Student I.
D: 201317557
Introduction:
Bribery is an evil practice which threatens the foundation of any civilized society1, it corrupts not
only the recipient but also the giver of the bribe2. Bribery is bad for legitimate businesses, along
with ruining their own name in the market it also tarnishes the names of the companies that
associate itself with these businesses. Such reputational damage is a key argument used in the
expansion of the legal repercussions of permitting or failing to prevent corrupt practices, whether
it be on the corporate level or by lower level or rogue representatives acting against the
company’s policies and procedures3. Bribery also creates problems for governments that are
trying to tackle corruption and to encourage foreign investment, as a level playing field is
obviously desirable for the honest majority4. The United Kingdom came under heavy duress
when the OECD’s Working Group on Bribery criticized the United Kingdom’s failure in
prohibiting bribes being paid by its companies in foreign markets as well as failing to bring its
anti-bribery laws into line with its international obligations under the OECD Anti-Bribery
Convention and urged the rapid introduction of new legislation5. Thus the Bribery Act, on 8th
April 2010, received a Royal Assent and came into action. Atkins describes the UKBA 2010 as
the “the toughest anti-corruption legislation in the world”6 , despite the issue of MoJ guidance7
1
A-G for Hong Kong v Reid [1994] 1 AC 324 (PC) per Lord Templeman, 330.
2
Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119 per Collins J, 122
3
Andrew Hudson, 'The UK Bribery Act: Are You Safe In The UAE?' (Al Tamimi, 2014)
<[Link]
accessed November 2014.
4
ibid
5
'OECD Group Demands Rapid UK Action To Enact Adequate Anti-Bribery Laws' (OECD,
2008) <[Link]
bribery/[Link]> accessed 17 May
2020.
6
Matt Atkins, ‘Introduction to the UK Bribery Act’ (2011) 6 Financier Worldwide 5
7
Ministry of Justice (MoJ), ‘Guidance about procedures which relevant commercial
organisations can put into place to prevent persons associated with them from bribing (section 9
of the Bribery Act 2010)’ (March 2011).
Student I.D: 201317557
and it bring reiterated in the terms of the SFO by its directors8, there still seems to be a mass
uncertainty of the law among businesses about how to interpret the Act. Therefore, this essay
will examine, firstly what the offences under the bribery act are and what part of the Bribery Act
2010 is most applicable to MoCash. secondly analyze how facilitating payments work and how it
compares to bribery, thirdly how to use the defence available to a company like MoCash and
lastly how this can be conveyed to their employees.
What are the offences under the Bribery Act 2010 and difference between Active and
Passive Bribery:
The key offences a company should keep in mind are:
- Section 1 Offences (Active Bribery)
- Section 2 Offences (Passive Bribery)
- Section 6 Offences (Bribing a foreign official)
- Section 7 Offences (Corporate offences- strict liability offences)
Active Bribery: This term refers to the offence committed by the party that promises or gives
the bribe, these set of offences are in relation to section 1 of the Bribery Act where a bribe can be
an offer, promise or a financial or other advantage to another person9. The aim of these offences
are:
- To bring about the improper performance of a relevant function or activity or to reward
such improper performance conducted by another person10 (Case 1) or
8
SFO ‘Pinsent Masons and Legal Week Regulatory Reform and Enforcement Conference’ (24
October 2013) <[Link]/about-us/our-views/director's-speeches/speeches-2013/pinsent-
masons-and- [Link]> accessed 7
October 2014.
9
Section 1(2) and (3) of the Bribery Act
10
Section 1(2) of the Bribery Act
Student I.D: 201317557
- Where the person who offers the advantage believes that the acceptance of the advantage
offered, promised or given in itself constitutes the improper performance of a function or
activity11(Case 2)
- Examples of active bribery are:
- A public official being offered financial advantage in order to be awarded a contract 12, To
circumvent planning or safety procedures mandatory for projects13
- Placing bribes through a consultant to be awarded public contracts 14
- Payment of small bribes to custom officials to expedite passage of goods through a
port15
- Employing a public official’s son to influence the award of contracts16.
- Influencing a doctor to prescribe your product by paying them an amount 17
- Any company, director or employee who offered or provided an advantage to a waste
company representative in order to deliberately misclassify or understate their waste
would also be guilty of this offence.
