New U.K. Bribery Act Stricter than FCPA, Can Apply Worldwide
On April 8, 2010, a new Bribery Act was passed by the U.K. Parliament. It is not yet in force - and will not be before October 2010 at the earliest.
However, this is a significant development for companies that do business in the U.K., especially those that are also subject to the U.S. Foreign Corrupt Practices Act. The Bribery Act goes beyond the Foreign Corrupt Practices Act (FCPA) in criminalizing public and commercial bribery.
The Bribery Act prohibits all commercial bribery making it an offense to:
- offer, promise or give a bribe; or
- request, agree to receive or accept a bribe.
The Bribery Act also tracks the FCPA with respect to the bribery of government officials by specifically outlawing:
- bribes to a foreign public official;
- with the intent to influence the official in their official capacity;
- in order to obtain or retain business or an advantage in the conduct of business.
A foreign public official is widely defined and includes anyone who holds a legislative, administrative or judicial position of any kind, who exercises a public function or who is an official or agent of a public international organization (a definition not dissimilar to that under the FCPA).
Importantly, the Bribery Act does offer some comfort to companies with effective compliance programs by providing a defense to companies who can prove they had in place adequate procedures designed to prevent bribery. The Bribery Act also purports to apply extraterritorially both to companies incorporated in the U.K. and persons with close connections to the U.K. through citizenship, residence or other similar circumstances.
Stricter than the FCPA
There are at least three ways in which the Bribery Act is stricter than the FCPA.
First, the offense of bribery of a foreign public official applies to any payments to officials carrying out administrative functions of any kind. This means that even “facilitating payments” made to speed up foreign administrative processes (e.g., visa applications) are criminalized by the Bribery Act. In contrast, the FCPA contains an explicit exception to allow facilitating payments for “routine governmental action.”
Second, in addition to the offense of corruption of public officials, the Bribery Act contains the other generic bribery offenses set out above. These offenses criminalize bribery between businesses and/or individuals, not just public officials. This is broader than the FCPA which only applies to corruption of foreign public officials.
Third, the test that the prosecution must satisfy for a conviction under the Bribery Act may be easier to satisfy than the test under the FCPA. Under the FCPA, the person making or authorizing the payment to the foreign official must have a “corrupt intent” - a subjective test. But the Bribery Act only requires “improper behavior,” which means acting in breach of an expectation of good faith or impartiality, or in breach of a position of trust. The Bribery Act creates an objective test to determine if this standard is met - what a “reasonable person in the United Kingdom would expect in relation to the performance of the type of function or activity concerned.”
Applicable outside the U.K.
Prosecutions for any of the bribery offenses created by the Bribery Act can be brought:
- against a party with no connection to the U.K., provided any part of the offense took place in the U.K.; or
- irrespective of where the offense takes place, if the act or omission which forms part of the core bribery offense was committed by a person who has a “close connection” to the U.K.
Someone with the necessary close connection is either:
- a British citizen;
- an individual ordinarily resident in the U.K.; or
- a body incorporated under the law of any part of the U.K. or a Scottish partnership.
Strict liability for “failing to prevent bribery”
The Bribery Act also creates a strict liability offense for companies, not of bribery, but of failing to prevent bribery by persons acting on the company’s behalf. However, the sting of this provision is limited by a defense for companies that can prove they had adequate procedures in place designed to prevent bribery.
This offense only applies to companies and partnerships incorporated, formed or carrying on business in the U.K.
As a result, any company that does business in the U.K. (even if it is not incorporated in the U.K. or does not have its central management in the U.K.) must put in place policies and procedures that can be shown to be effective in preventing bribery by employees and others.
The Bribery Act requires the U.K. Government to publish guidance on what procedures should put in place to avoid prosecution for this offense. Such guidance is not yet published.
Senior officers personally liable
Senior officers of companies - directors, managers, company secretaries or other similar officers - can also be personally liable for bribery offenses committed by the companies which they serve.
In order to be convicted, a bribery offense must have been committed by the company with the consent or connivance of the officer in question.
There is no geographical limitation to this provision. Accordingly, officers of companies doing business in the U.K. may be subject to prosecution under the Bribery Act regardless of where they live and work.
On conviction, the maximum penalty for officers who are guilty of bribery by reason of their consent or connivance is 10 years’ imprisonment and/or an unlimited fine.
(See also “Bribery Act FAQs”)
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