The laws dealing with bribery and corruption are getting a much needed overhaul.
The newly-published draft scheme of the Criminal Justice (Corruption) Bill, 2012 (the draft scheme) proposes to overhaul and consolidate Irish bribery and corruption law from seven overlapping and dated statutes into a single modern tool for enforcement. The existing piecemeal arrangement may have discouraged prosecution of bribery and corruption offences, which have been rare with the exception of prosecutions relating to political corruption.
The draft scheme proposes to combat both private sector and public sector bribery in equal measure. The UK Bribery Act 2010, which overhauled similarly complex UK bribery law, and the subsequent prosecutions under that Act, combined with high profile investigations into US companies, including BP and retail giant Walmart, have led to the offence of corruption receiving significant attention.
ACTS OF CORRUPTION UNDER THE DRAFT SCHEME
The definition of bribery as set out in the Prevention of Corruption Act 1906 (as amended) was very cumbersome, however clearer definitions of various acts of corruption are contained in the draft scheme, which include the following:
- Corruptly offering, giving or attempting or agreeing to give any gift, consideration or advantage as an inducement to or reward for doing any act or making any omission.
- Corruptly accepting, obtaining or agreeing to accept or attempting to obtain any gift, consideration or advantage as an inducement to or reward for doing any act or making any omission.
- Corruptly offering any gift, consideration or advantage in order to induce another person to exert an improper influence over the acts or omissions of an Irish public official or a foreign public official.
- Giving any gift, consideration or advantage to another person knowing or being reckless as to whether it would be used to facilitate the commission of an offence under the Act.
- Corruptly using a document which the person knows or believes contains any false statements with the intention of inducing another person to do some act or make some omissions relating to his or her office, employment, position or business to the prejudice of that person. Document includes any disk, tape, audio or video recording or internet page.
- Corruptly threatening harm to a person with the intention to influence any person doing any act or making an omission in relation to his or her office, employment, position or business.
“Corruptly” was defined in the Prevention of Corruption (Amendment) Act 2010 as including “acting with an improper purpose personally or by influencing another person, whether by means of making a false or misleading statement, by means of withholding, concealing, altering or destroying a document or other information, or by any other means”. This definition has been extensively broadened in the draft scheme as "corruptly" now includes doing any act or making any omission:
- in breach of duty
- without due impartiality;
- without lawful authority;
- in breach of a relevant code of ethics or discipline;
- in pursuit of undue benefit;
- in a deceitful, dishonest or misleading manner, or
- with an improper purpose.
MAKING RECKLESS PAYMENTS
The draft scheme proposes a novel offence of “Making Reckless Payments”. A person would be guilty of such an offence if he gave gifts or payments to an individual while knowing or being reckless as to whether the recipient might be using that money to pay bribes. If enacted, this may impose significant due diligence obligations on businesses and individuals when selecting trading partners.
PUBLIC OFFICIALS AND IRISH PUBLIC BODIES
The draft scheme also proposes extensive grounds for a presumption of corruption in respect of public officials. Public officials include members of the Dail and Seanad, and officers and employees of an Irish public body. The definition of Irish public body in the draft scheme is expansive and includes health boards, the National Asset Management Agency and any companies in which the state owns a majority of the shares, which will include certain banks.
PENALTIES UNDER THE DRAFT SCHEME
The majority of the offences are liable on summary conviction (a trial with a judge and no jury) to a Class A fine (which is a fine not exceeding €5,000) or imprisonment for a term not exceeding twelve months, or both. The penalties on conviction on indictment (a trial with a judge and jury) is any combination of: a term of imprisonment of up to ten years; a fine; forfeiture of any gift, consideration or advantage offered or given or in the alternative forfeiture of property of equivalent value to such gift, consideration or advantage.
The draft scheme, if enacted, would also create an additional penalty for public officials convicted of corruption of exclusion from public office for up to ten years.
Under the draft scheme a body corporate will be guilty of an offence where an offence is committed with the intention of obtaining or retaining business for the body corporate by a director, manager, officer, secretary, employee, subsidiary or agent of that body corporate. The body corporate can defend the charges on the basis that it can show that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence. Potential personal liability of company officers or employees could also arise from the same act. In accordance with the draft scheme, directors, managers and company secretaries can be held personally liable for any offence committed by the company with their consent, connivance or due to their willful neglect. The potential punishment for such individuals is the same as if the company officer has committed the offence personally.
The draft scheme also contains protections for whistleblowers, but it is envisaged that these protections will ultimately be contained in the Protected Disclosures in the Public Interest Bill once it is enacted. The reporting of corruption is already encouraged under existing legislation. In fact, both the Criminal Justice Act and the Prevention of Corruption (Amendment) Act 2010 contain ‘whistleblower’ protections for employees who report or cooperate with investigations into bribery. An employer who penalises an employee for reporting suspected bribery or for participating in a bribery investigation may be guilty of an offence under the 2010 Act punishable by up to twelve months’ imprisonment and/or a fine of €5,000 on summary conviction, or a sentence of up to ten years’ imprisonment and/or €250,000 on indictment.
IRISH BUSINESSES AND OVERSEAS CORRUPTION
The UK Bribery Act 2010 is also relevant to Irish companies that ‘carry on business’ in the UK due to its extra-territorial reach. A person with a close connection with the UK can be found liable under the UK legislation for acts of bribery committed outside of the UK. A person with a close connection with the UK is defined as including a British Citizen and a body incorporated under the laws of the UK.
The draft scheme contains similar provisions which would permit the Irish authorities to prosecute offences committed overseas by companies or individuals with Irish nationality. The domestic regulatory landscape is changing rapidly and domestic enforcement authorities have begun to take a harder line on all aspects of corporate crime.
The UK legislation includes an offence of failure of commercial organisations to prevent bribery, which is absent from both the existing and proposed Irish law. This includes any offence committed by an associated person which includes employees, agents or subsidiaries of the relevant commercial organisation. A relevant commercial organisation includes any body corporate (wherever incorporated) which carries on business in the UK. Commercial organisations with a business presence in the UK should take effective steps to prevent bribery and would be advised to have a robust anti-bribery/corruption policy.
We have seen a marked increase in regulatory investigations and prosecutions in recent years, with regulatory bodies vigorously and publicly using their significant powers. We would expect that the prosecution of corruption offences (both internationally and domestically) will become prevalent, especially given the enhanced focus of authorities on prosecuting domestic and international offences. While it is likely that amendments will be made to the provisions contained in the draft scheme before such provisions are enacted, businesses need to be vigilant to the risks of corruption and take steps to prevent corruption within the organisation. Companies or individuals who are contacted by authorities in relation to the investigation of any alleged domestic or international offence should obtain legal advice at the earliest opportunity so that the process of engagement with those authorities can be carefully and appropriately managed.