Appendix 1

BRIBERY ACT 2010 - BACKGROUND

Definition of Bribery

Bribery is defined as giving or receiving a financial or other advantage in connection with the "improper performance" of a position of trust, or a function that is expected to be performed impartially or in good faith. Bribery does not have to involve cash or the exchange of an actual payment but could be a gift, lavish treatment during a business trip or tickets to an event.

Listed below are some examples of types of commercial bribery:

  • bribery to secure a contract, order or to win business;
  • bribery of a foreign public official to secure a contract.
  • bribery to falsify an inspection report or obtain a certificate/licence.

Background

The UK Bribery Act is effective from 1 July 2011 and can be accessed at:

It contains the following offences:

  • Bribing another person; (Section 1)
  • Being bribed; (Section 2)
  • Bribing a foreign public official (“FPO”)[1];(Section 6)
  • Failure by a commercial organisation to prevent bribery by associated persons. (Section 7)

The Section 7 offence is a new corporate offence which may lead to commercial organisations being found criminally liable if they fail to prevent persons who are associated with them (e.g. agents) from bribing another person, intending to obtain or retain business or a business advantage for that commercial organisation. A company’s only defence is to demonstrate that they have adequate procedures in place designed to prevent bribery.

Commercial organisations are UK companies, partnerships and other incorporated bodies wherever they carry on business and foreign companies, partnerships and other incorporated bodies who carry on a business in the UK. To trigger these offences, the conduct can take place anywhere in the World. Therefore corrupt actions by managing agents’ associated parties no matter where located would be caught by the Act.

Unlike the Foreign Corrupt Practices Act, (which is the equivalent anti-bribery legislation in the US) the UK Bribery Act does not permit facilitation payments[2] and therefore local business practices such as facilitation payments, unless expressly permitted by law, would not be a defence.

What are the penalties?

The Act increases the penalties for failure to comply to a maximum 10 years imprisonment, unlimited fine or both for an individual, and an unlimited fine for a commercial organisation in respect of section 7.

In addition to the threat of criminal prosecution, UK firms are at risk of breaching their regulatory obligations if they are not demonstrating that they have adequate systems and controls in place to counter bribery (even if no bribery has actually occurred.) The Financial Services Authority is committed to enforcing regulatory action against any regulated firms it finds to be non-compliant, as seen by the fine imposed against Aon Limited of £5.25 million in 2009and against Willis Limited of £6.895 million in 2011.

Guidance

The MOJ Guidance issued by the UK Government sets out 6 principles designed to assist companies implement risk based measures to counter bribery. They are:

  • Proportionate Procedures – this may include having policies in place such as an anti-bribery policy, Code of conduct, guidance on offering and receiving gifts and entertainment, a whistle-blowing policy, expenses policy, policies for the donations of charitable and political payments
  • Top Level Commitment - ensuring that the commercial organisation’s commitment to anti-bribery compliance is driven from the top;
  • Risk Assessment – carrying out a review of the commercial organisation’s departments to establish bribery risk and controls
  • Due Diligence – carrying out due diligence on third parties, including associated parties such as on suppliers, claims handlers, loss adjusters, brokers, agents.
  • Communication (including training) – ensuring that policies and procedures are not only in place but communicated within an organisation and that training is provided to ensure correct implementation.
  • Monitoring and Review – ensuring that all procedures, policies, due diligence processes, risks are continually monitored, reviewed and audited.

In addition, Transparency International, which describes itself as a “global civil society organisation leading the fight against corruption”, has issued a comprehensive document called Business Principles for Countering Bribery, which sets out guidance on good practice procedures for corporate anti-bribery programmes. It has also issued its Corruption Perceptions Index which shows perceived levels of corruption in 178 countries around the World.

[1]A FPO is an individual holding a legislative, administrative or judicial position of any kind, or who exercises a public function for or on behalf of a country/territory outside the UK or for any public agency/enterprise of that country or territory, or is an official or agent of a public international organisation such as the UN or the World Bank.The term FPO does not include foreign political parties or candidates for foreign political office.

[2]A facilitation payment refers to the practice of paying a small sum of money to induce foreign officials to perform routine functions they are otherwise obligated to perform. Examples of such routine functions include issuing licenses or permits and installing telephone lines and other basic services.