless of whether the conduct forming the offence, or part of the offence, takes place in the UK or elsewhere. Under section 7, the sole jurisdictional requirement is that the accused company is incorporated in the UK or carries on part of its business in the UK.

The offence of bribing another person in section 1 of the Bribery Act 2010, and the offence of receiving a bribe under section 2 of the Bribery Act 2010, applies to both the public and private sector and may be used where, for example, it is unclear whether the person being bribed is a public official. It is worth noting that there are differences between sections 1 and 2, and section 6. The Bribery Act Guidance highlights that unlike section 6, section 1 (and by analogy, section 2) requires proof of an intention for the advantage to induce the improper performance of a function or as a reward for the improper performance of such function. The offence under section 6 requires an intention to influence the public official to obtain or retain business or an advantage in the conduct of business.

Definition of a foreign public official

How does your law define a foreign public official, and does that definition include employees of state-owned or state-controlled companies?

Under section 6(5) of the Bribery Act 2010, a ‘foreign public official’ is a person who, outside of the UK, holds a legislative, administrative or judicial position (whether appointed or elected), exercises a public function, or is an official or agent of a public international organisation.

A ‘public international organisation’ is defined in section 6(6) as an organisation whose members are:

  • countries or territories;
  • governments of countries or territories;
  • other public international organisations; and
  • a mixture of any of the above.
Gifts, travel and entertainment

To what extent do your anti-bribery laws restrict providing foreign officials with gifts, travel expenses, meals or entertainment?

There is no legislation specifically dealing with gifts, travel expenses, meals or entertainment. The Bribery Act: Joint Prosecution Guidance of the Director of the Serious Fraud Office (SFO) and the DPP (the Joint Guidance), published on 30 March 2011, recognises that hospitality and promotional expenditure that is reasonable, proportionate and made in good faith is an established and important part of doing business and the Bribery Act 2010 does not seek to penalise this activity. However, hospitality and promotional expenditure may amount to an offence under the Bribery Act 2010, provided the elements of the relevant offence are satisfied. 

Facilitating payments

Do the laws and regulations permit facilitating or ‘grease’ payments to foreign officials?

Facilitation or ‘grease’ payments would fall foul of section 6 of the Bribery Act 2010, as well as the old law.  English law, including the Bribery Act 2010, draws no distinction between a bribe and a facilitation payment. 

Payments through intermediaries or third parties

In what circumstances do the laws prohibit payments through intermediaries or third parties to foreign public officials?

It is irrelevant, in respect of an offence of bribery under section 1 of the Bribery Act 2010, whether the bribe was offered, promised or given by the defendant directly or through a third party. Similarly, in respect of an offence under section 6 (bribery of foreign public officials), the circumstances in which an offence is committed include where the bribe is offered, promised or given directly by the defendant or through a third party, and where the bribe is offered, promised or given to another person at the request of the foreign public official or with his or her acquiescence. 

A corporate body may be held criminally liable for bribery committed by an ‘associated person’ (which could include an intermediary or a third party) through the offence of failure to prevent bribery under section 7 of the Bribery Act 2010.

Individual and corporate liability

Can both individuals and companies be held liable for bribery of a foreign official?

Yes. Individuals can be held liable for bribery of a foreign public official under sections 1, 2 and 6 of the Bribery Act 2010.

Under section 14 of the Bribery Act 2010, bribery offences under section 1, 2 and 6 of the Bribery Act 2010 may be committed by a body corporate, where the offence is proved to have been committed with the consent or connivance of a senior officer of the body corporate or a person purporting to act in such capacity. In these circumstances, both the senior officer, as well as the body corporate, is guilty of the offence, unless the senior officer does not have a close connection with the UK. ‘Close connection’ with the UK is defined in section 12(4) of the Bribery Act 2010.

In addition, under section 7 of the Bribery Act 2010, a commercial organisation can be held strictly liable for failure to prevent bribery. The offence is committed by a relevant commercial organisation where an ‘associated person’ bribes another person, intending to obtain or retain business for the commercial organisation, or intending to obtain or retain an advantage in the conduct of business for the organisation.  The bribery must constitute an offence under sections 1 or 6 of the Bribery Act 2010.

An ‘associated person’ is defined in section 8 of the Bribery Act 2010 as a person who performs services for on behalf of the commercial organisation and includes employees, agents and subsidiaries. Where the person is an employee, there is a rebuttable presumption that he or she is an associated person.

