寄稿The UK Bribery Act in the context of overseas subsidiaries and global governanceSarah Martin
Counsel (England & Wales qualified)
Linklaters Tokyo1.

way of example, on 31 January 2020, Airbus reached a

Introduction

record-breaking €3.6bn global settlement with UK1,
Enforcement agencies and regulators across the globe

French and US authorities regarding allegations ofare increasingly focused on the culture and conduct ofbribery and corruption. This is the largest corruption re-corporations. Bribery and corruption, economic crime

lated deferred prosecution agreement (“DPA”)2 any-

and fraud continue to be high on political agendas. Over

where to date involving the SFO. These three resolu-

the past two decades, the number and profile of multi-

tions reflect the culmination of a three-and-a-half year

agency, multi-jurisdictional, regulatory and criminal in-

UK and French joint investigation and two-year paral-

vestigations have risen exponentially. As authorities

lel US investigation, together touching 16 jurisdictions

worldwide adopt a collaborative approach to the (formal

and serves as a warning on the far-reaching implica-

and informal) sharing of information, this trend is likely

tions of wrongdoing.

to increase. Further, on the basis that bribery and corruption risks are often elevated in times of crisis, theWe set out below an overview of the offences under the

impact of the Covid-19 pandemic will only act as an ac-

UKBA and explain how the offences could potentiallycelerant.

apply to Japanese companies. We also explore how appropriate governance and controls of overseas subsidi-

In this context, it is important for Japanese companies

aries are fundamental to ensuring effective compliance.

to be aware of the broad jurisdictional reach and implications of the UK Bribery Act 2010 (“UKBA”), viewed

2.

Overview of the UK Bribery Act 2010

as one of the toughest anti-corruption statutes in place
globally, and the steps that need to be taken to ensure

The UKBA contains four main bribery offences:

effective compliance. It goes beyond even the US For-①a general offence of bribing;3eign Corrupt Practices Act 1977 (the “FCPA”), on the②

a general offence of being bribed4 (together, the“General Offences”);③

an offence of bribing a foreign public official5(“FPO”); and④a corporate offence of failing to prevent bribery by
persons associated with relevant commercial or-

basis that it applies to commercial bribery (not only
bribery of public officials), there is no defence for facilitation payments (unlike the FCPA) and there is no needto prove “corrupt” intention (which is still required under the FCPA).

ganisations6 (the “Corporate Offence”).

A rele-The UKBA continues to be actively enforced by the UK

vant commercial organisation is not limited to UK

Serious Fraud Office (the “SFO”) which both investi-

companies.

gates and prosecutes its cases. And almost all its cases
involve multiple jurisdictions – some as many as 20. By

1

A diagram setting out how these offences might be en-fence will be committed where a written local law re-

gaged is below. It is also important to note that thequires or permits the FPO to be influenced by the ad-

UKBA is extraterritorial – depending on the circum-

vantage.

stances, a person or company may be liable regardlessof where in the world the bribe is paid.

Facilitation (or “grease”) payments are however illegal
under the UKBA, even if they are not prohibited, oreven where they are expected, by local custom. As mentioned above, this contrasts with the position in the US,
where under the FCPA there is an exception for socalled facilitation payments.8
The Corporate Offence
Under the Corporate Offence, a relevant commercial organisation will be liable if:①

a person associated with it bribes another person
intending to obtain or retain business or an advantage in the conduct of business for the company(that is, commits the general offence of bribing or
bribing an FPO), and②

there are no adequate procedures in place designed to prevent bribery.

It is effectively an offence of strict liability (subject to the

A General Offence is committed when a person (individ-

adequate procedures defence) and reflects the UK gov-

ual or corporate, as to which see paragraph immedi-

ernment’s emphasis on the importance of an ethical cor-ately below) either: (i) offers, promises or give anotherporate culture and the need for the entire organisation

person; or (ii) requests, agrees to receive or accepts, a

to be committed to preventing bribery.

financial or other advantage in connection with a person performing a function “improperly” 7. Improper per-The definition of “relevant commercial organisation” isformance of a function is one which breaches an expec-

very wide and includes bodies incorporated in the UKtation that the function will be performed in good faith,or UK partnerships, no matter where they carry on

impartially or as a result of a position of trust.

business, and companies and partnerships carrying on
business in UK, no matter where they are incorporated.

