If You Conduct Business on a Transnational Scale, Don't Leave Home Without an Anti-bribery Compliance Program

• Publication year: 2014
• Author: By Marc R. Greenberg

If You Conduct Business On A Transnational Scale, Don't Leave Home Without An Anti-Bribery Compliance Program

By Marc R. Greenberg¹

While corporate gifts, perks, incentives, and facilitation payments may be engrained in how business is conducted in various parts of the world, criminal prosecution of this type of influence pedaling is on the rise around the globe.² A global coalition against corruption was created in 1993 and is now active in over 100 countries. The goals of the coalition are the creation of international anti-corruption conventions and the prosecution of corrupt leaders, all as part of an effort to hold companies accountable for corruption.³ One of the leading efforts is currently underway in the United Kingdom ("U.K.").

The U.K. Bribery Act of 2010 ("U.K. Act") became effective on July 1, 2011.⁴ While the U.K. Act is similar in approach to the U.S. Foreign Corrupt Practices Act ("FCPA") in that they both have the goal of removing bribery from company practices, the U.K. Act is significantly broader in scope because it reaches beyond bribes to public officials or public contracts. Moreover, it is not necessary for the contract or bribe to have a direct connection to the U.K. The U.K. Act applies as long as the company whose employee or agent offered the bribe has operations, offices, or employees within the U.K.⁵ For example, a lavish gift by an employee or agent to a business prospect in Uganda may result in criminal liability for your company if you have offices in, or do business in, the U.K.

The reach of the U.K. Act is similar to U.S. criminal laws concerning corporate vicarious liability. The U.K. Act imputes the state of mind of those who represent the "directing mind" of the corporation to the company.⁶ It restricts vicarious corporate liability, however, to those in management. Contrary to U.S. laws, it does not extend to every employee in the company. In Tesco Supermarkets Ltd. v Nattrass⁷ a U.K. court restricted the application of vicarious liability to the actions of the Board of Directors, Managing Directors, and other senior officers carrying out management functions. The liability exists for the acts of these individuals even if the act was done in in violation of company policy and victimized the company itself.⁸

Factors weighing against prosecution include a lack of similar conduct or prior criminal or civil enforcement actions.⁹ They also include whether the company, upon learning of the offending conduct, took proactive measures, such as self-reporting, subsequent remedial actions, and compensation of victims.¹⁰

The most striking feature of the U.K. Act is that it reaches corrupt payments even if they are purely in the context of the private sector.¹¹ A payment is considered "corrupt" if it is made with the intent to influence or reward a preference in the decision making of the person receiving the payment or payment-in-kind. It covers any activity connected with a business, private and public.¹² Unlike the U.K. Act, the U.S. FCPA is limited to transactions involving government action and public officials.¹³

Prosecution under the U.K. Act is carried out primarily by the U.K.'s Serious Fraud Office, (SFO), created in 1987 as an independent government office operating under the U.K. Attorney General. The SFO was created to take on the most serious and complex cases, and includes investigators, lawyers, accountants, and information technology professionals in its investigative teams. The investigative teams are fully integrated from the outset of an investigation.

The Director of the SFO has published guidance for prosecutors.¹⁴ Much like the prosecution guidelines for US Attorneys,¹⁵ the U.K. prosecution guidance makes clear that it is important to prosecute not only the corporation but also individuals who are in control. Further, prosecution of the company is not necessary to obtain a conviction of the individuals within the company.¹⁶ As stated by Ben Morgan, the head of the Bribery and Corruption branch, the intent is to use the U.K. Act to strike at "tigers" as well as "flies." The SFO does not wish to limit itself to the easy cases against low-level employees, i.e., the "flies", and is willing to strike out against the business leaders, i.e., the "tigers."

The first U.K. Bribery Act prosecution by the SFO was the August 2013 filing of charges against individuals in connection with a £23m fraud at Sustainable AgroEnergy. The three defendants were charged with making and accepting a financial advantage in violation of the Bribery Act.¹⁷ While other defendants have been charged with violation of the Bribery Act, this was the first prosecution by the SFO.

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One unique feature of the U.K. Act is that the existence of an internal corporate compliance program can be a complete defense to a criminal charge. Section 7(2) of the U.K. Act provides that it is a defense for a commercial organization to prove that it had in place adequate procedures designed to prevent persons associated with it from undertaking such conduct. Although the...