A few days ago I was speaking at a conference on the Bribery Act and someone asked me how the Act applies to the small payments that his charity had to make in order to get the aid which the charity is distributing across a war torn country actually delivered to the people in need.  He asked me whether they were caught by the new Act for making modest “facilitation payments”. My strong belief is that a charity could, in theory, very well be caught by the Act, however worthy its aims and purpose. But would it ever in fact be prosecuted? And how can charities afford to take advice on the Act and undertake a compliance programme? 

Section 7(5) of the Act provides: 

“Relevant commercial organisation” means—

and, for the purposes of this section, a trade or profession is a business.”

(a) a body which is incorporated under the law of any part of the United Kingdom and which carries on a business (whether there or elsewhere),

(b) any other body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the United Kingdom,

(c) a partnership which is formed under the law of any part of the United Kingdom and which carries on a business (whether there or elsewhere), or

(d) any other partnership (wherever formed) which carries on a business, or part of a business, in any part of the United Kingdom.

It is likely that a charity would be a body corporate of one type or another. So it needs to put in place adequate procedures. Even if it felt that it wasn’t a likely target for prosecutors, in my view it needs to put in place a compliance programme because:-

  • it may well be at risk of prosecution for its other activities back in its home country
  • its associated persons (as defined by the Act, but broadly meaning, to recap, other parties it has dealings with) may ask it for sight of its compliance programme as a condition of continuing to deal with them
  • its benefactors and contributors (which may include governments) may ask for details of all its compliance and ethics policies, expecting a charity to lead the way in these areas by example
  • the risks to the charity of not complying with the law could be very damaging both to their assets, to their reputation and therefore to their ability to raise additional funds in the future.

As to whether or not they would be prosecuted for giving small facilitation payments to distribute aid across very poor, war torn countries: I think it is incredibly unlikely that the Director  of the Serious Fraud Office or the Director of Public Prosecutions would be prepared to consent to a prosecution i.e. that they would think that it would be in the public interest to do so. In fact it seems to me that it would be against the public interest to allow a prosecution, because it would not only mean that vital aid might not get through to the people who need it, but it would probably also deter charity workers, especially those in the relevant country from continuing to work in these circumstances, and it may also deter donors from making further donations, embarrassed that they might be associated, however remotely, with a criminal act. 

On 21st June 2011 my colleague Rose Parlane posted a blog on the recent guidance by the Serious Fraud Office on how to deal with organisations that continue to make "small" facilitation payments after 1 July. 

To recap, the SFO will be looking to see:

1. whether the company has a clear issued policy regarding such payments;

2. whether written guidance is available to relevant employees as to the procedure they should follow when asked to make such payments;

3. whether such procedures are being followed by employees;

4. evidence that all such payments are being recorded by the company;

5. evidence that proper action (collective or otherwise) is being taken to inform the appropriate authorities in the countries concerned that such payments are being demanded;

6. that the company is taking what practical steps it can to curtail the making of such payments.

For more detail, please take a look at Rose’s post.

So, all in all, whilst in theory such payments made abroad may be strictly against the Bribery Act, in the view of the BriberyLibrary there is unlikely to be any appetite politically to pursue charities for low value criminal acts which are often made out of desperation to try to save lives.

Interestingly, aid workers in dangerous countries are sometimes accompanied by soldiers, perhaps NATO soldiers, when distributing aid. The Act does give in Section 13 an exemption for British soldiers who bribe whilst on active service:

“It is a defence for a person charged with a relevant bribery offence to prove that the person's conduct was necessary for—

(a) the proper exercise of any function of an intelligence service, or

(b) the proper exercise of any function of the armed forces when engaged on active service...

6) In this section—

  • “active service” means service in—

(a) an action or operation against an enemy,

(b) an operation outside the British Islands for the protection of life or property, or

(c) the military occupation of a foreign country or territory......”

There may be cases where the soldier has been asked to make a facilitation payment in order to secure the safe transit of the aid worker or the safe delivery of the aid. This might be money provided by the charity of perhaps, I suppose, by the Ministry of Defence.  In his or her case, provided it is in furtherance of one or more of the duties in (a) to (c) above, the soldier is afforded a defence by Section 13 of the Bribery Act. I would be highly surprised, however, if the soldier were to be prosecuted in the first place if it were clear that he was carrying out duties in active service for his country. Prosecutions under the Bribery Act in the armed forces are far more likely I would have thought in the area of procurement than active service in the field.  Again, the likely backlash in the media and from the public from prosecuting a soldier who was helping aid workers to save lives is really unthinkable.

Understandably, all sorts of organisations are worried about the effects of the Act on them, including charities. As an aside: some of them may not be sufficiently well funded to take specialised legal advice. There are at least two ways to deal with this – advice for free is at hand either directly from the Serious Fraud Office itself, which welcomes approaches in writing or in person. Alternatively a commercial organisation or a charity (or anyone) can ask for help from LawWorks, the solicitors pro bono organisation which is housed within the National Pro Bono Centre in Chancery Lane, London. They do have financial criteria for qualifying for pro bono work, but if you do qualify, then they will refer you to one of the many thousands of lawyers across the UK who offer their legal services for free to those who cannot afford legal advice.