Q&A: anti-corruption regulation in United Kingdom


Relevant international and domestic law

International anti-corruption conventions

To which international anti-corruption conventions is your country a signatory?

The following conventions have been signed and, unless otherwise stated, ratified by the United Kingdom:

  • the Convention on the Fight Against Corruption Involving Officials of the European Communities or Officials of Member States of the European Union (signed on 26May1997 and notification on 11October1999);
  • the Convention on the Protection of the European Communities Financial Interests and Protocols (signed on 26 July 1995 and which came into force on 17October2002);
  • the Council of Europe Criminal Law Convention on Corruption (ETS 173) (signed 27January1999 and ratified 9 December2003). Implementation of this convention is monitored by the Group of States against Corruption (GRECO);
  • the Additional Protocol to the Criminal Law Convention on Corruption (ETS 191) (signed 15May2003 and ratified 9December2003);
  • the Council of Europe Civil Law Convention on Corruption (ETS 174) (signed on 8June2000 but not yet ratified);
  • the Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (signed 17December1997 and ratified 14December1998) (OECDConvention);
  • the United Nations Convention against Corruption (signed 9December2003 and ratified 9February2006); and
  • the United Nations Convention against Transnational Organised Crime (signed 14December2000 and ratified 9February2006).

The UK also signed the Agreement for the Establishment of the International Anti-Corruption Academy as an international organisation on 2September2010, but this Agreement has not yet been ratified.

Foreign and domestic bribery laws

Identify and describe your national laws and regulations prohibiting bribery of foreign public officials (foreign bribery laws) and domestic public officials (domestic bribery laws).

The Bribery Act 2010 (the 2010 Act) was introduced to bring the UK into line with the requirements of the OECD Convention, and applies to conduct that takes place on or after 1July2011. It contains the key provisions prohibiting bribery of foreign and domestic public officials and also applies to private sector bribery.

There are four main offences under the 2010 Act:

  • bribing another person- section 1;
  • receiving bribes- section 2;
  • bribing foreign public officials- section 6; and
  • failure of commercial organisations to prevent bribery- section 7.

The 2010 Act is widely recognised as being one of the most stringent pieces of anti-bribery legislation in the world. This in part stems from its extra-territorial reach. By virtue of section 12 of the 2010 Act, the UK courts have jurisdiction over offences committed outside of the UK where the individual concerned has a ‘close connection with the UK’, which includes:

  • British citizens and British overseas nationals and citizens;
  • individuals ordinarily resident in the UK;
  • bodies incorporated in the UK; and
  • Scottish partnerships.

In respect of section 7, the ‘close connection with the UK’ requirement does not apply and a company incorporated or carrying on business in the UK may be liable for conduct of an ‘associated person’, wherever that associated person is located.

Pre-Bribery Act regime

The Bribery Act 2010 is not retrospective and the old law still applies to offences that took place before 1July2011. The key offences committed before 1July2011 are:

  • the common law offences of public sector bribery:
    • receiving or offering an undue reward by or to a person in public office; and
    • misconduct in a public office;
  • active or passive bribery of a member, officer or servant of a public body under sections 1(1) and 1(2) of the Public Bodies Corrupt Practices Act 1889;
  • corrupt transactions with agents in the public or private sector under section 1(1) of the Prevention of Corruption Act 1906 (this Act is relied on most commonly by the UK authorities when prosecuting pre-July 2011 offences); and
  • corrupt transactions in respect of the grant of honours under section 1 of the Honours (Prevention of Abuses) Act 1925.

The statutory offences require the defendant to have acted ‘corruptly’. The term ‘corruptly’ is found in both the 1889 and 1906 Acts and there have been two competing strands of judicial interpretations for this: a dishonest intention to ‘weaken the loyalty of the servants to their master and to transfer that loyalty from the master to the giver’ (R v Lindley [1957] Crim LR 321) and ‘dishonestly trying to wheedle an agent away from his loyalty to his employer’ (R v Calland [1967] Crim LR 236).

The now generally accepted strand is that dishonesty is not an element of the offence. In the leading case of Cooper v Slade (1857) 6 HL CAS 746, Willes J stated that the word ‘corruptly’ means ‘not dishonestly, but purposely doing an act which the law forbids as tending tocorrupt’.

Conspiracy to commit a bribery offence contrary to section 1(1) of the Criminal Law Act 1977 may also be used to prosecute these types of offences where appropriate. For example, in the case of Güralp Systems Ltd three individuals were acquitted in December 2019 of conspiracy to make corrupt payments to a South Korean public official between 2002 and 2015.

Legislation and guidance

All legislation referred to in this chapter can be found at www.legislation.gov.uk.

See also the following relevant guidance:

  • the Ministry of Justice: The Bribery Act 2010 Guidance (the MOJ Guidance);
  • the Director of Public Prosecutions (DPP) and the Director of the Serious Fraud Office (SFO) Joint Guidance for Prosecutors (SFO/DPP Guidance); and
  • the Director of Public Prosecutions and the Director of the SFO Joint Guidance on Corporate Prosecutions (SFO/DPP Guidance on Corporate Prosecutions).

Successor liability

Can a successor entity be held liable for violations of foreign and domestic bribery laws by the target entity that occurred prior to the merger or acquisition?

Legislation and official guidance does not distinguish between commercial entities that have recently been taken over and their successor. Furthermore, case law has shown that successors can be held liable for acts of bribery committed by an entity they acquire.

However, under paragraph 2.8.2(v) of the Deferred Prosecution Agreement Code, the fact that an entity has been taken over by another commercial organisation after the act, or has had its corporate structure and management team changed, are factors in favour of being offered a deferred prosecution agreement (DPA) (see, for example, the 2015 DPA between the SFO and ICBC Standard Bank Plc and the 2019 DPA with Güralp Systems Limited).

Cases in this area are dealt with on their own facts, and companies should ensure to undertake sufficient due diligence and have adequate procedures in place to prevent, and detect, bribery.

Civil and criminal enforcement

Is there civil and criminal enforcement of your country’s foreign and domestic bribery laws?

The UK has demonstrated active enforcement of its foreign bribery laws, and the general trend is that there is an increased level of enforcement. However, the latest OECD Phase 4 Two-Year Follow-Up Report published in 2019 observed that the ‘total number of finalised and ongoing cases relative to the UK economy remains relatively low’ (see pages 4-5). The OECD Phase 4 Report (March 2017) noted that from the entry into force of the OECD Convention in February 1999 and up to October 2016, more than 100 allegations of foreign bribery had surfaced with a connection to the UK. Since 2017, there have been three foreign bribery investigations concluded resulting in the conviction of 12 individuals and nine acquittals, one civil recovery order, conviction of one legal person in 2019 (sentenced to pay a fine and compensation to a third country). More generally in terms of foreign bribery enforcement, prosecutions are ongoing in 4 SFO cases and there are at least 32 active investigations, of which at least 16 are pre-charge and five newly opened since the 2017 report (OECD 2019).

The SFO, the National Crime Agency (NCA) and the DPP have powers under the Proceeds of Crime Act 2002 (POCA) to recover criminal assets once a conviction has taken place. Part 5 of POCA also provides for recovery of any criminal activity outside of the criminal process, by way of civil recovery order. Such orders enable the recovery of criminal assets where a conviction has not been possible.

Victims of bribery may also bring a civil claim for damages against the briber and the recipient of the bribe for financial losses and, in some cases, for fraud.

On 1 June 2018, the CPS, NCA and SFO published new joint principles to compensate victims of overseas economic crime. The principles identify remedies for asset recovery and/or compensation available under the POCA 2002 for confiscation and the Powers of Criminal Courts (Sentencing) Act 2000 for compensation.

The principles are available online here: https://www.sfo.gov.uk/2018/06/01/new-joint-principles-published-to-compensate-victims-of-economic-crime-overseas/. The agencies have agreed a common framework to identify cases where compensation is appropriate and act swiftly in those cases to return funds to the affected countries, companies or people who were victims of the wrongdoing. See question 5 in relation to the Chad Oil case, Smith and Ouzman and Standard Bank Plc for examples of cases where compensation was paid to a country as a victim of wrongdoing.

Dispute resolution and leniency

Can enforcement matters involving foreign or domestic bribery be resolved through plea agreements, settlement agreements, prosecutorial discretion or similar means without a trial? Is there a mechanism for companies to disclose violations of domestic and foreign bribery laws in exchange for lesser penalties?

In some SFO investigations, civil recovery orders or plea agreements have been used as an alternative to criminal prosecution.

A civil recovery order may be used when a conviction cannot be secured, or in cases where a prosecution would be feasible but is not in the public interest.

DPAs, introduced in the Crime and Courts Act 2013, can be used to deal with offences under the Bribery Act 2010 as an alternative to criminal prosecution. They are voluntary agreements in which the prosecutor defers criminal prosecution subject to the company complying with the terms of the agreement. Examples of such terms are: a financial penalty, making reparations to victims and being subject to monitoring. DPAs are not available to individuals, regardless of whether they committed bribery offences on behalf of the corporation. Therefore, even if a company has entered into a DPA, its employees may still be prosecuted.

DPAs are available for certain offences including sections 1, 2, 6 and 7 of the Bribery Act 2010. The decision to invite a corporate to enter into a DPA is at the prosecutor’s discretion. The DPA Code, a joint code of practice published by the director of the SFO and the DPP, sets out the two-stage test used for determining whether a DPA is appropriate. The first stage is an evidential stage and the second is a public interesttest.

For a DPA to be approved, the court must be satisfied that there is sufficient evidence for a realistic prospect of conviction and that the public interest would be best served by a DPA instead of prosecution. Some of the factors that will be taken into account include:

  • the value of any gain or loss;
  • the risk of harm to the public or unidentified victims;
  • the impact on financial markets and international trade; and
  • the impact of the offence in other countries.

So as to satisfy the requirements for a DPA, the SFO must demonstrate to the court that a DPA will be in the interests of justice. Early cooperation is key if a company wants to enter into a DPA and avoid the reputational damage that comes with a prosecution and conviction. It is important to note that both the Standard Bank PLC and XYZ (now known as Sarclad Ltd) DPAs arose as a result of early self-reporting and this was a significant factor that was highlighted by both the court and the SFO as being of particular importance when assessing the interests of justice. In Sarclad Ltd the judge commented, ‘openness must be rewarded and seen to be worthwhile’. In the recent DPA with GSL in October 2019, the SFO reported that the DPA ‘is a result of timely self-reporting and full cooperation, and holds the company to account, whilst also promoting positive changes in corporate culture’.

