A year after receiving Royal Assent, the Bribery Act will come into force in April 2011. It replaces and repeals England’s fragmented and widely-criticised laws governing bribery and corruption, establishing four offences and creating a modern and more effective anti-bribery framework.
The offences contained within the act are two general offences concerning the paying and receiving of bribes (which include promising, offering, agreeing to or requesting bribes), a discrete offence of bribery of foreign public officials and a new offence of the failure of commercial organisations to prevent bribery.
The Act is wide-ranging, covering both the public and private sectors, with extraterritorial reach. Individuals who commit acts of bribery outside of the UK will be liable if these acts (or omissions to act) would have been an offence if committed within the UK and if that individual has a ‘close connection’ to the UK. Charges may be brought against companies ‘irrespective of whether the acts or omissions which form part of the offence take place in the UK or elsewhere’. The offence of bribing a foreign public official contained within section 6 also removes any existing issues with international jurisdiction. The Bribery Act is also stricter than its US counterpart, as facilitation payments are prohibited.
The Act will bring into force a major shift from the current law and will place obligations on corporate organisations to ensure that they deploy robust anti-corruption procedures. This will be a strict liability offence, so no corrupt intent will be required on the part of the organisation. It will therefore be easier for the Serious Fraud Office to prosecute organisations.
If adequate anti-corruption procedures are established, the company could escape liability for any corrupt activities carried out by its employees.
The Government has a statutory obligation to provide guidance on what constitutes ‘adequate procedures’. A consultation on this topic has just closed and the first set of guidelines is expected in the New Year to allow companies time to adjust before the new law comes into force.
The guidance will not be prescriptive in nature; it is intended to allow companies to develop procedures which are appropriate for their own circumstances and the sectors in which they operate. However, a letter from Lord Bach (then-Parliamentary Under-Secretary of State) indicated that the following should be incorporated:
- The Board of Directors will have overall responsibility of designing and implementing an anti-corruption program and establishing an anti-corruption culture, with a senior officer being directly accountable for the implementation and running of the program.
- Commercial organisations must incorporate anti-corruption elements into their code of conduct, risk management, due diligence, decision making, procurement and contract management, employee vetting and disciplinary procedures. The organisation must ensure relevant staff are appropriately trained in these areas.
- Organisations should establish gifts and hospitality policies and registers
- Companies must establish ‘whistle blowing’ procedures and properly investigate all allegations.
The maximum penalty for individuals found guilty of an offence of bribery will be increased from seven to ten years’ imprisonment, a fine, or both and the maximum penalty for corporate organisations will be an unlimited fine. There will also be collateral consequences to a conviction under the Act – director disqualification, debarment from public procurement and asset confiscation will follow.
In his letter, Lord Bach stated that it is not the Government’s ‘intention to drag well run companies before the courts for every infarction’. Many companies will already have sufficient anti-corruption procedures in place as a matter of good practice, but as the Bribery Act will criminalise an organisation’s failure to prevent bribery from April 2011, it is important for companies to review their existing policies and procedures now, paying particular attention to the risks they face in the sector in which they operate.