The implementation of the UK Anti-Bribery Act (ABC)
The implementation of the UK Anti-Bribery Act (ABC) 2010 on July 1, 2011 saw the long-awaited updating of the UK's somewhat antiquated laws on bribery. For many years the UK's anti-corruption common law and statutory offences were considered to be unsatisfactory and insufficiently robust. High-profile failures, such as the stalled investigation by the Serious Fraud Office (SFO) of allegations of corruption at BAE Systems, did little to improve the perception that UK anti-corruption laws were inadequate and lagged far behind the recommendations of the Organisation for Economic Co-operation and Development's Anti-Bribery Convention. That convention was the first international agreement to outlaw foreign bribery and was ratified by the UK in 1998.
It is widely recognised that bribery and corruption have adverse economic and social consequences. Typically in areas such as Africa, Asia and Latin America, it is the poorest and most vulnerable who suffer the consequences of corruption. Mindful of this and the discouraging effect which lax anti-corruption laws can have on inward foreign investment, the UK government embraced the need to reform UK bribery law. The act reflects a drive by the UK government to put in place modern and comprehensive anti-bribery legislation, allowing more effective intervention by the UK courts to penalise those who commit bribery in the UK and abroad.
Offences under the act
There are four principal offences created under the ABC Act:
- two general offences of giving or receiving bribes;
- bribing a foreign public official; and
- failure of commercial organisations to prevent bribery.
General offences
These cover
(1) offering, promising or giving a financial or other advantage with the intention of inducing a person to perform a "relevant function" improperly or rewarding them for doing so; and
(2) requesting, receiving or accepting a financial or other advantage intending that a "relevant function" should be performed improperly as a result.
A relevant function is defined to include all functions of a public nature, activities connected with a business and activities performed in the course of employment.
The Act does not define financial or other advantage.
For there to be improper performance of a relevant function a person must fail to perform the function in good faith or impartially, or act in breach of trust.
Whether there is a failure is to be assessed by reference to what a reasonable person in the UK would expect from the performance of the function or activity (even if the function is performed outside the UK).
Where the function is performed outside the UK, no account is to be taken of local custom or practice unless it is permitted or required under written law in that country.
Bribery of foreign public officials
The UK ABC Act makes it an offence to offer a financial or other advantage to a foreign public official with the intention of obtaining or retaining a business advantage, where the foreign public official is neither permitted nor required by law to be influenced in such a way.
The definition of a foreign public official is drawn from the OECD convention. It includes anyone holding a legislative, administrative or judicial position of any kind outside the UK or who exercises a public function for countries, public agencies and enterprises. The definition also includes officials or agents of public international organisations.
An offence will be committed if a bribe is given or offered to a foreign public official. Acceptance of a bribe is not covered.
Facilitation payments, i.e., small payments to a public official or other person to ensure that he or she performs his or her duty or does so in a timely way, are a routine way of smoothing administrative functions in overseas jurisdictions. They are, however, illegal under the act unless expressly permitted in writing under the relevant local law. Recent guidance issued by the SFO confirmed its stance that facilitation payments are bribes and, as such, are illegal under the act, irrespective of their size or frequency.
Failure by commercial organisations to prevent bribery
The act introduced what is termed as the "corporate offence" for commercial organisations, i.e., companies and partnerships, that fail to prevent bribery being committed on their behalf.
An organisation will be guilty of this offence if any person associated with the organisation bribes another person to gain or retain a business advantage for the organisation. The term "associated persons" is broadly defined and, as a result, covers employees, agents, subsidiaries and joint venture partners.
Under the previous law, a firm would only tend to have been guilty of a bribery offence if it could be shown that its directors were aware of the offence. Under the act, however, the onus is on the commercial organisation to show that it has in place "adequate procedures" to prevent bribery. See the "Implement adequate procedures" section for a description of adequate procedures.
Territorial application
The act has wide application. In addition to trying bribery offences committed in the UK by any person, the court has jurisdiction to try bribery offences in other territories where the person or organisation committing the offence has a close connection with the UK. The act will apply to any individual ordinarily resident in the UK or a corporate entity carrying on business in the UK (even if not incorporated here).
Penalties
The penalties in the act are potentially severe. Conviction carries a risk of imprisonment for up to 10 years and commercial organisations could face an unlimited fine.
Where a firm is convicted of giving or receiving a bribe, the directors and other senior managers of the organisation will also be held to be guilty of the offence if it is proved that the director or manager consented to or connived at the commission of the offence.
There is an additional risk for commercial organisations whose revenue is largely dependent on public-sector contracts. Any such organisation convicted of a corruption offence could find itself permanently banned from competing on future tenders for such contracts.
Author: Bachir El Nakib