Bribery Act 2010

Who should read this practice note?

What is the issue?

The Bribery Act 2010, which came into force on 1 July 2011, makes it an offence for a UK national or person located in the UK to pay or receive a bribe, either directly or indirectly.

The Bribery Act covers transactions that take place in the UK or abroad, and both in the public or private sectors.

Companies and partnerships can also commit an offence for failing to prevent bribery, where a bribe has been paid on their behalf by an "associated person".

"Associated persons" include employees, agents and any person performing services for or on behalf of the commercial organisation.

There is a defence available to this corporate offence to have "adequate procedures" in place to prevent bribery.

This practice note explains the key provisions of the Bribery Act in detail and provides information on the procedures that firms can put in place to reduce the risk of bribery being carried out for or on their behalf.

The three main offences

• An offence of bribing another person (offering, promising or giving a financial or other advantage to a person to induce or reward a person to perform a relevant function or activity improperly)
• An offence of being bribed (accepting, receiving or requesting a financial or other advantage as a reward for performing a relevant function or action improperly)
• An offence of bribery of foreign public officials (using a bribe to influence a foreign public official to obtain or retain business or a business advantage)
• A corporate offence of failing to prevent bribery

Commercial organisations can commit an offence if they, or an associated person, commit bribery to obtain or retain business or a business advantage for them.

However, there is a defence, in this case, for the organisation to have in place adequate procedures to prevent bribery.

Where an organisation commits an offence, senior officers of that organisation can also be held liable.

Relevant function or activity

A relevant function or activity is any:

• function of a public nature
• activity connected with a business, trade or profession
• activity performed in the course of employment
• activity performed by or on behalf of a body of persons (corporate or unincorporated)

and is performed with one or more of the following relevant expectations:

• in good faith
• with impartiality
• that by virtue of performing the activity, the person doing so is in a position of trust

The function or activity does not have to be connected to the UK or be performed in the UK for it to be relevant.

The test for whether the relevant expectations listed above apply to an activity or function would be whether a reasonable person in the UK would expect it to apply in relation to that type of function or activity.

If it occurred outside the UK, the same test would apply and local custom and practice would be disregarded; however, local written law would be considered.

Improper performance of a relevant function or activity

Improper performance of relevant function or activity would be a failure to perform it in line with the relevant expectation.

The test for whether performance was improper is as stated above for the relevant expectation – for example, what a reasonable person in the UK would expect.

The offence of bribing another person

A person is guilty of an offence if they offer, promise or give an advantage, directly or indirectly, to another person, intending that a person is rewarded for, or induced to, perform a relevant function or activity improperly.

The person whom the advantage is offered, promised or given does not need to be the same person as the person who is to perform or has performed the relevant function or activity improperly.

There must be an intention to induce improper performance of a relevant function or activity and the prosecution would need to be able to demonstrate this.

It is extremely unlikely that hospitality intended to cement good business relations would engage this section but hospitality is an area in which bribery is often involved. See section 3.6 below.

A person is also guilty of an offence where they offer, promise or give an advantage to a person knowing or believing that acceptance, in itself, will amount to improper performance of a relevant function or activity.

In this case the prosecutors will need to show that the person knew or believed that the acceptance would constitute improper performance.

A person does not have to offer, promise or give the advantage themselves to be guilty of an offence, it can be carried out through a third party. The advantage does not have to be financial.

The offence does not have to take place in the UK, but if it takes place outside the UK, the person committing the offence must have close connection with the UK.

A close connection means being a:

• British citizen
• British overseas territories citizen
• British national (overseas)
• British overseas citizen
• person who under the British Nationality Act 1981 was a British subject
• British protected person within the meaning of that act
• individual ordinarily resident in the UK
• body incorporated under the law of any part of the UK
• Scottish partnership

The description "offer, promise or give" should be considered to have a wide meaning and can include an implied offer.

The Law Commission gave the example of a meeting being held over an open briefcase full of money as a situation where an implied offer can be inferred.

