UK: The Bribery Act 2010

Last Updated: 14 March 2011
Article by Alan Bissett and Alan Taylor

The much anticipated Bribery Act 2010 (the "Act") due to come into force in April of this year has recently suffered another delay to its implementation following Government confirmation that final guidance surrounding the Act is to be reviewed.

The Ministry of Justice which is reviewing the guidance has recently confirmed as follows: "When the guidance is published it will be followed by a three-month notice period before implementation of the Bribery Act". However, it is our advice that the delay of the implementation of the Act should not stop businesses taking steps now to prepare for the Act coming into force.

The current law regarding bribery is a mix of statutory and case law developed piecemeal over the past 100 years. It is intended that the Act will replace the current law with comprehensive and far reaching anti-bribery laws.

The Act contains four bribery offences:

  • Bribing - the offering, promising or giving of an advantage.
  • Being bribed - requesting, agreeing to receive or accepting an advantage.
  • Bribing a foreign public official.
  • The "corporate offence", where a relevant commercial organisation fails to prevent an associated person from committing bribery.

Although, the first two offences are similar to offences under the current law, it should be easier for bribery offences to be prosecuted under the Act as there is no longer any need to show a corrupt intent of the party receiving or giving the bribe. The Act also introduces two new offences of bribing a foreign public official and the "corporate offence".

The Government has provided no guidance in respect of the offence of bribing a foreign public official however it appears clear that facilitation (or "grease") payments are illegal under the Act, even if they are permitted by local custom or practice. This differs from the equivalent US legislation (the Foreign Corrupt Practices Act or FCPA) which contains a specific exception allowing businesses to make certain payments for expediting the performance of routine government actions. A number of commentators have suggested that the Act will therefore disadvantage UK businesses when they are competing abroad.

It is the new corporate offence that has created the most controversy amongst the business community. This offence can only be committed by commercial organisations and such organisations will be guilty of an offence if a person associated with it bribes another person. However, the Act does contain a defence to the corporate offence if a commercial organisation can show that it had in place "adequate procedures" designed to prevent persons associated with it from committing bribery.

It is therefore important to understand what constitutes "adequate procedures" but unfortunately this is not clear. The Government published draft guidance regarding "adequate procedures" in September 2010 and the consultation period on this has now closed. However, the final guidance has not been published. The draft guidance focused on the following six key principles and provided commentary on each: risk assessment; top level commitment; due diligence; clear, practical and accessible policies and procedures; effective implementation; and monitoring and review. The Government has always stated that any guidance is not intended to be prescriptive and therefore should be viewed as reflecting good practice and providing generally applicable guidelines to be adapted by businesses as appropriate.

If a company is found guilty of the corporate offence under the Act, both the company and its directors could be subject to the penalties for breaching the provisions of the Act, with convictions carrying up to 10 years imprisonment or an unlimited fine (or both) for individuals and unlimited fines for businesses. Businesses also risk being debarred for competing for public contracts under the Public Contracts Regulations 2006.

It should also be noted that the definition of "relevant commercial organisation" is very wide and includes bodies incorporated in the UK or UK partnerships, no matter where they carry on business, and companies and partnerships carrying on business in UK, no matter where they are incorporated or established. As a result, the Act could potentially catch acts of bribery committed by companies where there is only a loose connection with the UK. By the same token, "associated person" has been defined widely to include people who perform services for or on behalf of a company regardless of their capacity, so may include, for example, the company's employee, agent or subsidiary or joint venture partner.

Although the Government's guidance has not yet been finalised, we do know at this stage from the recent Ministry of Justice confirmation that businesses will have a period of three months between the final guidance being published and the Act being implemented. In the meantime, it is our advice that businesses should review their existing policies, procedures, decision-making processes and financial controls and provide suitable staff training in respect of these matters. In addition, professional advice should be sought to determine what policies and procedures may be appropriate for a particular organisation.

Until the final guidance on what constitutes "adequate procedures" as a defence to the corporate offence is available, we would recommend that the following suggestions made by Lord Bach (then Parliamentary Under Secretary of State) in December 2009 should be considered in addition to the contents of the draft guidance:

  • A company's board of directors (or similar body) should take responsibility for establishing an anti-corruption culture and programme.
  • A senior officer should be responsible for overseeing the anti-corruption programme.
  • There should be a clear and unambiguous code of conduct including an anti-corruption element, and procedures should be established to assess the likely risks of corruption arising in a company's business.
  • Employment contracts should expressly state penalties relating to corruption.
  • There should be a gifts and hospitality policy to monitor receipt of gifts and entertainment.
  • Anti-corruption training should be provided.
  • There should be financial controls to minimise the scope for corrupt acts to be committed.
  • There should be appropriate whistleblowing procedures to enable employees to report corruption in a safe and confidential manner.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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