Monthly Archives: July 2016

The criminal law of bribery in commercial agency relationships

The Bribery Act 2010 reformed the criminal law of bribery in the United Kingdom. It abolished the bribery offences that had previously existed at common law and in statute, and extended the offence of bribery to cover all private sector transactions, where it had previously been confined to transactions involving public officials and their agents. This extension makes it important for commercial organisations and agents to be aware of how the new law operates, in particular in the light of the offence created by section 7.

Under section 7(1), a commercial organisation (an incorporated body or partnership) which is formed or incorporated in the United Kingdom and/or carries on business in the United Kingdom commits an offence if a person associated with it bribes another intending to obtain or retain business or an advantage in the conduct of business for that commercial organisation. An agent is a “person associated” by section 8(3).

In such a case, the commercial organisation will be criminally liable unless it can show, on the balance of probabilities, that it had adequate procedures to prevent bribery in place: section 7(2). If convicted, the commercial organisation can be fined an unlimited amount and may be barred from bidding for public contracts. It is not necessary that the agent have a connection with the United Kingdom. According to the government’s explanatory notes to the Act, the United Kingdom court will have jurisdiction as long as the commercial organisation is formed or incorporated in the United Kingdom and/or carries on business in the United Kingdom.

Section 9 requires the Secretary of State for Justice to publish guidance about procedures which commercial organisations can put into place to prevent persons associated with them from bribing. The current version of the guidance is available from the Ministry of Justice website. The guidance contains principles that a commercial organisation should take into account when implementing procedures to prevent their agents from bribing.

First, the commercial organisation’s procedures must be proportionate both to the nature and complexity of the commercial organisation’s activities and to the risk it faces. Therefore, the more complex the commercial activities undertaken by the organisation, and the more at risk it is of one of its agents bribing another person (e.g. if it carries on business in countries known for official corruption), the more stringent the procedures will need to be. However, the procedures must also be clear, practical, accessible and effectively implemented and enforced.

Secondly, it is vital that the top level management of the commercial organisation is committed to fostering an anti-bribery culture. This involves assessing the organisation’s own risks (see the example given above), carrying out due diligence in respect of its agents, carrying out appropriate training to ensure that the procedures mentioned above are understood and followed throughout the organisation, and subjecting the procedures to monitoring and review so that improvements can be made where necessary.

These principles will be taken into account by a court in deciding whether or not a commercial organisation had adequate procedures to prevent bribery in place under section 7(2). However, it should be remembered that the guidance document is just that – guidance. It is not law, and the courts will not interpret guidance as strictly as they would interpret, for example, legislation or a contract. Nevertheless, a commercial organisation applying these principles rigorously should not go far wrong in preventing bribery by its agents. One thing which a principal can do to help protect itself, is to include a clause in the agency agreement that the agent will comply with the Bribery Act 2010.