On 1 July 2011, the long delayed and much talked about Bribery Act 2010 (Act) came into force in the UK. The Act will have a significant practical impact on any company which is either incorporated in the UK or does business with companies based there. In addition, on an individual level, any person who holds any form of UK citizenship or who resides in the UK is also exposed to liability under the Act, regardless of where in the world they might be currently operating.
Given the perceived high risk environments of many modern major international construction projects, and also the degree of opportunity in the procurement and permitting life cycles, corruption has always been a concern in this field; but the Act puts a new emphasis on this, going beyond the US Foreign Corrupt Practices Act (FCPA) by focussing on commercial as well as public official corruption, and by making it an offence to receive a bribe as well as to offer one.
The Act replaces the existing UK legislation and is intended to be a "one stop shop" as far as UK bribery law is concerned. It was also intended to be deliberately aggressive and at the leading edge of the global anti-bribery scene. While the enforcement intent has been some what softened by recent guidance from the UK Ministry of Justice, no changes have been made to the Act itself, which continues to represent an uncompromising stop sign to any corrupt activities — including against the facility payments that the FCPA has traditionally still allowed.
Four new offences have been created:
- The giving or offering of a bribe;
- The receiving or soliciting of a bribe;
- The bribing of a public official; and
- The so-called 'corporate' offence.
The first three of these might be considered the 'active' offences. Any company incorporated in the UK and any individual who either holds any form of UK (or its dominions) citizenship or is resident in the UK can commit
Anything (be it money, favor, hospitality etc) can constitute a bribe, if it is offered with the intention that the receiver will act improperly as a consequence — remembering that this applies to corporate decision makers as well as public officials.
one of these offenses regardless of where in the world any corrupt payment might be offered. In addition, if the offence is carried out in the UK, then any person/company involved in its commission can be prosecuted, regardless of nationality.
In terms of what might qualify as a bribe, there is no minimum threshold or requirement that envelopes of cash must be involved. Anything (be it money, favor, hospitality etc) can constitute a bribe, if it is offered with the intention that the receiver will act improperly as a consequence — remembering that this applies to corporate decision makers as well as public officials. While the Ministry of Justice has clarified that the intention is not to prevent normal corporate hospitality etc., clearly any company engaged in any form of tendering process or who is negotiating a contract etc., will have to look very closely to their corporate entertainment and gifts policies to ensure that there is no appearance of impropriety which might spark a lengthy, and no doubt expensive, investigation. The biggest impact on business, however, is likely to be the corporate offence, which any company that is either incorporated in the UK, or which carries on a business (or part of a business) in the UK will be directly liable under. Equally, many companies who are not directly caught will be dealing with counterparts who will expect increased guarantees as to behaviour and conduct in order to avoid their own liability.
A company liable under the corporate offence is guilty under the Act if a person associated with the company (which could include a subsidiary, contractor, agent, joint venture partner, consultant etc.) bribes another person intending to obtain or retain business for the company, or to obtain or retain an advantage for the company in the conduct of its business. This is drafted as a strict liability offence, so if your agent offers a bribe to win you business or to speed up a permit, irrespective of whether this is sanctioned behaviour or not, then an offence has been committed. The only defence to this crime is to have in place "adequate procedures" designed to stop events like this from happening.
The need for such adequate procedures is likely to be the highest corporate cost of adapting to the new regulatory environment. While the Act does not define what procedures will be adequate, certain limited guidance has been released by the Ministry of Justice, which indicates that this will be assessed on a case by case basis, with six core principles at the heart of the examination: (1) having procedures in place proportionate to the risk environment of the company; (2) demonstrating a top-level commitment to preventing bribery; (3) engaging in periodic and documented risk assessment; (4) performing suitable due diligence of agents etc; (5) demonstrating good internal communication and in particular regular training; and (6) monitoring and review.
While it will be incumbent on those corporations directly liable under the Act to put in place and implement such procedures, those not subject to the Act, but who
For those major construction owners and contractors operating in high risk countries the Act is certainly not to be ignored, as those who breach it risk up to 10 years imprison and unlimited fines.
deal with UK companies or operations should expect to be increasingly asked (as part of the UK company's own compliance) to ensure that their behaviour is in accordance with the Act, and where the risk profile makes it necessary to implement their own similar internal procedures.
While it is as yet unclear whether the Act will have the effect of encouraging the world to change its attitude to certain practices (e.g. facilitation payments) or whether it will put British business at a competitive disadvantage remains to be seen. However, what is clear is that the Act is aggressive, and that the UK Serious Fraud Office has given significant indications that it intends to see that the Act is enforced to the maximum extent possible, and will no doubt be looking for headline grabbing cases to push the zero tolerance message forward. For those major construction owners and contractors operating in high risk countries the Act is certainly not to be ignored, as those who breach it risk up to 10 years imprison and unlimited fines.
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.