Enhanced Anticorruption Enforcement in the UK

March 2, 2010

After several years of criticism over lax enforcement of existing anticorruption laws, and more than a decade of failed efforts to pass similar legislation, the UK is on the verge of passing comprehensive anti-bribery legislation. The UK Bribery Bill is modelled after but reaches beyond the United States’ Foreign Corrupt Practices Act (FCPA), legislation that has in the past few years been enforced aggressively by the US government against both US and foreign companies. The expected passage of the now pending Bribery Bill would give the UK a strong platform upon which to build new anticorruption enforcement efforts. If enacted during this session of Parliament, the Bribery Bill would come into effect in 2010, and replace a patchwork of existing anticorruption laws and common law offences that date to World War I and before, which have become outdated.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 offences are bribing a foreign official, which tracks the Organisation for Economic Co-operation and Development’s (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 offences 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 feature is the Bribery Bill’s fourth offence, which creates a new strict liability offence of failure by a commercial organisation to prevent a bribe being paid for or on its behalf. Under this offence, 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 offence applies to both UK corporations or partnerships, and corporations or partnerships doing business in the UK. Companies may also be held criminally liable for offences 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 offence may be held liable for that offence.

However, it is a defence if the company can prove it had an adequate system in place to prevent bribery. The Ministry of Justice will provide guidance to companies as to what constitutes adequate anti-bribery procedures and will do so prior to the enactment of the Bribery Act 2010, in order to encourage adoption of robust compliance programmes within such organisations.

A more detailed review of the Bribery Bill can be found here.

For more information, or to discuss anticorruption related representation by McGuireWoods LLP, please visit our International Fraud/Anticorruption practice.