The United States' Foreign Corrupt Practices Act ("FCPA") has long been a mainstay in the fight against foreign governmental corruption. In recent years, however, other countries have enacted their own anti-corruption legislation, such that 2009 saw hundreds of investigations pending in dozens of countries across the globe. Among these foreign anti-corruption laws, perhaps none is more aggressive, or formidable, than the UK Bribery Act.
Do not be fooled by its title, as the Bribery Act - which became effective on July 1 - could usher in serious legal and commercial consequences for U.S. entities and executives. Patterned after the FCPA, the Bribery Act's prohibitions extend far beyond British shores. The law can ensnare public and private companies, wherever located, who conduct business in Great Britain. This is true regardless of whether the offending conduct occurs in the United Kingdom; as Great Britain's Ministry of Justice has noted, the prohibited conduct "may be carried out either in the UK or abroad and need have no connection with the UK. "1
Like the FCPA, the Bribery Act prohibits the offering, promising or giving of any "advantage," a nebulous term including not only overt bribery but also more innocuous gifts and favors, in order to obtain or retain business. It also prohibits the requesting, agreeing to receive or accepting of any such "advantage." Liability is not limited to the actual wrongdoer, but instead can extend to a far wider audience, including individual executives, directors, employers and corporate parents, to name just a few. Thus, for example, a U.S. company could be held liable under the Bribery Act if a London-based employee of its German subsidiary commits a prohibited act in China.
In many respects, the Bribery Act eclipses the FCPA. Most notably, it applies not only to the bribery of foreign officials - the sole focus of the FCPA - but also to non-governmental individuals. "Therefore," the Ministry commented, "bribery in both the public and private sectors is covered."2 For corporate entities, too, the Bribery Act creates a new strict liability offense for their failure to prevent bribery. Nor is there is any exception for so-called "facilitation payments," a narrow class of payments permitted under the FCPA. Lastly, potential penalties are more severe than the FCPA's: up to ten years' imprisonment and unlimited fines for individuals, and unlimited fines for entities.
An entity's existing anti-corruption compliance program may provide an affirmative defense to the offence of failing to prevent bribery, provided the program contains "adequate procedures." Such procedures must embrace both bribery prevention policies as well as their implementation. There has been uncertainty and concern, though, as to how successful this defense will prove in enforcement proceedings, inasmuch as the very occurrence of bribery within an organization undermines the argument that existing corporate policies and procedures were "adequate."
Parker Poe's Governmental Investigations and White Collar Defense group has extensive experience representing multinational clients subject to various countries' anti-corruption laws. For more information about the UK Bribery Act, the FCPA and ways to ensure compliance under each, please contact Richard S. Glaser or Eric H. Cottrell.
1 Bribery Act 2010, Ministry of Justice, Criminal Law Policy Unit Circular 2011/05
(June 27, 2011).
2 Id.