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UK Bribery Act 2010 Ben Tonner Andrew De La Rosa

UK Bribery Act 2010 Ben Tonner Andrew De La Rosa. October 2012. Outline . Background to the Act General offences Public service and private individuals Corporate offence (Extra) Territorial application Guidance Penalties – 10 years/unlimited fine. Why has the Act been implemented?.

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UK Bribery Act 2010 Ben Tonner Andrew De La Rosa

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  1. UK Bribery Act 2010Ben Tonner Andrew De La Rosa October 2012

  2. Outline • Background to the Act • General offences • Public service and private individuals • Corporate offence • (Extra) Territorial application • Guidance • Penalties – 10 years/unlimited fine

  3. Why has the Act been implemented? Guidance: ‘Bribery blights lives. Its immediate victims include firms that lose out unfairly. The wider victims are government and society, undermined by a weakened rule of law and damaged social and economic development. At stake is the principle of free and fair competition, which stands diminished by each bribe offered or accepted.’ Kenneth Clarke, Secretary of State for Justice March 2011

  4. Why has the Act been implemented? Victims? “Krysha” “Shaken Down” 4

  5. Why has the Act been implemented? Victims. 5

  6. Pre - Bribery Act 2010 -UK • Common law, • The Public Bodies Corrupt Practice Act 1889, • The Prevention of Corruption Act 1906, and • The Prevention of Corruption Act 1916.

  7. Pre - Bribery Act 2010 -International US Foreign Corrupt Practices Act 1977(as amended 1988 and 1998) OECD Convention on Combating Bribery of Foreign Public Officials in International Business 1997 UN Convention Against Corruption 2005 Cayman Islands Anti-Corruption Law 2008 (brought into force 1.1.2010) 7

  8. The Essential Focus Was (up to the Cayman and UK Acts) on the paying side of the proscribed transaction and related to payments toforeign government officials despite the fact that bribery is certainly not the exclusive preserve of officialdom. Anti-bribery measures now much wider and emphasis is on risk assessment and compliance regimes 8

  9. The US FCPA 1977 - 1 Post-Watergate era legislation - Congress found over 400 US corporations bribed foreign officials and\or political parties to obtain contracts or other advantages Overall scheme of legislation to (a) prohibit corrupt payments to foreign government officials\politicians, (b) impose accounting\reporting requirements to ensure disclosure, but (c) permit a little “grease” in the form of facilitation payments to secure performance of non-discretionary foreign government services (1988 amendments). 9

  10. The US FCPA 1977 - 2 Prohibitions extend to an improper payment to “any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any foreign official [or political party, party official or candidate]” The actions of foreign subsidiaries and other third parties (perhaps especially sales agents, lobbyists and joint venturers, but also consultants and distributors) can result in FPCA liability 90% of FCPA cases involve such third parties. The US government does not lose these cases. 10

  11. Cayman Islands Anti-Corruption Law 2008 - 1 Sought to give effect to UN and OECD conventions; drew on legislative precedents from Australia to Zambia, but especially Canadian Criminal Code Part 3 offences: Series of specific prohibitions on domestic corruption of “public officials”\MLAs, including trafficking in public appointments and frauds on the government (“influence peddling”) It does not stop there: Law also criminalises (a) fraud or breach of trust by public official and (b) non-disclosure of conflicts of interest 11

  12. Cayman Islands Anti-Corruption Law 2008 - 2 Bribery of a foreign public official punishable by a sentence of up to 14 years imprisonment, but savings provisions and facilitation payments exception exist in terms close to those of the FCPA “Secret commissions” payable to an agent also prohibited (section 1, UK 1906 Act) Administration of Law - Anti-Corruption Commission Compare UK Act: 17 pages v. 54, but also different territorial restrictions 12

  13. UK Act - 4 offences • The general offence of giving a bribe (s.1); • The general offence of receiving a bribe (s.2): • The specific offence of bribing a foreign official (s.6); and • A corporate offence targeting companies who fail to prevent their employees participating in corruption (s.7).

