This country-specific Q&A provides an overview to bribery and corruption laws and regulations that may occur in the United Kingdom.
This Q&A is part of the global guide to Bribery & Corruption. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/bribery-and-corruption-second-edition/
What is the legal framework (legislation/regulations) governing bribery and corruption in your jurisdiction?
The Bribery Act 2010 provides for a general offence of bribery, which criminalises both the receipt and payment of bribes.
Which authorities have jurisdiction to investigate and prosecute bribery in your jurisdiction?
The Serious Fraud Office (SFO) is the main prosecutor with the responsibility for enforcing the Bribery Act. Broadly speaking, when determining whether to commence a prosecution (against corporates or individuals), the SFO will consider both the evidential case against the suspect and whether a prosecution would be in the public interest.
How is bribery defined?
A bribe is paid where a person receives, offers or gives a bribe either (i) intending that, as a consequence, a function should be performed “improperly”; or (ii) where the bribe is or amounts to a reward for “improper” performance.
The Bribery Act provides three examples of when a function would be deemed to have been carried out “improperly”:
a) The person performing it is expected to perform the function or activity in good faith, but does not
b) The person performing it is expected to perform it impartially, but does not
c) The person is in a position of trust, but breaches that trust
The types of functions that are covered by the Bribery Act are as follows:
a) Functions of a public nature
b) Activities connected with a business
c) Activities performed in the course of a person’s employment
d) An activity performed by or on behalf of a body of persons
A corporate or commercial organisation will also commit an offence under Section 7 of the Bribery Act, where a person “associated with” it bribes another person, intending to obtain or retain business for the organisation or to obtain or retain an advantage in the conduct of business for the organisation. This is a strict liability offence that can be committed in the UK or overseas. Note that:
- A person will be “associated with” the company for these purposes where the person acts on an organisation’s behalf. This could include an employee, agent or subsidiary of the organisation. Contractors, suppliers, joint venture entities and joint venture partners may also be associated persons.
- While there is a rebuttable presumption that an employee acts on behalf of his or her organisation, an individual’s association will be determined by reference to all relevant circumstances, not merely the relationship between the individual and the organisation.
- It is a defence for an organisation to prove that it had “adequate procedures” in place to prevent the bribery.
In addition, Section 6 of the Bribery Act includes a specific offence of “bribery of foreign public officials” (FPOs). Broadly, an offence will be committed where a person directly or through a third party offers, promises, or gives a financial or other advantage to an FPO in his capacity as an FPO (or to a third party at the FPO’s request) and intends to obtain or retain business or a business advantage.
For the purposes of the Bribery Act, an FPO includes an individual who: holds a legislative, administrative or judicial position of any kind; exercises a public function for or on behalf of a country or territory outside the UK or for any public agency or public enterprise of that country or territory; or is an official or agent of a public international organisation. Foreign political parties or candidates for foreign political office are not considered FPOs.
The offence is not committed where the FPO is either permitted or required by the written law applicable to the FPO to be influenced in his or her capacity as an FPO. Effectively, this is only likely to provide protection in the very limited circumstances where a written law explicitly permits or requires the payment to the FPO.
A company or another commercial organisation will also commit an offence where a person “associated with” it bribes an FPO, intending to obtain or retain business for the organisation or to obtain or retain an advantage in the conduct of business for the organisation. This is a strict liability offence that can be committed in the UK or overseas.
Does the law distinguish between bribery of a public official and bribery of private persons? If so, how is ‘public official’ defined? Are there different definitions for bribery of a public official and bribery of a private person?
The general offences of bribery in the UK anti-bribery legislation do not distinguish between bribes paid to a public official and those paid in the private sector. However, the Bribery Act does provide an additional offence of bribery in relation to foreign public officials.
What are the civil consequences of bribery in your jurisdiction?
The SFO has civil recovery powers to recover property obtained through unlawful conduct without resorting to criminal prosecution.
Victims of bribery may also make civil claims for damages against the briber and/or the recipient of the bribe for financial loss.
