Bribery Act 2010

The Bribery Act 2010 (the Act) applies across the UK and all busi­ness­es need to be aware of its require­ments. The Act includes a ‘cor­po­rate’ offence of ‘fail­ure of com­mer­cial organ­i­sa­tions to pre­vent bribery’. The defence against this offence is to ensure that your busi­ness has ade­quate pro­ce­dures in place to pre­vent bribery. To help ensure this we rec­om­mend that you under­take a risk assess­ment for your own busi­ness and estab­lish appro­pri­ate com­pli­ance pro­ce­dures.

What action should you take?

• famil­iarise your­self with the guid­ance issued by the Min­istry of Jus­tice
• review the cur­rent activ­i­ties of your busi­ness and assess the risk of bribery occur­ring
• assess the strength of the mea­sures that you cur­rent­ly have in place to pre­vent bribery
• make any nec­es­sary updates to your staff hand­books: for exam­ple, your human resources man­u­al
• con­sid­er whether spe­cif­ic anti-bribery staff train­ing is required
• con­sid­er if changes are need­ed to oth­er poli­cies and pro­ce­dures, for exam­ple, expen­di­ture approval and mon­i­tor­ing process­es
• com­mu­ni­cate the changes that you have made to your poli­cies and pro­ce­dures
• con­sid­er if you need to under­take any due dili­gence pro­ce­dures.

The Bribery Act 2010

The Act replaced, updat­ed and extend­ed pre­vi­ous UK law against bribery and cor­rup­tion. It applies across the UK and all UK busi­ness­es and over­seas busi­ness­es car­ry­ing on activ­i­ties in the UK are affect­ed.

The offences estab­lished by the Act are defined very broad­ly and the Act has sig­nif­i­cant extrater­ri­to­r­i­al reach in that it extends to acts or omis­sions which occur out­side of the Unit­ed King­dom. Spe­cif­ic details about its juris­dic­tion can be found in the detailed guid­ance referred to under ‘Min­istry of Jus­tice guid­ance’ below, as well as in the Act itself.

What is bribery?

Bribery is a broad con­cept. In sup­ple­men­tary guid­ance pub­lished along­side the Act, it is very gen­er­al­ly defined as ‘giv­ing some­one a finan­cial or oth­er advan­tage to encour­age that per­son to per­form their func­tions or activ­i­ties improp­er­ly or to reward that per­son for hav­ing already done so. So this could cov­er seek­ing to influ­ence a deci­sion-mak­er by giv­ing some kind of extra ben­e­fit to that deci­sion-mak­er rather than by what can legit­i­mate­ly be offered as part of a ten­der process.’

The key offences

Under the Act there are two gen­er­al offences:

1. Active bribery

Sec­tion one of the Act pro­hibits offer­ing, promis­ing or giv­ing a finan­cial or oth­er advan­tage (a bribe) to a per­son with the inten­tion of influ­enc­ing a per­son to per­form their duty improp­er­ly.

2. Pas­sive bribery

Sec­tion two of the Act pro­hibits a per­son from request­ing, agree­ing to receive or accept­ing a bribe for a func­tion or activ­i­ty to be per­formed improp­er­ly.

In addi­tion, there are two fur­ther offences that specif­i­cal­ly address com­mer­cial bribery:

3. Bribery of for­eign pub­lic offi­cials (FPO)

Sec­tion six of the Act pro­hibits bribery of an FPO with the inten­tion of influ­enc­ing them in their offi­cial capac­i­ty and obtain­ing or retain­ing busi­ness or an advan­tage in the con­duct of busi­ness.

4. Fail­ure of com­mer­cial organ­i­sa­tions to pre­vent bribery

Sec­tion sev­en of the Act intro­duces a strict lia­bil­i­ty offence that will be com­mit­ted if:

• bribery is com­mit­ted by a per­son asso­ci­at­ed with a rel­e­vant com­mer­cial organ­i­sa­tion
• the per­son intends to secure a busi­ness advan­tage for the organ­i­sa­tion
• the bribery is either an active offence (sec­tion one of the Act) or bribery of an FPO (sec­tion six of the Act).

This means that a com­mer­cial organ­i­sa­tion com­mits an offence if a per­son asso­ci­at­ed with it bribes anoth­er per­son for that organisation’s ben­e­fit. This ‘cor­po­rate’ offence is the most sig­nif­i­cant and con­tro­ver­sial change to exist­ing law and it is pri­mar­i­ly this offence that you must now con­sid­er and pre­pare your busi­ness for as nec­es­sary.

It is impor­tant to note, how­ev­er, that the Act also states that there is a defence avail­able for com­mer­cial organ­i­sa­tions against fail­ing to pre­vent bribery if they have put in place ‘ade­quate pro­ce­dures’ designed to pre­vent per­sons asso­ci­at­ed with them from brib­ing oth­ers on their behalf. The Sec­re­tary of State is required by the Act to pub­lish guid­ance about such pro­ce­dures.

