The Implications of the Bribery Act
By Michael May
Posted: 9th July 2014 08:46The Bribery Act came into force on 1 July 2011. Described as the toughest anti-corruption legislation in the world, it has a much wider remit than its international counterparts such as the US Foreign Corrupt Practices Act and aims to criminalise all forms of bribery. The Act has had a significant impact on how UK businesses of all shapes and sizes conduct their affairs, targeting corrupt practices in both the public and private sectors.
Four categories of offence were created by the Act;
1. Offering, promising or giving a bribe;
2. Receiving or accepting a bribe;
3. Bribing a foreign public official;
4. Failure by a corporate body to prevent bribery.
A bribe could be defined as a payment or favour to another made with a view to encouraging them to abuse their position or perform their function improperly. A bribe does not necessarily have to be monetary to fall within the sphere of the offences created under the Act.
An individual found guilty of any of the first three categories of offence is liable to:
- Up to six months imprisonment and/or a maximum £5000 fine if tried in the Magistrate’s Court
- Up to 10 years imprisonment and/or an unlimited fine if tried at the Crown Court.
A commercial organisation found guilty of any of the first three categories of offence is liable to:
- A maximum £5000 fine if tried in the Magistrate’s Court
- An unlimited fine if tried at the Crown Court.
A corporate body may be found guilty of the fourth offence if it fails to prevent an associated person (an employee, contractor, agent, advisor etc.) from bribing a third party in order to procure some benefit for the corporate body. Small and medium businesses are by no means exempt from the remit of the Act by virtue of their size. A corporate body found guilty of the fourth category of offence following a Crown Court trial may be subject to an unlimited fine. It is worth noting that the term “corporate body” can include limited liability partnerships and standard partnerships.
A Defence to the Corporate Offence
A corporate body may successfully defend a charge of failure to prevent bribery if it can show that it had in place sufficient procedures to prevent such an act taking place. Commercial businesses should:
- Regularly review their anti-bribery policy;
- Ensure their staff are fully trained and aware of their reporting obligations;
- Include anti-bribery clauses in their standard commercial contracts;
- Carry out the appropriate checks in advance of entering into agreements with third parties;
- Consider how they will deal with an allegation of bribery either within the company or in the public arena.
A Quick Note on Corporate Hospitality
Bona fide hospitality or promotional or other legitimate business expenditure is recognised as an established and important part of doing business and is not criminalised by the Act. When providing hospitality businesses should consider:
- What is the purpose of the gift or hospitality?
- Does it comply with the firm’s relevant policies?
- Would the recipient feel under any obligation to confer business on the firm?
- Is the gift or hospitality particular lavish?
- Has a record of the occasion and the recipients been made?
Enforcement of the Act
It is acknowledged that there is an inherent public interest in the prosecution of bribery and if there is sufficient evidence against an individual or company the Public Prosecution Service will proceed. However, it is significant to note that here have been no corporate prosecutions under the Act to date. The Director of the Serious Fraud Office defines its function thus:
“The SFO’s primary role as an investigator and prosecutor of serious and/or complex fraud, including corruption”
This would suggest that the SFO intends to target high profile, high level cases yet the prosecutions brought thus far under the legislation relate to individuals and bribery of varying amounts. It is rumoured that several investigations of corporate bodies are underway with high profile prosecutions to follow. In the meantime it would be prudent to avoid assumptions that only large companies will fall victim to the strict regime.
An interesting element of this legislation is that it applies to bribes given not just in the UK but overseas as well. It can apply to people working overseas for UK companies, UK companies which fail to prevent bribery overseas and foreign companies which fail to prevent bribery within the UK. Many in business argue that the Act places UK firms at a disadvantage in international commerce.
An Alternative Disposal: Deferred Prosecution Agreements
The introduction of Deferred Prosecutions Agreements (DPA) reflects a more American style of restricting bribery and corruption in the UK. Under a DPA, criminal charges can be brought but taken no further, provided that the defendant company complies with terms and conditions agreed between them and the relevant prosecuting authority. Such terms can include financial penalties or remuneration to other parties. There is no formal admission of guilt by the Company and the DPA is in place for a specified period. Upon expiry of the agreed time and compliance with all terms and conditions, the DPA will cease to have effect and the prosecution will be deemed discontinued.
The benefits of a DAP to a potential defendant company are numerous;
- The financial penalties can be significantly lower than those imposed by a court;
- The process can be much shorter than a standard trial, thus saving time and legal costs;
- All court hearings are private and the terms of a DPA are only published once they have been agreed by all parties;
- A criminal conviction can be avoided along with damage to the company’s reputation;
- It will not be disqualified under the EU public procurement regime.
Michael May is a partner of Edwards & Co. Michael joined Edwards & Co. in 2003 having previously qualified and practised in England.
Michael specialises in disciplinary and regulatory work and has a track record of success is delivering quick and effective resolutions for his clients. His specialism has resulted in a demand for him to provide training courses and lectures which he does on a regular basis.
Michael also undertakes criminal work, representing clients at PACE interviews, as well as Magistrates' Court and Crown Court proceedings. He has also acted for a number of professionals in complex criminal investigations. Michael practises in Judicial Review and has been involved in a number of significant cases which have impacted upon how applications for employment are processed and upon the payment of occupational pensions to those in receipt of severance payments.
Edwards & Co is here to help when a difficulty arises, but more importantly to help prevent potential liability by advising you on the implementation of appropriate anti-bribery measures and safeguards for your business.
For further advice and information please contact Michael May by phone on +44 (0) 28 9032 1863 or alternatively via email at firstname.lastname@example.org.