LEGAL ANALYSIS AND REGULATIONS

LAR-503 March 2011

U.K. Bribery Act Implementation Delayed: Respite or Reprieve?
By: Frederick T. Stocker Vice President, General Counsel and Secretary fstocker@mapi.net

The Alliance promotes the technological and economic progress of the United States through studies and seminars on changing economic, legal, and regulatory conditions affecting industry. Copyright © 2011 Manufacturers Alliance/MAPI, All rights reserved. 1600 Wilson Boulevard, Suite 1100, Arlington, Virginia 22209-2594 Phone: 703.841.9000 Fax: 703.841.9514 www.mapi.net

counterpart.justice. Also reviewed in detail are provisions of the law which pose the most troubling questions which were the focus of the earlier draft guidance. In some key respects.K. May 18.K. After providing a brief overview of the new law and the draft guidance as to interpretation of its key provisions issued by the U. and related measures.com/documents/TheTimes_businesseth ics_final. the Public Bodies Corrupt Practices Act of 1889. July 2010.K. U.goodcorporation.html 3 Edward M. Available for download at http://www.K.C. 2010 Introduction On January 31. while on its 1 face the new Bribery Act reaches a broader range of conduct than does the FCPA. and received Royal Assent that same day. thoughts on the eventual implementation of the Act. Regardless of similarities/differences in the two countries‟ legal frameworks. Michael Dempsey.S.K. LAR-501. its bribery prohibitions are broader than those contained in U. other U. This expansive reach has prompted one hyperbolic commentator to describe the new law as “[t]he FCPA on steroids. et seq. laws are increasingly being used to narrow this perceived gap. Bribery Act. Bribery Act dictates were explained in an earlier MAPI publication.” Raconteur on BUSINESS ETHICS. Bribery Act (the Act)1—which was expected to go into effect this coming April. legislation is enacted. would be indefinitely delayed. the FCPA‟s legal regimen. Foreign Corrupt Practices Act (FCPA)2 which heretofore has been considered the gold standard of such measures. if left unchecked. Available at http://www. Anti-bribery Law. Joffee of Joffee & Joffee. The delay in implementation of the new law affords companies additional time to refine their compliance practices to ensure that the nuances of the new law are identified and addressed. Reexamining Corporate Compliance Programs in Light of Recent U. 2011. 8. It was passed on April 8. The Act repeals the pre-existing criminal antibribery/corruption laws in the United Kingdom.trendsininternationallitigation.K.K. 2009 for pre-legislative scrutiny by a Joint Committee of both Houses of Parliament. a partner in the forensic and dispute services practice of business advisors Deloitte. it will be one of the most draconian anti-corruption measures in the world. and suggestions for compliance preparations will be offered.”4 Although there are significant differences between these two anti-bribery legal schemes. the legislative history of the U. p.S.K.com/2011/01/articles/foreig n-corrupt-practices-act/uk-new-bribery-act-called-fcpa-on-steroids/ 4 A statement attributed to Mr. Bribery Act Implementation Delayed: Respite or Reprieve? “Bribery.” Kenneth Clark Lord Chancellor and Secretary of State September 14.MAPI 1 LAR-503 U.uk/ukpga/2010/23 2 The New Law in a Nutshell The U. Finally. The Act‟s anti-bribery reach is expansive. Ministry of Justice. companies should not be lulled into complacency thinking that their FCPA compliance programs are entirely adequate to protect them against potential violations of the U. This new law has been a cause of consternation in the global business community and among compliance professionals. Moreover.pdf . its enforcement. Those provisions will be compared to. The U.K. national policies and has become a global problem. Economic globalization means that the damaging impact of commercial bribery that seeks to subvert open competition in business transactions has now moved beyond unilateral. 2010.” January 1. “Bribery Act is set to bare its teeth. the 1906 and 1916 Prevention of Corruption Acts. 2011 the U.K. Ministry of Justice announced that implementation of the U. Nic Carrington. criminal law of bribery by providing a new consolidated scheme of bribery offenses covering such activity both in that country and abroad.S. The purpose of the Act is to reform the U.gov.S.S. The Act is available for download at http://www. The laws being replaced were generally acknowledged as being antiquated and lacking clarity 15 U. and contrasted with.S.”3 and another to opine that “[w]hen the U. FCPA Enforcement and the New U. public and private. this report will provide a more detailed analysis of the law‟s specific dictates. 2010. Bribery Act was published in draft form on March 25.legislation. Available for download at http://www. destroys the integrity of all institutions. including the common law offense of bribery. law and interpretive statements by enforcement officials in that country suggest that it is likely to be applied in a manner similar to its U. LLC monitors global customs and trade issues and reports on them in a blog. §78dd-1.gov/criminal/fraud/fcpa/statutes/regulations.K. “UK NEW BRIBERY ACT CALLED FCPA ON STEROIDS.

K. When such an offense is committed entirely outside of the U. the U. (including but not limited to U. Furthermore.. or accepting a bribe.” (draft guidance)5 which included draft guidance on what constitutes adequate procedures. The FCPA only covers the latter form of bribes.K.K.. The draft set out six general principles (each followed by commentary and explanation) which commercial organizations should consider when establishing and maintaining bribery prevention programs. Those six principles. while the FCPA focuses exclusively on the payment of bribes.K. no act in furtherance of the underlying offense needs to transpire in the United Kingdom. Top-level commitment. Once the Act comes into force it will replace old fragmented offenses with a more coherent legal framework of offenses with broad scope and extraterritorial reach. residents. Effective implementation. and companies). Bribery Act that are usually cited when it is described as being broader in scope than the FCPA. That is to say. practical.K. or carry on at least part of its business.K. On September 14. The new strict liability corporate offense in the Act has no such territorial nexus requirement. This delay was intended to afford businesses sufficient time to prepare for the new law and to give the Secretary of State time to publish the statutorily required guidance as to what would constitute “adequate procedures” to prevent the new corporate offense of failure to prevent a bribe. the Bribery Act creates two general offenses: the offering.K. include the fact that it applies to both commercial bribery as well as to bribery of foreign public officials.justice. the Act does not require that improper offer. promising. Unlike the FCPA. Originally. In most basic terms.gov. demonstration. the Act is potentially broader than the FCPA.. 2010. the new Act covers both the payment and receipt of such financial or other advantage. with regard to territorial reach. The draft guidance is principles-based and not prescriptive. or payment be made with corrupt intent as does the FCPA in the case of bribes to foreign officials. citizens. the newly elected coalition government in Great Britain announced that implementation would be delayed until April 2011. or giving a bribe and the requesting. In other words. There is also a specific offense for senior corporate officers. and Monitoring and review.MAPI 2 LAR-503 and scope. there is no one-size-fits-all answer to the question of what constitutes adequate procedures. These offenses apply to any acts which take place in the U. the senior officer will be guilty only if he or she has a close connection with the U. The features of the U. Finally.. It will not matter where in the world the bribery takes place.K. For purposes of jurisdiction the FCPA requires acts in furtherance of the bribery scheme to occur within the territorial United States.pdf . however. The Act does not define such adequate procedures but does require the Secretary of State to promulgate guidance on the procedures that commercial entities could put in place to prevent bribery.uk/consultations/docs/bribery-act-guidanceconsultation1. promise. are as follows:       5 Risk assessment. This offense applies to any commercial organization that carries on any part of its business in the U. If any of the offenses mentioned above are committed (under the usual rules of attribution of knowledge) by a corporate body with the “consent or connivance” of such a person. The Act also creates a discrete offense of bribery with a foreign government official in order to obtain or retain business or an advantage in the conduct of business. agreeing to receive. An organization subject to prosecution will have the burden of proving that preventive measures are adequate. and accessible policies and procedures. Of particular concern to corporations and partnerships is the Act‟s new strict liability offense of failing to prevent bribery.K. the Act was expected to come into force in late 2010. the Bribery Act does not include an explicit defense for so-called “facilitating payments” to secure the performance of routine governmental action or an affirmative defense for bona fide and reasonable expenditures relating to the promotion. The only defense to this crime is for the commercial organization to establish that it had in place “adequate procedures” designed to prevent the bribery from taking place. The document notes that the question of whether an organization has adequate procedures in place to prevent bribery in the context of a particular prosecution is a matter that can only be resolved by the courts taking into account the particular facts and circumstances of the case. Ministry of Justice published its “Consultation on guidance about commercial organizations preventing bribery. In July of last year. on this point. Clear. which fails to prevent bribery being committed by anyone associated with it (including but not limited to employees. Moreover. Available for download at http://www. that senior official may also be liable for the underlying offense. or subsidiaries) in order to gain a business advantage. while the commercial organization has to be organized. and to acts carried out anywhere in the world by a person with a “close connection” with the U. which will be elaborated on later in this report. or explanation of products or services. agents. Due diligence. in the U.

