ComplianceOnline

The UK Bribery Act 2010 - Its provisions, definitions and compliance procedures

  • By: Staff Editor
  • Date: May 22, 2011

The UK Bribery Act 2010, which came into force on July 1, 2011 has been called the toughest anti-bribery legislation in the world. The Act makes it a crime to bribe another, be bribed, bribe a foreign official or in the case of commercial organizations, fail to prevent bribery.

The UK Bribery Act was created to reinforce the country’s regulations on corrupt practices. It is meant to replace the previous, antiquated bribery law which dates back to 1886.  

The Act was delayed for almost a year in order to allow commercial enterprises enact and implement adequate procedures for the prevention of bribery. The UK Ministry of Justice issued a final guidance in April 2011.

What constitutes a bribe?

The Act defines a bribe as

“Giving someone a financial or other advantage to encourage that person to perform their functions or activities improperly or to reward that person for having already done so”.

This means trying to influence a decision maker such as a foreign official an extra benefit other than what may already be part of a tender process.

The UK Bribery Act 2010 is not concerned with fraud, theft, books and record offences, Companies Act offences, money laundering offences or competition law.  

Facilitation payments, which are paid to officials to induce them to perform routine functions they are officially obligated to perform, are bribes. Bribing foreign officials through a third party or indirectly is deemed illegal under the Act.


What doesn’t constitute a bribe?

Bona fide hospitality, promotional or other business expenditures which are proportionate and reasonable are not classified as bribes under the Act.

Businesses can continue to provide tickets to sporting events, take clients to dinner, offer gifts to clients as a reflection of good relations, or pay for reasonable travel expenses in order to demonstrate goods or services to clients if it is reasonable and proportionate

Type of offences as per UK Bribery Act 2010:

  1. General Bribery Offences
  2. Bribery of Foreign Public Officials
  3. Failure of Commercial Organizations to Prevent Bribery
  4. Prosecution and Penalties
  5. Other Provisions About Offences
  6. Supplementary and Final Provisions
Types of Offences Sections
General Bribery Offences 1. Offences of bribing another person
2. Offences relating to being bribed
3. Function or activity to which bribe relates
4. Improper performance to which bribe relates
5. Expectation test
Bribery of Foreign Public Officials 6. Bribery of foreign public officials
Failure of Commercial Organizations to Prevent Bribery 7. Failure of commercial organizations to prevent bribery
8. Meaning of associated person
9. Guidance about commercial organizations preventing bribery
Prosecution and Penalties 10. Consent to prosecution
11. Penalties
Other Provisions About Offences 12. Offences under this Act: territorial application
13. Defense for certain bribery offences etc.
14. Offences under sections 1, 2 and 6 by bodies corporate etc.
15. Offences under section 7 by partnerships
Supplementary and Final Provisions 16. Application to Crown
17. Consequential provision
18. Extent
19. Commencement and transitional provision etc.
20. Short title

 

Who does it cover?


The UK Bribery Act 2010 applies to any commercial organization that is:

  • A body or partnership incorporated or formed in the UK irrespective of where it carries on a business or
  • An incorporated body or partnership which carries on a business or part of a business in the UK irrespective of the place of incorporation or formation.

This means any international company doing business in the UK is covered by this act. Those companies that are only listed and trading on the London Stock Exchange would not be covered by the Act as they are not regarded as “carrying on a business or part of a business in the UK”.


Differences between UK Bribery Act and FCPA:


The UK Bribery Act and the US’ Foreign Corrupt Practices Act (FCPA) have key differences:
 

UK Bribery Act 2010 FCPA
Covers corruption between commercial entities and governmental bribery Deals only with governmental bribery
Imposes strict liability on any company that fails to prevent bribery from taking place regardless of awareness of intent Requires prosecutors to prove intent and awareness of the bribe at a senior level
Facility Payments (grease payments) are a punishable offence Not an offence

 

Failure to prevent bribery

Besides the general offenses of bribe-giving, bribe-taking and bribing foreign officials, the act makes a commercial organization liable for prosecution if it fails to prevent bribery. This means that a commercial organization can be penalized if a person associated with it bribes another person intending to obtain or retain business or an advantage in the conduct of business for that organization. An associated person could be an employee, agent or subsidiary of the organization.
 

Prosecution and penalties:


In England and Wales, the Director of Public Prosecutions, Director of the Serious Fraud Office or Director of Revenue and Customs Prosecutions, can prosecute commercial organizations for offences under the Bribery Act.

Individuals found guilty of bribery offences tried as summary offences, may be imprisoned for up to a year and fined up to £5,000. Individuals convicted on indictment could face up to 10 years’ imprisonment and unlimited fines. Commercial organizations that fail to prevent bribery can be slapped with unlimited fines. Those found guilty – both organizations and individuals – may also be subject to a confiscation order under the Proceeds of Crime Act 2002. Convicted company directors may be disqualified under the Company Directors Disqualification Act 1986.
 

Compliance procedures for commercial organizations:


In case of prosecution for a bribery offence, a commercial organization can claim a legitimate defense if it has enacted adequate procedures to prevent bribery. In the Guidance to this Act, the UK government has outlined six principles that organizations can apply to mitigate risks:
 

  • Proportionate procedures
    • Clear, practical, accessible, effectively implemented and enforced procedures
  • Top-level commitment
    • Senior management should communicate its commitment to bribery prevention
    • Senior executives should also be involved in formulating internal bribery-prevention policies
  • Risk assessment
    • Organization should identify and prioritize risks it will face when performing activities in various markets
  • Due diligence
    • Appropriate level of due diligence should be applied by the organization to prevent bribery
  • Communication (including training)
    • Communication should make clear the anti-bribery policies of the organization and senior management
    • Give clear guidelines on what is acceptable and unacceptable interaction with decision makers
    • Give training sessions on anti-bribery policies and legislation and the attendant risks 
  • Monitoring and review
    • Systems to deter, detect and investigate bribery.
    • Monitor the ethical quality of transactions, such as internal financial control mechanisms
    • Formal periodic reviews
    • External verification of company’s anti-bribery procedures
       

Additional Resources

The UK Bribery Act 2010 - read the full text here.
Final Guidance to UK Bribery Act 2010 - read the full document here.
 

Learn more about the UK Bribery Act 2010 through the following ComplianceOnline webinar:
Preparing for the UK Bribery Act

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