The UK Bribery Act 2010: Be Prepared

Monday, January 3, 2011 - 01:00

The current UK anti-corruption legislation is a mixture of common and statutory law, some of which dates back to 1889. It has been criticised as being confusing and complex, with increasingly little relevance to global corruption problems. The UK government has also been criticised for being out of step with the international community in contrast to, for example, the U.S. government, which brought the Foreign Corrupt Practices Act (the "FCPA") into force in 1977. The long-awaited Bribery Act 2010 (the "Act") , which will come into force in April 2011, aims to rationalise the existing legislation and also target overseas corruption by organisations with a connection to the UK.

Four Offences Under The Act

The Act creates the following offences:

A. "Offering, promising or giving a bribe to another person" and "requesting, agreeing to receive or accepting a bribe from another person"

The Act sets out two general offences of bribing and being bribed which are committed when someone:

• offers, promises or gives another person a bribe;

• requests, agrees to receive or accepts a bribe; or

• gives a financial or other advantage in connection with a person performing a function "improperly."

The improper performance of a function is one that breaches an expectation that the function will be performed in good faith, impartially or as a result of a position of trust. This contrasts with existing legislation which requires an element of corruption.

B. "Bribing a foreign public official"

Bribing a foreign official will be an offence if performed by a UK national or resident. This offence is committed when a person bribes a foreign public official or offers an advantage to such an official:

• with the intention of influencing the foreign public official in his capacity as such an official;

• to obtain or retain business or an advantage in the conduct of business; and

• when the official is not permitted or required by local law to be influenced by this business or advantage.

Unlike the offences of bribing or being bribed, there is no need for the official to perform his function "improperly" as a result of the bribe.

Facilitation payments remain illegal under the Act, even if they are expected by local custom. Concern has been raised that this will mean UK organisations will be at a disadvantage compared to U.S. organisations. The UK government is, however, keen to show that bribery will not be tolerated in any form and intends that the playing field will be levelled in the future for UK organisations.

C. Corporate offence of "failing to prevent bribery"

This is a new offence and the one which has, so far, provoked the greatest reaction from businesses. An organisation will be liable if:

• a person associated with it bribes another person intending to obtain or retain business or an advantage in the conduct of business for the organisation; and

• there are no "adequate procedures" in place designed to prevent bribery.

Organisations subject to this provision include UK companies, UK partnerships and non-UK companies and partnerships that do business in the UK. The Act, therefore, applies to companies with only a limited connection with the UK. Third parties who could potentially trigger a liability for the organisation under the Act ("associated persons") include any person who performs services for or on behalf of the organisation. This may include the company's employees, agents, consultants or joint venture partners.

Adequate Procedures

It is a defence to the corporate offence of failing to prevent bribery that the organisation had "adequate procedures" in place designed to prevent persons "associated" with the organisation from committing bribery offences. The government has recently published draft guidance on establishing "adequate procedures." The final guidance is expected to be released in early 2011. The draft guidance focuses on six key principles:

1. Risk assessment procedures

What constitutes adequate risk assessment procedures will vary depending on the size of the organisation, its activities, its customers and the markets in which it operates. As organisations evolve, they need to ensure that they devote adequate resources to the assessment and mitigation of bribery risks.

2. Top-level commitment

As it is believed that board members are best placed to foster a culture of integrity, where bribery is unacceptable within the organisation, anti-corruption should be led by a board director (possibly sitting with the general counsel's/legal director's office for privilege reasons). Leadership procedures that may be effective include the following:

• a statement of commitment to counter bribery in all parts of the organisation and to adopt a zero-tolerance policy towards bribery and set out the consequences of breaching the Act for employees; and/or

• the personal involvement of a board director in developing a code of conduct.

3. Due diligence

Organisations need to know with whom they are doing business if their risk assessment and mitigation are to be effective. Specific enquiries may be required depending on the jurisdiction, the nature of the business opportunity and the third party involved.

4. Policies and procedures

All organisations should have comprehensive, practical and accessible policies and procedures dealing with acceptable levels of gifts and hospitality, prohibiting bribery and dealing with reporting any requests for bribes to a senior manager. These policies and procedures could include a clear prohibition of all forms of bribery, including a strategy for incorporating this prohibition into the decision-making process of the organisation. Guidance on making political or charitable contributions, gifts, hospitality or promotional expenses to ensure that the purposes of such expenditure are ethically sound and transparent may also be helpful.

5. Effective implementation strategy

Organisations could establish an implementation strategy setting out how policies and procedures are to be implemented across the organisation's various groups and functions, including the following:

• who will be responsible for implementation;

• how the policies and procedures will be communicated internally and externally;

• the nature of training and how it will be rolled out;

the arrangements for monitoring compliance;

• the timescale of implementation; and

• a clear statement of the penalties for breaches of agreed policies and procedures.

