The Bribery Act 2010
The Bribery Act 2010 ("the Act") will now, finally, come into force on 1 July. The long-awaited "guidance" from HM Government is now with us. The provisions of the Act are indeed far reaching. It imposes on us one of the world's strictest anti-bribery regimes.
Summary of provisions
Fundamental aspects of the Act include:
- the wide scope of the bribery offences;
- the new offence of bribing a foreign official;
- the new corporate offence of failing to prevent bribery;
- the outright ban on "facilitation payments";
- the need for a considered policy covering promotional expenditure and corporate entertainment;
- the criminal liability of a senior officer of a business whose associates are involved (unknown to it) in bribery ("the strict liability offence"); and
- the extra-territorial reach of the legislation.
The best form of protection for businesses is to implement a compliance policy. The only defence to the strict liability offence is in fact to have in place "adequate procedures".
Laytons can assist you with this.
- The Wide Scope of the General Offences
The definition of bribery is complex but it can be summed up as:
A financial or other advantage offered to induce the improper performance of a function which is:
- of a public nature, or
- concerned with a business, or
- performed in the course of a person's employment, or
- performed by or on behalf of a body of persons (whether incorporated or not),
- it should be performed in good faith, or impartially, or
- the person performing it is in a position of trust.
The definition is very wide and may capture conduct that some might not see as criminal. For example, there is no requirement for the accused to act "corruptly" as there was under the previous law. This contrasts with the United States Foreign Corrupt Practices Act which requires persons to act corruptly and wilfully before criminal liability results and conduct which is not wilful attracts civil rather than criminal penalties.
- The New Offence of Bribing a Foreign Official
A person is guilty of the new offence of bribing a foreign public official if his intention is to "influence" that person in their capacity as such. Foreign public officials include government officials and those working for international organisations. The offence does not cover accepting bribes, only offering, promising or giving bribes.
It does not matter whether the offer, promise, or gift is made directly to the official or through a third party.
Unlike the position with the general offences, there is no requirement to prove that the payment or performance of the function should be "improper".
It is clear that buying a foreign public official an expensive holiday so as to gain his favour would be likely to be an offence. The government's guidelines suggest that taking the official out to dinner in order to provide information about the company seeking the business or the nature of its offering is unlikely to raise the necessary inference that there is an intention to "influence". However, the risks involved in relying on the discretion of the prosecuting authorities only serve to emphasise the importance of having proper policies and procedures in place.
- The New Offence of Failing to Prevent Bribery
The Bribery Act introduces a new offence for companies and partnerships of failing to prevent bribery by persons associated with them. This is committed where a person associated with the organisation commits an act of corruption with the intention of obtaining or retaining business or of obtaining or retaining an advantage in the conduct of business.
A person is deemed to be "associated" if he or she performs services for or on behalf of the company or partnership, without regard to whether the person is an employee, agent or subsidiary company. The offence is one of strict liability. There is a statutory defence if the organisation can show that it had in place "adequate procedures" designed to prevent bribery. The government has now provided detailed guidance about such procedures: however the guidance needs careful analysis to apply it to particular situations.
In many countries it is common to act wholly or partly through agents, or local businessmen, or joint venture partners. This may be because they have a serious business contribution to make, or it may be a requirement of local legislation. In either case the business will need to set up a system which prevents such agents from doing anything on its behalf which could constitute bribery.
- "Facilitation Payments"
These are payments to induce officials to perform routine functions which they are obliged to perform in any event. Such payments appear to fall within the definition of bribery. An example might be a person who has to bribe an official to permit him to take a seat on an aircraft for which he has already paid. There may be no other way for the person making the payment to get onto the aircraft. This was pointed out in the course of the bill's passage through Parliament but the then government was not prepared to make an amendment. It stated that it preferred to rely on the discretion of the prosecutor! So much for the rule of law!
It should be noted that this is one area where the Act is stricter than the United States Foreign Corrupt Practices Act which recognises the necessity of facilitation payments in certain circumstances. It may be of comfort to know that there will probably be a defence of duress if there is an imminent threat to "life, limb or liberty".
The government also says: "you can continue to pay for legally required administrative fees or fast-track services. These are not facilitation payments". It may of course be difficult to check the exact contents of overseas law at a time of crisis but this emphasises the need for procedures, preparation and "due diligence" in advance of doing business.
- Promotional Expenditure
The Act contains no exception for reasonable and bona fide expenditure relating to the promotion, demonstration, or explanation of services, or the execution or performance of a contract with a government. Given that the offence of bribing a foreign official contains no requirement that the payment must be "improper", and the only exception to the offence is where a payment is explicitly permitted or required under the written laws of the foreign country, bona fide expenditure could be an offence if it could be shown that it was made with an intent to influence the official and to obtain, or retain business.
The outgoing Labour government said that it would be left to the discretion of prosecutors to ensure that truly bona fide expenditure would not lead to prosecutions. Once again, so much for the rule of law! The new guidance suggests there are crumbs of comfort but once again there will be no substitute for having adequate procedures and policies in place.
- Liability of Senior Officers
If the business commits an offence and the offence occurs with the "consent or connivance" of a "senior officer" of the organisation the senior officer will be separately liable under the Act. Senior officer is not defined. It will be interesting to see how the courts interpret the terms "consent and connivance".
Foreign directors of companies will be relieved to hear that they cannot be liable for the corporate offence of failing to prevent bribery as the senior officer must be British or normally resident in the UK.
- Extra-territorial Effect
The Bribery Act has extra-territorial effect. For example, the offence of failing to prevent bribery applies to conduct outside the UK provided that an organisation carries on a business, or part of a business within the UK. This means that a French company, say, (whose only connection with the UK may be that it has a branch in London) can commit the offence if it fails to stop corrupt practices by its agent in South Africa! The conduct does not need to be in any way connected with the UK. To defend itself against prosecution in the UK the French company would need to demonstrate that it had in place adequate procedures to prevent bribery.
Who Needs to Worry About the Bribery Act?
Any company or partnership carrying out any business in the UK should consider its position in the light of this legislation.
How Can Businesses Protect Themselves?
- It is important that all businesses should ensure that they have adequate procedures in place to act as a defence if they should find themselves being prosecuted
- Regardless of size, commercial organisations which fail to have formal written anti-bribery systems and training programmes run a considerable risk
- Perhaps most importantly it is not enough to have a paper compliance policy. This will not provide protection unless the business can demonstrate that it has a genuine anti-corruption culture
What can Laytons do to help?
Laytons can work with you to develop a training and compliance programme appropriate for your needs, protecting your organisation's employees, image and reputation in the UK and beyond.
Contact Rupert Lescher: email email@example.com
Contact Ben Crichton : email firstname.lastname@example.org
Contact Keith Corkan : email email@example.com
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This Focus is offered on the basis that it is a general guide only and not a substitute for legal advice. Laytons cannot accept any responsibility for any liabilities of any kind incurred in reliance on this Focus.