Senior offi­cers of an organ­i­sa­tion can also be held per­son­al­ly liable under the Act for oth­er bribery offences com­mit­ted by the organ­i­sa­tion, i.e. the active and pas­sive bribery offences as well as the bribery of an FPO, where the offence is proved to have been com­mit­ted with their ‘con­sent or con­nivance’.

‘Senior offi­cer’ is wide­ly defined in the Act to include direc­tors, man­agers, com­pa­ny sec­re­taries and oth­er sim­i­lar offi­cers, as well as those pur­port­ing to act in such a capac­i­ty.

Key definitions and terminology

Inevitably, in order to ful­ly under­stand the require­ments of the Act, it is nec­es­sary to be famil­iar with a num­ber of key def­i­n­i­tions.

Relevant commercial organisation

The cor­po­rate offence can be com­mit­ted by a ‘rel­e­vant com­mer­cial organ­i­sa­tion’, which broad­ly includes:

• any body which car­ries on a busi­ness and is incor­po­rat­ed under, or is a part­ner­ship which is formed under, any UK law, regard­less of where it car­ries on busi­ness
• any body cor­po­rate or part­ner­ship, wher­ev­er it is incor­po­rat­ed or formed, which car­ries on busi­ness in the UK.

We will refer to those affect­ed by this cor­po­rate offence as ‘busi­ness­es’.

Persons associated

The cor­po­rate offence also refers to a per­son ‘asso­ci­at­ed’ with a com­mer­cial organ­i­sa­tion. While there is not an absolute list of all who could be includ­ed, we are told that this is a per­son who per­forms ser­vices for, or on behalf of, the organ­i­sa­tion, regard­less of the capac­i­ty in which they do so.

Accord­ing­ly, this term will be con­strued broad­ly and while exam­ples are giv­en of an employ­ee, agent or sub­sidiary, it could also cov­er inter­me­di­aries, joint ven­ture part­ners, dis­trib­u­tors, con­trac­tors and sup­pli­ers.

Guid­ance issued by the Min­istry of Jus­tice (see below) acknowl­edges that the scope of ‘per­sons asso­ci­at­ed’ is broad and states that this is so as to ‘embrace the whole range of per­sons con­nect­ed to an organ­i­sa­tion who might be capa­ble of com­mit­ting bribery’ on its behalf.

Improper performance

The pas­sive and active bribery offences both refer to the ‘improp­er per­for­mance’ of a func­tion or activ­i­ty. ‘Improp­er per­for­mance’ cov­ers any act or omis­sion that breach­es an expec­ta­tion that a per­son will act in good faith, impar­tial­ly, or in accor­dance with a posi­tion of trust. This is an objec­tive test based on what a rea­son­able per­son in the UK would expect in rela­tion to the per­for­mance of the rel­e­vant activ­i­ty.

Ministry of Justice guidance

The Act requires the Sec­re­tary of State to pub­lish guid­ance for com­mer­cial organ­i­sa­tions about pro­ce­dures that they can put in place to pre­vent per­sons asso­ci­at­ed with them from brib­ing. This is impor­tant guid­ance in respect of pro­vid­ing a defence against the ‘cor­po­rate offence’.

Defending your business against failing to prevent bribery

All busi­ness­es will need to pay some atten­tion to the new cor­po­rate offence of fail­ing to pre­vent bribery. How much you will have to do will depend on the bribery risks fac­ing your busi­ness.

If a busi­ness can show that it had ‘ade­quate pro­ce­dures’ in place to pre­vent bribery then it will have a full defence against the cor­po­rate offence. The mean­ing of ‘ade­quate pro­ce­dures’ is not defined in the Act and it is here that the MoJ statu­to­ry guid­ance should be con­sid­ered.

This guid­ance requires pro­ce­dures to be tai­lored to the indi­vid­ual cir­cum­stances of a busi­ness, based on an assess­ment of where the risks lie. There­fore, what counts as ‘ade­quate’ will depend on the bribery risks faced by a busi­ness and its nature, size and com­plex­i­ty.

The MoJ guid­ance does recog­nise that the Act is not there to impose the ‘full force’ of crim­i­nal law upon well run busi­ness­es for an iso­lat­ed inci­dent of bribery. It also recog­nis­es that no busi­ness is capa­ble of pre­vent­ing bribery at all times. The ‘quick start’ guid­ance for small­er busi­ness­es com­ments that ‘a small or medi­um-sized busi­ness which faces min­i­mal bribery risks will require rel­a­tive­ly min­i­mal pro­ce­dures to mit­i­gate those risks’.

How should you begin to deter­mine the approach need­ed in your busi­ness? The MoJ guid­ance iden­ti­fies six guid­ing prin­ci­ples for busi­ness­es wish­ing to pre­vent bribery from being com­mit­ted on their behalf (see the pan­el below). These prin­ci­ples are not, how­ev­er, pre­scrip­tive.

