The Bribery Act 2010 received Royal Assent on 8 April 2010. The substantive provisions of the Act are not yet in force, and are now not expected to come into force until April 2011. When the Act does come into force, it will have significant implications, in particular for businesses, and that includes those conducting business in the UK but not constituted here.
Everyone affected by the Act faces the challenge of reviewing and adapting their business practices and structures to safeguard themselves (and certain officers) from substantial penalties.
The Bribery Act 2010 creates:-
- Two new general offences, relating to bribing or being bribed – summarised below;
- A specific offence of bribing a foreign public official; and
- An offence for commercial organisations which fail to prevent bribing by a person associated with them.
The Act reflects a generally more aggressive, and international, approach to corruption, with the result that it is likely to be enforced vigorously where offences are committed. The Act uses carefully defined terms to achieve its ends. Any overview, like this, can't fully reflect the substance of the Act. However...........
Bribing
In terms of the Act, 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 an activity.
The offence covers "financial or other advantage", a term which is used consistently throughout the Act. This is about many more things than cash. The test is the intention of the bribe, not the outcome.
Being bribed
On the other side of the transaction, if it can be called that, a person is also 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, or where a person makes improper performance anticipating financial or other advantage.
Effect of Bribery
The offences of bribing or being bribed can be committed in relation to many activities:
- functions of a public nature;
- any activity connected with a business;
- any activity performed in the course of a person's employment; and
- 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 one who is expected to perform the function or activity in good faith and/or
- be one who is expected to perform the function or activity impartially; or
- be in a position of trust.
The concept of improper performance is at the core of the Act. The test of improper performance turns substantially on the standard of performance which may normally be expected. The test of expectation is what "a reasonable person in the United Kingdom would expect".
The test of expectation in the United Kingdom applies even if the function or activity concerned has no connection with the United Kingdom, or is performance in a country outside the United Kingdom. The Act is quite clear that what might be called the "When in Rome........." defence is not available. 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
What about just "oiling the wheels" abroad, cultivating the influential? In addition to the general offences described above, 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.
Requirement on commercial organisations to prevent bribery
Perhaps there are always going to be rogue employees or consultants, people who go further than their employers would consider right. Whatever the position in the past, their activities will be a clear threat once the Act comes into force. There will be a new offence, for commercial organisations, committed 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.
For this purpose "bribe" means both the offering of financial or other advantage, as described above, and bribing a foreign public official, again as described above.
This provision applies to incorporated bodies, and partnerships, wherever formed or incorporated. The rules catch corporate or partnerships not formed in the UK, but carrying on business here.
Who is an "associated person"? An associated person is any person who performs services for or on behalf of the commercial organisation, in any capacity. That includes, but isn't restricted to, employees. The Act suggests agents or subsidiaries as examples of associated persons but clearly the definition does not stop there. It is not hard to see that, as further examples, consultants or contractors also fall into the definition.
Is there any defence? Yes - if a commercial organisation can show that it had in place adequate procedures designed to prevent associated persons from bribing. The Act does give any definition of "adequate procedures".
The government must publish guidance about procedures which can be put in place. It is not suggested that such procedures will by definition be adequate, but obviously, when available, the guidance will be an important benchmark. The government will shortly launch a consultation on what should be in the guidance, and say they will publish it before the Act comes into force.
Bodies such as Transparency International and the Global Infrastructure Anti-Corruption Centre (GIACC) publish extensive materials in relation to measures which organisations can take to prevent corruption. It's a reasonable guess the UK guidance will be fairly similar.
Things like these could feature in the guidance :-
- Top-down responsibility – directors responsible for establishing a culture in which corruption is eradicated, including effective design and implementation of an anti-corruption programme;
- A clear statement by management about the expected culture, and consequences of breaching stated ideals;
- A senior officer appointed and given authority to put anti-corruption measures into effect, and monitor them;
- A clear code of conduct for the organisation's business, including an anti-corruption element, publicised internally and externally;
- A gifts and hospitality policy giving guidance to employees in relation to giving and receiving gifts and entertainment, and monitoring of all such activity;
Overall, the court will be expected to look at procedures and consider whether they are adequate and appropriate to the particular organisation, and to the level of risk it faces of persons associated with it committing bribery offences.
What about corporate hospitality?
The indications are that the government recognises that corporate hospitality is an accepted part of modern business practice. Corporate hospitality, however, is not excluded from the bribery offences. Reasonable corporate hospitality, within the normal range of relevant industry activity, is unlikely to cause difficulty. In addition to a gifts and hospitality policy (see above), if an organisation's procedures include a specific corporate hospitality budget, with procedures for control and approval of expenditure, that can only be helpful.
Lavish corporate hospitality, however, may raise issues. Just what that might be is a judgement call – perhaps, like defining an elephant, you know it when you see it.
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.
There is one obvious conclusion. Any organisation which doesn't consider the implications of the Act, and recognise it in their procedures, is asking for trouble.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.