  14. Penalties • 10 years and/or • Unlimited fine • Either way (s.1, 2 and 6) • Indictable only (s.7)

  15. Section 1:Bribing another Elements • Offering, promising or giving • Financial or other advantage • Intending to induce • Improper performance • Relevant function

  16. Section 2: Being bribed Elements • Requesting or receiving • Financial or other advantage • Intending • Improper performance • Relevant function

  17. Definitions • Bribery is not Conspiracy • Advantage (undefined) • Relevant function or activity (s.3) • Place of commission (irrelevant) (s.3(6)) • Improper performance (s.4) • Reasonable person (s.5)

  18. Jurisdiction (s.12) • Part of offence takes place in UK OR • Anyone with close connection to the UK

  19. Jurisdiction • 12(4) ‘a person has a close connection with the United Kingdom if, and only if, the person was one of the following at the time the acts or omissions concerned were done or made— • (a) a British citizen, • (b) a British overseas territories citizen, • (c) a British National (Overseas), • (d) a British Overseas citizen, • (e) a person who under the British Nationality Act 1981 was a British subject, • (f) a British protected person within the meaning of that Act, • (g) an individual ordinarily resident in the United Kingdom, • (h) a body incorporated under the law of any part of the United Kingdom,

  20. Corporate liability under s.1 and 2 • S. 14 • ‘Consent or connivance’ • Senior officer

  21. Bribery of foreign public officials (s.6) • 10 years/unlimited fine • Either way offence • Offence of bribing, not being bribed • Jurisdiction • Corporate liability

  22. Foreign public officials: Elements • Intention to influence foreign official in his capacity as foreign official • To obtain, retain business or gain advantage in business • By offering a financial or other advantage • Which is not permitted by the laws of that country

  23. Facilitation payments • Usually small • To secure or expedite • Performance of a routine action • To which the payer is entitled in any event =Illegal

  24. Failure of Companies to Prevent Bribery (s.7) • Supplements ‘Identification Principle’ • Address culture of bribe making/taking • Indictable only • Unlimited fine

  25. Failure to Prevent: Elements • Person associated (s.8) • With a ‘relevant organisation’ (s. 7(5)) • Committing offence under s. 1 or 6

  26. Failure to prevent: Defence • Adequate procedures • Guidance (s.9) • 6 key principles: • Proportionate procedures; • Top-level commitment; • Risk assessment; • Due Diligence; • Communication and training; • Monitoring and review. • Case studies

  27. Bribery Act - Territorial Reach Section 7 of the Act relates to liability for third party acts. A relevant “CO” includes any company, regardless of place of incorporation, or partnership that “carries on business” in the UK UK MOJ published guidance suggests that a “demonstrable business presence” in the UK will be required; neither listing on the LSE nor having a UK subsidiary will necessarily be enough A “person associated” with a CO can include contractors, suppliers and joint venturers who are neither UK nationals or residents; it “does not matter” where the acts constituting the offence take place, whether wholly or partly outside the UK 27

  28. Bribery Act - Whose Morals Matter? The definition of “relevant function or activity” is not confined to the exercise of government authority but includes “any activity connected with a business” and “any activity performed in the course of a person’s employment” - s. 3 Moreover, such a function or activity is performed improperly if performed in breach of a “relevant expectation” - s. 4 What is a relevant expectation is to be judged by what “areasonable person in the United Kingdom would expect” - s. 5 28

  29. Corporate hospitality • Entertaining, meals, receptions, tickets • The distinction between hospitality and gifts can blur • Where the giver does not attend

  30. Decision to prosecute • S.10 Consent to prosecute • Ministry Guidance notes • Joint Prosecution Guidance • Prosecutorial discretion • Evidential test • Public interest

  31. Decision to prosecute • Self reporting • Co-operation agreements • Settlement agreements • Deferred prosecution

  32. Penalties • S.11 • Case law • Ancillary orders • Compensation/reparation • Directors disqualification orders • Prosecution costs • Confiscation (POCA 2002) • Tendering for public contracts

  33. UK Bribery Act 2010Ben Tonnerbtonner@samsonandmcgrath.com1 345 949 2740Andrew De La Rosaadlr@ictchambers.com1 345 769 4508 October 2012

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