Corporate liability and penalties under The Bribery Act 2010

The Bribery Act 2010 (Act), designed to provide an effective legal framework to tackle corruption in both the public and private sectors, is the main legislation governing bribery and corruption in the UK. The Act, which came into force in April 2011, set out five key bribery offences and introduced strict liability for commercial organisations whose service providers engage in bribery (unless the organisation has adequate procedures in place to prevent participation in such activity).

Since its introduction, the Act has been actively enforced by the Serious Fraud Office (SFO), with enforcement gaining momentum in 2017 when Rolls Royce PLC agreed to pay the SFO £497m, alongside further penalties of $169m and $25m to the US Department of Justice and Brazilian authorities respectively after it was found to have paid bribes to secure orders in six countries, including Indonesia, Russia and China.

This article considers the extent of corporate liability under the Act. Given not only the substantial financial implications but also reputational consequences of a finding of bribery, it is imperative for organisations to ensure they have effective anti-bribery measures in place to mitigate their risk under the Act.

Corporate bribery offences

Is there an offence for making a bribe? If yes, what is the scope of this offence?

Yes, “active” bribery is an offence under UK law. Although the statutory definition requires some unpicking, most people’s understanding of what a bribe might look like is caught by the Act.    

Under section 1 of the Act, it is an offence for a person (Person) to offer, promise or give a “financial or other advantage” (Advantage) to another if the Person:

• intends the Advantage to bring about an improper performance of a relevant function or activity (Relevant Function) by another person (or to reward such improper performance); or
• knows (or believes) that the acceptance of the Advantage (offered, promised or given) would in itself constitute the improper performance of a Relevant Function.

“Relevant Function” is very widely defined to include: (a) functions of a public nature; (b) activities connected with a business (which includes a trade or profession); (c) any activity performed in the course of a person's employment; and (d) any activity performed by or on behalf of a body of persons.

“Improper performance” is defined by the Act as performance (or non-performance) which breaches a “relevant expectation”, being the expectation that Relevant Functions are carried out in good faith or impartially. In addition, where the person performing is in a position of trust, any expectation of the manner in which the Relevant Function will be performed which arises from that position also qualifies as a relevant expectation.

An Advantage is not defined by the Act but is drafted broadly and can cover a huge range of incentives including (obviously) cash or cash equivalents such as vouchers, making charitable donations to a third party, awarding a contract to a particular entity, or employing a public official (or their relatives or associates). The Advantage can either be offered by the Person himself or indirectly via another person. The Advantage also does not need to be given directly to the person who has the Relevant Function to perform.

Is there an offence for accepting a bribe? If yes, what is the scope of this offence?

Yes, UK law criminalises “passive” bribery.  

Under section 2 of the Act, the recipient (or potential recipient) (Recipient) of a bribe can be guilty of an offence if:

• The Recipient requests, agrees to receive or accepts an Advantage, intending that a Relevant Function then be performed improperly (whether by the Recipient or another person).
• The Recipient requests, agrees to receive or accepts an Advantage and that in itself amounts to improper performance by the Recipient of a Relevant Function, whether or not the Recipient knows or believes that the performance of the Relevant Function is improper.
• The Recipient requests, agrees to receive or accepts an Advantage as a reward for the improper performance of a Relevant Function (whether by the Recipient or another person), whether or not the Recipient knows or believes that the performance of the Relevant Function is improper.

A Relevant Function is improperly performed (by the Recipient or another person at the request of the Recipient, regardless of whether the other person knew or believed the performance to be improper) in anticipation or in consequence of the Recipient requesting, agreeing to receive or accepting an Advantage, whether or not the Recipient knows or believes that the performance of the Relevant Function is improper.

Is it an offence to bribe a public official?

Yes, the Act contains a separate offence for bribing a foreign public official (FPO) under section 6(1). An FPO includes government officials and those working for international organisations.

