Cadwalader FCPA Advisor: With Publication of Final Guidance, UK Bribery Act to Go Into Effect on July 1, 2011

Cadwalader FCPA Advisor: With Publication of Final Guidance, UK Bribery Act to Go Into Effect on July 1, 2011

Despite repeated delays and some question as to whether the UK would bow to pressure from the business community to water down the Bribery Act 2010 ("the Act"), on March 30, 2011, the UK Ministry of Justice released its final guidance (the "Final Guidance") on the Act, which leaves the import of the Act as a significant and expansive piece of anti-corruption legislation largely intact. The Final Guidance provides insights and clarifications on key issues raised by businesses since the Act's passage in April 2010, as well as guidance for companies on what constitutes "adequate procedures" for preventing bribery. Ultimately, however, the Final Guidance also makes clear that much remains at the discretion of the courts. Likewise, prosecutors will continue to have great flex­ibility in assessing whether cases should be brought, as emphasized in joint guidance issued by the Serious Fraud Office (the "SFO") and the Crown Prosecution Service (the "Joint Prosecution Guidance" and, together with the Final Guidance, "the Guidance") on the same day as the Final Guidance. Thus, for those individuals and companies that fall within the scope of the Act, it will be critical to understand its provisions and take measures to prevent violations by both themselves, and, for companies, by those acting on their behalf, prior to the Act's implementation on July 1, 2011.

Summary Overview of the Act

The Act replaced UK existing common law offenses with two general bribery offenses, a specific offense of the bribery of foreign government officials, and a specific offense of corporate negli­gence. It also allows for the imposition of criminal liability against senior officers (including direc­tors, company secretaries, managers or those purporting to act as such) who "consented or con­nived" in any commission of the general bribery offenses or the bribery of foreign official offense by the corporate entity.

Giving, Promising, Offering, Accepting or Receiving Bribes (Sections 1 and 2)

While both the FCPA and the Act prohibit bribery of foreign government officials, the Act goes further and imposes criminal liability for "business to business" or commercial bribery, as well as liability for receiving or accepting bribes. Section 1 makes it an offense for a person (or their agent) to offer, promise or give "a financial or other advantage" to another person with the intent to induce that person to perform "improperly" a function or activity. Conversely, Section 2 states that a person is guilty of an offense if that person requests, agrees to receive, or accepts an "advantage" under the same circumstances. Although the Act has a separate offense for bribes paid or offered to foreign government officials, such conduct may also be prosecuted under Sections 1 and 2, albeit using a lower standard of scrutiny. Similar to the FCPA, "financial or other advantage" is not clearly defined. However, a "function or activity" is defined broadly in that it applies equally to pub­lic and private sector business and includes all activities performed either in the course of employ­ment or on behalf of an individual.

Not every improper performance of a function or activity will violate the general bribery offense. Rather, the Act distinguishes between a function or activ­ity that is performed in good faith, which is akin to the US notion of acting in good faith except that a reasonable person in the UK test will be applied in determining whether the performance was improper. [footnotes omitted; available in full article]

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