The SFO has been clear that cooperation will include access to witnesses in internal investigations and their original accounts. See page5 of the DPA Guide:

Co-operation will include identifying relevant witnesses, disclosing their accounts and the documents shown to them. Where practicable it will involve making the witnesses available for interview when requested. It will further include providing a report in respect of any internal investigation including source documents.

Rolls-Royce Holdings Plc DPA ([2017] Lloyd’s Rep FC 249) generated significant commentary in relation to the fact that the company did not make an early self-report. Rolls-Royce’s high degree of cooperation was cited as a reason for judicial approval of the DPA (see paragraphs 38 and 39 ofjudgment). Giving insight into this, the SFO’s then general counsel, Alun Milford, speaking in September 2017 at the Cambridge Symposium on Economic Crime, explained that the SFO viewed the cooperation in the round in this case. While the failure to self-report was noted, Mr Milford commented that the subsequent years of maintaining ‘a consistently high degree of cooperation’ were key to the decision to enter into a DPA, including identifying wrongdoing that the SFO had not been aware of, in areas of the business wholly unconnected to the scope of the initial investigation. Mr Milford further commented that the information subsequently reported was extensive and beyond the scope of what is likely to have been exposed without the cooperation of the company.

In a speech in October 2018, Hannah von Dadelszen, then Joint Head of Fraud at the SFO, referred to tactics of ‘smoke and mirrors’ used by companies that the SFO would look unfavourably upon when considering a self-report by a company seeking to enter into a DPA, indicating that tactics that will be viewed unfavourably include:

  • reporting minor wrongdoing in one jurisdiction, but omitting to mention significant wrongdoing elsewhere;
  • providing the SFO with a bundle of key documents that are not key, and omitting those that are;
  • omitting to provide a sensible narrative of the suspicions around what actually took place and who was involved; and
  • blocking access to documents because of commercial sensitivity.

Ms von Dadelszen confirmed that the SFO do not require a waiver of privilege as part of cooperation, but that such a waiver would be viewed favourably. Speaking in April 2019, Lisa Osofsky, Director of the SFO, outlined steps for a company to demonstrate cooperation stating:

First, in carrying out their own investigation, we need to see the ultimate objective of cooperating with law enforcement by preserving vital evidence such as first-hand accounts and witness testimony . . . And waiving privilege over that initial investigative material will be a strong indicator of cooperation and an important factor that I will take into account when considering whether to invite a company to enter into DPA negotiations.

In August 2019, the SFO published its Corporate Co-operation Guidance, which sets out how the SFO assesses cooperation from business entities and its potential benefits. This includes a section on Witness Accounts and Waiving Privilege and provides further guidance to the Director’s comments. In January 2020, the SFO amended its Operational Guidance to include ‘Evaluating a Compliance Programme’.

A corporate body that identifies potential bribery or corruption within its organisation should seek specialist advice on what steps to take- including whether or not to self-report to the relevant authorities. The SFO guidance on self-reporting makes clear that for a self-report to be considered as a public interest factor tending against prosecution, it must form part of a ‘genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice’. However, each case will turn on its own facts and a self-report is no guarantee that a prosecution will not follow.

DPAs were introduced under Schedule 17 of the Crime and Courts Act 2013 and were designed to provide a mechanism to allow companies to avoid prosecution for certain financial offences by entering into an agreement with the SFO. In addition, the authorities can consider civil recovery as an alternative to criminal prosecution in appropriate cases (eg, when it is not possible to secure a conviction, or in cases where the public interest may be better served by using civil recovery powers rather than proceeding with a prosecution). It is also possible for prosecutors to stay proceedings and adopt terms agreed by the parties in the form of a consent order, although this is less common.

Under the POCA 2002, the SFO has the ability to bring civil proceedings to recover property obtained through unlawful conduct. For example, a property freezing order was obtained by the SFO in the Chad Oil corruption case in 2014 and upheld by the Court of Appeal in January 2017. In March 2018, the SFO announced that it was set to recover £4.4 million arising from share profits derived from the bribery in this matter. The Director of the SFO at that time, David Green QC, said the recovered money was to be transferred to the Department for International Development, which would identify key projects to invest in that would benefit the poorest in Chad.

This approach to reinvesting the proceeds of crime can also be seen in the case of Smith & Ouzman (2016) in which senior officials were convicted of foreign bribery and the SFO’s confiscation order paid for seven new ambulances in Kenya. Furthermore, the DPA entered into with Standard Bank Plc involved payment of £4.9 million to the government of Tanzania.

However, civil recovery powers should be considered in light of the judgment in Innospec, which held that civil procedures would be inappropriate in cases of serious crime such as the corruption of senior foreign officials (R v Innospec Ltd Crown Court (Southwark), 26March2010 [2010] Lloyd’s Rep FC 462 at paragraph 37).

Notwithstanding this, there may still be cases where the SFO considers a civil settlement appropriate following a self-report. In 2012, the SFO exercised its civil recovery powers under section 276 of POCA 2002 that resulted in an order for Oxford Publishing Limited (OPL) to pay £1.9 million. OPL had self-reported to the SFO when it became aware of concerns in relation to contracts arising from tenders entered into by its Kenyan and Tanzanian subsidiaries. The order was made in recognition of sums it received that were generated through unlawful conduct related to those subsidiaries. It is worth noting, however, that DPAs were not available in 2012 and it is likely that a similar self-report in future would be dealt with by way of a DPA rather than through civil proceedings.

Foreign bribery

Legal framework

Describe the elements of the law prohibiting bribery of a foreign public official.

Section 6 of the Bribery Act 2010 was introduced to satisfy the requirements of the OECD Convention.

Section 6(1) of the 2010 Act states:

[A] person (‘P’) who bribes a foreign public official (‘F’) is guilty of an offence if P’s intention is to influence F in F’s capacity as a foreign public official.

The mental element of the section 6 offence requires a specific intention to ‘obtain or retain business, or an advantage in the conduct of business’ and is often described as a ‘business-only offence’ (see section 6(2)). Note that the acceptance of the bribe is not covered by section 6, but is covered by section 2 of the 2010 Act.

Section 6(2) is not an insignificant hurdle for the prosecution. Cordial relationships and functions designed to enhance relationships or get to know each other better are not sufficient evidence to raise the inference that a person intended to gain an advantage. In addition, the MOJ Guidance recognises that in seeking tenders for publicly funded contracts, governments may often permit or require those tendering for the contract to offer some kind of additional investment in the local economy (see paragraph 25 of the MOJ Guidance).

The conduct element of the offence is set out at section 6(3):

P:

(a) directly or through a third party offers, promises or gives any financial or other advantage:

i. to F, or

ii. to another person at F’s request or with F’s assent or acquiescence, and

(b) F is neither permitted nor required by the written law applicable to F to be influenced in F’s capacity as a foreign public official by the offer, promise or gift.

In respect of section 6(3)(b) and the issue of influencing F in the performance of F’s functions, this includes any omission to exercise those functions and any use of F’s position as such an official, even if not within F’s authority (section 6(4)).

Although there is a requirement that P’s intention is to influence F in F’s capacity as a foreign public official, there is no requirement for P to have intended to elicit ‘improper performance’ (in contrast to the offences at sections 1 and 2 of the 2010 Act).

Section 6(3)(b) ensures that no offence will have been committed where the written law that applies to F allows for F to be influenced by an offer, promise or gift. However, a mistaken belief that F was required or permitted to accept an advantage under the local law is no defence to section 6.

An offence under section 6 will not only be committed in the UK if any act or omission that forms part of the offence takes place in the UK (section 12(1) of the 2010 Act), but also if a person’s acts or omissions took place outside the UK and the person has a ‘close connection with the UK’ (section 12(2) of the 2010 Act). As set out above, the definition of ‘close connection’ includes all British citizens, British overseas citizens, an individual ordinarily resident in the UK and a body incorporated under the law of any part of the UK (section 12(4)(a) to (i) of the 2010 Act).

Where it is unclear whether the recipient of a bribe is indeed a foreign public official (as defined under section 6(5)), then it is of course open to the investigating authority to prosecute under section 1 of the 2010 Act, which applies to both the public and private sector. However, as mentioned above, under section 1 of the 2010 Act the prosecutor would also need to prove the additional element of improper performance.

See also the section 7 offence. Under section 7, acts of bribery committed within or outside of the UK by an employee or associated person of any ‘relevant commercial organisation’ could result in a criminal conviction for that commercial organisation.

Section 7(5) defines ‘relevant commercial organisation’ as including ‘any other body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the UK’.

‘Any part of a business’ is not defined by the legislation and so companies with any professional connection to, or demonstrable presence in, the UK should be mindful of the breadth of thislegislation.

In respect of offences committed prior to 1July2011, the common law, Public Bodies Corrupt Practices Act 1889 and the Prevention of Corruption Acts 1906 and 1916 apply. In particular, the Prevention of Corruption Act 1906 makes it a crime to bribe ‘any agent,’ whether in the public or in the private sector.

In respect of foreign bribery, the question as to whether the definitions of ‘principals’ and ‘agents’ within the 1906 Act included foreign principals and agents was unclear until the Court of Appeal decision in R v AIL (A Company) [201] EWCA Crim 2; [2016] 2 WLR1287. This case confirmed that, provided that the UK court had jurisdiction over the offence (through part of the act or conspiracy taking place within the UK), bribery of a foreign principal or agent (which would include a foreign public official) was caught by the Prevention of Corruption Act 1906, even prior to the UK implementing the Anti-Terrorism, Crime and Security Act 2001 (the 2001 Act). See in particular, section 108 of the 2001Act.

However, from 14 February 2012, section 109 of Part 12 of the 2001 Act made the offence of foreign bribery extra-territorial for UK citizens and corporates, therefore capturing acts of bribery committed by UK citizens and corporates where the act took place entirely overseas.

Definition of a foreign public official

How does your law define a foreign public official, and does that definition include employees of state-owned or state-controlled companies?

Section 6(5) of the Bribery Act 2010 defines a ‘foreign public official’ as:

[An] individual who –

(a) holds a legislative, administrative or judicial position of any kind, whether appointed or elected, of a country or territory outside the UK (or any subdivision of such a country or territory),

(b) exercises a public function –

(i) for or on behalf of a country or territory outside the UK (or any subdivision of such a country or territory), or

(ii) for any public agency or public enterprise of that country or territory (or subdivision), or

(c) is an official or agent of a public international organisation.

