Prevalence and Laws of Anti-Corruption and Bribery in the UK
 
 
Prevalence and Laws of Anti-Corruption and Bribery in the UK
 

The Bribery Act 2010 is an act of the Parliament in the UK. Its purpose is to legislate criminal law as it relates to bribery. It covers all instances of bribery, both foreign and domestic, for private and public companies. In addition, it lays out the penalties for individuals and companies who are found guilty of bribery.

Domestic Bribery in the UK: Private and Public

The Bribery Act of 2010 sets out regulations and laws for bribery. These laws cover bribes in the private and public sector. Unlike in other countries, there is not a distinction between private to private bribes - and private to public bribes. Both private and public bribes are covered under the Bribery Act. Convictions for either private or public bribes carry the same penalties. The Bribery Act of 2010 makes it a criminal act to pay bribes, as well as to receive them.

The Definition of Bribery

A bribe is defined as when a person offers, gives, or receives payment. The payment is intended to influence a function to be performed improperly. The payment can also be a reward for improper performance.

A function will be deemed to be carried out improperly if:

1.       The person who performs the function is expected to perform it in good faith, but does not.

2.       The person who performs the function is expected to be impartial when performing the function, but does not.

3.       The person holds a position of trust, but breaches it.

In the Bribery Act, functions are defined as:

1.       Those of a public nature

2.       Actitivies performed in the course of an individual's employment

3.       Activities that are connected with a company or business

4.       An activity that is performed by or on behalf of a body of people

When a person associated with a company bribes another person using the definition above, the company also commits an offense under Section 7 of the Bribery Act. This is a liability offense. It can be commited within the UK or overseas.

A person is considered associated with a company if that person acts on the company's behalf. This is not limited to employees. People associated with a company could be agents, contractors, joint venture partners, or subsidiaries. If the company has procedures in place, such as those in a compliance program, to prevent bribery, this can be used by the company as a defense.
 
 

About Section 7 of the Bribery Act

Section 7 makes it an offense for a company to fail to take action to prevent bribery on its behalf. It applies to all companies that do business in the UK. A company can be found guilty of the offense if bribery is committed by an employee, agent, contractor, third party, joint venture partner, or anyone doing business on behalf or as a representative of the company.

The defense for this offense is proof that the compnay had adequate procedures in place to prevent bribery from taking place. The burden of proof is on the company. In other words, the company must prove that it had adequate procedures in place.

Guidance was published on this matter to educate companies on the principles they need in place in order to possibly use this defense successfully. These principles are listed below.

1.       Proportionate Procedures. The procedures put into place by a company to prevent bribery should be proportionate to the risks it faces, as well as the scale of the company's activities.

2.       Commitment of Top Management. The top-level management, as well as directors and board members, should be committed to preventing bribery within the company. There should be a company culture in which bribery is not acceptable.

3.       Risk Assessment.  It means that a company should identify the risks the company faces in all areas where it does business, both in the UK and abroad.

4.       Due Diligence. The company should implement due diligence procedures for any third parties who might act on the company's behalf.

5.       Training and Communication. The company should conduct training programs so all employees understand the standards and procedures of the program. The company should also communicate these standards and procedures periodically to employees.

6.       Monitoring and Review. The company should monitor the program and employee conduct. Regular audits should also be performed. There should also be a reporting system put into place for employees who need to report suspected misconduct.

It should be noted that the things listed above are also part of a anti-corruption compliance program. While companies are not required to have an anti-corruption compliance program by law in the UK, it is highly recommended. Under the UK Bribery Act Section 7, companies at least need a code of conduct that is documented, in place, and that covers the items listed above in order to be able to use it as a defense.

Interested in learning more? Why not take an online class in Global Anti-Corruption and Bribery?
We will talk about compliance programs later in this article.

Consequences

An individual convicted of bribery in the UK can face the following penalties:

1.       Imprisonment for up to 10 years, and/or

2.       An unlimited fine

A company that commits a bribery offense will face an unlimited fine, as well as debarment from competing for public contracts. If a company is convicted under Section 7 of the Bribery Act, the disbarment will be discretionary rather than mandatory.

If a company has been convicted of bribery, that company's senior officers who colluded, allowed, or consented to the conduct can also be convicted.

The Serious Fraud Office (or SFO) can also use its civil powers to recover property that was gained through the illegal acts of bribery.

The Corruption of Foreign Public Officials
 
 

An offense for the bribery of foreign public officials (or FPO's) is included in the UK Bribery Act.

The offense is committed when an individual offers, promises to give, or gives a monetary or other advantage to a foreign public officer who is working in his or her capacity as a foreign public officer as a means to influence and unfairly gain a business advantage.

