UNITED KINGDOM BRIBERY ACT 2010

 

SUMMARY

The UK Bribery Act 2010, that had been describe as one of ‘the toughest anti-corruption legislation in the world’, repeals all previous statutory and common law provisions in relation to bribery. Prior to the Act, British anti-bribery law was based on the more than century old Public Bodies Corrupt Practices Act 1889 as well as another century old corruption Acts – the Prevention of Corruption Act 1906 and 1916. A construction industry corruption case in the 1970s first stirred the need for a change in the British legislative. But it was not until John Major was the Prime Minister that similar recommendations in the report of the Committee on Standards in Public life was established in 1994.

In 1997 a draft consultation paper was published by the Home Office, discussing the extending of the anti-bribery and anti-corruption law followed by the Law Commission’s report the following year. It took eight years from the time the first draft of the bill was mentioned in the Queen’s Speech in 2002 before The UK Bribery Act 2010 received the Royal Assent in 2010 and was eventually enforced in July 2011. The Act covers three (3) categories of offenses:

1. A corporate offense of failure to prevent bribery
  • A strict liability offense which means that it only needs to be proven that the defendant is guilty of the act, regardless of the criminal intent or mental state the defendant was in during the act.

2. Bribing of foreign public official

  • Like the United States FCPA, it is an offense to bribe a foreign public official for the purpose of obtaining and/or retaining business.

3. General Commercial bribery offenses

  • The UK Bribery Act goes broader than the US FCPA and covers bribery on a private level by way of a commercial bribery offense. Unlike the US FCPA, which only covers bribery of a foreign public official, the UK Bribery Act has criminalised bribes paid to people working in the private sector (commercial bribery). In addition, a person who inappropriately performs a function and/or duty in anticipation of receiving a benefit is deemed to have committed a commercial bribery offense.

It should be noted that unlike the US FCPA, there are no exceptions for facilitation payments under the UK Bribery Act.

The Serious Fraud Office (SFO) is responsible for the enforcement of the UK Bribery Act with a purpose to create a level playing field for companies in the UK that are complying with the law.

PURPOSE AND SCOPE

Bribery undermines democracy and the rule of law and poses very serious threats to sustained economic progress in developing and emerging economies and to the proper operation of free markets more generally. The UK Bribery Act 2010 is intended to respond to these threats and to address a broad range of ways that bribery can be committed. It does this by providing robust offences, enhanced sentencing powers for the courts (raising the maximum sentence for bribery committed by an individual from 7 to 10 years imprisonment) and wide jurisdictional powers.

The Act extends to England, Wales, Scotland and Northern Ireland (the United Kingdom.) In relation to corruption and more specifically bribery, the Act has major sections that cover the offences and deliver rectifications:

1.Section 1 & 2: Cover general bribery offences
2.Section 6: Covers bribery of foreign public officials
3.Section 7: Failure of commercial organisations to prevent bribery
4.Section 9: Covers the guidance notes on how a commercial organisation can prevent bribery
5.Section 10 & 11: Outline the prosecution and penalties

The Act creates a new offence within Section 7 that organisations have to sit up and consider when doing business within and with the UK. An offence is committed by commercial organisations which fail to prevent persons associated with them from committing bribery on their behalf. It is a full DEFENCE for an organisation to prove that, in spite of a case of bribery, they had adequate procedures and controls in place to prevent the person associated with it from bribery.

With reference to the offence above, the Act has also set out guidance notes within Section 9, in the form of six (6) guiding principles for organisations to follow to prevent the offence as stated in section 7 from occurring.

JURISDICTION

1.The Act covers both private and public activities as stated in Section 14, The UK Bribery Act 2010:

  • Section 14 – Offences under sections 1, 2 and 6 by bodies corporate etc.
  • Section 14(1) – This section applies if an offence under section 1, 2 or 6 is committed by a body corporate or a Scottish partnership.

2.UK courts have jurisdiction over bribery committed outside the UK where the person committing the offence is a British national or is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership as stated in Section 3, The UK Bribery Act 2010:

  • Section 3(6) – A function or activity is a relevant function or activity even if it-
      (a) has no connection with the United Kingdom, and
      (b) is performed in a country or territory outside the United Kingdom.

