The UK Bribery Act 2010 (the "Bribery Act" or the "Act") broadly criminalized not only the giving and receiving of bribes by companies and individuals with a business nexus to the UK, but also the failure of an organization to prevent bribery by its associated persons. In stark contrast to the Foreign Corrupt Practices Act (FCPA) in the US, which limits its scope to bribes directed at foreign governmental officials, the UK statute's prohibition on commercial bribery is sweeping. It applies to bribes relating to any function of a public nature, any activity connected with a business and any activity performed in the course of a person's employment.

Since its effective date in July 2011, the Bribery Act has generated significant interpretive guidance from the UK's Serious Fraud Office (SFO). The latest round of guidance from the SFO, issued on October 9, clarifies the SFO's positions on facilitation payments, hospitality and business expenditures, and corporate self-reporting of violations of the Act. The guidance notes that, in circumstances where there is a "realistic prospect of conviction," the SFO will prosecute violations of the Bribery Act "if it is in the public interest to do so." While it leaves intact much of the previously-issued pronouncements, [1] the new guidance introduces an invigorated tone concerning enforcement of the Act generally and an entirely new approach with regard to the SFO's treatment of self-reporting entities. The SFO's new guidance, together with the US Department of Justice's anticipated guidance concerning its enforcement of the FCPA, highlights the need for companies to keep abreast of the evolving regulatory environment in both the US and the UK.


While the FCPA permits certain types of payments paid to facilitate routine government action, the Bribery Act flatly prohibits any and all such facilitation payments "regardless of their size or frequency," explaining that "a facilitation payment is a type of bribe and should be seen as such." The new guidance does not represent a change in the SFO's stance toward the illegality of facilitation payments, but its tough tone suggests that the SFO intends to prosecute any such payments with renewed vigor. Accordingly, companies with ties to the UK should review and revise their internal compliance protocols to implement and enforce a zero-tolerance policy toward facilitation payments. This poses a particular challenge for companies doing business in both the UK and the US, as the FCPA's tolerance for certain facilitation payments may cause confusion among employees and agents.


In contrast to the FCPA's strict proscription against providing hospitality benefits to foreign governmental officials, the Bribery Act permits such hospitality in certain circumstances. Under the guidance the SFO previously issued in March 2011, the Act permitted bona fide hospitality, such as tickets to a sporting event or an evening of fine dining. The new guidance reaffirms that "bona fide hospitality or promotional or other legitimate business expenditure is recognized as an established and important part of doing business." Just what constitutes bona fide hospitality, however, remains unclear. Perhaps to alleviate continuing concerns (such as those articulated in the OECD [2] Working Group on Bribery's recommendations released in March 2012) as to that lack of clarity, the SFO in its Q&A issued alongside the new guidance indicates that it will pursue hospitality-related prosecutions only if "the case is a serious or complex one that falls within the SFO's remit." Accordingly, a company should carefully document not only the hospitality it provides but also the business purposes for that hospitality. Doing so should help to establish the practice's bona fide status in the event of an SFO inquiry.


The biggest change announced in the recent guidance concerns the benefits a company may expect to gain from self-reporting violations of the Bribery Act. The SFO's earlier guidance indicated that companies could avoid criminal penalties in favor of civil settlements by self-reporting violations. The UK's judiciary, as well as the OECD Working Group on Bribery, criticized this approach, the latter saying in its report that the SFO had been too lenient toward companies that self-reported past misconduct. The SFO seems to have taken such criticism to heart; under the new guidance, the SFO will consider a company's decision to self-report not as dispositive but merely one factor tending against prosecution.

Similar to the approach adopted by the US Department of Justice in the context of the FCPA, self-reporting will militate against prosecution only if the decision to self-report is part of a "genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice." In its Q&A, the SFO stresses that "there will be no presumption in favour of civil settlements in any circumstances." As the new guidance succinctly states, "self-reporting is no guarantee that a prosecution will not follow." Rather, the SFO cautions that "each case will turn on its own facts." Thus, it appears that self-reporting will still typically provide a benefit to companies when the SFO exercises its enforcement discretion, but the message from the regulator is clear that a company with sufficiently pervasive practices in violation of the Act that were approved by senior level management within the company may well give rise to criminal prosecution of the company and/or its employees or agents even if the company self-reports the misconduct.

With its new guidance concerning self-reporting, the SFO has toughened its approach. However, the UK's Ministry of Justice has yet to release the results of its recently concluded consultation on Deferred Prosecution Agreements, which are commonly used in the US to address corporate misconduct without penalizing shareholders or employees. Should the Ministry of Justice endorse the use of Deferred Prosecution Agreements to resolve corporate misconduct, that framework may have a blunting effect on the SFO's new hard line against letting self-reporting companies off the hook. In light of the current ambiguity, any company faced with the prospect of reporting its own violations of the Bribery Act should carefully weigh its options aided by the advice of counsel. As always, the best course is for a company to be proactive with its internal compliance protocols with respect to both the Bribery Act and the FCPA so as to avoid the self-reporting question altogether.