Defining key terms in the Section 1 and 2 general offenses. Their charge is to review regulations with an eye towards reducing red tape that impedes business growth. and the strict liability offense for commercial organizations that fail to prevent bribery by associated persons. and implementation of. The explanatory notes to the Act7 make it clear that the BRIBERY ACT 2010. . Ministry of Justice also announced it would be publishing a circular on the Act as a whole to assist those seeking a better understanding of its provisions. senior official liability for persons who consented to —or connived—in their corporation‟s bribery or receipt of bribes. as a result of strong concerns expressed by the business community in his country that the new law could have an adverse impact on the British economy by hampering U.K. During this period the U. In the scenarios set forth in 2-4 immediately above. even if it is entirely within the private sector.5. government department that investigates and prosecutes serious or complex fraud and corruption and is likely to have enforcement responsibility for the Bribery Act) is expected to follow with specific guidance on what constitutes “reasonable” corporate hospitality. Moreover. Explanatory Notes.—For the purposes of these general bribery offenses the Act provides some definitional assistance. or accepting a financial or other advantage. paragraph 28. As previously noted.K. or professions. Prime Minister David Cameron ordered a review of the Bribery Act.K. bribing another person. it does not matter whether R knows or believes the performance is improper. It was anticipated that this consultation process would lead to the publication of final guidance on adequate procedures by the end of January 2011. or acceptance itself constitutes an improper performance. R requesting. the Serious Fraud Office (SFO—an independent U. promised. A person (“R”) is guilty of this offense when they either request. but also potentially to behavior of 6 The Appendix to this report outlines the Act‟s focus and reach in a convenient chart. the Act might not be on schedule. the Bribery Act creates five distinct criminal offenses in the area of bribery/corruption. Person R would also violate Section 2 of the Act: (4) Where a relevant function or activity is performed improperly in anticipation of. including its impact on corporate spending on hospitality/entertainment and on facilitation payments. promises or gives a financial advantage to another person [either directly or through a thirdparty intermediary]” and P either: (1) Intends the advantage to induce that person (or someone else) to perform improperly a relevant function or activity or to reward that person (or someone else) for “improper” performance of a relevant function or activity. individuals and corporate bodies all over the world.—Section 1 of the Act creates a new general bribery offense where a person (“P”) “offers. agree to receive.‟s Chancellor of the Exchequer and the government‟s Business Secretar y. or (2) Knows or believes that the acceptance of the advantage would itself constitute the improper performance by that person (or someone else) of a function or an activity. Section 3 sets forth an expansive definition of what constitutes a relevant “function or activity. At this time it is uncertain when finalized guidance on the Act‟s adequate procedures provisions and other issues will be published. p. (2) Where the request. bribing a foreign public official. Receiving a bribe. All of these offenses apply not only to behavior in the U.” Covered are virtually all activities associated with businesses.. or in consequence of.MAPI 3 LAR-503 The draft guidance also commented in general terms on other issues of concern about the Bribery Act. a relevant function or activity should be performed improperly. the involved function or activity. while it is less than clear what impact the Growth Review will have on final guidance on. Once published it will be followed by a three-moth notice period before implementation of the Act. or given is the same person who is to perform. As part of the so-called Growth Review. being bribed.K. These offenses will be examined in turn.K. the Act will be scrutinized by a committee chaired by the U. As this past January progressed. or accept a financial or other advantage (directly or through a third party): (1) Intending that. in consequence. agreeing to receive. agreement. companies‟ ability to compete abroad. or has performed. As indicated. Available for download at 7 General Bribery Offenses A Detailed Examination of the Act’s Focus and Reach6 As alluded to previously. on January 31 the Ministry of Justice announced an indefinite delay.—Section 2 of the Act‟s offense of being bribed is largely complementary to the Section 1 of offense of bribing. there were signs that formal guidance on. or (3) Where the advantage is an award for such improper performance. trades. it does not matter if the person to whom the advantage is offered. On January 13. Bribing another person. that is. and implementation of the Act.

S. “a person who under the British Nationality Act of 1981 was a British subject”). is expected to perform impartially. For example. if it does take place.S.. U.C.K. prosecutors have the option to target such acts of foreign bribery under either Section 1 of the Act of or the Section 6 foreign official bribery offense. promises. Section 3 of the Act does limit the general bribery offenses to those cases where the person performing the function or activity meets at least one of the following conditions:    is expected to perform in good faith.pdf 18 U. Cal. available for download at http://www. from an overall perspective.html . the intent to reward improper performance. Moreover. .K. Available at http://www. or an agreement is made or reached to satisfy this element of the offense.K. or where the target holds a position of trust with regard to such performance.. 9 CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONS.en_2649_34859_201781 3_1_1_1_1. Also. promise.—Section 6 of the Act contains a specific stand-alone offense for bribing foreign government officials. the new law will apply to foreign entities and individuals.co.telegraph. It is not necessary for prosecuting authorities to prove dishonesty or corrupt intent. corporation or partnership.oecd. statutes other than FCPA can serve as the basis of commercial bribery charges. As such.K. U. One such case is United States v. instead they only need to meet a less stringent standard— that is. §1952. 2011. July 22. critics who say it would place the country at a disadvantage in comparison with international competitors note that only 7 of the 36 signatories to the convention are currently enforcing it. While the Bribery Act does indeed prohibit a broader range of conduct it should be noted that U. Moreover. 8 Bribery of a foreign public official. on which the OECD Convention is basically modeled. . a general bribery offense is committed if the proscribed conduct takes place anywhere in the world. Improper performance of a relevant function or activity need not happen. Travel Act. The “advantage” conferred need not exceed any minimum threshold.S.     What constitutes an “improper” performance of a function or activity is defined in Section 4 of the Act as conduct that is in breach of a relevant expectation that the target of the bribe is expected to perform in good faith or impartially.9 Section 6 largely mirrors the substantive standards of the FCPA.” The Telegraph. . January 21.—  An actual “advantage” need not be conferred—it is sufficient that an offer.uk/finance/yourbusiness/briberyact/8272140/Fears-Bribery-Act-will-harm-UK-plc. (Section 12(2)(4) of the Act). Section 5 specifically notes that this expectations test is to be applied without regard to any local custom or practice “unless it is permitted or required by the written law [either judicial or legislative] applicable to the country or territory concerned.org/document/21/0. This factor is often cited as one of the key differences between the Act and FCPA since the latter only applies to bribery of foreign officials to obtain or retain business. That objective test is “what a reasonable person in the United Kingdom would expect in relation to the performance of the type of function or activity concerned. a person with a close connection is defined as a British citizen or resident (or a person falling into similarly defined http://www. an advantage in the conduct of business.3746. 8:09-cr-00162-JVS (C. business. “Fears Bribery Act will harm UK plc. categories—e. As such.” either directly or indirectly to influence that official in his/her official capacity and to “obtain or retain. the laws of the two countries are not so different. the perpetrators need not believe that they are acting improperly. or gives any “financial or other advantage” to a “foreign public official. Important features of bribery offenses.” A general bribery offense is committed if the proscribed conduct takes place in the United Kingdom (Section 12 (1) of the Act). but has said it will rely on the appropriate exercise of prosecutorial discretion to establish those exact parameters. In essence this offense applies where a person offers.html While the Act would bring the United Kingdom into line with the OECD Convention. Commercial Components.g.com/statutes/Bribery_Act_2010_Explanatory_Not e. what constitutes a “reasonable expectation” in these circumstances is defined by the “Expectation Test” found in Section 5 of the Act. 2009).00&&en-USS_01DBC.8 which prohibits travelling between states or countries or using the mail or interstate facilities in aid of any crime (state or federal). Inc.banksr. prosecutors are increasingly relying on the U. or. Jonathan Russell. to target commercial bribery abroad. and/or by virtue of such performance holds a position of trust. The U.D. provided such act or omission is “done or made” by a person with a “close connection” to the U. In these circumstances. or a U. No. .MAPI 4 LAR-503 purpose of the definition is to ensure that the law of bribery applies equally to public and selected private functions without discriminating between the two.” Also. This section is included in order to ensure that the Act complies with the United Kingdom‟s commitments under the Organization for Economic Cooperation and Development (OECD) Anti-Bribery Convention (the OECD Convention). government has acknowledged the broad scope of these offenses.S.” Importantl y.

