The key anti-bribery and corruption legislation in the United Kingdom is the Bribery Act 2010 (the “Act”).  The Act came into force on July 1, 2011, in relation to offenses committed after that date.

The Act is the specific anti-bribery and corruption law which has been enacted in the last ten years and which applies across the United Kingdom.  It was enacted in response to criticisms of anti-bribery and corruption laws by the Organization for Economic Co-operation and Development ("OECD").

The United Kingdom was a signatory to the OECD Convention Combating Bribery of Foreign Public Officials in International Business transactions since 1997 and the UN Convention against Corruption since 2006.  The law prior to the Act was regarded as out of date and in some cases unfit for purpose.  The Act was designed to modernize and simplify anti-bribery and corruption laws.

Prior to the Act coming into force, the law relating to anti-corruption consisted of common law offenses and under three main acts referred to collectively as the Prevention of Corruption Acts (namely, The Public Bodies Corrupt Practices Act 1889, The Prevention of Corruption Act 1906, and The Prevention of Corruption Act 1916). Those acts (while repealed) and other legislation may still apply to bribery that took place prior to July 1, 2011. 

A bribe payment to domestic government officials is not a specific offense under the Act, however, would be prohibited under the general offenses created by the Act of offering or giving a bribe and requesting or receiving a bribe under Sections 1 and 2.

For those general offenses, no distinction is made between the public and private sector.  The Act applies equally to bribes paid to domestic government officials as it does to the private sector.  The offenses may be committed by individuals and/ or commercial organizations. For example, a city council valuation officer in Aberdeen was jailed in December 2017 for requesting bribes when calculating the price of council houses being sold to their occupants (HMA v Desmond Tough (unreported)).

Section 5 of the Act creates a separate offense of bribery of a foreign public official.  Under the Act, foreign government officials are defined as Foreign Public Officials (“FPO”).  The definition of FPO is broad and includes individuals holding legislative, administrative and judicial functions for a foreign country and also includes individuals exercising a public function for a foreign country.  It could include a state-owned oil company, state employees and government officials.

Again the offense can be committed by an individual or commercial organization.  There must be an intention to influence the FPO and obtain a business advantage.  There is no requirement to show impropriety, however, there is no offense where the advantage is permitted or required by written law applicable to the foreign government official.

Under the Act, it is an offense to:

• offer or give a bribe; and
• request or receive a bribe.

The concept of a “bribe” is broad and goes beyond monetary payment.  It includes offers, promises or the giving of any financial or other advantages, where:

• there is an intention to induce or reward the improper performance of a public function or business activity; or
• it is done in the knowledge/ belief that acceptance of the advantage itself constitutes the improper performance of a public function or business activity.

“Improper performance” includes any act or omission that breaches an expectation of good faith or impartiality, or an expectation arising from a position of trust.  This is an objective test based on what a reasonable person in the United Kingdom would expect in relation to the performance of the relevant activity.  That “wrongfulness element” must be connected to the bribe for an offense to occur.

The reach of the legislation is wide.

The general offenses of giving or receiving a bribe apply to private or public sector bribery and to individuals and commercial organizations.  A commercial organization includes corporate entities or partnerships formed under the law of any part of the United Kingdom.  Where the bribery takes place in the United Kingdom, any individual or commercial organization can be prosecuted.

Senior officers of commercial organizations can also become criminally liable if the commercial organization committed one of the general offenses of giving or receiving a bribe with their consent or connivance.

It is possible for the Act to apply even where no element of the bribery takes place in the United Kingdom: as long as the behavior in question would have amounted to an offense in this jurisdiction and the individual or commercial organization in question had a close connection with the United Kingdom.  That may include a British citizen, national or subject and anybody incorporated under the law of any part of the United Kingdom.

Overseas corporate entities may be subject to the Act in relation to the corporate failure to prevent bribery offense, referred to in paragraph 7 when they carry on business in the United Kingdom.  What is meant by carrying on business is not specifically defined and it will be a matter of interpretation for the courts.  However, a common sense approach has been suggested and a demonstrable business presence in the United Kingdom would be required.  It does mean, however, a foreign corporate entity may be prosecuted in respect of a foreign bribe merely by virtue of having a business present in the United Kingdom (even if the bribe is unrelated to that business in the United Kingdom). See, for example, the case of Sweett Group PLC, prosecuted in England in February 2016 for failure to prevent bribery in relation to corrupt payments made by their UAE subsidiary to secure work on a luxury hotel project in Dubai. Sweett Group pled guilty and were ordered to pay GBP 2.5 Million. 

For corporate entities to be convicted of one of the general offenses it would be necessary to prove that the “directing mind and will” of the organization was behind the behavior attributable to the offense.  The “directing mind” test has been difficult for prosecutors to meet in the past, particularly in relation to larger organizations with complex management structures.

As a result, the Act includes a specific offense that applies to corporates and which was designed to make it easier to prosecute corporate entities. 