3.Any company including international companies that carries on business in the UK will be subject to the Section 7 and Section 7(5) the UK Bribery Act 2010 which stated as follow:

  • Section 7 – Failure of commercial organizations to prevent bribery
  • Section 7(5) – a firm or entity of a similar character formed under the law of a country or territory outside the United Kingdom.

For the purposes of this section, a trade or profession is a ‘business’.

POLICY PROHIBITION

The Act contains 2 general offences covering the offering, promising or giving of a bribe (active bribery) and the requesting, agreeing to receive or accepting of a bribe (passive bribery) at sections 1 and 2 respectively.

It also sets out 2 further offences which specifically address commercial bribery. Section 6 of the Act creates an offence relating to bribery of a foreign public official in order to obtain or retain business or an advantage in the conduct of business , and section 7 creates a new form of corporate liability for failing to prevent bribery on behalf of a commercial organisation.

1. Bribery Offences – Bribing and being bribed (Sections 1 and 2)

  • The Act consolidates the common law and UK bribery related legislation into two general offences:
    -Bribing : it is an offence to offer, promise or give a financial or other advantage for the purpose of bringing about an improper performance of a function or activity.
    -Being bribed : it is an offence to request, agree to or receive a financial or other advantage for the purpose of bringing about an improper performance of a function or activity or to request, agree to or receive a reward for having done so.
  • “Improper performance” is one which is in breach of an expectation of good faith or impartiality, or is in breach of a position of trust. The test of whether an activity has been performed improperly is what a reasonable person in the UK would expect in relation to the activity. If the activity takes place overseas, then any local customs are disregarded unless permitted by the country’s written law.
  • In each case, it is the intention to bring about the improper performance that is the key to the offence.

2. Bribery of Foreign Official (Section 6)

  • The Act also introduces a new offence of offering, promising or giving a financial or other advantage to a foreign public official where such advantage is not permitted under the written law applicable to that foreign official.
  • The briber must intend that the advantage given or offered would influence the foreign official in the performance of his duties as a public official and must intend to secure business or to obtain a business advantage.
  • The definition of “foreign public officials” is very broad and includes those working for international organizations.

3. Failure of commercial organisation to prevent bribery (Section 7)

  • A commercial organisation commits an offence under the Act if a person associated with it bribes another person with an intention of obtaining or retaining either business or a business advantage for that organisation.
  • “Persons associated” with the organisation are defined as any person who performs services on behalf of the organisation; they can be individuals or business entities, and include employees, agents and subsidiaries.
  • The commercial organisations will have an absolute defence to liability if they can show that they have put in place “adequate procedures” to prevent bribery. Details of adequate procedures are summarised below and further detailed iN Section 9.

4. Prosecution and penalties (Section 10 and 11)

  • Section 11 explains the penalties for individual and companies found guilty of committing the crime. If an individual is found guilty of bribery offence, tried as a summary offence, they may be imprisoned for up to 12 months and fine up to £5,000. Someone found guilty on indictment, however, faces up to 10 years imprisonment and an unlimited fine. The crime of a commercial organisation failing to prevent bribery is punishable by an unlimited fine. In addition, a convicted individual or organisation may be subject to a confiscation order under the Proceeds of Crime Act 2002.

5. Bribes vs hospitality

  • While the Act is designed to punish bribery, it is clear that genuine acts of hospitality could easily appear to fall within the Act.
  • The key difference between genuine hospitality allowed by the Act and a bribe dressed up as hospitality is the intention to obtain an advantage.
  • A person’s intention behind an act is very difficult to determine. In the absence of direct evidence, the prosecution will consider a number of factors but will chiefly consider the reasonableness and proportionality of the hospitality provided together with industry norms to help decide whether the requisite intention is present.

RESOLUTION

Adequate procedures to prevent bribery (Section 9 )

The UK Ministry of Justice has published a guide for commercial organizations to consider and implement to prevent the offence under Section 7 of the Act, and in line with preventing bribery from occurring. The guide comes in the form of six (6) guiding principles. It should be noted that even though the principles are not prescriptive, they are important to identify risks, mitigating factors and prevention measures.

  • Proportionate procedures - the procedures adopted should be proportionate to the risk faced.
  • Top-level commitment - the company should adopt a culture of zero tolerance through a commitment by senior management.
  • Risk assessment - the company should identify its bribery risks and priorities its actions in high risk areas.
  • Due diligence - the company should take appropriate care when entering into relationships or markets with a risk of bribery.
  • Communication - the company's policy should be clearly communicated to all relevant parties, supported by appropriate training and "speak up" procedures.
  • Monitoring and review - the procedures put in place should be reviewed and updated as the company's risks change over time.

