We have been waiting for some guidance from the United Kingdom
about their new Bribery Act since it received Royal Assent last
April. The delay on the guidance has delayed the implementation of the
Bribery Act itself. Now the guidance is out.
The Bribery Act 2010 creates a new offence under section
7 which can be committed by commercial organisations which fail to prevent
persons associated with them from bribing another person on their behalf.
An organisation that can prove it has adequate procedures
in place to prevent persons associated with it from bribing will have a defence
to the section 7 offence.
The guidance, published here under section 9 of the Act,
will help commercial organisations of all sizes and sectors understand what
sorts of procedures they can put in place to prevent bribery, as mentioned in
With the release of the guidance, Kenneth Clarke, Lord
Chancellor and Secretary of State for Justice, announced that the Bribery
Act will go into force on July 1.
Bribery and Corruption are bad and we want to have
systems in place to prevent them and to detect them if they happen. Tucked into
Section 9 of the Bribery Act was requirement that the Secretary of State
publish guidance about procedures which commercial organizations can put in
place to prevent persons associated with them from bribing. Under section 9 of
the Bribery Act, the only defense against criminal liability for a commercial
organization which has "failed to prevent bribery" is that the organization had
adequate procedures" to prevent bribery.
In what appears to be a very user-friendly approach the
Ministry of Just has published a Quick start guide (PDF 0.27mb 9 pages) to get
you up to speed on the Bribery Act.
Of course there is some question about the applicability
and enforcement beyond the borders of the United Kingdom. Clearly, if you have
operations in the UK and those employees are paying bribes for business to be
sent to those operations then it falls under.
If you have an office in London, are all of your
operations worldwide subject to the Act? I'm sure we will find out, eventually.
It will be up to the court to decide whether
or not any individual organisation can be said to be 'carrying on a business'
in the UK. They obviously take a range of factors into account - mere listing
on the London Stock Exchange or just the fact of having a UK incorporated
subsidiary would not necessarily mean the Act applies. To be clear: this is not
a 'carve-out. Under the terms of the Act, it has always been a decision for the
courts. - Kenneth Clarke, Lord Chancellor and Secretary of State for Justice
If you have a London office (or operations somewhere in
the United Kingdom), or other "demonstrable business presence in the United
Kingdom" you should pay attention to the Act. However, merely being listed on
the London Exchange alone would not be enough. (See paragraph 36 in the
According to Quick Start Guide:
The government does not intend that genuine hospitality
or similar business expenditure that is reasonable and proportionate be caught
by the Act.
In any case where it was thought the hospitality was
really a cover for bribing someone, the authorities would look at such things
as the level of hospitality offered, the way in which it was provided and the
level of influence the person receiving it had on the business decision in
question. But, as a general proposition, hospitality or promotional expenditure
which is proportionate and reasonable given the sort of business you do is very
unlikely to engage the Act. So you can continue to provide tickets to sporting
events, take clients to dinner, offer gifts to clients as a reflection of your
good relations, or pay for reasonable travel expenses in order to demonstrate
your goods or services to clients if that is reasonable and proportionate for
That may actually be a broader ability to deal with
government officials than under the FCPA.
Facilitation payments, which are payments to induce
officials to perform routine functions they are otherwise obligated to perform,
are bribes. There was no exemption for such payments under the previous law nor
is there under the Bribery Act.
That is more strict than the FCPA. They do leave it open
to prosecutorial discretion, that based on the facts and circumstances they can
decide whether prosecution is in the public interest.
Foreign Public Official
Over here in the US it looks like there some be some
court decisions coming down that will add clarity to the definition of a
foreign official under the US FCPA. Here is the guidance under the Bribery Act
as to who is a foreign public official:
A 'foreign public official' includes officials, whether
elected or appointed, who hold a legislative, administrative or judicial
position of any kind of a country or territory outside the UK. It also includes
any person who performs public functions in any branch of the national, local
or municipal government of such a country or territory or who exercises a
public function for any public agency or public enterprise of such a country or
territory, such as professionals working for public health agencies and
officers exercising public functions in state-owned enterprises. Foreign public
officials can also be an official or agent of a public international
organisation, such as the UN or the World Bank.
There is lots to digest in the guidance. Ultimately,
other than the removal of facilitation payments I does not seem that compliance
with the UK law would be any different than compliance under the FCPA.
additional commentary on developments in compliance and ethics, visit Compliance Building,
a blog hosted by Doug Cornelius.
more information about LexisNexis products and solutions connect with us
through our corporate site.