The Bribery Act 2010 (the “Act”) came into force on 1 July 2011 to better address the requirements of the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. It was designed to streamline the myriad of anti-bribery and corruption legislation and common law that had governed this space historically.
The Act was introduced to much fanfare, with many hailing it as the “golden standard” for anti-bribery legislation. Unfortunately, the intervening 10 years have not seen the stellar success the government was hoping for.
The Act went further than the US’s well known Foreign Corrupt Practices Act (the “FCPA”) as it applied to bribery in the public and private arena, earning it the moniker the “FCPA on steroids”. Along with implementing the Act, the government published statutory guidance (the “Guidance”), which introduced six key high-level principles designed to provide a blueprint for procedures that commercial organisations could put in place to prevent bribery. The Guidance was revised in October 2012.
Over the past decade, only two companies have been convicted of section 7 “failure to prevent bribery” offences. And just six Deferred Prosecution Agreements (“DPAs”) (introduced in 2014) have been approved in cases involving section 7 offences. A section 7 offence is committed where bribery occurs on behalf of a company, and the company is unable to demonstrate by way of defence that it had implemented “adequate procedures” to prevent such bribery.
For those companies looking for practical input on compliance with the Act and, in particular, what is required to mount a successful section 7 defence, the dearth of official information is palpable. While the phrase “adequate procedures” is repeatedly included in the Guidance, what this means in practice is not defined. The trade body for Aerospace Defence Security and Space Group has stated: “Our assessment is that no company can feel totally confident to put forward such a defence as it is hard to think of a scenario when it would have much chance of being successful… As was stated by industry representatives as the bill was going through parliament, companies like certainty and the ‘adequate procedures’ defence falls far short of that.”
The Guidance is vague, and the six principles are not prescriptive. Therefore, the lack of interpretive case law as to what are from a proportionality perspective “adequate procedures” is hardly helpful. During the House of Lords select committee’s (the “Committee”) 10-year review, they recommended that the meaning be further clarified, with one suggestion being that the interpretation should be revised to mirror the wording which already exists under section 45 of the Criminal Finances Act 2017.
The Committee stated: “The statutory Guidance should be amended to draw attention to the different wording in the Criminal Finances Act 2017 and in the HMRC Guidance to that Act, and to make clear that “adequate” does not mean, and is not intended to mean, anything more stringent than “reasonable in all the circumstances”.
Problems of implementation
While the Act is and remains a hugely successful piece of statutory drafting, the implementation has been problematic. By trying to provide guidance suitable for businesses of all sizes and leaving it open to interpretation, the government has failed to give clear, prescriptive requirements as to the minimum compliance standards expected. The reason for this is clear; if compliance requirements are vague, the natural response is to over-comply, which, in the case of corruption, leads to a “zero-tolerance” attitude. However, this binary approach by businesses, which results in significant compliance costs, is only sustainable where offences under the Act are properly and successfully prosecuted.
This is where the disconnect is palpable. In circumstances in which the Serious Fraud Office, for example, is able to extract numerous DPAs owing to the lower (civil) standard of proof, yet has repeatedly been unable to secure convictions of individuals in the criminal courts, it is hardly surprising that the tide is beginning to turn. Some businesses are increasingly willing to have their day in court to defend their compliance programme, rather than simply agreeing to a DPA and the resultant significant expenditure on fines and systems and controls remediation.
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