On 30 March 2011, the Serious Fraud Office (SFO) and the Director of Public Prosecutions published their joint guidance for prosecutors (the Guidance) for offences under the UK’s new Bribery Act, which comes into force on 1 July 2011. This coincides with the publication of the final guidance issued by the Department of Justice on the adequate procedures defence to the s. 7 corporate offence of failing to prevent bribery. Bribery Act 2010 – Adequate Procedures Guidance.
The new Guidance addresses a number of issues:
- Two-stage test for prosecutors – As with other criminal offences, prosecutions for bribery under the new Act need to pass the two-stage test in the Code for Crown Prosecutors – i) the evidential stage and ii) the public interest stage.
If a prosecutor does not have sufficient evidence to make a conviction more likely than not, prosecutors should not go on to consider whether a prosecution is in the public interest, no matter how serious or sensitive the case is.
- Public interest considerations – In determining whether a prosecution is in the public interest, prosecutors should take into account a number of factors set out in the Guidance which tend either in favour or against prosecution. These factors differ depending on the offence in the Act in respect of which prosecution may be brought. They include, among other factors:
○ whether conviction is likely to result in a substantial sentence
○ whether the suspect was in a position of authority or trust; and
○ whether there was an element of corruption of the victim in the way the offence was committed.
In respect of the Corporate Offence, the SFO’s Guidance on Corporate prosecutions will be considered. This Guidance sets out further factors likely to weigh in favour of prosecuting a company which include:
○ whether the company has a history of similar conduct;
○ whether the conduct is part of the established business practices of the company
○ whether the company has already been the subject of warnings or sanctions; and
○ whether the company’s reporting was slow or concealed the full extent of the offending conduct.
Prosecutors are also entitled to consider whether conviction of company personnel for a minor offence under the Act would have a disproportionate effect on the company by leading to the company’s debarment from public contracts.
- “Financial or other advantage” – The general “active” and “passive” bribery offences and the offence of bribing a foreign public official all refer to a “financial or other advantage”. This term is not defined in the Act. The Guidance states that the term “advantage” should be understood in its ordinary everyday meaning.
- Strict Liability Corporate Offence of failing to prevent bribery – The Guidance makes clear that the Corporate Offence does not require prior prosecution of the associate person although there needs to be sufficient evidence to prove bribery by the associate person to the normal criminal standard.
For corporates seeking to avail themselves of the adequate procedures defence, they will need to establish the defence on the balance of probabilities. The Guidance makes clear that a single instance of bribery does not necessarily mean that an organisation’s procedures are inadequate. The actions of an employee may be wilfully contrary to very robust corporate contractual requirements, instructions or guidance.
- Hospitality – The Guidance makes clear that hospitality which is not excessive or disproportionate and which is made in good faith is unlikely to attract the attention of the prosecutors. The more lavish the hospitality or expenditure, the greater the inference that it is intended to encourage or reward improper performance of a function or activity. Lavishness is just one factor that may be taken into account in determining whether an offence has been committed.
- Facilitation Payments – Unlike the US Foreign Corrupt Practices Act, the UK Bribery Act has no carve-out for facilitation or grease payments and this point is reiterated in the Guidance.
The Guidance stresses that all cases under the new Bribery Act should be considered on their own merits, but given the likely importance of precedents – particularly for prosecutions under the Corporate Offence – lawyers will be watching closely to see how prosecutors and the courts apply the new law in practice after 1 July 2011.