promise. the general offenses of bribery and receiving a bribe and the offense of bribing foreign public officials) is committed by a covered corporation or a partnership. which will be detailed in the next segment of this report) does not trigger senior officer liability. a sufficient nexus would exist if a commercial organization had a representative or sales office in the United Kingdom or was listed on the London Stock Exchange or Alternative Investment Market. or part of a business. Section 7 of the Act applies to corporations (wherever incorporated) and partnerships (wherever formed) which carry on “business. or 3 (bribing a foreign government official) in order to support a senior officer violation under Section 14.g. Senior official offense. for conduct by persons acting on their behalf. the Act could bring these parties and their officials and candidates within its purview as the “exercise” of “a public function. (2) “exercises a public function” for or on behalf of a foreign government or public agency or “enterprise”. in itself.e. and the offense occurs with the “consent or connivance” of a “senior officer” of the organization. A reasonable person could ask whether purchasing commercial insurance . It provides a new offense. 2 (receiving a bribe). while their organizations escape such a fate (e. or judicial position” (whether elected or appointed). administrative. manager.e. an organization can only be convicted of a crime in the United Kingdom if a senior manager (i. Commentators have suggested that. unique to each case. known as the “identification” doctrine. the Act does not include in this definition of foreign officials. specifically applicable to commercial organizations. a relevant commercial organization can be found guilty if any person “associated with” it commits bribery with an intent to “obtain or retain business” or “obtain or retain an advantage in the conduct of business” for the organization.” In contrast to the FCPA . Conceivably.. Corporate failure to prevent a bribe. or candidates for foreign political office.10 Section 6 of the Act provides a specific exception to its reach in cases where the recipient of an advantage is permitted or required by the written law of that person‟s country to be influenced in his/her official capacity by the offer. and courts in such interpretive efforts.org/dataoecd/4/18/38028044.K. Both those persons and the “body corporate” will be guilty of the same offense as the perpetrators. Conceivably. corporate bodies and partnerships no matter where in the world they conduct their business. or other similar officer (or a person purporting to act in such capacity).MAPI 5 LAR-503 unlike the FCPA. however. but consistent with the OECD Convention. Notably. the Act defines the term “foreign public official” to include individuals who (1) hold a “legislative. for the purposes of this aspect of Section 7 of the Act. prosecutors. As such. in any part of the United Kingdom. has posed a difficult hurdle for prosecutors in bribery cases where such transgressions are often perpetrated by relatively junior personnel in an organization without senior management involvement. This U. or payment need not be made “corruptly. promise. regulators.” The term carry on business or part of a business is not defined. someone who can be viewed as possessing the “direct mind” of the organization) is personally responsible for an element of the crime. in recent cases. Under this new corporate offense.K.pdf The Act does not clarify whether the organization itself must be charged with violations of Sections 1 (bribery).” Similar to both the OECD Convention and the FCPA. or (3) is an “official or agent of a public international organization. current or former senior officers could be the subject of prosecution. criminal liability under the new strict liability corporate offense of failure to prevent bribery (Section 7. legal precept. or gift. 10 Available for download at http://www. Most significantly for global companies. for their failure to prevent bribery by an associated person. For the most part.—Section 7 of the Bribery Act is perhaps its greatest cause of consternation for global companies.. failure to meet the standards for an “adequate procedures” defense to that new corporate offense will not.K. through a negotiated civil settlement). might well assist U. on a respondeat superior basis. however. however. This trend is even more pronounced in recent FCPA enforcement actions in the United States.” The Act does not specify what degree of government ownership or control is required for an organization to qualify as a “public enterprise” for the purposes of Section 6 of the Act.—Section 14 of the Act provides that if any of the three offenses examined previously (i. party officials.oecd. secretary. this offer. have stated publicly that whether a company “carries on” business in the United Kingdom will be a factspecific question. A senior officer includes a director. Section 6‟s foreign official bribery offense basic ally has the same jurisdictional scope as the general bribery offenses previously described. a readiness to target senior management in egregious bribery-related cases. foreign political parties. Existing guidelines on ownership/control issued by the OECD in reference to its Anti-Bribery Convention. serve as a basis for criminal liability of corporate management. This exception corresponds to the seldom-invoked affirmative defense in the FCPA that the payment was lawful under the written laws of the country of the recipient.. SFO officials. It should be noted that the SFO already has shown. Section 7 creates a new offense that clears this hurdle by rendering organizations criminally liable. The term “relevant commercial organization” is defined (Section 7(5)) to include all U.

