While bribery has a reputation for being a knotty area of law, given the alarming criminal effects of non-compliance, it requires careful attention.
Businesses must be wary of adverse legal consequences when making payments to other parties. Where bribery or corruption is alleged, early engagement of legal representation is critical to avoid costly errors.
Whether a company is already in contact with enforcement agencies, or it is planning its next move, early engagement of experienced lawyers is wise. Be it an internal procedural alteration or an investigation response, the earlier a company engages legal services, the quicker a positive and enduring resolution can be reached.
Through the explanation of issues both seen and unforeseen, early legal engagement provides solutions to problems before they arise; it puts the company and its individuals back in control.
Following the Bribery Act 2010, the offence of bribing another person is under s1 of the Act:
Here, ‘an advantage’ may be financial or otherwise.
‘Improperly’ is the word on which the offence turns. Generally, it means where a person has breached a relevant expectation. The standard for whether someone has acted improperly is set by what a reasonable person in the UK would expect in relation to that activity.
Unlike most English law, the Bribery Act 2010 has worldwide scope. This means UK authorities have the option to pursue someone with a ‘close connection’ to the UK suspected of making bribes outside UK borders. Such scope means investigations can fast become difficult for a company to manage, as multiple international agencies work in tandem to investigate a company. Bearing in mind the global scope of the Bribery Act, if the offending act is made overseas, local customs are usually disregarded in favour of the UK citizen ‘impropriety’ test.
There are three major categories of bribery offences:
When referring to ‘corporations’ or ‘corporates’ in everyday conversation, we usually mean companies. However, the legal definition in the Bribery Act is far wider, encompassing all ‘relevant commercial organisations’. This can even extend to partnerships, which are by definition not incorporated at all. Such precise usage of language in corporate crime is common, demanding specialist legal knowledge and experience to navigate.
A corporate can be liable in three ways.
Section 7 of the Bribery Act introduced an offence of ‘failing to prevent’ bribery, which aims to stop a company from using innovative methods to bribe. This is an offence of what is called ‘strict liability’, meaning there need not be any intent or fault from the company; to attract liability, it is sufficient that the offence happened. The only defence available is to demonstrate that ‘adequate procedures’ were in place to prevent the activity.
The first prosecution under this section was of Sweett Group, for using their subsidiary in the UAE to make bribes in the hope of retaining a contract. Sweett Group were sentenced and ordered to pay £2.25m in 2016. Section 7 therefore imposes a duty on those running companies to scrutinise each arm of their business and ensure that any undisciplined elements are brought swiftly to heel.
Incorporation creates a new legal entity, one which limits certain liability from associated individuals. However, in all bribery offences apart from failing to prevent bribery, individuals can be liable. This means that an individual providing a bribe can be liable for the crime alongside the wider corporate.
For example, in 2020, three individuals were each given a custodial sentence for bribing a senior official at Coca Cola Enterprises UK Ltd. Alongside these sentences, the individual businesses (WABGS Limited, Tritec Systems and Electron Systems Limited) were fined for failure to prevent bribery under s7 of the Bribery Act 2010.
A robust internal investigation procedure provides assurance to shareholders and investors. It demonstrates a firm commitment to regulatory compliance and a responsible approach to business. Prosecuting authorities may also adopt a less punitive approach if they are convinced that a company did what it could to prevent malpractice through, in part, an internal investigation procedure.
Companies should be visibly neutral during internal investigations to prevent generating hostility from employees, which in turn can create problems of confidentiality and shareholder confidence. Such neutrality can prove difficult if a company operates the process itself, with embedded working relationships risking real or perceived unfairness. Thus, a company should usually instruct external legal experts to carry out the investigation.
However, in the UK, not all parts of an internal investigation are automatically protected by legal privilege, which means enforcement agencies can sometimes demand that parts of an internal investigation are produced as evidence before the courts. Naturally, this increases risk for companies, who may face the findings of their internal investigations being levered against them in a criminal court.
Since the identification principle sets a high threshold for prosecution, Parliament introduced ‘Deferred Prosecution Agreements’ via the Crime and Courts Act 2013. Under a DPA the corporate will negotiate with the prosecutors to find a solution which allows the accused to avoid prosecution. Instead, the company might pay a financial penalty.
A coherent negotiation strategy is imperative for corporates in these circumstances. Achieving a Deferred Prosecution Agreement requires the fine balance of a variety of considerations on the part of the prosecution, which in turn demands expert representation of the company in question. Once a DPA is floated as an option, that representation is needed further still, as any penalty must be appropriate and not unduly harsh.
Should you require further information about this area and wish to speak to our specialist teams in confidence, please do not hesitate to contact us on 0344 587 9996.
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