The Bribery Act 2010 (“the Act”) received Royal Assent on 8 April 2010 and came into force on 1 July 2011.
The Act is concerned with bribery and not, for example, fraud, theft, Money Laundering or Companies Act offences.
The Act contains 2 general offences dealing with the offering, promising or giving of a bribe (active bribery) and the requesting, agreeing to receive or accepting of a bribe (passive bribery).
It also deals with 2 further offences which specifically address commercial bribery. The first of these is the newly created offence for failing to prevent bribery on behalf of a commercial organisation – the offence is committed by commercial organisations which fail to prevent persons associated with them from committing bribery on their behalf. The second relates to bribery of a foreign public official (this is not considered further).
Active Bribery
Bribery (the offence) is essentially giving (or offering or promising – above) a financial or other advantage to another to encourage that person to perform their functions or activities improperly or to reward that person for having already done so. “Improper Performance” amounts to a breach of an expectation that a person will act in good faith, impartially or in accordance with a position of trust. For example, seeking to influence a decision maker by giving some additional benefit to that person outside what can legitimately be offered as part of the tender process would constitute bribery. The offence applies to bribery related to functions of a public nature, but also to bribery connected with a business or performed in the course of a person’s employment or on behalf of a company or other body of persons.
In deciding whether an activity has been performed improperly, the test of what is expected is a test of what any reasonable person in the UK would expect in relation to that activity. For example, to proceed with an allegation that hospitality was intended as a bribe, it would be necessary to show that the hospitality was intended to induce conduct that amounts to a breach of an expectation that a person will act in good faith – this would be judged against what a reasonable person in the UK thought.
The introduction of the Act raised concerns over the established practice of providing corporate hospitality. The Government acknowledged that hospitality, promotional and similar business expenditure which sought to improve the image of a commercial organisation, better present products/services or establish cordial relations was an established and important part of doing business. It noted that it was not the intention of the Act to prohibit reasonable and proportionate expenditure intended for these purposes. Nevertheless hospitality that is overly lavish may be viewed as a bribe. So far as the general offence of active bribery is concerned however, the hospitality can would be unlawful if it was provided to induce “Improper Performance” on the part of the recipient i.e. the person was expected to either perform in good faith, impartially or be in a position of trust but breached that expectation.
Active Bribery (Cont’d)
Jurisdiction exists to prosecute offences committed in the UK and also outside the UK if the person committing the offence has a close connection with the UK – broadly is a British national or is ordinarily resident in the UK or is a body incorporated in the UK or a Scottish partnership.
Passive Bribery
The offence is committed if a person agrees to receive or accepts a financial or other advantage in one of four possible cases which are linked to the improper performance of a function or activity. For example agreeing to receive or accepting a financial or other advantage intending that, as a consequence, a function or activity should be performed improperly is an offence. The relevant functions are the same as those noted in the section on active bribery and similarly “Improper Performance” has the same meaning as noted in that section. The jurisdiction to prosecute is as for the active bribery offence.
Further Offences
One of the two offences that address commercial bribery is found at Section 7 of the Act. It creates a new type of corporate liability for failure to prevent bribery on behalf of the organisation. An organisation is liable to prosecution if a person associated with it bribes another person with the intention of obtaining or retaining business or an advantage in the conduct of the business.
The offence applies only to relevant a “Relevant Commercial Organisation”. This is a body or partnership incorporated or formed in the UK or a body corporate or partnership which carries on business in the UK (regardless of place of incorporation/formation). Thus the Section 7 offence does not apply to sole traders and sole practitioners.
Referring back to the issue of hospitality above, Section 7 of the Act requires an intention to obtain/retain business or gain an advantage. It also requires that the bribery offence explained above is committed on behalf of the organisation. In contrast to the position with the active/passive bribery offences, an offence under Section 7 is committed regardless of whether that offence is committed in the UK or elsewhere – there is no requirement for a close connection with the UK as regards offences committed outside the UK.
The organisation will have a full defence if it can show that despite an incident of bribery, it had adequate procedures in place to prevent persons associated with it from bribing.
A person “associated” with an organisation is one (individual or corporate) who performs services for or on behalf of the organisation. Thus employees, agent and subsidiaries are caught, so too are subcontractors if these are performing services for or on behalf of the organisation.
As regards defence. What is constitutes “adequate procedures” turns on the nature, size and complexity of the organisation and thus the risks it faces. Accordingly procedures to prevent bribery require risk assessment and a risk based approach.
Further Offences (Cont’d)
So a business operating in overseas markets, particularly one where bribery is known to be commonplace would face a greater risk than one operating solely in the UK. Certain business sectors are known to be higher risk than others. An organisation that uses intermediaries or agents would need to consider carrying out due diligence on them and communicating to them the policies and procedures of the organisation where a small organisation might be able to rely on oral briefings.
It should be noted that the Section 7 offence is in addition to and does not displace the active bribery offence. A corporate body can itself be liable where a senior person (for example a managing director) commits a bribery offence (as under the “identification principle” where a person is regarded as the directing mind of the corporate, the corporate can be charged). Linked with this, under Section 14, if the corporate body has committed a bribery offence, perhaps due to the application of this principle, any senior officer will be guilty of the offence (as well as the body corporate).
