The UK Bribery Act 2010: Implications for Commercial Organisations
The Bribery Act 2010 of the United Kingdom (the Act) received Royal Assent on 8 April 2010. It will likely come into force in stages, with the entire Act being in force by October 2010.
The Act is of importance to British companies doing business internationally, including in the Russian Federation. It creates offences which can be committed by British companies and their associates not only within the United Kingdom, but also overseas. It is wide-ranging in its coverage, and criminalises both commercial bribery (i.e. between private sector parties) as well as bribery of government or public officials. The Act could be used to prosecute not only British individuals and companies, but also non-British individuals/companies who conduct business in the UK even if they have not incorporated a UK company.
The Act envisages individual and/or corporate liability for the general offences of giving, or receiving, bribes. It also creates certain stand-alone offences, including (i) a specific corporate offences of failing to prevent bribery by “associated persons”, and (ii) an offence which criminalises bribery of foreign (i.e. non UK) public officials.
Bribery of foreign public officials
With regard to foreign public officials, an offence may be committed where a bribe or other financial advantage is given to an official (i) with the purpose of influencing that official in his official capacity; and (ii) in order to obtain or retain business or an advantage in business. An offence may be committed even where the payment is made to a third party at the request or order of a foreign public official, or with that official’s assent or acquiescence. However, if the written law applicable to the official permits or requires him to accept (and be influenced by) the payment, no offence arises under the Act.
Corporate offence - failure to prevent bribery
The Act includes a strict liability offence that can only be committed by a company or partnership (“commercial organisation”). The commercial organisation is presumed to be liable for the offence if an “associated person” offers, promises or gives a bribe on behalf of the commercial organisation.
The “associated person” may be an employee, subsidiary, agent, consultant, joint venture partner, outsourced service provider, etc. The list is not limited to the above persons and/or entities, and it is important to note that there is no requirement that a written contract be in place between the legal entity and the associated person. Ultimately, the question of whether a person is sufficiently “associated” with the organisation for exposure to liability shall depend on the specific facts of each given case.
The Act contains a defence to this strict liability offence, allowing a commercial organisation to avoid punishment in circumstances where bribery is committed by an associated person. The defence is available where the commercial organisation can prove that, notwithstanding the bribery, it had “adequate procedures” in place designed to prevent such bribery. Official guidance as to what may constitute such “adequate procedures” will be published by the UK Ministry of Justice during the summer of 2010.
Accordingly, companies which may be subject to the Act are advised to:
adopt a binding anti-corruption policy which imposes disciplinary liability for unlawful conduct - it should apply to all employees, officers, managers, partners, etc;
perform due diligence and (where possible) monitoring of associated persons, including subsidiary companies, contractors and agents of all types;
incorporate anti-corruption warranties and guarantees into contracts with associated persons, including contractors and agents of all types;
identify business lines and territories with the highest risks of bribery and focus resources on preventing such bribery from taking place; and
perform regular internal audits of the company.
The terms and conditions of any anti-corruption policy should also comply with the Russian anti-corruption legislation and, in particular, with the requirements of the Federal Law “On Combating Corruption”.
British companies doing business in Russia should, therefore, ensure that their Russian subsidiaries and/or branches have relevant policies in place and should seek to ensure that “adequate procedures” in place to prevent bribery, so as to minimise the risk of corporate liability for bribery or other corruption-related offences committed in Russia.
Contravention of the Act may have serious consequences: individuals and legal entities are subject to an unlimited fine and individuals may also be given a custodial sentence of up to 10 years.
Goltsblat BLP can provide legal support for British companies in Russia in complying with anti-corruption legislation by giving training, carrying out risk assessments, developing internal policies and standards, rendering consultancy services, negotiating with state regulators in the United Kingdom or abroad, and providing legal defence.
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