The Queen's Speech on 18 November 2009 marked the end of an era in respect of anti-bribery and corruption laws in the UK. The new Bribery Bill will be included in the legislative programme for the next session of Parliament. It is intended to provide a comprehensive, easily understandable and easily applicable set of rules to an area of UK law which, according to the Law Commission, had previously been "riddled with uncertainty and in need of rationalisation."
In 1977, the Foreign Corrupt Practices Act ("FCPA") was brought into force with little fanfare. Although this piece of US legislation was the first major recognition of overseas bribery, it remained little thought of and often ignored for some time. Bribery was simply de rigeur in the global, commercial marketplace with the expectation of public propriety at home not extending to business overseas. The US Department of Justice was the first prosecution agency to take umbrage with this and it has been flexing its prosecutorial muscles ever since.
Closer to home, the Organisation for Economic Cooperation and Development ("OECD") has taken the reigns in the fight against bribery and corruption. Its Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the "Convention") has been ratified by 38 countries globally. The OECD requires the implementation of functional equivalents of the Convention in member countries and then assesses that implementation; the UK in particular has been weighed, measured and quite frankly, found wanting.
The OECD found the UK's implementation of the Convention to be inadequate and its prosecution record to be shockingly poor. Despite ratifying the Convention in December 1998, it was October 2009 before the SFO succeeded in obtaining its first prosecution for bribery of a foreign government official. Further criticism has been heaped onto the UK government in respect of Tony Blair's personal request in 2006 for the SFO to drop its investigation into allegations of bribes totalling more than £1 billion paid by BAE Systems to a senior member of the Saudi royal family for the award of a contract to sell military aircraft to the Saudi Government.
Such criticism has ramped up the pressure on the UK government to reform this area of law and to prosecute more rigorously. This, coupled with the desire of Richard Alderman, the new Director of the Serious Fraud Office, to prove his worth, is creating tangible momentum behind the UK's anti-bribery and corruption drive.
Prosecutions can still be carried out under the current law though it is arguably deficient, and certainly complex. For example, the law relies on the ambiguous term "corruptly" to differentiate between bribes and legitimate payments, but the definition of the term (according to the Court of Appeal) as "an act which the law forbids as tending to corrupt" is fairly unhelpful.
There is also an argument that the current UK law gives a "get out of jail free card" where the person receiving the bribe can show that his principal approved any such payments.
It is these deficiencies, and others, that the Bribery Bill seeks to correct. It makes explicit the mischief of bribery, setting out plainly the offences pertaining to bribing another and being bribed. It aims to protect the public interest and the proper administration of functions in the public and private sector where there are expectations of impartiality or good faith or where there is a duty of trust on the person carrying out the function. This is not trust in the legal sense but in the everyday sense.
The Bill contains specific provision for the bribery of foreign public officials. Here, the test is whether the payer makes an offer, promise or gift for the purpose of influencing the official to gain or attain business and as a result is given an advantage not legitimately due. The Bill does provide that the payment is only a bribe where the official is neither permitted nor required by the written law applicable to him to be influenced in his capacity as an official by it. Accordingly, whether the payment is legitimately due will often be decided under foreign law. The Bill attempts to limit the potential ramifications of this by requiring that the payment be allowed under the relevant country's written law. Acquiescence or approval under local custom and practice will not suffice.
The FCPA provides a specific defence in relation to "facilitation payments" i.e. payment of a small amount of money to a public official or other person to ensure they perform their duty in a timely way, or at all. The Bribery Bill does not include such a defence and facilitation payments will continue to be illegal under UK law. That said, Mr Alderman has indicated that the SFO is unlikely to pursue prosecution for offences involving small sums of money.
Importantly, the Bill includes a new corporate strict-liability offence of failing to prevent bribery which can only be defended by proof of adequate preventative procedures. The imposition of strict liability in this area will be welcome to the UK's prosecution agencies, as the current test for corporate criminal liability (the "controlling mind" doctrine) is notoriously difficult to apply.
The government is yet to issue any guidance on what will constitute "adequate procedures", though it has said that it intends to do so. Such guidance is likely to include things such as the creation and vigilant implementation of policies on gifts, hospitality, facilitation payments, engagement of agents, monitoring of third parties and training for employees.
The acid test for the success of the Bribery Act, once it comes into force, will be the implementation of it by the prosecution agencies. Mr Alderman is making it very clear that this a priority for the SFO. He wants companies to self-report wrongdoing found amongst their ranks and to instigate a sea-change in any lax corporate culture allowing the wrongdoing. He also, unsurprisingly, wants to see that companies will pay for investigations to be done by their own advisers. If he can be satisfied on these things, he has stated that the SFO will consider a civil recovery order rather than a criminal trial. This can be a significant incentive for companies, as entering the criminal process may result in debarment from government contracts under the EU Procurement directive, and the UK's draconian confiscation regime could be crippling for any company which finds itself subject to it. Prudent companies will, notwithstanding any issues of timing, note that new bribery legislation is now a step closer and review their risk assessments, training programmes, systems and controls accordingly.
Laura O'Neill is a Solicitor in the Corporate Crime and Investigations team of DLA Piper, London.
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