By Poorvi Chothani
The United Kingdom’s Bribery Act, 2010 (“Act”), seeks to reform its existing criminal laws to ostensibly provide a new, modern and comprehensive scheme to prosecute bribery. The Act is, among other things, expected to:
- provide a more effective legal framework to combat bribery in the public and private sectors;
- replace the fragmented and complex offences at common law and in anti-corruption statutes;
- create two general offences – (a) offering, promising or providing an advantage, and (b) requesting, agreeing to receive, or accepting an advantage;
- create a discrete offence of bribery of a foreign public official; and
- create a new offence of failure by a commercial organization to prevent a bribe from being paid for or on its behalf.
An organization charged with failing to prevent a bribe may assert as a defense that it had implemented adequate procedures to prevent bribery.
The Act, which represents the culmination of several decades of reports and draft bills, received Royal assent on 8 April 2010. It was originally set to become effective from April 2010, but that was postponed to April 2011, and then again to May 2011, as a result of concerted lobbying and criticism from business groups, including the Confederation for British Industry.
The legislation attracted a significant amount of controversy because the Act provided a defense for bribes paid by security and law enforcement agencies. However, this defense now applies only to the intelligence services and armed forces. Business groups in the U.K. also expressed concern that the new law would place them at a competitive disadvantage to U.S. companies because the ban on “facilitation payments” is more stringent than the provisions of the U.S. Foreign Corrupt Practices Act (“FCPA”). Political parties also objected that the bill was rushed through Parliament before the elections, preventing them from examining the practical aspects of the bill in detail.
Under the Act, an individual found guilty of a crime, tried as a summary offence may be imprisoned for up to 12 months and fined up to £5,000. A person found guilty on indictment may be imprisoned for 10 years and subject to an unlimited fine. If a commercial organization fails to prevent bribery it may be punished with an unlimited fine. In addition, property may be confiscated under the Proceeds of Crime Act, 2002, in certain circumstances. A director of a company found to have violated the Act may be disqualified under the Company Directors Disqualification Act, 1986.
One of the most significant features of this Act is that it has an almost universal jurisdiction, enabling enforcement authorities to prosecute any individual or company with links to the U.K., regardless of where the crime occurred. A corporation is guilty of an offence where an act promising, offering, or giving an advantage to a foreign public official is committed anywhere in the world by someone performing services on the corporation’s behalf in any capacity intending to obtain business or a business advantage for the corporation. Further, a corporation is guilty even if the offending activity is carried out through an intermediary.
Counsel advising Indian companies acquiring businesses overseas should take note – many Indian companies are familiar with the FCPA, but the U.K. law provides for more serious criminal penalties. All Indian businesses that operate or otherwise conduct business in the U.K. need to comply with this new law because of its extraterritorial reach; indeed, its express purpose is to “deal effectively with bribery at home and abroad.” Moreover, bribery need not have been approved or financed by a U.K. entity, or its branch or subsidiary. The Act also applies to a non-U.K. company if it has an office or conducts business in the U.K. and mere presence in the U.K. will be sufficient to establish jurisdiction. For example, if an Indian company has a U.K. branch or subsidiary, and the Indian company engages in bribery in any country, the Indian company’s U.K. branch or subsidiary can be prosecuted in the U.K.
The Act requires the Secretary of State to publish guidelines to help organizations establish adequate anti-bribery measures. The government has published the guidelines on establishing “adequate procedures,”.
Poorvi Chothani is the founder and managing partner of LawQuest, a law firm in Mumbai, India, and a Vice Chair of the India Committee. She is admitted to the New York State Bar and is a registered solicitor in England and Wales. Poorvi has been practicing law in India since 1984 and is admitted to the Bar Council of Maharashtra and Goa. She can be reached at email@example.com.