Offences relating to being bribed

A person commits an offence if, directly or indirectly, they request, agree to or accept a financial or other advantage:

• intending that a relevant function or activity should be performed improperly, either by them or by a third party
• when to do so, in itself, would be improper performance of a relevant function
• as a reward for carrying out a relevant function improperly, or
• in anticipation or consequence that they (or someone else at their request or with their assent or acquiescence) will perform a relevant function improperly

In the last three cases, it does not matter if the person committing the offence knows or believes that the performance of the function or activity was improper.

In addition, in the last case it does not matter if the person carrying out the action at their request or with their assent or acquiescence was aware that the performance was improper.

The offence does not have to take place in the UK, but if it takes place outside of the UK, the person committing the offence must have close connection with the UK.

Bribery of a foreign official

It is an offence under section 6 of the Bribery Act to attempt to influence a person acting in their capacity as a foreign public official by offering, promising or giving a financial or other advantage to obtain or retain business or a business advantage.

It is still an offence if the offer, promise or giving is done through a third party and/or where the offer, promise or giving of a reward is to a third party at the foreign public official’s request or agreement.

Unlike the offence under section 1, there is no requirement to show that the foreign public official was being bribed to carry out their function improperly.

However, the Ministry of Justice's guidance recognises in many cases there will be an element of improper performance. It also states that it’s not the intention of the government to "criminalise behaviour where no such mischief occurs".

The MoJ guidance provides further guidance about what this will mean in practice in relation to:

• government tenders where those bidding are required to offer additional benefits to the local community, and
• hospitality, promotional and other business expenditure

A foreign public official includes any person who:

• holds a legislative, administrative or judicial position of a foreign country or territory (or its subdivision)
• exercises public functions:
  • for or on behalf of a foreign country or territory (or its subdivision), or
  • for any public agency or public enterprise of a foreign country or territory (or its subdivision)
• is an official or agent of a public international organisation such as the United Nations, World Health Organisation or the World Bank

An exception to this offence is made where a foreign public official is permitted or required by local written law to be influenced by offers, promises or gifts.

The offence does not have to take place in the UK but if it takes place outside the UK, the person committing the offence must have a close connection with the UK.

Individuals who are guilty of the offences under section 1, 2 or 6 of the Bribery Act are liable, on summary conviction, to a term of imprisonment for up to a year, or to a fine not exceeding the statutory maximum, or both.

In cases of conviction on indictment, individuals are liable to a term of up to 10 years’ imprisonment or to a fine not exceeding the statutory maximum, or both (see section 11 of the Bribery Act).

Corporate offence

If a person associated with a commercial organisation bribes a person with the intention of obtaining or retaining business or a business advantage for the commercial organisation, then the organisation may be guilty of an offence under the Bribery Act and liable for an unlimited fine.

An "associated person" is a person who performs services for, or on behalf of, the commercial organisation (section 8 of the Bribery Act). This includes, but is not limited to, employees, agents and subsidiaries.

Employees will be presumed to be performing services for or on behalf of their employer unless the contrary can be shown.

Government guidance highlights the broad scope of the definition of "associated persons" and that it may also apply to contractors or subcontractors (although it is less likely to apply to a supplier simply acting as a seller of goods).

The key factor in deciding whether a person is an "associated person" is the nature of what is done for the organisation and not the capacity in which it is done.

Where there is a supply chain in place, the government suggests that a firm carries out the appropriate due diligence on the contractual counterparty and requests the counterparty adopts a similar approach to the next party in the chain.

A commercial organisation has a wide meaning and includes:

• partnerships
• limited liability partnerships
• bodies corporate which carry on business

It is the government's intention that a body incorporated in the UK (or a partnership formed in the UK) will be caught under the definition of "carrying on business" if it engages in commercial activities regardless of what the profits are for. Therefore this could include commercial activities with charitable aims or those that are purely public functions.

A commercial organisation does not have to be incorporated or formed in the UK, nor does the offence need to be committed in the UK, to come under the act: it merely has to carry on some or part of its business in the UK.

It is the government's view that this will mean that there will need to be a demonstrable business presence in the UK, merely being listed on a UK market, in itself, will not be considered as "carrying on business".