The test of "impropriety" is an objective, "reasonable person in the United Kingdom"
standard. That is to say, the question of whether or not R has behaved improperly will
11
See Section 1(3) of the Bribery Act.
12
R v Sweett Group Plc
13
'Tianjin Chemical Blast: China Jails 49 For Disaster' (BBC, 2016)
<[Link] accessed 4 November 2016.
14
'What Is Bribery ?' (Anti Bribery Guidance, 2020)
<[Link] accessed 18 May
2020.
15
Ibid(n14)
16
Ibid(n14)
17
Ibid(n14)
Student I.D: 201317557
disregard any issues such as overseas customs or practices18 so the reach is proven to be extra
territorial.
Passive Offences: This terms refers to the offence committed by the party that requests,
receives, agrees to receive or accepts the bribe. These are 4 types of offences:
- Requesting or agreeing to receive or accept a financial advantage, ‘intending that’, in
consequence, a function is performed improperly. (Case 3)
- Requesting or agreeing to receive or accept a financial advantage that of itself
constitutes the improper performance of a function (Case 4)
- Requesting or agreeing to receive or accept a financial advantage as a reward for
improper performance of a function (Case 5)
- In anticipation of requesting or agreeing to receive or accept a financial advantage, a
function is performed improperly by the defendant or the a person made
responsible by the defendant for the improper function (Case 6)
In cases 3, 5 and 6 it does not matter whether the function or activity is to be, or has been,
performed by the defendant or by another person19. In cases 3-6 it does not matter whether the
defendant requests, agrees to receive or accepts the advantage directly or through some third
party20. In cases 4-6, it does not matter whether the defendant knows or believes the performance
of the function or activity to be improper21. In case 6, where a person other than the defendant is
performing the function or activity, it does not matter if he believes his function to be improper22.
18
Thomas Webb and Nick Churchward, 'Preventing Bribery In The Waste Industry' (Recycling
Waste World, 2016) <[Link]
bribery-in-the-waste-industry/148187/> accessed 15 November 2016.
19
S2(2),(3),(5) of the Bribery Act 2010
20
S2(6) of the Bribery Act 2010
21
S2(7) of the Bribery Act 2010
22
S2(8) of the Bribery Act 2010
Student I.D: 201317557
A bribe is not just restricted to an offering or taking a simple monetary reward, it can mean
corporate hospitality, Christmas gifts or even employing someone23. Letting agents who are paid
referral fees for introducing contractors to their clients need to be careful that they do not fall
under the Bribery Act 201024. Section 5(1) of the Bribery Act 2010 states that under sections 3
and 4 the reference to expectation is a test of what a reasonable person in the United Kingdom
would expect in relation to the performance of the type of function or activity concerned in the
issue being discussed.
Section 6 of the Bribery Act provides a solution to the problem that is bribing a foreign official.
It creates a discrete offence of P bribing F, a foreign public official. In terms of coverage, doubts
arise whether this offence adds much to the core offence under section 1 of P offering or paying
a bribe to R given that R may well be an official foreign or otherwise25,given that since 2001 UK
corruption legislation has an extraterritorial reach26.
The reach of section 6 is wider and less complex than the section 1 offence as liability can be
proven from offer or giving of advantage by P to F to obtain or retain business without any
requirement to prove impropriety. Any promise made to a foreign public official of financial or
other advantage through P or a third party, intending to obtain or retain business or an advantage
in the conduct of business will prove to be liability under Section 6. P will not commit an offence
if F is required or permitted by written law applicable to him to be influenced in his capacity as a
foreign public official by any offer, promise or gift27.
The Bribery Act recognizes the nationality and territoriality principles, if Section 1,2 and 6 type
acts were committed in the UK, the authorities have complete jurisdiction28. If no such act takes
place in the UK, the authorities can rely on the nationality principle under two conditions, the act
23
Claire King, 'April 2018' (Fenwick Elliott, 2020) <[Link]
insight/newsletters/insight/78> accessed 18 May 2020.
24
ibid
25
Jeremy Horder and Peter Allridge, Modern Bribery Law: Comparative
Perspectives(Cambridge University Press 2020).
