The Bribery Act was expected to come into force in April 2011 this was delayed to allow further review of the legislation and will now be in force from 1st July 2011, it will create a comprehensive framework to replace most of the previous antiquated laws governing bribery which have been the subject of criticism and debate for several years. The Act will create four new offences:
- Paying bribes
- Receiving bribes
- Bribery of a foreign public official
- Failure to prevent bribery
Paying And Receiving Bribes
It will be an offence to pay and receive bribes with the intention of inducing a person to perform, or performing, a relevant function or activity improperly.
What constitutes a "relevant function or activity" is quite wide and includes any function of a public nature, connected with a business and in the course of employment in both the private and public sectors.
The question of whether the performance is "improper" will be judged by reference to whether or not it accords with the expectation of a reasonable person in the UK albeit that such function or activity need have no connection to the UK.
Many of the definitions in the Act are complicated which has been a significant area of concern and debate. They are widely drafted in an effort to catch all inappropriate behaviour but one obvious consequence is that there is a risk that normal, previously innocent, business behaviour conduct may also now be criminal.
Bribery Of Foreign Public Officials
There is a specific offence of bribing foreign public officials. What constitutes a "foreign public official" is quite wide and the offence is committed if a person offers to give, or gives, an advantage to a foreign public official intending to influence the official to obtain, or retain, business where that official was not permitted, nor required, expressly by law to be so influenced.
Failure By Commercial Organisations To Prevent Bribery
This is the most controversial offence. It is a completely new offence and is only capable of being committed by partnerships and companies.
It requires a person associated with the commercial organisation to bribe another person with the intention that business will be obtained and/or retained.
A "person" for these purposes is widely drafted and includes employees, agents and other third parties. The term "bribes" requires a person to have committed one of the three offences set out above.
The offence is so widely drafted that it is possible that a company could be guilty of the offence even if nobody within the company was aware that the bribery had taken place and the burden is on the organisation to demonstrate that its anti-corruption procedures were robust enough to prevent its own staff (and those of third parties/agents) from committing bribery. It is intended that the Government will issue guidance on what will amount to adequate procedures but it is likely that this will be very general and difficult to apply to the individual needs of a business. Ultimately it will be the responsibility of every business to create its own business specific policies and protocols.
As general guidance, adequate procedures will include:
- A general statement of intent communicated to all employees and business partners
- Written policies setting out what is prohibited, including definitions of what is prohibited
- Zero tolerance HR policies
- Detailed procedures and controls
Entertainment, gifts and promotional expenditure may, depending on the circumstances, be caught by the Act and this is the area that has given businesses most cause for concern.
Draft guidance from the Ministry of Justice states that promotional expenditure which is ‘reasonable and proportionate’ should not cause problems however no definitions or monetary levels have been supplied.
It is likely that only lavish or extraordinary hospitality may lead a jury to reach the conclusion that it was intended to induce the recipient to act improperly.
In terms of gifts it has been suggested that a bottle of wine wouldn’t fall foul of the legislation but a case of wine might. Offering lunch at a football match may be fine, but flying clients to Australia to watch the Ashes could be risky.
Some see the dividing line for corporate hospitality events being where the event is purely for enjoyment; where no business talk is expected to be held. So in the previous example of lunch at a football match, this may be questionable if the host wasn’t present at that event.
The timing of the hospitality may also have an impact. If hospitality has always been offered as routine then it is unlikely to attract attention whereas entertaining clients at a sensitive time, such as when a related contract was due for renewal, would be riskier.
All of the four new offences can be prosecuted regardless of whether the offence took place within or outside of the UK provided that it has been committed by a British national or British corporate or by someone ordinarily resident in the UK. The corporate offence will also apply to all commercial organisations with a business presence in the UK.
The maximum sentence for bribery by an individual will be 7 years imprisonment and/or an unlimited fine. A company found guilty of failing to prevent bribery could receive an unlimited fine.
This document is intended to be a very brief overview of the Act and its contents may be subject to change. It should not be used as a substitute for taking specific legal advice and no reliance should be placed on it.
Dan Stowers, Partner