The corporate offence is essentially a strict liability offence.

There is only one defence to the corporate offence if a commercial organisation can prove that it had adequate procedures in place that were designed to prevent bribery by associated persons.

The Bribery Act is silent on the meaning of "adequate procedures" but requires statutory guidance to be issued by the secretary of state on procedures that the relevant commercial organisations can put in place (see section 3).

Senior officials

Where a body corporate (or a Scottish partnership) has committed an offence mentioned in section 2.1 above (offences of bribing another person, offences of being bribed, bribery of foreign public officials) and a senior officer (or person purporting to act in such a capacity) has consented to or connived in the commission of the offence, the senior officer can also be held liable for the offence and proceeded against and punished accordingly.

For a senior officer to be found guilty under this offence, they must have a close connection with the UK.

A senior officer means in relation to:

• a body corporate, its director, manager, secretary or other similar officer
• a partnership or body corporate managed by its members, its members
• a Scottish partnership, its partners

Proportionate procedures

The procedures (including bribery prevention policies and the procedures which implement them) should be proportionate to the risk posed, the scale and complexity of the commercial organisation's activities.

Therefore, an initial assessment of the risks across the organisation is a necessary first step.

The procedures referred to below cover a non-exhaustive list of issues.

It may not be necessary for firms to implement these all in full, but firms may wish to do so or implement parts of them depending on the risks they identify.

Commitment from the top

A successful anti-bribery policy will need support from the top of the organisation.

If those at the top turn a blind eye to bribery, then employees are unlikely to support or comply with the policy.

Someone senior within the organisation should take the overall responsibility for developing and implementing such policy and procedures.

In larger firms, it may be that anti-bribery procedures and compliance become a standing item on the agenda of the audit committee or equivalent.

In smaller firms, it might be discussed at the partners' or directors' meetings.

Creating an anti-bribery policy

The anti-bribery policy should reflect the firm's aims to put in place a programme.

It is important that the policy reflects that the firm's commitment not to offer or accept bribes and is properly communicated.

The firm’s anti-bribery policy might be a convenient place to incorporate all internal policies and procedures that would facilitate the firm’s overall anti-bribery program.

It may be appropriate to also include policies on:

• code of conduct and conflict of interest
• due diligence and anti-bribery procedures
• dealing with and managing third parties
• gifts and hospitality – setting out what is considered appropriate and any requirements for the recording of what is given or received
• expenses – what the firm considers appropriate and how expenses are to be handled (particularly important for staff working abroad)
• whistleblowing – setting out the support (including a no-retaliation policy) and channels available for those with information on potential incidents of bribery, perhaps naming a dedicated person who may be approached in confidence
• record-keeping – demonstrating due diligence measures and anti-bribery procedures, showing the firm’s ‘adequate procedures’ to prevent bribery. Central records may show the procedures, reviews for compliance and training of relevant persons
• training – setting a policy on the firm’s training program, with the aim of ensuring that all relevant staff are aware of their role in implementing the firm’s anti-bribery procedures and are familiar with the risks and indicators of bribery
• monitoring and review – the procedures should be reviewed periodically to ensure that they are fit for purpose
• disciplinary procedures

Risk assessment

You should identify where within your firm you are most at risk of either offering or accepting bribes. You should consider factors such as the following.

The countries you do business in

Are they at high risk from bribery? Do you have sufficient oversight of staff working in these countries? You can find out more about the risks associated with various countries on the Business Anti-Corruption Portal and via the corruption perceptions and bribe-payer's index published by Transparency International and Trace Bribery Risk Matrix.

The sectors in which your firm trades or conducts business

Are you doing business in a sector that is at high risk of bribery?

The contracts you have with agents and other business partners

Where appropriate, do your contracts make it clear that offering or accepting bribes could lead to termination of the contract? Are there clear payment terms within the contract that are appropriate for the services provided?

The checks you have made on the integrity of those you do business with where necessary

Do those you do business with have an anti-bribery policy? Do they do business in countries that are at high risk from bribery? Have they ever been involved in bribery?

