The UK Government recently stated the existing laws do not adequately deal with bribery and corruption and that “failure to modernise the law could tarnish the UK reputation and this could lead to potential economic losses to UK businesses”. Accordingly, on 25 March 2009 the Government published the Bribery Bill (the “Draft Bill”) aimed providing a comprehensive scheme of offences that will put in place a more effective response to bribery both in the UK and abroad.
Overview of the legislation
The Draft Bill re-codifies existing laws and increases the maximum sentence to 10 years imprisonment. It also creates an offence for bribery of foreign public officials and, importantly, it introduces a new corporate offence where a commercial organisation fails to prevent bribery.
Despite the stated aims of the new Draft Bill, the impact assessment implies that the newly created offences will have a limited impact in terms of actual prosecutions. Specifically, the Ministry of Justice expects only 1.3 additional prosecutions a year as a result of the new corporate offence.
General offences of bribery
The proposed legislation includes two general offences of bribery:
· an offence of bribing another person; and
· an offence of receiving a bribe.
The offence of making a bribe is defined broadly and includes the offering of “any financial or other advantage” in situation that is “improper”. For example, an offence will be committed when an improper payment is offered to a person who owes a duty to another and the acceptance of that advantage would be either improper in itself or erode the duty owed.
An offence would also be committed by a person accepting the bribe under those circumstances. The Draft Bill makes it clear that it does not matter whether the advantage is agreed upon, or given directly, through another person.
These two offences of bribery relate to the following functions and activities:
· “any function of a public nature”;
· “any activity connected with business”;
· any activity performed in the course of employment; and/or
· on behalf of a body of persons whether incorporated or not.
The function or activity must be performed “improperly” and it is performed improperly if:
· it is preformed in breach of a relevant expectation such as the expectation to act in an impartial manner, expectation to act in good faith, or an expectation created by the fact that the person performing the function or activity is in a position of trust; or
· there is a failure to perform the function or activity and that is itself a breach of a relevant expectation.
Corporate offence of failing to prevent bribery
It will be an offence where a relevant commercial organisation negligently fails to prevent to prevent bribery in connection with its business. A “relevant commercial organisation” means any company incorporated in the UK, Wales and Northern Ireland, therefore the proposed offences only in respect of a business.
The offence is committed where a person or person whose functions at the time of the bribery included having responsibility within the company for the prevention of bribery and was negligent in failing to fulfil that function. If there is no person (or persons) with that specific responsibility, then such responsibility is deemed to be that of any “senior officer” within the organisation, including any director, secretary or manager of a company or partner of a partnership.
This provides incentive for a company to ensure that, first, someone within the company is assigned this responsibility and, second, adequate systems are adopted to prevent bribery. This is due to the fact that a defence is available where the person deemed to have responsibility was not wholly partly a senior officer and the company can prove it had adequate procedures in place designed to prevent a person (or persons) from committing bribery. Therefore, the onus is with the commercial organisation to prove the defence on the balance of probabilities.
Bribery of foreign public officials
The Draft Bill contains a specific offence of bribery of foreign public officials. To commit the offence, those making the payment must “also intend to obtain or retain business or an advantage in the conduct of business”.
The offence of bribing a foreign public official is drawn more widely than the two general offences i.e. without the need for the official to act improperly. Instead the offence is limited by the condition that the financial or other advantage promised or given is “legitimately due” to that foreign official. Accordingly, the Draft Bill makes it an offence for a person to offer, promise or give any financial or other advantage not legitimately due to that public official.
The definition of foreign public official includes an individual who “holds a legislative, administrative or judicial position”, “exercises a public function”, or is an “official or agent of a public international organisation”.
In order to secure a conviction under the general offences of bribery it is necessary to establish that one of the “function” elements have been satisfied, as outlined section 3 above. This will likely be easy to establish given most public officials will undertake “function of a public nature”; however it might be so clear where those officials work for a public international organisation.
Other elements of the Draft Bill
Consent to Prosecution
The Draft Bill proposes that the Attorney General’s consent is no longer required for a prosecution of an offence of bribery. Now consent may be granted by a number of specified officials, none of whom is a political appointment, such as the Director of Public Prosecutions and the Director of the Serious Fraud Office.
The proposed maximum penalty has been increased from seven to ten years imprisonment and the level of the fine remains unaltered at an unlimited amount.
Proceedings in Parliament
The Draft Bill has proposed that the law be changed in order to allow proceedings in Parliament to be admissible in evidence. Therefore, where a bribery offence relates to the Parliamentary activities of a Minister they may be prosecuted. Accordingly, Parliamentary privilege is removed for bribery related offences.
The Draft Bill provides for extra-territorial jurisdiction for all offences save for the corporate offence. Therefore even where no act takes place in England or Wales, proceedings may still take place in those countries where the person is a UK citizen or a UK company. The Draft Bill also applies to British territories’ citizens, British Nationals (Overseas), British Overseas Citizens, British subjects, British protected persons and individuals ordinarily resident in the United Kingdom.
Implecations for Corporate Entities
Companies who do business in jurisdictions and industries where corruption is common must pay strong attention to the proposed legislation, in particular the new corporate offence. If the Draft Bill comes into force in its current form then it is certain the many UK companies will need to put in place an anti-corruption compliance code, or review and strengthen their existing procedures to ensure that employees do not commit bribery in the corporate environment. The Draft Bill does not impose any obligations on a company implement these measures, however the risks of not doing so are very evident.
In summary, it would be wise to make sure that those individuals given responsibility for the implementation of adequate ant-corruption and bribery procedures within an organisation are clearly identified and do not include “senior officers”. This will at least allow the company to rely on the “adequate process” defence if the situation ever arises.