first prosecution under the Bribery Act 2010

Employers have been waiting to see whether the application of the provisions of the Bribery Act 2010 will impact upon the way in which they conduct business, most particularly in respect of corporate hospitality and overseas transactions where it is often considered essential to ‘smooth the way’ in order to do business. The Act has a broad jurisdictional reach as it covers acts which take place outside the UK if the individual or company have a close connection with the UK.

It may then perhaps come as a small relief that the first prosecution under the Act is in connection with conduct that most of us would consider to be inappropriate, even immoral. Mr Munir Patel, a former magistrates’ court clerk, was filmed accepting a £500 ‘bung’ to ensure details of a traffic offence were not entered onto the court’s database. Continue reading

Bribery Act

The Bribery Act 2010 was passed just over a year ago, on 8 April 2010 as one of the final pieces of legislation enacted by the last Labour government. The incoming coalition government originally intended to bring the Act into force on 1 October 2010 but postponed this until April 2011 – and then again postponed commencement of the Act following a consultation and representations from business until three months after publication of guidance on how the Act should be applied.

That guidance was eventually published by the Ministry of Justice on 30 March and the Act is now due to come into force on 1 July 2011.

The Act extends to England & Wales, Scotland and Northern Ireland. It creates new criminal offences in connection with offering or receiving bribes and it abolishes the old common law offences of “bribery and embracery” (in Scotland “bribery and accepting a bribe”). The new offences are essentially offering a bribe, accepting a bribe, bribing a foreign public official and (importantly in an employment law context) a new corporate offence of failing to prevent bribery. The Act provides for senior officers to be guilty of an offence committed by a body corporate if it was committed with their consent or connivance. It applies both in the UK and abroad and to both the public and private sectors. The Act provides for a maximum jail sentence of 10 years.

Importantly, the Act provides for a full defence if an organisation can show that it had adequate procedures in place to prevent persons associated with it from indulging in the bribery of which it is accused (Bribery Act 2010 s.7(2)).

Whilst not generally concerned with employment law, the Act provides that a commercial organisation will be guilty of an offence if a person associated with it bribes another person intending to obtain or retain a business advantage for the organisation and also provides for senior staff to be personally guilty of an offence in appropriate circumstances.

From a practical point of view, the Guidance (rather longwindedly entitled “Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing”) is of at least as much, if not more, interest than the Act itself. Overall, the Guidance makes it clear that “Adequate bribery prevention procedures ought to be proportionate to the bribery risks that the organisation faces”, and says that it follows that “a very small business may be able to rely heavily on periodic oral briefings to communicate its policies while a large one may need to rely on extensive written communication” (page 21 of the guidance). It is interesting that this Guidance thus envisages that even a very small business should have some more or less formal bribery policy in place and that it must be communicated to staff while the “Quick Start” guide also provided by the Ministry of Justice specifically states that “you do not need to put bribery prevention procedures in place if there is no risk of bribery on your behalf”.

In regard to hospitality, the Quick Guide simply says “Hospitality is not prohibited by the Act”. The full guidance goes into more detail, pointing out:

“By way of illustration, in order to proceed with a case under section 1 based on an allegation that hospitality was intended as a bribe, the prosecution would need to show that the hospitality was intended to induce conduct that amounts to a breach of an expectation that a person will act in good faith, impartially, or in accordance with a position of trust. This would be judged by what a reasonable person in the UK thought. So, for example, an invitation to foreign clients to attend a Six Nations match at Twickenham as part of a public relations exercise designed to cement good relations or enhance knowledge in the organisation’s field is extremely unlikely to engage section 1 as there is unlikely to be evidence of an intention to induce improper performance of a relevant function”.

newsletter – Bribery Act

The Bribery Act 2010 introduces new criminal offences in connection with offering or receiving bribes.  It also abolishes the old common law offences of “bribery and embracery”.  The main new offences are those of offering a bribe, accepting a bribe, bribing a foreign public official and (importantly for this employment law newsletter) a new corporate offence of failing to prevent bribery. The Act also provides for senior officers to be guilty of an offence committed by a body corporate if it was committed with their consent or connivance – turning a blind eye may have been possible for Lord Nelson two centuries ago but it is unlikely to wash under the Bribery Act 2010.

According to an article in the Guardian shortly before the new Act received Royal Assent (the Guardian, 25th March 2009  “Bribery Bill finally reaches parliament”) only one UK company was prosecuted for foreign bribery during Labour’s 12 years in power.

The Bribery Act 2010 is not yet in force.  It was originally expected that it would come into force on 1st October 2010 but commencement has been postponed until, probably, April 2011.  Penalties for breach are severe – companies and individuals can face an unlimited fine.  Individuals can also be sentenced to up to 10 years’ in prison and be disqualified from holding directorships for up to 15 years.

Under section 7 of the 2010 Act “A relevant commercial organisation (“C”) is guilty of an offence … if a person (“A”) associated with C bribes another person intending (a) to obtain or retain business for C, or (b) to obtain or retain an advantage in the conduct of business for C”.

Importantly, it is a defence for C to prove that “adequate procedures” were in place designed to prevent persons associated with C from undertaking such conduct (there are also defences if the accused can prove that the otherwise forbidden conduct was necessary for the proper exercise of any function of an intelligence service, or the proper exercise of any function of the armed forces when engaged on active service).  In September 2010 the Ministry of Justice launched a public consultation on proposed formal “guidance on preventing bribery” to be followed in the New Year with publication of formal guidance as to what will be “adequate procedures”.  The consultation closes on 8th November.

The consultation document explains that “The guidance sets out six principles, each followed by commentary and explanation. The guidance is not prescriptive and is not a one-size-fits-all document. The question of whether an organisation had 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”.

The six principles are listed as:

  • Risk assessment (keeping up to date with bribery risks in “your sector and market”);
  • Top level commitment (establishing a culture in which bribery is unacceptable);
  • Due diligence (knowing your business partners);
  • Clear, practical and accessible policies and procedures (including encouragement of “whistleblowing” where appropriate);
  • Effective implementation (practising what you preach);
  • Monitoring and Review (including consideration of whether external review is appropriate).