Most companies would be aware that since the turn of the century, companies and organisations within the UK, have come under serious scrutiny. This was with a view to eliminate, or at the very least significantly reduce certain practices in the world of business, that had extensive links to organised crime.
This as many people are aware, started off with the anti-money laundering regulations. This placed obligations upon organisations, to ensure that their business was not being used by criminal organisations, to launder their otherwise dirty money. The Bribery Act 2010, was another way of tackling certain reprehensible behaviour within the business world. Corruption was and is still often regarded as a necessary way of doing business.
Many companies would still be unaware of their obligations under the Bribery Act 2010, due to the fact that so far, there have only been a handful of prosecutions brought under this legislation. In 2015 the case of SFO v Standard Bank PLC, brought about the first Deferred Prosecution Agreement under the Bribery Act 2010.
Prior to the Bribery Act 2010, the courts relied upon the common law offence of corruption. This defined corruption as “the receiving or offering of any undue reward, by or to any person whatsoever, in a public office in order to influence his behaviour in office, and incline him to act contrary to the known rules of honesty and integrity.” The issue of course was that the offence under the Common Law only applied to a person in a public office, undue reward was not defined in any way, also despite this drawback, the courts tended to construe the offence as widely as possible. It was clear that a statutory offence was required.
There have been attempts through various statute from Victorian times, such as The Prevention of Corruption Act 1889, and The Prevention of Corruption Act 1906. Although these were limited in who was targeted, and did not address the private sector or global corruption. There were further attempts in 1997, when a large number of European Member states signed The Convention on Combating Bribery of Foreign Public Officials. The focus of this was on active bribery, targeting the supplier of the bribe and not the recipient. A further issue, was that the scope was expressly restricted to foreign public officials.
Subsequent legislation in 2001, 2003 and 2004 still did not address various issues. It did not deal with the inconsistencies in The Prevention of Corruption Acts. There was no definition of corruption in any Act. The distinction between the public and private sectors was increasingly untenable. It was difficult to establish corporate liability. There were also Jurisdictional problems. These issues, combined with pressure from Europe and the growing concern of the widespread reach and impact of corruption with its links to organised crime, led to the overhaul of the UK’s legislation on corruption, leading to the Bribery Act 2010.
Whilst the Act received Royal Assent on the 8th of April 2010, it’s coming into force was delayed until the 1st of July 2011. This Act covers 4 categories of offending. S1 deals with bribing a person. S2 deals with being bribed. Bribing Foreign Officials is covered by S6. Finally S7 deals with the failure by a commercial organisation or partnership to prevent bribery.
The ramifications of these sections are broad indeed, and anyone from the directors, the manager and secretaries of companies, as well as the corporate body itself can be held liable. This means, that where an offence under S1, 2 or 6 is committed by a corporate body, and it is proved that it is committed by the consent or connivance of a senior officer, the senior officer as well as the corporate body may be prosecuted. The penalties for which range from a fine to up to 10 years imprisonment.
The way the Act is drafted, also means, that UK companies have to be very careful as to who is representing their business interests abroad. The reason being, that whilst the offences apply to a range of persons in the UK, it also applies to non-UK nationals, companies and partnerships, if the act or omission which creates the offence takes place within the UK. Furthermore, under S12, an offence will deemed to have been committed in the UK, if a person with a close connection to the UK, partakes in an act or makes an omission, which if done in the UK would have been an offence under S 1, 2 or 6. S12 (4) defines people who have a close connection with the UK and include, as examples, British Citizens, British Overseas Citizens, Scottish partnership and Body incorporated under any law or any part of the UK.
When looking at behaviour outside of the UK, it would not be sufficient for the corporate body to say, that certain practices are necessary in order to carry out business in that area, or fall part of local custom in the area. They would have to show that such custom, is in the written law of the jurisdiction. Thereby the test of what is expected under this legislation, is objective rather than subjective.
What corporate bodies also need to be wary of, is S7 of the Act whereby the actions of any employee or associate of the company would make the corporate body liable. This also includes any person in a foreign jurisdiction who represents the interests of a UK Corporate body/organisation i.e an agent, if he or she was to commit an offence under The Bribery Act 2010. Therefore, corporations and UK businesses/organisations, have to be vigilant, as to who is conducting business on their behalf and who they are conducting business with.
S7 (2) provides a defence to corporate bodies and organisations, against the actions of a rogue employee or associate. The body or organisation would have to show, that they have put in place such adequate policies and procedures, that would prevent employees or people associated, from undertaking such conduct.
Similarities can clearly be drawn with the Money Laundering Regulations, whereby organisations have to show, that procedures have been put in place to avoid situations where Money Laundering could be taking place. Furthermore, to show that employees and associates have been given full training, on what is expected of them, especially when dealing with matters in foreign jurisdictions. Businesses would be well advised, to have a full audit carried out, of their policies and protocols, to ensure they do not fall foul of S7.
The recent 2015 case of SFO v Standard Bank PLC, shows that prosecutions can be deferred by order of the Court, if the company/organisation involved was willing to make amends by way of paying a fine. In other instances, this could be achieved by co-operating with the authorities, in order to hold those actually responsible to account.
However, the author would strongly suggest, that companies and organisations put their house in order, because if an agreement can not be reached to defer prosecution, then there is the risk of time in prison. For which any senior member of the body could be liable!