TOPIC: THE UK BRIBERY ACT (UKBA) EN ANGLAIS
Object: Anti-corruption Law
Date: 8th April 2010
Summary: we study here a famous aspect of the UK Bribery Act which submit UK and foreign companies to penalties if no anti-corruption program takes place within the organisation.
Target: You will learn that United Kingdom passed a law with extra-territoral effect in order to rebuild his image, as UK were seen as one of the most bribe-giver country in the world after Siemens and BAE Systems scandals.
Duration: 16 mn
On line: 1 july 2014
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Slide 1: In this presentation, we will study the United Kingdom new regulation called the “Bribery Act”. The Bribery Act was adopted by the UK Parliament on the 8th of April 2010. The law was quickly completed by a governmental Guidance issued by the Ministry of Justice. The Bribery Act came to force on the first of July 2011.
Slide 2: We will briefly review what is really new in this UK regulation in comparison with the existing international treaties and other regulations against corruption. The UK Bribery act contains in its Section 7 a new corporate offence, introducing criminal liability on corporate bodies that fail to prevent bribery Consequently, companies have major incentives to put in place adequate procedures.
Slide 3: What kind of procedures shall companies put in place ? First of all, the procedures must be adequate; that is to say proportionate to the level of risk. It is not a matter of the company’s size. It mainly concerns the countries where the company operates and the persons with whom the company deals. Bribery may be direct or indirect, that is to say directly between the company and the official or indirectly through a third party agent.
Slide 4: Companies are expected by the Bribery Act and Guidance to audit their business. They should therefore ask themselves the following types of questions: does the company deal with local public officials or foreign public officials ? Does the company use third party agents to obtain new contracts? Is Due diligence in use inside the company before establishing a partnership? Then, thanks to these self-assessments, the companies will draft a risk assessment in order to estimate potential internal and external risk of bribery.
Slide 5: Efficient procedures and clear assessments are requested by the law:
- Top level commitment: the top level management must foster a culture within the organization in which bribery is never acceptable. “Tolerance zero”. A correlation between bribery and getting fired should be made by the companies.
- Code of business conduct handbook
- Gift and hospitality policy
- Ethics policy
- Procurement policy
- I.T Policy
- Group approval process
- Disciplinary procedures
- Fraud Policy and so on…
Slide 6: But the anti-bribery program must also be efficient: “Not only Assessments but tools and procedures”. The company must implement:
- Trainings in seminar or classroom format dedicated to employees and associated persons.
- E.learning sessions,
- Regular information,
- Regular monitoring of the procedures included in the various handbooks,
- Escalation procedures,
- Whistleblowing “speak up” program
- Activity regular monitoring
- Compliance officer appointment, and so on….
The enforcement of these statements and procedures will be checked and evaluated by the prosecutors.
Slide 7: Who is concerned by this new offence ? All companies having a demonstrable Business presence in the UK; so all companies incorporated or having a partnership formed in the UK are obviously addressed by the Law. Are also addressed all companies in the world carrying on business or a part of business in the UK irrespective to the place of formation or incorporation. There is no requirement of a close connection with the UK such as UK nationality, UK residence or incorporation in the UK. Guidelines affirm that the court will be the final arbiter as to whether an organization “carries on business in the UK”. Guidelines suggested, for example, that the mere listing of securities in the UK stock exchange would not demonstrate that a company carries on business in the UK.
Slide 8: A commercial organization is liable under Section 7 if a person associated with it bribes another person. The person considered to be associated (associated person) is someone who “performs services for or on behalf of the organization”. It could be an individual or a company irrespective of the place of incorporation. So it could be employees located in a foreign branch. Indeed, employees are always presumed to be performing services for their companies. It can also be agents and subsidiaries.
Slide 9: But other situations have to be tackled: Contractors. For example a partner who performs some services for its client rather than simply acting as a seller of goods.
Slide 10: Joint venture acting in a separate company: A member of the JV may be liable for failure to prevent bribery if the JV is performing services for that member and gives a bribe with the intention to benefit that member. If the bribe only benefits to the JV, members won’t be liable for it.
Joint venture conducted in a contractual arrangement: the degree of control that a member has over the arrangement is a relevant information in order to decide if a member has performed a service for the JV or in the name of the JV for its own interest or for the interest of the JV.
Slide 11: Today corruption has reached a high level of complexity, using financial, IT, and intelligence networks to operate. Consequently, the examples we have just studied are far from reality. The number of parties involved in a massive corruption system is often huge and networks are very difficult to identify as they are often using tax haven and money laundering. So it is in the interest of all companies to set up a very efficient anti-Bribery program.
SLIDE 12: The Judge has the full power to grant a non-defined fine. This could lead to very severe sanctions as the fault for not developing a compliance program may not be the cause of the Bribery.
SLIDE 13: The main prosecution authority in the UK regarding the crime of bribery is the S.F.O.= Serious Fraud Office which operates in England, Wales and Northern Ireland. The Serious Fraud Office developed an international intelligence strategy with, most notably, the United States Department of Justice (D.O.J) and the Securities and Exchanges Commission (SEC) but also through international and European networks such as Eurojust, European Justice Network, the International Association of Prosecutors (IAP), and the World Bank.
SLIDE 14: In practice, prosecutors can refer to the Crime and Courts Act issued in 2013 and analyze if a deferred agreement is possible. A DPA is an agreement reached under judicial supervision between the prosecutor and an organization. It may be appropriate where the public interest is not best served by mounting a prosecution. For example, we can mention cases when corruption is not too expanded or when the prosecution involves national security or when the organization fully co-operates with the Serious Fraud Office.
SLIDE15: The agreement allows a prosecution to be suspended for a defined period provided the organization meets some specified conditions. Conditions attached to a DPA may include:
- Disgorgement of profit,
- Payment of a fine
- Compensation for the victims
- Cooperation in any prosecution of individuals
- Implementation of compliance program, with, if necessary, the appointment of a monitor.
However entering into the agreement will be a fully transparent public event.
SLIDE 16: With Section 7 of the Bribery Act, the United Kingdom has developed a clear strategy of self-defense putting companies all over the world under the constraint to develop a program against corruption. In this way, Section 7 of the Bribery-Act is very similar to an-antivirus software. As a conclusion, we can mention around 15 ongoing investigations by the Serious Fraud Office against companies, but no prosecution until now.