What are the criminal consequences of bribery in your jurisdiction?
An individual convicted of committing any of the general bribery offences may:
a) be imprisoned for a term of up to 10 years; and/or
b) be subject to an unlimited fine.
A company or partnership that commits any of the general bribery offences will be liable on conviction on indictment, to an unlimited fine, and to automatic and perpetual debarment from competing for public contracts.
Note that a conviction under Section 7 of the Bribery Act will attract discretionary rather than mandatory disbarment from competing for public contracts.
Where an organisation has been convicted of a bribery offence, senior officers of the organisation who have consented to or connived in the conduct can also be convicted of the offence concerned.
Does the law place any restrictions on hospitality, travel and entertainment expenses? Are there specific regulations restricting such expenses for foreign public officials?
Corporate hospitality will only amount to one of the general offences if there is improper conduct on the part of the person bribing or being bribed. If the act of hospitality is routine and inexpensive, it is unlikely to amount to a breach of an expectation of good faith, impartiality or trust.
The UK government has confirmed that legislation should not be used to penalise legitimate and proportionate hospitality, including in respect of foreign public officials, but its view is that hospitality is also an issue best considered by prosecutors rather than by Parliament.
Are political contributions regulated?
The Bribery Act does not include any specific provisions in relation to political contributions, although the general offences of giving or receiving a bribe may be applicable.
Are facilitation payments regulated? If not, what is the general approach to such payments?
A facilitation payment refers to the practice of paying a small sum of money to a public official as a way of ensuring that they perform their routine, non-discretionary duties, either promptly or at all.
Facilitation payments are illegal under the Bribery Act.In 2014, the UK government recognised “the problems that commercial organisations face in some parts of the world and in certain sectors”. However, in May 2019, the House of Lords' Select Committee on the Bribery Act 2010 recommended no changes in the law in relation to facilitation payments, stating that it would be a retrograde step to legalise facilitation payments. Moreover, in its response to the Select Committee's conclusions, the UK Government agreed that facilitation payments will remain a form of bribery and should not be legalised. The Government confirmed that there was no plan to change the law in this regard. Even if prosecutions do not take place, the continuing illegality of facilitation payments causes issues from a money laundering point of view.
Are there any defences available?
It is a defence to the corporate offence under Section 7 of the Bribery Act for an organisation to prove, on the balance of probabilities, that it had “adequate procedures” in place to prevent persons associated with it from engaging in bribery.
Are compliance programs a mitigating factor to reduce/eliminate liability for bribery offences in your jurisdiction? Please identify any guidance indicating what features a compliance program should have in order to provide an effective defence/mitigation.
It is a defence for an organisation to prove, on the balance of probabilities, that it had “adequate procedures” in place to prevent bribery. The UK Ministry of Justice has issued guidance on procedures that commercial organisations can put into place to prevent persons associated with them from bribing (see question 13 below).
It is also a criminal offence for a company to fail to prevent a person associated with it from facilitating tax evasion. Similar to the corporate bribery offence, the company will have a defence if it had prevention procedures in place which were “reasonable in all the circumstances” to prevent the criminal facilitation of tax evasion. It will also be a defence if it was not reasonable to expect the company to have any prevention procedures in place.
Who may be held liable for bribery? Only individuals, or also corporate entities?
Both individuals and corporates can be held liable for bribery, with the exception of offences under Section 7 of the Bribery Act, which applies only to corporate bodies.
Senior officers can be held liable for the offences of their organisation if they consented to or connived in the offence and had a close connection to the UK.
Has the government published any guidance advising how to comply with anti-corruption and bribery laws in your jurisdiction? If so, what are the elements of an effective corporate compliance program?
The UK Ministry of Justice has issued guidance on procedures that commercial organisations can put into place to prevent persons associated with them from bribing.
