Bribery

Jon Taylor

24 June 2010

What is bribery?

Transparency International (a non-governmental anti-corruption organisation) defines bribery as "the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal or a breach of trust"

(Business Principles for Countering Bribery, 2009) 

Reform

• Bribery Act 2010 received Royal Assent on 8 April 2010• In force later in the year• Explanatory notes published 27 April 2010

Bribery Act 2010 – what does it do?

Makes it an offence to:

• Offer a bribe• Accept a bribe• To fail to take steps to prevent bribery taking place

Bribery Act 2010Offence of bribing another person (section 1)

• A person (P) is guilty of an offence where they offer, promise or give a financial or other advantage to another person in two cases:

• Case 1, where P intends the advantage to bring about an improper performance of a relevant function or an activity by another person or to reward such improper performance (section 1(2))

• Case 2, where P knows or believes that the acceptance of the advantage offered, promised or given, in itself constitutes the improper performance of a relevant function or activity (section 1(3))

"Financial or other advantage" is not defined

Bribery Act 2010Offence of bribing another person (section 1)

• In case 2 it does not matter whether the person to whom the advantage is offered, promised or given is the same person as the person who is to perform, or has performed, the function or activity concerned (section 1(4))

• In either case, the advantage can be offered, promised or given by P himself or through someone else (section 1(5))

“Relevant function or activity" (section 3)

• All functions of a public nature• All activities connected with a business (which includes a trade

or profession (section 3(7)))• Any activity performed in the course of a person's employment• Any activity performed by or on behalf of a body of persons

(whether corporate or unincorporated)

A function or activity is a relevant activity even it has no connection with the

UK or is performed in a country or territory outside the UK (section 3(6))

"Relevant function or activity" (section 3)

The relevant function or activity must also meet one or more of the following

conditions:

• There must be an expectation that the functions are carried out in good faith (condition A)

• Or impartially (condition B), or • The person performing them must be in a position of trust

(condition C) (sections 3(3), 3(4) and 3(5))

Offences relating to being bribed

The recipient or potential recipient of the bribe (R) is guilty of an offence in 4

sets of circumstances (cases 3 to 6)

Offences relating to being bribed – Case 3

• R requests, agrees to receive or accepts a financial or other advantage

• R intends that a relevant function or activity is performed improperly

• It does not matter if the improper performance is by R or by another person

Case 3 is subject to section 2(6)

Offences relating to being bribed – Case 4

• R requests, agrees to receive or accepts a financial or other advantage

• The request, agreement or acceptance itself is the improper performance by R of a relevant function or activity

• It does not matter whether R knows or believes that the performance of the function or activity is improper (section 2(7))

Case 4 is subject to section 2(6)

Offences relating to being bribed – Case 5

• R "requests, agrees to receive or accepts" a financial or other advantage as a reward for the improper performance of a relevant function or activity

• It does not matter if the improper performance is by R or by another person

• It does not matter whether R knows or believes that the performance of the function or activity is improper (section 2(7))

• Case 5 is subject to section 2(6)

Offences relating to being bribed – Case 6

• A relevant function or activity is "improperly performed" by R (or another person, where R requests, assents to or acquiesces in it) in anticipation of or in consequence of R requesting, agreeing to receive or accepting a financial or other advantage

• It does not matter whether R knows or believes that the performance of the function is improper (section 2(7))

• Where the function or activity is performed by another person, it is immaterial whether that person knew or believed that the performance of the function or activity is improper (section 2(8))

• Case 6 is subject to section 2(6)

Offences relating to being bribed – section 2(6)

• It does not matter whether it is R, or someone else through whom R acts, who requests, agrees to receive or accepts the advantage

• In addition, the advantage can be for the benefit of R or another person

Improper performance to which bribe relates (section 4)

• Performance or non-performance which breaches a relevant expectation (section 4 (1))

• "Relevant expectation" means the expectation mentioned in either condition A or B above

• In relation to condition C, it means any expectation of the manner in which, or the reasons for which, the function or activity will be performed which arises from the position of trust mentioned in that condition (section 4 (2))

The “expectation test” (section 5)

• What a reasonable person in the UK would expect in relation to the performance of the type of function or activity concerned

• In deciding what such a person would expect where the performance is not subject to the law of any part of the UK, any local custom or practice should be disregarded unless it is permitted or required by the written law of the country or territory concerned (sections 5(1) and 5(2))

• "Written law" means law contained in any written constitution or provision made by or under legislation, or any judicial decision applicable to the country or territory concerned and which appears in published written sources (section 5(3))

