Anti-corruption and bribery offences in the workplace: in-depth guidance

02 May 2018

The Bribery Act 2010 (BA 2010) came into force on 1 July 2011, making significant changes to anti-corruption law in the UK. Businesses and companies need to take action to ensure their conduct complies with its requirements. They have to be aware of the offences that can be committed, potential liability and statutory defences.

What is bribery?
The BA 2010 deals only with bribery and is not concerned with any other forms of white-collar crime such as fraud, theft, book and record offences, money laundering offences or competition law.

A bribe is defined in section 1 of the BA 2010 as a “financial or other advantage” offered, promised or given to induce a person to perform a relevant function or activity improperly, or to reward them for having already done so.

This very broad definition covers many sorts of possible advantages, including political or charitable donations, hospitality and entertainment, gifts, payments, sponsorship or publicity.

An “improper performance” is a performance or non-performance breaching the expectations that a reasonable person in the UK would expect regarding the performance of the activity in question.

Offences under the BA 2010
The BA 2010 introduces new offences:

offering, promising or giving a bribe to another person (section 1 of the BA 2010);
requesting, agreeing to receive or accepting a bribe from another person (section 2 of the BA 2010);
bribing a foreign public official (section 6 of the BA 2010); and
the “corporate offence” of failing to prevent bribery (section 7 of the BA 2010).

Offence of bribing another person
Under section 1 of the BA 2010, a person in guilty of bribing another person where they offer, promise or give a financial or other advantage to another person in two situations:

where the first person intends the advantage to induce the second person to perform a relevant function or activity improperly, or to maintain such improper performance; or
where the first person believes that the acceptance of the advantage by the second person constitutes in itself an improper performance of the relevant function or activity. In any circumstances, the advantage can be offered, promised or given by the first person or through a third party.

Offence of being bribed
Under section 2 of the BA 2010 a person is guilty of being bribed where this person:

agrees to receive or accepts a financial or other advantage and intends that a relevant function or activity is performed improperly by the recipient of the advantage or by a third party; or
requests, agrees to receive or accept a financial or other advantage. In this case, the request, agreement or acceptance itself is the improper performance of the relevant function or activity; or
improperly performs a relevant function or activity in anticipation or in consequence of requesting, agreeing to receive or accepting a financial or other advantage. It is also the case where the relevant function or activity is improperly performed by a third party, where the recipient of the advantage requests, assents to or acquiesces in it. In any circumstances, the advantage can be requested, agreed to be received or accepted by the recipient of the advantage or through a third party.

Bribery of foreign public officials
Section 6(1) of the BA2010 introduces the offence of bribing a foreign public official.
This offence covers the offering, promising or giving of bribes to a foreign public official or to a third party at the foreign public official’s request or with his assent or acquiescence. On the other hand, the acceptance of such bribes from a foreign public official does not fall within its scope.

Moreover, the person offering, promising or giving the bribe only needs to have intended to influence the foreign public official. They must also have had the intention to obtain or retain business or an advantage in the conduct of business.
Judicial reach

An individual or a commercial organisation may be liable for the offences under sections 1,2 and 6 of the BA 2010 when the bribery either takes place:

in the UK,
outside the UK, if the individual or commercial organisation concerned has a “close connection to the UK”.

According to the BA 2010 such connection will exist for example where the person is a British citizen, a British overseas citizen or an individual ordinarily resident in the UK. It has to be noted that a commercial organisation will be liable for an offence under sections 1, 2 and 6 only when the offence was committed by a person who is “the directing mind and will of the commercial organisation”, including a director or a senior executive. In some situations, the senior person in the organisation will also be personally liable.

The new “corporate offence”
A commercial organisation will be liable under section 7 of the BA 2010 when it fails to prevent bribery. The commercial organisation will commit this offence if an “associated person” performing services on its behalf bribes another person in order to obtain or retain business or an advantage in the conduct of business. The BA 2010 focuses on conduct, not on result and there is no need for the transaction to have been completed.

The only defence available is to establish that adequate procedures were in place to prevent bribery from being committed by the people performing the relevant services on the commercial organisation’s behalf.

This corporate offence is likely to become a primary concern for companies. In order to avoid penalties they have to ensure their conduct complies with the requirements set up by the BA 2010.