What the law requires you to do in the countries within which you operate

Your risk analysis should inform you of the main areas that your policy and procedures should concentrate on. Any procedures you put in place should be proportionate to the risk.

Due diligence

As part of an anti-bribery programme you may wish to put processes in place for checking associates, agents, contractors, consultants and others that may act for or on your firm's behalf or your firm has a business relationship with.

You should consider:

• their integrity-related track record – this may be a negative news search on publicly available sources or a more in-depth background check depending on the risks level
• whether they have an anti-bribery policy
• if they understand your anti-bribery policy and are happy to comply with it

Where appropriate, contracts should:

• allow for immediate termination if your anti-bribery policy is contravened by a business
• have clear payment terms
• identify what is being paid for
• allow audit rights or access to the relevant information for anti-bribery compliance purposes

You should also check that what is paid is reasonable for the services provided and that the services provide measurable benefit.

For example, if you are paying an agent a substantial sum of money, consider what services you are getting for the money. Is it transparent from the invoices what you are paying for? Is the sum appropriate for the work done and are the services provided of measurable benefit to your firm?

The extent of the due diligence you carry out should depend on the nature of the relationship and the risk of bribery occurring.

For example, if you are preparing to enter into a joint venture with a company involved in an industry where there is a high risk of bribery, in a country where bribery is a high risk, your due diligence process will be more rigorous and searching than if you are entering into a contract with another regulated professional based in a country where the risk of bribery is low.

Depending on the risk, as part of your due diligence you may wish to conduct background research on the parties you’re working, or plan to work, with, and consider:

• obtaining detailed information about the companies with which you are dealing, together with their owners, key managers and decision-makers, and their operating and litigation history
• seeking insight on the background, track records, competencies, potential conflicts of interest, and political/criminal links of individuals with which you engage
• gathering intelligence from regulators, industry observers, suppliers, competitors, distributors and customers, both former and current

Sources of information might include UK diplomatic posts, UK Trade and Investment, local law societies and business representative bodies.

The government-sponsored Business Anti-Corruption Portal aimed at small- and medium-sized businesses involved in overseas trade also provides guidance on sources of information.

A firm could commit an offence if anyone associated with the firm offers, promises or gives a bribe for or on your firm's behalf to gain a business advantage for the firm, unless the firm can prove it has adequate procedures in place to prevent bribery.

As noted above, the term "associated person" is loosely defined but, given that it includes agents and subsidiaries, it can be concluded that it has a wide meaning. Firms will need to be careful when engaging agents and other third-party intermediaries.

Gifts and entertainment

Many firms will give gifts and provide hospitality to build relationships and to market their products. Hospitality would normally include entertaining, meals and tickets to events. If the host does not attend the hospitality, then it should be considered a gift rather than hospitality.

Firms may also pay expenses for a prospective client to visit part of the firm or to attend a conference or event.

There can be significant risks around gifts, entertainment and expenses in relation to bribery.

Gifts and hospitality are often part of the business culture and it can be difficult for staff to know what is appropriate in terms of giving and receiving gifts and hospitality.

Gifts and hospitality can be used to influence and corrupt third parties and on occasion to manoeuvre employees into a position of obligation.

The firm should seek to prevent the giving or receiving of gifts, hospitality or paying of expenses if it might influence or be perceived to influence a business decision.

Firms should ensure staff and other relevant stakeholders are made aware of any policies on gifts and entertainment.

Firms may wish to provide guidance on what gifts or hospitality it’s acceptable to give or receive – whilst there is no statutory value threshold, this is often done in terms of a financial limit. Any limit should take account of the cumulative impact of several small gifts and the frequency of the gift given.

Where firms operate internationally, they may wish to provide guidance on how gifts and hospitality might be handled in relation to local customs, living standards and culture.

Where firms offer to pay expenses, they may wish to provide guidance on what are considered acceptable expenses.

Firms should be transparent about the expenses they pay, the business reason for their payment and any prior approval requirements, and maintain adequate records of the payments and prior approvals (if relevant).

