Bribery Act 2010 - What's in it for me?
Tuesday, August 03, 2010
by
Robin Corbett
The Bribery Act 2010 came into force on 1 July 2011.
Everyone affected by the Act should have business practices and structures to safeguard themselves (and, in certain circumstances, directors) from substantial penalties.
The Bribery Act 2010 creates these offences:-
The Act uses various defined terms to achieve its ends. Any advice must involve a careful reading of these and all other provisions. The following is necessarily an overview.
Bribing
An offence is committed if a person promises or gives financial or other advantage to another person and intends, by doing so, to induce or reward that other person for improper performance of certain functions or activities. The offence includes giving financial or other advantage to a person, knowing that acceptance, of itself, is improper performance.
The offence covers “financial or other advantage”, a phrase which is used consistently throughout the Act. The bribe may not be the obvious cash, gifts, and the like. Note also that the test is the intention of the bribe, not the outcome.
Being Bribed
A person is guilty of an offence when (summarising) that person requests, agrees to receive or accepts a financial or other advantage as a reward for improper performance of certain functions or activities, or makes improper performance anticipating financial or other advantage.
Relevant Functions or Activities
The offences of bribing or being bribed can be committed in relation to:-
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functions of a public nature;
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any activity connected with a business;
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any activity performed in the course of a person’s employment;
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any activity performed by or on behalf of a body of persons (corporate or not).
For an offence to be committed, though, the person performing the function or activity must be:-
The concept of improper performance is at the core of the Act. The test of improper performance is what is “expected” in relation to performance of the function or activity concerned. The “relevant expectation” is what a reasonable person in the United Kingdom would expect.
That test of expectation in the United Kingdom applies even if the function or activity concerned has no connection with the United Kingdom, or is performed in a country outside the United Kingdom. UK standards are, in effect, exported. Local custom or practice is disregarded unless permitted or required by the written law applicable to that locality.
Bribing foreign public officials
The Act makes it an offence to bribe a foreign public official with the intention of influencing that official, in his or her capacity as a public official and with the intention of obtaining or retaining business, or an advantage in the conduct of business. For this offence, the Act does not refer to “improper” performance. Instead, the focus is simply on intention to influence, linked to intention to obtain or retain business or an advantage in its conduct.
Facilitation Payments
These are payments commonly expected in certain countries to “oil the wheels” of business.
The Act makes no allowance for such local practices. The Guidance given by the UK government in relation to the section 7 offence (see below) makes clear the government is aware of the issue, but offers no comfort. The government says only that it “recognises the problems that commercial organisations face in some parts of the world and in certain sectors”, and notes that eradicating facilitation payments is recognised at national and international level as a “long term objective”, requiring “economic and social progress and sustained commitment to the rule of law”, in countries where the practice is most prevalent.
Associated persons who bribe
Section 7 of the Act makes it an offence by a commercial organisation if a person associated with it bribes another person with the intention either of obtaining or retaining business for the organisation, or obtaining or retaining an advantage for the organisation in the conduct of business.
(“Bribe” is not defined for section 7 – it should be assumed to be the offering of financial or other advantage.)
Section 7 applies to incorporated bodes, and partnerships, wherever formed or incorporated. It therefore catches corporates or partnerships not formed in the UK, but carrying on business here.
Who is an “associated person”?
As associated person is any person who performs services for or on behalf of the commercial organisation,in any capacity. Association is judged case by case, according to circumstances. It can reasonably be taken, however, normally to include agents, employees, consultants or contractors.
Is there any defence? Yes – if a commercial organisation can prove that it had in place adequate procedures designed to prevent associated persons from bribing. The standard of proof is the “balance of probabilities”.
The Act does not give any definition of “adequate procedures”.
The Ministry of Justice has published Guidance. It sets out six principles by which organisations may judge whether their procedures are adequate. The means of applying these principles, and the judgement on adequacy will depend on the size of the organisation and the level of risk in its sector and in places it trades.