The only defence available for the commercial organisation is to prove that it had in place ‘adequate procedures’ designed to prevent bribery.

Private commercial bribery

To what extent do your foreign anti-bribery laws also prohibit private commercial bribery?

The offences under section 1, 2 and 14 of the Bribery Act 2010 apply to private and public sector bribery.  Similarly, the section 7, failure to prevent bribery, offence also applies to bribery by associated persons in the private sector.

Defences

What defences and exemptions are available to those accused of foreign bribery violations?

There are limited defences available to those accused of foreign bribery offences. The Bribery Act Guidance recognises that there may be circumstances in which an individual is left with no alternative but to make payments to protect against loss of life, limb or liberty. In those circumstances, the common law defence of duress is likely to be available.

 

Section 6 offence (bribery of foreign public officials)

Under section 6(3)(b) of the Bribery Act 2010, for the offence to be complete, the foreign public official must be neither permitted nor required by the written law applicable to him to be influenced in his capacity as a public official by the offer, promise or gift. A mistaken belief that the public official was so permitted or required is not a defence. 

 

Section 7 commercial organisational offence (failure to prevent bribery)

It is a defence for the commercial organisation to prove that it had in place adequate procedures, designed to prevent such conduct by associated persons. It is for the organisation to establish, on a balance of probabilities, that it had adequate procedures in place. 

The Bribery Act Guidance sets out six key principles for commercial organisations wishing to prevent bribery being committed on their behalf by associated persons:

  1. Proportionate procedures. The procedures should be proportionate to the risk faced and to the nature, scale and complexity of the commercial organisation’s activities. Procedures must be clear, practical, accessible, effectively implemented and enforced.
  2. Top-level commitment. The top-level management must be committed to preventing bribery by persons associated with the organisation and should foster a culture within the organisation in which bribery is never acceptable.
  3. Risk assessment. This involves an assessment of the nature and extent of the exposure to potential external and internal risks of bribery on the organisation’s behalf. The assessment should be periodic, informed and documented.
  4. Due diligence. The application of due diligence procedures, taking a proportionate and risk-based approach, in respect of associated persons in order to mitigate identified bribery risks.
  5. Communication (including training). This involves seeking to ensure that the bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training, that is proportionate to the risks faced.
  6. Monitoring and review. The risks and procedures should be regularly monitored and reviewed, and improvements made where necessary.

 

Section 13 of the Bribery Act 2010 provides a defence to an offence under section 1 and 2 of the Bribery Act 2010, where the defendant proves his or her conduct was necessary for the proper exercise of any function of an intelligence service, or the proper exercise of any function of the armed forces when engaged on active service. The defence does not apply to an offence under section 6 of the Bribery Act 2010.

Agency enforcement

What government agencies enforce the foreign bribery laws and regulations?

The SFO’s remit is to investigate and prosecute serious or complex fraud, including domestic or overseas bribery or corruption:

  • that undermines UK plc commercial or public interests;
  • where the actual or potential financial loss is high;
  • where the potential economic harm is significant; and
  • where there is a significant public interest.

 

The CPS may also prosecute offences involving bribery and corruption, but the SFO is the primary agency engaged in such prosecutions.

The NCA leads UK law enforcement’s response to bribery, corruption and sanctions evasion. It provides intelligence support and specialist operational capability. The work of the NCA extends to corruption overseas and it engages with foreign law enforcement agencies. The International Corruption Unit (ICU) within the NCA investigates international bribery, corruption and related money-laundering offences. The ICU traces and recovers the proceeds of international corruption. Its key role is to investigate:

  • money laundering in the UK resulting from corruption of high-ranking officials overseas;
  • bribery involving UK-based companies or nationals that has an international element; and
  • cross-border bribery where there is a link to the UK.

 

The Financial Conduct Authority (FCA) is a regulatory body responsible for regulating financial services firms and financial markets in the UK, and the prudential supervisor. Although it does not prosecute matters under the Bribery Act 2010, any conduct by a regulated firm relating to bribery or corruption risks may also constitute a breach of the rules or principles of the FCA Handbook. Under Principle 11 of the FCA Handbook, a firm must deal with its regulator in an open and cooperative way, and must disclose to the appropriate regulator anything relating to the firm, of which that regulator would reasonably expect notice.  Accordingly, a regulated firm may be required under Principle 11 to report conduct involving bribery or corruption to the regulator.