Many firms will be offered hospitality or gifts by other professionals who they’re likely to refer work to. Firms should consider how they handle such offers or whether they need to ensure that acceptance of such offers is approved at a more senior level and whether any threshold should be applied.

Firms will also need to be mindful of their duty to act in the best interests of the client when referring clients to other professionals.

Firms often offer clients hospitality. Government guidance highlights that offers of hospitality are not prohibited under the Bribery Act. However, firms should consider what is appropriate in terms of hospitality.

It is prudent for the firm to keep a record of gifts, hospitality and expenses given or received. Given the potential range of hospitality or gifts a firm might receive, the firm may wish to consider an element of materiality when deciding the level of details that should be recorded.

Facilitation payments

Facilitation payments are small payments demanded by officials to provide a service that they are obligated to perform (such as processing a visa application).

Facilitation payments are often used to obtain permits or to 'jump the queue' for services such as customs checks or visa processing. These payments are also sometimes known as 'grease' payments.

These payments differ from the payments made to upgrade services (for example, upgrading to a faster train), where the price is clearly advertised, open to everyone and payment is receipted.

Some countries such as the USA make specific exemptions for such payments within their anti-foreign bribery legislation. However, there is no such exemption under the UK act and, as such, these types of payments are unlawful.

The government does, however, recognise the problems that some commercial organisations face when operating in certain sectors and in some parts of the world.

The prosecution guidance provides specific detail on facilitation payments (see the Joint Prosecution Guidance of the Director of the Serious Fraud Office and the Director of Public Prosecutions).

A prosecution will usually take place unless the prosecutor is sure that there are public interest factors tending against prosecution that outweigh those tending in favour.

Factors that would make it more likely that a prosecution would occur include that:

• making such payments is seen as a standard part of conducting business
• payments are repeated or large
• indication of an element of active corruption of the official, and
• failure to follow the firm's procedures on payment facilitation payments

Prosecutors are less likely to take action where payments are a 'one-off' and small – which is likely to result in only a nominal penalty – or where there has been self-reporting and remedial action taken.

The guidance highlights that those making payments under fear of loss of life, limb or liberty are likely to have the common law defence of duress available to them. However, loss of business may not qualify for this defence for paying bribes.

The guidance also sets out that prosecution is less likely where the person making the payment was in a vulnerable position. Any anti-bribery policy should include guidance for staff on the issue of facilitation payments.

Charitable donations

Many firms donate money to charity and provide pro bono services.

However, it is important to ensure that you are donating to a legitimate charity. You should:

• check whether a charity is registered under the local country's law and the purpose of the donation
• ensure that money is donated to the organisation directly and not to an individual
• exercise caution when making a donation if the charity has a connection to a customer or an organisation (including a government) or a government official that might influence your firm's business (for example, it might be appropriate to wait for a deal with an organisation to be concluded before promising to make a donation to a charity linked to that organisation)

For publicly funded contracts, governments often permit or require those tendering for the contract to offer some kind of additional investment in the local economy or benefit to the local community.

The government has provided further guidance on this matter. It has also provided a case study with examples of the actions a company might take when asked to provide such additional benefits.

Read the MoJ's guidance on GOV.UK

Referral fees

The Bribery Act is a consolidation of the current law relating to bribery. With the exception of the creation of a new corporate offence, the offences under the Bribery Act have not changed markedly from those previously in force.

There has been no implication that referral fees were illegal under previous legislation and it is therefore unlikely that such fees are illegal under the new arrangements.

However, the situation is different for personal injury work.

Under section 56 of the Legal Aid Sentencing and Punishment for Offenders Act 2012 (LASPO), referral fees in all personal injury work became unlawful with effect from 1 April 2013.

Although section 56 does not impose criminal liability, it is a regulatory breach to offer or accept a referral fee (see paragraph 5.1(d) and (e) and 5.2 SRA Code of Conduct for Solicitors (SCCS) 2019).

It is therefore necessary for firms to review their anti-bribery policies to ensure that there is no breach of either the statutory ban imposed by section 56 of LASPO or any breach of the SCCS.

