Originally published in Reed Smith's Export, Customs and Trade Sentinel Newsletter, Winter 2008

On 29 November 2007, the Law Commission of the United Kingdom published its Consultation Paper ("the Paper") No. 185 entitled "Reforming Bribery." The Paper is the latest in a long running series of papers and reports that have been produced in an attempt to get a consensus as to the form that a modernized law to control bribery and corruption should take. A copy of the Paper can be obtained from www.lawcom.gov.uk/docs/cp185.pdf.

Background



In 1997, the Law Commission published a Consultation Paper that was followed in 1998 by a Report. In 2000, the Home Office produced a White Paper. In 2003, a draft Corruption Bill was produced by the Home Office. Also in 2003, the Bill was the subject of a Report of a Joint Committee of Parliament, and a Reply to the Joint Committee Report was provided by the Home Office. The Home Office produced a Consultation Paper in 2005. As a result of the criticism of the draft Corruption Bill, the Government decided to undertake a further consultation exercise and asked the Law Commission to publish the Paper. The hope is that an agreement can be reached with interested parties as to the form that a comprehensive, yet simple and easily understood, law to control bribery and corruption should take.

The Law Commission has deliberately entitled the Paper "Bribery" rather than "Corruption" in an effort to ensure that those reading the Paper understand that the purpose of the Paper is limited to consideration of the narrow offence of bribery rather than corruption in a wider sense, such as market abuse or the corruption of a market as a result of anti-competitive behavior.

The Paper is more than 320 pages and includes a detailed review of the current problems with the UK law governing bribery, details of the previous attempts to reform the law of bribery, as well as the Law Commission's current proposals for reform. There is a detailed explanation as to the fault element of the proposed offense, an explanation as to why there should be a separate offense of bribing a foreign official, an explanation of the proposed defenses, as well as a discussion on corporate liability and inchoate liability. Included within the appendices are:

  • Details of comparative laws from other jurisdictions;
  • A detailed discussion as to whether the focus of the offense should be on the harm caused to markets by bribes as opposed to betrayal by individuals and, in particular, the relationship between corruption and anti-competitive behavior; and
  • A discussion as to the status that should be attributed to facilitation payments, commission payments, and corporate hospitality.

The Law Commission's Provisional Proposals

The Paper is a consultation paper. The Paper includes requests for comments on a large number of questions. The questions are posed in the context of the Law Commission's proposals contained within the Paper. The proposals include:

The law to control domestic bribery – It is proposed that there should be a single law that will control both private and public bribery. Elements of the offense include:

  • The conferring, promising, receiving or soliciting of an advantage in connection with an improper act performed by or solicited from the recipient.
  • For a bribe to have taken place there will need to have been an improper act that involves: (1) a breach of a legal or equitable duty and (2) the betrayal of a relationship of trust or breach of a duty to act impartially or in the best interests of another.
  • The recipient of a bribe will be regarded as acting improperly if he or she represents a willingness to act improperly or agrees to act improperly. The recipient only needs to act improperly and not dishonestly. There is no need for the improper act to have been completed.
  • To be a principal offender, the bribe must be the primary reason why the recipient does the improper act. The payer will satisfy the fault element of bribery if he or she intends the advantage to be the primary reason for the recipient doing an improper act or foresees a serious risk that the advantage will create the primary reason for the recipient doing an improper act.

The law to control the bribery of a foreign public official – Elements of the offense include:

  • To constitute a bribe, the purpose of the bribe would be obtaining business, retaining business or obtaining or retaining a business advantage, as opposed to causing the recipient to breach a legal or equitable duty, which is the equivalent element in the domestic law. The reason that the purpose differs from the proposed domestic law is because of the potential difficulty in identifying whether an act carried out in another jurisdiction is such that it breaches a legal or equitable duty as recognized by English common law.
  • The proposed offense does not extend to inculpate the foreign public official who accepts the bribe.

As recorded above, the Law Commission proposes that the tried and tested concept of obtaining and retaining business as contained in the U.S. Foreign Corrupt Practices Act and the OECD Convention – Combating Bribery of Foreign Public Officials in International Business Transactions, should be used in relation to the bribery of foreign public officials.

Defenses – It is proposed that:

  • There should be a defense available to a payer who can prove that he or she believed it was reasonable to confer an advantage in order to avert imminent danger of physical harm to him or herself or another, or there was a reasonable belief that the payment was legally required.
  • One question in the Paper is whether the proposed defense of a belief that the payment was legally required should be extended to cases where the payer had a reasonable belief that the payment was legally permissible.

Consent to prosecution – Consent from the Attorney General for the prosecution of some of the statutory offenses is currently required. It is proposed that:

  • For all offenses except for those involving an extra-territorial element, consent should be given by the Director of Public Prosecutions or the Director of the Serious Fraud Office.
  • Where there is an extra-territorial element, consent of the Attorney General would have to be obtained.

Corporate Liability – The Paper includes a discussion of the various options, identified by the Law Commission, which could be used to increase the opportunities to convict a company of bribery. These options include the creation of offenses such as:

  • Inadequate supervision of a foreign subsidiary company;
  • Consent or connivance of a high ranking employee to the making of a bribe, and
  • Negligent supervision of others employed by the company.

The provisional proposal contained within the Paper is that the whole issue of corporate liability should be deferred to a wider review of corporate liability to be undertaken by the Law Commission.

Bribery committed outside England and Wales – It is proposed that any United Kingdom national or natural person who is resident in the United Kingdom would commit a bribery offence if they do an act anywhere that would constitute a bribery offence if done in England and Wales.

Comments

To commit the proposed domestic offense, the primary reason for the recipient acting improperly must be the receipt of the bribe. For example, if a public official had already decided to grant a license, and subsequently takes a bribe from a payer before issuing the license, the primary reason for granting the license is not the bribe as the public official had decided to grant the license before receiving the bribe. Most people would probably agree that a person, and in particular a public official, should be punished for taking a payment in such circumstances. However, under the proposed offense, those receiving the payment will only be punished if the bribe itself is the primary reason for their taking a certain course of action. Many of the comparable laws in other jurisdictions do not require that the payment of a bribe has to be the primary reason for an action being taken, merely that the bribe is a factor that contributed towards the relevant act being done.

It is to be expected that the Law Commission will receive detailed and considered comments to the many interesting questions contained within the Paper. The Law Commission has itself identified in the Paper many difficulties that exist in the compilation of a comprehensive, yet robust and easily understood law. The Law Commission has yet to take on the challenge of producing a Bill that satisfies all the interested parties.

What Happens Next?

The Law Commission has requested that it receive comments by March 20, 2008, and is to produce a final Report and draft Bill by Autumn 2008.

This article is presented for informational purposes only and is not intended to constitute legal advice.