Patterns in enforcement

Describe any recent shifts in the patterns of enforcement of the foreign bribery rules.

In recent years, one of the most noteworthy shifts in the patterns of enforcement is the use of DPAs to resolve a criminal investigation into a body corporate. From the point of view of the SFO, a DPA can result in very large penalties and the recovery of prosecution costs. A DPA also avoids the uncertainty of a criminal trial, which is costly and risky for both the SFO and the corporate defendant.  

For the SFO, DPAs are a success. However, the continued investigations into individuals who may have been involved in unlawful conduct forming the basis of a DPA, have not yet resulted in any convictions.  Nevertheless, there is every indication that the SFO intends to continue, and increase, its use of DPAs.

The increased cooperation between prosecutors in different jurisdictions has been clear. This is likely to expand further as more jurisdictions introduce DPAs in some form. The recent Airbus DPA is a good example of this. It resulted in a global settlement in which the company entered into DPAs in the USA and the UK, and a CJIP in France. The prosecutors in each jurisdiction coordinated and agreed which jurisdictions each would investigate.

The Criminal Finances Act 2017 (the CFA), which was designed ‘to make the UK a more hostile place for those seeking to move, hide or use the proceeds of crime or corruption’, came into force on 27 April 2017. The CFA introduced unexplained wealth orders (UWOs), which have been available to law enforcement since 31 January 2018. A UWO is an investigative tool, requiring a person holding certain property to provide relevant information, including details of his or her interest in the property, and how he or she acquired, and paid for it. A UWO can be made in respect of any property, located anywhere in the world, that is held by a politically exposed person (PEP) from outside the European Economic Area, or a person reasonably suspected of past or present involvement in serious crime or of being connected to such a person. There is no requirement for suspicion in relation to criminality regarding a PEP. The property in question must have a value of at least £50,000. Failure to comply with a UWO results in a presumption that the property in question is recoverable, as it was obtained through unlawful conduct.   

Prosecution of foreign companies

In what circumstances can foreign companies be prosecuted for foreign bribery?

Under the Bribery Act 2010, a foreign company which carries on a business or part of a business in any part of the UK is a ‘relevant organisation’ for the purpose of section 7 of the Bribery Act 2010. As such, a foreign company may be prosecuted for the section 7 offence of failure to prevent bribery even where none of the associated person’s relevant conduct occurs in the UK (section 7(5)(b) and (d), and section 12(5) of the Bribery Act 2010). 

Sanctions

What are the sanctions for individuals and companies violating the foreign bribery rules?

Offences under section 1, 2 and 6 of the Bribery Act 2010 carry a maximum penalty of 10 years imprisonment for an individual. The individual may also be required to pay a financial penalty. In relation to a body corporate, the court may impose an unlimited fine. The fine imposed is based on:

  • an assessment of the gross profit from the advantage obtained, retained or sought as a result of the bribery offence (‘the harm’); and
  • multiplying the harm figure by reference to a determined level of culpability.

 

Conviction of an offence under the Bribery Act 2010 may also be subject to confiscation or a civil recovery order under Proceeds of Crime Act 2002. Non-payment of any confiscation can result in a custodial sentence.

The financial penalty under a DPA is likely to be broadly comparable to a fine the court would have imposed following a guilty plea. 

A conviction for an offence under section 1, 2 or 6 of the Bribery Act 2010 will result in the mandatory debarment for up to five years. The debarment prevents a company from entering into public contracts as a provider, supplier or contractor. 

The EU’s 2014 Public Procurement Directive amended the regulations, and clarified that an offence under section 7 does not trigger mandatory debarment. However, a conviction under section 7 offence could attract discretionary debarment of three years, which could have a significant impact on a company.

Recent decisions and investigations

Identify and summarise recent landmark decisions or investigations involving foreign bribery.

