The Bribery Act 2010 | Corporate Liability and Failure to Prevent Bribery
Bribery is a criminal offence under the Bribery Act 2010 (the ‘Act’), and allegations of bribery and corruption can have serious consequences for individuals and businesses. The Act applies to both the public and private sectors in the UK and creates four key bribery offences.
The Act introduces strict liability for those commercial organisations whose service providers engage in bribery, unless that organisation has adequate procedures in place to prevent it. Section 7 of the Act provides that a ‘relevant commercial organisation’ can be found liable for the offence of failing to prevent an act of bribery.
The Act’s provisions can raise complex questions for individuals and organisations facing allegations of bribery, including the circumstances in which liability may arise and whether adequate procedures were in place.
In order to assist the provision of such adequate procedures, Section 9 of the Act requires the Secretary of State to publish guidance about the procedures that relevant commercial organisations can put in place to prevent persons associated with them from committing an offence.
John Veale of KANGS outlines the bribery offences and recommended steps to commercial organisations to avoid any allegations of preventing an act of bribery.
Offences Created by The Bribery Act 2010
The offence of making a bribe
The Act provides at S.1 that:
A person is guilty of an offence where:
- he offers, promises or gives a financial or other advantage to another person intended to induce that other person to perform, improperly, a relevant function or activity or to reward a person for having performed such function or
- he offers promises or gives a financial or other advantage to another person knowing or believing that the acceptance thereof would itself constitute the improper performance of a relevant function or activity.
S.3 - Relevant functions include:
- functions of a public nature,
- activity connected with a business,
- activity performed in the course of a person's employment,
- activity performed by or on behalf of a body of persons, whether corporate or unincorporate.
S.4 - Improper performance. A relevant function or activity:
- is performed improperly if it is performed in breach of a relevant expectation and
- is to be treated as being performed improperly if there is a failure to perform the function or activity and that failure is itself a breach of a relevant expectation.
The offence of accepting a bribe.
The Act provides at S.2 that:
A person is guilty of an offence where:
- a person requests, agrees to receive or accepts a financial or other advantage intending that, in consequence, a relevant function or activity should be performed improperly or
- a person requests, agrees to receive or accepts a financial or other advantage, and the request, agreement or acceptance itself constitutes the improper performance, by that person or another, of a relevant function or activity or
- where, in anticipation of or in consequence of the person so requesting, agreeing to receive or accepting a financial or other advantage, a relevant function or activity is performed improperly by any person.
The offence of bribery of foreign public officials.
The Act provides at S.6 that:
A person who bribes a foreign public official is guilty of an offence if the intent is to influence that person’s capacity as a foreign public official when intending to obtain or retain:
- business, or
- an advantage in the conduct of business and
- directly or through a third party, promises or gives any financial or other advantage to that foreign official or another person and
- that foreign official is neither permitted nor required to be so influenced as a foreign public official by the offer, promise or gift.
The offence of failure of commercial organisations to prevent bribery
The Act provides at S.7 that:
A relevant commercial organisation is guilty of an offence if an associated person bribes another person intending to:
- obtain or retain business for that commercial organisation or
- obtain or retain an advantage in the conduct of that commercial organisation’s business.
A relevant commercial organisation is a company, partnership or other entity incorporated or formed under UK law or a non-UK company or other legal entity which carries on a business, or part of a business, in the UK.
An associated person is one who performs services for the relevant commercial organisation and who may be an employee, agent, consultant, contractor, subsidiary company and joint venture partner.
It is a defence for a relevant commercial organisation charged with the failure to prevent bribery, if it can prove that it had sufficient safeguards in place designed to prevent associated persons from undertaking acts of bribery from which it would benefit.
Recommended Procedures to Prevent Bribery
As mentioned above, Section 9 of the Act requires the Secretary of State to publish guidance about procedures that relevant commercial organisations can put in place to prevent persons associated with them from committing an offence.
The following six principles are provided to guide companies.
Proportionate Procedures
The procedures are only expected to be proportionate to the risk of the company’s agents being involved in bribery. For example, if a company operates in multiple countries that are more susceptible to bribery, the expectation would be that they have more extensive anti-bribery procedures than a small company that only operates in the U.K.
Top-Level Commitment
It is expected that the management of a relevant commercial organisation will evidence that they are committed to preventing bribery. This is often considered to be fostering an anti-bribery culture that makes clear that bribery is never acceptable.
Risk Assessment
The relevant commercial organisation is expected to undertake a risk assessment to determine its potential exposure to bribery, both internally and externally, on its behalf. Further, this assessment is expected to be an ongoing exercise, with periodic assessments being well documented.
Due Diligence
The relevant commercial organisation is expected to have due diligence procedures, allowing for a risk-based approach along with the mitigation of any identified risks of bribery occurring in respect of any associated persons.
Communication
This includes training of staff and external agents to ensure that the anti-bribery policies are understood throughout the organisation and are sufficiently embedded in every level of the corporation.
Monitoring and Review
The relevant commercial organisation is expected to monitor its procedures and, where appropriate, make such improvements as necessary to ensure bribery is prevented effectively.
Penalties Following Conviction of Bribery
The Act provides for a maximum prison sentence of ten years for individuals convicted of such offences.
Penalties attaching to commercial organisations include:
- an unlimited fine,
- removal of tainted proceeds,
- debarment from public sector contracts/tenders,
- criminal investigation.
Company directors may face Director Disqualification Proceedings, potentially resulting in disqualification from acting as a company director for between two and fifteen years.
In practice, prosecuting agencies regularly enter into a Deferred Prosecution Agreement whereby no immediate prosecution action is taken provided the corporate body observes agreed performance requirements specified in the Agreement such as:
- paying financial penalties,
- paying compensation,
- co-operation with prosecutions of individuals.
Any Deferred Prosecution Agreement must be approved by a Judge, who must be satisfied that it is in the interests of justice, and that its terms are ‘fair, reasonable and proportionate’.
The failure to comply with the terms of such an Agreement is serious and may result in the continuance of the suspended prosecution.
How Can We Help You?
The team at KANGS has extensive experience advising individuals, organisations and businesses in relation to allegations of bribery and corruption, money laundering, tax evasion and a wide range of other criminal offences.
Our criminal defence solicitors have substantial experience representing clients subject to white collar crime investigations by HM Revenue & Customs (HMRC), the Serious Fraud Office (SFO) and the National Crime Agency (NCA). We provide robust, discreet and strategic advice throughout the investigative process, from the earliest stages of an investigation through to any subsequent criminal proceedings.
To speak to a member of our team, contact us using the details below:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
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