The government must. the Section 7 corporate offense applies to any commercial organization that is established under United Kingdom law or any foreign corporation that carries on business. in the U. To reiterate. partners. or other intermediaries under the respondeat superior principle.K. and consortia over which the commercial organization does not have direct control. proof of such a compliance effort would be considered a mitigating factor in prosecutorial decisions and by a court in sentencing determinations. Also with regard to this new corporate offense.K. Ministry of Justice. companies that fall within the purview of the FCPA are generally responsible for the criminal acts of employees. law. and continuously improving a strong anti-bribery compliance program.” however. Section 7 of the Act contains an affirmative defense whereby organizations can avoid criminal liability if they can establish that they have adequate procedures in place to prevent bribery. A person who commits bribery is associated with a commercial organization if he performs service for or on behalf of that entity. while “knowing” that all or a portion of that payment will go directly or indirectly to a third party. accounting. Showing that an entity has an effective FCPA compliance program in place. with regard to Section 7 of the Act.K. The Act gives non-exclusive examples of such persons to include employees. It goes on to say that whether there is a sufficient connection between the person and the organization to satisfy this provision of the Act will be evaluated by reference to “all the relevant circumstances and not merely by reference to the nature of the relationship between” the organization and the partnership. Moreover.” Since Section 7 requires the Secretary of State to provide guidance on “adequate procedures” more will be said on the meaning of this term in the segment of this report below which examines the draft guidelines published by the U. the government need not establish that the associated person or the misconduct in question had any connection to the United Kingdom as is required when prosecuting cases under Section 1 and 6 of the Act. It is not necessary that the associated persons have been convicted of bribery for the new corporate offense to be brought into play. There is no direct correlation in the FCPA to the strict-liability corporate offense set forth in Section 7 of the Bribery Act. the FCPA provides that it is unlawful to make a payment to a third party. The standard is sufficiently broad to apply to foreign affiliates. or consulting firm would be deemed carrying on business in that country? Suffice it to say that the phrase “part of a business” is quite broad and will be left to the courts to construe. includes a conscious disregard and deliberate ignorance standard under which a company can be held liable for an FCPA violation without actual knowledge or direct complicity in the criminal acts of third parties such as agents. criminal penalties under the anti-bribery . government has yet to issue guidance as to how to weigh these fines.MAPI 6 LAR-503 in the London market or engaging a U. however. It will be the organization‟s obligation to present evidence and establish by a balance of probabilities. however. agents. Penalties. The U. establish beyond a reasonable doubt that the associated person engaged in misconduct would constitute bribery under Section 1 of the Act or bribery of a government official under Section 6 of the Act.—Penalties for offenses under the Bribery Act are up to 10 years imprisonment for individuals and unlimited monetary fines. the standard is broader than the face of the FCPA would seem to indicate. Although this does not constitute a strict liability offense. First of all. Conversely. The person‟s exact capacity is not relevant. implementing. The breadth of the U. would go a long way toward blunting a willful blindness charge in such a prosecution. but may do so (as recommended by the Parliamentary Joint Committee on the Bribery Bill). Finally. This potentially open-ended concept does not require a contractual relationship between the commercial organization and the associated person. In making its case. as mentioned above. pursuant to the statute‟s terms. In these circumstances. agents. the absence of an effective anti-bribery compliance program and adequate related internal controls could expose a company to civil liability from charges of violating the statute‟s accounting provisions. are the same under both the FCPA (to counter charges of deliberate ignorance or willful blindness) and the Bribery Act (to meet the requirements of an “adequate procedures” defense).K. statute. and subsidiaries. Section 8 of the Act attempts to clarify the term “associated person” as used in Section 7‟s new corporate offense. or part of a business. that its anti-bribery compliance efforts are “adequate. By comparison.S. the FCPA has no such affirmative defense. Recent SFO enforcement actions under preexisting bribery law suggest that penalties in the millions of pounds can be expected in significant cases. however. The strict-liability offense applies to any acts of bribery. knowledge of illegal acts can be imputed to a company when evidence shows that it was aware of red flags that could have alerted it to corrupt activity and that it failed to investigate further or act to prevent the illegal conduct or transaction. The term “knowing. anywhere in the world that can be linked to those organizations—even if the bribery itself transpires outside the United Kingdom. Secondly. In other words. which includes thorough intermediary/third-party due diligence policies and procedures. is broad enough to reach much of the conduct targeted by the latter law. a strong argument can be made that the inducements for creating.

Moreover. While this issue of international cooperation may resolve itself over time.. Securities and Exchange Commission (SEC) could bring a civil action against corporations and/or individuals for these violations for amounts up to $500 thousand.MAPI 7 LAR-503 provisions of the FCPA can be as high as $2 million for corporations and other business entities and up to $100 thousand for covered individuals. This was part of $1. prosecution 11 agreements with the use of monitors and agreed to compliance program improvements. As alluded to previously. 18 U. court cases cast doubt on the continuation of these practices. which implements the European Union (EU) Procurement Directive.sfo. penalties. government. government has indicated that it will seek guidance from the EU as to how the Directive‟s mandatory debarment feature should apply in connection with the Act‟s corporate offense and EU guidance on the matter is expected to be forthcoming. Indictment alone can lead to a suspension of the right to do business with the U. The SFO has also stated that it would be amenable to settlements in bribery cases that result in civil penalties under other related statutes for parties that voluntarily disclose infractions.K. That settlement was made up of over $23 million in disgorgement and a $10 million penalty to the SEC along with an $11 million criminal fine imposed by the DOJ. Dougall [2010] EWCA Crim 1048. Innospec Limited [2010] EW Misc 7 (EWCC) (18 March 2010). a person or firm found in violation of the FCPA may be barred from doing business with the federal government.S. Similarly.S. in effect. Adding to these complications.03. and disgorgement of profits to U. the U. available for download at http://www. It has also signed off on press releases of defendants who agreed to penalties. Two recent U.S.html 14 Op. the Bribery Act is strictly a criminal statute. has recently sought to emulate the U.bailii. 13. not prosecutors. Under guidelines issued by the U.S. SFO has offered immunity and reduced sentences to whistleblowers and others providing useful information and engaged in practices similar to those in the United States such as non-. The judge in the Innospec case indicated that it was proper for the courts. The U. Office of Management and Budget. p.S. unlike the FCPA which permits both civil and criminal penalties. Additionally. The judge stated in no uncertain terms that “the Director of the SFO had no power to enter into the arrangements made and no such arrangements should be made again.K.gov.K. This debarment possibility tracks closely with potential FCPA penalties. available for download at http://www. pdf Comments noted in the sentencing remarks of Lord Justice Thomas from the sentencing hearing of March 26. Department of Justice and the SEC in an FCPA case for $800 million. The SFO. or deferred-.§ 3571. to impose sentences. the relatively new coalition government in the U. He added that it was improper for a party accused of corruption to be treated in a manner different from those accused of other serious crimes such as rape or murder.org/ew/cases/EWCA/Crim/2010/1048. The previous record FCPA penalty was the $44 million settlement that Baker Hughes Inc.K. He went on to castigate the SFO for agreeing to press statements and monitoring agreements. These uncertainties will be exacerbated by questions concerning interpretation of the provisions of the Bribery Act. indicating that it is inappropriate for the SFO to engage in “global settlements” which. such individuals can be imprisoned for up to five years. footnote 12. and German authorities for bribery-related offenses. the present uncertainty creates a strong disincentive for defendants to constructively engage with the enforcement authorities of either or both countries.uk/media/105634/opening%20note%2018. cit. .S. Sentencing remarks of Lord Justice Thomas. The separate cases—one involving the corporation Innospec Limited. deprive the courts of sentencing discretion. Attorney General or the U.K. In terms of the magnitude of total financial exposure a company can face in these kinds of cases.C.uk/NR/rdonlyres/5343F038-A6E5-448BBB2D-7CA31F9E2DDA/0/sentencingremarksthomasljinnospec.”14 These developments inject a measure of uncertainty into the negotiating process for parties seeking to resolve these matters in the United Kingdom and could have an impact on related matters in the United States. entered into with the DOJ and the SEC. Department of Justice and the SEC in the practices of encouraging defendants to voluntarily disclose criminal acts.S.S.pdf 13 Regina v. The United States and the United Kingdom have also regularly cooperated with one another both formally and informally on anti-corruption matters— including those which were brought to light through voluntary disclosures. Public Contracts Regulation 2006.judiciary. the U.6 billion the company paid in fines.12 and the other cooperating individual13—question the use of plea-bargains. It should be noted that criminal penalties under the Act would result in mandatory debarment under the U. available for download at http://www.10. suffice it to note that in 2009 Siemens AG entered into a plea agreement with the U. announced last year that it planned to create a single new agency to tackle serious economic crime—work that is currently 12 Regina v. 2010.gov. government body that has been most involved in bribery prosecutions. often agreeing to plea bargains and financial settlements with potential defendants who come forward on their own. Under the Alternative Fines Act11 these fines could climb significantly higher—the actual fine may be up to twice the benefit that the defendant sought to obtain by making the corrupt payment.

