Bribery Act 2010: overview
Sarah-Marie Williams and Rachel Cropper-Mawer of Clyde & Co LLP begin a series of articles on the Bribery Act 2010 with an overview of some of the main provisions in the Bribery Act and key points in the Government's Bribery Act guidance. Under the Bribery Act, employers may be liable for acts of bribery carried out by their employees and "associated persons" who provide them with services.
Introduction
The Bribery Act 2010 is due to come into force on 1 July 2011. It
was originally due to come into force in April 2011, but the Government delayed
its implementation in response to concerns from employers about the potential
impact of the Act, to allow it to give more thought to its final guidance (see
below). The Act applies to
Main provisions
Under ss.1 and 2 of the Act, it is a criminal offence for an individual or a commercial organisation to offer or receive a bribe to bring about or reward the improper performance of a function or activity. Bribes do not need to be monetary to be covered by the Act and can amount to some other advantage. Nor do they need to be actually received for an offence to take place.
Commercial organisations that are registered in the UK or that merely do business in the UK will be guilty of an offence under s.7 of the Act if they fail to prevent acts of bribery being carried out by their employees. They will also be responsible for the actions of "associated persons". An "associated person" is defined (in s.8) as one who provides services to the organisation. This can be an individual or a body and will include employees, intermediaries, agents, joint ventures and other forms of business vehicle, as well as suppliers of services and contractors. However, under s.7(2), the organisation will have a defence if it can show that it has "adequate procedures" in place to prevent bribery.
Section 9 of the Act requires the Government to publish guidance about procedures that commercial organisations can put in place to prevent bribery. On 30 March 2011, the Government duly published Bribery Act 2010: Guidance about commercial organisations preventing bribery (PDF format, 0.38MB) (on the Ministry of Justice website). It has also published a non-statutory Quick start guide (PDF format, 0.27MB) (also on the Ministry of Justice website), aimed at helping employers to prepare for the Act's implementation.
The Act introduces a new offence of bribing a foreign public official (which is widely defined and includes a situation in which the foreign public official has asked for the bribe). However, it is not only the bribery of foreign public officials that is caught by the Act. Bribery of and by individuals and corporate bodies engaged in private business is also caught.
In terms of the global reach of the Act, and in relation to a
corporate offence, a
Penalties
Individuals who are successfully prosecuted under the Act can face up to 10 years' imprisonment and an unlimited fine. Commercial organisations can face unlimited fines. In addition, on conviction, individuals and companies can be subject to the confiscation proceedings under the UK Proceeds of Crime Act 2002. Further, companies that are regulated by the Financial Services Authority under the Financial Services Markets Act 2000 may be subject to the cost of investigation and any subsequent changes to systems and controls that are required.
Guidance
The government guidance to the Act aims to give commercial
organisations a steer as to how they should be working to prevent bribery, and
what the Serious Fraud Office (which is the prosecution authority along with
the Director of Public Prosecutions) will, in the event that it is conducting
an investigation into an alleged breach of the Act, expect them to have done to
be compliant with the law. As the Act will be extraterritorial and carry criminal
sanctions, it will have far-reaching implications for
The guidance highlights the detrimental effect of bribery, including facilitation payments (which are illegal under the Act and which the guidance defines as "small bribes paid to facilitate routine government action"), on the global economy and particularly on developing countries.
The guidance makes clear that, in the event of a potential prosecution for a bribery offence, there will be careful consideration of the circumstances and evidence, and whether or not prosecution is in the public interest. The common law defence of duress may be available where payments need to be made to protect personal safety. In relation to hospitality, the guidance states that "reasonable and proportionate hospitality and promotional or other similar business expenditure" are not intended to be prohibited by the Act. However, where hospitality or promotional expenditure does appear to amount to a breach of the Act the guidance makes clear that careful consideration has to be given as to whether or not a prosecution will be brought. Where a certain level of hospitality is normal and commensurate in a particular sector that will be deemed to be acceptable.
In respect of foreign public officials, where written local law allows foreign public officials to be influenced by additional investment or benefits, there is no breach of the Act. The example given in the guidance is where tenders are being placed for government contracts and there is a legal requirement for the foreign public official to give weight to additional added value such as the provision of charitable organisations or the building of public facilities. There will be no exemption from a bribery offence under the Act in circumstances in which there is no legal allowance for such an additional benefit, where there is a personal benefit for a public official or where the local law is silent on the matter.
In terms of what amounts to an "adequate procedure" (for the purposes of the defence for a failure to prevent bribery), the size of the commercial organisation will be of paramount importance. The guidance acknowledges that small and medium-sized businesses, with limited risk, will not necessarily need to introduce such extensive procedures as larger organisations. The guidance sets out six key principles to guide and inform employers when they set out their anti-bribery procedures. The principles cover the following points:
- Procedures should be proportionate. The guidance states that an organisation's anti-bribery procedures should be "clear, practical, accessible, effectively implemented and enforced".
- There should be top-level commitment to ensuring that the organisation is unified in tackling bribery.
- Organisations should carry out periodic risk assessments in relation to bribery.
- Organisations should apply due diligence procedures in respect of persons who will perform services for them or on their behalf.
- Communication, both internal and external (including training), helps to ensure that bribery prevention policies and procedures are "embedded and understood throughout the organisation".
- Policies and procedures to prevent bribery should be monitored and reviewed.
Top-level commitment by board members and senior management to all six principles is required across all sectors. However, this requirement is caveated by an expectation that changes to existing procedures will be proportionate for each particular sector, industry and organisation.
Next week's topic of the week article will look at the practical implications of the Bribery Act 2010 for employers, with reference to the principles in the government guidance, and will be published on 9 May.
Sarah-Marie Williams (Sarah-Marie.Williams@clydeco.com) and Rachel Cropper-Mawer (Rachel.Cropper-Mawer@clydeco.com) are legal directors at Clyde & Co LLP.
Further information on Clyde & Co LLP can be accessed at www.clydeco.com.
