Issue 4 - March 2011
Crossing The Line
Britain’s new anticorruption statute puts companies on the spot for the actions of anyone working on their behalf. And ignorance of an agent’s bribes is no excuse.
In 2010 the United Kingdom’s Bribery Act went into effect, superseding 19th-century legislation that was widely regarded as no longer fit to tackle overseas corruption. The new legislation, one of the world’s toughest anticorruption laws, makes it a criminal corporate offense to fail to stop bribes from being paid on a company’s behalf. Ian Trumper, senior managing director with FTI Consulting in London, explains what the law, which will start being enforced sometime this year, means both to companies based in the United Kingdom and to foreign firms doing business there.
What was the impetus for these reforms?
There has been increasing international pressure for the U.K. government to introduce an effective anticorruption measure similar to the Foreign Corrupt Practices Act in the United States. The existing U.K. law had a very poor track record in prosecuting overseas corruption cases and had been criticized for failing to meet its obligations under the Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials. Pressure increased when the U.K. Serious Fraud Office, citing concerns about national security, decided to abandon a major part of a case against BAE Systems concerning alleged corrupt practices in securing contracts with Saudi Arabia.
What are the key goals of the new law?
The primary objective is to create an effective legal framework to combat bribery in both the public and private sectors. The Bribery Act creates four prime offenses: two that cover offering, promising or giving an advantage, and requesting, agreeing to receive or accepting an advantage (Sections 1 and 2); one for bribing a foreign public official (Section 6); and a corporate offense of failing to prevent a bribe from being paid (Section 7).
The first two offenses cover bribes in both the public and private sectors, but a person (or corporation) is guilty only if there was an intention to induce another to do something improper or to reward someone for such an action. These types of bribes already were illegal, but under the new law it will be easier to bring charges. The offense of bribing a foreign public official brings the U.K. law into line with the OECD Convention, which criminalizes bribes intended to influence a public official in obtaining or retaining business. But if the first three offenses merely clarified or modified existing legislation, the fourth is entirely new. Under Section 7, any corporation with a business presence in the United Kingdom can be held criminally liable if any person associated with it, including any of its employees or agents anywhere in the world, is found guilty of giving or receiving a bribe. The only defense will be that the organization had put adequate procedures in place to prevent such bribery.
What does that mean for companies based in the United Kingdom?
You have to look at specific wording within Sections 6 and 7 to understand the new law’s significance. For example, in Section 6 there is no test for improper performance, so if you offer anyone working in a public capacity a financial reward with the intention of influencing that person to obtain or retain business, that is an offense — even if that person does nothing improper.