The General Offences apply to both the public and theprivate sectors. Commercial organisations may be lia-

What constitutes “carrying on a business” has not been

ble for the General Offences (or the offence of bribing anformally defined, and it is likely that an assessment will

FPO) if the organisation is incorporated in the UK or if

be made on the basis of the frequency and importance

any act or omission which formed part of the offenceof the company’s dealings in the UK, a company’s phys-

took place in the UK.

ical presence in the UK and the location of its central
management.

There is also a separate offence of bribing an FPO. Unlike the General Offences, there is no need for the FPO

Whether a non-UK company with a UK subsidiary is

to perform his or her function “improperly” as a result

considered to be carrying on business or part of a busi-of the bribe – all that is required is an intention to influ-

ness in the UK through its subsidiary will depend onence the FPO in their official capacity. However, no of-

the relationship between the parent and subsidiary andthe degree of control exercised by the parent company.

2

Likewise, “associated person” has been defined widely

Penalties10

to include people who perform services for or on behalf

Penalties for breaching the provisions of the UKBA areof the company regardless of their capacity. This is in-severe and include a potentially unlimited fine as welltended to be broad so as to embrace the whole range ofas the possibility of mandatory debarment from publicpersons connected to an organisation that might be ca-

procurement contracts. On the basis of recent enforce-pable of committing bribery on the organisation's behalf,

ment decisions, the scale of the penalties being imposedso may include, for example, the company’s employee,

continues to increase.

agent or subsidiary or joint venture partner.
3. Implications in relation to the Modern Slavery Act
It should be noted that it is irrelevant whether the business, or part of a business, which is carried out in the

Companies that “carry on a business” for the purposes

UK has any hand in, or connection to, the bribery. Theof the UKBA should also be aware of their obligations

offence will be applicable wherever an associated per-under the UK Modern Slavery Act 2015 (the “MSA”),

son pays bribes with the intention that the non-UK par-which requires commercial organisations (wherever in-ent company should gain a business or an advantage incorporated) who: (i) are carrying on a business (or partthe conduct of business, and any part of the non-UKof a business) in the UK; (ii) supply goods or services;parent company’s business is carried on in the UK.

and (iii) have an annual (aggregated)11 turnover of GBP
36 million or more (equivalent to approximately JPY

All this goes to say that Japanese companies should

5.4 billion), to prepare and publish on their website acarefully consider whether the extent of their opera-

board-approved ‘modern slavery and human trafficking

tions mean that they may fall within the extra-territo-

statement’ (a “Statement”) for each financial year set-rial application of the UKBA. In any case, we note thatting out the steps they are taking to combat modern

it is good practice for an organisation to regularly re-slavery and human trafficking in their organisation andview and monitor its anti-bribery policies and proce-

supply chains.

dures to ensure they are UKBA-compliant in order, if
necessary, to be able to avail itself of the defence of hav-

Similarly to the UKBA, “carrying on a business” is noting in place “adequate procedures” to prevent bribery.

defined in the MSA, and Government guidance merely
states that this should be interpreted “by applying a

Adequate procedures

common sense approach”. In practice, organisations

It is a defence to the Corporate Offence that the busi-

that are carrying on a business in the UK for the pur-ness had “adequate procedures” in place designed toposes of the UKBA tend to take the view that they areprevent persons associated with the company from un-doing so for the purposes of the MSA as well and vice

dertaking such conduct. Guidance from the UK Minis-

versa12.

try of Justice9 sets out six principles that should informa commercial organisation’s approach in establishing

While the UKBA is enforced by the SFO, the require-adequate procedures. The first of these is that a com-ment to prepare and publish a Statement has histori-

mercial organisation should implement procedures

cally been enforced through informal pressure fromwhich are proportionate to the bribery risks it faces, andNGOs, but also increasingly from investors. However,the nature, scale and complexity of its activities. The re-the UK Government has previously written to a num-maining five principles provide guidance on how these

ber of allegedly non-compliant companies indicatingprocedures should be tailored to the company’s risk pro-that it plans to publish a non-compliance list; although

file and implemented throughout the organisation.

to date, no such list appears to have been prepared. The

These include: (i) top level commitment; (ii) risk assess-

UK Government also proposes to make it mandatory

ment; (iii) due diligence; (iv) communication (including

for in scope organisations to publish a Statement on a

training); (v) monitoring and review.

