Canada: U.K. Bribery Act 2010: Extending the Long Arm of Global Anti-Corruption Enforcement

Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Business, October 2010

Sophisticated multinationals now recognize the importance of establishing, continually monitoring and updating a global anti-corruption compliance strategy. This represents good corporate governance and is also necessary to ensure compliance with the U.S. Foreign Corrupt Practices Act (FCPA) and Canada's Corruption of Foreign Public Officials Act (CFPOA). The CFPOA and FCPA, and the importance of compliance programs and anti-corruption due diligence was discussed in previous Blakes Bulletins on White Collar Crime entitled: Canada's Corruption of Foreign Public Officials Act: What You Need to Know and Why, The Long Reach of the Law: Practical Tips for Compliance with Anti-Corruption Legislation, and Importance of Anti-Corruption Due Diligence for International Transactions.

Enhanced regulatory enforcement under the FCPA has emphasized the need for rigorous compliance. Staggering fines and jail terms for executives are now common in the United States. Siemens paid $1.6-billion in fines, disgorgement and monetary penalties in the U.S. and Germany in 2008, Halliburton/KBR paid $600-million in 2009, and $400-million was paid by Technip in 2010. It is expected that U.S. authorities will receive over $1-billion in monetary penalties in 2010. Recent international criticism has prompted Canadian officials to establish CFPOA enforcement units in Ottawa and Calgary and several investigations are pending.

The British have also been active, penalizing BAE Systems and Innospec Ltd., and arresting several individuals. The recent enactment of the U.K. Bribery Act 2010 (Bribery Act), however, brings the threat of enforcement and the reach of these laws to a new level. This Act is sweeping in its scope and potentially far broader than either the FCPA or the CFPOA. It also has potential application to non-U.K. companies conducting business in the U.K., such that any company conducting business in the U.K. needs to ensure they have a robust compliance program in place in order to comply with this expansive U.K. legislation.

Extraterritoriality

Like the FCPA, the Bribery Act is extraterritorial in its application, applying to U.K. individuals or organizations regardless of where the conduct occurs. However, unlike the U.S. and Canadian laws, the Act also applies to non-U.K. individuals or organizations that carries on "a business, or part of a business, in any part of the United Kingdom". What constitutes "part of a business" is not defined. This is potentially very broad and could apply to any company or individual that has even a small subsidiary, affiliate or other minor presence in the U.K. Further, no part of the offence need even take place in the U.K., as long as a person committing the offence has a "close connection" to the United Kingdom. While explanatory notes from U.K. regulators and judicial interpretation may ultimately clarify these issues, at this time, prudent organizations should take a conservative view and assume that they will be subject to the Bribery Act if they have any reasonable nexus to the U.K.

Bribery Act Offences

Another critical difference between the U.K. and the North American laws is the Bribery Act's new corporate offence of failing to prevent bribery. This is a strict liability offence. Knowledge or intent to bribe on the part of the organization is not required. Under this provision, commercial organizations are liable where they fail to stop a bribe by an "associated person" – defined broadly as a person who performs services on behalf of the organization. Thus, associated persons will likely include employees, agents, partners, intermediaries, introducers and subsidiaries, perhaps even consultants. Associated persons need not have any connection to the U.K. nor is there any explicit requirement under the Bribery Act that any formal contractual relationship exist between an associated person and an organization. The lack of a need to prove knowledge makes the scope of the offence, and the possibilities of prosecution, far broader than under the FCPA or CFPOA.

The main defence for commercial organizations is to demonstrate that they have "adequate procedures" in place, i.e., company policies and internal controls – aimed at thwarting bribery. Given that the corporate offence is a strict liability offence and "associated person" is broadly defined, the importance of having anti-corruption policies in place cannot, therefore, be overemphasized.

The concept of a bribe under the Bribery Act includes any "financial or other advantage" to secure or induce "improper performance". The Bribery Act codifies four categories of offences:

  • Offence to give, promise or offer a bribe;
  • Offence to agree to receive or accept a bribe;
  • Offence to bribe a foreign public official; and
  • A corporate offence of failing to prevent bribery.

Facilitation and Hospitality Payments Are Not Permitted

Another difference in the Bribery Act is its failure to permit "facilitation payments" (i.e., payments made to expedite or secure performance of routine, non-discretionary governmental action, such as the issuance of permits, visas or other services including, say, docking and the unloading of cargo). These types of payments are permitted under U.S. and Canadian law, but have not been exempted in the Bribery Act. Accordingly, companies with any presence in the U.K. should consider stopping all facilitation payments, given the threat of prosecution in the United Kingdom.

The Bribery Act also does not have an exception for reasonable expenditures related to the promotion or demonstration of products or services. However, the U.K. government has indicated that there will be a reasonableness standard to distinguish between legitimate expenditures relating to the promotion of one's business or products and improper benefits, though the absence of any current guidance provides little comfort today.

The Bribery Act Applies to the Private Sector

Unlike the FCPA and CFPOA, which apply only to the bribery of foreign public officials (though this is broadly defined in both Acts), the Bribery Act goes further, extending to include bribery in the private sector as well.

Penalties Under the Bribery Act

Penalties for both organizations and individuals are significant, with unlimited fines for both organizations and individuals as well as a maximum of 10 years imprisonment for individuals. This contrasts with only a five-year maximum under U.S. and Canadian law. The recent sentencing of individuals to jail terms under the FCPA means that this possibility should not be taken lightly.

Anti-Corruption Compliance Action Plan

The Bribery Act and stepped-up enforcement of anticorruption legislation makes it imperative for international organizations to have an anti-corruption strategy suitably tailored to cover their operations. The U.K.'s Ministry of Justice suggests six principles that should be included in anti-corruption action plans. These are:

  • Risk Assessment – knowing what risks face your organization and industry:
    • certain industries attract higher regulatory scrutiny like oil and gas, mining, high-tech and pharmaceuticals
    • do the countries you do business in have a history of corruption?
    • what is your international business model (direct sales or use of intermediaries like agents or sales representatives)?
  • Top Level Commitment – leadership at every level in the organization placing emphasis on the importance of compliance. Does your organization have a culture of monitoring and compliance or just pay it lip service?
  • Due Diligence – knowing who you are doing business with.
  • Clear, Practical and Accessible Policies and Procedures - developing clear policies and guidelines to assist employees.
  • Effective Implementation – going beyond paper compliance and embedding core anti-corruption values within your organization.
  • Monitoring and Review – use of auditing and financial controls that are sensitive to bribery.

Further discussion of the key components of a compliance plan and anti-corruption due diligence are discussed in prior bulletins: The Long Reach of the Law: Practical Tips for Compliance with Anti-Corruption Legislation, and Importance of Anti-Corruption Due Diligence for International Transactions.

Conclusions

Just as health, safety and environmental policies have become a standard component of how most organizations conduct business, anti-corruption policies must also become an integral part of any international business operation.

As a leading law firm with seven international offices, Blakes is well positioned and experienced in assisting clients to:

  • Draft and implement global anti-corruption compliance policies;
  • Create bespoke anti-corruption provisions for contracts with agents, suppliers, joint venture partners and other "associated persons";
  • Conduct transactional due diligence for anticorruption;
  • Conduct internal investigations of potential violations; and
  • Respond to government investigations and defend prosecutions.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.