New UK Bribery Act 2010: Are You Compliant?

May 18, 2010

After several years of criticism over lax enforcement of existing anticorruption laws by the Organisation for Economic Co-operation and Development (OECD), and more than a decade of failed efforts to pass similar legislation, the Bribery Act 2010 (The Bribery Act) finally received Royal Assent on 8 April 2010.

The Act will give the UK a strong platform upon which to build new anticorruption enforcement efforts, and will make it easier for the Serious Fraud Office (SFO) to prosecute commercial organisations. The purpose of the Bribery Act is to modernise existing anticorruption law by creating a single piece of legislation criminalising bribery (and other associated corrupt activities), and by repealing what is generally accepted to be outdated legislation.

It is now anticipated that the Bribery Act will come into force after the General Election on 6 May 2010, on a commencement date chosen by the newly appointed Minister of Justice Ken Clarke.

The general structure of the Bribery Act’s anticorruption regime is familiar to anyone who has experience dealing with the U.S. Foreign Corrupt Practices Act 1977 (FCPA), including penalties for payments or offers 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. The Bribery Act has greater impact than the FCPA, in that it covers corruption situations involving the public and private sectors, and because it prohibits facilitation payments.

Key Offences under the Bribery Act

  1. Offering a bribe.
  2. Taking a bribe.
  3. Bribing a foreign official.
  4. Strict corporate liability for failing to prevent bribery.

The most noteworthy feature of the Bribery Act for businesses, is the creation of the strict corporate liability offence for failure by a commercial organisation to prevent bribery being committed on its behalf. However, there is a defence for the commercial organisation if it can prove it has put adequate systems in place to prevent bribery. The Bribery Act will penalise companies that do business with the UK and whose employees engage in bribery, even if committed overseas.

Under the Bribery Act, the maximum penalty for individuals is 10 years’ imprisonment and/or a fine, and the maximum penalty for a corporate entity is an unlimited fine. Conviction under the Bribery Act could lead to collateral consequences: a director of a company could be disqualified, and a convicted company could be debarred from competing to tender for public contracts under Part 4 of the Public Contracts Regulations 2006. Also pursuant to the agreement entered into by the World Bank and leading banks, companies and individuals will be debarred if found guilty of bribery.

Commercial organisations doing business with the UK (whether British or foreign) should therefore start reviewing their internal compliance procedures as a matter of urgency to avoid triggering possible criminal liability when the Act comes into force.

A more detailed review of the Bribery Act 2010 is available online.