Click here to view the Guidance.
In summary, the principles are:-
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Procedures should be proportionate to the bribery risks the organisation faces, and the nature, scale and complexity of its activities. They should be clear, practical, accessibly, and effectively implemented and enforced;
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Top level management should be committed to preventing bribery by associated persons, and should foster a culture in which bribery is always unacceptable;
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There should be periodic, informed and documented assessments of the potential external and internal bribery risks;
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Proportionate and risk-based due diligence should be undertaken in respect of persons who perform, or will perform services for the organisation;
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The organisation should seek to ensure its bribery prevent procedures are embedded in and understood throughout the organisation, using (proportionate) internal and external communication, including training; and
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Procedures should be monitored and reviewed, and improvements made where necessary.
The Guidance is not prescriptive. Whether there are “adequate procedures” is a matter that can only be resolved, in a particular prosecution, by the court taking into account the particular facts and circumstances of the case. There are no boxes to tick.
Despite the non-prescriptive nature of the principles, a number of actions can be suggested as likely to be helpful:
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Policy can be written down, then clearly communicated, externally and internally. Publication on a website may hel. Staff manuals can be used to articulate policy;.
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A statement by a chairman or chief executive endorsing the policy is evidence of commitment at the top;
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• The organisation’s board can record a consideration of its bribery risk, allowing a judgement on what is “proportionate”;
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Contractors or agents can be given statements of business principles to be adhered to and made subject to contractual obligations not to commit Bribery Act offences;
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Cost control processes, and expenditure controls, especially on hospitality expenditure, are standard business practices, and clearly helpful in this context;
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Training or information sessions may be important for some businesses or parts of them, depending on how exposed to bribery the organisation believes it is. (Some parts of a business may be more exposed than others.)
Some implications
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Corporate Hospitality
All the offences under the Act are based on the giving of financial or other advantage, linked to an intention to influence behaviour. That could include hospitality. The Guidance tells us, though, that the Government does not intend that reasonable and proportionate hospitality, or promotional, or similar business expenditure should be criminalised. Such expenditure may cover improvement of image, presenting products or services, or establishing “cordial relations”.
Prosecutors would have to show a clear connection between the hospitality and intention to influence, or secure business. What is “reasonable and proportionate” may depend on the business sector. Whatever the sector, lavish corporate hospitality may raise issues – or at least be harder to defend as reasonable and proportionate. Businesses who regularly use hospitality for relationship building would be well advised to set down clear guidelines for staff, perhaps including record keeping. Businesses whose employees may receive frequent offers of hospitality should have clear guidance on what may be accepted, and how often. Here again, a register of hospitality is worth considering.
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Public Sector
Those tendering for public sector contracts are now asked regularly for details of their anti-corruption policies, and their approach to Bribery Act compliance. Conviction for a Bribery Act offence may disqualify a tenderer. Contracts offered to successful tenderers are likely to contain fairly onerous Bribery Act clauses.
Penalties
Penalties for all offences can be significant. Substantial fines are possible, and for individuals imprisonment for up to 10 years.
In addition, if a corporate body or a Scottish partnership is guilty of an offence of bribing, being bribed or bribing a foreign official, and the offence is shown to have been committed with the consent or connivance of any of its senior officers then the senior officer is also guilty of the offence and liable to be punished accordingly. Senior officer, in a company, is a director, manager or similar, and in a Scottish partnership, a partner.
Conclusion
Our experience to date is that many businesses have been prompted by the Act to review their anti-corruption policies and processes. Some have concluded that they already have adequate procedures, but others are taking steps, for example making explicit their expectations of staff and contractors or re-considering how certain activities may be perceived.
Prosecutors’ approach to applying the Act has yet to become clear. However, there has already been one successful prosecution of an individual under the Act.
The information contained in this bulletin is given for general information only and does not constitute legal advice on any specific matter.