Today, the UK Ministry of Justice published the Guidance to the Bribery Act 2010 (“the Guidance”), and announced that the Act will come into force on 1 July 2011. The publication of this Guidance, which was a pre-requisite to the Act coming into force, and the implementation of the Act mark the culmination of nearly ten years of government consultation surrounding reform of the United Kingdom’s anti-bribery laws and comes one year after the Bribery Act was finalised and passed by Parliament.1 Contemporaneous with the Guidance, the government also published a separate guidance document concerning the enforcement of the Bribery Act (“the Enforcement Guidelines”), which provides additional detail concerning standards by which UK prosecutors will exercise their discretion in bringing criminal cases under the Act.
The Guidance and Enforcement Guidelines include significant interpretive comments concerning the scope of the Act, and should be reviewed carefully by practitioners and company personnel responsible for anti-corruption compliance. Among the highlights are the following:
- Jurisdiction. The Guidance indicates that the jurisdiction of the Act will be evaluated on the basis of a “common sense” approach and provides insightful commentary concerning the jurisdictional scope of the corporate offence in Section 7 of the Act.
- The Guidance states, for example, that the mere fact that a company’s securities have been listed and therefore trade on the London Stock Exchange would not be expected, in itself, to qualify that company as “carrying on a business” or “part of a business” in the United Kingdom and would not therefore fall within the definition of a relevant “commercial organisation” under the Section 7 offence. This is consistent with the views expressed by many commentators, although there had been some speculation that the Bribery Act might be interpreted to extend to companies simply on the basis of being traded on UK exchanges.
- In addition, the Guidance indicates that prosecution will be unlikely in cases where a UK entity merely owns an overseas entity that engages in bribery, but the overseas affiliate did not intend to obtain or retain business for the parent company: “The fact that an organisation benefits indirectly from a bribe is very unlikely, in itself, to amount to proof of the specific intention required by the offence. Without proof of the required intention, liability will not accrue through simple corporate ownership or investment, or through the payment of dividends or provision of loans by a subsidiary to its parent.”
- Supply Chain Control Responsibility. The Guidance makes it clear that an “associated person,” for the purposes of the Section 7 offence, has a wide meaning that can cover contractors and suppliers. However, the Guidance notes that in cases where a supply chain involves several entities or a project is to be performed by a prime contractor with a series of sub-contractors, “an organisation is likely only to exercise control over its relationship with its contractual counterparty.” In those cases, the Guidance indicates that organisations should employ their anti-bribery procedures in the relationship with their contractual counterparty, and request that the counterparty adopt a similar approach with the next party.
- Joint Ventures. The Guidance also considers the Act as it applies to joint ventures. The Guidance indicates that the mere participation in a joint venture will not necessarily trigger liability for a joint venture participant “simply by virtue of them benefiting indirectly from the bribe through their investment in or ownership of the joint venture.” Rather, the participant’s relationship to the underlying misconduct, and the degree of control that the participant holds over the joint venture, will be relevant factors.
- Facilitation Payments. Concerning the approach to enforcement of bribes involving “facilitating payments” (which, in contrast to US law, are prohibited under the Bribery Act), the Guidance refers to the new Enforcement Guidelines which sets out factors in favour and against a prosecution when a facilitation payment has been made. For example, facilitation payments which come to light as a result of a genuinely proactive approach involving self-reporting and remedial action is a factor tending against prosecution, as is a situation where a commercial organisation has a clear and appropriate policy setting out procedures an individual should follow if facilitation payments are requested and these have been correctly followed.
- Hospitality. Consistent with views expressed regularly over the last year by the Serious Fraud Office, the Guidance confirms that the government does not intend the Act to prohibit reasonable and proportionate hospitality and promotional or other similar business expenditures.
- Cooperation and Disclosure. The Guidance briefly addresses the prospect of cooperating with the UK government in enforcement matters, noting that “the commercial organisation’s willingness to co-operate with an investigation under the Bribery Act and to make a full disclosure will also be taken into account in any decision as to whether it is appropriate to commence criminal proceedings.” (This echoes similar comments that have been made regularly by the Serious Fraud Office over the last two years.)
Finally, the Guidance also provides commentary concerning six core “principles” of compliance that should underpin effective anti-corruption compliance programs, as well as a series of case scenarios that highlight those principles in implementation. The six principles (which also were reflected in the Ministry of Justice’s draft “adequate procedures” guidance from September 2010 and broadly reflect other international anti-corruption best practices standards), include:
- adopting proportionate procedures tailored to the size and nature of the business;
- ensuring “top-level commitment” to the compliance program within the corporate organisation;
- conducting risk assessments to evaluate where corruption risks may present themselves in the company’s operations;
- conducting due diligence on key third party service providers and in the employee hiring process;
- implementing anti-corruption training programs; and
- monitoring and reviewing the implementation of the compliance program.
It is important to keep in mind that the Guidance does not carry the force of law—it does not amend the Bribery Act, the Ministry of Justice can revise the Guidance at any point in the future, and neither courts or prosecutors are bound by the Guidance. However, the Guidance provides a useful basis to assist companies in evaluating likely risk scenarios under the Bribery Act and developing proportionate compliance procedures.
The separate Enforcement Guidelines are also worth close study by those involved in Bribery Act compliance. The guidelines set out the approach of the Director of Public Prosecutions and the Director of the Serious Fraud Office in deciding whether to bring a prosecution under the Act, including particular factors that will be considered in evaluating whether it is in the public interest to bring actions under the various offences in the Act.
In his celebrated novel Bleak House, Charles Dickens wrote of the fictional case Jarndyce and Jarndyce that "this scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. . . . Innumerable children have been born into the cause; innumerable old people have died out of it. . . . The little plaintiff or defendant who was promised a new rocking-horse when Jarndyce and Jarndyce should be settled has grown up, possessed himself of a real horse, and trotted away into the other world." Similar sentiments might be expressed about the Bribery Act, after the protracted consultations leading up to it, mountains of commentary surrounding it, and more than a year of deliberation over “adequate procedures” and prosecutorial guidelines. Whether that time has been spent productively is now, however, a matter for historians or future novelists.
While some groups have already decried the perceived "watering down" of the statute as a result of the Guidance, the Act, as mentioned above, will come into force on 1 July. Companies that are subject to the Act are well-advised to evaluate their anti-corruption procedures and consider whether those procedures—and the manner in which they have been implemented and absorbed by company personnel—will be viewed favourably in light of the new Ministry of Justice guidance and the Bribery Act’s "adequate procedures" affirmative defence. For companies that have already implemented strong anti-corruption compliance programmes (in light of pre-existing UK laws or other regimes, such as the US Foreign Corrupt Practices Act), relatively little may need to be done. For other companies, the entry into force of the Bribery Act presents an opportunity to build effective anti-corruption corporate policies, which will be beneficial not only from the standpoint of the Bribery Act, but also other UK and international anti-corruption laws, debarment regimes, and commercial liability risks that corruption increasing involves.