A Person commits this offence if they intend to influence the performance of the FPO’s functions as a public official and to obtain a business advantage and:

• the Person directly or indirectly (through a third party) offers, promises or gives any Advantage to the FPO (or to another person at the FPO's request or with the FPO's assent or acquiescence); and  
• the FPO is neither permitted nor required by law to be influenced in his capacity as a FPO by such an offer, promise or gift.

What is the jurisdictional reach of all those offences?

An offence is committed under the above sections of the Act if:

• any act or omission which forms part of the offence takes place in the UK; or
• the act or omission does not take place in the UK, but: (i) would constitute an offence if it had been carried out in the UK; and (ii) the person carrying out the act or omission has a close connection with the UK.

A person will be considered to have "a close connection with the UK" if they are a British citizen (or various other categories of British passport holder), a UK resident or a body incorporated under the law of any part of the UK.

Can corporates commit bribery offences?

Yes, companies can be criminally liable under sections 1, 2 and 6 of the Act.

Under English law, the general rule is that to convict a person of a criminal offence, you must prove beyond reasonable doubt that the person both:

• committed the act prohibited by the offence – the actus reus; and
• had a guilty state of mind - the mens rea.

As artificial legal persons, English law recognises that companies do not have their “own” mind or intentions. However, the necessary mental state may be attributed to a company using the identification principle. To establish a company's guilty state of mind, it must be demonstrated that the "directing mind and will" of the company is behind the offence. The identification principle accordingly acknowledges the existence of corporate officers who embody the company. The acts and states of mind of certain officers and employees of the company are deemed to be those of the company, meaning the acts and mental state of such officers can constitute the actus reus and mens rea required to find a company culpable under English criminal law.  

The existence of the identification principle leads to a question as to which employees are considered the “controlling mind” of a company. The application of this principle has typically been restricted to the actions of the board of directors, the managing director and other senior officers, prompting criticism as it effectively limits corporate criminal liability to crimes committed directly by the highest-ranking executives. The Economic Crime and Corporate Transparency Act 2023 (ECCTA) aims to expand the identification principle to in short attribute criminal liability to an organisation if a “senior manager” acting within the actual or apparent scope of their authority commits an offence listed in the act (which include a section 1, 2 and 6 bribery offence). A “senior manager” is granted a broad definition, covering “those in the direct chain of management as well as those in, for example, strategic or regulatory compliance roles”¹, shifting the focus from assessing whether an individual is the “directing mind” of a company to an examination of the precise role and responsibilities of the individual in question.

Who enforces the legislation and what are the penalties for corporates?

The SFO is the main body with responsibility for enforcing the Act. When deciding whether to prosecute a corporate, the SFO must consider the “Full Code” test. This requires a two-stage approach. First the prosecutor must consider whether it has sufficient evidence to have a realistic prospect of successfully convicting the relevant company. If satisfied that is the case, the SFO then considers whether it would be in the public interest to prosecute.

If a corporate is prosecuted under sections 1, 2 or 6 of the Act, it will face an unlimited fine, the level of which the court will determine with reference to the Sentencing Act 2020 which provides that:

• the fine must reflect the seriousness of the offence; and
• the court must take into account the financial circumstances of the offending organisation.

In practice however, many corporate bribery cases investigated by the SFO have been subject to a deferred prosecution agreement (DPA) under which a corporate is not immediately subject to formal prosecution. Instead, the relevant entity agrees to a certain course of conduct and prosecution is deferred for a set period of time. If the corporate complies with all the requirements of the DPA, the matter is concluded without prosecution.

However, a conviction under section 1, 2 or 6 of the Act will lead to mandatory debarment from all EU public sector contracts for a period of up to five years². It should also be noted that a corporate prosecution does not prevent individuals from also facing prosecution. The maximum penalty for an individual convicted of a bribery offence is ten years imprisonment and the court can also make a directors disqualification order prohibiting an individual from acting as a company director. 