A ‘public international organisation’ is defined at section 6(6) as an organisation whose members are:

  • countries or territories;
  • governments of countries or territories;
  • other public international organisations; or
  • a mixture of any of these.

The offence will also be committed if the financial or other advantage is offered to someone other than the official, if that happens at the official’s request, or with the official’s assent or acquiescence.

As set out above, in respect of pre-1 July 2011 offences, the Anti-Terrorism, Crime and Security Act 2001 extended the existing bribery offences under common law and statute to include bribery of foreign public officials. Additional amendments were made under section 108(3) and (4) of the 2001 Act so that ‘local and public authorities’ includes equivalent foreign bodies and local and public authorities of all descriptions, including ‘authorities existing in a country or territory outside the UK’.

The Ministry of Justice Guidance on the Bribery Act 2010 states that a ‘foreign public official’ includes officials ‘who exercise a public function for any public agency or public enterprise . . . such as . . . officers exercising public functions in state-owned enterprises’. The question of the limits of the definition has not yet been tested in the courts and so there is a degree of uncertainty as to the precise circumstances in which the courts would determine that an employee of a state-owned company could be said to be exercising a public function in that company.

Gifts, travel and entertainment

To what extent do your anti-bribery laws restrict providing foreign officials with gifts, travel expenses, meals or entertainment?

While other jurisdictions may provide a defence for ‘reasonable and bona fide’ expenses (eg, US Foreign Corrupt Practices Act 1977), there is no specific legislation in the UK dealing with gifts, travel expenses, meals or entertainment. The absence of such a defence in the legislation has meant that companies are uncertain about what may be appropriate, and there is a risk that disproportionate or lavish hospitality could form the basis of an offence under sections1, 6 or 7 of the 2010 Act.

For example, under section 1 of the 2010 Act, gifts may be deemed bribes if they are found to constitute an ‘advantage’ offered or received in return for ‘improper performance’. Case law has not yet clarified the definition of an ‘advantage’ or ‘improper performance’, which adds to the uncertainty in this area. Under section 6, the prosecution would need to establish that the gift was intended to influence the foreign public official in order to obtain or retain business or an advantage in the conduct of business.

While there is no detailed guidance on what gifts or hospitality might constitute a bribe, the SFO/DPP Guidance recognises that ‘reasonable, proportionate’ hospitality made in good faith is an established and important part of doing business. The SFO/DPP Guidance makes clear that its focus is on targeting bribes disguised as legitimate business expenditure, rather than genuine hospitality. Decisions on whether to prosecute will be taken in line with the Full Code Test in the Code for Crown Prosecutors, the Guidance, and MOJ Guidance. Page 7 of the SFO/DPP Guidance sets out a list of factors tending in favour of, and against, prosecution.

In March 2011, in the foreword to the MOJ Guidance, then Secretary of State for Justice Kenneth Clarke QC MP wrote: ‘Rest assured- no one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix.’ However, in the absence of detailed guidance as to what gifts or hospitality constitute a bribe, companies need to ensure that their hospitality and gifts policy reflects the SFO/DPP Guidance and be prepared to demonstrate that they have considered the Bribery Act and that any hospitality is given or received in good faith and is reasonable and proportionate.

Facilitating payments

Do the laws and regulations permit facilitating or ‘grease’ payments to foreign officials?

Facilitation payments are defined within the SFO/DPP Guidance as ‘unofficial payments made to public officials to secure or expedite the performance of a routine or necessary action’.

Facilitation payments are a type of bribe and are illegal under the Bribery Act 2010 (under section 6 or, if there is an intention to induce improper performance, under section 1) regardless of the value or frequency of the payments. A facilitation payment that took place before the implementation of the 2010 Act would potentially be an offence at common law and under the Prevention of Corruption Acts 1906/1916.

The SFO/DPP joint guidance on corporate prosecutions sets out factors relevant to prosecution for facilitation payments:

Factors tending in favour of prosecution:

  • large or repeated payments are more likely to attract a significant sentence;
  • facilitation payments that are planned for or accepted as part of a standard way of conducting business may indicate the offence was premeditated;
  • payments may indicate an element of active corruption of the official in the way the offence was committed; and
  • where a commercial organisation has a clear and appropriate policy setting out procedures an individual should follow if facilitation payments are requested and these have not been correctlyfollowed.

Factors tending against prosecution:

  • a single small payment likely to result in only a nominal penalty;
  • the payment or payments came to light as a result of a genuinely proactive approach involving self-reporting and remedial action (additional factor (a) in the Guidance on Corporate Prosecutions);
  • where a commercial organisation has a clear and appropriate policy setting out procedures, an individual should follow if facilitation payments are requested and these have been correctly followed;
  • the payer was in a vulnerable position arising from the circumstances in which the payment was demanded.

The examples given in the Code do not explain how the DPP or Director of the SFO would assess what a ‘large’ payment is. They have also not provided guidance on what constitutes ‘repeated payments’. In a 2013 interview with Fraud Magazine, the then director of the SFO, David Green QC, said that the SFO was not interested in a single payment of £20 and bottle of whisky made to a pilot to take a ship to a specific destination. However, he added that a course of conduct over a number of years will not be viewed as a small, insignificant bribe, but rather a regular payment over time to ensure business.

Payments through intermediaries or third parties

In what circumstances do the laws prohibit payments through intermediaries or third parties to foreign public officials?

Sections 1(5) and 6(3) of the Bribery Act 2010 capture bribes paid by third parties or intermediaries.

Corporate bodies should note that under section 7 of the 2010 Act they can be held criminally liable for bribery committed by an ‘associated person’, which could include an agent.

Pre-Bribery Act, the Prevention of Corruption Act 1906 was specifically introduced to ensure that private or public sector bribery involving agents was criminalised. In the 1906 Act, ‘agent’ is defined as ‘any person employed by or acting for another’ (section 1(2)) and a ‘person serving under the Crown or under any corporation or any borough, county, or district council, or any board of guardians’ or ‘any local or public authority’ (section 1(3), as amended by the 1916 Act).

Individual and corporate liability

Can both individuals and companies be held liable for bribery of a foreign official?

The pre-Bribery Act offences at common law and in statute apply to both corporates and individuals.

Under section 6 of the Bribery Act 2010 both individuals and corporates can be held liable for bribery of a foreign public official. Under section 14, in cases where a body corporate commits an offence under sections 1, 2 or 6, a senior officer of the company can also be held individually liable if they consented to or connived in the offence and had a close connection to the UK. The meaning of ‘close connection to the UK’ is set out in section 12(4) of the Bribery Act 2010.

Section 7 of the Bribery Act 2010 introduces a strict liability offence of failure to prevent bribery committed by a commercial organisation. This section applies only to corporate bodies (defined above). A commercial organisation (C) may face prosecution where an ‘associated person’ intentionally bribes another person. Knowledge on the part of C is not required for the offence to be committed. However, if C had adequate procedures in place to prevent bribery, it will have a complete defence.

The meaning of ‘associated person’ (section 8 of the 2010 Act) is a person who performs services on behalf of the company (disregarding any bribe under consideration). An associated person includes agents and subsidiaries of C. The presumption is that this test is satisfied where the associated person is an employee of C unless the contrary is shown.

According to the MOJ Guidance, unless the prosecution can prove beyond reasonable doubt that a section 1 or 6 offence has been committed, the section 7 offence will not be triggered. This does not, however, require a person to have been convicted of a section 1 or 6 offence (paragraph 13 MOJ Guidance).

The Bribery Act provides a strong incentive to firms to ensure that they have adequate procedures in place, as this would be a complete defence to the section 7 offence. The MOJ Guidance (produced pursuant to section 9 of the 2010 Act) provides guidance on procedures that relevant commercial organisations can put in place to prevent persons associated with them from bribing another.

It is for C to raise the defence and bear the probative burden of establishing the adequacy of its procedures on the balance of probabilities, rather than for the prosecution to establish the inadequacy of C’s procedures beyond reasonable doubt.

The MOJ Guidance sets out six key principles (supported by case studies), which C should follow to demonstrate that they are committed to preventing bribery being conducted on their behalf:

  • proportionate procedures to the risks that it faces and the nature of its business;
  • top-level commitment to preventing bribery;
  • periodic risk assessment of the nature and extent of possible exposure to bribery;
  • due diligence in order to mitigate identified bribery risks;
  • communication (including training) to ensure bribery prevention policies and procedures are embedded and understood; and
  • monitoring and review of procedures designed to prevent bribery and making improvements where necessary.

The public interest factors tending against prosecution in relation to a section 1 offence are also relevant to section 7, as are the additional factors set out in the SFO/DPP Guidance on Corporate Prosecutions at paragraphs 31 to 35.

Private commercial bribery

To what extent do your foreign anti-bribery laws also prohibit private commercial bribery?

The Bribery Act 2010 prohibits public and private sector bribery under sections 1 and 2. See for example, the case of Sustainable Agroenergy Plc and Sustainable Wealth Investments UK Ltd.

The 1906 Act criminalised private sector bribery, prior to the Bribery Act being in force.

The UK has demonstrated active enforcement of its foreign bribery laws, and the general trend is that UK investigations into foreign bribery are increasing. The OECD Phase 4 Follow-up Report (2019) noted (at p 6) that additional resources have been allocated to the SFO, which has enhanced its capacity to carefully and fully review foreign bribery allegations. Lisa Osofsky, Director of the SFO, has spoken of investigations in the private sector and the cooperation the SFO expects from the private sector in numerous speeches from 2018 and 2019. As set out above, the SFO has also published corporate cooperation guidance on this subject.

The SFO, the National Crime Agency (NCA) and the DPP also have powers under POCA to recover criminal assets once a conviction has taken place. Part 5 of the Act also provides for recovery of any criminal activity outside of the criminal process, by way of civil recovery order. Such orders enable the recovery of criminal assets where a conviction has not been possible.

Victims of private commercial bribery may also bring a civil claim for damages against the briber and the recipient of the bribe for financial losses and, in some cases, fraud.

See question 4 for information about the joint principles to compensate victims of economic crime overseas.

Defences

What defences and exemptions are available to those accused of foreign bribery violations?

Defences to those accused of foreign bribery violations under the Bribery Act are available only in very limited circumstances. The MOJ has produced guidance (pursuant to section 9 of the 2010 Act) on offences under sections 1, 6 and 7 of the Bribery Act, particularly in relation to the strict liability offence under section 7. The MOJ Guidance recognises that the common law defence of duress is commonly available in circumstances where individuals are ‘left with no alternative but to make payments in order to protect against loss of life, limb or liberty’.