have a specific policy on outside agents. processes for securing regulatory approvals from foreign governments. six key principles for ensuring bribery prevention (i. advisers. 2010. Ethics.K.org . Secretary of State would issue guidance on this critical point prior to the new law being implemented.e. travel and entertainment expenditures. Concerning the adequate procedures guidance. Instead. While the Act sets forth no specifics as to what might constitute such adequate procedures.ussc. the draft does not contain prescriptive rules nor does it propose to introduce any direct obligations on commercial organizations.pdf WOOLF COMMITTEE REPORT—Business ethics. Section 7 of the U.pdf 19 20 http://www. the Financial Services Authority and the Office of Fair Trading). and illustrations set against the backdrop of the six key principles. the commercial organization can escape liability under this new offense..oecd. February 18. and (8) conduct ongoing risk assessment and auditing and continuously work to improve the anti-corruption compliance program. five questions about the guidance (plus a general request for public comment). Ethics. which governs FCPA penalties. (5) hold individuals accountable through appropriate disciplinary and incentive programs. Available for download at http://ir.sfo. organizations that would be subject to new laws held out some hope for enlightenment on the issue by the Act‟s requirement that the U. Moreover. including appropriate due diligence policies and procedures. facilitating payments. can commit this offense if persons or entities providing services on their behalf pay bribes that are intended to get or retain business for the organization or secure it as a business advantage.16 The OECD Good Practices Guidance on Internal Controls. July 21.K.uk/media/28313/approach%20of%20the%20sfo %20to%20dealing%20with%20overseas%20corruption.g.cfm 17 Good Practice Guidance on Internal Controls. Available for download at http://www. Consultation on Guidance About Commercial Organizations Preventing Bribery Adequate procedures. where appropriate. (6) in terms of dealings with intermediaries. senior management and the board of directors).org/ www. global compliance and the defense industry. For example.e. and sets forth standards for an effective ethics and compliance program.transparency. covering issues such as dealing with intermediaries. These resources setting forth international best practice compliance standards include.—As described above. the Ministry of Justice issued its draft guidance on September 14.17  15 APPROACH OF THE SERIOUS FRAUD OFFICE TO DEALING WITH OVERSEAS CORRUPTION. Chapter Eight. adequate procedures guidance).S.MAPI 8 LAR-503 handled by the SFO and other government entities (e.baesystems. By showing that it has in place adequate procedures to prevent bribery. and political and charitable contributions). organizations are expected to: (1) publish clear policy statements and anti-corruption guidance (including specific procedures. Commercial organizations. even prior to such formal guidance.18 Other compliance benchmarking material is available from such organizations as Transparency International19 and the World Economic Forum. but are not limited to.org/dataoecd/5/51/44884389. Uncertainties regarding the new entity‟s mission and practices will further influence corporations‟ decisions to interact with enforcement authorities. Bribery Act introduces a new strict liability offense for the failure to prevent bribery for commercial organizations. (3) have a code of ethics and anti-corruption principles that are to be adhered to regardless of whether local laws prohibit bribery and whether there is cultural acceptance of improper payments. the following:   Guidance on compliance standards outlined by the SFO in its July 2009 guidelines on selfreporting..pdf 16 The May 2008 Woolf Committee independent report on the BAE Systems anti-corruption compliance program prepared after the relatively recent bribery scandal involving that company. and Compliance.15 Chapter Eight of the U. consultants.20 There are some common themes that run through these various best practice benchmarks. 2009. (4) conduct and oversee specific training of employees and third-party representatives on the organization‟s anti-corruption code. there was a wealth of information available that concerned organizations could turn to for help to position themselves for future compliance. policies. The guidance was split into four parts: a summary of the law.gov/Guidelines/2010_guidelines/index.weforum. such as corporations and partnerships. and Compliance (OECD Council. 2010).com/investors/storage/woolf_report_2008.. Sentencing of Organizations. Federal Sentencing Guidelines Manual.gov. Available for download at http://www. May 2008. and other third parties. (2) have visible involvement and support for anti-corruption efforts from the highest levels in the organization (i. In anticipation of prospective implementation of the Act. Available for download at www. it envisages—as  18 2010 Federal Sentencing Guideline and Manual and Supplement. (7) implement transparent books and records procedures to ensure that company funds are properly accounted for and not diverted for the purpose of making improper payments. and practices. however.

The adequate nature of any risk assessment procedure is dependent upon such factors as the organization‟s size. who its customers are. and where it does business. the nature of its business..g. . Clearly. contractors. administrative. OECD good practice guidance advises use of risk assessment techniques. The draft suggests that both internal data (e. etc. prosecuted. client/customer complaints. and criminal law and the existence of any procedures for reporting bribery to local authorities. It is entirely likely that the final guidance. organizations may wish to enquire as to whether partners have anti-corruption measures in place.. and all markets in which it does business. While this might disappoint potentially affected organizations. annual audit and internal investigations reports.g. final guidance will still constitute a useful template and necessary scheme of reference. intermediaries. partners. Concerning the draft guidance‟s six key principles for ensuring bribery prevention. Top-level commitment is another commonly recognized element of an effective compliance program. the general workforce. corporations‟ Enterprise Risk Management Activities are based) and the DOJ. and any relevant external actors.  Business partners—whether involved individuals or entities (e. the framework upon which most U. Global entities that are subject to the FCPA and other international anti-bribery regimes should not be surprised by this compliance requirement. This may include information about the relevant civil. including the organization‟s supply chain. compliance best practice benchmarks in developing the six principles. whether such parties or their associates have been investigated.. Also. (1) Risk Assessment Commercial organizations should know and keep up-to-date with the bribery risks they face in their sectors and markets. These same senior people are responsible for clearly communicating this message to all levels of management. The draft guidance suggests that organizations may wish to consider putting into place procedures relating to the general principles. publicly available data on bribery/corruption in particular sectors and markets) should be analyzed. subsidiaries.g.) have a reputation for bribery.S.. (2) Top-Level Commitment Top-level management (normally senior executive management and the board of directors) must set a cultural tone within an organization that bribery is simply unacceptable. Similarly. The draft guidance offers some examples of what top-level commitment should include: a “zero tolerance policy” communicated throughout the organization. suppliers. the draft guidance advises organizations to consider whether those performing the assessments have adequate skills and what data sources they rely on for information. all forms of joint ventures and similar relationships. and understanding. whenever it might be issued. Regardless of these factors.g. Influencing factors as to adequacy considerations are the size of the organization and the nature of its activities. of the risks an organization faces is a necessary starting point for any viable compliance program. they are examined in turn. and likely other. examining whether the project is to be undertaken at market prices as well as whether it has defined legitimate specifications and objectives).S. and/or debarred for bribery or related offenses should be examined. will not provide a detailed compliance format that organizations can model after without the need for rigorous self-assessment. convicted. the personal involvement of top-level management in developing a code of conduct and in ensuring that anti-bribery policies are published and communicated to employees. and the appointment of a senior manager to oversee the development of anti-bribery programs and to ensure their effective implementation throughout the organization. there was reliance on the abovementioned. agents and intermediaries.  Business opportunity—the bribery risks inherent in a particular business opportunity (e. and business partners. The types of enquiries which should be made include:  Location—the bribery risks unique to a particular country where an organization intends to do business. Common sense dictates that identification.MAPI 9 LAR-503 is evident from the illustrative scenarios set against the backdrop of the six principles—that what constitutes “adequate procedures” will depend on the unique facts and circumstances of a particular case. Sentencing Guidelines includes periodic risk assessments as an element of an effective compliance program. and input from staff and focus groups) and external data (e. defined consequences for breaching the provisions of the policy. This “tone at the top” message is included in virtually every guide to compliance activity including the Committee of Sponsoring Organizations of the Treadway Commission (COSO. Chapter Eight of the U. (3) Due Diligence Commercial organizations should develop due diligence policies and procedures which cover all parties to a business relationship. Additionally.