Government-run reporting service13 (not just on the relevant organisation’s website). The UK Government can3compel the publication of a Statement by obtaining anheld overseas can be frustrated by a mutual legal assis-

injunction (a failure to comply with which would betance process unsuited to modern communication

punishable by unlimited fine), but in practice this mech-methods. However, it does underline the fact that theanism has never been used.

SFO does consider overseas companies within its purview.

4. Appropriate governance and controls of overseas
subsidiaries

5. Importance of effective compliance

Within the context of increased focus by enforcement

In this context, it has become increasingly important foragencies and regulators on corporate misconduct, there

parent companies to implement a structure of appropri-is rising scrutiny of parent company controls over its

ate controls relating to the governance of overseas sub-overseas subsidiaries. In particular, there are enhanced

sidiaries, and effective compliance through embedding

legislative efforts to hold parent companies responsible

good corporate culture remains key in minimising cor-for subsidiaries and other associated undertakings (e.g.,

porate governance risks. Key features of this will in-joint ventures) in relation to operational corruption, hu-

clude:

man rights, labour, environmental and taxation risks.
Additionally, litigation or complaints to regulators have(1) Governance and Oversight: Board and senior man-been increasingly used as a tool to push organisations

agement should maintain effective and adequate

to improve their corporate governance in some cases asoversight of the governance and compliance frame-part of a broader emphasis on environment, social andwork in place, as policies and procedures alone aregovernance issues.

not sufficient and can create risk if not effectively
implemented. Cross-functional skills and perspec-

For example, the UK Supreme Court recently opened

tives are key, and the importance of cultural differ-

the way for a hearing on environmental and economic

ences is often underestimated.

damage allegedly caused by an overseas subsidiary of(2) Accountability: Companies are increasingly em-

Royal Dutch Shell, on the basis that the London-head-

bedding compliance into KPIs and remuneration,quartered parent company controlled and directed thewhich will drive accountability. Subsidiaries should

relevant operations of its fully-owned Nigerian subsidi-

have adequate autonomy, resource and expertise toary. The US Supreme Court is also set to rule on a casebe able to implement, support and maintain an ef-

against food manufacturers relating to the nature of

fective compliance framework.

corporate liability for alleged human rights abuses and(3) Transparency: Regular risk assessment is funda-child slavery in the supply chain.

mental to effectiveness and adaptability of compliance environment. External reporting has been

Also of note is the recent UK Supreme Court ruling14

driving enhanced internal scrutiny, while whistle-

which held that the SFO did not have the power to com-blowing remains a key mechanism for identifying

pel a foreign company to produce documents held over-and managing risk “hot-spots”.

seas, pursuant to its investigation powers. The practical(4) Evidence: Often practical implementation of poli-effect of this decision is that foreign companies will notcies and procedures cannot be sufficiently evi-

find themselves on the receiving end of an order com-denced within the business and therefore compa-

pelling the production of information or documents,

nies should ensure that they appropriately evi-should a UK-based group entity be under investigation

dence decision-making and remedial actions taken.

by the SFO (unless it can be obtained through a mutual
legal assistance treaty or other process). This will be adisappointing decision for the SFO, whose efforts to investigate overseas companies in connection with crossborder crime where crucial documentary evidence is4Secondly, company transformation through a compli-

6. Increased regulatory focus on control of subsidiar-ance and culture overhaul now appears to be the norm.

ies and cross-border enforcement trends

Airbus was praised for its remediation efforts to comAs mentioned above, the Airbus DPA highlights firstly,

pletely transform the company’s leadership and compli-

the increasing willingness of authorities to come to aance framework. In circumstances where Airbus’ previ-

global resolution; the three settlement agreements (inous approach to compliance was found to be good on pa-

the UK, France and the US) each acknowledged andper but ineffective in practice, with policies and proce-gave credit for fines paid across the other two jurisdic-

dures being easily circumvented, the overhaul of its ex-

tions.

ecutive committee, board and ethics and complianceframework was necessarily significant.