Section 6

Section 6(3)(b) provides a defence to section 6 of the Bribery Act. It ensures that no offence will have been committed where the written law that applies to a foreign public official (‘F’) allows for F to be influenced by an offer, promise or gift. However, a mistaken belief that F was required or permitted to accept an advantage under the local law is no defence to section 6.

Section 7

It is a complete defence to section 7 of the Bribery Act for a commercial organisation to demonstrate that they have adequate procedures in place to prevent bribery. It is for the commercial organisation to raise the defence and bear the probative burden of establishing the adequacy of its procedures on the balance of probabilities, rather than for the prosecution to establish the inadequacy of C’s procedures beyond reasonable doubt.

It is also a defence if a person’s conduct was for the proper exercise of any function of an intelligence service or the armed forces (section 13 of the Bribery Act).

Agency enforcement

What government agencies enforce the foreign bribery laws and regulations?

The SFO is the specialist agency tasked with investigating and prosecuting serious or complex fraud, including domestic or overseas bribery and corruption:

  • that undermines UK Plc commercial or financial interests;
  • where the actual or potential financial loss is high;
  • where the potential economic harm is significant; and
  • where there is a significant public interest.

The NCA was set up in 2013 to lead the operational response to serious and organised crime, including economic crime. It has oversight of the law enforcement response to bribery and corruption and works with the SFO, the CPS, the MOD and the Financial Conduct Authority (FCA). It has a particular focus on corruption relating to Department for International Development countries (states in Africa, Asia and the Middle East in which the Department works to end extreme poverty). The NCA’s Financial Intelligence Unit receives and analyses Suspicious Activity Reports (money laundering reports made under the POCA). In 2015, the NCA’s International Corruption Unit was set up to investigate grand corruption and money laundering involving developing countries.

Cases that are not prosecuted by the SFO or the NCA may be prosecuted by the CPS. The Ministry of Defence Police investigate corruption involving the Ministry’s employees (including members of the UK’s armed forces) or contracts.

The FCA regulates the financial services industry in the UK. It does not enforce the Bribery Act 2010. However, it has imposed large fines on firms for breaches of the FCA’s principles where bribery and corruption has taken place or where a firm’s systems and controls have been inadequate to deal with the threat of corruption (eg, Besso Ltd in 2014 and JLT Specialty Limited in 2013).

On 31 October 2018, a new government initiative, the National Economic Crime Centre (NECC) began operating. The NECC is based within the NCA in London and includes officers from the NCA, HM Revenue and Customs, City of London Police, SFO, FCA, CPS and the Home Office.

The NECC was launched as an overarching body whose function is to coordinate the UK’s national response to economic crime by tasking and coordinating the various prosecuting bodies, supported by ‘enhanced analytic capabilities and intelligence’. Its aim is to improve the UK’s ability to fight economic crime, with a particular focus on money laundering and corruption offences, by enhancing cooperation between the different agencies, the government and the private sector. The Economic Crime Strategic Board (which was launched in January 2019) is largely based on a public-private partnership model incorporating both government and law enforcement and the professional and financial services sector reported back on the NECC work to date in its first meeting in January 2020, from which it appears that tackling illicit finance and money laundering are key considerations although there is no specific reference to bribery and corruption.

On 17 May 2019, the NECC published a press release, announcing that 250 visits and compliance reviews had been carried out with business and that 42 has been identified with potential compliance failings. The NECC was also in the process of referring three suspected professional enablers to regulatory bodies in connection with on-going investigations into illicit finance. This was a statement of intent from the NECC, to send a strong message to businesses that it will enable compliances leads and regulators to ‘identify and deal with any suspicious or criminal activity’.

The Economic Crime Plan 2019-22 refers to the NECC working with the NCA’s National Assessments Centre to undertake the first public-private threat assessment of economic crime, focusing on money laundering, fraud and international bribery. This is a pilot project, from which lessons learned and best practices will be drawn to inform the UK’s response to serious and organised economic crime.

The threat assessment highlighted several areas of particular concern across both sectors, including:

  • the need for more information and intelligence sharing;
  • the use of money mules and their recruitment via social media;
  • the threat from corrupt professional enablers and insiders;
  • the role of technology and innovation in addressing or creating new threats; and
  • the abuse of corporate structures.

Patterns in enforcement

Describe any recent shifts in the patterns of enforcement of the foreign bribery rules.

In recent years, the most significant shift in patterns of enforcement in this jurisdiction has come from the use of DPAs in respect of companies found to have committed bribery offences. There is every indication from the SFO that DPAs will continue to be used where companies meet the high threshold of cooperation and demonstrate willingness to reform.

The first DPA was entered into in 2015 between the SFO and ICBC Standard Bank Plc for failure to prevent bribery under section 7 of the Bribery Act. Since then, there have been four further DPAs for offences relating to bribery and corruption – Sarclad Ltd (formerly referenced as XYZ) in 2016, Rolls-Royce in 2017, GSL in December 2019 – and more recently Airbus SE in January 2020 where the DPA was part of a global settlement.

In August 2018, Lisa Osofsky was appointed as Director of the SFO. As a former US prosecutor, it remains to be seen what shifts, if any, in patterns of enforcement by the SFO are likely to arise. However, her initial speeches point to a renewed focus on collaborative working with overseas jurisdictions when tackling economic crime, including working with ‘the newcomers to DPAs – Sapin II, Argentina, Canada, Australia’ and a desire to work using ‘cutting edge technology’. She has also made clear that the SFO will continue to prioritise the recovery of criminal proceeds (Lisa Osofosky, 3 September 2018, Cambridge Symposium).

She has also continued the course of action set by her predecessor to enter into DPAs. It is of note that no individuals have yet been found guilty of an offence in related proceedings – see Tesco Ltd and Güralp Systems Ltd where all defendants were acquitted. This has caused some debate in the marketplace as to whether the DPA system is flawed. However, the SFO stated in its Written Evidence to the Bribery Act Committee that:

The SFO view is that DPAs represent an outcome which ensures that justice can be done, whilst protecting the interests of innocent employees and shareholders as far as possible. A DPA is not a soft option and the penalties involved in a DPA are carefully balanced to punish the company involved appropriately without discouraging them from entering into a DPA.

Indeed, the availability of DPAs, together with the failure to prevent offence, provides a welcome incentive for companies to self-report. Together these developments mean that UK investigators and prosecutors now have more effective tools available to tackle corporate bribery.

Recent outcomes suggest that they are to remain a key enforcement tool in the SFO’s armory.

We set out above the SFO’s expectation for cooperation to secure a DPA. The route to a DPA and corporate cooperation was formalised in August 2019 when the SFO published its Corporate Co-operation Guidance, which sets out how the SFO assesses cooperation from business entities and its potential benefits. It confirms its expectations when assessing a company’s level of cooperation:

Co-operation means providing assistance to the SFO that goes above and beyond what the law requires. It includes: identifying suspected wrongdoing and criminal conduct together with the people responsible, regardless of their seniority or position in the organisation; reporting this to the SFO within a reasonable time of the suspicions coming to light; and preserving available evidence and providing it promptly in an evidentially sound format.

On 17 January 2020, the Serious Fraud Office (SFO) published a new chapter in its Operational Handbook entitled ‘Evaluating a Compliance Programme’. It sets out the relevance of compliance for SFO cases and states that:

If the SFO is investigating an organisation, it will need to assess the effectiveness of the organisation’s compliance programme. This assessment is relevant in all cases involving an organisation. Its purpose is to inform decisions on the case, including:

  • Is a prosecution in the public interest?;
  • Should the organisation be invited into DPA negotiations and, if so, what conditions should the DPA include?;
  • Does the organisation have a defence of ‘adequate procedures’ against a charge under s.7 of the Bribery Act 2010 (failure of a commercial organisation to prevent bribery’?; and
  • Might the existence and nature of the compliance programme be a relevant factor for sentencing considerations?

The message is clear that a key feature of any compliance programme needs to be ‘effective and not simply a ‘paper exercise’’.

The Criminal Finance Act 2017 (the CFA 2017), which is designed ‘to make the UK a more hostile place for those seeking to move, hide or use the proceeds of crime or corruption’ received royal assent on 27April2017. The CFA 2017 introduced Unexplained Wealth Orders (UWOs), which require a person who is suspected of involvement in, or association with, serious criminality to explain the origin of any assets that appear to be disproportionate to his or her known income. Focusing on corruption, the CFA 2017 makes it much easier for politically exposed persons, their immediate family or known close associates to be targeted under a statutory presumption that they were involved in serious criminality.

The relevant provisions of the CFA 2017 entered into force on 31 January 2018, and at the time of writing 15 UWOs had been issued in four cases and the NCA had successfully resisted any appeal. These largely related to overseas or politically exposed persons but have more recently included an action against a person suspected of involvement in serious organised crime in the UK.

The CFA 2017 has also introduced new corporate offences of failing to prevent the facilitation of tax evasion, which entered into force on 30 September 2017. The first offence (section 45) applies to all businesses, wherever located, in respect of the facilitation of UK tax evasion, and the second (section 46) applies to businesses with a UK connection in respect of the facilitation of non-UK tax evasion. The government has published guidance in connection with this offence, which confirms that DPAs will be available.

The length of time the SFO takes to investigate cases has been criticised and it remains to be seen whether this criticism will result in a change in approach within the SFO.

Prosecution of foreign companies

In what circumstances can foreign companies be prosecuted for foreign bribery?

A foreign company can be prosecuted for bribery if any act or omission forming part of the offence takes place inside the UK (section 12 Bribery Act 2010).

Where an act has taken place outside the UK, section 7 of the Bribery Act 2010 has extraterritorial reach. As a result, acts of bribery committed outside of the UK by an employee or associated person of any ‘relevant commercial organisation’ could result in a criminal prosecution for that company.

A ‘relevant commercial organisation’ is defined under section 7(5) of the 2010 Act as ‘any other body corporate (wherever incorporated) which carried on a business, or part of a business, in any part of the UK’. ‘Any part of a business’ is not defined by legislation, and therefore companies with any professional connection to, or demonstrable presence in, the UK should be mindful of the breadth and reach of this legislation.

Section 7(3) states:

For the purposes of this section, A bribes another person if, and only if, A –

(a) is, or would be, guilty of an offence under section 1 or 6 (whether or not A has been prosecuted for such an offence), or

(b) would be guilty of such an offence if section 12(2)(c) and (4) were omitted.

