There is a lot of interest and a lot of misunderstanding and apprehension in US companies about the UK Bribery Act which went into effect July 1, 2011.
I have followed the Act from the start and gave written comments on the draft guidance to the UK government some time ago. I have been speaking on the on the UK Bribery Act in my courses, moderated a panel of UK lawyers for an ACC webcast earlier this year, and attended two presentations on the Act in September 2011 at conferences in San Francisco.
Compared to the FCPA, the UK Act is clearly worded and very tough. It goes beyond the FCPA in that it applies to bribe takers as well as bribe givers, does not have an exception for facilitating payments and applies to commercial corruption as well as giving value to government officials. But in many ways compliance with the FCPA is more straightforward because of a longer history of enforcement. For example, the explicit 13 point guidance from the US Department of Justice on what constitutes an adequate FCPA compliance program contained in the "Attachment Cs" to many reported cases is more thorough and clear than the 6 rather vague points contained in the UK Guidance.
A major problem at this point is the lack of enforcement action in the UK - only one case so far and it involved a 500 pound bribe paid in the UK. So it is guess work as to how the terms of the Act will be interpreted and enforced in practice over the next few years. The UK Authorities are lightly staffed and budgeted, but probably will bring around a dozen or so cases a year, so there will be more specific information to go on year by year. Most of the cases under the Act will be against UK individuals and companies, not US or other foreign companies doing business in or from the UK. The UK authorities have a target rich environment of UK companies paying bribes in international business and are likely to turn US companies they come across over to the US Department of Justice. The UK authorities may make use of many of the practices of the DOJ, such as deferred prosecution agreements and allowing companies which self report to conduct their own "independent" investigations.
There have been many articles on the UK Act. It is interesting that there has not been a similar interest in the German Anti-corruption law which has been in place longer and has a history of strong enforcement. One practical issue is there is not much on the German law published in English and there is a lot on the UK Act.
My message to US companies on the UK Bribery Act is: If you have a first class FCPA Compliance Program and apply it to your operations in the UK (and everywhere you do business) you will be in compliance with the UK Bribery Act. In my opinion a first class FCPA program should already include a prohibition on facilitating payments an a prohibition on commercial corruption. Still, for the majority of US companies which do not have a first class FCPA compliance program, looking at the UK Act in depth will help them develop an appropriate global anti-corruption program.
With respect to the UK Bribery Act, Companies should:
- Know the provisions of the law and the MOJ Guidance,
- Be aware and vigilant if they have a major operation in the UK which does business or supervises business outside the UK,
- Understand that the strict liability crime of failing to prevent bribery and the related "compliance defense" in the UK Act does not exist in the US because of differences with the UK prosecutor's ability to impose criminal liability on corporations. The "compliance defense" is limited to the crime of failing to prevent bribery and how it will develop in practice will not be known for some time.
- Make sure to understand the Guidance on adequate procedures and make sure your FCPA compliance program complies with all the 6 Principles set out in the Bribery Act.
- Revisit your policy on commercial corruption - and prohibit it if you have not already done so.
- Revisit your facilitating payments policy - and prohibit them if you have not already done so.
- Revise your training program to include the UK Act (and others - Germany for example)
US companies with operations in the UK should become informed so they have a sense of security about dealing with a new, exotic law. When looking for advice on its global anti-corruption program, a US company should consult with a US lawyer. A professional from the UK would take a UK centric approach and would miss some of the FCPA issues which are much more critical to a US company.
October 27, 2011
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