The Justice Secretary, Jack Straw, recently unveiled the much anticipated Bribery Bill which, he says, will "modernise the currently outdated bribery laws in this Country so that there is a clear legal framework for combating corruption".
The proposed legislation follows the Law Commission's detailed recommendations, which were announced in November 2008.
The prospects of the Bill becoming law are difficult to determine. It is possible that the Bill will not receive Royal Assent before the next general election.
The Bill contains two general offences, comprising "active" and "passive" bribery. In broad terms, active bribery means giving a bribe or offering or promising to do so. Passive bribery is requesting, agreeing to receive, or accepting a bribe. A person can be guilty of these criminal offences whether the act of giving or receiving is done directly by them, or through a third party.
WHAT CONSTITUTES A BRIBE?
In broad terms, a "bribe" may occur where a "financial or other advantage" is given or received, where this is linked to "improper performance" of a work related function. The Bill would therefore cover not only cash inducements, but also gifts or other advantages.
As for who might commit an offence by being bribed, if a "financial or other advantage" is accompanied by "improper performance", a person could commit an offence if they "request, agree to or receive" an inducement. Even if a person did not actually receive any payment or advantage, they may still have committed an offence.
The Bill also contains a new offence of bribing a foreign public official. For an offence to have been committed, the person giving the bribe must intend to win or retain business, or gain an advantage in the conduct of business.
IS THE UK PLAYING CATCH-UP WITH THE US?
The UK's record on prosecuting bribery and corruption is poor in comparison with the US. The US Department of Justice and the Securities and Exchange Commission have been extremely active in prosecuting companies under the US Foreign Corrupt Practices Act. By way of example, in December 2008, Siemens AG reached a $1.6bn agreement to settle a long-standing corruption investigation by both the German and US Authorities. It was alleged that from the 1990s until 2007, Siemens had been engaged in widespread practices involving the payment of millions of dollars in bribes across the globe. Siemens are also reported to have spent over $1bn on investigating and dealing with the charges. Siemens ultimately agreed with the Authorities to maintain an anti-corruption monitoring programme.
It seems, however, that the tide may be turning in the UK.
In a landmark settlement in October 2008, the Serious Fraud Office (SFO) agreed to accept from Balfour Beatty Plc a £2.25m settlement, plus a contribution to its costs, following an investigation into alleged payment irregularities during a joint venture construction project in Egypt. Balfour Beatty carried out its own internal investigation and self-reported the findings to the SFO.
The Balfour Beatty case was significant, as this was the first reported occasion upon which the SFO had deployed the civil recovery powers made available to it as from April 2008. Previously, the power to mount civil recovery proceedings under the Proceeds of Crime Act 2002 was held by the Asset Recovery Agency (ARA). However, following the abolition of the ARA in April 2008, the powers of civil recovery in England and Wales were transferred to, amongst others, the Serious Organised Crime Office (SOCO) and the SFO.
The SFO has, in the past, been heavily criticised for its failure to tackle corporate corruption matters, however, its clear intention is that the Balfour Beatty case should be seen as a precedent, sending out a strong message to the corporate world.
In its press release of October 2008 (following the Balfour Beatty settlement), the SFO stated that it is "committed to combating improper corporate behaviour in line with similar efforts being made in other jurisdictions… [and] the use of these new powers should be seen as an important example of how the SFO will use the new tools at its disposal to enhance the criminal justice process".
CIVIL RECOVERY FROM COMPANIES
Civil recovery enables Enforcement Authorities (such as the SFO and SOCO) to recover, in civil proceedings before the High Court, any property, including cash, which is, or represents, property obtained through unlawful conduct.
In deploying the threat of civil recovery proceedings, the SFO has found an effective way to impose significant sanctions on major UK companies, whilst potentially avoiding the extensive cost to the public purse of lengthy Criminal Court proceedings. The SFO has made it clear that the deployment of these powers will be dependent on the level of co-operation demonstrated by the company concerned.
It seems that Balfour Beatty's prompt and open approach in reporting the matter, its co-operation with the investigation and putting in place compliance systems, were key factors in it receiving relatively lenient treatment.
WHAT DOES THIS MEAN FOR BUSINESS?
UK and other European companies who have operations within the US already face the very real risk of anti-corruption enforcement, in light of the potential exposure to the US Authorities. The risks may now increase, in view of the possible adoption of the Bribery Bill in the UK, as well as the apparent determination on the part of the UK authorities to clamp down on corrupt practices.
Recent high profile investigations into corrupt or unethical behaviour by a number of global companies, including Siemens and BAE Systems, have severely damaged business reputations. Companies are increasingly considering ways in which they can "get their house in order" to minimise the risks.
A prudent company should look to update their risk assessments, training programmes, systems and controls. Board members and senior managers may wish to determine whether their organisation has in place suitably robust compliance, monitoring and reporting procedures and whether more needs to be done to proactively manage the risks.