The effect of this section is that an act amounting to a section 1 or 6 offence by A does not have to have taken place in whole or in part in the UK, and it is immaterial whether or not A is a person with a close connection with the UK (section 12(2)(c) and 12(4) of the 2010 Act). Therefore, where there is a connection to the UK, a company can be prosecuted for the section 7 offence in circumstances where there would be no jurisdiction under the 2010 Act to prosecute A for the underlying bribery offences.

It is of note that wholly owned foreign subsidiaries of a UK company, where the offending behaviour takes place entirely abroad, are not caught by section 1 or 2 of the 2010 Act. They would, however, be caught by the section 7 offence, for which it is immaterial whether or not there is a close connection with the UK.

For commercial organisations formed outside the UK, ‘organisations which do not have a demonstrable business presence in the UK would not be caught’ (paragraph 36 of MOJ Bribery Act Guidance). The fact a company’s securities have been admitted to the UK Listing Authority’s Official List and, therefore, admitted to trading on the London Stock Exchange, does not of itself mean that the company is carrying on business in the UK. Paragraph 36 also states:

Likewise, having a UK subsidiary will not, in itself, mean that a parent company is carrying on a business in the UK, since a subsidiary may act independently of its parent or other group companies.

Sanctions

What are the sanctions for individuals and companies violating the foreign bribery rules?

The sanctions for violating foreign bribery offences will depend on the seriousness of the offence. There are no mandatory minimum sentences for bribery offences in the UK. The 2010 Act provides for maximum penalties for individuals of imprisonment not exceeding 10 years or an unlimited fine. At common law, bribery is an indictable offence and there is no statutory maximum term of imprisonment.

Under the Prevention of Corruption Act 1906 and the Public Bodies Corrupt Practices Act 1889, the maximum penalty for individuals is seven years’ imprisonment or an unlimited fine. At common law, bribery is an indictable offence and there is no statutory maximumpenalty.

If prosecuted, not only do commercial organisations face an unlimited fine, but a bribery conviction also triggers a court’s power to impose a confiscation or civil recovery order under POCA. The appropriate level of fine is determined by:

  • assessing the gross profit from the contract obtained, retained or sought as a result of the bribery offence (ie, the ‘harm’); and
  • multiplying this figure by reference to a culpability category (the multiplier is higher depending on the level of culpability).

Up to 50 per cent discount on a penalty is available by way of a DPA, with up to one-third discount available by way of an early guilty plea during prosecution.

In addition, any conviction under sections 1, 2 or 6 of the Bribery Act 2010 will result in mandatory debarment for up to five years. ‘Debarment’ (also known as ‘exclusion’ or ‘blacklisting’) is the prevention or exclusion of a company from entering into public contracts as a provider, supplier or contractor. The Public Contracts Regulations 2015, which implement the EU Directive on Public Procurement (2014/24/EU) into UK law, took effect from 26February2015. These regulations adopt the maximum periods of exclusion provided for in the directive.

It is worth noting that the regulations allow a convicted company to avoid debarment by a process of ‘self-cleaning’ if they can demonstrate that they have put in place effective measures to remedy the consequences of their criminal conduct and ensure that it will not happen in future. If the contracting authority considers the evidence to be sufficient, the company can avoid debarment.

Regulation 57 (15) sets out the various matters that the company must prove to demonstrate self-cleaning, including that it has:

  • paid or undertaken to pay compensation in respect of any damage caused by the criminal offence or misconduct;
  • clarified the facts and circumstances in a comprehensive manner by actively collaborating with the investigating authorities; and
  • taken concrete technical, organisational and personnel measures that are appropriate to prevent further criminal offences ormisconduct.

The measures taken will be evaluated, taking into account the gravity and particular circumstances of the criminal offence or misconduct (Reg 57 (16)). It has been suggested that the assessment would be similar to that involved when determining whether a company has in place ‘adequate procedures’ in relation to a section 7 offence.

The contracting authority must give the economic operator a statement of reasons where it considers that the measures taken by the company were insufficient to amount to ‘self-cleaning’ for the purposes of the Regulations (Reg 57 (17)).

In a written statement to Parliament on 30March2011, Kenneth Clarke QC MP (then Lord Chancellor and Secretary of State for Justice) confirmed that section 7 was not intended to trigger mandatory debarment, and the regulations were amended to reflect this in 2015. However, a conviction under section 7 could attract discretionary debarment of three years, which could have a significant and damaging impact on a company in many industries.

Debarment will also be considered in the context of a DPA. When considering the terms of the Rolls-Royce DPA, Sir Brian Leveson specifically considered the impact of debarment on the future business of Rolls-Royce. Evidence was submitted that 15 per cent of Rolls-Royce’s order book was comprised of public sector orders in countries with mandatory debarment provisions, and a further 15 per cent for countries with discretionary debarment provisions. It was concluded that a criminal conviction would have ‘a very substantial impact’ on the company’s business. This is also in line with the SFO Guidance on Corporate Prosecutions, which explains that the SFO will consider the commercial consequences for a company of a conviction under European law when assessing whether the outcome of any investigation is proportionate.

Recent decisions and investigations

Identify and summarise recent landmark decisions or investigations involving foreign bribery.

DPAs

The advent of the DPA in February 2014 heralded a significant change in the way anti-corruption regulations are being enforced against companies by the UK authorities.

To date, seven DPAs have been reached in the UK. Five of these involved allegations of foreign bribery and corruption (Standard Bank, Sarclad Ltd, Rolls-Royce, GSL and Airbus SE).

On 17January2017, Sir Leveson approved a DPA in the case of Rolls-Royce. Under the terms of the DPA, which was described by Sir Leveson at that time as ‘by far the largest’ DPA to date, Rolls-Royce agreed to pay a penalty of £239 million, disgorge £258.17 million in profits and pay the SFO’s costs of £12.96 million. The company was also required to complete a compliance programme and to continue to cooperate with the relevant authorities in relation to action taken against the individuals concerned. The focus was on cooperation from the company. It was noted that the conduct of the company since 2013 in cooperating with the investigatory authorities was to be commended (the SFO described it as ‘extraordinary’ cooperation). In giving his judgment, Sir Leveson made it clear that companies are expected to engage openly and show a willingness to unearth and accept wrongdoing if a DPA is to be considered.

In October 2019, the SFO entered into a DPA with Güralp Systems Limited (GSL). The company had been charged with conspiracy to make corrupt payments (contrary to section 1 of the Criminal Law Act 1971) and failure to prevent bribery by employees (contrary to section 7 of the Bribery Act 2010). GSL agreed to pay a total of £2,069,861 for disgorgement of gross profits. The DPA also requires GSL to cooperate fully and truthfully with the SFO and to review and maintain its existing internal controls, policies and procedures regarding compliance with the Bribery Act 2010. Three individuals were acquitted of Bribery in December 2019, following a contested trial.

However, in January 2020, the SFO announced a record-breaking DPA had been entered into with the global aerospace company Airbus SE. Airbus SE agreed to pay a fine and costs amounting to €991 million in the UK, and in total, €3.6 billion as part the world’s largest global resolution for bribery (including French and the US authorities). The indictment covered five counts of failure to prevent bribery and concerned five jurisdictions: Sri Lanka, Malaysia, Indonesia, Taiwan and Ghana between 2011 and 2015.

In her judgment, Dame Victoria Sharp said:

The seriousness of the criminality in this case hardly needs to be spelled out. As is acknowledged on all sides, it was grave. The conduct took place over many years. It is no exaggeration to describe the investigation it gave rise to as worldwide, extending into every continent in which Airbus operates. The number of countries subject to intense criminal investigation by the various agencies, and the scale and scope of the wrongdoing disclosed in the Statement of Facts demonstrate that bribery was to the extent indicated, endemic in two core business areas within Airbus.

As set out above, the SFO has placed significant emphasis on cooperation and its expectation that to be considered for a DPA a company must have cooperated with the SFO’s investigation. This can include the provision of information and, in certain circumstances, waiving privilege over relevant documentation. Of note, in December 2015 Sweett Group Plc pleaded guilty to the offence of failure to prevent bribery under section 7 of the Bribery Act 2010, following which the company was sentenced to a fine of £1.4 million, £851,152.23 in confiscation, and costs were awarded to the SFO to the amount of £95,031.97. In that case the company’s refusal to provide its notes of internal investigation witness interviews was considered by the SFO to be non-cooperative.

Section 7 offence

In the first contested prosecution for a section 7 offence, Skansen Interiors Ltd was convicted by a jury in February 2018, having pleaded not guilty on the basis that it had adequate procedures to prevent bribery in place. Two individuals (including an employee of Skansen) had previously pleaded guilty to offences under sections 1 and 2 of the 2010 Act. This case was significant as the company had self-reported the behaviour to the police and had provided substantial assistance to the investigation, including the provision of legally privileged material. Ultimately, the CPS decided to prosecute the case and the jury rejected the company’s defence of adequate procedures. Skansen Interiors received an absolute discharge following trial as a result of it having no assets to pay a financial penalty. This case highlights the reality that a self-report in and of itself will not be sufficient to avoid prosecution, and the importance of having an appropriate bribery and corruption policy in place (and embedded within the company) to establish a defence of adequate procedures.

The decision to prosecute Skansen (which was dormant and could not pay any financial penalty) in spite of its cooperation has been criticised by some commentators, who feel this prosecution was brought to serve as a lesson to others, rather than truly being in the public interest. Regardless of motivation, it serves as a reminder to small and large companies alike that, in the right case, authorities will prosecute a section 7 offence.

Legal privilege

Legal privilege in the context of an internal corruption investigation was considered in the case of SFO v ENRC. In 2017, at first instance the High Court held on the facts of that case that certain documents produced as a result of an internal investigation, including notes of interviews with employees, were not subject to legal privilege. Of particular concern to many practitioners was the court’s decision that, on the facts, a criminal investigation by the SFO was not sufficient to amount to adversarial litigation for the purposes of litigation privilege. The Court held at first instance that:

Criminal proceedings cannot be reasonably contemplated unless the prospective defendant knows enough about what the investigation is likely to unearth, or has unearthed, to appreciate that it is realistic to expect a prosecutor to be satisfied that it has enough material to stand a good chance of securing a conviction.

