United Kingdom Bribery Act Comes Into Force
On July 1, the Bribery Act 2010 (Act) came into force in the United Kingdom. The Act is the new gold standard worldwide, and we believe that any of our clients with connections to the U.K. should consider the implications of the Act on their business. The main features of the new Act are summarized below.
In summary, the Act introduces four new categories of offence:
- offering, promising or giving a bribe to another person;
- requesting, agreeing to receive or accepting a bribe from another person;
- bribing a foreign public official; and
- for corporations, failing to prevent bribery.
New Corporate Offence — The corporate offence introduces a new offence for "failing to prevent bribery." A company will commit the offence if an "associated person" performing services on its behalf bribes another person to obtain or retain either business or a business advantage for the company (whether the bribe is ultimately effective or not). The only defence available is to prove that adequate procedures were in place to prevent bribery from being committed by those performing services on its behalf.
An "associated person" includes foreign agents of any nationality, service providers and potentially subsidiaries, so even companies that do not conduct business in the U.K. should be prepared to demonstrate to their U.K. business partners compliance with anti-bribery measures.
Territorial Scope — The Act has a wide territorial scope. Acts of bribery committed by anyone in the U.K. or, if overseas, by a British citizen or any other person with a close connection with the U.K. can be prosecuted. The new corporate offence applies to any U.K.-incorporated entity (or U.K.-registered partnership) and any overseas entity that carries on a business or even part of a business in the U.K.
Penalties — The Act carries a maximum penalty of 10 years’ imprisonment for all new offences, except the offence relating to commercial organizations, which carries an unlimited fine. Other penalties can include being barred from government contracts, disqualification as a director in the U.K. and of course reputational damage.
The Act is also much stricter than the U.S. Foreign and Corrupt Practices Act 1977 (FCPA), with no exemptions for any form of facilitation payments, which are illegal in all forms under the Act.
Any companies that are registered in the U.K., have U.K. subsidiary companies, conduct business in the U.K., or that employ British nationals should carefully consider the implications of the Act in relation to their businesses.
In addition to increased enforcement in both the U.K. and U.S., other jurisdictions, such as Canada, are also redoubling anti-bribery and corruption enforcement. The first significant sentence under Canada’s Corruption of Foreign Public Officials Act (CFPOA) was handled down on June 24, 2011 when Calgary-based Niko Resources Ltd. was sentenced to a fine of approximately $9.5 million. Please see our June 27 e-Alert for further details.
The increased risk of enforcement emphasizes the need for any company with international and cross-border business to have in place programs to counter and mitigate the risk of bribery and corruption occurring.
McCarthy Tétrault has extensive experience in assisting companies in dealing with anti-bribery measures and is available to advise on all elements to ensure your company has "adequate procedures" in place — from board presentations, training, policies and codes of conduct to the review and audit of anti-bribery procedures and systems.