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The U.K. Bribery Act 2010 (the “Act”) represents a fundamental reform of the U.K. anti-bribery regime and greatly expands the potential legal exposure of companies and individuals that do business, including practice of a trade or profession, in the U.K. For example, it criminalizes purely private bribery with no involvement of a government official and creates a new corporate offence of “failing to prevent” bribery. These offences are subject to unlimited fines and a 10-year maximum prison sentence for individuals. The Act bears some similarity to its U.S. counter-part, the Foreign Corrupt Practices Act (“FCPA”), but is in general stricter and broader. Accordingly, companies with business operations in the U.K. must not assume that even robust FCPA compliance programs will assure compliance with the requirements of the Act.
The Act creates offences that cover a variety of situations and, in some instances, appear to create a form of strict liability. The provisions of each section of the Act are discussed briefly below.
Has no connection with the U.K.
- Has no formal contract with the corporation
- Has no degree of control over the corporation and
- Is in no way controlled by the corporation.
Moreover, the associated person or entity need not have been prosecuted for bribery.
This prima facie offence can be rebutted if the company shows that it had in place “adequate procedures” designed to prevent persons associated with it from engaging in bribery. What procedures are “adequate” is not defined, although the Act requires the U.K. government to publish guidance on this issue. No timetable for the issuance of such guidance has yet been announced, however. The outgoing Labour Government indicated that the guidance would only provide relevant principles and examples of good practice rather than a prescription of what is required. This would leave tremendous discretion to prosecutors to decide what is “adequate” enough to trigger the defense, inviting the potential for significant disparities in enforcement. In any case, this provision of the Act makes it essential for companies and partnerships operating in the U.K. to implement robust compliance programs.
Criminal Liability of Senior Company Management
A senior corporate officer (defined as a director, manager, secretary or other similar officer) may not be prosecuted under the Act for the corporate offense of failing to prevent bribery, but such officers may be prosecuted if they have British nationality or are ordinarily resident in the U.K. and the company committed a bribery offense with their consent or connivance.
Facilitation Payments
Unlike the FCPA, the Act does not provide a defense or exception for facilitation or “grease” payments – payments to officials to expedite a routine government function. The outgoing Government, however, indicated that the policing of such payments would be by means of prosecutorial discretion exercised in the public interest.
Corporate Hospitality
The Act does not seek to characterize corporate hospitality as bribery, but also does not contain a specific exception for reasonable and bona fide promotional and demonstration expenses like the FCPA does. Thus, the Act allows U.K. regulators to prosecute corporate hospitality given with the intention of influencing a foreign public official or inducing a private recipient to act improperly, provided that there is no applicable written law that permits the hospitality. It seems likely that under the Act, as under the FCPA, bona fides and reasonableness will play a role in determining whether hospitality is regarded as improper and subject to prosecution as a form of bribery.
Some Practical Recommendations
Companies subject to the Act need to provide:
- Clear policy statements and anti-corruption guidance from the highest levels of the company;
- Training on the company’s anti-corruption code, policies and procedures; and
- Compliance procedures for outside agents, consultants, advisers and joint venture or consortium partners, including effective due diligence prior to entering into such business relationships.
Companies with anti-corruption procedures already in place should review them to be sure they cover the private sector and address the other elements of the Act that expand upon prior law. Not surprisingly, the U.K. Government has said that paper policies will not suffice and that companies must take tangible compliance steps and create a culture that actively resists corruption.
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