Introduction
Significant new UK anti-bribery legislation, the Bribery Act, received Royal Assent in April 2010, and is likely to come into force later this year. The Act reforms UK criminal anti-bribery law and covers bribery both within and outside the UK. As well as containing general offences concerning paying and receiving bribes, the Act makes it a specific offence to bribe foreign public officials. However, perhaps the most notable aspect of the new Act is that the failure of commercial organisations to prevent bribery is also an offence. This strict liability offence extends to non-UK organisations which carry on business in the UK.
Background to the New Legislation
Previous UK anti-corruption law was based on common law and on statutes dating from the late nineteenth and early twentieth centuries. It was generally viewed as in need of reform.
There was widespread disquiet about the weaknesses in the UK's anti-bribery regime following the UK government's controversial decision in 2006 to stop, in the interests of national security, the Serious Fraud Office's investigation into alleged bribery in connection with BAE's Al-Yamamah arms deal with Saudi Arabia.
The Organisation for Economic Cooperation and Development (OECD) adopted its anti-bribery convention in 1997. In 2008, the OECD Working Group on Bribery stated that it believed that the UK's laws on foreign bribery were insufficient and created an obstacle to successful prosecutions. It recommended that the UK enact anti-foreign bribery legislation as soon as possible.
With this background, in 2008 the Law Commission published proposals on reforming anti-bribery law, upon which the new Act is based.
Bribing Another
The Act contains general offences of bribing another, which consist of either (i) bribing another with the intention of inducing, or rewarding, the "improper performance" of a "function or activity", or (ii) knowing that the acceptance of the bribe would in itself constitute such "improper performance".
The "function or activity" to which the bribe relates includes any function of a public nature and those private functions connected with a business.
The "function or activity" will be performed "improperly" if the person performing it does not meet an "expectation" that it will be performed in good faith or impartially, or in a manner arising from that person's position of trust. The test for this "expectation" is the standard expected by a reasonable person in the UK. This means that where the activity takes place outside the UK, local practice or custom is not relevant to assessing whether this standard has been met (save where the practice or custom is permitted or required by local written law).
Receiving Bribes
A person accepting a bribe, or just requesting or agreeing to receive a bribe (whether or not it is actually received) will commit an offence, where there is "improper performance" of a "function or activity". A person will be guilty of an offence if he intends such improper performance to follow as a consequence of his acceptance or request. However, he may also commit an offence where he does not have any such intention, but where accepting or asking for a bribe, in itself, amounts to improper performance, or where the bribe is a reward for such improper performance.
Bribing a Foreign Public Official
There is a separate offence of bribing a foreign public official, which is committed where a foreign public official (or a third party at his request or with his acquiescence) is bribed intending to influence that official, in order to obtain or retain business, and where the official is neither permitted nor required by the written law of that country to be so influenced.
The scope of this offence follows the OECD recommendations on combating the bribery of foreign public officials.
This offence could catch small facilitation payments made to foreign public officials, even in those countries where such payments are normal practice. This means that, in this respect, the new UK anti-bribery law is even more restrictive than equivalent US anti-corruption law. It will be up to the UK prosecuting authorities to decide whether or not to prosecute persons making facilitation payments.
Extra-Territorial Application
The general offences in the Act concerning bribing another and receiving bribes, and the discrete offence of bribing foreign officials, all have extra-territorial application. These offences also apply to bribery taking place outside the UK, if committed by persons having "a close connection with the United Kingdom", which term includes British nationals and UK corporates.
Failure of Commercial Organisations to Prevent Bribery (the "Corporate Offence")
The most controversial aspect of the Act is an offence, which can only be committed by commercial organisations (rather than by individuals), in circumstances where a person "associated" with the organisation bribes another person intending to obtain or retain a business advantage. Such "associated" persons include not only its employees, but also its agents and other third parties performing services for or on its behalf (which may, for example, include joint-venture partners).
Bribing for these purposes constitutes the offences of bribing another or bribing a foreign public official (whether or not the person has actually been prosecuted for committing such offences).
A defence to this offence is available if the organisation can show that it had "adequate procedures" in place to prevent associated persons from undertaking bribery. The burden of proof is therefore on the company to demonstrate (on the balance of probabilities) that its procedures were adequate in preventing its employees, agents, or other third parties acting on its behalf, from committing bribery.
The government intends, before this section of the Act comes into force, to publish guidance as to what constitutes adequate procedures, but compliance with this guidance is not intended to be a safe harbour. Although this guidance has not yet been published, it is expected to include requirements on the company to have proper policies, controls and procedures in place, and to have board level involvement to ensure that such procedures have been implemented.
This corporate offence is in effect a strict liability offence, and so can make companies criminally liable for bribery carried out by its agents, even if no one within the company knew of the bribery.
Territorial Application of the Corporate Offence
The corporate offence applies not only to companies and partnerships incorporated in the UK, but to any corporate body or partnership which "carries on a business, or part of a business," in the UK.
This clearly has significant implications for non-UK companies which carry on business in the UK. Under the Act, such non-UK companies could be prosecuted by UK authorities for the actions of their agents, even if the foreign company had no knowledge of such activities.
Conclusion
Perhaps the most important point arising from the new Act is that the requirement on organisations to have "adequate procedures" in place to prevent bribery will apply not just to UK companies, but also to non-UK companies which carry on business in the UK. Furthermore, such overseas companies may be criminally liable for actions taken on their behalf by the company's agents, wherever in the world such activities take place. Companies with a UK presence will therefore need to have proper systems in place to ensure compliance with the Act.
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