Lawyers, Guns and Money – The Bribery Problem and U.K. Bribery Act

Abstract

With expanding U.S. business operations around the globe, the potential for significant exposure to international corruption increases along with the increased risks associated with anti-bribery laws. Companies who employ citizens of the United Kingdom, maintain an office in the United Kingdom, or are service providers to any United Kingdom organizations are subject to the U.K. Bribery Act and may be held liable for unlimited fines and jail terms which increase to ten years. Regardless of their countries of origin, multinational companies will inevitability be impacted by the U.K. and U.S. anti-bribery statutes. The SEC and the U.K.’s SFO [Serious Frauds Office] and FSA [Financial Services Authority] are increasing their coordination to work together in the areas of common regulatory interest, including cross-border enforcement cases. Any attempt to assess corporate risk for a U.K. Bribery Act violation requires an understanding of how the statute operates and is enforced.

The U.K. Bribery Act replaces a patchwork of statutory and common law offenses dating back to 1889 and is designed to modernize and simplify the current anti-bribery restrictions in the United Kingdom. At its core, the U.K. Bribery Act creates four distinct categories of offenses: (1) bribing another person; (2) taking bribes; (3) bribing foreign public officials; and (4) the failure of a commercial organization to prevent bribery. We begin with a brief discussion of the international bribery problem. Next, because the U.K. Bribery Act is relatively new, we provide an explanation and analysis of the Act, along with a description of the SFO’s revised policies published on October 9, 2012. An analysis of many of the key differences between the Foreign Corrupt Practices Act (FCPA) and U.K. Bribery Act is then presented. Now that more than two years has past since implementation, an assessment of this law’s impact is presented. As the world continues to grow smaller and commerce increases, corporate officers and directors must necessarily become familiar with the provisions of the U.K. Bribery Act.

Keywords: Bribery, Corporate Governance, Corruption, Criminal Penalties, Director Liability, DOJ, Enforcement, Ethics, Facilitating Payments, FCPA, Fines, Foreign Corrupt Practices Act, Leadership, International Business, Litigation, OECD Convention on Combating Bribery, Sanctions, SEC, SFO, U.K. Bribery Act

JEL Classification: F13, F23, G18, G28, G38, K14, K20, K22, K33, K42, L14, L21, L51, M14, O17, O38