The sanctions
The consequences of a breach of the BA 2010 are severe. In order to avoid heavy penalties, it is essentials that companies take actions to ensure they comply with the requirements of the BA 2010.

Under sections 1, 2 or 6 of the BA 2010, individuals face conviction of up to ten years’ imprisonment, an unlimited fine or both. Companies are only liable to an unlimited fine.

Under section 7 of the BA 2010, companies are liable to an unlimited fine. A breach of section 7 may also lead to discretionary debarment from public procurement (implementation of EU Procurement Directive 2004/18) or to confiscation orders (Proceeds of Crime Act 2002).

Finally, directors convicted of an offence under the BA 2010 may be subject to a director qualification order (Commercial organisation Directors Disqualification Act 1986).

Main issues for commercial organisations
The primary concern for commercial organisations is the corporate offence under section 7 of the BA 2010. In order to provide assistance to commercial organisations, the government published the Guidance in April 2011.

“Relevant commercial organisations” will be subject to the BA 2010 when they “carry on business in the UK”.

The guidance anticipates that any organisation incorporated in the UK and engaging in commercial activities will fall within the scope of the corporate offence, even if it pursues charitable or educational function or public functions. Therefore, a foreign organisation carrying out business in its own right in the UK is likely to be subject to the BA 2010.

Where a UK subsidiary is effectively performing the same role as a branch or an agency for a foreign parent, the parent may be liable under the corporate offence. However, the mere presence of the subsidiary in the UK is not enough to consider that the parent is carrying business in the UK since the subsidiary may operate independently from the parent.

In any circumstances, the courts will be “the final arbiter” as to the meaning of “relevant commercial organisation”. In the meantime, the government’s intention is that a “common sense approach” should be adopted in interpreting this notion.

Associated persons
Under section 7 of the BA 2010, a commercial organisation will be liable where an “associated person” bribes another in order to gain or retain a business advantage for the organisation. The “associated person” is a person performing services on the behalf or the organisation.

The guidance also provides useful direction on the extent to which contractors, suppliers, joint ventures and subsidiary are likely to be “associated persons”. In any case, this is a question of fact and it must be determined by reference of all the circumstances of the case and not merely by reference to the legal relationship between the organisation and therelevant person.

Defence of “adequate procedure”
Where the offence under section seven is committed, the commercial organisation will have a defence if it can establish that it had in place adequate procedures aiming at preventing a third party from committing bribery.

The guidance set out six principles that commercial organisation should apply when establishing “adequate procedures”:

Proportionate procedures: Organisations should have in place clear, practical, accessible, effectively implemented procedures that are proportionate to the bribery risks that they face and to the nature, scale and complexity of its activities.
Top-level commitment: Such commitment is necessary to prevent bribery and fostering a culture within the organisation in which bribery is never acceptable.
Risk assessment: The nature and the extent of the organisation’s exposure to potential bribery must be assessed.
Due diligence: Due diligence procedures taking a proportionate and risk-based approach must be applied to the persons who perform or will perform services on behalf of the organisation.
Communication (including training): Companies must seek to ensure that bribery prevention policies and procedures are embedded and understood.
Monitoring and review: The organisation must establish monitoring and reviewing procedures designed to prevent bribery and making improvements where necessary. Overall, commercial organisations are only expected to put into place procedures that are proportional to their circumstances and the actual risks of bribery they face.

Gifts and hospitality
The BA 2010 does not criminalise bona fide hospitality or other business expenditure unless all the elements of an offence can be proven.

Proportionality being heavily emphasised throughout the BA 2010, corporate hospitability is more likely to be acceptable where it is reasonable and proportionate. The standards and norms applying in the relevant sector may be relevant.

According to the guidance, “common sense” should help commercial organisations to adopt a pragmatic approach and decide the appropriate level of hospitability. Examples are given in the guidance to illustrate the types of activities that could result in prosecution.

Facilitation payment
Small payments made to secure or expedite routine government or administrative actions are known as “facilitation payment”. Such payments are illegal under the act and no exemption has been included.

However, the guidance lists various factors that will tend in favour of prosecution (for example, facilitation payments accepted as part of a standard way of conducting business) and against prosecution (for example, where the payer was in vulnerable circumstances).

Marc Jones is a Partner at IBB Law LLP
https://www.ibblaw.co.uk/people/marc-jones