 

 

DIFFERENCE BETWEEN THE UNITED KINGDOM BRIBERY ACT AND UNITED STATES FOREIGN CORRUPT PRACTICES ACT (FCPA)

It is important for organisations who operate from the USA, UK or anywhere around the world and do business with the USA and UK to know the main differences between the UK Bribery Act and US FCPA. In short the main differences highlighted in the table below:
Provision US FCPA UK Bribery Act
Who is being bribed Only bribes (“anything of value”) paid or offered to a “foreign official” are prohibited Prohibits bribes paid to any person to induce them to act “improperly” (not limited to foreign officials)
Nature of advantage obtained Payment must be “to obtain or retain business” Focus is on improper action rather than business nexus (except in case of strict corporate liability)
“Active offense” vs. “passive offense” Only the act of payment, rather than the receipt/acceptance of payment, is prohibited Creates two offenses:  (1) offense of bribing another (“active offense”) and (2) offense of being bribed (“passive offense”)
Corporate strict liability Strict liability only under accounting provisions for public companies (failure to maintain adequate systems of internal controls) Creates a new strict liability corporate offense for the failure of a commercial organization to prevent bribery (subject to defense of having “adequate procedures” in place designed to prevent bribery)
Jurisdiction U.S. companies and citizens, foreign companies listed on U.S. stock exchange, or any person acting while in the U.S. Individuals who are UK nationals or are ordinarily resident in the UK and organizations that are either established in the UK or conduct some part of their business in the UK
Business promotion expenditures Affirmative defense for reasonable and bona fide expenditure directly related to the business promotion or contract performance No similar defense (but arguably such expenditures are not “improper” and therefore not a UK Bribery Act violation)
Allowable under local law Affirmative defense if payment is lawful under written laws/regulations of foreign country No violation if permissible under written laws of foreign country (applies only in case of bribery of foreign public official; otherwise a factor to be considered)
Facilitating payments Exception for payment to a foreign official to expedite or secure the performance of a routine (non-discretionary) government action No facilitating payments exception, although guidance is likely to provide that payments of small amounts of money are unlikely to be prosecuted
Civil/criminal enforcement Both civil and criminal proceedings can be brought by DOJ and SEC Criminal enforcement only by the UK Serious Fraud Office (SFO)
Potential penalties Bribery:  for individuals, up to five years’ imprisonment and fines of up to $250,000; for entities, fines of up to $2 million  
Books and records/internal control violations: for individuals, up to 20 year’s imprisonment and fines of up $5 million; for entities, fines of up to $25 millionFor individuals, up to 10 years’ imprisonment and potentially unlimited fines; for entities, potentially unlimited fines

CASE EXAMPLE

COURT CLERK MUNIR PATEL JAILED FOR TAKING BRIBES

A clerk who took bribes while working at a London court became the first person convicted under the UK Bribery Act 2010 and has been jailed for six years.

BACKGROUND
Munir Yakub Patel, 22, worked at Redbridge Magistrates’ Court as a clerk at the time of the incident was found guilty on bribery offence.

  • Patel, of Green Lane, Dagenham, took £500 to avoid putting details of a traffic summons on a court database.
  • Between February 2009 and August 2011 he also gave people advice about how to avoid being summoned to court over traffic penalties.
  • He admitted to one count of bribery but the prosecution believed that he earned at least £20,000 by helping 53 offenders.

  • PENALTIES 
  • Patel was sentenced to three years jail for bribery and six years for misconduct in a public office, which he also admitted at Southwark Crown Court last month. He will serve both sentences concurrently.

  • KEY TAKEAWAYS 
  • Patel’s position as a court clerk had at its heart a duty to public confidence in it.
  • Sentencing him, Judge Alistair Mc Creath told Patel his offences were a “very substantial breach of trust”
  • “A justice system in which officials are prepared to take bribes in order to allow offenders to escape the proper consequences of their offending is inherently corrupt and is one which deserves no public respect and which will attract none.”
  • DOCUMENT

    TOP

    Visitor Statistic


    Today
    10
    Yesterday
    52
    Week
    257
    Month
    908

    All
    3427519