Preventing corporate corruption

The UK’s outmoded bribery laws ­ some of which date from 1889 ­ are to be
replaced by legislation that will make it a criminal offence to give or offer a
bribe in the UK or abroad, and will increase the maximum prison term from seven
to 10 years.

A new draft bill also introduces a corporate offence of negligent failure to
prevent bribery on behalf of a business and, for the first time, MPs and peers
can be prosecuted in bribery cases.

The draft bill’s publication comes as 20 investigations are underway at the
City of London Police’s foreign bribery unit. During Labour’s 12 years in power,
only one UK company ­ BAE Systems ­ was prosecuted for foreign bribery, but that
case spectacularly collapsed.

The legislation comes six months after the UK was criticised by the
Organisation for Economic Co-operation and Development (OECD) for failing to
modernise its anti-corruption protocols.

Corporate offence
Rebecca Robinson, solicitor at Wake Smith & Tofields, says, “The impact on
companies and businesses is that the combination of the extra-territorial effect
and the introduction of a new corporate offence may make it easier for bribery
prosecutions to be brought against UK companies.”

She also says that while the new bill does not define what would constitute
“adequate procedures”, she warns, “In light of the proposed new legislation,
companies should be reviewing their bribery law compliance programmes to ensure
it has responsible and effective risk management systems in place.”

Under the bill:
• It will be a criminal offence for someone ­ directly or through a third party
­ to offer, promise or give a bribe;
• It will be a criminal offence for someone to request, agree to receive, or
accept a bribe;
• It will be a separate offence to offer, promise or give a bribe to a foreign
public official;
• It does not matter whether the bribery was committed in the UK or abroad: if
abroad, it will apply to all British nationals, UK companies and anyone
ordinarily resident in the UK;
• If the above offences are committed by a company, then any senior manager of
the business will be similarly guilty if they consented to or connived in the
bribery;
• The maximum penalty for individuals is increased from seven to 10 years’
imprisonment (and/or an unlimited fine); for corporate offences there will be an
unlimited fine;
• Parliamentary privilege is removed in connection with the prosecution of an MP
or peer for bribery-related matters; and
• The attorney general’s consent is no longer required to prosecute a bribery
offence: it will be sufficient if the director of a relevant prosecuting
authority gives their consent.

Active bribe
The bill also creates a new offence for companies. Under the proposed
legislation, it will be an offence where a ‘relevant commercial organisation’
negligently fails to prevent bribery in connection with its business.

This offence focuses on the failure to prevent an ‘active’ bribe only. The
offence is committed where:
• A person performing services for a commercial organisation (including its
employees, agents and subsidiaries) bribes someone anywhere in the world in
connection with the commercial organisation’s business; and
• Those in the organisation with responsibility for preventing bribery
negligently fail to do so.

The draft legislation says that if there is no one with specific
responsibility for preventing bribery, the responsibility is deemed to be that
of any senior officer in the organisation, including any director, secretary or
manager of a company or a partner in a partnership.

Balance of probabilities
However, lawyers point out that there is an incentive in ensuring that someone
other than a senior officer in the organisation is given such responsibility and
that adequate systems are adopted to prevent bribery. This is because a defence
is available where the person deemed responsible for preventing bribery is not a
senior officer, and the commercial organisation can show that it had adequate
procedures in place to prevent bribery. This means the onus is on the
organisation to prove its defence on the balance of probabilities.

As a result, Keith Allen, an associate in the business, crime and regulatory
department at law firm Clarion Solicitors, says, “All companies should consider
appointing a person with the responsibility of ensuring compliance and that
person should not be a senior officer, as defined in the bill, to attempt to
ensure that the potential defence remains available to the company.”

Generally, experts agree that the draft legislation will make it easier to
prosecute companies and individuals for bribery, whether committed in the UK or
abroad. Will Kenyon, forensics services partner at PricewaterhouseCoopers, says
the real implications for companies come in the form of a new offence of
negligently failing to prevent bribery, which puts directors and senior managers
firmly on the hook for corrupt practices at home or abroad.

“The fact that the offence carries both corporate and personal criminal
liability for corruption within a company should make directors sit up and
listen,” says Kenyon.

“Companies of all sizes will need to look carefully at their own anti-bribery
programme and controls as well as those of their agents and subsidiaries as they
may potentially be liable for breaches in other significant parts of their
supply chain and sales channels.”

Useful links
Go to
‘draft
bribery bill’
Click
here
to check on the bill’s progress through parliament, then click on ‘Government
bills’, then ‘bribery bill’