At its April 7, 2010 meeting the United
States Sentencing Commission approved amendments to its Sentencing Guidelines.
The next day on April 8, 2010, the UK Bribery Bill received Royal Assent. These two events
follow the December 9, 2009 release by the Organization for Economic Co-Operation and Development's (OECD)
for Further Combating Bribery of Foreign Public Officials, when
the OECD marked the tenth anniversary of the entry into force of the OECD
These three releases, which comprise of
two changes in the legal schemes by two of the world's largest economic players
and the proposal of one of the largest Non-Governmental Organizations (NGO)
dedicated to ending corruption across the globe portend significant changes in
how companies will be structured and transact business going forward in the new
decade. This is the second of three postings in which will discuss the changes
that companies, with any US or UK presence, will be required to implement. The
initial post will was on the changes to the US Sentencing Guidelines;
in this post, we will consider the changes required by the UK Bribery Bill; and in the third and final
post we will consider the recommendations as found in the OECD's Recommendation for Further Combating Bribery of
Foreign Public Officials regarding ending of facilitation payments.
There are several differences between
Corrupt Practices Act (FPCA) and the UK Bribery Bill which all companies
should understand. These include:
There is one affirmative defense listed
in the Bribery Bill and it is listed as the "adequate procedures" defense. The
Explanatory Notes to the Bribery Bill indicate that this narrow defense would
allow a corporation to put forward credible evidence that it had adequate
procedures in place to prevent persons associated from committing bribery offences.
The legislation requires the Secretary of State for Justice to publish guidance
on procedures that relevant commercial organizations can put in place to
prevent bribery by persons associated with their entity.
Other than this commentary, the Bill
provides no further information on what might constitute "adequate procedures"
as a defense but the Government has signaled that it will work with the UK
business community to provide appropriate guidance to this critical component
of the Bribery Bill. The UK law firm KattenMuchin has indicated that they expect the Government
will apply a test regarding the "adequate procedures" defense "with regard to
the size of the company, its business sector and the degree to which it
operates in high risk markets". The law firm of Covington and Burling, in a client advisory dated March 31,
2010, has opined that the Bribery Bill will not come into force until late 2010
because it will take the UK government until then to issue guidance on what may
constitute "adequate procedures".
The Bribery Bill is a significant
departure for the UK in the area of foreign anti-corruption. It cannot be
emphasized too strongly that the Bribery Bill is significantly stronger than
the US FCPA. The Bribery Bill provides for two general types of offence:
bribing and being bribed, and for two further specific offences of bribing a
foreign public official and corporate failure to prevent bribery. All the offences
apply to behavior taking place either inside the UK, or outside it provided the
person has a "close connection" with the UK. A person has a "close connection"
if they were at the relevant time, among other things, a British citizen, an
individual ordinarily resident in the UK, or a body incorporated under the law
of any part of the UK. Many internationally focused US companies have offices
in the UK or employ UK citizens in their world-wide operations. This
legislation could open them to prosecution in the UK under a law similar to,
but stronger than, the relevant US legislation.
These changes include the outright
banning of facilitation payments and the outright banning of all bribery and
corrupt payments by US companies to not only foreign governmental officials but
all private citizens. The Bribery Bill certainly does away with any legal
question of "who is a foreign governmental official" under the FCPA and the use
of other legislation, such as the Travel Act, which bans bribery generally, to
back corrupt actions made to a foreign person who is not a governmental
official, into an FCPA violation. All US companies with UK subsidiaries or UK
citizens as employees, should ban such acts as part of their overall compliance
and ethics policies sooner rather than later.
Visit the FCPA Compliance and Ethics Blog, hosted by Thomas Fox, for more commentary on FCPA compliance,
indemnities and other forms of risk management for a worldwide energy practice,
tax issues faced by multi-national US companies, insurance coverage issues and
protection of trade secrets.
This publication contains
general information only and is based on the experiences and research of the
author. The author is not, by means of this publication, rendering business,
legal advice, or other professional advice or services. This publication is not
a substitute for such legal advice or services, nor should it be used as a
basis for any decision or action that may affect your business. Before making
any decision or taking any action that may affect your business, you should
consult a qualified legal advisor. The author, his affiliates, and related
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© Thomas R. Fox, 2010