DPAs

There have been 12 DPAs since their introduction in 2014. Of these, nine have involved offences involving bribery and corruption. DPAs of particular note are:

  • Rolls-Royce plc – in January 2017, Rolls-Royce entered into a DPA in relation to two counts of failure to prevent bribery (section 7 offence). It paid a fine of £497 million. Rolls-Royce achieved this DPA without self-reporting, although the court found that Rolls Royce’s level of cooperation with the SFO was tantamount to self-reporting. To date, no individuals have been charged with any offences arising out of the conduct forming the subject matter of the DPA.
  • Airbus SE – in January 2020, Airbus entered into a three-year DPA with the SFO, as part of a global settlement involving the Parquet National Financier in France and the US Department of Justice. The total penalty imposed was €3.6 billion. This was the largest penalty imposed under a DPA. The DPA agreed with the SFO involved the payment of a fine of €398,034,571, disgorgement of profits of €585,939,740 and the payment of costs in the sum of €6.9 million. The sums paid by Airbus, under its DPA with the SFO, exceeds the total sum paid in all preceding DPAs. The SFO has not yet announced any charges against individuals arising out of the conduct forming the subject matter of the DPA.

 

Privilege

The SFO has made clear that it is willing to challenge cases where it disputes a claim of legal professional privilege (LPP), particularly in the context of an internal investigation. This has been subject to litigation in the case of SFO v Eurasian Natural Resources Corporation Ltd (ENRC) [2018] EWCA Civ 2006. The SFO issued ENRC with a compulsory notice requiring the production of a number of documents, including notes of interviews conducted with ENRC employees as part of an internal investigation and presentations to the board and governance committee about the findings of ENRC’s investigation. ENRC claimed that the material sought was subject to LPP. At first instance, in the High Court, the SFO argued successfully that the material was not privileged. However, on appeal, the Court of Appeal held that litigation privilege applied from the point at which ENRC engaged lawyers to conduct an internal investigation, which was some time before the SFO opened its investigation. On the evidence, comments made by the SFO, and its interactions with ENRC, made it clear that criminal proceedings were possible, if not likely, unless the matter was settled, and therefore were within reasonable contemplation. The court stated that it is:

 

 Obviously in the public interest that companies should be prepared to investigate allegations from whistle blowers or investigative journalists, prior to going to a prosecutor such as the SFO, without losing the benefit of legal professional privilege for the work product and consequences of their investigation.

 

The SFO’s Corporate Co-operation Guidance, published in August 2019, reiterates the SFO’s willingness to challenge an assertion of LPP, particularly in relation to first accounts, internal investigations, interviews or other documents.

 

Section 2 notices – extraterritoriality

Under section 2(3) of the Criminal Justice Act 1987, the Director of the SFO has the power to compel any individual or entity to provide information or documentation, which is believed to be relevant to a matter under investigation. Whether this power extends to material held outside the United Kingdom was raised in a recent case, KBR v SFO [2018] EWHC 2010 (Admin). In that case, a section 2 notice was issued to KBR Inc, the parent company of the UK subsidiary under investigation (KBR Ltd), to provide documents held outside of England and Wales, but which the SFO felt were potentially relevant to their investigation of KBR Ltd.

The High Court confirmed that section 2 notices must have an element of extraterritorial application, stating that it was ‘scarcely credible that a UK company could resist an otherwise lawful s.2(3) notice on the ground that the documents in question were held on a server out of the jurisdiction’. UK companies are therefore required, upon receipt of a section 2 notice, to furnish the SFO with relevant material that they hold both domestically and overseas, unless they have a reasonable excuse for failing to comply.

As for whether KBR Inc (as a foreign parent company) was obliged to provide the SFO with documents held overseas, the High Court held that there was a clear public interest in the extraterritorial ambit of section 2(3). It held that section 2(3) should extend to foreign companies in respect of documents held outside the jurisdiction, when there is a sufficient connection between the company and jurisdiction’; language that does not appear in the legislation. 

The mere fact that KBR Inc was the parent of KBR Ltd did not amount to a ‘sufficient connection’, nor was the fact that KBR Inc had cooperated to a degree with the SFO’s request for documents. However, among other things, the SFO’s investigation had revealed a purported link between KBR Inc and the method of making the alleged corrupt payments, and the High Court held that this was a ‘sufficient connection’. The Supreme Court handed down its judgment in February 2021, overturning the High Court's decision. It held that it was not Parliament's intention for the Criminal Justice Act 1987 to give the SFO the power to compel a non-UK company (with no registered UK address) to produce documents held in the US. Other tools such as mutual legal assistance were available to assist with such a request and to facilitate international investigations. The Supreme Court held that implying a 'sufficient connection' test into the legislation (in order to require a non-UK company to produce documents outside the UK) would be inconsistent with the intention of Parliament and 'involve illegitimately rewriting the statute". At its core the Supreme Court's judgment reflects the fact that UK legislation is generally not intended to have extra-territorial effect.