This decision was appealed and partially overturned in 2018 when the Court of Appeal found that the facts of the case demonstrated that criminal proceedings were reasonably contemplated at the time of the internal investigation, and that the dominant purpose of the documents that came into existence was for the purposes of litigation. It therefore found that litigation privilege applied to the materials gathered as part of that internal investigation, including the notes of interviews with employees. Of key importance was the fact that the Court found the entire subtext of the relationship between the SFO and ENRC in that case was the possibility, if not likelihood, of prosecution if the self-reporting process did not result in a civil settlement. The Court held ([2018] EWCA Civ 2006 at 96):

We are not sure that every SFO manifestation of concern would properly be regarded as adversarial litigation, but when the SFO specifically makes clear to the company the prospect of its criminal prosecution (over and above the general principle set out in the guidelines), and legal advisors are engaged to deal with that situation, as in the present case, there is a clear ground for contending that criminal prosecution is in reasonable contemplation.

The judgment was welcomed by many criminal defence practitioners who see the decision as returning the position of privilege in the case of internal investigations to the status quo pre-2017 ENRC. However, what is important for all companies to consider is the fact that the SFO is increasingly keen to challenge claims of privilege and in that respect, it is vital that the question of privileged material is a key consideration for any company before undertaking an internal investigation or making a self-report.

Section 2 notice

Another significant decision from 2018, this time in the SFO’s favour, is the case of R (KBR Inc) v SFO (2018 EWHC 2368 Admin) in which the court held that where a company has a ‘sufficient connection’ to the UK, the SFO can compel the production of documents from that company using a section 2 notice, even if the documents are held outside the jurisdiction. This decision confirms the extraterritoriality of section 2 notices insofar as they relate to company documents in circumstances where there is a ‘sufficient connection’ between the company and the jurisdiction.

Pre-Bribery Act Legislation

More recently, the SFO has successfully prosecuted a number of individuals on allegations of bribery (under the old law, pre-Bribery Act) in connection with FH Bertling, making a total of nine convictions (including one conviction of the company itself in 2017) over two parallel investigations concerning that company. The individuals concerned were sentenced in 2019.

Financial record-keeping and reporting

Laws and regulations

What legal rules require accurate corporate books and records, effective internal company controls, periodic financial statements or external auditing?

The financial reporting and accounting rules applicable to private and limited companies in the UK are set out in the Companies Act 2006. From April 2016, UK companies are now required to publish a central and publicly accessible register of beneficial ownership (known as persons with ‘significant control’). In addition, the government is currently considering whether to extend this requirement to overseas entities that own UK property or participate in UK government procurement. The government has described this step as an ‘important element’ of its ‘new anti-corruption strategy’.

In July 2018, the government published draft legislation for the creation of a register of beneficial owners of overseas companies owning property in the UK. This follows the commitment made at the Anti-Corruption Summit in 2016 to combat money laundering and increase the transparency of the UK property market. In the government’s Serious and Organised Crime Strategy (November 2018), it described the new register as ‘the first of its kind in the world’ and said it ‘will aim to make it more difficult for kleptocrats and serious and organised criminals to hide their Illicit funds in the UK’. At the time of writing, the legislation has not yet been enacted but it is expected to be operational in 2021.

Depending on the nature of its business, companies may be subject to further record-keeping requirements. For example, the European Union Markets in Financial Instruments Directive (MiFIDII) requires investment firms within the EU to keep records of all services and transactions to monitor compliance with the directive. In addition, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 set out the obligations on certain businesses (including most financial and credit businesses) to establish appropriate policies and procedures in respect of money laundering and terrorist financing.

In terms of ‘internal controls’, the adequate procedures defence to an offence under section 7 of the Bribery Act 2010 has increased the incentive for businesses to establish strong anti-bribery policies, including protection for whistle-blowers and a mechanism for internal reporting. The MoJ Guidance on the Bribery Act specifically includes ‘the reporting of bribery including ‘speak up’ or ‘whistle-blowing’ procedures’ as a part of a company’s proportionate procedures (page 23 of MOJ Guidance).

Disclosure of violations or irregularities

To what extent must companies disclose violations of anti-bribery laws or associated accounting irregularities?

There is no statutory requirement within the Bribery Act for a company to disclose a violation of anti-bribery laws or associated accounting irregularities. However, given the SFO’s expectation that for a DPA to be considered, a company should self-report allegations of misconduct and cooperate with its investigations, a company may wish to consider whether to disclose allegations of wrongdoing that have come to light. Officers of a company will also need to consider whether they are obliged to report knowledge or suspicion of money laundering as a result of the misconduct by means of suspicious activity reports under the terms of the POCA.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 set out the obligations on certain businesses (including most financial and credit businesses) to establish appropriate policies and procedures in respect of money laundering and terrorist financing.

Regulated companies and officers of those companies may also be required to disclose a violation or allegation of misconduct in accordance with their regulatory obligations.

Prosecution under financial record-keeping legislation

Are such laws used to prosecute domestic or foreign bribery?

While not specific to domestic or foreign bribery, section 386 of the Companies Act 2006 sets out the requirement for companies to keep adequate records and accounts. Failure to do so is a criminal offence under section 387 and carries a sentence of imprisonment not exceeding two years or a fine (or both).

Section 386 of the Companies Act 2006 requires companies to keep adequate accounting records that:

  • show and explain their transactions;
  • disclose, with reasonable accuracy and at any time, the financial position; and
  • enable their directors to ensure that accounts comply with the requirements set out in the Companies Act 2006 and, where applicable, article 4 of the International Accounting Standards Regulation.

In a landmark case in 2010 involving both US and UK authorities, BAE Systems pleaded guilty to failing to keep reasonably accurate accounting records (under the previous regime- section 221 of the Companies Act 1985) relating to its activities in Tanzania.

Section 17 of the Theft Act 1968 makes it an offence of fraud by false accounting if a person dishonestly destroys, conceals or falsifies accounting records, or produces misleading, false or deceptive accounting records.

Sanctions for accounting violations

What are the sanctions for violations of the accounting rules associated with the payment of bribes?

Under section 993 of the Companies Act 2006 if:

. . . business of a company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who is knowingly a party to the carrying on of the business in that manner commits an offence.

A person guilty of this offence is liable on summary conviction to a maximum of 12 months’ imprisonment or a £5,000 fine, or both, and on indictment, a maximum of 10 years imprisonment, or a fine not exceeding the statutory maximum (£5,000 in Magistrates’ Courts, but unlimited if the case is heard in the Crown Court).

Section 9 of the Fraud Act 2006 sets out the relevant offence for sole traders and others who are not covered by section 993.

Tax-deductibility of domestic or foreign bribes

Do your country’s tax laws prohibit the deductibility of domestic or foreign bribes?

Yes. Both section 55 of the Income (Trading and Other Income) Act 2005 and section 1,304 of the Corporation Tax Act 2009 prohibit the tax deduction of payments that constitute a criminal offence, which includes foreign bribery.

The Business Income Manual for HM Revenue and Customs also confirms that payments that constitute an offence under the Bribery Act, and are therefore criminal payments, are disallowable.

Domestic bribery

Legal framework

Describe the individual elements of the law prohibiting bribery of a domestic public official.

In section 1 of the Bribery Act 2010 the individual elements of this offence are set out within section 1 and the concept of ‘improper performance’ is central to the offence.

The section 1 offence of bribing another person is set out in two ‘cases’. Under section 1, it is an offence for a person (P) to offer, promise or give directly or through a third party (see section 1(5) of the 2010 Act), a financial or other advantage to another person.

In ‘case 1’, P intends the advantage to induce a person to perform improperly a relevant function or activity (section 1(2)(b)(i) of the 2010 Act) or to reward a person for the improper performance of such a function or activity (section 1(2)(b)(ii) of the 2010 Act). In both of these scenarios it does not matter whether the person to whom the advantage is offered, promised or given is the same person who is to perform, or has performed, the function or activity (section 1(4) of the 2010 Act).

In ‘case 2’, P knows or believes that the acceptance of the advantage would itself constitute the improper performance of a relevant function or activity (section 1(3)(b) of the 2010 Act). An example of an offence under case 2 is where the recipient is a civil servant and not entitled to accept the advantage. In addition, save for in circumstances where the allegation is that an advantage was given or received, there is no need for the transaction to have been completed (page 5 of SFO/DPP guidance).

The terms ‘financial or other advantage’ have not been defined and the question has been left to be determined as a matter of common sense by the tribunal of fact. The SFO/DPP joint guidance (at page 5), states that prosecutors should therefore approach prosecutions under the 2010 Act on the basis that ‘advantage’ should be understood in its normal, everyday meaning, and the Law Commission’s report No.248 provides additional examples of ‘financial or other advantage’. However, the failure to provide a definition of these terms has beencriticised.

Sections 3 and 4 Bribery Act 2010

Key to the 2010 Act are the definitions of ‘function or activity’ (section3), ‘improper performance’ and ‘relevant expectation’ (section4).

The definition of ‘function or activity’ is set out at section 3 of the 2010 Act and comprises:

  • any function of a public nature;
  • any activity connected with a business;
  • any activity performed in the course of a person’s employment; or
  • any activity performed by or on behalf of a body of persons (whether corporate or unincorporated).

But only where the person performing the function or activity is:

  • expected to perform it in good faith;
  • expected to perform it impartially; or
  • in a position of trust by virtue of performing it.

The question of what constitutes ‘improper performance’ of an activity or function is for the jury to decide. In accordance with the ‘expectation test’, a relevant function or activity is performed improperly if it is performed in breach of a ‘relevant expectation’. It is to be treated as being performed improperly if there is a failure to perform the function or activity and that failure is itself a breach of a relevant expectation.

A relevant expectation relates to the expectations set out above, in other words an expectation to perform the functions or activities in good faith, or impartially, or that the person is in a position of trust by virtue of their performance.

For conduct before 1 July 2011, the offences in section 1(1) of the Prevention of Corruption Act 1906 and the Public Bodies Corrupt Practices Act 1889 apply to bribery of domestic public officials.

Section 1 of the 1889 Act sets out that:

(1) Every person who shall by himself or by or in conjunction with any other person, corruptly solicit or receive, or agree to receive, for himself, or for any other person, any gift, loan, fee, reward, or advantage whatever as an inducement to, or reward for, or otherwise on account of any member, officer, or servant of a public body as in this Act [Public Bodies Corrupt Practices Act 1889] defined, doing or forbearing to do anything in respect of any matter or transaction whatsoever, actual or proposed, in which the said public body is concerned, shall be guilty of a misdemeanour.

(2) Every person who shall by himself or by or conjunction with any other person corruptly give, promise, or offer any gift, loan, fee or reward, or advantage whatsoever to any person, whether for the benefit of that person or of another person, as an inducement to or reward for or otherwise on account of any member, officer or servant of any public body as in this Act defined doing or forbearing to do anything in respect of any matter or transaction whatsoever, actual or proposed, in which such public body as aforesaid, is concerned, shall be guilty of a misdemeanour.’

