The Bribery Act 2010

Introduction

With the law in this area long overdue a revamp, the Bribery Act 2010 (the “Act”) is set to modernise the criminal law of bribery, providing a consolidated scheme of offences which cover bribery both in the UK and abroad.

In this Alert:

• Key points
• The offences – in brief
• When do the offences apply?
• What are adequate procedures?
• Penalties
• Corporate hospitality 
• Impact on pension scheme trustees

Key points

• The Act comes into force on 1 July 2011, three months after the Ministry of Justice published accompanying guidance.
• Employers and trustees should have adequate bribery prevention procedures in place.
• The good news is that the guidance confirms that the Act is not intended to criminalise genuine corporate hospitality.

The offences – in brief

The Act creates four offences:

• offering, promising or giving a bribe1 (active bribery);
• requesting, agreeing to receive or accepting a bribe (passive bribery);
• bribing a foreign official; and
• a “relevant commercial organisation” (which includes any corporate body or partnership carrying on a business in the UK) failing to prevent bribery.

When do the offences apply?

Active and passive bribery

For the first two offences to bite, a bribe must be offered or accepted in return for “the improper performance of a relevant function or activity”. “Relevant functions” include activities performed in the course of a person’s employment as well as those “performed by or on behalf of a body of persons”, such as a trustee board.

For there to be “improper performance”, the person or body performing the relevant function must be expected to act in good faith, impartially, or in accordance with a position of trust, but fails to do so. This is an objective test, assessed by reference to the expectations of a reasonable person in the UK.

Commercial organisation

The fourth offence is committed if a commercial organisation fails to prevent a person associated with it, and performing services on its behalf, bribing another person in order to obtain or retain either business or a business advantage for the organisation. In the Government’s view, a relevant commercial organisation will include any organisation engaging in commercial activities “irrespective of the purpose for which profits are made”. Unfortunately, therefore, a corporate trustee looks set to be caught here.

Recognising the difficulty that preventing bribery poses for any business, it is a full defence to any prosecution under the fourth offence if the commercial organisation can show that it had adequate procedures in place designed to prevent bribery.

What are adequate procedures?

As required by the Act, the Secretary of State has published guidance on procedures that businesses can put in place to thwart bribery. In summary, the guidance is formulated around the following six principles:

• Proportionality – procedures should be proportionate to the bribery risk the organisation faces and to the nature, scale and complexity of its business;
• Top-level commitment – seeking to prevent bribery by fostering a culture in which bribery is never acceptable;
• Risk assessment – assessing the nature and extent of the organisation’s exposure to potential external and internal risks of bribery;
• Due diligence – taking a proportionate and risk based approach, carrying out due diligence in respect of persons who perform or will perform services for or on the organisation’s behalf;
• Communication – ensuring that bribery prevention policies and procedures are embedded and understood throughout the organisation (including the need for appropriate training); and
• Monitoring and review – of procedures, making improvements where necessary.

Penalties

In the event of a prosecution, the question as to whether an organisation had adequate procedures in place to prevent bribery will be up to the courts to decide, taking into account the particular facts and circumstances of each case.

For individuals found guilty of one of the offences, there is a maximum penalty of 10 years’ imprisonment and/or an unlimited fine. Companies are liable to an unlimited fine.

Corporate hospitality

Since the Act’s inception, a primary concern has been the effect it will have on corporate hospitality. The final guidance now provides a good deal of comfort on this issue, with the result that most corporate hospitality will be unaffected by the Act.

The guidance recognises that hospitality, promotional or other business expenditure designed to improve an organisation’s image or its client relations is an integral part of doing business. The Act is not designed to “stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix”. However, acknowledging that corporate hospitality is sometimes offered as a bribe, the guidance hints that the more lavish the hospitality, the greater the possibility of this being inferred.

In the unlikely event that corporate hospitality does trigger the provisions of the Act, the guidance notes that prosecutors “will consider very carefully what is in the public interest before deciding whether to prosecute.”

Impact on pension scheme trustees

Individual and corporate trustees will be subject to the first three offences under the Act, with corporate trustees also subject to the fourth. However, given the nature of the bribery offences, the impact on trustees should be limited.

To decrease the likelihood of decisions being called into question and as part of their governance regime generally, trustees should consider developing a policy on corporate hospitality. This could include setting up a register for trustees to record any corporate hospitality received.

1A bribe is referred to as a “financial or other advantage”