 The timetable for implementation.. Satisfying the thrust of this principle will be expensive and can only serve to increase the reliance on outside organizations. Some aspects of appropriate policies and procedures which the draft guidance identifies include the following:  A clear prohibition of all forms of bribery including a strategy for building this prohibition into the decision-making processes of the organization. and appropriate levels and manner of provision of bona fide hospitality or promotional expenses to ensure that the purposes of such expenditure are ethically sound and transparent.  A clear statement of the penalties for breaches of agreed policies and procedures. Additionally.legislation. practical. for example:  Who will be responsible for implementation. Indeed. gifts.  Advice on relevant laws and regulations. and  Implementation of procedures to deal with incidents of bribery. in a prompt. this requirement poses a daunting task for many organizations. Large organizations should establish an implementation strategy specifically detailing how policies and procedures are to be put into place throughout the business entity. which sets out expected standards of behavior for employees that is included in their 21 employment contracts.  The internal reporting of progress to top management. etc. should they arise. Practical.  The arrangements for monitoring compliance. consistent. The need to provide clear anti-bribery standards and procedures is an integral part of an effective ethics and compliance program under the U. and  Information on anti-corruption programs relevant to the sector.gov. political and charitable contributions.  The nature of training and how it will be rolled out. financial and auditing controls. including. This principle seems to be the most substantive recommendation in the draft guidance. performance appraisals.g. Public Interest Disclosure Act of 1998 (employment law protection for whistleblowers)21 and an explanation of the process.  The extent to which external assurance processes will be engaged.. (4) Clear.g. (5) Effective Implementation Commercial organizations must implement their anti-bribery policies and procedures throughout the business entity.S.  The organization‟s level of commitment to the U.  Guidance on what action should be taken when faced with blackmail or extortion.). and appropriate manner. agents.MAPI 10 LAR-503 Anti-bribery enforcement authorities throughout the world have focused on counterparty due diligence in their investigations. supply chain management. and other intermediaries. a relatively new industry of investigative firms such as Trace International. Understanding everything that one needs to know about myriad third parties located all over the globe poses monumental challenges.uk/ukpga/1998/23/contents .  How the policies and procedures will be communicated internally and externally.K. and  The date of the next review of these policies and procedures.  The vulnerability and ability to resist bribery of particularly exposed functions or operations of the entity (e. accessible. anonymous whistleblower hotlines. has developed to fill this pressing need.  Guidance on making. and Accessible Policies and Procedures Commercial organizations should develop and maintain clear. Effective implementation requires the allocation of roles and responsibilities and the setting of milestones for delivery and review. organizations might consider:  How existing procedures may be used for bribery prevention purposes (e. Notwithstanding the increased awareness of the importance of due diligence on what the Bribery Act refers to as associated persons. and enforceable anti-bribery policies and procedures which take into account the roles of their entire ownership and workforce as well as all people and entities over which they have control. Largely as a result of FCPA enforcement activity in recent years.  Modifying sales incentives to give credit for orders refused where bribery is suspected. the extent to which that entity is Available for download at http://www. Sentencing Guidelines for Organizations and the COSO framework among other compliance program guidelines. directly or indirectly. global companies have heightened awareness of the risks they face as a result of activities by partners. Organizations may also wish to consider issuing a code of conduct. procurement. If enforcement authorities such as the DOJ or the SOF instigate a bribery investigation and find that an organization has not fully implemented a relevant compliance program.). etc. disciplinary procedures. which specialize in this type of due diligence.

taking into account relevant developments in the field. in an effective manner. p. reviewed.16. * * * Available for download at http://www.MAPI 11 LAR-503 able to produce a well-conceived implementation plan against which it has made reasonable progress will undoubtedly improve the target‟s situation. implemented. one can look to the changes made in 2008 to the “Principles of Federal Prosecution of Business Organizations”22 directed by then U. and evolving international and industry standards.” Those latter effective compliance programs. . Moreover. along these lines organizations may wish to:  Consider what internal checks and balances are necessary for effective monitoring and review of these policies and procedures. or join one of several independently verified bodies or associations that evaluate anti-corruption compliance programs. the draft guidance. monitoring and review of anti-bribery policies and procedures is a widely recognized element of effective compliance efforts by government and private organizations alike. designed to evaluate and improve their effectiveness in preventing and detecting foreign bribery. the Bribery Act is consistent with the OECD Convention and more stringent than the FCPA. courts to provide guidance on these matters in the context of actual bribery cases. These events should be tracked both in their home countries and abroad. in large part.  Identify appropriate trip-wires for mandatory bribery risk assessments and anti-corruption program reviews. Facilitating payments.pdf 23 All in all. may well result in “a decision to charge only the corporation‟s employees and agents or to mitigate charges or sanctions against the corporation. the Act does not provide an explicit defense or exception for small.gov/opa/documents/corp-charging-guidelines. routine. It simply does not provide a great deal of practical assistance or real help in understanding an organization‟s obligations under the Act. It does not relieve the uncertainty posed by the breadth of the Act.”24 Of course. full Boards. cit. and revised.. and  Utilize external tools for assurance and verification of the continuing effectiveness of their anti-bribery policies.K. Among other things. it will be left to the U. By being purposefully non-prescriptive and intentionally indefinite. Article 12 of the OECD‟s Working Group on Bribery‟s February 18. Deputy Attorney General Mark Filip.S. Most commentators are not predicting a departure from this principles-based examination of the adequate procedures standard in the forthcoming final guidance. The draft guidance suggests that larger organizations might include financial monitoring and reviews of bribery reporting mechanism and incident management procedures. its principles-based approach leaves much to be desired in terms of instruction about compliance procedures that prosecutors will deem adequate in any particular case. as appropriate. clear. Section 9-28. the prosecutorial principles provided. That is to say. the guidance just reiterates the Act‟s language.S.800. The notion that “paper compliance” is a potential pitfall that organizations should be wary of has been a mantra of U.” 23 (6) Monitoring and Review Commercial organizations must put into place mechanisms to monitor and review compliance with their anti-bribery policies and implement improvements when appropriate. Under the FCPA these payments are described as being for “routine governmental actions.” Routine governmental action 24 Ibid. it would behoove organizations to keep abreast of related statutory and regulatory changes and trends in prosecutions and convictions. enforcement authorities.—The draft guidance also explores the issue of facilitating payments in the most general terms. and ethical decision making. In fact. organizations should exercise an abundance of caution in these matters and err on the conservative side in interpreting the Act. while offering some direction. nondiscretionary payments to foreign officials which are commonly referred to as “grease” or “facilitating” payments. In this respect. 2010 Good 22 Practices Guidance on Internal Controls. inasmuch as it is incomplete and drafted in terms as general as the statutory language itself. does not go a long way toward calming the fears of potentially affected organizations concerned with developing and implementing adequate procedures to prevent bribery. Indeed. Consistent with pre-existing law in the United Kingdom. the Secretary of State is sending a message that companies should aspire to maximum compliance efforts and consistent. As is the case with most of the other five principles.  Larger organizations might also consider periodically reporting the results of their monitoring/review efforts to the Audit Committees of their Boards of Directors. or equivalent bodies. footnote 17. that cautions prosecutors to distinguish between mere “paper programs” and those compliance programs that are “designed. such an exception was proposed during the legislative process and rejected by Parliament. Unfortunately. Op.. Ethics and Compliance calls for “periodic reviews of ethics and compliance programmes or measures. By way of example. Again.usdoj.

