Chapter 11. United Kingdom Corporate Criminal Liability and the Bribery Act 2010

• Author: Robert W. Tarun
• Pages: 1-48

CHAPTER 11

United Kingdom Corporate

Criminal Liability and the Bribery

Act 2010

I. INTRODUCTION

This chapter focuses on (1) corporate criminal liability in the United Kingdom and

the principles that guide U.K. prosecutorial authorities in corporate investigations

and prosecutions; (2) the U.K. Bribery Act 2010 (Bribery Act) offense of bribery of a

foreign public official (Section 6 of the Bribery Act), which is most analogous to the

bribery provisions of the U.S. Foreign Corrupt Practices Act (FCPA); (3) the U.K.

strict liability offense for failure of a company to prevent bribery on its behalf (Sec-

tion 7 of the Bribery Act); (4) the adequate procedures defense under the Bribery

Act as amplified in the U.K. Ministry of Justice’s Bribery Guidance in March 2011;

(5) a summary of the same guidance’s 11 case studies; (6) a table of the principal

similarities and differences between the Bribery Act and the FCPA; (7) a discussion

of the Serious Fraud Office’s self-reporting and cooperation program; and (8) prac-

tical guidance for multinational companies seeking to comply with the Bribery Act.

The purpose of this chapter is to outline U.K. corporate criminal liability princi-

ples and provide practical advice to companies and their counsel facing corruption

issues and investigations that may subject their businesses and executives to the

broad jurisdictional reach of the Bribery Act.

II. JOINT GUIDANCE ON CORPORATE PROSECUTIONS

AND CORPORATE CRIMINAL LIABILITY

The Director of Public Prosecutions, the Director of the Serious Fraud Office, and

the Director of the Revenue and Customs Prosecutions Office have issued Joint

Guidance on Corporate Prosecutions (Joint Guidance).1 The Serious Fraud Office

(SFO) is the leading U.K. agency for investigating and prosecuting cases of overseas

corruption. The Joint Guidance should be carefully considered by counsel repre-

senting companies subject to investigation for bribery that conduct business in the

United Kingdom (England, Scotland, Wales, and Northern Ireland). It defines a

company as “a legal person capable of being prosecuted, and should not be treated

1

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2 CHAPTER 11

differently from an individual because of its artificial personality.”2 While a com-

pany normally means a company registered under the Companies Act 2006, a com-

pany can also be one registered under equivalent legislation in another jurisdiction.3

A. General Principles

The Joint Guidance sets forth three general principles:

1. A thorough enforcement of the criminal law against corporate offenders,

where appropriate, will have a deterrent effect, protect the public and

support ethical business practices. Prosecuting corporations, where appro-

priate, will capture the full range of criminality involved and thus lead to

increased public confidence in the criminal justice system.

2. Prosecutions of a company should not be seen as a substitute for the

prosecution of criminally culpable individuals such as directors, officers,

employees, or shareholders. Prosecuting such individuals provides a strong

deterrent against future corporate wrongdoing. Equally, when considering

prosecuting individuals, it is important to consider the possible liability of

the company where the criminal conduct is for corporate gain.

3. It is usually best to have all connected offenders prosecuted together at

the same time. However there are circumstances where the prosecution of

a company will take place before the prosecution of connected individuals

or vice versa. This may occur where there is going to be delay in initiating

proceedings which could result in unfairness to one or more parties.4

B. Establishing Corporate Liability

The Joint Guidance distinguishes between vicarious liability and non-vicarious

liability:

• Vicarious liability for the acts of a company’s employees/agents. This has some lim-

ited application at common law, for example, in relation to public nuisance.

Many statutory or regulatory offenses impose strict liability upon employers

(corporate and human) to ensure compliance with the relevant regulatory

legislation.

• Non-vicarious liability arising from the so-called identification principle. The identi-

fication principle determines whether an offender was “a directing mind and

will” of the company. It applies to all types of offenses, including those that

require mens rea5 such as Section 6’s bribery of foreign public officials.

1. Vicarious Liability

In explaining vicarious liability, the Joint Guidance states in pertinent part:

1. A corporate employer is vicariously liable for the acts of its employees and

agents where a natural person would be similarly liable (Mousell Bros. Ltd. v.

London and North Western Railway Co. [1917] 2 KB 836).

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United Kingdom Corporate Criminal Liability and the Bribery Act 2010 3

2. When determining if a company is vicariously liable, you must first

consider the terms of the statute creating the offense. It may require mens

rea, yet impose vicarious liability. Conversely, it may create strict liability

without specifically imposing vicarious liability.

3. Normally vicarious liability will arise from offenses of strict liability.

These are offenses which do not require intention, recklessness, or even

negligence as to one or more elements in the actus reus . . . If an offense of

strict liability is committed by an employee of a company in the course of

his employment, the company may also be criminally liable. It is likely that

any corporate prosecution will be linked to the prosecution of a controlling

officer and/or other employees.6

2. Non-Vicarious Liability, the Identification Principle, and the “Directing Mind and Will”

In addressing non-vicarious liability and offenses requiring mens rea, the Joint

Guidance explains the identification principle and highlights the leading case of

Tesco Supermarkets Ltd. v. Nattrass. The identification principle requires action by at

least one senior officer, for example, a managing director, who carries out the func-

tions of management and speaks and acts as the company.7 The Joint Guidance

makes four key points with respect to non-vicarious liability:

1. Companies are legal persons. They may also be criminally responsible

for offenses requiring mens rea by application of the identification

principle. This is where ‘the acts and state of mind’ of those who represent

the ‘directing mind and will’ will be imputed to the company—Lennards

Carrying Co and Asiatic Petroleum [1915] AC 705, Bolton Engineering Co. v.

Graham [1957] 1 QB 159 (per Denning LJ) and R v. Andrews Weatherfoil 56

C App R 31 CA.

2. The leading case of Tesco Supermarkets Ltd. v. Nattrass [1972] AC 153 restricts

the application of this principle to the actions of the Board of Directors,

the Managing Director and perhaps other superior officers who carry out

functions of management and speak and act as the company.

3. This identification principle acknowledges the existence of corporate

officers who are the embodiment of the company when acting in its busi-

ness. Their acts and states of mind are deemed to be those of the company

and they are deemed to be ‘controlling officers’ of the company. Criminal

acts by such officers will not only be offenses for which the company can

be prosecuted because of their status within the company. A company may

be liable for the act of its servant even though that act was done in fraud of

the company itself—Moore v. I. Bressler, Ltd. [1944] 2 All ER 515.

4. In seeking to identify the “directing mind” of a company, prosecutors

will need to consider the constitution of the company concerned (with

the aid of memoranda/articles of association/actions of directors of the

company in general meeting) and consider any reference in statutes to the

offenses committed by officers of a company. Certain regulatory offenses

may require a more purposive interpretation in addition to the primary

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