By Joanna Ludlam* and Andrew Matheson*(Baker McKenzie London)
1. Domestic bribery (private to public)
1.1 Legal framework
The Bribery Act 2010 provides for a general offense of bribery, which criminalizes both the receipt and payment of bribes. There is no distinction between bribes paid in the private sector and those paid in the public sector.
1.2 Definition of bribery
UK anti-bribery legislation does not distinguish between bribes paid to a public official and those paid in the private sector. See Paragraph 2.2.
1.3 Definition of public official
Per Paragraph 1.1, UK anti-corruption legislation does not distinguish between bribes paid to a public official and those paid in the private sector.
1.4 Consequences of bribery for individuals involved and companies/legal entities
UK anti-bribery legislation does not distinguish between bribes paid to a public official and those paid to those in the private sector. See Paragraph 2.3.
1.5 Political contributions
The Bribery Act does not include any specific provisions in relation to political contributions, although the general offenses of giving or receiving a bribe may be applicable. See Paragraph 2.2.
1.6 Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others)
Corporate hospitality will only amount to one of the general offenses if there is improper conduct on the part of the person bribing or being bribed. If the act of hospitality is routine and inexpensive, it is unlikely to amount to a breach of an expectation of good faith, impartiality or trust.
The UK government has confirmed that legislation should not be used to penalize legitimate and proportionate hospitality, including in respect of foreign public officials, but its view is that hospitality is also an issue best considered by prosecutors rather than by Parliament.
2. Domestic bribery (private to private)
2.1 Legal framework
The Bribery Act 2010 provides for a general offense of bribery, which criminalizes both the receipt and payment of bribes. There is no distinction between bribes paid in the private sector and those paid in the public sector.
2.2 Definition of bribery
A bribe is paid where a person receives, offers or gives a bribe either (i) intending that, as a consequence, a function should be performed “improperly”; or (ii) where the bribe is or amounts to a reward for “improper” performance.
The Bribery Act provides three examples of when a function would be deemed to have been carried out “improperly”:
(a) The person performing it is expected to perform the function or activity in good faith, but does not.
(b) The person performing it is expected to perform it impartially, but does not.
(c) The person is in a position of trust, but breaches that trust.
The types of functions that are covered by the Bribery Act are as follows:
(a) Functions of a public nature
(b) Activities connected with a business
(c) Activities performed in the course of a person’s employment
(d) An activity performed by or on behalf of a body of persons
A corporate or commercial organization will also commit an offense under Section 7 of the Bribery Act, where a person “associated with” it bribes another person, intending to obtain or retain business for the organization or to obtain or retain an advantage in the conduct of business for the organization. This is a strict liability offense that can be committed in the UK or overseas. Note the following:
(a) A person will be “associated with” the company for these purposes, where the person acts on an organization’s behalf. This could include an employee, agent or subsidiary of the organization. Contractors, suppliers, joint venture entities and joint venture partners may also be associated persons.
(b) While there is a rebuttable presumption that an employee acts on behalf of his or her organization, an individual’s association will be determined by reference to all relevant circumstances, not merely the relationship between the individual and the organization.
(c) It is a defence for an organization to prove that it had “adequate procedures” in place to prevent the bribery. See Section 5 for further details.
2.3 Consequences of private bribery for individuals involved companies/legal entities
(a) An individual convicted of committing any of the general bribery offenses may:
(i) be imprisoned for a term of up to 10 years; and/or
(ii) be subject to an unlimited fine.
(b) A company or partnership that commits any of the general bribery offenses will be liable on conviction on indictment, to an unlimited fine, and to automatic and perpetual debarment from competing for public contracts.
(c) Note that a conviction under Section 7 of the Bribery Act will attract discretionary rather than mandatory disbarment from competing for public contracts. Where an organization has been convicted of a bribery offense, senior officers of the organization who have consented to or connived in the conduct can also be convicted of the offense concerned.
