With much fanfare, the UK's Bribery Act, trumpeted by many as the most stringent anti-corruption legislation in the world, came into force on 1 July 2011 (those who had managed to get all their bribes paid by 30 June breathed a sigh of relief). One year on, what has the impact of this far-reaching piece of legislation been? Was it, as some commentators feared, the end of private boxes at Ascot and seats at the Wimbledon finals? Were businessmen returning from doing deals in far-flung parts of the world immediately arrested on arrival at Heathrow? Or has it all been a damp squib?
Corruption was, of course, illegal in the UK long before the Bribery Act was drafted. Under the Public Bodies Corrupt Practices Act 1889, it was an offence to bribe or offer to bribe a public official or for a public official to accept a bribe. Under the Prevention of Corruption Act 1906, it was a criminal offence for any agent to accept or offer a bribe for doing or forbearing to do something in relation to his principal's business (even if the offence took place outside the UK). Both of these Acts carried a penalty of up to seven years in prison for offenders. Even for centuries before these Acts, corruption had been prosecuted as a crime, often one which carried the death penalty (which is still the punishment today for those convicted of corruption in China).
The real innovations introduced by the Bribery Act 2010, which set it apart from previous anti-corruption legislation in the UK and the rest of the world, are:
1. To make commercial organisations strictly liable for the corrupt acts of their "associated persons'', even where the commercial organisation has no knowledge of the associated person's behaviour. Commercial organisations (which include any organisation which carries on business or part of its business in the UK) only have one possible defence if an associated person commits an offence intending to benefit the organisation – that they have in place "adequate procedures" designed to prevent corruption.
2. To make senior officers of organisations, which were culpable of an offence of bribery, personally liable if they "consented to" or "connived in" the bribery. For example, if a director learns that someone in his company has won a contract through giving a personal gift to a person at the counterparty and, instead of reporting it, turns a blind eye, the director himself would be liable to prosecution and imprisonment for having consented to that offence.
These are important new offences and ones which should attract significant attention. As was previously the case under UK law, the offences apply to acts of "private" corruption (i.e. corruption between commercial enterprises or individuals) as well as acts of public corruption, involving a public body or official. Certain jurisdictions, like Italy, only provide in their criminal codes that corruption involving a public official is illegal and do not make private corruption a criminal offence. Similarly, the US Foreign Corrupt Practices Act ("FCPA"), which like the Bribery Act covers offences of corruption anywhere in the world, only applies to offences where a public official is involved. The FCPA would not apply where, say, a US motor parts company bribes a director of an Indonesian auto-parts supplier in order to get that director to persuade his company to enter into a big contract with the US firm. However, a UK firm (and its directors) would be criminally liable under the Bribery Act if they did the same.
The first prosecution under the Bribery Act took place very shortly after the new law came into force. A magistrate's court clerk was filmed by the Sun newspaper accepting a £500 bribe for making a traffic offence "disappear". He was sentenced to six years (three for the bribery, and six for misconduct in a public office, to run concurrently).
Since then, there have been few convictions under the Bribery Act, and certainly none under the new offences of senior officer connivance or failure by a commercial organisation to prevent corruption by its associated persons. However, there have been a number of cases that have been concluded over the past year which were brought under the old laws, relating to behaviour before 1 July 2011. Eleven prison sentences have been handed down in the past 12 months for corruption under the old laws.
The reasons for the lack of prosecutions under the Bribery Act can be explained in practical terms. It can take a long time for law enforcement to gather sufficient evidence to have a reasonable prospect of securing a conviction. Prosecutions for bribery offences inevitably rely on testamentary evidence, and witnesses can be reluctant to come forward to provide such evidence where (as may often be the case) they were party to the corrupt activity themselves. Furthermore, there may be an issue of adequate resources: the Serious Fraud Office ("SFO") is the body responsible for policing and prosecuting offences under the Bribery Act. The SFO is a famously stretched organisation, with limited resources (its annual budget is just £34 million). However, the SFO has a new director, David Green QC, the former head of the Crown Prosecution Services" central fraud group. He has announced the SFO's commitment to pursue Bribery Act investigations and apparently there are already "several in the pipeline".
Businesses should not therefore take the small number of prosecutions to date as a sign that they can return to "business as normal", that all the hype about the Bribery Act a year ago was just a storm in a teacup, and that all the training sessions they attended and new policies which they put in place were time and money wasted. This may well be the calm before the storm. David Green QC will be looking for big prosecutions and to make examples of culprits. However, a certain amount of comfort can be taken from his words regarding corporate hospitality:
"We are not interested in that sort of case. We are interested in hearing that a large company has mysteriously come second in bidding for a big contract. The sort of bribery we would be investigating would not be tickets to Wimbledon or bottles of champagne. We are not the 'serious champagne office'!"
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