The information contained in this Legal News Alert was developed jointly by attorneys at Eversheds LLP, a U.K.-based law firm, and Foley & Lardner LLP. A list of authors and additional contacts appears immediately following this article.
On March 30, 2011, the U.K. Ministry of Justice issued long-awaited finalized guidance (Guidance) on what constitutes “adequate procedures,” that is, compliance policies and procedures, under the U.K. Bribery Act 2010 (U.K. Bribery Act). The publication of the Guidance means that the U.K. Bribery Act will, in fact, go into effect on July 1, 2011.
Passed in 2010, the U.K. Bribery Act created a new strict liability criminal corporate offense of failing to prevent bribery by a person associated with it, including employees, agents, and intermediaries. In order to establish a defense to such a charge, organizations will need to be able to demonstrate they have adequate anti-bribery procedures in place. The Guidance is aimed at assisting organizations in better understanding what constitutes “adequate procedures.”
Reach and Jurisdiction
The U.K. Bribery Act contains two general offenses of (i) offering, promising, or giving of a bribe (active bribery) and (ii) the requesting, agreeing to receive, or accepting of a bribe (passive bribery). Broader than its U.S. counterpart, which makes it illegal to offer or pay bribes to foreign officials, the U.K. Bribery Act prohibits bribes to any person to induce them to act “improperly.” In other words, it reaches both governmental and commercial bribery.
The U.K. Bribery Act purports to assert broad extraterritorial jurisdiction; among other things, it applies to any company that “carries on a business” in the
Gifts and Entertainment
Since the U.K. Bribery Act was drafted, businesses located in and outside of the
Under the Act, facilitating payments remains illegal and the Guidance does not seek to minimize this fact.
The Guidance also addresses businesses’ fears that they could be liable for persons associated with them, whom they cannot control. It refers to a supply chain involving several entities and states that a party is only likely to be liable for acts of its contractual counterparty and not for the activities of sub-contractors further down the chain. The Guidance tries to make clear that bribes paid on behalf of a joint venture will not necessarily trigger liability for the member simply by virtue of the member benefiting indirectly from the bribe through his or her investment in, or ownership of, the joint venture.
The Guidance states that businesses may wish to use anti-bribery terms and conditions in relationships with contractual counterparties and request that the counterparty adopt a similar approach with any sub-contractors.
The Guidance also states that in cases where bribery does appear to have taken place as a result of hospitality, promotional expenditure, or facilitating payments, prosecutors are to carefully consider the public interest before deciding whether to prosecute. The directors of the
The Guiding Principles
The Guidance remains non-prescriptive and indicates that “adequate procedures” should be built around the six principles outlined below.
Ensuring compliance with the above principles will assist companies in showing that they have taken a serious approach toward bribery risk as contemplated by the U.K. Bribery Act. For many
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney or the following:
0845 497 4533
0845 497 1377
Foley & Lardner LLP:
Pamela L. Johnston
Chair, Government Enforcement, Compliance & White Collar Defense Practice
Los Angeles, California
David W. Simon
Ivonne Mena King
Scott L. Fredericksen
John B. Wynn
New York, New York