The 10-year milestone of the Bribery Act 2010 (the Act) presents an opportunity to reflect on its workings, its many successes, and areas that still have room for improvement. As a general observation, the Act is seen by many to have set the ‘gold standard’ globally for anti-bribery legislation, and has helped to enhance the way in which companies approach compliance.
The Act’s acts?
The Act served to consolidate previous bribery laws consisting of both legislation and common law offences, creating four bribery offences: active bribery; passive bribery; bribing a foreign public official; and the corporate offence of a company failing to prevent bribery by one of its associated persons. The corporate offence is hailed as one of the Act’s great successes, placing the onus onto companies to ensure they have ‘adequate procedures’ in order to prevent bribery within their organisations. Not only are companies obliged to enhance and monitor such compliance measures across their operations in the UK, but the Act’s wide territorial reach has meant that acts of bribery committed abroad by those associated with the company are also caught. Coupled with a risk of unlimited fines and other significant penalties, the strict liability offence has motivated companies to ensure they have robust compliance measures to avoid falling foul of the law.
Deferred Prosecution Agreements
A further success, though not derived from the Act, has been the Deferred Prosecution Agreement (DPA) regime, used by the Serious Fraud Office (SFO) as a means of settling criminal investigations into corporates, with seven of the 10 DPAs entered into so far relating to bribery offences. While some criticise the DPA regime for enabling companies to ‘pay their way’ out of prosecution, DPAs have been effective in encouraging companies to self-report and cooperate with investigations, and most importantly, to implement remedial efforts in order to prevent further misconduct from occurring. In early 2019, the Act was scrutinised by a House of Lords Select Committee as to whether it was achieving its intended purposes since its enactment in 2010. Having considered evidence from practitioners and businesses, the Committee concluded that “the Act is an excellent piece of legislation which creates offences which are clear and all-embracing”, that it was an example to other countries of what is needed to deter bribery, and the corporate offence was recognised as particularly effective.
Scope for development
However, various areas for improvement were identified. For example, although the SFO and Ministry of Justice have released guidance on implementing the requirements of the Act, adequate procedures are still perceived as a ‘one size fits all’ requirement, lacking in practical guidance as to how such procedures may vary, according to the particular features of a company. Small and medium enterprises (SMEs), in particular, would benefit from more information on matters such as the point at which hospitality exceeds what a reasonable member of the public might think was acceptable, or what procedures would be deemed proportionate, when balanced alongside the significant costs associated with compliance measures. A further area for development, which is likely a result of the relative infancy of the Act, is a low prosecution rate against both individuals and corporates. Most notably, SFO prosecutions against individuals, after having entered into DPAs with the companies they have worked for, have resulted in no convictions to date. This area clearly requires further consideration, and it remains to be seen how the SFO will reconcile the disparity between holding corporates to account for wrongdoing, and the subsequent prosecution of individuals connected to the misconduct. This is analogous situation to the US, as there have been many settlements using DPAs and limited individual prosecutions related to those settlements.
Overall, while there remain concerns about the lack of prosecutions under the Act, it is evident that the legislation itself is considered to be a success. Indeed, the ‘failure to prevent’ model has been seen as an effective method by which to enforce corporate liability, having been adopted by the Criminal Finances Act 2017, which criminalises the corporate failure to prevent the facilitation of tax evasion, and is reflected by a growing appetite amongst UK prosecutors to extend the model to apply to broader economic offences. While there has been limited judicial scrutiny of the Act, it is hoped that the next10 years will allow opportunities for further clarity over the application of various provisions of the Act. In a climate where the risk of bribery and corruption is growing, effective enforcement of the Act is likely to remain a key enforcement priority.
Kathleen Harris is Managing Partner of Arnold & Porter and co-chair of their Anti-Corruption team: arnoldporter.com...