This offense can be commited by the person offering the advantage to the foreign public official or through a third party. By the same token, the advantage can be given to a foreign public officer, but also to a third party by the request of the foreign public officer. It is not an offense if the foreign public officer is permitted or required by laws that govern the foreign public officer to be influenced.

When a person associated with a company bribes a foreign public official using the definition above, the company also commits an offense. This is a liability offense that is applicable in the UK and overseas.

A person is considered associated with a company if that person acts on the company's behalf. This is not limited to employees. People associated with a company could be agents, contractors, joint venture partners, or subsidiaries. If the company has procedures in place, such as those in a compliance program, to prevent bribery, this can be used by the company as a defense.

The Definition of a Foreign Public Official

Under the Bribery Act, a foreign public official includes individuals who:

1.       Exercise public functions for or on behalf of a country or territory outside the UK

2.       Exercise public functions for or on behalf of any public agency or public enterprise of another country or territory that is not the UK.

3.       Holds a legislative, administrative, or judicial position of any kind for a foreign government.

4.       Is an official or agent of a public international organization.

Under the Bribery Act, foreign political parties and candidates are not foreign public officials.

Consequences

The penalties for an individual convicted of corrupting a public official can include:

1.       Imprisonment for up to 10 years, and/or

2.       An unlimited fine

The penalties for a company that is found to have bribed a foreign public official will be subject to:

1.       An unlimited fine

2.       Automatic and perpetual disbarment from competing for public contracts.

If a company has been convicted of bribery, that company's senior officers who colluded, allowed, or consented to the conduct can also be convicted.

The Serious Fraud Office (or SFO) can also use its civil powers to recover property that was gained through the illegal acts of bribery.

Facilitation Payments

A facilitation payment is defined as a payment made to a public official or government agency to expedite an action or process. The payment is made to benefit the party making the payment. Under the Bribery Act, facilitation payments are illegal. However, the government has recognized that companies face problems doing business in some areas of the world, and the Joint Committee has stated that there needs to be guidance that establishes which facilitation payments will be prosecuted. That said, because facilitation payments are illegal, making them can lead to an issue of money laundering. Companies should avoid making facilitation payments.

Compliance Programs

A compliance program is a corporate program that specifies a company's policies, procedures, and actions to mitigate risks and detect violations of the laws and regulations regarding corruption and bribery.

As stated earlier, a compliance program that contains adequate procedures to prevent individuals from committing the act of bribery is a defense for companies under Section 7 of the Bribery Act. The UK Ministry of Justice has also issued guidance for companies as to the principles and type of procedures that can be put into place to prevent individuals associated with them from committing acts of bribery.

While we already covered these things earlier in this article, they are crucial to any compliance program and worth repeating again.

  •          Proportionate Procedures. The procedures put into place by a company to prevent bribery should be proportionate to the risks it faces, as well as the scale of the company's activities.

  •          Commitment of Top Management. The top-level management, as well as directors and board members, should be committed to preventing bribery within the company. There should be a company culture in which bribery is not acceptable.

  •          Risk Assessment. It means that a company should identify the risks the company faces in all areas where it does business, both in the UK and abroad.

  •          Due Diligence. The company should implement due diligence procedures for any third parties who might act on the company's behalf.

  •          Training and Communication. The company should conduct training programs so all employees understand the standards and procedures of the program. The company should also communicate these standards and procedures periodically to employees.

  •          Monitoring and Review. The company should monitor the program and employee conduct. Regular audits should also be performed. There should also be a reporting system put into place for employees who need to report suspected misconduct.

    While it is not illegal for a company not to have an anti-corruption compliance program in place, it is highly recommended.

    Investigation and Prosecution

    The Serious Fraud Office has the responsibility for enforcing and prosecuting violations of the Bribery Act. Before prosecuting, the Serious Fraud Office will weigh the evidence, then decide if prosecuting the case would be in the best interest of the public.

    The Differences Between the UK Bribery Act and the FCPA

    There are many similarities between the UK Bribery Act and the FCPA. Both regulate the corruption of public officials, for example. However, the UK Bribery Act is wider in scope than the United States' FCPA in three different areas.

    1.       The FCPA only applies to the corruption of public officials. The Bribery Act covers bribes offered or given to any individual, regardless of whether the person is foreign or from the UK.

    2.       The Bribery Act does not require corrupt intent on the part of the person offering or giving the bribe.

    3.       The FCPA applies to those who are giving or offering a bribe. The UK Bribery Act also applies to those who agree to or receive a bribe.

    The UK Bribery Act is known as one of the toughest pieces of legislation that covers bribery and corruption. It has also been criticized for damaging British company's ability to be competitive around the globe.


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