Friday, November 15, 2019
The Bribery Act 2010
What is the Bribery Act 2010?
The Bribery Act 2010 replaced a complex web of outdated legislation and common law with a single regime of Bribery offences. It is undoubtedly a complex piece of legislation which was unveiled to much fanfare. The Act is undoubtedly tough, one of the more draconian Acts of its sort in the world. However, fears within the business community about the use of the Act have not been realised to their worst extent, as the levels of prosecution since the Act came into force have been relatively modest.
This post outlines some issues relating to the key offences, under the Act and looks at how the Act in enforced and how it operates in practice.
Offences under the Bribery Act 2010
The key offences are contained in sections 1, 2 and 6 of the act:
- Section 1 Bribery Act 2010: Bribery. A person commits ‘active’ bribery when they offer, give or promise to give a “financial or other advantage” in exchange for “improperly” performing a “relevant function or activity”.
- Section 2 Bribery Act 2010: Being bribed. A person commits ‘passive’ bribery when they request, accept or agree to accept a financial or other advantage, in exchange for improperly performing a relevant function or activity.
- Section 6 Bribery Act 2010: Bribery of a foreign official. A person commits this offence when they offer, promise or give a financial or other advantage to a foreign public official with the intention of influencing the official in the performance of his or her official functions.
Section 3 of the Bribery Act 2010 explains that the ‘“relevant function or activity” can be “any function of a public nature; any activity connected with a business, trade or profession; 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”.
Each offence attracts a maximum sentence of 10 years imprisonment and/or an unlimited fine for individuals, or an unlimited fine for a company convicted of the offence. However, this varies considerably depending on the scale of the bribery - cases brought relating to attempts to bribe driving test and university examiners have resulted in sentences of only a few months. In 2014, however, three directors were sentenced to a combined 28-year custodial sentence in relation to £23m fraud.
In practice: corporate hospitality
The offences and terms are thus very broad, and it is sometimes difficult to know whether something is a bribe within the meaning of the legislation. This issue arises particularly in considering the question of corporate hospitality. Some activities - such as paying travel expenses for potential clients or important officials to go to exotic locations - clearly can be used as bribes. However, the Ministry of Justice guidance is clear that the act does not criminalise “reasonable and proportionate hospitality and promotional or other similar business expenditure” intended to “improve the image of a commercial organisation”, rather than as a bribe.
So does taking someone who you are attempting to build a business relationship for a meal, or to a Rugby final at Twickenham constitute a bribe? The answer is no, unless it can be demonstrated that the hospitality was intended as a bribe or, as the Ministry of Justice guidance puts it, “intended to induce conduct that amounts to a breach of an expectation that a person will act in good faith, impartially, or in accordance with a position of trust”. At the other end of the spectrum, three people were jailed in 2012 for bribery in which directors provided gifts and hospitality, to a supermarket potato buyer, as well as paying travel expenses, in return for contracts, receiving sentences of up to four years imprisonment.
Liability of companies
It is also important to be aware of another offence, created by section 7 of the Bribery Act 2010, which enables the prosecution of companies who ‘fail to prevent’ bribery by their employees and the imposition of an unlimited fine. That offence can be triggered once an employee is charged with a section 1 or 2 offence, if it can be demonstrated that the company had inadequate safeguards to prevent unlawful behaviour. This poses difficulties for smaller businesses, who may have less resources to devote to compliance, training and oversight.
Combined with the introduction of ‘deferred prosecution agreements’ (a form of corporate plea bargain), the prospect of a charge under s.7 has created a strong incentive for companies to self-report wrongdoing by directors and employees to the authorities. It is therefore increasingly common for individuals to find themselves facing internal investigation by their employer, which may involve law enforcement at an early stage.
Bribery cases are handled either by the Crown Prosecution Service (‘CPS’) or the Serious Fraud Office (‘SFO’) in high value cases, which usually tend to be more complex and involve large companies and parties outside the United Kingdom. In each case the permission of the Director of Public Prosecution (the head of the CPS) is required before charges can be brought under the BA.
A major issue affecting the handling of bribery cases is delay. The average time it takes for an SFO case to reach trial has been estimated at about four and a half years, during which the subjects of the investigation are often given little or no information about the investigation’s progress for periods as long as 18 months. Similar delays have been reported in investigations carried out by the CPS. During one SFO investigation into a company eventually charged with the s.7 offence, nearly three years passed between the company self-reporting and the relevant individuals being interviewed under caution. It was only after that point that decision was taken to charge the company. Property seized by the investigators can also be held for a year. These delays often create problems for companies, especially SMEs, and cause considerable stress for individuals who have long waits to find out if they will face charges.
Bribery cases also often result in defendants being charged with other offences outside the Bribery Act. These include money laundering, abuse of position, and misconduct in a public office (which is used in many cases as a result of the emphasis on reducing public corruption in the Home Office’s Anti-Corruption Strategy 2017-2022).
The Bribery Act 2010 is a complex and serious piece of legislation. Companies and individuals are often worried about whether their actions constitute an offence under the Act. In those circumstances, or if you are under investigation for an offence it is important to secure first rate legal advice at an early stage. Quentin Hunt is a Criminal Barrister specialising in fraud and financial crime. If you, your company or someone you know requires representation in respect of a Bribery Act 2010 matter you may contact Quentin for a no obligation conversation about your case.