The 6 Guiding Principles of the U.K. Bribery Act
"In a state where corruption abounds, laws must be very numerous," said Tacitus, the Roman historian, two millennia ago. Perhaps he had a premonition of the modern world, for one estimate suggests that the global cost of corruption is $2.6 trillion and about $1 trillion in bribes are paid every year.
Find out how the U.K. Bribery Act is working to reduce these numbers and clean up bribery in the business world.
What Is the U.K. Bribery Act?
At the forefront of the United Kingdom's fight against corruption and bribery is the U.K. Bribery Act (or the Bribery Act 2010). It's an anti-corruption legislation to prevent and prosecute bribery offenses by companies and individuals operating in the U.K.
The Act was enacted by the U.K. government in response to the call for strong anti-bribery measures by the Organization for Economic Co-operation and Development (OECD) anti-bribery convention.
The U.K. Bribery Act covers both general and specific bribery offenses by placing significant responsibility on the private sector to implement effective anti-bribery measures. Let's review the possible offenses under this bribery legislation.
Offenses Under the U.K. Bribery Act
The act defines offenses in the context of "relevant functions." Relevant functions include all functions of a public nature, all activities connected with a business or employment, and all activities performed by or on behalf of corporate organizations. Four offenses are defined:
- Giving a bribe: An offer, promise, or grant of a financial or another advantage to a person to induce or reward the latter's improper performance of a relevant function is an offense. Such offers include small bribes like facilitation payments to government officials to initiate some action.
- Receiving a bribe: Similarly, a request, agreement, or acceptance of a financial or another advantage in return for the improper performance of a relevant function is also an offense.
- Bribing a foreign public official: Bribing a foreign public official to get or retain some business or business advantages is a special bribery offense under the act. A foreign public official is a foreign official of a government or exercises public functions on behalf of a foreign government or one of its public agencies.
- Failing to prevent bribery as an organization: If a person associated with an organization bribes another person to gain some business or business advantage, the organization can be charged with failure to prevent it under the strict liability concept of common law. But this offense can be invoked only following the successful conviction of the accused person.
Who Is Subject to the U.K. Bribery Act?
The first three offenses apply to any act of bribery committed either in the U.K. or outside by a person with a close connection to the U.K., such as British citizens, overseas citizens, residents, or incorporated bodies.
However, the last offense, failure to prevent bribery by an organization, applies regardless of whether such failure occurred in the U.K. or anywhere else in the world.
Are U.S. Companies Subject to the U.K. Bribery Act?
A U.S. citizen who ordinarily resides in the U.K. or one of its territories is subject to the act. Any U.S. company or subsidiary incorporated in the U.K. is also subject to the act.
What Is the Difference Between the U.K. Bribery Act and the U.S. FCPA?
The U.K. Bribery Act and the U.S. Foreign Corrupt Practices Act (FCPA) are the two major anti-bribery laws that U.S. and U.K. companies have to comply with to prevent bribery, money laundering, and other white-collar crimes.
Interestingly, both these corruption laws have extra-territorial jurisdiction. The FCPA is supervised by the U.S. Department of Justice while the U.K. Bribery Act comes under the Serious Fraud Office (SFO).
One difference between them is related to facilitation payments. While the FCPA allows some of them, the Bribery Act treats them as offenses unless made under duress.
Companies can stay on the right side of these laws by following the government's guidance, explained next.
6 Guiding Principles for Preventing Bribery
Avoiding bribery is easier said than done because of the cultural subtleties involved. For example, is taking a foreign executive out to lunch a type of bribe?
To help companies navigate the subtle dilemmas posed by the Bribery Act, the U.K. Ministry of Justice published a guidance document with six guiding principles, recommended procedures for each principle, and offered hypothetical scenarios.
Let's review these six guiding principles and the recommended procedures.
1. Procedures Proportionate to Your Business
Based on the nature and scale of your business, and the bribery risks it faces, you should adopt proportionate procedures like the following:
- Policies for preventing bribery: You should have organization-wide policies to guide your people on specific bribery risks like gifts, hospitality, facilitation payments, and political donations. You should strive for clarity on how these policies apply to each project and department.
- Financial controls: Practice high standards of bookkeeping, auditing, and expenditure approvals to detect bribes.
- Punishments: Set up proportionate disciplinary actions and sanctions for non-compliance.
- Contractual enforcement: Enforce bribe prevention measures through your contracts with associated persons and third parties.
Your procedures under the other five principles below also count. According to section seven of the act, proof that you have adopted adequate procedures can protect your organization from liability for any bribing offenses committed by individuals associated with it.
