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The Law Society has just published a report entitled Reforming Bribery setting out proposals which it intends should clarify and simplify the existing laws.

Anyone in business should be aware that there already are established offences of bribery and corruption on the United Kingdom statutes. International pressure is increasingly being applied to stamp out activities which are intended to gain a business advantage by the payment of money, goods or services as inducements to enter into contracts. A common complaint is where it is alleged that a company has obtained a contract by paying “backhanders” perhaps to an offshore company or private Swiss bank account owned by one or more people who have the power to grant the contract.

You will know that the British Government has come under fire for ordering the Director of Public Prosecutions to cease action against British Aerospace who, it is alleged, made payments to members of the Saudi Royal Family to gain contracts for the supply of aircraft and services.

Leaving aside the rights or wrongs of the British Aerospace case the fact is that as the current laws are generally agreed to be confusing and outdated there is a need for reforms to clarify the situation.

The Law Society propose that the common law offence of bribery and all existing statute law pertaining to with regard to bribery should be repeals and replaced with two general offences, one concerned with the conduct of the payer of a bribe and the other with the conduct of the recipient. There will also be a specific offence regarding the bribery of a foreign public official, and a new corporate offence which could mean that all directors of a company could be prosecuted.

Under the new proposals:

  • It will be an offence for an individual to offer an advantage to somebody in an attempt to induce them to do something improper.
  • It will be an offence for a company to employ an agent who bribes others on the company’s behalf, unless the Company can show it had adequate procedures in place designed to prevent this kind of conduct.
  • The making of “facilitation payments” (see below) will also be an offence.
  • Individual managers and directors could also be convicted if they consent or connive in an offence committed by the Company.

It should be noted that offences under UK law can also be committed outside the United Kingdom if the person is a British citizen or ordinarily resident in the UK or if committed by or on behalf of a UK company. The penalties for these offences will be in line with fraud which could mean very heavy prison sentences for individuals.

If accepted the proposals will not only give clarity to the UK position but also bring it more into line with the situation in the US and other European countries and reinforces the views expressed by Lord Woolf in his report issued in May this year on global ethical codes of conduct for multinational companies and the necessity for all companies operating internationally of having a robust code of conduct which is not only adopted at Board level but enforced vigorously in every area the company operates.

Facilitation Payment

A facilitation payment is a form of bribery made with the purpose of expediting or facilitating the performance by a public official for a routine governmental action and not to obtain or retain business or any other improper advantage.

A facilitation payment is typically demanded by low level and low income officials in order to obtain levels of service that one would officially be entitled to without such payment.

Generally a distinction is made between facilitation payments and outright bribery and corruption in many countries it is considered normal to provide small unofficial payments to public servants under certain circumstances.

Although facilitation payments are prohibited by the United Nations Convention against Corruption they are not covered by the OECD (Organisation for Economic Cooperation & Development) Anti-Bribery Convention. This means that although countries such as the UK and Germany have made facilitation payments abroad illegal, others, including the United States, have not. Indeed they have no upper limit on such payments. Not really a level playing field then.

So, business owners beware. It isn’t just big business that the law is aimed at even the supply of tickets for a football international or a free holiday could be investigated as bribery if it is felt that these were made in the expectation of gaining a business advantage. But what else would you be doing it for?

Looking on the bright side, if it means that we can get rid of all the business hospitality packages at rugby internationals so that there are more seats for fans who want to watch the match rather than get drunk in the hospitality suites then it gets my vote!

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Category: Business Law

3 Responses to “Reforming the Law on Bribery and Corruption”

  1. John Arnold says:

    Gosh – isn’t this all a bit complicated?

  2. Arizona67 says:

    Good info. Good luck with the blog

  3. Usdjango says:

    I’ve made it to the end. Thanks for putting it together. Lots of things I didn’t know. BOOKMARKED!

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