Anti-bribery & corruption laws either side of the Atlantic
A comparison of enforcement under the UK Bribery Act and the US FCPA
By Andrew Keltie – Baker & McKenzie | CFO UK | Published 15:24, 01 May 13
The UK Bribery Act 2010 (the "Bribery Act") came into force on 1 July 2011, whereas the US Foreign Corrupt Practices Act (the "FCPA") has been around for over 30 years.
In the first few years after the FCPA came into effect, enforcement was focused on single-actor type cases, until 1982 when an action was brought against five corporate and twelve individual defendants. As the FCPA reaches its 35th anniversary, the US government collected more than $260 million in financial penalties from corporations in 2012, and enforcement peaked in 2010 with collections of over $1 billion.
Almost two years have passed since the Bribery Act came into force which repealed existing anti-corruption legislation in the UK and there is yet to be a significant prosecution. However, given that investigations on average take two years to complete, we may expect to see the results in the near future, especially with a new director at the helm of the Serious Fraud Office (the "SFO").
Both Acts have broad extra-territorial application and consequently many international companies will fall within the scope of both. In order to protect themselves, it is important for affected companies to be aware of the differences. This article aims to provide an overview of the differences between the two Acts and of the trends in enforcement on both sides of the Atlantic in recent years.
Differences between the Bribery Act and FCPA
Whilst the FCPA is renowned for aggressive criminal and civil enforcement by the US Department of Justice ("DOJ") and the US Securities and Exchange Commission ("SEC") respectively, businesses must appreciate that an FCPA compliance policy will not necessarily satisfy the requirements of the Bribery Act.
Public vs. private
Most importantly, the UK regime applies to the bribery of both public and private persons whereas the FCPA generally only applies to foreign public officials. The UK rules also cover both the payment and receipt of bribes, whereas the FCPA only covers payment. However, note that other US laws (state and federal) may be used to punish commercial bribery.
Corporate offence: strict liability vs. burden of proof
The corporate offence under the Bribery Act, where a person associated with a company bribes another person, is one of strict liability and so does not require corrupt intent on the part of the company or its officials. By contrast, under the FCPA, some level of knowledge or intent in relation to the corrupt payment must be demonstrated. It is thus arguably easier to establish liability against a corporate entity under the Bribery Act.
Both Acts have a wide jurisdictional reach. As well as including US nationals and domestic entities, the FCPA applies to non-US companies who are listed in the US and to non-US companies and citizens who commit bribery in the jurisdiction. US enforcement authorities view this expansively; for example, sending an email through a server in the US could establish jurisdiction over a company that has no US operations. Furthermore, in recent years the SEC has held parent companies liable under the FCPA for corrupt payments made by their foreign subsidiaries.
The Bribery Act will apply if any part of the offence takes place in the UK or if an offence outside the UK is committed by a person with a close connection with the UK, or where a person associated with a UK company, or a company that does business in the UK, commits an offence anywhere in the world. In theory, therefore, acts of bribery which have been committed outside of the UK by non-UK entities or persons could be caught.
Failing to prevent bribery
Under the Bribery Act, a company can be directly liable for failing to prevent bribery committed on its behalf by a person associated with it. Although there is no specific offence in the US, this could be caught if a company has ignored signs of corruption and corporate officers can be held responsible if they supervise senior management or are responsible for policies on the company's international operations.
Adequate procedures defence
The Bribery Act provides a defence for organisations when a person associated with the company commits an offence, if the company has adequate procedures in place designed to prevent persons associated with it from committing bribery. Generally, companies will be judged on the competency of their procedures and whether they have adequately targeted the risks that they face.
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