2. Top-Level Commitment Toward an Anti-Bribery Culture
Your top-level management — founders, owners, board of directors, and C-suite — should demonstrate and communicate their commitment to fostering an organizational culture that strongly discourages bribery. Follow these suggested practices:
- Involve actively in anti-bribery implementation: Top management must lead all your anti-bribery initiatives, monitoring, and reviews.
- Communicate zero tolerance of bribery: Communicate your commitment regularly to both external and internal stakeholders.
3. Risk-Based Approach and Risk Assessment
The bribery risks you face must influence the proportionality of your measures. For that, you must regularly assess these risks and evaluate the effectiveness of your measures through these practices:
- Design policies for the bribery risks in the countries and sectors you operate in, and the business opportunities and partnerships you pursue.
- Conduct risk assessments driven by top management.
- Find reliable internal and external sources of information related to bribery.
- Identify any work incentives that may promote bribery.
4. Due Diligence Before Business Activities
Practice due diligence on associated persons and third-party intermediaries that act on behalf of your organization. The level of due diligence should be appropriate to the assessed risks of such parties based on their country, sector, reputation, media reports, and similar information.
5. Communication and Training for Employees
Foster a zero-tolerance anti-bribery culture through regular communication on policies and training for all employees and other associated persons. Best practices include:
- Cover a wide range of scenarios: Effectively communicate anti-bribery measures in decision-making, financial control, facilitation payments, hospitality expenditure, political donations, and similar.
- Set up whistleblowing policies: Enable people to speak up or submit information about bribery without fear of internal or external retaliation.
- Train high-risk departments: Training for departments with a higher risk of bribery, like procurement and subsidiaries in high-risk countries, should be proportionate to the risks.
6. Monitoring and Review of Anti-Bribery Procedures
Monitor your bribery risks and anti-bribery measures. Review them periodically and whenever your business, regulatory, or political environment changes. Set up both objective indicators of bribery, like financial controls, and subjective indicators like staff surveys. External certification of your procedures and financial practices can also improve your monitoring and preventive measures.
Penalties for Non-Compliance With the U.K. Bribery Act
What happens if your business or employee commits an offense under the act? If the SFO investigates an offense and approves prosecution, section 11 of the act prescribes the possible penalties.
For summary conviction in a Magistrate's court on charges of bribing a person or a foreign public official, or for receiving bribes from anyone, the punishment is a prison term, a fine, or both. Imprisonment can be up to 12 months. Fines can be up to £5,000 in England, Wales, and Northern Ireland, or up to £10,000 in Scotland.
For a more severe bribery offense that gets a conviction on indictment in a Crown Court, a prison term of up to 10 years, an unlimited fine, or both are possible. Confiscation of properties of individuals as proceeds of crime is also possible.
If any commercial organization is charged with a failure to prevent bribery and convicted on indictment in a Crown Court, it faces an unlimited fine. However, it can get a deferred prosecution agreement instead of a conviction by cooperating fully with the SFO's conditions. Let's review some cases when organizations faced bribery charges.
High-Profile Cases of Non-Compliance With the U.K. Bribery Act
Here are some recent high-profile prosecutions under the Bribery Act. Understanding them can help your organization avoid the same mistakes.
Oil and Gas Major Fined US$400 Million for Bribes in Africa
In 2022, Glencore Energy UK Ltd. incurred fines of more than US$400 million for endemic corruption in their West Africa oil business. It reportedly paid bribes of up to US$29 million for a financial gain of around £93.5 million.
As the SFO report says, it used local agents to bribe state-owned oil companies and government ministries by disguising them as service fees, signing bonuses, or success fees in financial reports. Millions of dollars in cash were flown and handed over to the local agents by Glencore executives.
Interestingly, it's the first time top executives have been charged with active bribery offenses and not merely a failure to prevent them. Having paid the massive fine, Glencore claims to have implemented risk assessment, policies, procedures, training, awareness, and monitoring.
Oil Executive Charged With Bribery in the Middle East
Yes, big oil again! In 2021, the global head of sales at Petrofac was charged with bribery and pleaded guilty. Bribes of US$30 million were made between 2012 and 2018 to win contracts worth US$3.3 billion. The executive was given a suspended sentence and their property was confiscated. Petrofac paid a fine of US$104 million for its failure to prevent bribery and reportedly implemented corporate reforms.
The 6 Guiding Principles of the U.K. Bribery Act
"In a state where corruption abounds, laws must be very numerous," said Tacitus, the Roman historian, two millennia ago. Perhaps he had a premonition of the modern world, for one estimate suggests that the global cost of corruption is $2.6 trillion and about $1 trillion in bribes are paid every year.
