The Long (and Sometimes Surprising) Tentacles of the Bribery Act 2010
In introducing the Bribery Act 2010, the UK Government is making a serious attempt to eradicate bribery which it describes as a ‘scourge’ which ‘blights lives’.
For the purposes of the Act, bribery means giving someone a financial or other advantage to encourage that person to perform his or its functions or activities improperly or to reward him or it for having already done so.
In general, bona fide, proportionate and reasonable corporate hospitality and promotional expenditure on gifts to clients should not be caught by the Act, but if the level of hospitality or expenditure is excessive and really a cover for bribery it will be caught.
Under the Bribery Act ‘facilitation payments’ made to induce officials to perform or expedite a function or duty which they are obliged to perform anyway are bribes, even if they are small. Contrast the exception for payments to ‘expedite or secure …… routine governmental action’ under the US Foreign Corrupt Practices Act 1977 (FCPA).
Traditionally bribery has been something to guard against when dealing with public officials and the agents of government, but the Bribery Act 2010 also applies, potentially, to any private sector transaction.
The Bribery Act 2010 comes into force on 1 July 2011.
There are four offences under the Act:
The first three offences are committed where the bribery occurs in the UK or where the bribery occurs outside the UK and the person committing the offence has a close connection with the UK – either because he is a British national or ordinarily resident in the UK, or it is a body incorporated in the UK or a Scottish partnership.
The requirement for a close connection with the UK does not apply to the fourth offence. A business which is incorporated or formed in the UK or which carries on business in the UK (wherever it may be incorporated or formed) can be liable for bribery by a person who is neither a UK national nor resident in the UK, nor a body incorporated or formed in the UK, regardless of where the failure to prevent the bribery takes place.
Failing to Prevent a Person Associated with your Business from Bribing Someone for the Benefit of that Business
A person is ‘associated’ with your business if that person performs services for or on behalf of the business. That applies regardless of the capacity in which that person performs services for you or acts on your behalf. This is broad enough to cover your agents, distributors, employees, contract staff, consultants, subsidiaries, intermediaries, joint venture partners, delivery partners and suppliers of services.
You will not have a defence to this offence unless you can show that you have ‘adequate procedures’ in place to prevent bribery. What is adequate will depend on the risks your business faces and the nature, size and complexity of that business.
The Ministry of Justice has published guidance on ‘adequate procedures’ which you can find at: http://www.justice.gov.uk/guidance/docs/bribery-act-2010-guidance.pdf. In that guidance the government recognises that the Act needs to be implemented in a workable way, especially for small businesses with limited resources. It has also produced a ‘Quick Start’ Guide which you can find at: http://www.justice.gov.uk/guidance/docs/bribery-act-2010-quick-start-guide.pdf.
That guide provides that:
You may find useful materials on the Business Anti-Corruption Portal at:
http://www.business-anti-corruption.com/?L=0. This is designed to help SMEs doing business in emerging markets and developing countries. It provides country profiles, due diligence tools, advice on carrying out risk assessments and a model anti-corruption policy and code of conduct.
The Consequences of Committing an Offence
The consequences of committing an offence can be serious. Not only may the company commit an offence, but its senior officers (such as directors) who have given their consent or connived in giving or receiving a bribe or bribing a foreign public official may also commit an offence. Even failing to act might be regarded as consent or connivance.
The company may be fined (and there is no limit on the amount of that fine) and senior officers may be fined (again to an unlimited extent), face a prison sentence of up to 10 years, and be disqualified from acting as directors. We can expect the level of fines to be high.
If convicted of failing to prevent bribery, the business could face exclusion from public contracts.
- whether the business operates in a high risk sector;
- whether the business operates in any high risk country;
- whether the business often deals with public officials;
- whether the business uses agents or representatives and the role of those people;
- whether the business has paid or received bribes in the past;
- the exposure of employees and officers to bribery; and
- the business’s policy on corporate hospitality and gifts,
If you would like further advice about any of the issues considered above please contact Christine Reid on 01865 864195 or email him at email@example.com
This article is not intended to be, and should not be taken as being, legal advice. The law often changes and it varies from jurisdiction to jurisdiction; the information in this article is generic in nature and specific legal advice should be taken before acting on any of it.