The common law offence of misconduct in a public office may also be relevant. This offence, which is currently being reviewed for possible reform by the Law Commission, is generally used to prosecute police officers for misconduct. However, the offence was also used in Operation Elveden, the investigation into allegations that journalists had conspired to commit misconduct in a public office through paying public officials (eg, police, prison and military personnel) for information to be used in news stories.

Scope of prohibitions

Does the law prohibit both the paying and receiving of a bribe?

Yes. Section 1 of the Bribery Act 2010 deals with the payment of a bribe and section 2 prohibits R receiving a bribe.

Elements of the section 2 offence are described in four further‘cases’.

Case 3

R requests, agrees to receive or accepts a financial or other advantage (directly or through a third party and whether for the benefit of R or another person (section 2(6)(a) and (b) of the 2010 Act) intending that, in consequence, a relevant function or activity should be performed improperly (whether by R or another person) (section 2(2) of the 2010Act)).

Case 4

R requests, agrees to receive or accepts a financial or other advantage (directly or through a third party and whether for the benefit of R or another person (section 2(6)(a) and (b) of the 2010 Act)) and the request, agreement or acceptance itself constitutes the improper performance by R of a relevant function or activity (section 2(3) (a) and (b) of the 2010 Act) (note that it does not matter whether or not R knows or believes that the performance of the function or activity is improper (section 2(7) of the 2010 Act)).

Case 5

R requests, agrees to receive or accepts a financial or other advantage (directly or through a third party and whether for the benefit of R or another person (section 2(6)(a) and (b) of the 2010 Act) as a reward for the improper performance (whether by R or another person) of a relevant function or activity (section 2(4) of the 2010 Act); note that it does not matter whether or not R knows or believes that the performance of the function or activity is improper (section 2(7) of the 2010 Act)).

Case 6

In anticipation of or in consequence of R requesting, agreeing to receive or accepting a financial or other advantage (directly or through a third party and whether for the benefit of R or another person (section 2(6) (a) and (b) of the 2010 Act)), a relevant function or activity is performed improperly by R or by another person at R’s request or with R’s assent or acquiescence (section 2(5) (a) and (b) of the 2010 Act) (note that it does not matter whether or not R knows or believes that the performance of the function or activity is improper (section 2(7) of the 2010 Act)).

As set out above, the terms ‘financial or other advantage’ have not been defined and the question has been left to be determined as a matter of common sense by the tribunal of fact. In accordance with the joint SFO/DPP guidance, ‘prosecutors should therefore approach prosecutions under the 2010 Act on the basis that “advantage” should be understood in its normal, everyday meaning’ (see page 5 of the guidance).

Definition of a domestic public official

How does your law define a domestic public official, and does that definition include employees of state-owned or state-controlled companies?

Under section 6(5) of The Bribery Act 2010, a public official is definedas:

An individual who:

(a) holds a legislative, administrative or judicial position of any kind, whether appointed or elected [ . . . ]

(b) exercises a public function –

(i) for or on behalf of a country or territory [ . . . ]or

(ii) for any public agency or public enterprise of that country or territory (or subdivision), or

(c) is an official or agent of a public international organisation.

A ‘public international organisation’ is defined at section 6(3) as an organisation whose members are:

  • countries or territories;
  • governments of countries or territories;
  • other public international organisations; and
  • a mixture of any of these.

The MOJ Guidance confirms at paragraph 22 that it includes:

[P]rofessionals working for public health agencies and officers exercising public functions in state-owned enterprises. Foreign public officials can also be an official or agent of a public international organisation, such as the [United Nations] or the World Bank.

Pre-Bribery Act

R v Whitaker [1914] 3 KB 1,283 at 1,296 provided a common law definition of a ‘public officer’ as: ‘[A]n officer who discharges any duty in the discharge of which the public are interested, more clearly so if he is paid out of a fund provided by the public’.

In DPP v Holly and Manners [1978] AC 43, HL, the House of Lords found that the expression ‘public body’ (within section 4(2) of the 1916 Act) meant any body that has public or statutory duties to perform and that performs those duties in carrying out its transactions for the benefit of the public, and not for private profit.

However, ‘public body’ under the 1889 Act and ‘local and public authorities of all descriptions’ as amended by the 1916 Act does not include the Crown or government departments and therefore the corrupt conduct of civil servants is not covered by the 1889 Act: see RvNatji [2002] EWCA Crim 271, [2002] 1 WLR 2,337, [2002] 2 Cr App Rep 302.

The correct course in the case of civil servants is to bring a charge under the Prevention of Corruption Act 1906.

Gifts, travel and entertainment

Describe any restrictions on providing domestic officials with gifts, travel expenses, meals or entertainment. Do the restrictions apply to both the providing and the receiving of such benefits?

While there is no detailed guidance on what gifts or hospitality to domestic officials might constitute a bribe, the SFO/DPP Guidance recognise that ‘reasonable, proportionate [hospitality] made in good faith is an established and important part of doing business’. This is an example of where case 3, as set out in section 2 of the Bribery Act 2010, may be most relevant.

Case 3 is where R requests, agrees to receive or accepts a financial or other advantage intending that, in consequence, a relevant function or activity should be performed improperly (whether by R or anotherperson).

The Civil Service Code states that civil servants must not accept gifts or hospitality or receive other benefits from anyone who might reasonably be seen to compromise their personal judgement or integrity. Civil servants are generally required to declare gifts on a hospitality register.

The SFO Guidelines (updated in October 2012) make clear that its focus is on targeting bribes disguised as legitimate business expenditure, rather than genuine hospitality. Payments to domestic officials would not be an acceptable part of doing business. Decisions on whether to prosecute will be taken in accordance with the ‘Full Code Test’ within the Code for Crown Prosecutors, the Guidance on Corporate Prosecutions and the SFO/DPP Guidance (see page 7 of the guidance for a list of factors tending in favour of and against prosecution that may be particularly relevant in cases of bribery).

Facilitating payments

Have the domestic bribery laws been enforced with respect to facilitating or ‘grease’ payments?

Facilitation payments are considered a form of bribery within the UK and fall to be prosecuted on that basis. On 9October2012, the SFO under its then director, David Green QC, emphasised in its policy on facilitation payments that:

[A] facilitation payment is a type of bribe and should be seen as such . . . facilitation payments were illegal before the Bribery Act came into force and they are illegal under the Bribery Act, regardless of their size or frequency. Whether or not the SFO will prosecute in respect of a facilitation payment or payments will still be governed by the Code and the SFO/DPP Guidance.

The SFO guidance states that in appropriate cases, the SFO may use its powers under POCA as an alternative (or in addition) to prosecution. However, the position is clear that facilitation payments are illegal and have always been illegal under the law of England and Wales.

Public official participation in commercial activities

What are the restrictions on a domestic public official participating in commercial activities while in office?

There is no blanket prohibition on public officials participating in commercial activities while serving as a public official. Public officials are required to adhere to codes of conduct, including requirements that they declare and register interests and ensure no conflict arises, or appears to arise, between their public duties and private interests.

The Committee on Standards in Public Life is an independent advisory non-departmental public body that advises the prime minister on ethical standards across the whole of public life in England. It monitors and reports on issues relating to the standards of conduct of all public office holders. The Committee has developed Seven Principles of Public Life which public officials must abide by: selflessness, integrity, objectivity, accountability, openness, honesty and leadership.

Under the Honours (Prevention of Abuses) Act 1925, section 1, the following applies:

(1) If any person accepts or obtains or agrees to accept or attempt to obtain from any person, for himself or for any other person, or for any purpose, any gift, money or valuable consideration as an inducement or reward for procuring or assisting or endeavouring to procure the grant of a dignity or a title of honour to any person, or otherwise in connection with such a grant, he shall be guilty of anoffence.

(2) If any person gives, or agrees, or proposes to give or offers to any person any gift, money or valuable consideration as an inducement or reward for procuring or assisting or endeavouring to procure the grant of a dignity or a title of honour to any person, or otherwise in connection with such a grant, he shall be guilty of an offence.

The maximum punishment on indictment is two years’ imprisonment or an unlimited fine, together with liability to forfeiture of the amount (section 1(3)).

This Act came to be considered in relation to the investigation that followed allegations that political parties had provided peerages in exchange for donations and loans: the so called ‘Cash for Honours’ investigation. The investigation in relation to the loans did not lead to any charges, although over 130 people were interviewed. The investigation also looked into whether there had been any breaches of the Political Parties, Elections and Referendums Act 2000 (not considered here), which sets out requirements for political parties to declare public donations of more than £5,000.

Payments through intermediaries or third parties

In what circumstances do the laws prohibit payments through intermediaries or third parties to domestic public officials?

Sections 1(5) and 6(3) of the Bribery Act 2010 capture bribes paid by third parties or intermediaries.

Corporate bodies should note that under section 7 of the 2010 Act they can be held criminally liable for bribery committed by an ‘associated person’, which could include an agent.

Pre-Bribery Act: the Prevention of Corruption Act 1906 was specifically introduced to ensure that private or public sector bribery involving agents was criminalised. In the 1906 Act, ‘agent’ is defined as ‘any person employed by or acting for another’ (section 1(2)) and a ‘person serving under the Crown or under any corporation or any borough, county, or district council, or any board of guardians’ or ‘any local or public authority’ (section 1(3), as amended by the 1916 Act).

Individual and corporate liability

Can both individuals and companies be held liable for violating the domestic bribery rules?

In respect of foreign bribery, the pre-Bribery Act offences at common law and in statute apply to both corporates and individuals. The relevant sections of the Act are set out in detail above, and are summarised here for ease of reference.

Under sections 1, 2 and 6 of the Bribery Act 2010 both individuals and corporates can be held liable for bribery. Under section 14, in cases where a body corporate commits an offence under sections 1, 2 or 6, a senior officer of the company can also be held individually liable if they consented to or connived in the offence and had a close connection to the UK. The meaning of ‘close connection to the UK’ is set out in section 12(4) of the Bribery Act 2010.

Section 7 of the Bribery Act 2010 introduces a strict liability offence of failure to prevent bribery committed by a commercial organisation. This section applies only to corporate bodies (defined above). A commercial organisation (C) may face prosecution where an ‘associated person’ intentionally bribes another person. Knowledge on the part of C is not required for the offence to be committed. However, if C had adequate procedures in place to prevent bribery, it will have a complete defence.