Find out how the U.K. Bribery Act is working to reduce these numbers and clean up bribery in the business world.
What Is the U.K. Bribery Act?
At the forefront of the United Kingdom's fight against corruption and bribery is the U.K. Bribery Act (or the Bribery Act 2010). It's an anti-corruption legislation to prevent and prosecute bribery offenses by companies and individuals operating in the U.K.
The Act was enacted by the U.K. government in response to the call for strong anti-bribery measures by the Organization for Economic Co-operation and Development (OECD) anti-bribery convention.
The U.K. Bribery Act covers both general and specific bribery offenses by placing significant responsibility on the private sector to implement effective anti-bribery measures. Let's review the possible offenses under this bribery legislation.
Offenses Under the U.K. Bribery Act
The act defines offenses in the context of "relevant functions." Relevant functions include all functions of a public nature, all activities connected with a business or employment, and all activities performed by or on behalf of corporate organizations. Four offenses are defined:
- Giving a bribe: An offer, promise, or grant of a financial or another advantage to a person to induce or reward the latter's improper performance of a relevant function is an offense. Such offers include small bribes like facilitation payments to government officials to initiate some action.
- Receiving a bribe: Similarly, a request, agreement, or acceptance of a financial or another advantage in return for the improper performance of a relevant function is also an offense.
- Bribing a foreign public official: Bribing a foreign public official to get or retain some business or business advantages is a special bribery offense under the act. A foreign public official is a foreign official of a government or exercises public functions on behalf of a foreign government or one of its public agencies.
- Failing to prevent bribery as an organization: If a person associated with an organization bribes another person to gain some business or business advantage, the organization can be charged with failure to prevent it under the strict liability concept of common law. But this offense can be invoked only following the successful conviction of the accused person.
Who Is Subject to the U.K. Bribery Act?
The first three offenses apply to any act of bribery committed either in the U.K. or outside by a person with a close connection to the U.K., such as British citizens, overseas citizens, residents, or incorporated bodies.
However, the last offense, failure to prevent bribery by an organization, applies regardless of whether such failure occurred in the U.K. or anywhere else in the world.
Are U.S. Companies Subject to the U.K. Bribery Act?
A U.S. citizen who ordinarily resides in the U.K. or one of its territories is subject to the act. Any U.S. company or subsidiary incorporated in the U.K. is also subject to the act.
What Is the Difference Between the U.K. Bribery Act and the U.S. FCPA?
The U.K. Bribery Act and the U.S. Foreign Corrupt Practices Act (FCPA) are the two major anti-bribery laws that U.S. and U.K. companies have to comply with to prevent bribery, money laundering, and other white-collar crimes.
Interestingly, both these corruption laws have extra-territorial jurisdiction. The FCPA is supervised by the U.S. Department of Justice while the U.K. Bribery Act comes under the Serious Fraud Office (SFO).
One difference between them is related to facilitation payments. While the FCPA allows some of them, the Bribery Act treats them as offenses unless made under duress.
Companies can stay on the right side of these laws by following the government's guidance, explained next.
6 Guiding Principles for Preventing Bribery
Avoiding bribery is easier said than done because of the cultural subtleties involved. For example, is taking a foreign executive out to lunch a type of bribe?
To help companies navigate the subtle dilemmas posed by the Bribery Act, the U.K. Ministry of Justice published a guidance document with six guiding principles, recommended procedures for each principle, and offered hypothetical scenarios.
Let's review these six guiding principles and the recommended procedures.
1. Procedures Proportionate to Your Business
Based on the nature and scale of your business, and the bribery risks it faces, you should adopt proportionate procedures like the following:
- Policies for preventing bribery: You should have organization-wide policies to guide your people on specific bribery risks like gifts, hospitality, facilitation payments, and political donations. You should strive for clarity on how these policies apply to each project and department.
- Financial controls: Practice high standards of bookkeeping, auditing, and expenditure approvals to detect bribes.
- Punishments: Set up proportionate disciplinary actions and sanctions for non-compliance.
- Contractual enforcement: Enforce bribe prevention measures through your contracts with associated persons and third parties.
Your procedures under the other five principles below also count. According to section seven of the act, proof that you have adopted adequate procedures can protect your organization from liability for any bribing offenses committed by individuals associated with it.
2. Top-Level Commitment Toward an Anti-Bribery Culture
Your top-level management — founders, owners, board of directors, and C-suite — should demonstrate and communicate their commitment to fostering an organizational culture that strongly discourages bribery. Follow these suggested practices:
- Involve actively in anti-bribery implementation: Top management must lead all your anti-bribery initiatives, monitoring, and reviews.
