The Bribery Act will came into force on 1st July 2011. It replaces and repeals previous laws governing bribery and corruption, establishing four offences and creating a modern and more effective anti-bribery framework.
The offences contained within the act are two general offences concerning the paying and receiving of bribes (which include promising, offering, agreeing to or requesting bribes), a discrete offence of bribery of foreign public officials and a new offence of the failure of commercial organizations to prevent bribery.
The Act is wide-ranging and covers both the public and private sectors, with extraterritorial reach. Individuals who commit acts of bribery outside of the UK will be liable if these acts or omissions would have been an offence if committed within the UK and if that individual has a ‘close connection’ to the UK. Charges may be brought against companies ‘irrespective of whether the acts or omissions which form part of the offence take place in the UK or elsewhere’. The offence of bribing a foreign public official contained within Section 6 also removes any issues relating to international jurisdiction. Facilitation payments are also prohibited under this Act, making it in this aspect more stricter than its US counterpart.
The Act will bring into force a major shift from the current law and will place obligations on corporate organizations to ensure that they deploy robust anti-corruption procedures. This will be a strict liability offence, so no intent will be required on the part of the organization and mean prosecutions can be attained much easier and quicker by the Serious Fraud Office.
If adequate anti-corruption procedures are established, then the company may be able to escape liability for any corrupt activities carried out by its employees.
The Government has a statutory obligation to provide guidance on what constitutes ‘adequate procedures’. A consultation on this topic has just closed and the first set of guidelines is expected in the New Year to allow companies time to adjust before the new law comes into force.
The guidance will not be prescriptive in nature; it is intended to allow companies to develop procedures which are appropriate for their own circumstances and the sectors in which they operate. However, a letter from Lord Bach (then-Parliamentary Under-Secretary of State) indicated that the following should be incorporated:
- The Board of Directors will have overall responsibility of designing and implementing an anti-corruption program and establishing an anti-corruption culture, with a senior officer being directly accountable for the implementation and running of the program.
- Commercial organizations must incorporate anti-corruption elements into their code of conduct, risk management, due diligence, decision making, procurement and contract management, employee vetting and disciplinary procedures. The organization must ensure relevant staff are appropriately trained in these areas.
- Organizations should establish gifts and hospitality policies and registers
- Companies must establish ‘whistle blowing’ procedures and properly investigate all allegations.
The maximum penalty for individuals found guilty of an offence of bribery will be increased from seven to ten years’ imprisonment, a fine, or both. The maximum penalties for corporate organizations is an unlimited fine.
Collateral consequences such as director disqualification, debarment from public procurement and asset confiscation will follow may also occur from convictions that may be brought under the Act.
Many companies will already have sufficient anti-corruption procedures in place as a matter of good practice, but as the Bribery Act will criminalize an organization’s failure to prevent bribery from April 2011, it is important for companies to review their existing policies and procedures now, paying particular attention to the risks they face in the sector in which they operate.
Useful Links
• BBC News- Bribery Act targets corrupt firms
• Bribery Act 2010