White Collar Crime - United Kingdom


Joint Committee Reports on Draft Bribery Bill
Contributed by DLA Piper UK LLP
September 07 2009

During June and July 2009 the Joint Committee on the Draft Bribery Bill heard oral evidence and received written submissions from the attorney general, the Ministry of Justice, the Law Commission, defence lawyers, prosecutors, academics, non-governmental organizations and business representatives. The bill is intended to overhaul UK law on bribery in the United Kingdom and abroad (for further details please see "Bribery Bill Aims for Corruption Crackdown"). On July 28 2009 the committee published its findings and recommendations in a report. The introduction to the report states that:

    "While the draft Bill is not a cure for the many challenges contributing to corruption both within the United Kingdom and in relation to international business, we believe that it is an essential step forward. It should create an improved platform for the Government and the business community to build upon the increasing global commitment to tackle bribery. But the Government must focus on the need for rigorous enforcement, including the resources this will require. We believe it is an investment that is well worth making."

In brief, the committee concludes that it:

    * strongly supports the draft bill as a significant and overdue step in reforming the United Kingdom's bribery law;
    * supports the two proposed offences of bribing and being bribed, including the 'improper performance' test;
    * has concerns about the test's potential to catch conduct that should properly be viewed only as a civil wrong - an issue that it asks the government to address;
    * recommends that the draft bill be amended to clarify that in considering whether a payment to an overseas public official is a bribe, an advantage is not legitimately due unless required or permitted by a written law;
    * has concerns about the offence of corporate bribery;
    * endorses the substantial penalties that are available under Clause 11 of the bill;
    * fears that there is a risk to justice in debarring companies from entering into public contracts on an automatic and perpetual basis, stating that this policy undermines the effectiveness of the draft bill; and
    * endorses calls for guidance on the 'adequate procedures' defence for corporate entities.

The corporate offence of negligently failing to prevent bribery received a mixed reaction and was much analyzed during the evidence stage of the proceedings. Although the committee particularly welcomes the proposed offence in Clauses 5 and 6 which targets companies and partnerships that fail to prevent bribery by persons performing services on their behalf, the report expresses concern about how this offence and the 'adequate procedures' defence will operate in practice.

The committee is concerned about the draft bill's focus on whether a responsible person acts negligently, rather than on a company's collective failure to ensure that adequate anti-bribery procedures are in place. The committee calls this a "narrow and complex solution to a pressing problem" and recommends the removal of the need to prove negligence under Clause 5(1)(c). It acknowledges that this would lead to corporate entities being strictly liable, subject to an 'adequate procedures' defence, but believes that this would not be unfair, "particularly given the parallel with the approach taken in other leading countries". However, it considers that a company is best placed to demonstrate the adequacy of its anti-bribery procedures.

There was much discussion of Clause 5(5), which states that the 'adequate procedures' defence does not apply where a senior officer is negligent in performing his or her role as a responsible person. The committee recommends that this clause be removed. The report states that:

    "It is hard to imagine any circumstances in which the procedures would be adequate where a senior officer was at fault. This would leave the role that has been played by senior officers to be determined as part of the 'adequate procedures' defence. It would also reflect difficulties identified in relation to the meaning of the term 'senior officer'."

As far as guidance is concerned, the committee endorses calls for official guidance on the meaning of the term 'adequate procedures'. It recommends that a clause be added to the draft bill to give the government power to approve guidance prepared by appropriate bodies.

The draft bill is likely to be amended and passed into law before the end of 2009. The United Kingdom has been criticized internationally for its failure to overhaul its bribery and corruption laws and the government appears to be committed to the reforms. Giving evidence to the committee, Secretary of State for Justice Jack Straw said that he wants the bill to become law as soon as possible and mentioned that this might be achieved by October 2009.

Given the widespread support for a corporate bribery offence and the committee's recommendation for a tougher strict liability offence of negligently failing to prevent bribery, companies should update their training and compliance programmes without delay so that they are ready to comply with the new law and can use the 'adequate procedures' defence if need be. Guidance on this defence is already emerging and the expectations are high. In its guidance on self-reporting overseas corruption offences, published on July 21 2009, the Serious Fraud Office welcomed the introduction of new bribery legislation and stated that in considering what constitutes 'adequate procedures' under the new law, it will look for:

    * a clear statement of anti-corruption culture, fully and visibly supported at the highest level in the company;
    * a code of ethics;
    * principles that apply regardless of local laws or culture;
    * individual accountability;
    * policies on:
          o gifts, hospitality and facilitation payments;
          o outside advisers and third parties, including vetting, due diligence and appropriate risk assessments; and
          o political contributions and lobbying activities;
    * training to ensure dissemination of the anti-corruption culture to all staff at all levels within the company;
    * regular and proportionate checks and auditing;
    * a helpline within the company so that employees can report their concerns;
    * a commitment to making clear that the anti-bribery code applies to business partners; and
    * appropriate and consistent disciplinary processes.

In addition, the Serious Fraud Office will consider whether there have been previous cases of corruption within the company and, if so, whether remedial action has been taken and has had an effect.

For further information on this topic please contact Jonathan Pickworth or Neil Gerrard at DLA Piper UK LLP by telephone (+44 87 0011 1111), fax (+44 20 7796 6666) or email (jonathan.pickworth@dlapiper.com or neil.gerrard@dlapiper.com).

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