- Communicate zero tolerance of bribery: Communicate your commitment regularly to both external and internal stakeholders.
3. Risk-Based Approach and Risk Assessment
The bribery risks you face must influence the proportionality of your measures. For that, you must regularly assess these risks and evaluate the effectiveness of your measures through these practices:
- Design policies for the bribery risks in the countries and sectors you operate in, and the business opportunities and partnerships you pursue.
- Conduct risk assessments driven by top management.
- Find reliable internal and external sources of information related to bribery.
- Identify any work incentives that may promote bribery.
4. Due Diligence Before Business Activities
Practice due diligence on associated persons and third-party intermediaries that act on behalf of your organization. The level of due diligence should be appropriate to the assessed risks of such parties based on their country, sector, reputation, media reports, and similar information.
5. Communication and Training for Employees
Foster a zero-tolerance anti-bribery culture through regular communication on policies and training for all employees and other associated persons. Best practices include:
- Cover a wide range of scenarios: Effectively communicate anti-bribery measures in decision-making, financial control, facilitation payments, hospitality expenditure, political donations, and similar.
- Set up whistleblowing policies: Enable people to speak up or submit information about bribery without fear of internal or external retaliation.
- Train high-risk departments: Training for departments with a higher risk of bribery, like procurement and subsidiaries in high-risk countries, should be proportionate to the risks.
6. Monitoring and Review of Anti-Bribery Procedures
Monitor your bribery risks and anti-bribery measures. Review them periodically and whenever your business, regulatory, or political environment changes. Set up both objective indicators of bribery, like financial controls, and subjective indicators like staff surveys. External certification of your procedures and financial practices can also improve your monitoring and preventive measures.
Penalties for Non-Compliance With the U.K. Bribery Act
What happens if your business or employee commits an offense under the act? If the SFO investigates an offense and approves prosecution, section 11 of the act prescribes the possible penalties.
For summary conviction in a Magistrate's court on charges of bribing a person or a foreign public official, or for receiving bribes from anyone, the punishment is a prison term, a fine, or both. Imprisonment can be up to 12 months. Fines can be up to £5,000 in England, Wales, and Northern Ireland, or up to £10,000 in Scotland.
For a more severe bribery offense that gets a conviction on indictment in a Crown Court, a prison term of up to 10 years, an unlimited fine, or both are possible. Confiscation of properties of individuals as proceeds of crime is also possible.
If any commercial organization is charged with a failure to prevent bribery and convicted on indictment in a Crown Court, it faces an unlimited fine. However, it can get a deferred prosecution agreement instead of a conviction by cooperating fully with the SFO's conditions. Let's review some cases when organizations faced bribery charges.
High-Profile Cases of Non-Compliance With the U.K. Bribery Act
Here are some recent high-profile prosecutions under the Bribery Act. Understanding them can help your organization avoid the same mistakes.
Oil and Gas Major Fined US$400 Million for Bribes in Africa
In 2022, Glencore Energy UK Ltd. incurred fines of more than US$400 million for endemic corruption in their West Africa oil business. It reportedly paid bribes of up to US$29 million for a financial gain of around £93.5 million.
As the SFO report says, it used local agents to bribe state-owned oil companies and government ministries by disguising them as service fees, signing bonuses, or success fees in financial reports. Millions of dollars in cash were flown and handed over to the local agents by Glencore executives.
Interestingly, it's the first time top executives have been charged with active bribery offenses and not merely a failure to prevent them. Having paid the massive fine, Glencore claims to have implemented risk assessment, policies, procedures, training, awareness, and monitoring.
Oil Executive Charged With Bribery in the Middle East
Yes, big oil again! In 2021, the global head of sales at Petrofac was charged with bribery and pleaded guilty. Bribes of US$30 million were made between 2012 and 2018 to win contracts worth US$3.3 billion. The executive was given a suspended sentence and their property was confiscated. Petrofac paid a fine of US$104 million for its failure to prevent bribery and reportedly implemented corporate reforms.
Comply With the U.K. Bribery Act Using Certa
Certa's ABAC solution capabilities can help your organization comply with the U.K. Bribery Act:
- Conduct and document bribery risk assessments using your unique risk controls framework.
- Carry out your third-party risk assessments with integrated vendor scorecards for bribery risks.
- Do your due diligence on local third-party intermediaries.
- Embed your anti-bribery measures into all your contracts.
- Provide anti-bribery training within the Certa platform itself — using SCORM package integrations — to ensure a consistent user experience for internal and external stakeholders.
Talk to our experts for assistance with your compliance measures.