Bribery of foreign public officials (section 6)

• A person is guilty of the offence if his intention is to influence the official in the official's capacity as a foreign public official

• A foreign public official includes, among others, government officials and those working for international organisations

• The offence does not cover accepting bribes, only offering, promising or giving bribes

Bribery of foreign public officials (section 6)

• P commits the offence if and only if, directly or through a third party, P offers, promises or gives any financial or other advantage to the foreign public official (F) or to another person at F's request or with F's assent or acquiescence (section 6(3)(a)) and F is neither permitted nor required by the written law applicable to F to be influenced in F's capacity as a foreign public official by such an offer, promise or gift (section 6(3)(b))

• It does not matter whether the offer, promise or gift is made directly to the official or through a third party (section 6(3)(a))

• P must intend to influence F in the performance of F's functions as a public official, including any failure to exercise those functions and any use of his position, even if he does not have authority to use the position in that way (section 6(4))

• P must also intend to obtain or retain business or an advantage in the conduct of business (section 6(2)), which includes what is done in the course of a trade or profession (section 6(8))

Failure of commercial organisations to prevent bribery (section 7)

A relevant commercial organisation (C) is guilty of an offence:

• if a person associated with C bribes (within the meaning of sections 1 and 6) another person

• and in doing so, is intending to obtain or retain business or a business advantage for C

• The offence can be committed in the UK or overseas• Under section 7(2) C has a defence if it can show that it had in

place adequate procedures designed to prevent bribery

Relevant Commercial Organisations

• A body which is incorporated under the law of any part of the UK and which carries on a business anywhere (whether there or elsewhere)

• Any other body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the UK

• A partnership which is formed under the law of any part of the UK and which carries on a business whether there or elsewhere

• Any other partnership (wherever formed) which carries on a business, or part of a business, in any part of the UK

• For the purposes of section 7, a trade or a profession is a “business”

What does "associated with" mean?

• A person (A) is associated with C if (disregarding any bribe under consideration), A is a person who performs services for or on behalf of C

• It does not matter in what capacity A performs services for or on behalf of C

• If A is an employee, it will be presumed (unless the contrary is shown) that A is a person who performs services for or on behalf of C

Offences by corporate bodies

• If the offence is proved to have been committed with the consent or connivance of a senior officer of a body corporate, or a person purporting to act in such a capacity, the senior officer (as well as the body corporate) is guilty of the offence

• “Senior officer” includes not only directors but senior managers and the company secretary

• If no act or omission forming part of the offence takes place in the UK a senior officer will not be guilty of the offence unless he or she has a close connection with the UK

Penalties (section 11)

• Section 11 provides for the following penalties

• An individual guilty of an offence under sections 1, 2 or 6 is liable

• On summary conviction, to imprisonment for a maximum term of 12 months imprisonment or a fine not exceeding the statutory maximum on the standard scale of fines (currently £5,000) or both

• On conviction on indictment, to imprisonment for a maximum term of ten years, or to a fine, or both (section 11(1))

• A company guilty of an offence under sections 1, 2, 6 or 7 is liable

• On summary conviction, to a fine not exceeding the statutory maximum

• On conviction on indictment, to a fine (section 11(2))

Penalties (section 11)

• A person guilty of an offence under section 7 is liable on conviction on indictment to a fine

• Note, therefore, that both a company and its director could be subject to criminal penalties

“Close connection”

A person has "a close connection with the UK" if they are any of the following:

• A British citizen or various other categories of British passport holder

• A resident of the UK• A body incorporated under the law of any part of the UK• A Scottish partnership

Prosecutions

• Consent of one of the following required for a prosecution• The Director of Public Prosecutions• The Director of the Serious Fraud Office• The Director of Revenue and Customs Prosecutions

Practical implications for organisations

All organisations should:

• Prohibit bribery in any form whether direct or indirect and by or for the organisation

• Commit to implementing systems to counter bribery

Larger companies' anti-bribery systems and procedures could additionally include:

• A statement of values

• A code of conduct

• Detailed policies and procedures, including, for example, policies on gifts, hospitality, facilitation payments, vetting outside agents and advisers, lobbying and political contributions

• Risk management procedures, for example, regular auditing of compliance

• Training and guidance

• Internal controls

• Oversight

• Monitoring and assurance

• Whistleblowing procedures

Public-sector organisations

Two key roles when preventing or eliminating bribery and corruption:

• Eliminating bribery and corruption themselves (for example, not paying or accepting any bribes)

• Seeking to eliminate bribery and corruption in the private sector

Bribery

Jon Taylor

24 June 2010