On April 8, 2010, the UK Parliament passed the Bribery Act 2010 (“the Act”). The Act is significantly broader than its U.S. counterpart, the Foreign Corrupt Practices Act (FCPA). For example, the Act does not exempt facilitating payments made for routine governmental action. Also, the Act prohibits bribery of private citizens, not just government officials. Of the several offenses under the new law, the most notable is strict liability for commercial organizations that fail to prevent bribery. This offense could have far-reaching impacts on companies doing business in the United Kingdom.

Failure of Commercial Organizations to Prevent Bribery

Under the Act, a commercial organization commits a violation if a person “associated” with it bribes another with the intent to obtain or retain business, or a business advantage, for the organization. The Act covers corporations and partnerships that carry on a business, or a part of a business, within the United Kingdom, and corporations and partnerships incorporated in the United Kingdom. The organization is liable for a violation regardless of whether the acts or omissions that form part of the offense take place in the United Kingdom.

A person is “associated” with an organization if he or she performs services for, or on behalf of, the organization. Employees are presumed to meet this standard. Agents and subsidiaries are also covered.

It is an affirmative defense if the organization had “adequate procedures” in place designed to prevent such bribery. The U.K. Secretary of State will issue guidance on the meaning of “adequate procedures” in the near future. We expect the Secretary to rely in part on the factors set forth in the Woolf Report, which suggested ethical business standards for BAE Systems after the company faced allegations of unethical conduct. The Woolf Report is available here.

Offering Bribes

The Act makes it illegal to offer, promise, or give a financial or other advantage to another with the intent to induce that person to improperly perform a relevant function or activity or to reward the recipient for his or her improper performance. It is also illegal to offer, promise, or give a financial or other advantage to another with the knowledge or belief that acceptance of the advantage is itself improper. It is irrelevant who ultimately performs the function or activity. Bribes are actionable regardless of whether they are made directly or through a third party.

Receiving Bribes

Unlike the FCPA, the Act makes it illegal to request, agree to receive, or accept a financial or other advantage with the intent that a relevant function or activity will be performed improperly as a result, or if the request, agreement, or acceptance itself amounts to improper performance of a relevant function or activity. One may not request, agree to receive, or accept a financial or other advantage as a reward for improperly performing a relevant function or activity. Finally, if in anticipation or consequence of a person requesting, agreeing to receive, or accepting a financial or other advantage, a relevant function or activity is performed improperly by that person or by one acting at that person’s request, or with that person’s assent or acquiescence, the behavior is prohibited. Again, third-party bribes are prohibited as well as direct bribes. Knowledge or belief that performance of the function or activity is improper is not required.

Bribery of Foreign Public Officials

Like the FCPA, the Act prohibits the bribery of foreign public officials for business advantages. To be guilty under this section, the person making the bribe must intend to influence the public official in his or her official capacity and must intend to obtain or retain business or a business advantage.

Implementation Date

After receiving Royal Assent, the Act is now law. However, the Act will not be in force until the government releases important implementing instruments. For example, the Secretary of State must issue guidance on the meaning of “adequate procedures,” as required under Section 9 of the Act. It is our understanding that such guidance is expected by the end of the year, and that the government intends to publish this guidance before prosecuting organizations for failure to prevent bribery. Under the Act, the U.K.’s Serious Fraud Office is the lead enforcement agency.