The six prin­ci­ples that should guide anti-bribery pro­ce­dures

1. Pro­por­tion­ate pro­ce­dures

A com­mer­cial organisation’s pro­ce­dures to pre­vent bribery by per­sons asso­ci­at­ed with it are pro­por­tion­ate to the bribery risks it faces and to the nature, scale and com­plex­i­ty of the com­mer­cial organisation’s activ­i­ties. They are also clear, prac­ti­cal, acces­si­ble, effec­tive­ly imple­ment­ed and enforced.

2. Top-lev­el com­mit­ment

The top-lev­el man­age­ment of a com­mer­cial organ­i­sa­tion (be it a board of direc­tors, the own­ers or any oth­er equiv­a­lent body or per­son) are com­mit­ted to pre­vent­ing bribery by per­sons asso­ci­at­ed with it. They fos­ter a cul­ture with­in the organ­i­sa­tion in which bribery is nev­er accept­able.

3. Risk assess­ment

The com­mer­cial organ­i­sa­tion assess­es the nature and extent of its expo­sure to poten­tial exter­nal and inter­nal risks of bribery on its behalf by per­sons asso­ci­at­ed with it. The assess­ment is peri­od­ic, informed and doc­u­ment­ed.

4. Due dili­gence

The com­mer­cial organ­i­sa­tion applies due dili­gence pro­ce­dures, tak­ing a pro­por­tion­ate and risk based approach, in respect of per­sons who per­form or will per­form ser­vices for or on behalf of the organ­i­sa­tion, in order to mit­i­gate iden­ti­fied bribery risks.

5. Com­mu­ni­ca­tion (includ­ing train­ing)

The com­mer­cial organ­i­sa­tion seeks to ensure that its bribery pre­ven­tion poli­cies and pro­ce­dures are embed­ded and under­stood through­out the organ­i­sa­tion through inter­nal and exter­nal com­mu­ni­ca­tion, includ­ing train­ing, that is pro­por­tion­ate to the risks it faces.

6. Mon­i­tor­ing and review

The com­mer­cial organ­i­sa­tion mon­i­tors and reviews pro­ce­dures designed to pre­vent bribery by per­sons asso­ci­at­ed with it and makes improve­ments where nec­es­sary.

Other important matters

Corporate hospitality

A poten­tial area of con­cern under the Act is the pro­vi­sion and receipt of cor­po­rate hos­pi­tal­i­ty, pro­mo­tion­al and oth­er such busi­ness expen­di­ture and how this might be per­ceived. While this may not be a sig­nif­i­cant issue for your busi­ness, espe­cial­ly when you con­sid­er your own lev­el of such expen­di­ture, it may be an impor­tant con­sid­er­a­tion for oth­ers.

The MoJ guid­ance states: ‘Bona fide hos­pi­tal­i­ty and pro­mo­tion­al, or oth­er busi­ness expen­di­ture which seeks to improve the image of a com­mer­cial organ­i­sa­tion, bet­ter to present prod­ucts and ser­vices, or estab­lish cor­dial rela­tions, is recog­nised as an estab­lished and impor­tant part of doing busi­ness and it is not the inten­tion of the Act to crim­i­nalise such behav­iour. The Gov­ern­ment does not intend for the Act to pro­hib­it rea­son­able and pro­por­tion­ate hos­pi­tal­i­ty and pro­mo­tion­al or oth­er sim­i­lar busi­ness expen­di­ture intend­ed for these pur­pos­es.’

The guid­ance goes on to say: ‘It is, how­ev­er, clear that hos­pi­tal­i­ty and pro­mo­tion­al or oth­er sim­i­lar busi­ness expen­di­ture can be employed as bribes.’

Facilitation payments

Facil­i­ta­tion pay­ments, which are pay­ments to induce offi­cials to per­form rou­tine func­tions they are oth­er­wise oblig­at­ed to per­form, are bribes and are there­fore ille­gal under the Act.

Penalties

The penal­ties asso­ci­at­ed with the Act are sig­nif­i­cant. On con­vic­tion for one of the main bribery offences, an indi­vid­ual may face up to ten years’ impris­on­ment and/or an unlim­it­ed fine. A busi­ness faces an unlim­it­ed fine.

The senior offi­cers of a busi­ness could also be liable to a prison sen­tence if bribery was per­pe­trat­ed with their ‘con­sent or con­nivance’. Dis­qual­i­fi­ca­tion from act­ing as a direc­tor for a sub­stan­tial peri­od of time could also arise.

Conclusion

The steps to be tak­en to pre­vent bribery will clear­ly vary from busi­ness to busi­ness and not all busi­ness­es will need to put in place com­plex pro­ce­dures to deal with the require­ments of the leg­is­la­tion. The sup­port­ing guid­ance issued by the MoJ empha­sis­es the need for a com­mon sense approach.

A key point not­ed in ‘quick start’ guid­ance is that ‘there is a full defence if you can show you had ade­quate pro­ce­dures in place to pre­vent bribery. But you do not need to put bribery pre­ven­tion pro­ce­dures in place if there is no risk of bribery on your behalf.’