The Ministry of Justice’s guidance is not prescriptive as to the nature of systems and procedures that firms should implement in order to meet the “adequate procedures” standard necessary to provide a defence against the Section 7 corporate offence. A one-size-fits-all approach is simply not possible; whether an organisation has adequate procedures in place to prevent bribery will depend on the specific facts and circumstances of the case. However, the guidance highlights six principles of bribery prevention that an organisation’s officers should consider when drafting an anti-bribery compliance program:
(a) Proportionate procedures
An organisation’s internal procedures to prevent bribery by persons associated with it ought to be proportionate to the bribery risks it faces and to the nature, scale and complexity of the organisation’s activities.
(b) Top-level commitment
The management of an organisation (i.e., directors, owners or any other equivalent body or person) ought to be committed to preventing bribery by persons associated with it. The management should endorse a culture in which bribery is never acceptable.
(c) Risk assessment
An organisation should consider the nature and extent of its exposure to potential risks of bribery on its behalf by persons associated with it. Its assessment ought to be “periodic, informed and documented”.
(d) Due diligence
An organisation must implement due diligence procedures, applying a proportionate approach, in respect of persons who perform or will perform services for or on its behalf.
(e) Communication (including training)
An organisation should seek to ensure that its anti-bribery policies are understood throughout the organisation via internal and external communication and, if appropriate, training.
(f) Monitoring and Review
An organisation needs to periodically monitor and review its anti-bribery procedures, and where necessary, make improvements.
Does the law provide protection to whistle-blowers?
The UK provides protection to whistle-blowers under the Employment Rights Act 1996, as amended by the Public Interest Disclosure Act 1998 and the Enterprise and Regulatory Reform Act 2013. This legislation protects workers from unfair dismissal or other detriment where they disclose information about wrongdoing in specific circumstances.
The two key requirements to be met in order to quality for protection are:
- There must be a "qualifying disclosure" of information. This means the worker must reasonably believe the disclosure is made in the public interest, and tends to show that one or more of six relevant failures has occurred, is occurring or is likely to occur (e.g. a criminal offence).
- The disclosure must be "protected". Whether or not disclosure is protected depends in part on to whom the disclosure is made.
How common are government authority investigations into allegations of bribery?
The SFO is an active enforcement agency and there are at least 40 reported ongoing investigations and prosecutions under both the pre-Bribery Act corruption legislation and the Bribery Act itself. However, some of the SFO's caseload is not public. It claims to have around 60 live criminal cases at any given time. There have been four Deferred Prosecution Agreements since 2015 (see question below).
What are the recent trends in investigations and enforcement in your jurisdiction?
In the last two to three years, the SFO has begun to use Deferred Prosecution Agreements (DPAs) following corporate bribery investigations. The SFO entered into its first DPA in 2015, with Standard Bank. Other examples have followed: XYZ (an unnamed company) in 2016; Rolls-Royce and Tesco in 2017.
The SFO has also become more assertive in testing claims of legal professional privilege arising in internal investigations. Companies - particularly against the backdrop of negotiating a DPA - are coming under increasing pressure to waive arguments of privilege.
Finally, there is increased coordination between the SFO and its counterparts in foreign jurisdictions. This can include sharing of information and documents, creating an increasing challenge for companies under investigation to manage their global regulatory risk.
Is there a process of judicial review for challenging government authority action and decisions?
The decisions of UK government authorities, including the SFO, are subject to judicial review of the courts in certain, relatively limited, circumstances. Applicants have a narrow time frame to request review and must identify where a decision is irrational, improper or illegal.
The criteria to show irrationality are high, and rarely met in practice. Most successful judicial reviews rely upon showing that an authority has not followed its own procedures (an improper decision) or that human rights legislation has been infringed (an illegal decision).
Recent JR challenges to the SFO have focused on issues of disclosure and privilege.
Are there any planned developments or reforms of bribery and anti-corruption laws in your jurisdiction?
The are no immediate known plans to changes the UK's bribery and anti-corruption legislation. However, in 2017 the UK government published its Anti-Corruption Strategy 2017 to 2022, setting out a number of executive initiatives to tackle domestic and international corruption. This includes, for example, a commitment to prioritise anti-corruption provisions in any future trade agreements. Moreover, in May 2019, the House of Lords' Select Committee on the Bribery Act 2010 published a number of recommendation for amendments or clarifications in relation to the Act. The overall response of the Government was mainly neutral, and it is therefore unclear whether many changes to the law will be made on the back of the Committee's recommendations.
