"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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