For work other than personal injury work, you may wish to consider how an introducer is obtaining work that is then referred to you.

Audit procedures

If you have put in place anti-bribery procedures, it will be important to carry out regular reviews to ensure that they are being adhered to and are effective.

Results of the review may be reported to the partners or other such designated persons within the firm to ensure any remedial action required is taken promptly.

Reviews should also be undertaken where a breach of the procedures has occurred to ensure that any actions to prevent further breaches are taken as soon as possible.

Reporting systems

Employees should be aware of the procedure for reporting any breaches of policies or procedures.

You may have one point of contact within the firm (or department, depending on size) whom employees can contact to discuss any concerns or to find out further information about your processes.

It is important that staff feel confident about reporting concerns and that they will not be penalised or retaliated against for speaking out.

Information on reporting channels and procedures should also be made available and accessible to external parties such as clients or other relevant third parties.

Human resources

Your human resources policies should be linked to your anti-bribery policy. Where appropriate, you may wish to provide that any breach of the anti-bribery policy by staff could lead to disciplinary action.

Conversely, staff should know that the firm will support them in implementing the policy and that they will not be penalised for losing business by refusing to pay or accept a bribe.

Staff raising genuine concerns about payments made to the firm, or associates on its behalf, should know that raising these concerns will not affect their career prospects or lead to disciplinary action.

If policies and procedures are put in place, staff should be made aware of these and their implications.

Information relating to these policies and procedures should also be made easily accessible to the staff. Training can be an important part of this and the level of training needed will depend on the risks an employee is likely to encounter.

For example, those working in countries with a high level of corruption or working closely with associates such as agents will normally need a much greater understanding of the:

• risks of corruption occurring and potential red flags
• firm's relevant policies and procedures, and
• actions they will need to take than those working in an internal role in the UK

A firm currently gives Christmas gifts each year to local estate agents. Is this acceptable under the Bribery Act?

The firm should consider:

• the purpose of the gifts – are they to cement good business relations or are they intended as some form of inducement or reward?
• does the firm have a policy on gifts which is clear and transparent and do these gifts comply with the policy?
• is the recipient given the impression that they are under some obligation to confer business on the firm as a result of accepting the gift?
• is the gift lavish?
• is a record made of the gift and the cost entered into the accounts?

It is less likely a small token of appreciation sent to local estate agents at Christmas will engage section 1 of the Bribery Act.

However, firms should consider carefully the intent behind gifts. They should also ensure that they have a clear policy on gifts and record both the giving and receiving of gifts.

A firm is considering setting up an overseas operation in a country which has a high level of corruption. What risks should they consider?

There are particular risks that occur during the setting up of the firm, for instance:

• gaining the appropriate government licences for the firm
• acquiring planning permission for building new offices or changing existing ones
• applying for visas for staff who will be working in the new offices

These are all transactions where there is a risk of being asked to pay a bribe.

Many of these issues may be dealt with by a local agent. Using a third party also creates a risk, as the firm will have less control over the third party and visibility into their conduct.

A firm has instructed a professional firm based overseas on behalf of a client regarding a dispute in another country. There is a high level of corruption within this country. The firm is concerned that a bribe may have been paid by the professional firm in order to resolve the dispute. The firm is not clear on whose behalf the bribe has been paid.

In most cases, the bribe is likely to have been paid for or on behalf of the client, as the professional firm is providing services on their behalf. However, this may vary depending on the retainer that has been put in place

If the retainer makes it clear that the professional firm has been retained on behalf of the firm, then the firm may be liable for any bribe paid.

Firms should consider carrying out appropriate due diligence on firms they refer work to.

The due diligence required will depend on the risk, including:

• the country in which the firm operates
• current knowledge such as the firm's and the key partners'/directors' reputation, previous experience of dealing with the firm
• the nature of the transaction or service provided – for example, is the work a simple research exercise or does it involve contract negotiations or dealing with government officials where the risk is likely to be higher?

Legal and other requirements

• Bribery Act 2010
• British Nationality Act 1981

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