To which international anti-corruption conventions is your country party?
- The United Nations Convention Against Corruption
- The United Nations Convention Against Transnational Organised Crime
- The Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
- The Council of Europe Criminal Law Convention on Corruption (with Additional Protocol)
- The Council of Europe Civil Law Convention on Corruption
- The Convention on the Fight Against Corruption Involving Officials of the European Communities or Officials of Member States of the European Union
- The Convention on the Protection of the European Communities Financial Interests and Protocols
- The Agreement for the Establishment of the International Anti-Corruption Academy (yet to be ratified)
Do you have a concept of legal privilege in your jurisdiction which applies to lawyer-led investigations? If so, please provide details on the extent of that protection.
The concept of legal professional privilege in England and Wales is considered to be a fundamental human right. If a document is covered by legal professional privilege, it entitles the party claiming privilege to withhold production from those seeking to inspect it. That is so even where the party seeking inspection is a governmental or regulatory body. Documents will attract legal professional privilege provided that they meet the tests for legal advice privilege or litigation privilege.
Legal advice privilege covers confidential communications between lawyers (acting in their professional capacity) and clients for the purposes of giving or obtaining legal advice. It does not matter whether the advice sought relates to contentious or non-contentious matters.
Litigation privilege covers confidential communications between clients and their lawyers or between either of them and a third party for the purpose of obtaining information or advice in connection with existing or contemplated litigation, that were made: (a) when litigation was in progress or reasonably in contemplation; and (b) with the sole or dominant purpose of conducting that litigation. Crucially, the litigation must be adversarial, not investigative or inquisitorial.
Some documents generated in a lawyer-led investigation may well be covered by legal advice privilege. However, it is unlikely that documents generated in a lawyer-led investigation (or, for that matter, any investigation) will be covered by litigation privilege. That is because, as noted above, litigation privilege is concerned with adversarial litigation only.
As a practical point, the SFO is putting investigated parties under an increasing amount of pressure to waive privilege claims over documents, against the backdrop of co-operation which is necessary to secure a DPA. It has also challenged rules on privilege through the courts (see questions 23 and 25 below).
How much importance does your government place on tackling bribery and corruption? How do you think your jurisdiction’s approach to anti-bribery and corruption compares on an international scale?
The UK has been described by the OECD as a "major enforcer of the foreign bribery offence". Many perceive the UK to be one of the two most active enforcement regimes in the world (along with the US).
During the 2016 Anti-Corruption Summit, the UK committed to establishing and hosting the International Anti-Corruption Co-ordination Centre (IACCC). The IACCC was officially launched in July 2017 and will be hosted by the National Crime Agency in London until 2021. The IACCC aims to bring together specialist law enforcement officers from multiple jurisdictions into a single location to tackle allegations of grand corruption.
In December 2017, the UK government launched its Anti-Corruption Strategy 2017 to 2022, setting out plans to tackle domestic and international corruption. Commitments in the plan include better coordination in the fight against economic crime, and a new Ministerial position focused on economic crime.
The UK government has also put in place improved "blockbuster" funding for the SFO, allowing it greater financial resource to tackle the largest and most challenging cases.
In Transparency International's Corruption Perception Index, the UK's scores have been high. The UK ranking's general trend has been improving each year despite the UK's position dropping slightly in the past year. The UK's ranking moved from 8th place in 2017 to 11th place in 2018.
Generally how serious are organisations in your country about preventing bribery and corruption?
UK organisations are governed by some of the toughest anti-corruption legislation in the world. The SFO is relatively well-funded (a budget of £53 million in 2018-9) and has a team of more than 400 staff including lawyers, investigators and forensic accountants. The SFO has had some high profile success in recent years.
