The Bribery Act 2010 was passed in the last minute legislative scramble before the dissolution of the last parliament.
Most people will have a broad understanding of what constitutes bribery; the law has been in existence for a substantial period. Indeed the Magna Carta declared, “We will sell to no man…either justice or right”. The question which is screaming out to be asked is why has it taken the UK so long to reform the bribery laws in the UK?
A parliamentary research paper on the Bribery Bill which was published on 1 March 2010, explains that there has been pressure on the UK to update its anti-corruption legislation, which was last amended way back in 1916.
The new bribery law replaces the offences at common law and under the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916. The new law also creates a discrete offence of bribery of a foreign public official and a new offence of negligent failure of commercial organisations to prevent bribery. It is the latter of which will be of particular concern to UK businesses.
Does this sound familiar?
Have we not heard the rhetoric about getting tough on bribery and corruption before? Yes we have. The Law Commission reviewed the bribery laws way back in 1998. A draft Corruption Bill was presented to Parliament in 2002 Queen’s Speech, but was rejected by the Joint Committee which examined it and who also heavily criticized the Bill and recommended that the scheme of offences be restructured.
The Law Commission then published a consultation paper “Reforming Bribery” in November 2007. That paper argued that the distinction between bribery in the public sector and bribery in the private sector should be abolished, and also proposed a new offence of bribing a foreign public official.
Pressure to reform
In November 2008 the Law Commission published its final report on bribery. The Organisation for Economic Co-operation and development (OECD) Working Group on Bribery issued a report in 2008. The press release to that report stated:
“Current UK legislation makes it very difficult for prosecutors to bring an effective case against a company for alleged bribery offences. Although the UK ratified the OECD Anti-Bribery Convention 10 years ago, it has so far failed to successfully prosecute any bribery case against a company.”
Prosecutions for Bribery
A government research paper made much of the fact that the above statement was incorrect, and provided two examples:
1. Mabey & Johnson who were convicted and fined in September 2009 for trying to unlawfully influence officials in Jamaica and Ghana and also for violating the terms of the UN’s ‘Oil for Food’ scheme in Iraq, and,
2. Balfour Beatty who agreed in 2008 to pay a fine to settle bribery allegations concerning its work to rebuild Alexandria’s Library – although this was not a formal conviction.
Compliance Risk Assessment
Ignorance of the law is no defence. Employers should carry out a compliance risk assessment to ensure that they are prepared when the law comes into force, and then set out a timetable to review that policy and implement training.
Businesses should arrange training for all staff about the standards expected, both in the UK and abroad, to demonstrate that they have “adequate procedures” in place. A much anticipated September 2010 Government consultation exercise has provided UK businesses with some advice on how to effectively implement the “adequate procedures” required to shield themselves from potential section 7 liability, which the guidance has expressed as six “principles”:
1. Risk Assessment,
2. Top level commitment,
3. Due diligence,
4. Clear, practical and accessible policies and procedures,
5. Effective implementation, and,
6. Monitoring and review.
The practical implications of these principles provide some indication of the level of commitment the Government will expect from UK businesses if they are not to breach section 7.
Although expressed as six principles, the guidance can be simplified into just two: The aforementioned risk assessment, and the mitigation of that risk.
What is required will vary according to the size of an organisation, but is likely to include regular assessment by way of:
- Company audit reports,
- Internal investigation reports,
- Focus groups,
- Analysis of staff/client/customer complaints,
- Analysis of any bribery issues/risks associated with the industry sector(s) and foreign jurisdictions in which the company operates,
- Employee knowledge of potential bribery risks, and,
- The remuneration structure of the company.
The completion of risk assessment procedures will then inform the action needed to mitigate that risk. The guidance to principles 2-6 suggest this may include:
- The personal involvement of top level management (i.e. directors) in establishing a culture within their organisation where bribery is never an acceptable business practice and ensuring that this message is communicated through all levels of management;
- Adding anti-bribery measures to the due diligence procedures applied to all third parties before a transaction is conducted, including the organisation’s supply chain, agents and intermediaries;
- Seeking advice of the relevant civil and criminal law governing a foreign jurisdiction in which a company may wish to conduct business;
- Formation of a strategy to implement an anti-bribery element into all relevant decision making processes;
- Issuance of a code of conduct to all employees, detailing expected standards (which could potentially form part of the company’s standard employment contract); and,
- Appointing a senior manager to oversee the company’s adherence to anti-bribery policies.
Businesses may want to create a stand alone bribery policy to ensure that third parties (including agents and joint venture parties) – especially those in other jurisdictions as section 7 provides that it is immaterial where the conduct element of the offence occurs – do not breach any provisions of the new law on their behalf.
Many businesses are already asking suppliers to confirm that they have equal opportunity and corporate social responsibility policies in place; an anti-bribery provision may quickly be added to that list as an added seal of approval (and reassurance) for the modern business.
The explanatory notes state at section 5 that: “in deciding what a reasonable person in the UK would expect in relation to functions or activities the performance of which is not subject to UK laws, local practice and custom must not be taken into account unless such practice or custom is permitted or required by written law”. Therefore businesses with an associated office in another jurisdiction may want to take specific local advice as to whether a practice or custom is permitted by “written law”.
Corporate hospitality was a dogged issue in the parliamentary debates. So much so that Lord Tunnicliffe (the former Government spokesperson for the Ministry of Justice) wrote a letter to Lord Henley in January this year requesting “further clarification about the treatment of Corporate hospitality” under the then Bill. That letter stated: “We recognise that corporate hospitality is an accepted part of modern business practice and the Government is not seeking to penalise expenditure on corporate hospitality for legitimate business purposes. But lavish corporate hospitality can also be used as a bribe to secure advantages and the offences in the Bill must therefore be capable of penalising those who use it for such purposes”.
No more gift bags?
In the entertainment industry, for example, outlandishly lavish gifts are often included in bags given to celebrities. Will they become a thing of the past?
Who will prosecute?
Section 10 of the new law provides that no proceedings under the Act can be instituted in England and Wales without the consent of (a) the Director of Public Prosecutions, (b) the Director of the Serious Fraud Office, or (c) The Director of Revenue and Customs Prosecutions. Unless under section 10 (5) the Director is “unavailable” (although it is not clear what this means!) and there is another person designated in writing to exercise such a function.
Treasury cash cow?
Putting my cynical hat on when seen in the context of the current financial malaise we may see the authorities in the future wanting to use the new law as a way to raise additional revenues. How strictly the new law will be enforced will remain to be seen. The best advice is to carry out a risk assessment of your business sooner rather than later, and to seek advice from a lawyer as to the best way of doing this.
For further comments please follow this link for a special bribery supplement that I contributed to which was published in the Times Newspaper.
 Published on the Ministry of Justice web page.
 My comments can be found on page 8.