Shepherd and Wedderburn LLP
  May 5, 2010 - Scotland

No Place For bribery
  by Natasha Durkin

New legislation means it is more important than ever that organisations have effective anti-bribery measures in place.

The dissolution of Parliament took place on 12 April.  As part of the 'wash-up' process before this date the Bribery Bill received Royal Assent and will become law throughout the UK later this year.

The existing criminal law on bribery in Scotland is a mixture of statutory and common law offences.  The bill will repeal these which will be replaced with four new offences.
The first two offences are of bribing another and being bribed.  The key idea behind these offences is that the 'bribe', the promise or advantage offered, is made with the intention that a business activity or public function should be performed improperly.  What is 'improper' is judged against what would be expected by a "reasonable person" in the UK.  Local customs in other jurisdictions are disregarded in assessing this expectation unless the custom is permitted by the law of that country.

A specific offence of bribing a foreign public official is included to comply with the OECD anti bribery convention.

The fourth offence is a new corporate offence of failing to prevent bribery.  This has caused most concern in the business community, especially from businesses operating in other jurisdictions, and it is the most significant innovation of the proposals.  An organisation will be guilty of the offence if a person associated with it bribes another person intending to obtain or retain business for the organisation.  That is all that is required.  Someone could therefore act on behalf of a company, and unbeknown to the company, pay bribes to win business.  This would fall foul of the Act's provisions.  The offence does however have a defence.

If the organisation had "adequate procedures" in place designed to prevent bribery then that is a defence.  No further detail on what adequate are is given in the Act however.  This has prompted much debate and the House of Lords in February introduced an obligation on the Secretary of State to publish guidance. Some detail of what the guidance will contain has been given by Lord Tunnicliffe.  It will emphasise the importance of the board of directors in taking responsibility for anti-corruption, and suggest that companies appoint a senior officer accountable for oversight and the assessment of risk.  The assessment might include identifying risks linked to the nature/location of the organisation's activity, ensuring the training of new/existing staff in anti-bribery procedures, having internal financial controls and record-keeping to minimise the risk of bribery, and establishing whistle-blowing procedures so that employees can report corruption.

The territorial scope of the Act is extremely wide as offences can be committed anywhere in the world.  Individuals with a "close connection with the UK" will be liable, and the corporate offence applies to UK incorporated bodies and UK partnerships, wherever those bodies do business.  It also includes all corporate bodies carrying on business in the UK.  This means that a foreign company carrying on business in the UK could be prosecuted here for an offence committed in any part of the world.

It is vital that organisations reflect on the proposals and ensure that they have adequate anti-bribery procedures in place.  The prospect of a maximum penalty of 10 years' imprisonment for individuals and an unlimited fine for companies and individuals provides a clear incentive to take action.  There is no doubt that enforcement is becoming more rigorous: Mabey & Johnson paid out £6.5m after admitting paying bribes in Jamaica, Ghana and Iraq, while Aon were fined £5.25m by the FSA for failing to maintain effective systems to counter the risks of bribery and corruption.  As enforcement steps up, so will the focus on the role of senior management in ensuring that effective anti-bribery measures are in place.