United Kingdom Bribery Act 2010, Corporate Criminal Liability, And Corporate Prosecution Guidance

• Author: Robert W. Tarun
• Profession: Former Executive Assistant U.S. Attorney in Chicago
• Pages: 643-702

CHAPTER 11

United Kingdom Bribery Act 2010,

Corporate Criminal Liability, and

Corporate Prosecution Guidance

I. INTRODUCTION

This chapter focuses on (1) the U.K. Bribery Act 2010 (Bribery Act or the 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); (2) the U.K. strict liability offense for failure of a company to prevent

bribery by others on its behalf (section 7 of the Bribery Act); (3) the adequate pro-

cedures defense under the Bribery Act as amplified in the U.K. Ministry of Jus-

tice’s Bribery Guidance of March 2011 (MOJ Guidance); (4) a summary of the MOJ

Guidance’s 11 case studies; (5) a summary of the principal similarities and differ-

ences between the Bribery Act and the FCPA; (6) a discussion of the 2013 Deferred

Prosecution Agreements legislation and the Deferred Prosecution Agreement Code

jointly issued by the Crown Prosecution Service (CPS) and the Serious Fraud Office1

(SFO); (7) a review of the Joint Prosecution Guidance that relates to the Bribery Act

and the Corporate Prosecution Guidance that addresses the broader issue of cor-

porate prosecutions; (8) the corporate criminal liability principles that guide U.K.

prosecutorial authorities in corporate investigations and prosecutions; (9) the U.K.

Sentencing Council Definitive Guideline for Bribery Offences; and (10) practical

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

With respect to corporate criminal liability, U.S. counsel must be aware of the

very different U.K. identification principle under which a company will only be

prosecuted if the acts were done by the controlling mind and will of the company,

that is, by senior managers or directors. (See section IX.A.2.b.) The purpose of this

chapter is to provide practical advice to companies and their counsel facing cor-

ruption issues and investigations in the United Kingdom that may subject their

businesses and executives to the broad jurisdictional reach of the Bribery Act.

II. BRIBERY ACT 2010

A. Overview of Four Bribery Offenses

The Bribery Act is an Act of the Parliament of the United Kingdom that covers its

criminal law relating to bribery.2 Following both Labour and Conservative Party

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644 CHAPTER 11

support, the 19-section Bribery Bill received Royal Assent on April 8, 2010, becom-

ing the Bribery Act 2010 and eventually become effective on July 1, 2011. The Act

repeals all previous statutory and common law provisions in relation to bribery,

replacing them instead with four bribery offenses (two general offenses, a discrete

offense of bribery of a foreign official, and a new corporate offense of failing to

prevent bribery). The Bribery Act does not apply to conduct that took place before

it came into force on July 1, 2011. Conduct before that date remains subject to the

preexisting law, which in many respects was very similar to the Act, other than the

Act contains the broad section 7 corporate offense of failing to prevent bribery.

The Act addresses only bribery, which is generally defined as giving someone a

financial or other advantage to perform his or her functions or activities improp-

erly, or to reward that person for already having done so. “Financial or other advan-

tage” is not defined in the Bribery Act and is left to the fact finder. The four bribery

offenses under the Act can be committed by individuals and corporations:

1. Offering a bribe (section 1);

2. Receiving a bribe (section 2);3

3. Bribery of a foreign public official (section 6); and

4. The failure of a commercial organization (corporation or partnership) to

prevent bribery on its behalf (section 7).

Only the third and fourth Bribery Act offenses (sections 6 and 7 of the Bribery Act)

are discussed in this chapter. Sections 1 and 2 apply to commercial bribery, that is,

private bribery involving nongovernment officials or employees.

The penalties for committing a crime under the Act are a maximum of 10 years’

imprisonment for an individual along with an unlimited fine for corporations,4 and

the potential for the confiscation or civil recovery of property (e.g., the disgorgement

of profits) under the Proceeds of Crime Act 2002 (POCA), as well as the disqualifica-

tion of directors under the Company Directors Disqualification Act of 1986.

