Never one to be easily outdone by its colonial cousins, the UK appears to be on the verge of passing comprehensive anti-bribery legislation modeled after but reaching beyond the United States’ Foreign Corrupt Practices Act (FCPA).
After several years of criticism over lax enforcement of existing anticorruption laws, and more than a decade of failed efforts to pass similar legislation, expected passage of the now pending Bribery Bill would give the UK a strong platform upon which to build new anticorruption enforcement efforts. If the opposition Conservative Party wins the upcoming elections in 2010, it has pledged to create a new financial crime regulator, which could give anticorruption enforcement in the UK an additional boost.
Although drafts of the Bribery Bill have been discussed since March of this year, the Bribery Bill to be put before Parliament was not revealed until a speech by Queen Elizabeth II on November 18. It is anticipated that Parliament will act quickly on the Bill, likely before its current legislative session ends. The current session would be the last before next year’s general elections. If enacted during this session of Parliament, the Bill would come into effect in 2010, and replace a patchwork of existing anticorruption laws and common law offenses that date to World War I and before, and have become outdated.
The general structure of the Bribery Bill’s anticorruption regime is familiar to anyone who has experience with the FCPA, including penalties for the payment or offer of illicit inducements to foreign government officials, and for failure to have adequate controls in place to detect and remediate corruption issues as they arise. However, the UK has taken that model several steps further. Among the Bribery Bill’s four offenses are bribing a foreign official, which tracks the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and is similar to the FCPA’s anti-bribery provision. Two of its other offenses are making and taking a bribe. These prohibit offering or accepting a “financial or other advantage” intended as a reward for performing, or to cause a person to perform, a function or activity improperly. This includes government and non-government functions, and in some instances extra-territoriality, meaning that purely commercial business-to-business activities inside and outside the UK can fall within its scope.
Perhaps the most striking departure is the Bill’s fourth offense, which creates a new strict liability offense allowing for stiff fines against companies that fail to prevent a bribe being paid for or on its behalf. Under this offense, a company has committed a crime if a person acting on its behalf bribes someone in connection with company business in an effort to “obtain or retain business” for the company or to “obtain or retain an advantage in the conduct of business” for the company. This offense applies to both UK corporations or partnerships, and corporations or partnerships doing business in the UK. However, it is a defense if the company can prove it had an adequate system in place to prevent bribery. The Bill states that the intent of the strict liability offense is to encourage adoption of robust compliance programs within such companies.
Companies may also be held criminally liable for offenses committed by individuals acting on the company’s behalf, including employees, agents and other third-party representatives. Further, officers and directors who consent to or assist in a bribery offense may be held liable for that offense.
The current draft of the Bill is a departure from earlier drafts, which had originally forwarded a negligence rather than strict liability standard for the fourth offense. It is likely that as the Bill progresses through Parliament it will be further amended. Consequently, the above is far from the final word on what the offenses are likely to end up being. Sources inside the Conservative Party have alluded that while they are supportive of the Bill in principle and have been pursuing similar legislation for the last 10 years, it is possible that amendments will be necessary to ensure passage before the 2010 elections. However, because it is in both parties’ interest to pass the Bill during the current legislative session, it is unlikely that significant changes in the direction of the Bill will occur.
Although it is impossible to tell at this early date how vigorously UK law enforcement will seek to investigate and prosecute possible offenses, just this week the Serious Fraud Office (SFO) launched its first prosecution of a British executive for overseas corruption when it charged a former vice president of a British subsidiary of Johnson & Johnson with conspiracy to corrupt. The SFO is the UK’s current lead agency in investigating and prosecuting overseas corruption cases such as this one, which involves alleged bribes of Greek officials to buy Johnson & Johnson medical products. The case springs from a wider ongoing effort by the U.S. Department of Justice (DOJ) to investigate U.S. healthcare companies and pressure its foreign law enforcement counterparts to pursue high-profile cases.
The passage of the Bribery Bill in this environment will add to the growing chorus cautioning companies to take great care in how they handle their international business transactions. U.S. law enforcement has already signaled that efforts are underway to enhance cooperation and information sharing with its foreign counterparts in this area, and it can be expected that the Bribery Bill will serve as a catalyst for that effort over the next several years. However, the Bill offers both a carrot and a stick by tipping its hat to the notion that companies taking steps to implement a robust compliance organization can avoid or mitigate the risk of prosecution under its provisions.
This approach was recently endorsed in guidelines on overseas corruption cases issued in July 2009 by the SFO. These guidelines focus on voluntary disclosure by corporations, followed by remedial actions and cooperation with investigators in exchange for civil rather than criminal resolution of overseas corruption matters. Its provisions are closely aligned with core considerations of the DOJ’s Principles of Federal Prosecution of Business Organizations (commonly known as the Filip Memo), and other mechanisms already familiar to many companies, such as the FCPA Opinion Procedure.
McGuireWoods’ Government, Regulatory and Criminal Investigations Department has attorneys with extensive experience defending anticorruption investigations; conducting anticorruption risk assessments, audits and internal investigations; and designing and helping to implement overall and anticorruption-specific corporate compliance programs and training. As recognized by the Bribery Bill and SFO guidelines, the most valuable weapons a corporation and its officers and directors have against potential anticorruption issues are preparedness, responsiveness and the deployment of a robust compliance program designed to identify, address and prevent issues before they become government investigations.
For more information about the capabilities of our Government, Regulatory and Criminal Investigations Department in this or any other area, including the capabilities of McGuireWoods’ London office, please contact the authors.