Douceurs

The BBC reports that the UK Bribery Act 2010 has come into force, updating laws from 1889 and creating offences that now "carry prison terms of up to 10 years and unlimited fines".

The Act makes it illegal for British and foreign companies with operations in the UK (and individuals) to offer or receive bribes and to fail to prevent bribery. The reform follows OECD and other criticism of the abortive Serious Fraud Office investigation into alleged bribery as part of the £43bn al-Yamamah arms deal between Saudi Arabia and the UK, with failure being attributed to Britain's "antiquated bribery laws".

The 2010 Act reflects the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions [here] which came into force in Australia in late 1999 and is consistent with the Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999 (Cth).

It creates offences of -

• offering bribes

• receiving bribes

• failing to prevent bribery

A viable defence for a company facing prosecution is to show it has implemented "adequate procedures" (eg policies, training) to stop bribes. Corporate hospitality that is "reasonable and proportionate" will not be regarded as a bribe. In implementing the Act organisations are expected to embrace six principles -

Proportionate procedures - a commercial organisation’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation’s activities. They are also clear, practical, accessible, effectively implemented and enforced.

Top-level commitment - the top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They foster a culture within the organisation in which bribery is never acceptable.

Risk Assessment - the commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment is periodic, informed and documented.

Due diligence - the commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation, in order to mitigate identified bribery risks.

Communication (including training) - the commercial organisation seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training, that is proportionate to the risks it faces.

Monitoring and review - the commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.

The Ministry of Justice's 45 page Guide to the Bribery Act states that -

Bribery blights lives. Its immediate victims include firms that lose out unfairly. The wider victims are government and society, undermined by a weakened rule of law and damaged social and economic development. At stake is the principle of free and fair competition, which stands diminished by each bribe offered or accepted.

Tackling this scourge is a priority for anyone who cares about the future of business, the developing world or international trade. That is why the entry into force of the Bribery Act on 1 July 2011 is an important step forward for both the UK and UK plc. ...

Readers of this document will be aware that the Act creates offences of offering or receiving bribes, bribery of foreign public officials and of failure to prevent a bribe being paid on an organisation’s behalf. These are certainly tough rules. But readers should understand too that they are directed at making life difficult for the mavericks responsible for corruption, not unduly burdening the vast majority of decent, law-abiding firms.

The emphasis on market distortion was evident in the Second Reading Speech for the Criminal Code (Bribery of Foreign Public Officials) Bill 1999 (Cth), where Australian Attorney-General Daryl Williams stated -

It is important that Australia should support the OECD's initiative to combat the bribery of foreign public officials and take a principled stand against corruption. ... There is good business sense, as much as morality, in introducing this legislation. Bribery distorts attempts at international competitive bidding, bribes themselves are non-productive and are therefore paid from profits and bribes distort trade in that contracts are not based on merit and can lead to production of poor quality goods and services. In the aid context, bribery can lead to a very poor selection of projects, and this can in turn lead to diversion of resources away from areas of greatest need

The UK Guide indicates that -

Very generally, [bribery] is defined 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.

In Australia the Criminal Code Act 1995 (Cth) provides that -

70.2 Bribing a foreign public official

(1) A person is guilty of an offence if:

(a) the person:

(i) provides a benefit to another person; or
(ii) causes a benefit to be provided to another person; or
(iii) offers to provide, or promises to provide, a benefit to another person; or
(iv) causes an offer of the provision of a benefit, or a promise of the provision of a benefit, to be made to another person; and

(b) the benefit is not legitimately due to the other person; and

c) the first-mentioned person does so with the intention of influencing a foreign public official (who may be the other person) in the exercise of the official's duties as a foreign public official in order to:

(i) obtain or retain business; or
(ii) obtain or retain a business advantage that is not legitimately due to the recipient, or intended recipient, of the business advantage (who may be the first-mentioned person).

For defences see sections 70.3 and 70.4.

In a prosecution it is not necessary to prove that business, or a business advantage, was actually obtained or retained.

70.4 of the Cth Code provides for Facilitation Payments as a Defence. A person is not guilty of an offence against section 70.2 if:

(a) the value of the benefit was of a minor nature; and

(b) the person's conduct was engaged in for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature; and

(c) as soon as practicable after the conduct occurred, the person made a record of the conduct that complies with subsection (3); and

(d) any of the following subparagraphs applies:

(i) the person has retained that record at all relevant times;

(ii) that record has been lost or destroyed because of the actions of another person over whom the first-mentioned person had no control, or because of a non-human act or event over which the first-mentioned person had no control, and the first-mentioned person could not reasonably be expected to have guarded against the bringing about of that loss or that destruction;

(iii) a prosecution for the offence is instituted more than 7 years after the conduct occurred.

For the purposes of that section, a routine government action is an action of a foreign public official that:

(a) is ordinarily and commonly performed by the official; and

(b) is covered by any of the following subparagraphs:

(i) granting a permit, licence or other official document that qualifies a person to do business in a foreign country or in a part of a foreign country;

(ii) processing government papers such as a visa or work permit;

(iii) providing police protection or mail collection or delivery;

(iv) scheduling inspections associated with contract performance or related to the transit of goods;

(v) providing telecommunications services, power or water;

(vi) loading and unloading cargo;

(vii) protecting perishable products, or commodities, from deterioration;

(viii) any other action of a similar nature; and

(c) does not involve a decision about:

(i) whether to award new business; or

(ii) whether to continue existing business with a particular person; or

(iii) the terms of new business or existing business; and

(d) does not involve encouraging a decision about:

(i) whether to award new business; or

(ii) whether to continue existing business with a particular person; or

(iii) the terms of new business or existing business.