The implementation of the Bribery Act, which had been due to take place in April 2011, has been delayed, to allow further consultation on the guidance in relation to the new offence of failing to prevent bribery. When the Act comes into force, it will have significant implications for businesses, and that includes those conducting business in the UK and overseas and will apply to both public and private sector corruption.

The four offences:

The active bribery offence (i.e. giving, promising or offering a bribe)

A person will be guilty of an offence if they offer, promise or give financial or other advantage to another person, intending the advantage to encourage the person to improperly carry out a relevant function or activity or to reward the person for improper performance of that function or activity.

The offence will apply to functions of a public nature and those linked with a business or activities performed in the course of employment or on behalf of a body of persons.

There is a two-step test to assess whether there has been ‘improper performance’ of a relevant function or activity:

1. Was the person performing the function expected to perform it in good faith, or impartially, or in a position of trust?
2. It is then necessary to consider whether there is a failure to perform the function or activity in breach of a relevant expectation.

The passive bribery offence (offences relating to being bribed)

A person can be guilty of this offence in four circumstances:

• A person requests, agrees to receive or accepts a financial or other advantage, intending that in consequence a relevant function or activity should be improperly performed. 
• A person agrees to receive or accepts a financial or other advantage as a reward for the improper performance of a relevant function or activity by that person or another.
• A person agrees to receive or accepts a financial or other advantage as a reward for the improper performance of a relevant function or activity by that person or another.
• A person (or another at the demand or with the agreement or consent of such person), in anticipation of the person requesting, approving to receive or accepting a financial or other advantage, improperly performs a relevant function or activity.

An offence will be committed even if the benefit was not for the person directly receiving the bribe or if the agreement to receive the bribe was made directly or through a third party. 

It should be noted that the latter three offences listed above do not require proof of intent, which means that a person receiving a bribe could be guilty of an offence, even if they did not know that their act was improper.

Bribing a foreign official

The person who bribes a foreign public official must intend to influence the official in his power as a public official and must not intend to obtain business or a gain in the conduct of business. Moreover, that person must directly or through a third party, offer, promise or give an advantage to the foreign public official or to another at the official’s demand or with the official’s agreement.

Corporate offence (failure of commercial organisations to prevent bribery)

The Act provides a broad definition of “relevant commercial organisations”: it includes a body incorporated or a partnership formed under UK law and which carries on a business in the UK or elsewhere ; or any other body corporate or partnership (whether incorporated or formed) which carries on a business( or part of a business) , in any part of the UK. This may include charities and not-for-profit organisations which are incorporated or have activities in the UK. The jurisdictional reach of the Act, extending to organisations of any nationality carrying on any part of their business in the UK, is therefore significant.

The Act clarifies that an ‘associated person’ will be a person who performs services on behalf of the commercial organisation. Accordingly, this could be an employee, agent (including a contractor) or subsidiary of the commercial organisation.

Impact of the Bribery Act on organisations

The changes introduced by the BA 2010 are likely to change the way in which business is conducted. In order to be compliant with UK law, a commercial organisation needs to prove that it “had in place adequate procedures designed to prevent persons associated with (it) from undertaking such conduct”. The burden of proof here rests with the organisation. To discharge this burden, the organisation will need to show not only that it has adopted appropriate policies, but also that it has taken appropriate steps to apply and enforce them.

Bribery abroad counts too; one of the most significant characteristics of the corporate offence is its international reach. There is no requirement that there be any connection between the bribe in question and the UK. It is enough merely for the person paying the bribe to be associated with a commercial organisation which is connected to the UK by carrying on a “part of (its) business” there.

It is also worth noting that the jurisdictional reach of the corporate offence is greater than that of the other offences, where it is a requirement that the act took place in the UK or was committed by a person having a “close connection” with the UK.

Predictably, the penalties for breach of BA2010 can be significant; a commercial organisation convicted of the corporate offence will be liable for an unlimited fine. A conviction could also seriously impede a company’s ability to do business. The reputational harm, which may be suffered as a result of conviction, will undoubtedly have consequence upon the future success of the business in question.

According to recent research by Eversheds, which gathered the views of approximately 700 executives, 60% of businesses are unaware of the corporate offence of failing to prevent bribery and one in four board directors don’t know that they could face prosecution.

How have you prepared for these changes?

Do you understand the full implications and extent of the Bribery Act?

Are you worried that your business may fall foul of the new Act due to a lack of knowledge and understanding of the new laws?

As a director or a partner, have you taken adequate precautions to prevent corruption within your business in order to prevent crippling legal actions?

Do you accept corporate hospitality? Do you have concerns about what constitutes reasonable corporate hospitality?

Please contact a member of our commercial team if you would like more information on how to adapt your business practices and structures to safeguard your company from substantial penalties.