Australia: Australian Companies Could be Caught by the UK Bribery Act

Last Updated: 20 July 2011
Article by Amanda Turnill, Simon Airey and Gowri Kangeson

Director of the Serious Fraud Office highlights tough stance towards foreign companies

The Bribery Act 2011 (Act) came into force on 1 July 2011, significantly extending the UK's existing anti-bribery and corruption laws.

Richard Alderman, Director of the Serious Fraud Office (SFO), has set out a hard line approach and highlighted the SFO's intention to take a much stronger stance than expected in enforcing the Act.

What follows are some key points that we believe Australian companies need to bear in mind, along with some commentary from Mr Alderman, previously published by Britain's Daily Telegraph newspaper.

Why should Australian companies take note of the new UK law?

Australian companies with any sort of UK presence cannot afford to ignore the Act which gives the SFO wide powers to prosecute companies and individuals for offences which take place overseas.

The Director's latest pronouncements highlight the potential for the Bribery Act to impact on any Australian company that has connections with the UK, whether that be an office, business operations or a London listing.

The Act brings into force the controversial new 'strict liability' corporate offence of failing to prevent bribery (section 7). Under section 7, a commercial organisation is guilty of an offence if an 'associated person' bribes another to obtain or retain business, or an advantage in the conduct of business, for the organisation. The offence has a broad territorial reach.

Bribes paid to a third party by an associated person will constitute an offence, irrespective of where in the world the bribe was paid. It is irrelevant that the organisation did not participate in or know about the bribe. This raises real concerns for companies who use agents, contractors or business sponsors in countries where bribery is commonplace or where 'facilitation' or 'grease' payments are routine. Such payments are illegal under the UK law.

The wide jurisdiction of section 7 caused significant concern to foreign companies when the Bill was first published which the Ministry of Justice (MoJ) sought to alleviate in part by issuing guidance that:

"the Government would not expect...the mere fact that a company's securities have been...admitted to trading on the London Stock Exchange, in itself, to qualify that company as carrying on a business or part of a business in the UK and therefore falling within the definition of a 'relevant commercial organisation'."

However, in a clear challenge to this interpretation, Mr Alderman, responded in the following terms to a question as to whether foreign companies listed on the London Stock Exchange (LSE) would be liable under the Act:

"You bet we will go after foreign companies. This has been misunderstood. If there is an economic engagement with the UK then in my view they are carrying on business in the UK."

This new approach should concern any Australian company that has chosen to list their shares on the LSE, particularly if they have little or no further connection with the UK.

In an equally bold move, Mr Alderman issued a call to companies to work with the SFO to blow the whistle on their rivals who might be gaining an unfair competitive advantage through bribery. He said:

"I am prepared to take courageous action against these foreign corporations but please help me with evidence. Tip me off and tell me there was corruption."

It is clear from Mr Alderman's comments that the MoJ Guidance is not definitive and will not tie the hands of the SFO when it comes to enforcement. The SFO clearly intends to take a much stronger approach than anticipated and wants to spread its prosecution net far and wide.

10 things your business needs to know

It is, therefore, particularly important for Australian companies with a UK and International presence to ensure that their anti-bribery policies and procedures are not only adequate but are actively implemented, managed and monitored. For further information about the Act, click here 'The UK Bribery Act 2010 - Ten things your business needs to know', a publication from our London Office.

Our colleagues in the London office have also prepared a short review document which considers the impact of the Act on the construction industry.

You can access that review by 'clicking here'

How can DLA Piper's international team help your business comply with the new law?

The overriding objective of the Act is to make companies take anti-bribery and corruption compliance seriously. Large Australian companies that have connections with the UK and conduct business overseas or through foreign intermediaries will be especially vulnerable. Unlike any other local Australian law firm that claims expertise in this area, DLA Piper offers a truly international Corporate Crime, Compliance and Investigations team, which is well placed to address the requirements of local law, language and conventions, as well as the extraterritorial application of legislation. Our team comprises experienced corporate and criminal defence lawyers, former prosecutors and trained investigators. Our specialist lawyers in the UK have been providing extensive advice and assistance to large multi-national organisations in respect of implementation of "adequate procedures" and tailored compliance programmes. We can help your business by:

  • Reviewing or drafting policies and procedures.
  • Conducting compliance reviews to determine whether exisiting policies and procedures are compliant with the new Act.
  • Advising on whether you would be able to rely on the 'adequate procedures' defence if an act of bribery were to be carried out by a person associated with your organisation.
  • Training your staff on ethics and the new anti-bribery and corruption law.

It is never too late to act and we can provide cost effective, realistic, common sense and practical advice on anti-bribery and corruption issues.

If you would like to discuss the issues raised in this alert, please contact us.

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

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