UK Bribery Bill Could Ensnare Companies who Lack Adequate Programs and Policies to Prevent Bribery

Companies incorporated in the United Kingdom could subject themselves to unlimited fines for failing to take adequate measures to prevent domestic and overseas bribery under a new bill proposed by the U.K. Ministry of Justice on March 25, 2009. The draft legislation, which would replace Britain’s existing patchwork of bribery laws and create the new offense of a corporation’s negligent failure to prevent bribery, could have significant ramifications for British companies involved in international development projects.

Background

Britain’s existing bribery laws are a confusing mix of overlapping corruption offenses codified in four statutes enacted between 1889 and 2001[1] and an even older bribery offense existing under the common law. The laws have been targeted for reform since at least 1995 and have been the subject of several U.K. Law Commission studies and stop-start legislative proposals over the last decade.

In October 2008, the Organisation for Economic Co-operation and Development’s (OECD) Working Group on Bribery issued a scathing report criticizing the United Kingdom for its failure to comply with its obligations under the OECD’s Anti-Bribery Convention.[2] The Working Group specifically highlighted Britain’s failure to address deficiencies in its laws on bribery of foreign public officials and on corporate liability for foreign bribery[3], as well as its track record of only one successful prosecution. In addition, the Working Group complained of “systemic deficiencies” revealed by the Blair government’s scrapping of the BAE investigation concerning certain Saudi Arabian arms deals, which underscored the need to protect Britain’s Serious Fraud Office from political interference.[4]

In November 2008, the Law Commission attempted to put Britain’s house in order by issuing a report detailing a legislative proposal that forms the basis of the new bribery bill[5], which would repeal most of the existing myriad statutory and common law provisions on bribery and corruption.

Overview of Draft Bribery Law

The Draft Bribery Bill, which was proposed by the Ministry of Justice on March 25, 2009, creates a unified statutory scheme to criminalize bribery whether it occurs within Britain or anywhere overseas. The bill consolidates existing statutory and common law into two general offenses: (1) giving, promising and offering a bribe; and (2) agreeing to receive or accept a bribe.[6] There will also be a specific offence of the bribing of a foreign public official and the new offence of a “commercial organisation” negligently failing to prevent bribery by an employee or agent.[7] The general offenses and foreign bribery provisions subject individual offenders to up to 10 years in prison and unlimited fines, while the violation of the “commercial organisation” provision is punishable by unlimited fines only.[8]

Although the entire bill is worth careful review and study, its “commercial organisation” provision is particularly noteworthy. It subjects companies incorporated or carrying on a business in England, Wales or Northern Ireland to potential liability whenever a person performing services on the company’s behalf bribes another person in connection with the company’s business.[9] Specifically, the company is guilty of violating the statute where the “responsible person [within the company], or a number of such persons taken together, was negligent in failing to prevent the bribe.”[10] It is a valid defense under the statute to show that the company “had in place adequate procedures designed to prevent persons performing services for or on behalf of [the company] from committing” bribery under the law.[11] The bill’s impact assessment explains that the purpose of this defense is to “encourag[e] those companies which have not already done so to adopt adequate systems to prevent bribery.”[12]

Potential Implications of the Draft Bribery Law

The draft Bribery Bill would clarify and strengthen British bribery laws and ensure that U.K. law reaches the commission of bribery wherever it may occur. The bill’s inclusion of a new offense for negligent failure to prevent bribery underscores the need for companies operating in the U.K and abroad to conduct a detailed assessment of their compliance policies and programs based on a thorough review of their business and operations. To prepare for the possible advent of the new law and avoid potential liability, companies should carefully evaluate whether they have adequate procedures and programs in place to prevent those working on their behalf from committing bribery anywhere in the world that the business operates.

Such a review is particularly important in light of the recent European Union public procurement directive mandating that companies be excluded from participation in public contracts whenever they have been convicted of “corruption.”[13] A conviction under the new U.K. bribery law could, in certain cases, fall within the ambit of the EU procurement directive and jeopardize a company’s participation in EU public contracts.

 


[1] See the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and 1916, and Part 12 of the Anti-Terrorism, Crime and Security Act 2001.
[2] See Organisation for Economic Co-operation and Development, Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Dec. 17, 1997, DAFFE/IME/BR(97)20.
[3] See Press Release, Organisation for Economic Co-operation and Development, OECD Group Demands Rapid UK Action to Enact Adequate Anti-Bribery Laws (Oct. 16, 2008), available at http://www.oecd.org/document/8/0,3343,en_2649_34855_41515464_1_1_1_1,00.html. [4] In December 2006, the U.K. government, citing national security concerns, terminated the SFO’s bribery investigation into an arms sales contract between BAE Systems and the Saudi Arabian government.
[5] See U.K. Law Comm’n, Reforming Bribery (Nov. 19, 2008), available at http://www.lawcom.gov.uk/docs/lc313.pdf.
[6] See generally U.K. Ministry of Justice, Draft Bribery Bill, 2009, Cm. 7570, at §§ 1, 2, available at http://www.justice.gov.uk/docs/draft-bribery-bill-tagged.pdf.
[7] Id.§§ 4, 5.
[8] See id. § 11.
[9] Id. § 5(1), (7).
[10] Id. § 5(1) (emphasis added).
[11]Id. § 5(4). The defense is not available, however, if the negligence “was wholly or partly that of a senior officer of [the company] or a person purporting to act in such a capacity.” Id. § 5(5).
[12] U.K. Ministry of Justice, Impact Assessment of Draft Bill on Reform of the Law on Bribery 8 (2009), available at http://www.justice.gov.uk/docs/draft-bribery-bill-impact-assessment.pdf.
[13] See Council Directive 2004/18, art. 45, 2004 O.J. (L134) 144 (EC), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:134:0114:0240:EN:PDF.

CONTACT INFORMATION


Akin Gump Strauss Hauer & Feld LLP has extensive experience in developing compliance programs and procedures to prevent bribery. We can help companies prepare for the advent of the new bribery law.

Paul W. Butler pbutler@akingump.com 202.887.4069 Washington, D.C.
Thomas McCarthy Jr. mccarthyt@akingump.com 202.887.4034 Washington, D.C.
Sebastian Rice srice@akingump.com 44.20.7012.9618 London