6. Internal monitoring and review mechanisms

Organisations should consider what internal checks and balances are needed to monitor and review anti-bribery policies. In smaller organisations, this might include effective financial and auditing controls that pick up potential and actual irregularities, combined, perhaps, with a means by which the views and comments of employees and key business partners are incorporated into the continuing improvement of anti-bribery policies.In larger organisations, this may include periodically reporting the result of such reviews to the audit committee or the board of directors.


The penalties for breaching the provisions of the Act are far more severe than under the current regime, with conviction carrying unlimited fines for businesses and up to ten years' imprisonment (currently seven years) and/or an unlimited fine. The potential damage to an organisation's reputation, however, cannot be quantified. Businesses also risk being excluded from bidding on public or utilities contracts if they have been considered to have committed a bribery offence (under mandatory exclusion rules in Europe), and they are also likely to incur negative publicity and damage to their reputations.

Additional Liability Of "Senior Officers"

If any of the offences of bribing another person, being bribed or bribing a foreign public official are committed by an organisation, any "senior officer" is guilty of the same offence if he or she has "consented" to or "connived" in the commission of the offence provided that, if the offence is committed outside the UK, he or she has a close connection to the UK. This provision places an obligation on senior officers to ensure that they are not deemed to have consented (explicitly or implicitly) to bribery committed by others. The provision reiterates the need for an organisation's anti-corruption culture to be led from the top (as envisaged in the government's draft guidance). A "senior officer" will include a director, manager, secretary or similar officer.

Contrasting The FCPA With The Act

Many U.S. companies and businesses are already familiar with the requirements of the FCPA and used to ensuring that their policies and practices meet those requirements. Compliance with U.S. law will not, however, necessarily ensure compliance with the Act.

The Act is broader than the FCPA in the following respects:

• not only does the Act apply to bribery of public officials but also bribery of private citizens, unlike the FCPA (individual commercial bribery is generally covered by state law in the U.S.);

• there is no defence for facilitation payments in the Act, unlike under the FCPA;

• the FCPA does not contain an equivalent to the corporate offence for failing to prevent bribery, although it does include provisions relating to the keeping of books and records that accurately reflect business transactions and to the maintenance of effective internal controls, similar to corporate requirements in the UK; and

• there is no need to prove "corrupt" intention under the Act, as there is under the FCPA.

It will, therefore, be necessary to ensure that any organisations with a connection to the UK comply with the Act, in addition to applicable U.S. requirements. Given that a connection will be established simply by having a place of business in the UK, even if the organisation's main activities are carried on elsewhere, the ambit of organisations subject to the Act is wide.


The Serious Fraud Office (the "SFO"), the current UK prosecutor of crimes under the Act, has actively promoted a policy of encouraging companies to self-report, in line with the practice of U.S. companies to the U.S. Securities and Exchange Commission or U.S. Department of Justice. The SFO's approach has been that it would usually seek to agree to civil remedies, rather than criminal sanctions for co-operating companies. Recently, however, the SFO's role in negotiating settlements has been criticised by the UK courts. The recent decisions in Innospec and Dougall have created uncertainty for companies about the benefits of self-reporting and co-operating with the prosecutor regarding possible corruption activities, as the courts have indicated that they will not automatically approve negotiated settlements.

Be Prepared Now

The government has announced that final guidance on adequate procedures will be issued early in 2011, to allow companies to prepare for the Act coming into force in April 2011. Companies should still consider taking the following steps now to prepare for the Act as these are still likely to represent good business strategy:

• put in place a clear ethics code or anti-corruption statement, applicable to all organisations operating in the UK (if not globally), issued by the managing director or chief executive officer of the organisation;

• develop a gifts and hospitality policy, requiring employees to seek approval for gifts or hospitality above a specified threshold and monitor the reports submitted by employees for approval; approvals should be given or refused in a consistent manner;

• require all employees to abide by a code of ethics, prohibiting bribery in any form, and make any breach of the policy an act of gross misconduct;

• consider comprehensive pre-employment screening before employees are hired;

• set up a compliance function, ideally within the legal function, with a senior officer or board director responsible for compliance and anti-corruption responsibilities;

• allow employees to blow the whistle on bribery offenders in a confidential and protected manner (whether or not via a formal hotline, bearing in mind there are data protection rules to comply with when implementing hotlines in Europe);

• investigate all allegations of bribery quickly and consistently; any disciplinary action taken against employees suspected of bribery should be carried out promptly, after investigation, and consistently applied sanctions should be issued;

• undertake diligence on agents, consultants, distributors and new business partners (including joint venture companies and new company acquisitions); include anti-corruption obligations, immediate termination rights for breach of these provisions and indemnities against liabilities incurred by the business in all contracts with third parties;

• put in place adequate audits of financial transactions and internal financial controls to highlight suspicious transactions; and

• train all employees on anti-corruption policies on a regular basis.

Pulina Whitaker is a qualified lawyer in King & Spalding's London office and a Partner in the firm's Employment & Benefit practice.

Please email the author at with questions about this article.