UK Bribery Act 2010 - Lessons that still need to be learnt: a lack of clarity?
July 18, 2016
By Victoria Murphy & Ayesha Salahuddin
Whilst important lessons have been learnt over the last five years on the UK Bribery Act 2010 (UKBA), more clarification is still required around enforcement and the steps commercial organisations need to take to manage their bribery and corruption risk. In our latest blog we look at five areas we believe require further clarification.
- “Adequate procedures” - Whilst cases arising from enforcement of the UKBA have shown us what “adequate procedures” don’t look like, we are yet to learn what they do look like. This is because, as the Ministry of Justice (MOJ) Guidance states, the defence of “adequate procedures” in a particular prosecution “can only be resolved by the Courts taking into account the particular facts and circumstances”.
- Small or medium sized businesses (SMEs) - The MOJ guidance further states that the application of the MOJ principles are likely to vary for SMEs as compared to large multinational organisations. Whilst the most recent Deferred Prosecution Agreement (DPA) – which we will detail in next week’s blog – concerned an SME, it is not immediately clear from the judgement issued on 11 July 2016 whether the treatment of anonymised ‘XYZ Limited’ was significantly influenced by company size.
- Jurisdictional reach - Section 7 of the UKBA applies to any commercial organisation incorporated or formed in the UK, or which carries on business or part of the business in the UK. When the UKBA was introduced, clients in foreign jurisdictions questioned whether they could be said to be carrying on a business in the UK in whole or in part. Companies looking for answers to these questions are unlikely to have found them to date.
- Gifts & hospitality - Of great concern when the UKBA came into force was the extent to which gifts and hospitality could be interpreted as bribery. The MOJ was keen to point out that the UKBA was never intended to stop genuine relationship development events “like Wimbledon or the Grand Prix” however, the questions remain; what would happen in a scenario where excessive gifts and hospitality coincided with a company winning a significant contract and what does excessive look like?
- DPA or not DPA? - The Serious Fraud Office (SFO) has commented that for a defendant to strengthen its argument that a DPA is in the interests of justice, a defendant should approach the SFO as a soon as possible and involve it in any investigation and strategic decisions. However, given the small number of cases to date, arguably there remains a lack of clarity around the benefits of a DPA and the extent of cooperation required for a corporate to be offered a DPA, which may mean some corporates are hesitant to come forward.
Ultimately, a full robustly defended trial may be required in order to truly test and understand the issues at (1) to (4) above. In the interim, corporates who have doubts over their compliance with the UKBA should obtain legal advice to manage the risk of bribery and corruption in the business.
In next week’s blog we will look into our crystal ball and provide our thoughts on potential future trends.