The additional corporate offence applies to entities where they fail to prevent an “associated person” bribing someone on their behalf (that is offering or giving a bribe or bribing an FPO)  An “associated person” includes employees, agents, and subsidiaries of the organization as well as third parties who perform services for or on behalf of the corporate entity. 

This failure to prevent bribery offense has far-reaching consequences for corporate entities as it covers bribery in the United Kingdom and overseas and applies to both businesses in the United Kingdom and those overseas who have a connection in this jurisdiction.

An individual who has breached the Act is punishable by up to ten years imprisonment or an unlimited fine. 

Corporate entities that breach the Act can receive an unlimited fine. There may also be debarment from tendering for public contracts.

A corporate entity may have a defense to the failure to prevent bribery offense if it can demonstrate that it had “adequate procedures” in place to prevent bribery.  The Act does not define “adequate procedures” but guidance has been published by the United Kingdom government about procedures which corporate entities can put in place to prevent persons associated them from bribing.

The guidance is based around six high-level principles that organizations should be able to demonstrate that they have implemented and followed: risk assessment, top-level commitment, due diligence, proportionate procedures, communication (including training) and monitoring and review.

The adequacy or otherwise of the procedures in place is a matter that can only be decided by the courts considering the particular facts and circumstances of the case.  The onus is on the corporate entity to prove that it had adequate procedures in place which require to address all component parts recommended in the guidance and working in practice rather than theory. By way of example, see R v Skansen Interiors Limited (unreported) April 2018 – this was the first defended case under Section 7 of the Act (England) and the jury convicted Skansen for failure to prevent bribery due to lack of adequate procedures. 

While the Act is a United Kingdom-wide piece of legislation there are important, practical differences in the way offenses, including bribery, are investigated and prosecuted in the different jurisdictions within the United Kingdom including:

• Where the conduct giving rise to the offense occurs in Scotland or the accused party is a Scottish company the offense will be prosecuted in Scotland. In Scotland, the Crown Office and Procurator Fiscal Service (“ COPFS") is responsible for the prosecution of all crime including bribery and corruption offenses.  The Serious and Organised Crime Unit (“SOCU”) of COPFS has primary responsibility for enforcing the Act with specialist units within Police Scotland conducting and supporting investigations;
• Where the conduct giving rise to the offense occurs elsewhere in the UK or the accused party is a company based elsewhere in the UK the Serious Fraud Office (“SFO”) and the Crown Prosecution Service (“CPS”) would investigate and prosecute bribery and corruption in the rest of the United Kingdom. The SFO has no jurisdiction in Scotland, however, COPFS and the SFO may work together on cross-border issues with the rest of the United Kingdom;
• Where the conduct is potentially across the United Kingdom, Scottish and English authorities will have concurrent jurisdiction.  It will depend on the nature of the offenses including the extent of local involvement as to who will take the lead.  A Memorandum of Understanding between COPFS and SFO suggest that if a business is headquartered or carries on business in Scotland then SOCU may deal with any prosecution;
• Sentencing guidelines are in place in England and Wales which may be applied for bribery offenses. They include steps for considering the imposition of compensation and confiscation orders and a calculation for the fine taking into account the harm and culpability of a defendant.  There are no such guidelines in place in Scotland, however, it is expected that while English cases decisions are not binding on the Scottish courts they are likely to be persuasive and a similar approach would be taken; and
• Where a case is prosecuted there is scope for a discount to be applied generally of up to a third of any penalty for an early guilty plea. 

All cases which are prosecuted in the United Kingdom are referred for financial investigation within the relevant jurisdiction to consider confiscation proceedings under the Proceeds of Crime Act 2002. That legislation permits the seizure of available assets which are the proceeds of crime.

Deferred prosecution agreements (“DPAs”) have been available to the SFO since 2014. Self-reporting is no guarantee of a DPA: the SFO states that a DPA will only be offered in specific circumstances instead of a full prosecution. The earlier a company self-reports and level of cooperation are key factors for the SFO.

Deferred prosecution agreements are not currently available in Scotland.  A voluntary self-reporting scheme exists in Scotland.  Where an offense is reported the prosecuting authorities may agree to the offender paying a civil penalty equivalent to the profits derived from the corrupt payment.

There are similarities between DPAs and the civil settlement process in Scotland, however, unlike England, this does not prevent the prosecution authorities from bringing criminal proceedings. COPFS is not obliged to proceed on the basis of a civil settlement and this will depend on the circumstances of the case including the seriousness and nature of the offense and whether any adequate procedures may now be in place. Scotland’s initial self-reporting scheme expired on June 30, 2015 but has been continued on an informal basis annually since then dependent upon the approval of the head of the COPFS, the Lord Advocate. It has been confirmed that the scheme will continue on the same terms until June 30, 2019 and it is expected that the scheme will continue thereafter.