26
Anti-terrorism, Crime and Security Act 2001, ss. 108-109
27
S6(4)(b), Bribery Act 2010
28
Section 12(1) of the Bribery Act
Student I.D: 201317557
would form part of a bribery if done or made in the UK or/and the briber has a close connection
with the UK29.
Section 7 is a new act under the Bribery act where an offence is committed when an associated
person (A) bribes another person with the intention of obtaining a business advantage for C
(Company)30. For the offence to apply the individual must be shown to have been guilty under
Section 1 or 6.
In the case of MoCash, a waste disposal company with public and private sector clients it is
highly likely in my opinion that they would be susceptible to, Section 2 (Passive) in the scenario
that a company pays one of their employees to misclassify or under or overstate their waste,
Section 1(Active) in the scenario that MoCash pay a bribe to some companies to be awarded the
contract of being their main waste disposal contractor, Section 6 (Bribing a Foreign Official) is
relevant as MoCash has overseas clients and Section 7 (Corporate Offence) as bribes given by
any employee, agent or sub-contractor, whether in the UK or abroad, in order to help the
MoCash will result in that company being criminally liable, facing unlimited fines31.
Facilitation Payments:
Facilitation or ‘grease payments’ are relatively minor amounts, that are paid to officials, used to
conduct routine business activities. Despite these sums being small, these payments help
facilitate business activities and the consequences of not paying can be dangerous, for example.
(A delay by a foreign official issuing a permit for example could seriously delay an entire
project, which could increase overhead costs and could result in monetary penalties). Under the
current OECD convention, facilitation payments are permitted as well as the FCPA has a written
exception for bona fide facilitation payments, the prosecutors at the DOJ apply the same rules32 .
However, the UK has never recognized facilitation payments as an exception to the foreign
29
Section 12(2) and (3) of the Bribery Act
30
David Lawler, Frequently Asked Questions On Anti-Bribery And Corruption(John Wiley &
Sons 2012).
31
Ibid (n18)
Student I.D: 201317557
bribery offence33 and the Act makes it an offence for any payment falling within this description
to be made in the UK or abroad34. Under S.6 of the act an individual will be guilty if he offers an
advantage to a foreign public official directly or through a third party, the inclusion of ‘third
party’ is intended to prevent people or companies from using third parties to avoid committing a
crime themselves35. However, they have become a fact of life in many countries to get things
done quickly and there has been a massive outcry from businesses as some have claimed that the
UKBA is too stringent in its approach as such payments in some countries are customary and
transacted on a daily. The SFO has indicated that it does not approve of any company that does
not adopt a ‘zero-tolerance’ policy to facilitation payments. Even more importantly, if companies
have a policy of allowing facilitation payments then the courts will view the companies policies
as not compliant to the ‘adequate procedures’ under Section 7 of the Act. It must be said,
however, when there is a scenario where a corrupt public official puts undue pressure on an
individual or corporation to make a facilitation payment in order to protect themselves against
loss of life, limb or liberty, the common law defence is very likely to be available in such
situations36. It should also be mentioned that the Government recognizes the problems that some
companies face in some parts of the world and sectors therefore keeping the eradication
facilitation payments as a long term goal37. There is a scenario where facilitation payments in the
32
David Lawler, Frequently Asked Questions On Anti-Bribery And Corruption(John Wiley &
Sons 2012).
33
All Answers ltd, 'Is the Bribery Act 2010 Harmful to UK Companies?' ([Link], May
2020) <[Link]
[Link]?vref=1> accessed 16 May 2020
34
Serious Fraud Office (SFO) ‘Facilitation Payments’ (9 October 2012)
<[Link]/bribery-- corruption/the-bribery-act/[Link]>accessed 7
October 2014.
35
Ibid (n.26)
36
The Bribery Act 2010 Guidance (The Ministry of Justice 2010)
<[Link] accessed 18
May 2020.
