The UK Bribery Act 2010
Louise Thompson – KPMG LLP
29 November 2011
Ethics, Bribery and Corruption
Co-operatives are renowned for
their strong ethical practices
Bribery and corruption are
unethical and unfair
Grand corruption
“With tens of millions of dollars
already missing in Kenya’s Ministry of
Education, the corruption scandal
currently rocking Kenya’s schools
threatens to cost the country millions
more.” Voice of America, 20 June 2011
“The UK co-operative economy 2011 - Britain’s return to cooperation”
Petty corruption?
“I have paid bribe of Rs 25,000 at
Pune, to police department to get an
NOC (No Objection Certificate) to
start a new petrol pump as a dealer.”
ipaidabribe.com – India
What kinds of bribery happen?
“Big ticket” – grand corruption
• To influence high value contractual awards
• Supply to government bodies
Petty
• Facilitation payments – to expedite a process which a public employee
should do as part of their normal employment duties
• Bribes to obtain something from a state official to which you are not
legally entitled
Grey area
• Hospitality, gifts and entertainment
Where do bribery and corruption happen?
Transparency International – Corruption Perceptions Index 2010
www.transparency.org
Where do bribery and corruption happen?
International Enforcements by Industry 1977 – June 2010
Number of prosecutions
0
Extractive Industries
Aerospace/Defense/Security
Manufacturer/Service Provider
Industry
Health Care
Engineering Construction
Transportation/Communications
Non-Profit/Education/Consulting/Other
Technology/Software
Agriculture/Food
Financial Services
Property Development
Retail
Entertainment/Film
Source: Trace Global Enforcement Report (GER) 2010
10
20
30
40
50
60
70
Background
Global landscape
• US Foreign Corrupt Practices Act (FCPA), 1977
• OECD Convention on Bribery,1997 - 38 signatory countries
• UN Convention Against Corruption , 2005 - 140 signatory countries
UK Bribery Act 2010
• Entered into force on 1 July 2011
• Replaces out-dated UK anti-bribery and corruption legal framework
• Objectives:
• To provide a modern, single piece of legislation criminalising
bribery
• To enable effective prosecution of bribery offences
UK Bribery Act 2010
Four separate bribery offences
• Two “active” offences of bribing and being bribed
• The offer, promise or giving of a financial or other advantage
• The bribing a foreign public official
• A “passive” offence of requesting, agreeing to receive or
accepting a financial or other advantage
• “Corporate” offence of failure of a commercial organisation to
prevent bribery
UK Bribery Act 2010 (continued)
Corporate scope of liability is extreme
• Broad interpretation of “commercial organisation”
• A commercial organisation will be liable for the corporate offence if
an ‘associated person’ acting on its behalf conducts an active
offence of bribery anywhere in the world
• An ‘associated person’ includes: Employees, consultants, agents,
distributors, intermediaries, joint ventures or subsidiaries
• Conduct ‘all or part’ of a business in the UK regardless of where
incorporated or where the bribe was paid
• Applies to non-UK organisations/individuals
Only defence = ‘adequate procedures’
• That an organisation did everything it reasonably could have done to
prevent bribery in the conduct of its business
UK Bribery Act 2010 (continued)
• Penalties
• For the individual: unlimited fines and up to 10 years
imprisonment .
• For the organisation: unlimited fines and potential debarment
from government contracts within the EU.
• Consequential penalties
• Reputational damage
• Legal and investigation costs
• Loss of management time
• Loss of key business relationships
• Competitor claims
UK Bribery Act 2010 (continued)
The Serious Fraud Office has in recent years taken actions against UK
corporates
Macmillan ordered to pay $17m
for corruption in South Sudan
The first prosecution under the UK Bribery Act
UK Bribery Act 2010 (continued)
The Serious Fraud Office (SFO) has stated its intent to enforce the
Act where prosecution is in the public interest.
“We will put as much of our resource as possible into tracking down and
finding the individuals and the companies that want to continue
using corruption and get them before the criminal courts. Those bad
cases are the ones we need to get before the courts. This will enable us to
support the good ethical companies that are disadvantaged by those
activities.”
Source: http://www.trust.org/trustlaw/news/the-complinet-interview-richard-alderman-director-of-the-serious-fraud-office
Bribery Act Compliance – Prevent, Detect, Respond
•
Ministry of Justice guidance
Bribery Act
compliance can be
summarised in a
simple Prevention,
Detection, Response
model
Bribery Act Compliance – 10 key actions
1.
Take a clear anti-bribery stance – sound ethics!
2.
Assess where risks lie
3.
Allocate management responsibility
4.
Have clear policies
5.
Spread awareness and keep a record of recipients
6.
Conduct risk-based due-diligence (3rd parties, employees)
7.
Monitor and audit at-risk functions, contracts, transactions
8.
Encourage reporting of misconduct
9.
Apply consistent and robust disciplinary processes
10. Have an investigation and response plan
Keep procedures proportionate to your business!