enforcement authorities help. With regard to the Act. because the Bribery Act does not require that an improper offer. Nonetheless. . This trend has been further confirmed by informal polls taken at a recent meeting of the MAPI Law and Ethics and Compliance Councils. the legislative history of the Act. making criminal acts of corporate hospitality or entertainment where there is an intention either to induce a person to perform an act improperly or to influence an official for the purpose of obtaining business or an advantage in the conduct of business.g. or scheduling inspections associated with contract performance or inspections related to the transit of goods across country. cit. providing police protection. or payment made to a foreign government official be made “corruptly.S. This affirmative defense allows individuals or entities subject to the FCPA‟s jurisdiction to incur reasonable expenses for legitimate business hospitality or entertainment of foreign officials that might otherwise violate the letter of the law. on its face. considerable concern has been expressed that what would be seen by most commercial organizations as a legitimate hospitality or entertainment expense would constitute a criminal offense—particularly when the expenditures involve a government official. The article. In that regard. In these circumstances. such gifts and promotional expenditures are extended with the intent to influence the recipient in order to obtain or retain business. global organizations would be well advised to be sure that their anti-bribery compliance programs and related training materials address the matter specifically. “SFO to prosecute „serious‟ overseas bribes. providing phone service. a 2009 survey on this 25 Richard Tyler.”26 As such.MAPI 12 LAR-503 in turn.co. discourage the practice of facilitating payments. such as: obtaining permits. To further document this undeniable development. the Ministry of Justice anticipates that “prosecutors will consider the public interest “in bringing charges and . As alluded to above.traceinternational. op. is defined to include only an action which is ordinary and commonly performed by a foreign official. 2010. But whether we prosecute depends on whether it falls within our criteria. The Act. demonstration. takes a broad-brush approach. to a degree.telegraph. because most jurisdictions tend to be critical of the facilitating payment exception to the FCPA. mail pick-up and delivery. Is it significantly serious?”25 While admitting that facilitating payments are likely to fall under the Act‟s proscriptions. Trace International). loading and unloading cargo. incurred by or on behalf of a foreign official). the more likely it is that a prosecution will be required in the public interest. as previously mentioned. Moreover. on September 23. or explanation of products or services or the execution or performance of a contract with a foreign government or agency. provides an affirmative defense for reasonable and bona fide expenditures (such as travel and lodging expenses.org/documents/FacilitationPayments SurveyResults. the decision as to whether a case should be brought involving facilitating payments is a matter left to prosecutorial discretion and it is not expected that many cases involving only small facilitation payments will be pursued. or protecting perishable products or commodities from deterioration.[t]he more serious the offense. processing governmental papers (e. and statements by the U. the Bribery Act contains no exception for nondiscretionary facilitating payments. signatories to the OECD Convention—which includes the United States—have agreed to a set of resolutions that. Furthermore. visas and work orders). government enforcement authorities and typically is finding its way into corporate compliance programs as well as those entities‟ standards of conduct.K. licenses. promise.” as does the FCPA. U.. to allay 27 Draft Guidance. this distinction between the Act and the FCPA is not as dramatic as it might appear on the face of the two laws since the FCPA exception has been narrowly construed and companies subject to its jurisdiction are increasingly discouraging the use of facilitating payments. . Hospitality. enforcement authorities have been quoted as saying that they do not intend to focus their efforts on the prosecution of such matters. quoting Mr.—The FCPA. the head of anti-corruption enforcement at the SFO said: “We certainly don‟t condone facilitating payments and never will. the draft guidance. on the other hand. among other things. Arguably. The term specifically does not include decisions by such officials to award new business to or continue business with a particular party.uk/finance/newsbysector/banksandfinance/ 8019024/SFO-to-prosecute-serious-overseas-bribes. or other official documents to qualify a person to do business in a foreign country.” The Telegraph. Available for download at https://www. or actions of a similar nature. by definition. 2010. the plain language of the Act would seem to criminalize all promotional gratuities and hospitality expenses. TRACE FACILITATION PAYMENTS BENCHMARKING SURVEY (October 2009.K. September 23. In contract. directly relating to the promotion. power and water supply. Robert Amall is available for download at http://www. This discouragement is fostered by the U.pdf . A person charged with a violation of the FCPA‟s anti-bribery provisions can assert as a defense that the payments made were a reasonable and bona fide expenditure as part of demonstrating a product or performing a contractual obligation.html# 26 subject by the antibribery compliance/due diligence specialist Trace International27 found a “clear trend” in which companies are banning or severely limiting the use of facilitating payments in their anti-bribery compliance programs. unlike the Act. Once again.