37
ibid
Student I.D: 201317557
form of Corporate Hospitality and Networking will not be classified as bribery, Lord Tunnicliffe
stated that it would be legal to use corporate hospitality for ‘legitimate commercial purposes’ but
it must be kept in mind that if the service offered is deemed too lavish or disproportionate it will
be deemed illegal38. Mocash being a private limited company, domiciled in the UK is naturally
compliant with the Bribery Act 2010 and as Mocash makes frequent payments to facilitate its
activities, e.g. license application fees, import/export fees etc, the company has no choice, if it
wants to be compliant to the act and not commit any criminal offences, but to stop these
payments as soon as possible. Although the risk of large scale corruption is low, it can be
understood that paying these fees has to do with the constant liaison with port authorities, custom
officials, countries where these payments are legal and it is compulsory to pay these fees and that
these encounters carry a high risk of demands for facilitation payments39 but nevertheless where
it is customary to pay the fee it must be stopped immediately due to it being fully illegal. The
advice that is given is based in the fact that if the commercial organization is guilty of an offence
of failing to prevent bribery, under Section 7 of the Bribery Act this is a strict liability offence.
How can MoCash avoid liability and what procedures should it place ?:
The Identification Doctrine has been a cornerstone in determining corporate liability and
determining any wrongdoings carried by agents of the company. The doctrine has a key
component in the form of directing mind and will, which has been key in determining the
outcome of cases. The case of Tesco v Nattrass40 held that the defendant had set up a proper
system of control and the offence that was committed was just ‘another person’ and that he took
all reasonable precautions for avoidance of such an offence by him or anyone under his control.
Large scale corporations can adopt such principles and show how employees were not
identifiable as being the directing mind and will for a company as they were not at a decision
making level41 but the courts in Meridian42 had stated that the conviction of a smaller company is
38
Nick Kochan and Robin Goodyear, Corruption: The New Corporate Challenge (Palgrave
MacMillan 2020).
39
A.P. MOLLER MÆRSK, 'Sustainability Report 2016' (AP MOLLER MÆRSK 2016).
40
Tesco Supermarkets v Nattrass [1972] AC 153
41
R v Redfern [1993] Crim LR 43
42
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 A.C. 500
Student I.D: 201317557
easier as the relationship between the culprit and the company can be identified with more ease
and certainty which is not the case in larger companies. Most companies that make a clear
demarcation between Top Level Management and its employees most of the time circumvent the
Identification doctrine. But the question that arises, is MoCash a large corporation or a small
business ? A private limited company is a type of privately held small business entity with a
minimum of 2 shareholders and a maximum of 5043, which shows that MoCash is a small
business entity. So in the case of MoCash, despite the doctrine bring unsuited to modern
corporations44 it has to be wary of not being liable under the principle that a company can form
its intentions through its human agents and the actions of the agents can be presented to be that
of the corporations45. The way it can do this is by showing that MoCash indeed has in place
adequate procedures designed to prevent persons associated with MoCash from undertaking such
conduct46 that would cause them to be liable form improper behaviour47.
The Ministry of Justice laid down six principles48 in the their guidance to assist in determining
what adequate procedures are, MoCash applying them would be beneficial:
- Proportionate Procedures: MoCash should set out clear clauses in their contracts with
any company that they deal with in the future that they have adopted a strict zero
tolerance policy when it comes to bribery. A right to terminate exists in certain
circumstances where there has been a corrupt act 49and my belief is that adoption of this
right in their contracts would benefit MoCash
- Top Level Commitment: MoCash should issue a board level statement of its commitment
to its zero tolerance when it comes to bribery and should ensure that senior management
takes it absolutely seriously.
43
[Link]
disadvantages.
44
Ibid(n42)
45
Director of Public Prosecutions v Kent & Sussex Contractors Ltd [1944] KB 146
46
Section 7(2) of the Bribery Act 2010
47
Ibid (n40)
48
Ibid(n7)
49
See Clause 91.8 of NEC4 Engineering and Construction Contract, June 2017
Student I.D: 201317557
- Risk Assessment: . Identify areas where facilitation payments will be required no matter
what and try to abstain doing business with them if possible and concentrate on areas
with a low risk index so those areas can be capitalized and business can be done
accordingly. Inform to the top level regularly where coercion of payment has taken place
so the authorities can be mentioned accordingly.
- Due Diligence: Carry out all the appropriate checks before entering into agreements or
signing contracts with a third party. Must be thoroughly checked in the context of the S.7
offence.
