The Draft Bribery Bill- A New Burden on Business?
Stephen Gilchrist (Partner)
If
the Government's new draft Bribery Bill reaches the statute book,
the prevention of corrupt practices, and the ability of a commercial
organisation to be able to disprove negligence in preventing bribery,
will become essential elements of good corporate governance. Critically,
the exercise of due diligence by a company or partnership (perhaps
by acting on the advice its lawyers) will be crucial in defeating
criminal charges and potentially preventing the incarceration
of its Officers.
The
World Bank estimates that around a trillion dollars' worth of
bribes are paid each year, worldwide. The United Kingdom routinely
ranks as one of the least corrupt countries in the world, but
it has not escaped damaging scandals affecting British industry
and politics. The Defence industry is one of the sectors historically
associated with corruption going back to a series of scandals
surrounded Lockheed Martin in the 1970s concerning payments to
foreign officials to gain contracts for the sale of military aircraft.
Bribery
has been illegal under UK domestic law for centuries. A process
of ad hoc reform has led to a "patchwork" of offences
under the common law, the Public Bodies Corrupt Practices Act
1889, the Prevention of Corruption Act 1906 and the Prevention
of Corruption Act 1916. There have been few developments in the
law for over 90 years, aside from the jurisdiction of these offences
being extended in 2001 to include acts done abroad by UK citizens
and companies
Following
the failure, in the 2006/7 Parliamentary session, of the Corruption
Bill to reach the statute book, a new draft Bribery Bill, was
introduced early in 2009 and at the end of July the Joint Committee
on the Draft
Bribery Bill reported back strongly supporting the Bill, asserting
that it 'represents an important, indeed overdue, step in reforming
the United Kingdom's bribery laws, which have been a source of
criticism at home and abroad for more than thirty years'.
The
Serious Fraud Office told the Committee that inadequacies in the
law had stood in the way of securing a conviction on several occasions
since 2005, while The UK Anti-Corruption Forum added that:
'the
current complexity and uncertainty makes it difficult not only
to prosecute bribery, but also for the public and business properly
to understand the law, and for businesses efficiently to train
staff.'
The
new Bill proposes to:
- Repeal
the existing common law and statutory bribery offences and replace
them with two general offences of bribing and being bribed (clauses
1 and 2);
- Introduce
a specific offence of bribing foreign public officials (clause
4);
- Create
a new criminal offence for companies and partnerships that negligently
fail to prevent bribery by persons performing services on their
behalf (clauses 5 and 6); and
- Make
supplementary provision for the jurisdiction of the offences
(clause 7), the application of parliamentary privilege (clause
15), the role of the Attorney General (clause 10) and the powers
of the security services (clauses 13 to 14).
The
two proposed offences of bribing (clause 1) and being bribed (clause
2) apply to individuals who offer or accept, directly or indirectly,
an "advantage" of any kind in connection with the "improper"
performance of the recipient's functions. The functions can include
acts of a public nature and, among other things, any act connected
to a business, trade, profession, or in the course of employment
in both the public and private sectors (clause 3(1)).
The
offences are divided into six separate "cases" or scenarios.
Under each the prosecution has to prove an objective test of "improper"
performance based on whether a "reasonable person" would
consider that the recipient had breached an expectation of "good
faith", "impartiality" or "trust" (clause
3). Knowledge or intention of improper performance must also be
proven by the prosecution in four of the statutory cases under
clauses 1 and 2 (cases 1 to 4).
Specific
provision is made for bribery via third party intermediaries and
also in relation to foreign public officials.
Of
utmost importance to commercial organisations are provisions contained
in s.5 which provides that if a person 'performing services' on
behalf of the organisation bribes another in the course of the
organisation's business and 'a responsible person, or a number
of such persons taken together, was negligent in failing to prevent
the bribe' the organisation is guilty of an offence. It is a defence
to prove that the organisation had in place adequate procedures
to prevent the commission of the offence. The defence is not available
where the negligence is on the part of a senior officer of the
organisation. Such persons include a director, secretary or manager
of a body corporate or other similar senior individuals, and in
relation to partnerships include partners and any person who has
control or management of the business of the partnership.
Clause
8 is aimed at 'a senior officer' (or somebody acting as such)
who consents or connives at bribery, contrary to clause 1, 2 or
4, committed by a body corporate (of any kind). The first step
is to ascertain that the body corporate has indeed been guilty
of an offence under clause 1, 2 or 4. That established, the clause
provides that a director, partner or similar senior manager of
the body is guilty of the same offence if he or she has consented
to or connived at the commission of the offence. In a body corporate
managed by its members, the same applies to members.
Readers
familiar with consumer legislation of various types, such as fair
trading legislation and the Health and Safety at Work Act will
be familiar with the positive burden on organisations and employers
to prevent breaches of the law, the liability of conniving officers,
and the defence of due diligence. Companies can of course only
be fined but individuals could go to prison for 12 months if convicted
in the magistrate's court, or 10 years in the Crown Court.
In
relation to the corporate offence, a Board of Directors should
be aware that the SFO (as well as the Serious Organised Crime
Agency) has also shown interest in developing other methods of
disposal. Recently the SFO made use of civil recovery powers under
the Proceeds of Crime Act 2002, under which the SFO can recover
property obtained by unlawful conduct, without resorting to a
prosecution. In the event of a criminal conviction against individuals
in the Crown Court, an application may also be made for a confiscation
order at the conclusion of which the defendant may be ordered
to pay a sum of monies up to the financial benefit calculated
by the Court to have accrued to the defendant as a result of his
wrongdoing or serve a further term of imprisonment in default.
The
new Bill, if enacted provides new challenges to corporate entities.
Companies therefore would be well advised to ensure:
- that
their officers and employees (or at least those concerned with
sales) are properly trained, and understand the ramifications
of possible corrupt practices
- that
their officers and employees are subject to proper supervision
- if
necessary a proper audit trail is kept of all traffic and conversations
in situations which might be vulnerable to corrupt practices.
For
further information, please contact Stephen
Gilchrist at Saunders Law Partnership LLP.
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