B. Recent U.K. Foreign Bribery Prosecutions

Foreign bribery prosecutions and civil recovery proceedings against companies are

a relatively recent development in the United Kingdom and have been brought thus

far under the common law and statutes that preceded the Bribery Act. The first case

in which the SFO used its civil recovery powers was against Balfour Beatty plc in

2008 and resulted in a £2.25 million penalty. Balfour Beatty was part of a joint ven-

ture to build the Bibliotheca Alexandrina, a library in Alexandria, Egypt. The com-

pany investigated irregularities and reported the matter to the SFO in April 2005.

The SFO investigated and ultimately agreed to a civil recovery order, the first such

order made under POCA. The civil recovery order allowed Balfour Beatty, a major

engineering and construction services company, to avoid being debarred from pub-

lic works contracts. Since this action, the SFO has obtained ten other corporate

resolutions relating to improper foreign payments with the amounts recovered by

the SFO from the companies involved ranging from £5 million to £30 million:

• Mabey & Johnson Ltd. (2009)—£6.5m

• AMEC plc (2009)—£5m (civil recovery)

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• Innospec Inc. (U.S.) & Innospec Ltd. (U.K.) (2010)—U.S. $17m and £9m

(U.S./U.K.)

• BAE Systems plc (2010)—U.S. $400m and £30m (U.S./U.K.)

• M.W. Kellogg Ltd. (2011)—U.S. $400m and £7m (U.S./U.K.) (civil recovery)

• Johnson & Johnson and DePuy Ltd. (2011)—U.S. $70m and £5m (U.S./U.K.)

(civil recovery)

• Weir Group (2011)—£17m5

• Macmillan Publishers Ltd. (2011)—£11.2m (civil recovery)

• Oxford Publishing (2012)—£1.9m (civil recovery)

• Smith and Ouzman Ltd. (2014)—corporation and two employees awaiting

sentence

The 2014 trial of Smith and Ouzman Ltd. resulted in the SFO’s first conviction

of a corporation after a trial for bribery of a foreign official.6 The printing firm and

two former employees were convicted of corruptly agreeing to make payments to

public officials in order to obtain business contracts in Kenya and Mauritania, in

violation of the Prevention of Corruption Act of 1906.

Five of the ten bribery resolutions since 2008 have resulted in civil rather than

criminal sanctions, largely as a result of disclosure and cooperation by the com-

panies. (See Self-Reporting discussion in section VIII.B.3). However, since taking

control of the SFO in 2012, Director David Green Q.C. has made it clear on sev-

eral occasions that he looks less favorably on civil recovery as an option for the

SFO than his predecessor did and that the SFO is a prosecutorial agency first and

foremost.

In the United Kingdom, as in the United States, foreign bribery prosecutions of

individuals have been significantly fewer. With the Bribery Act having only become

effective on July 1, 2011, the SFO has had to use older statutes for misconduct

before July 2011. It is presently investigating Alstom, GlaxoSmithKline, and Rolls

Royce, among other companies, for potential bribery violations.

In developing comprehensive foreign public official bribery legislation and poli-

cies, the United Kingdom has borrowed from the 1997 OECD Anti-Bribery Con-

vention on Combating Bribery of Foreign Public Officials in International Business

Transactions (OECD Convention) as well as the U.S. Department of Justice and

Securities and Exchange Commission’s FCPA enforcement policies. The SFO staff

have developed close working relationships with their U.S. counterparts and can be

expected to consider U.S. policies; see, for example, the 2014 Deferred Prosecution

Agreement legislation and code.

U.S. efforts to enforce the law in this area were gradual and at times halting

in the first 20 years following the 1977 enactment of the FCPA. Foreign bribery

enforcement certainly remains at essentially an infancy stage in the United King-

dom, but there is no doubt that the Bribery Act gives the SFO the legislative tools

to tackle overseas corruption where it sees fit. In addition, the SFO and its new

legislation and policies will likely serve as an anticorruption catalyst for other

nations in Europe and elsewhere, marking the end of an era where one superpower

attempted to enforce global anticorruption largely alone. Finally, U.S. counsel need

to consider the broad corporate money laundering reporting obligations in the

United Kingdom.

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