- Communication and Training: Ensuring that all your staff are fully trained and aware of
their obligations to report bribery or any attempts at bribery, training should be taken
place if any new guidance is issued under s.950 about procedures relevant to the
commercial organizations that can be put in place to prevent bribery.
- Monitoring and Review: Regularly review and act on your anti-bribery procedures. Be
clear about how you will deal will allegations of bribery in the public arena or within the
company.
Conclusion:
There are a variety of challenges that MoCash will face when adhering to this new regime yet in
the long term it can prove to be beneficial as it increases their market reputation as well as their
credibility with the government and public institutions which in a way will get them referrals for
increase of business. The best way to implement this is to first send out an internal email on what
policies the company is adopting and give them clarity as to what bribery is and how it affects a
company so it is clear to the employees. Insisting on following through with the adequate
procedures to ensure total compliance with the general law is the best way to ensure longevity in
the market aside from other business principles.
Bibliography:
50
Section 9 of the Bribery Act 2010
Student I.D: 201317557
Primary Sources (cases, legislation):
A-G for Hong Kong v Reid [1994] 1 AC 324 (PC) per Lord Templeman, 330.
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 A.C. 500
Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119 per Collins J, 122
Director of Public Prosecutions v Kent & Sussex Contractors Ltd [1944] KB 146
R v Sweett Group Plc
R v Redfern [1993] Crim LR 43
Section 1(2) of the Bribery Act 2010
Section 1(3) of the Bribery Act 2010
Section 1(5) of the Bribery Act 2010
Section 9 of the Bribery Act 2010
Tesco Supermarkets v Nattrass [1972] AC 153
Secondary Sources: (Books, journals, websites):
All Answers ltd, 'Is the Bribery Act 2010 Harmful to UK Companies?' ([Link], May
2020) <[Link]
[Link]?vref=1> accessed 16 May 2020
A.P. MOLLER MÆRSK, 'Sustainability Report 2016' (AP MOLLER MÆRSK 2016)
David Lawler, Frequently Asked Questions On Anti-Bribery And Corruption(John Wiley & Sons
2012).
Horder J, and Allridge P, Modern Bribery Law: Comparative Perspectives (Cambridge
University Press 2020)
Hudson A, 'The UK Bribery Act: Are You Safe In The UAE?' (Al Tamimi, 2014)
<[Link]
accessed November 2014
King C, 'April 2018' (Fenwick Elliott, 2020) <[Link]
insight/newsletters/insight/78> accessed 18 May 2020
Student I.D: 201317557
Kochan N, and Goodyear R, Corruption: The New Corporate Challenge (Palgrave MacMillan
2020)
Matt Atkins, ‘Introduction to the UK Bribery Act’ (2011) 6 Financier Worldwide 5
Ministry of Justice (MoJ), ‘Guidance about procedures which relevant commercial organisations
can put into place to prevent persons associated with them from bribing (section 9 of the Bribery
Act 2010)’ (March 2011).
'OECD Group Demands Rapid UK Action To Enact Adequate Anti-Bribery Laws' (OECD,
2008) <[Link]
bribery/[Link]> accessed 17
May 2020
Serious Fraud Office (SFO) ‘Facilitation Payments’ (9 October 2012)
<[Link]/bribery-- corruption/the-bribery-act/[Link]>accessed 7
October 2014.
The 2010 UK Bribery Act Adequate Procedures (Transparency International UK 2010)
The Bribery Act 2010 Guidance (The Ministry of Justice 2010)
<[Link] accessed
18 May 2020
'Tianjin Chemical Blast: China Jails 49 For Disaster' (BBC, 2016)
<[Link] accessed 4 November 2016
Webb T, and Churchward N, 'Preventing Bribery In The Waste Industry' (Recycling Waste
World, 2016) <[Link]
in-the-waste-industry/148187/> accessed 15 November 2016
'What Is Bribery ?' (Anti Bribery Guidance, 2020)
<[Link] accessed 18
May 2020
Student I.D: 201317557
'Wilkinson, Meaghan --- "Corporate Criminal Liability. The Move Towards Recognising
Genuine Corporate Fault" [2003] Canterlawrw 5; (2003) 9 Canterbury Law Review 142'
([Link], 2020) <[Link] accessed
20 May 2020
No Title:
[Link]
disadvantages