The Bribery Act (in force July 2011) has been much trumpeted. Is it not until now that we have had a stringent piece of legislation by which to pursue every corrupt official or business deal? You maybe forgiven for thinking that the answer is yes AND no! In 1906 the Prevention of Corruption Act was passed so we have had the power to act for over one hundred years. If one takes a look however at the number offences of bribery of foreign public officials that have taken place in that 100 years the answer would be none, save for in 2008 one solitary conviction was secured (and that was a guilty plea).
As pressure mounted from the likes of the OECD, on the last day of Parliament in 2010, the Act was passed. It has been said that the rational behind the legislation is to ensure the UK lead in ethical business principles. Some have argued that this may make businesses uncompetitive when trading with other less ‘regulated’ global nations, however the act clearly sends out the message that ethical clean business and a company’s reputation still counts.
Something which is underlined by the 10 year maximum prison sentence the Act carries.
The Act is not retrospective and will abolish all existing corruption law with a frame work of 4 key offences:
- Bribing (Section 1)
- Being bribed (Section 2)
- Bribing a foreign official (Section 6)
- Failing to prevent bribery - a strict liability offence for commercial organisations (Section 7)
Some academics argue that we do not have the money to confront white collar crime. They draw upon the impact statement at the end of the Act which implies that there will only be approximately 1.3 prosecutions a year. They cite the Foreign Corrupt Practices Act (US legislation) which having been in force 34 years has resulted in 50 prosecutions and 2 contested cases. The reality of course is that the DOJ are investigating more bribery offences now than ever. Hundreds of cases are "settled". The press releases and recent cases involving the Serious Fraud Office, may suggest that in the UK, we too may follow the "negotiated justice" route.
Corporate Hospitality
The guidelines also deal with corporate hospitality, to which a reasonable and proportionate test is applied. Whilst Richard Alderman, Director of the Serious Fraud Office in April 2011 said "The notion that the SFO would be interested in the extra bottle of wine or the opportunity to watch a match at Twickenham seem to me to be greatly exaggerated" The MoJ has made it clear that hospitality and promotional or other similar business expenditure can be employed as bribes. A greater analysis of that can be found in the article titled Can you still go to the races?.
The Bribery Act
Section 1
This creates an offence of ‘active’ bribery where a person offers, promises or gives a financial or other advantage to another person with the intent to induce that person or another to perform improperly a relevant function or activity.
Section 2
This creates a ‘passive’ offence where a person requests, agrees to receive or accepts a financial or other advantage. The offence can be committed in four different ways and it is irrelevant if the recipient of the bribe receives it directly through a third party or whether it is for the recipient’s benefit.
Section 6
This creates an offence of bribing a foreign official. It is committed where a person offers, promises or gives a financial or other advantage to a foreign public official with the intention of influencing the official in the performance of his or her official functions. This must be accompanied by an intention to obtain or retain business or an advantage in the conduct of business.
Section 7
This makes it an offence for a commercial organisation to fail to prevent bribery. The prosecution will need to prove that a person associated with the company (note ‘associated’) bribes another person, ie has committed an offence under section 1 or 6, intending to obtain or retain a business advantage. The burden then switches to the company to prove (not a breach of the ECHR ACT) that on the balance of probabilities it had in place adequate procedures* to prevent such persons from indulging in bribery.
Failure to Prevent - the defence
In the MoJ guidelines they set out a principle based approach to what adequate procedures* are. 6 guiding principles have been identified;
- Introduce proportionate procedures - ACTION TAKEN SHOULD BE PROPORTIONATE TO THE RISKS A BUSINESS FACES
- Ensure top level commitment for company executives and officers - SENIOR MANAGEMENT NEED TO TAKE THE LEAD
- Conduct a risk assessment - CERTAIN SECTORS, COUNTRIES AND SITUATIONS ARE MORE LIKELY TO NEED ROBUST ANTI-CORRUPTION MEASURES
- Carry out due diligence - BUSINESSES NEED TO KNOW WHO THEY ARE DEALING WITH
- Introduce communication throughout, including training - ENSURE STAFF KNOW YOUR POLICY AND PROCEDURE
- Monitoring and review - BUSINESS RISKS CHANGE OVER TIME, THE EFFECTIVENESS OF YOUR PROCEDURES MAY ALSO CHANGE OVER TIME
* The guidelines make it clear that adequate procedures should be proportionate to the organisation’s bribery risks. All UK organisations are affected by the legislation to a greater or lesser extent. Your response will be equally proportionate, but doing nothing is probably not the best option.