Less restrictive standards. at an October 7. The Joint Committee expressed confidence that enforcement authorities would not exercise their prosecutorial discretion in a way that would make legitimate and proportionate hospitality criminal. or establish cordial relations. the FMLC suggested it would be preferable to set “approval limits” for such expenditures. Clearly.K. The United Kingdom had been the subject of vigorous criticism from its EU partners over its handling of certain high profile commercial bribery cases.org/papers/Issue160report. have the effect of allaying concerns over the Act‟s harsher aspects remains to be seen. however. however.uk/pa/jt200809/jtselect/jtbribe/11 5/11502. In response to the draft guidance‟s request for public comment. These limits. The guidance indicated that not all such business expenditures would constitute bribery—even though the clear language of the Act would suggest otherwise—and the question of whether a particular expenditure is a bribe would have to be determined by the totality of the circumstances. Commercial organizations should be wary. Looking at this history and the debate which preceded Parliament‟s enactment of the Act—along with the worldwide publicity attendant to its passage—it is difficult to imagine that the Growth Review will result in any transformational changes to the Act. would put companies in a more comfortable position regarding hospitality expenditures for foreign officials. Bribery Act make of the delay in the issuance of final guidance on the new law and the corresponding delay in its implementation? Whether final guidance will be more specific and. legitimate and modest hospitality expenditures might satisfy the constituent elements of bribery of a foreign government official. on July 28. When trying to predict what will happen with the Act it is important to remember the circumstances that led up to its development. 2009. Finally on this point. Reflecting on the proper exercise of prosecutorial discretion in these matters. whose role is to identify issues of legal uncertainty or misunderstanding in the framework of wholesale financial markets that give rise to material risks. In the eyes of the Ministry of Justice. For example. government at its word—it would appear that enforcement of the Act. government is concerned about the Act‟s potential as an obstacle to investment in the country and a weight on its economic growth. thus. Again. The report the . 2010 industry/governmental consultation session on the Act. It was further suggested that even an express statutory affirmative defense. government continues to denounce commercial corruption and voice its support of OECD efforts regarding the criminalization of foreign bribery. While concerns remain over the hospitality issue —if one takes the U. sponsored by the Bank of England. The report went on to affirm that corporate hospitality is a legitimate part of doing business at home and abroad. issued a report on the bill28 in which it recognized that. is likely to be the target of prosecution. reasonable and proportional hospitality is unlikely to trigger the offense of giving or receiving a bribe. the delay coupled with the Growth Review of the Act ordered by Prime Minister David Cameron‟s office.K. This moderate take was reinforced in the draft guidance which suggests that reasonable and proportionate expenditures which seek to improve the image of a commercial organization. including the notorious matter involving BAE Systems. there will be more substantial guidance FMLC filed in response to the guidance is available for download at http://www. however. the closer to the less-than-specifically-defined line of impropriety they may be straying.K. will not be much different than that currently associated with the FCPA. a Ministry of Justice spokesperson stated that the concern over the hospitality and business expenditure issue is misplaced. might be applicable for commercial entities. Available for download at http://www. better present products and services. the FMLC suggested. Conclusion What should a commercial organization that is potentially subject to the provisions of the U. similar to the FCPA approach. that the more expensive or lavish the gift or hospitality is.pdf Joint Committee on the Draft Bribery Bill-First Report.publications.29 submitted a report that 28 expressed continued concern over this hospitality issue. the guidance noted that the standard to be applied by a commercial organization making hospitality or promotional expenditures is whether they are making such expenditures to induce a person to perform a function improperly.parliament. in certain circumstances. at least regarding foreign government officials.fmlc. 2009. he added. and to consider how such issues should be addressed. Only hospitality that is lavish or clearly a sham.htm 29 The FMLC is an independent United Kingdom legal expert. The Joint Committee on the Draft Bribery Bill in Parliament. taking into account existing practices in particular industries. Hopefully.MAPI 13 LAR-503 these concerns. could be graduated to reflect varying circumstances. In that particular case an SFO investigation was halted on government orders. tighter limits on expenditures or even a “zero tolerance” approach could be taken where public officials are the focus of the promotional activity. July 28. The draft pointed out that it is unlikely that a routine and incidental business courtesy of small value would have an impact on decision making in the context of a high value business opportunity. Despite these concerns it must be remembered that the U.K. the Financial Markets Law Committee (FMLC). means that the U. are recognized as an established and important part of doing business.

under the terms of the Act. Many companies‟ anti-bribery policies and procedures may already touch upon these issues in the FCPA context (i. no bid rigging or price fixing has been engaged in. no competition rules have been violated. suppliers. Bribery Act. the approved list. The DOJ and the SOF collaborate regularly on investigations and enforcement activities. joint venture partners. Create an anonymous whistleblower facility for third parties. Such a program should. The Alliance will continue to monitor issues associated generally with anti-bribery and corruption enforcement. prosecutors will be instructed to relax their enforcement efforts—particularly with regard to controversial issues such as facilitating payments. agents. Ensure that contracts with third parties include provisions addressing the issue of bribery. It should be remembered that voluntary disclosures of FCPA violations may be shared by DOJ with U. subcontractors.e. As such.  Use the results of these surveys to create an approved list of acceptable third parties with whom doing business is acceptable. and report on them to its membership. Again. as a result of the Growth Review. an area to which particular attention should be paid is the relationships with third parties. Maintain an ongoing communication link with your third parties on key issues related to your anti-bribery policy.. Provide ready access for third parties to relevant documents such as the code of conduct. exposing companies to potential penalties in both jurisdictions. Bribery Act. such as warranties that no secret commissions have been paid. hospitality. at a minimum:  Survey these third parties as to their ethics and compliance efforts. MAPI recommends that companies would be well advised to keep anti-bribery and corruption matters high on the agendas of both senior management and boards of directors. contracts. and other third parties live up to its standards of ethical conduct. . The importance of such revisions is magnified in light of the close working relationship that exists between enforcement authorities in the United States and the United Kingdom. however.K. the draft guidance‟s focus on the “due diligence” aspect of dealing with “associated persons” as part of a commercial organization‟s “adequate procedures” to prevent bribery might warrant a reexamination and tightening of these policy and procedures. Companies with minimal connections to the United Kingdom that are being investigated by the DOJ for FCPA violations are entirely likely to find themselves subject to multijurisdictional charges. Since. authorities.K.K. the further delay in guidance/implementation should be viewed as a respite and not a reprieve. it is unlikely that the terms of the Act itself will be modified and MAPI suggests that concerned entities prepare themselves to see stringent new anti-bribery laws come into force in the United Kingdom in 2011. a company can be liable for bribes committed by “associated persons. Include the third parties in your companies‟ antibribery training programs or conduct separate training for them.K. etc.MAPI 14 LAR-503 concerning the Act‟s purview forthcoming from the Ministry of Justice and the SFO. the concern over charges of “willful blindness” discussed above). and consultants—particularly in highrisk countries. Third parties on the approved list should be monitored        to ensure that they maintain the standards which qualified them in the first instance. * * * In conclusion.” it is imperative that a commercial organization ensure that its agents. MAPI member companies that have even minimal connections to the United Kingdom should use this delay as time to review and perhaps revise their antibribery procedures to ensure compliance with both the FCPA and the Bribery Act. and bribery by intermediaries/third parties. In is conceivable that. In preparing for the broad reach of the U. Policies designed with the FCPA in mind are likely to need at least some revisions given the broader reach of the Act. consultants. judicious organizations should read its provisions liberally and err on the side of caution when reviewing and revising appropriate policies and practices. and specifically with the U. In revising anti-bribery policies and practices to cover the Act‟s broader scope. distributors. Set standards in a Code of Conduct for third parties so they understand that integrity is a prerequisite for doing business with your company. Still. Establishing an effective third-party ethics and compliance program is strongly advised. Closely monitor all payments to and from third parties such as commercial representatives. etc. U.

”  Intending to induce or reward the improper performance of a relevant function or activity OR knowing that accepting the advantage is improper. or giving a “financial or other advantage. agreeing to receive.  A “person associated with” a commercial organisation bribes someone else.”  Intending to influence the Foreign Public Official in their official capacity.  Intending to “obtain or retain business.  Acts committed anywhere in the world by a person with a “close connection” with the UK.  Requesting.MAPI 15 LAR-503 APPENDIX Nature of Scope/Reach of the Offenses Criminal Conduct Section 1: Bribery Covered Activities  Offering.”  Intending to perform relevant function or activity improperly OR reward for improper performance OR where requesting. promising. or any part of a business. agreeing to receive.” Territorial/Jurisdictional Reach  Acts committed in the UK.  Where the commercial organisation carries on “a business.  The senior officer has “consented to or connived” in the bribery.  Acts committed in the UK. if the bribery takes place in the UK.” .  Acts committed by any senior officer.  Offering.  Intending to obtain or retain “an advantage in the conduct of business. or giving a “financial or other advantage.  The organisation did not have in place “adequate procedures.. promising.”  Where the Foreign Public Official is neither permitted nor required by local law to be so influenced  The corporate body has bribed or has been bribed.  Acts committed anywhere in the world by a person with a “close connection” with the UK (e. a UK company or a British citizen or resident).  Acts committed anywhere in the world by a person with a “close connection” with the UK. or receiving the advantage is improper in itself. Section 2: Being Bribed Section 6: Bribing a Foreign Public Official  Acts committed in the UK. Section 14: Senior Officer Offence Section 7: Failure to Prevent Bribery  Acts committed by any senior officer with a “close connection” with the UK. or an advantage in the conduct of business” for the organisation. or receiving a “financial or other advantage.g.  Where the commercial organisation is a UK company or partnership.

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