(d) In addition, the Serious Fraud Office (SFO) will be able to use its civil recovery powers to recover property obtained through the unlawful conduct without resorting to criminal prosecution.
2.4 Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others)
Corporate hospitality will only amount to one of the general bribery offenses if there is improper conduct on the part of the person bribing or being bribed. If the hospitality is routine and inexpensive, it is unlikely to amount to a breach of an expectation of good faith, impartiality or trust.
The government has confirmed that the legislation should not be used to penalize legitimate and proportionate hospitality, including in respect of foreign public officials, but its view is that hospitality is also an issue best considered by prosecutors rather than by Parliament.
3. Corruption of foreign public officials
3.1 Legal framework
The Bribery Act includes a specific offense of “bribery of foreign public officials” (FPOs).
3.2 Definition of corruption of foreign public officials
Broadly, an offense will be committed where a person directly or through a third party offers, promises, or gives a financial or other advantage to an FPO in his capacity as an FPO (or to a third party at the FPO’s request) and intends to obtain or retain business or a business advantage.
The offense is not committed where the FPO is either permitted or required by the written law applicable to the FPO to be influenced in his or her capacity as an FPO. Effectively, this is only likely to provide protection in the very limited circumstances where a written law explicitly permits or requires the payment to the FPO.
A company or another commercial organization will also commit an offense where a person “associated with” it bribes an FPO, intending to obtain or retain business for the organization or to obtain or retain an advantage in the conduct of business for the organization. This is a strict liability offense that can be committed in the UK or overseas.
Note the following:
(a) A person will be “associated with” the company for these purposes where the person acts on an organization’s behalf. This could include an employee, agent or subsidiary of the organization. Contractors, suppliers, joint venture entities and joint venture partners may also be associated persons.
(b) While there is a rebuttable presumption that an employee acts on behalf of his or her organization, an individual’s association will be determined by reference to all relevant circumstances, not merely the relationship between the individual and the organization.
(c) It is a defence for an organization to prove that it had “adequate procedures” in place to prevent the bribery. See Section 5.
3.3 Definition of foreign public official
For the purposes of the Bribery Act, an FPO includes an individual who: holds a legislative, administrative or judicial position of any kind; exercises a public function for or on behalf of a country or territory outside the UK or for any public agency or public enterprise of that country or territory; or is an official or agent of a public international organization.
Foreign political parties or candidates for foreign political office are not considered FPOs.
3.4 Consequences of corruption of foreign public officials
(a) For the individuals involved
An individual convicted of bribing a foreign public official may be imprisoned for a term of up to 10 years and/or be subject to an unlimited fine.
(b) For a company/legal entity
A company or partnership that is found to have bribed an FPO will be liable on conviction on indictment, to an unlimited fine and to automatic and perpetual debarment from competing for public contracts.
Where an organization has been convicted of a bribery offense, senior officers of the organization who have consented to or connived in the conduct can also be convicted of the offense concerned.
In addition, the SFO will be able to use its civil recovery powers to recover property obtained by the unlawful conduct without resorting to criminal prosecution.
3.5 Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others)
Corporate hospitality will only amount to one of the general offenses if there is improper conduct on the part of the person bribing. If the hospitality is routine and inexpensive, it is unlikely to amount to a breach of an expectation of good faith, impartiality or trust.
The government has confirmed that the legislation should not be used to penalize legitimate and proportionate hospitality, including in respect of foreign public officials, but its view is that hospitality is also an issue best considered by prosecutors rather than by Parliament.
However, there is some risk that corporate hospitality may trigger the specific offense of bribing an FPO if the provider of the hospitality:
(a) intends to influence the official in his or her capacity as foreign public official; and (b) intends to obtain or retain business or a business advantage, and the official is neither permitted nor required to be influenced under the local written law.
4. Facilitation payments
A facilitation payment refers to the practice of paying a small sum of money to a public official as a way of ensuring that they perform their routine, non-discretionary duties, either promptly or at all.