Please note that the information contained in this article is for general information purposes only and does notclaim to be comprehensive or provide legal or other advice.

When might a Japanese company be liable under

A Japanese company could be liable for the Cor-the UKBA?

porate Offence if it carries on business in the UK,
even if it is not incorporated in the UK.

A Japanese company could be liable under the
General Offences (of bribing or being bribed) or li-

Example: Company B is incorporated in Japan

able for bribing a FPO where the relevant mis-

and develops land for golf courses. It conducts

conduct takes place within the UK.

business in the UK through its local subsidiary

Example: Company A is a well-known sports(an “associated person”). During the application
process to obtain planning permission to enlarge

clothing company incorporated in Japan. It has

its flagship golf course in a conservation area, theyet to break into the UK market. It pays bribes inlocal subsidiary provides lavish gifts and hospital-

the UK to a UK agent acting on behalf of a well-

ity to a member of the local council’s planning re-

known UK retail chain, to help it win a contract

view team in an effort to influence the decision.

to supply a new line in golfing wear to that chain

Company B could be liable for the Corporate Of-

in the UK. Company A may be liable for the gen-fence unless it had adequate procedures in placeeral offence of bribing15.

to prevent bribery.

If a senior officer of Company A (such as a director or manager) consented to or connived in thepayment of the bribe, that officer may also be lia-

This will be the case no matter where in the world

ble for the same offence16.

the "associated person" commits the offence.
Example: Company B is looking to develop new
golf courses in China, where it has yet to conduct
any business. Mr. X, an employee of Company B,
pays a bribe to a public official in China to enable
Company B to acquire land for potential new development. Because Company B has a UK subsidiary, Mr. X would be considered to be an “associated person” of Company B. Company B could be
at risk of prosecution in the UK for the Corporate
Offence, even though the act of bribery occurredin China.

5

1.

The agreement reached with the SFO under a DPA wasfor €991 million and related to five counts of failure to prevent bribery under section 7 of the UKBA between 2011
and 2015 across the same number of jurisdictions: Sri
Lanka, Malaysia, Indonesia, Taiwan and Ghana.

2.

A DPA is effectively a settlement agreement between the
SFO and the organisation being prosecuted. The agreement allows a prosecution to be suspended for a defined
period provided the organisation meets certain conditions.
DPAs can be used for fraud, bribery and other economic
crime. They apply to organisations, but not individuals.

3.

UKBA, section 1

4.

UKBA, section 2

5.

UKBA, section 6

6.

UKBA, section 7

7.

UKBA, section 3 and 4

8.

This permits companies to make payments for the purpose of expediting the performance of routine governmental actions, such as clearing goods through customs, although it does not extend to payments made for the purpose of obtaining a particular substantive decision from agovernmental agency.

9.

The Bribery Act 2010 – Guidance about procedures which
relevant commercial organisations can put into place toprevent persons associated with them from bribing (section 9 of the Bribery Act 2010)

10. UKBA, section 11
11. For the purposes of the MSA, turnover is calculated as theturnover of an organisation and the turnover of any of its
subsidiary undertakings (including those operating
wholly outside the UK).

12. That is, those deeming themselves outside the scope of the
UKBA typically also do so for the purpose of the MSA, albeit some organisations do still prepare a Statement, butmake clear that they are doing so voluntarily.

13. Note that, currently, submission to the Government-run
reporting service is voluntary (although encouraged) but
due to become mandatory in one of the proposed changes
to section 54 of the MSA (but the timing of the necessary
legislative changes is unclear).

14. R (on the application of KBR, Inc) v Director of the Serious
Fraud Office [2021] UKSC 2

15. UKBA, section 1
16. UKBA, section 14(2)6