The Bribery Act 2010 (the “Bribery Act”) received Royal Assent on 8th April of this year and is of critical importance to companies transacting business in emerging markets. The Bribery Act aims to place the UK at the forefront of the battle against bribery and corruption; and pave the way for more ethical business practice by encouraging companies to adopt more stringent measures that safeguard against bribery.
The Bribery Act now makes it a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe either in the UK or abroad. The maximum penalty for bribery has been increased to ten years imprisonment, with an unlimited fine. Furthermore, a corporate offence of failing to prevent bribery by persons associated with the business, subject to a defence, has been introduced.
This Article outlines certain elements of the legislation which are of significance to companies transacting business both in the UK and internationally.
Changes to the Bribery Act
The main amendments to the Bribery Act since our last Focus Article written on the Bribery Bill in June 2009 are as follows:
– The removal of the requirement for negligence by a responsible person from the corporate offence;
– The introduction of strict liability for organisations failing to prevent bribery, subject to an ‘adequate procedures’ defence;
– The creation of a strict liability offence for the payer of a bribe to a Foreign Public Official (‘FPO’), removing the defence of mistaken but reasonable belief. The Bribery Act also clarifies when payments to FPOs would not be legitimately due and extends the corporate offence to Scottish companies and partnerships; and
– The Director of the Serious Fraud Office (“SFO”) and other agencies must personally consent to initiate a prosecution of an offence under the legislation.
The Corporate Offence
The most significant change for all companies is that the corporate offence is now one of strict liability. Therefore, under the Bribery Act, an organisation will automatically be guilty of a criminal offence where a bribe is paid on its behalf, subject to the defence of ‘adequate procedures’.
If a bribe has been paid on the organisation’s behalf, the onus will then be on the organisation to prove that ‘adequate procedures’ were in place to prevent its employees and/or associates from giving or accepting a bribe. The Secretary of State is under a duty to publish guidance on the types of procedures that businesses will be required to put in place to be able to rely on the defence. We are yet to see any evidence of this guidance.
The previous requirement under the Bribery Bill for the prosecution to prove negligence on the part of the organisation itself is no longer necessary. Nevertheless, it must now be proven that not merely was the bribe paid in connection with the company’s business, but that the bribe was paid with the intention to obtain or retain business for the organisation itself.
Liability will still arise under the corporate offence even where the bribe was paid by a foreign agent or subsidiary in a foreign jurisdiction. The only necessary connection to this jurisdiction is that the commercial organisation itself is either a UK commercial organisation or carries on part of its business in the relevant jurisdiction.
The Bribery Act contains no defence in relation to so-called facilitation or ‘grease’ payments (unlike the Foreign Corrupt Practices Act in the USA) made to expedite the performance of routine administrative functions. Despite the fact that it is difficult to see a one-off minor facilitation payment being in the public interest to prosecute, especially where the payment was made in an overseas jurisdiction, such payments will remain illegal and the SFO has signalled that it expects commercial organisations to strive to eradicate them.
This presents a real risk for companies in that a company could unknowingly commit the corporate criminal offence as a result of an employee or agent (over whom it has little or no control) making an irregular payment on the ground in a foreign jurisdiction.
Addressing Bribery and Corruption
Given the introduction of the Bribery Act, all companies need to be proactive and not reactive in terms of compliance; and should ensure that the requisite anti-corruption measures are put in place to properly address bribery and corruption within their organisations. In next month’s edition of Focus, we will provide examples of case studies on the issue and outline certain practical measures which companies can implement in order to protect their organisation and employees from corruption and bribery in this current business climate.