Small but Crucial Distinctions: Understanding the UK Bribery Act vs. the FCPA

Small but Crucial Distinctions: Understanding the UK Bribery Act vs. the FCPA

 "We are not the 'serious champagne office,' " said David Green, chief of the UK's Serious Fraud Office (SFO). But Green says he is working to focus his agency on bigger cases of bribery and corruption. Green's commitment, and the sweeping nature of the UK Bribery Act (UKBA), means that American companies with global reach should be on notice and be ready to adhere to some new standards.

UK Law on American Shores

Until recently, the U.S. Foreign Corrupt Practices Act (FCPA) has dominated international anti-corruption enforcement. Like the FCPA, the UKBA has considerable reach. Any commercial organization may be subject to prosecution if it carries on even part its business in the UK, regardless of where the alleged improper activity actually takes place.

Though the stated goals of the two pieces of legislation are similar, the UKBA's standards could mean that behavior that may be permitted by U.S. laws may be forbidden by the UKBA. This means it might be unwise for companies to rely on their existing FCPA-based anti-corruption compliance for complete protection against liability under the UKBA.

Knowing the Distinctions

There are some distinctions between the FCPA and the UKBA that American companies should be aware of. For instance, the FCPA applies to dealings with government entities, but the UKBA also applies to exchanges with private businesses and nongovernmental entities. According to the UK Ministry of Justice [PDF], this means that payments to private persons designed to "induce conduct that amounts to a breach of an expectation that a person will act in good faith, impartially, or in accordance with a position of trust" are not allowed, and both the payer and the private recipient may be punished.

A Strict and Somewhat Guiding Hand

Under the FCPA, a company could be held vicariously liable for acts of its employees and agents. The UKBA takes a slightly different tack, creating a strict liability for corporations that fail to prevent bribery. This has meant that to help prevent potential issues, a company could establish "adequate procedures." In the past, the UK Justice Ministry released guidance on what those procedures might include, based on six explicit principles. This might be a useful start for companies wanting to adjust their anti-bribery policies.

A potentially confusing detail is that the SFO seems to have now distanced itself from its own guidance-the SFO website says that it is "in no way responsible for the content." This might be part of the change in the SFO's priorities with the arrival of David Green in April 2012-prioritizing prosecutions over offering guidance and compromise.

In Theory, There Is No Difference Between Theory and Practice

In theory, the existence of this tough new set of regulations should have changed a lot. So how does this work in practice? Has the expansive UKBA come down hard on both domestic and foreign wrongdoers? Not quite, or at least not quite yet. The first prosecution under the act was of a court clerk who took a bribe to hide a speeding ticket. He received a six-year sentence, but that has since been reduced. According to Ernst & Young [PDF], four of the five completed cases in the first half of 2012 were prosecutions of individuals, with a further 11 individuals being sentenced. In practice, prosecuting large companies may raise some challenges.

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