The Bribery Act received Royal Assent on the 8th April 2010, and will come into force in April 2011. The implementation date is six months later than was originally envisaged. When it is brought into force, the Act will repeal and replace the UK's out-dated bribery law.

The legislation will introduce four offences: the general offences of paying and receiving bribes, the bribery of foreign officials and the failure of commercial organisations to prevent bribery. The corporate offence is the most significant change from the old bribery law and will place the onus on companies to ensure that their anti-corruption procedures are robust.

The Bribery Act offences

1.  The general offences

The two general offences are similar to the current law, although it does introduce the issue of "improper performance".  They are as follows:

• Paying bribes: it will be an offence to offer or give a financial or other advantage  with the intention of inducing that person to perform a "relevant function or  activity" "improperly" or to reward that person for doing so.
• Receiving bribes: it will be an offence to receive a financial or other advantage  intending that a "relevant function or activity" should be performed "improperly"  as a result.

"Relevant function or activity" includes any function of a public nature and any activity connected with a business. The person performing that activity must be expected to perform it in good faith or impartially or be in a position of trust. 

"Improper performance" will be whether the action or behaviour of the individual is in breach of what a court would expect from a reasonable person when performing the type of function or activity concerned. The function or activity being considered does not need to have a connection to the UK.

These definitions are complex and were deliberately widely drafted, so there is a possible risk that they could catch certain types of legitimate business conduct. This could create unnecessary litigation costs defending legitimate conduct, should companies be prosecuted.

2.  Bribery of foreign public officials

This offence will be committed if a person offers or gives a financial or other advantage to a foreign public official with the intention of influencing the foreign public official and obtaining or retaining business, where the foreign public official was neither permitted nor required by written law to be so influenced. This is a narrower test than the general offences; but given the extra-territorial provisions of the Act (see below). It is difficult to see what this section brings which is not already covered under 'general offences'.

3.  Failure of a commercial organisation to prevent bribery

The most controversial offence will be a new offence which can be committed only by commercial organisations (which includes partnerships). A commercial organisation will be guilty under strict liability of a corporate offence where:

• a person associated with the relevant commercial organisation (which includes  not only employees, but agents and external third parties) bribes another person  (i.e. commits one of the offences above) intending to obtain or retain a business  advantage in the conduct of business for that commercial organisation
• the organisation cannot show that it had adequate procedures in place to  prevent bribes being paid.

Under both the existing law, and with the introduction of the new general offences in April 2011, a commercial organisation is likely to be guilty of a bribery offence only if very senior management are involved. If the bribery was committed with the consent or involvement of a senior officer of the organisation or a person who acted in such a capacity, then where the senior officer or person has a close connection with the United Kingdom he or she will also be guilty of the offence and liable to criminal prosecution.

Yet under the new corporate offence, the organisation may still be found guilty even if no-one within it knew of the bribery taking place. However, the organisation has a defence under the Act if it can show that it had 'adequate procedures' in place designed to prevent such conduct. This defence places the burden on the organisation to ensure that their anti-corruption procedures are sufficiently robust to stop any employees, agents or other third parties acting on the organisation's behalf from committing any acts of bribery.

Under the Act the Government is required to provide an illustrative guidance on what amounts to "adequate procedures". The guidance itself will be published in January 2011, 3 months before the Act comes into force. The procedures will need to be modified to reflect each organisation's assessment of where any potential risks lie. Ultimately, it will be left to the courts to assess whether an organisation has implemented "adequate procedures"; so the onus will be on the organisation to prove that they have.

Extra-territoriality

All of the new offences will have extra-territorial application, namely that the offences may be prosecuted if:

• done by a British national or company or by a person who is ordinarily resident  in the UK regardless of whether the act or omission which forms part of the  offence took place outside the UK; and/or
• if any act or omission which forms part of the offence occurs within the UK
• in addition, the corporate criminal offence will apply to commercial organisations  which have a business presence in the UK (regardless of where the bribe is paid  or whether the procedures are controlled from the UK); this extends the reach of  the legislation well beyond the current regime.

Penalties

The Act will raise the maximum jail term for bribery by an individual from 7 years to 10 years.

A company convicted of failing to prevent bribery could receive an unlimited fine.

If you require any further information regarding the Bribery Act 2010, please contact Mark Taylor, Head of Department & Business Development.