In our experience, UK organisations are increasingly aware of their anti-corruption obligations and generally take a responsible approach to corporate risk. However, standards may vary depending on the type of company. Most large UK public companies now have compliance programs in place, backed by dedicated compliance teams. However, small to medium sized enterprises are sometimes less committed or simply less-well resourced, and here standards are more mixed.
What are the biggest challenges enforcement agencies/regulators face when investigating and prosecuting cases of bribery and corruption in your jurisdiction?
There have been reported difficulties over the SFO's retention and recruitment of senior staff. The SFO has also yet to establish the free flow of experienced legal professionals into and out of the organisation which, for example, has helped to make the US Department of Justice so successful. This high turnover of staff, combined with the complexity of the cases, has been a material cause of delay within the SFO. Recently, the SFO has dropped a number of investigations (including two very high-profile investigations) in order to ease the organisation's backlog of cases.
Moreover, the SFO has been criticised over its apparent inability to progress from a DPA with companies to the prosecution of the individuals responsible for the offences committed. This is the case despite details of individuals' illegal behaviour being published in the DPA.
The SFO has faced challenges in the past regarding the funding of large "blockbuster" cases, although, as noted above, recent moves have been made to a more flexible budget structure which should reduce this challenge in the future.
Finally, there is a relative lack of enforcement precedent under the UK Bribery Act compared to, say, the FCPA. The body of case law is small and this can make it difficult for both the SFO and the investigated party to know where the boundaries lie.
What do you consider will be the most significant corruption-related challenges posed to businesses in your jurisdiction over the next 18 months?
Mergers and acquisitions represent a key risk area. Buyer companies face real challenges in conducting pre-acquisition due diligence on a potential target which is sufficient to uncover corruption issues. Issues may not be discovered until after execution of the deal, at which point the buyer has "bought an investigation". Similar risks exist in joint ventures.
A high proportion of bribery cases involve intermediaries such as consultants and agents. The Rolls-Royce case shows the issues which companies face in monitoring and policing action by intermediaries. Putting effective due diligence measures into place to manage this risk remains a significant challenge for UK businesses.
It is also difficult for businesses to keep pace with regulatory and legal developments. The UK has experienced a proliferation of changes in the last few years, but the challenge is not simply volume of law or the pace of change. Companies face a multitude of different business risks, some of which are still emerging (e.g. risks around technology). They face the challenge of applying evolving laws to the evolving business landscape.
Finally, businesses face the challenge of global investigations and increasing cooperation between jurisdictions – sharing information, and joint prosecutions. There are an increasing number of countries co-operating, beyond the UK and US. These include Canada, Australia, France, Russia, China, Brazil and other South American countries.
How would you improve the legal framework and process for preventing, investigating and prosecuting cases of bribery and corruption?
The UK Bribery Act is considered to provide a stringent framework for combating bribery and corruption. The SFO has also been one of the most active enforcing agencies.
However, there are areas for improvement. For example, there is a need for clarity on legal privilege during investigations. As shown in the recent ENRC case, UK enforcement agencies have developed an aggressive stance towards claims of privilege and are testing the boundaries of the previously accepted law, particularly around claims to litigation privilege.
There is also a need for businesses and individuals to have improved clarity on what is expected of a corporate compliance programme, and what constitutes good co-operation during an investigation. What standards are good enough? There is real uncertainty on these issues in the UK (and in most other parts of the world bar the US). This is perhaps not surprising given the body of UK Bribery Act case law is still in its infancy. But this may be mitigated by improved dialogue between the SFO and industry. To date, the SFO has not been particularly forthcoming in setting out the standards it expects. Again, comparisons may be drawn with the US, where the DoJ is more open. The SFO may change its approach with its recently appointed Director, Lisa Osofsky.. Ms Osofsky is a former US prosecutor and commentators expect that she will aim to add some US-style force to the SFO's operations.
In addition, although enforcement agencies are co-operating more closely across national boundaries, there may be a need for global enforcement rules to avoid excessive penalties and ensure more effective coordination and enforcement.