The meaning of ‘associated person’ (section 8 of the 2010 Act) is a person who performs services on behalf of the company (disregarding any bribe under consideration). An associated person includes agents and subsidiaries of C. The presumption is that this test is satisfied where the associated person is an employee of C unless the contrary is shown.

According to the MOJ Guidance, unless the prosecution can prove beyond reasonable doubt that a section 1 or 6 offence has been committed, the section 7 offence will not be triggered. This does not, however, require a person to have been convicted of a section 1 or 6 offence (paragraph 13 MOJ Guidance).

Private commercial bribery

To what extent does your country’s domestic anti-bribery law also prohibit private commercial bribery?

The Bribery Act 2010 prohibits public and private sector bribery under sections 1 and 2. See for example, the case of Sustainable Agroenergy Plc and Sustainable Wealth Investments UK Ltd (2014).

The 1906 Act criminalised private sector bribery, prior to the Bribery Act being in force.

Defences

What defences and exemptions are available to those accused of domestic bribery violations?

Defences to those accused of foreign bribery violations under the Bribery Act are available only in very limited circumstances. The MOJ has produced guidance (pursuant to section 9 of the 2010 Act) on offences under sections 1, 6 and 7 of the Bribery Act, particularly in relation to the strict liability offence of a commercial organisation failing to prevent bribery (section 7). The MOJ Guidance recognises that the common law defence of duress is commonly available in circumstances where individuals are ‘left with no alternative but to make payments in order to protect against loss of life, limb or liberty’.

Section 6

Section 6(3)(b) provides a defence to section 6 of the Bribery Act. It ensures that no offence will have been committed where the written law that applies to a foreign public official (‘F’) allows for F to be influenced by an offer, promise or gift. However, a mistaken belief that F was required or permitted to accept an advantage under the local law is no defence to section 6.

Section 7

It is a complete defence to section 7 of the Bribery Act for a commercial organisation to demonstrate that they have adequate procedures in place to prevent bribery. It is for the commercial organisation to raise the defence and bear the probative burden of establishing the adequacy of its procedures on the balance of probabilities, rather than for the prosecution to establish the inadequacy of C’s procedures beyond reasonable doubt.

Section 13 of the Bribery Act also provides a defence if a person’s conduct was for the proper exercise of any function of an intelligence service or the armed forces.

Agency enforcement

What government agencies enforce the domestic bribery laws and regulations?

The SFO, NCA and CPS are the government agencies enforcing bribery laws and regulations, and in October 2018 a new government initiative, the National Economic Crime Centre (NECC) began operating. Further details are provided at question 14.

Patterns in enforcement

Describe any recent shifts in the patterns of enforcement of the domestic bribery rules.

The House of Lords Bribery Act inquiry reported in March 2019 that much of the action by the CPS was under the previous regime – it stated that ‘between 2014 and the second quarter of 2018, the CPS has launched 107 proceedings under the Prevention of Corruption Act 1906, compared with around 42 for all offences under the Bribery Act’.

The report referred to criticism of the slow pace of investigations, and the failure to update businesses and individuals on the progress of cases; improvements on these fronts should be made a priority by the SFO and the CPS.

The cases reported on bribery tend to be the large-scale ones conducted by the Serious Fraud Office, with the most recent CPS pronouncement on this being the conviction of two company directors for bribery offences relating to Skansen Interiors Limited in 2018.

Prosecution of foreign companies

In what circumstances can foreign companies be prosecuted for domestic bribery?

A foreign company can be prosecuted for domestic bribery under section 7 of the Bribery Act 2010. The strict liability offence applies to ‘relevant commercial organisations’. Section 7(5) defines ‘relevant commercial organisation’ as including ‘any other body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the UK’.

Under section 7, acts of bribery committed both within or outside of the UK by an employee or associated person of any ‘relevant commercial organisation’ could result in a criminal conviction for that commercial organisation. ‘Any part of a business’ is not defined by the legislation and so companies with any professional connection to, or demonstrable presence in, the UK should be mindful of the breadth of this legislation.

Foreign companies can be prosecuted for domestic bribery under sections 1, 2 and 6 of the Bribery Act 2010 if any act or omission forming part of the offence takes place in the United Kingdom – see section 12(1).

Under section 14, in cases where a body corporate commits an offence under sections 1, 2 or 6, a senior officer of the company can also be held individually liable if they consented to or connived in the offence and had a close connection to the UK. The meaning of ‘close connection to the UK’ is set out in section 12(4) of the Bribery Act 2010.

Sanctions

What are the sanctions for individuals and companies that violate the domestic bribery rules?

See question 17.

Recent decisions and investigations

Identify and summarise recent landmark decisions and investigations involving domestic bribery laws, including any investigations or decisions involving foreign companies.

Recent landmark decisions are set out above in respect of DPAs (Serco Geografix Ltd, Güralp Systems Ltd and Airbus SE) and legal professional privilege (SFOvENRC). The SFO has continued to make clear that early cooperation is key.

From a practical perspective, the case of R (KBR Inc) v SFO (2018 EWHC 2368 Admin) is significant. In that case, the court held that where a company has a ‘sufficient connection’ to the UK, the SFO can compel the production of documents from that company using a section 2 notice, even if the documents are held outside the jurisdiction. This decision confirms the extraterritoriality of section 2 notices insofar as they relate to company documents, in circumstances where there is a ‘sufficient connection’ between the company and the jurisdiction.

It is worth noting that in addition to the DPAs there are a number of ongoing, significant investigations into the conduct of individuals in connection with allegations of bribery and corruption, including Chemring, Unaoil, Amec Foster Wheeler and ENRC. However, the SFO prosecution and conviction figures do appear to be decreasing. Following a freedom of information request submitted by the Law Society Gazette, it was reported on 2 January 2020 that five defendants prosecuted had been convicted in the financial year 2019, compared with 17 in the year ending 31 March 2019 and 10 in the year ending 31 March 2018. The SFO’s caseload also appears to have decreased, with the number of active investigations falling by 20 per cent from 75 in 2017/18 to around 60.

Update and trends

Key developments of the past year

Please highlight any recent significant events or trends related to your national anti-corruption laws.

Key developments of the past year39 Please highlight any recent significant events or trends related to your national anti-corruption laws.

DPAs and UWOs continue to be the most significant developments and trends in terms of enforcement in this area. Although neither are specific to corruption laws, they can be, and have been, used in connection with such offences.

UWOs were introduced under the Criminal Finances Act 2017 with law enforcement able to use these new powers from 31 January 2018. These powers were recently tested in the case of Hajiyeva v NCA ([2020] EWCA Civ 108). The subject of the UK’s first UWO was targeted as the wife of an Azeri banker who is currently imprisoned in Azerbaijan for abuse of office. The NCA had asked Mrs Hajiyeva (referred to initially as Mrs A) to explain the source of funds for the purchase of two properties in London with a combined value in excess of £22 million. She is also said to have spent more than £16 million in Harrods over 10 years. ‘We are ultimately looking for Mrs Hajiyevato comply with the original order of February 2018 to explain the source of the funds used to purchase her property,’ said Andy Lewis, head of asset denial at the National Crime Agency. At the appeal, the couple had provided evidence in order to demonstrate that Mr Hajiyev was wealthy, independent of his employment with the state-controlled bank (as his salary alone did not explain the source). However, the Court of Appeal dismissed the appeal and rejected the evidence stating: ‘This report posed more questions as to the source of his wealth than it answered.’ The judgment is a significant boost to the NCA and other agencies in their fight against illicit finance flowing through the UK.

The Economic Crime Plan 2019-20

At the end of 2018, the government published its ‘1 Year Update’ of the Anti-Corruption Strategy 2017-20 (the Update). This report highlights the importance of anti-corruption legislation noting that ‘corruption and economic crime undermines our economy, damages our international reputation and communities’. It concludes that the government’s ‘commitment and effectiveness’ is demonstrated by ‘the UK’s strong performance’ in this area. The National Economic Crime Plan was published for 2019-20 – it underlined specific areas of risk including: UK contractors paying bribes overseas to conduct business and improperly secure contracts; mining and extractive industries, in particular oil and gas; and the overseas development sector, with UK contractors having paid bribes to secure development contracts.

The Economic Crime Plan refers to its international strategy and efforts to strengthen its capability to investigate and prosecute bribery and corruption overseas. This includes a funding commitment for the International Corruption Unit at the NCA and the CPS to increase their staffing. The government states that this is will enable more action in the UK to recover and return assets stolen from developing countries by corrupt individuals, and to pursue UK companies and nationals who engage in bribery and corruption in developing countries.

Brexit

Post-Brexit there is a focus on the government’s ability to demonstrate globally an ability to offer and conduct ‘clean business’. It has been suggested that criminals may seek to exploit changes created by the UK’s departure. The National Economic Crime Plan 2019-2022 (July 2019) noted that the UK’s departure may also affect UK businesses seeking to expand into jurisdictions beyond Europe. By engaging with new markets and industry sectors that are commonly affected by corruption, the foreign bribery threat may increase.

The House of Lords report on Economic Crime March 2019 underlines this point:

The UK holds a prime position in global financial services, with the City of London a dominant financial centre. Despite Brexit challenges, the UK must work to keep it that way. A ‘clean’ City is important, so the Government must recognise the responsibility to combat economic crime that comes with that position. Recent moves by the Government in this area are welcome, but must be sustained, and match the UK’s ambitions to continue to be a global leader in financial services.

SFO Corporate Co-operation Guidance

The SFO’S Corporate Co-operation Guidance published in August 2019 was long awaited and gives effect to a number of high-level statements and references from senior members of the SFO team over a number of years. The SFO make these initial points.

  • Cooperation will be a relevant consideration in the SFO’s charging decisions to the extent set out in the Guidance on Corporate Prosecutions and the Deferred Prosecution Agreements Code of Practice.
  • Cooperation means providing assistance to the SFO that goes above and beyond what the law requires. It includes: identifying suspected wrongdoing and criminal conduct together with the people responsible, regardless of their seniority or position in the organisation; reporting this to the SFO within a reasonable time of the suspicions coming to light; and preserving available evidence and providing it promptly in an evidentially sound format.
  • Genuine cooperation is inconsistent with: protecting specific individuals or unjustifiably blaming others; putting subjects on notice and creating a danger of tampering with evidence or testimony; silence about selected issues; and tactical delay or information overloads.
  • It is important that organisations seeking to cooperate understand that cooperation – even full, robust cooperation – does not guarantee any particular outcome. It is just one of a number of factors.



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