Source: https://www.omm.com/resources/alerts-and-publications/publications/new-bribery-act-creates-additional-liability-risk-for-corporations-doing-business-in-the-uk/
Timestamp: 2019-04-24 06:39:47+00:00

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New Bribery Act Creates Additional Liability Risk for Corporations Doing Business in the U.K.
Bribing Another Person. The first offense, defined in Section 1, covers the offering, promising or giving of an advantage to another person with the intent to induce the person to perform a function improperly or to reward a person for performing a function improperly.
Being Bribed. The second offense, described in Section 2, deals with the requesting, agreeing to receive or accepting of an advantage in exchange for or as a reward for improper performance.
Bribing Foreign Public Officials. The third offense, outlined in Section 6, prohibits bribery of foreign public officials; this offense is the most similar to the prohibition contained in the U.S. Foreign Corrupt Practices Act (FCPA). Per Section 14, corporate bodies commit an offense under Section 1, 2 or 6 where the offense “is proved to have been committed with the consent or connivance” of a director or senior officer of the corporation with a close connection with the United Kingdom.
Prosecutions under the Act can be brought only with the consent of the Director of Public Prosecutions, the Director of the Serious Fraud Office or the Director of Revenue and Customs Prosecutions. Violations are punishable by fines (corporations and individuals) and up to 10 years imprisonment for individuals.
Broader Corporate Jurisdiction. The Bribery Act purports to cover all commercial organizations, wherever incorporated, that carry on a business or a part of a business in the U.K. With that jurisdictional threshold passed, the location of the acts or omissions constituting the offense is irrelevant. In theory, at least, this jurisdiction goes beyond the territorial or nationality principles of the FCPA. The Bribery Act could reach a private company with employees in the U.K. even if the U.K. employees were not factually connected to the bribery.
Commercial Bribery Also Prohibited. Section 1 of the Bribery Act covers bribery of private citizens, wherever located. The criminalization of foreign commercial bribery significantly expands the scope of prohibited conduct relative to the FCPA. Many types of payments exchanged between business people are potentially subject to scrutiny by prosecutors. In addition, corporations face corresponding additional risk, as an offense under Section 1 can be a predicate for corporate liability under Section 7 of the Act. Corporations that will be subject to the Bribery Act now have an added incentive to monitor closely all payments to and from consultants, commercial representatives, agents and other third-parties.
No Explicit Knowledge Requirement for Payments Made Through Intermediaries. Under both the FCPA and the Bribery Act, payments to foreign officials made through third-parties can form the basis of an offense. Unlike the FCPA, however, the Bribery Act does not spell out of the extent of knowledge of the third-party’s subsequent payment to the foreign official is required to establish criminal liability. It will likely be left to British courts to determine whether to import a knowledge and/or conscious avoidance standard into Bribery Act prosecutions involving payments through intermediaries.
Broader Business Nexus Language. To be guilty of the offense of bribing a foreign public official under the Bribery Act, a person must intend to “obtain or retain business or an advantage in the conduct of business.” This phrasing is broader than the FCPA’s “obtain or retain” business formulation. Thus, the Bribery Act more clearly covers payments made to secure favorable treatment beyond the award of a particular contract; e.g., payments to reduce tax liability or to obtain favorable regulatory treatment, etc. U.S. courts have struggled with whether such payments are covered by the FCPA. The lead case holds that it must be shown that any allegedly improper payment assisted — directly or indirectly — in obtaining or retaining business.
No Statutory Defense for Legitimate Promotional Activities. The FCPA provides for an affirmative defense for reasonable and bona fide business expenditures directly related to certain promotional activities. The Bribery Act contains no such defense, although to be guilty of an offense under Section 6, a person must intend to influence the foreign public official in the performance of their functions. The House of Lords considered and rejected proposed statutory language that would have clarified that legitimate commercial conduct is permissible, leaving individual determinations to prosecutorial discretion. This aspect of the Bribery Act makes it important for corporations to review their travel and entertainment expense policies to ensure that they clearly draw a line between acceptable and unacceptable corporate hospitality.
No Exception for Facilitating or “Grease” Payments. There is also no carve-out in the Bribery Act for facilitating or expediting payments to foreign officials. Corporations that will be subject to the Act may therefore wish to take a fresh look at payments made when the corporation interacts with local regulators — e.g., clearing customs, renewing licenses or visas, obtaining permits, passing annual inspections, etc.
Absence of Accounting and Internal Controls Provisions; No Civil Enforcement Authority. A major difference between the Bribery Act and the FCPA is that the Bribery Act does not contain equivalents for the FCPA’s books and records or internal controls provisions. Nor does the Bribery Act provide for civil enforcement. The absence of such provisions will likely streamline corporate prosecutions, making the existence of “adequate procedures” the critical issue on which most turn.
Proper vetting of business partners, agents, representatives, etc.
Because having adequate procedures to prevent bribery in place will provide a complete defense to corporate liability under the Bribery Act, corporations subject to the Act have even greater incentive than before to develop a robust anti-corruption program.
 Bribery Act 2010, 2010 Chapter 23, available at http://www.opsi.gov.uk/acts/acts2010/pdf/ukpga_20100023_en.pdf.
 Under U.K. law, person includes a “body of persons corporate or unincorporate.” Interpretation Act, 1978, c. 30.
 See Section 14, cross-referencing Section 12(4)’s definition of persons with close connections with the United Kingdom.
 For a more fulsome comparison, see Richard W. Grime and Katherine L. Buchanan, Implications of the U.K. Bribery Bill for Individuals and Corporations Already Subject to the FCPA, Apr. 2, 1010, available at http://www.omm.com/files/upload/Anti-Corruption-and-Bribery-2010-Annual-Seminar.pdf.
 Compare Bribery Act, Section 6(3)(a) with 15 U.S.C. § 78dd-3(a)(3).
 The FCPA provides that “[a] person’s state of mind is ‘knowing’ with respect to conduct, a circumstance, or a result if — (i) such person is aware that such person is engaging in such conduct, that such circumstance exists, or that such result is substantially certain to occur; or (ii) such person has a firm belief that such circumstance exists or that such result is substantially certain to occur.” 15 U.S.C. § 78dd-3(f)(3). In United States v. Bourke, the federal district court in the Southern District of New York explained how conscious avoidance of actual knowledge might satisfy this standard. See Jury Charge, United States v. Bourke, No. 05-CR-518 (S.D.N.Y. 2009).
 See 15 U.S.C. § 78dd-3(a).
 In United States v. Kay, the Fifth Circuit considered whether the FCPA is limited to payments intended to secure a government contract. Pointing to the addition of the words “improper advantage” to the statute in 1998, the Court concluded that “Congress intended for the FCPA to apply broadly to payments intended to assist the payor, either directly or indirectly, in obtaining or retaining business for some person.” However, while the court was clear that payments to reduce taxes could fall within the scope of the statute, it was equally clear that paying bribes to reduce taxes “does not automatically constitute a violation of the FCPA: It must still be shown that the bribery was intended to produce an effect here, through tax savings, that would “assist in obtaining or retaining business.” 359 F.3d 738, 754-56 (5th Cir. 2004).
 Letter from Lord Bach to Lord Henley, House of Lords, Dec. 2009, available at http://www.justice.gov.uk/publications/docs/bach-letter-adequate-procedures-guidance.pdf.

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