Facilitation payments are illegal under the Bribery Act. Nevertheless, the UK government has recognized “the problems that commercial organizations face in some parts of the world and in certain sectors.” Although the UK’s Joint Committee has recommended that there be guidance as to the circumstances in which facilitation payments will be prosecuted, the government has made it clear that this should be policed by prosecutorial discretion exercised in the public interest, leaving the position uncertain. Even if prosecutions do not take place, the continuing illegality of facilitation payments causes issues from a money laundering point of view.
5. Compliance programs
5.1 Value of the compliance program in mitigating/eliminating the criminal liability of companies
It is a defence to the corporate offense under Section 7 of the Bribery Act (identified in Paragraphs 2.2 and 3.2) for an organization to prove, on the balance of probabilities, that it had “adequate procedures” in place to prevent persons associated with it from engaging in bribery.
The UK Ministry of Justice has issued guidance on procedures that commercial organizations can put into place to prevent persons associated with them from bribing. See Paragraph 5.3.
By September 2017, it will become a criminal offense for a company to fail to prevent a person associated with it from facilitating tax evasion. Similar to the corporate bribery offense, the company will have a defence if it had prevention procedures in place which were “reasonable in all the circumstances” to prevent the criminal facilitation of tax evasion. It will also be a defence if it was not reasonable to expect the company to have any prevention procedures in place.
In September 2016, the government’s chief legal advisor stated that the government would soon consult on extending ‘failure to prevent’ offences “beyond bribery to other economic crimes, such as money laundering, false accounting and fraud”. As anticipated, the government has now published a Call for Evidence, which examines the case for reform beyond the existing measures relating to bribery and tax evasion. The Call for Evidence asserts that the Section 7 offence has provided a “significant incentive” for companies to implement bribery prevention compliance measures. In particular, the government seeks evidence as to whether the “identification doctrine” for attributing corporate criminal liability is deficient as an enforcement tool. The Call for Evidence ends on 24 March 2017.
5.2 Lack of a compliance program as a criminal offense
The failure of a corporate entity to implement a compliance program is not an offense under the Bribery Act. However, there is significant value in corporates having a robust anti-bribery program in place to protect against corporate liability, as explained in Paragraphs 2.2 and 3.2.
5.3 Elements of a compliance program
The Ministry of Justice’s guidance is not prescriptive as to the nature of systems and procedures that firms should implement in order to meet the “adequate procedures” standard necessary to provide a defence against the Section 7 corporate offense. A one-size-fits-all approach is simply not possible; whether an organization has adequate procedures in place to prevent bribery will depend on the specific facts and circumstances of the case. However, the guidance highlights six principles of bribery prevention that an organization’s officers should consider when drafting an anti-bribery compliance program:
(a) Proportionate procedures
An organization’s internal procedures to prevent bribery by persons associated with it ought to be proportionate to the bribery risks it faces and to the nature, scale and complexity of the organization’s activities.
(b) Top-level commitment
The management of an organization (i.e., directors, owners or any other equivalent body or person) ought to be committed to preventing bribery by persons associated with it. The management should endorse a culture in which bribery is never acceptable.
(c) Risk assessment
An organization should consider the nature and extent of its exposure to potential risks of bribery on its behalf by persons associated with it. Its assessment ought to be “periodic, informed and documented.”
(d) Due diligence
An organization must implement due diligence procedures, applying a proportionate approach, in respect of persons who perform or will perform services for or on its behalf.
(e) Communication (including training)
An organization should seek to ensure that its anti-bribery policies are understood throughout the organization via internal and external communication and, if appropriate, training.
(f) Monitoring and Review
An organization needs to periodically monitor and review its anti- bribery procedures, and where necessary, make improvements.
6. Regulator with jurisdiction to prosecute corruption
The SFO is the main prosecutor with the responsibility for enforcing the Bribery Act. Broadly speaking, when determining whether to commence a prosecution (against corporates or individuals), the SFO will consider both the evidential case against the suspect and whether a prosecution would be in the public interest.
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