Anti-Bribery and Corruption: United Kingdom
What is the governing legislation?
The Bribery Act 2010
The Proceeds of Crime Act 2002
What is the definition of ‘bribery’?
The Bribery Act 2010 (“the Act”) does not give a definition of bribery, but rather prohibits 4 bribery offences, two of which are general and two are of a more specific nature.
- Offences of bribing another person: under section 1 of the Act, an offence occurs when a person offers, promises or gives a financial or other advantage to another person and either: 1) intends the advantage to induce a person to perform improperly a relevant function or activity or to reward a person for improperly performing a relevant function or activity; or 2) knows or believes that the acceptance of the advantage would itself constitute the improper performance of the relevant function or activity. In the first case, it does not matter whether the person to whom the advantage is offered, promised or given is the same person as the person who is to perform, or has performed, the function or activity concerned.
- Offences relating to being bribed: under section 2 of the Act, an offence occurs when a person requests, agrees to receive or accepts a financial or other advantage, either: 1) intending that, in consequence, a relevant function or activity should be performed improperly (whether by that person or another person); or 2) where the request, agreement or acceptance itself constitutes the improper performance of a relevant function or activity. It will also be an offence if, in anticipation of, or in consequence of, a person requesting, agreeing to receive or accepting a financial or other advantage, a relevant function or activity is performed improperly by that person, or by another person at the first person’s request or with their assent or acquiescence.
- Bribery of foreign public officials: section 6 of the Act specifically deals with the circumstances where a person, directly or through a third party, offers, promises or gives any financial or other advantage to a foreign public official or to another person at the request or with the consent of a foreign public official, with the intention to influence the foreign public official in his capacity as a foreign public official, in order to obtain or retain business or an advantage in the conduct of business. Unlike the section 1 offences, it is not necessary for there to be any intention that the person receiving the bribe improperly performs their function or activity. This offence therefore catches so-called ‘facilitation payments’, in respect of which there is no de minimis exception under the Act.
- Failure of commercial organisations to prevent bribery: section 7 of the Act introduces the novel corporate offence of failing to prevent bribery on behalf of a commercial organisation. A commercial organisation will be guilty of the section 7 offence where a person associated has committed one of the offences described at points 1 and 3 above. An ‘associated person’ is widely defined as a person who performs services for or on behalf of the commercial organisation, in any capacity (it therefore includes employees, agents or subsidiaries and could include arms-length contractors). This section of the Act applies to any organisations either incorporated in the UK or carrying on business, or part of a business, in the UK; and regardless of where the bribery actually takes place.
Under the Proceeds of Crime Act 2002 (“POCA”), proceeds resulting from criminal conduct constitute criminal property and can be subject to confiscation. This includes proceeds resulting from receiving a bribe but also profits resulting from the giving of a bribe. Under sections 327 to 329 of POCA, dealing with criminal property in any way is a money laundering offence.
What are the defences/exceptions?
It is generally accepted that the common law defence of duress is very likely to be available, where the individual can show that he or she was left with no alternative but to make payments in order to protect against loss of life, limb or liberty.
In addition, the acts described in sections 1, 2 and 6 will not constitute an offence under the Act where local written law permits or requires that such advantage influence the performance of the relevant activity.
It is a defence to the section 7 offence (failure of a commercial organisation to prevent bribery) to show that the commercial organisation had adequate procedures in place designed to prevent persons associated with it from undertaking such conduct. The Ministry of Justice has issued guidance, according to which such procedures should be informed by six principles:
- Proportionate procedures: the procedures should be proportionate to the bribery risks faced by the commercial organisation and to the nature, scale and complexity of its activities;
- Top-level commitment: the top-level management of the commercial organisation should be committed to preventing bribery by persons associated with it and foster a culture within the organisation in which bribery is never acceptable;
- Risk Assessment: the commercial organisation should periodically carry out an informed assessment of the risk of exposure to potential bribery by persons associated with it;
- Due diligence: the commercial organisation should apply due diligence procedures, taking a risk based and proportionate approach in order to mitigate identified bribery risks;
- Communication (including training): the commercial organisation should seek to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through communication and training that is proportionate to the risk;
- Monitoring and review: the commercial organisation should monitor and review the procedures designed to prevent bribery by persons associated with it and makes improvements as necessary.
What are the sanctions?
Persons guilty of the sections 1, 2 and 6 offences are liable to imprisonment for a term of up to 10 years and a fine (the amount is not limited by the Act). In addition, a director convicted of an indictable offence can be disqualified by a court from acting as a director for up to 15 years (section 2 of the Company Directors Disqualification Act 1986).
A commercial entity guilty of the section 7 offence is liable to a fine (the amount is not limited by the Act).
According to s10 of the Act, any prosecution first needs to be authorised by the Director of Public Prosecutions or the Director of the Serious Fraud Office. They issued Joint Prosecution Guidance in 2011, which sets out their approach to bribery prosecutions. This confirms that, for bribery offences to be prosecuted, there must be sufficient evidence that the offence took place and it must be in the public interest for it to be prosecuted.
Persons convicted of a bribery offence also face debarment from public contracts. Under Regulation 23 of the Public Contracts Regulations 2006, which implement the EU Public Sector Procurement Directive, a public authority shall treat any economic operator as ineligible and shall not select that economic operator if it knows that the economic operator, its directors or any other person who has powers of representation, decision or control of the economic operator has been convicted of any of the section 1 or 6 bribery offences. The only exception is where there are “overriding requirements in the general interest which justify” disregarding this prohibition, which is an extremely narrow exception. Where the commercial organisation is convicted under section 7 of the Act in respect of a failure to prevent bribery, then the conviction will attract a discretionary rather than mandatory exclusion from public procurement.
Money laundering offences under POCA attract a maximum penalty of 14 years imprisonment and/or an unlimited fine.
Industry focus: bribery and the shipping industry
Shipping companies are especially vulnerable to bribery and corruption issues, especially in view of the extra-territorial application of the Act. To assist in navigating anti-corruption laws and to further the aim of tackling bribery, those in the shipping industry have some useful tools at their disposal:
- The BIMCO anti-corruption clause
BIMCO recommends a clause that aims to provide the shipping industry with a wording that balances owners’ and charterers’ responsibilities and is itself compliant with the requirements of the Bribery Act 2010. The clause contains a mechanism for shipowners to issue a Letter of Protest to charterers in the event that a demand for payment, goods or another thing of value is made by a third party and, despite the parties taking reasonable steps to resist it, such a demand is not withdrawn. Ordinarily a Letter of Protest will be issued to local interests at the port in question. Without evidence to the contrary, it will be deemed that any delay will be as the result of resisting the demand and the vessel will remain on-hire, or time lost will count as laytime/demurrage. If either party fails to comply with anti-corruption legislation, it is to reimburse the other for any fines, penalties or other losses incurred as a result of the breach. It also permits the innocent party to terminate the charter in circumstances where the applicable anti-corruption legislation has been breached by the other party, resulting in the innocent party attracting liability under the relevant anti-corruption laws. This clause is generally considered to be more balanced than such clauses often proposed by charterers.
- UK Chamber of Shipping Guidance
Recognising the practical difficulties faced by shipping companies in relation to facilitation payments, the UK Chamber of Shipping has published guidance to suggest corporate procedures for preventing bribery to comply with the law. This Guidance suggests a practical, flowchart approach based on “Resist, Report, Record”. Whilst this arguably departs from the strict zero tolerance approach prescribed by the Bribery Act, it is generally accepted as being consistent with the aims of the Act, and we often advise clients on the appropriateness of this approach to their organisation’s policies and procedures.