Failure to prevent bribery offences

Does the UK have a (separate) offence punishing corporates for “failing to prevent” bribery?  

Yes, section 7 of the Act provides that a corporate will be guilty of this offence if a person associated with the company bribes someone with the intention of obtaining / retaining business (or an advantage in the conduct of business). However, the corporate will have a defence if it can demonstrate that it has “adequate procedures” in place “designed to prevent … such conduct”.

If so, what is the scope of that offence?

• Jurisdictional reach (in terms of which corporates can be claimed against)
  
  In contrast to sections 1, 2 and 6, an offence will be committed under section 7 of the Act regardless of where the offence takes place - it covers bribery in both the UK and abroad.
  
  Section 7(3) of the Act makes clear that a corporate can be criminally liable for conduct amounting to a section 1 or 6 offence on the part of a person who is neither a UK national nor resident in the UK, nor a body incorporated or formed in the UK.
  
  In addition, section 12(5) of the Act provides that it does not matter whether the acts or omissions which form part of the section 7 offence take place in the UK provided the organisation itself:
  
  - is incorporated or formed in the UK; or
  - carries on a business in the UK.
  
  What is meant by “carrying on business or part of a business” in the UK is not defined in the Act. However, the Ministry of Justice Bribery Act 2010 Guidance (Guidance) states that the Government expects a common-sense approach to be applied to this question. In effect this means that organisations that do not have a demonstrable business presence in the UK would not be caught. For example, the Guidance states:
  
  “The Government would not expect, for example, the mere fact that a company’s securities have been admitted to the UK Listing Authority’s Official List and therefore admitted to trading on the London Stock Exchange, in itself, to qualify that company as carrying on a business or part of a business in the UK and therefore falling within the definition of a ‘relevant commercial organisation’ for the purposes of section 7. Likewise, having a UK subsidiary will not, in itself, mean that a parent company is carrying on a business in the UK, since a subsidiary may act independently of its parent or other group companies”

• What do you need to show to have a claim?
  
  To establish liability under section 7 of the Act, a claimant needs to demonstrate that a person associated with an organisation has committed an offence under sections 1 or 6 of the Act. The conviction of that person under sections 1 or 6 is not needed to found a conviction under section 7. The organisation also does not need to know of, sanction, or even turn a blind eye to the conduct which amounts to the bribery to be found guilty of a section 7 offence.
• What defences are available to corporates?
  
  If an offence is made out under section 7, the only defence available to a company is to show that it had adequate procedures in place to prevent bribery.
  
  “Adequate” is not defined by the Act but the Guidance sets out six principles which the government considers should guide organisations when putting in place procedures to prevent bribery:
  
  a)    Proportionate procedures: An organisation’s procedures to prevent bribery should be proportionate to the bribery risks it faces and to the nature, scale and complexity of the organisation’s activities.
  b)    Top-level commitment: The top-level management of a commercial organisation should be committed to preventing bribery by persons associated with it.
  c)    Risk assessment: The organisation should undertake periodic, documented assessments of the nature of its exposure to risks of bribery.
  d)    Due diligence: An organisation should apply due diligence procedures in respect of persons who perform services for or on behalf of the organisation, in order to mitigate identified bribery risks.
  e)    Communication: An organisation should ensure bribery prevention policies are embedded throughout the organisation.
  f)    Monitoring and review: An organisation should monitor and review procedures designed to prevent bribery by persons associated with it and make improvements where necessary.
• What are the penalties and other potential consequences?
  
  An organisation guilty of an offence under section 7 of the Act is liable to an unlimited fine. Commercially, an organisation found guilty would also be at risk of suffering reputational damage which may in turn impact share price and consumer confidence.
  
  In addition, whilst successful prosecution for a section 7 offence would not result in an organisation being automatically barred from participating in tenders for public contracts, public authorities would have discretion to exclude such organisations from tenders on the basis of “grave professional misconduct, which renders its integrity questionable”³. 

The Bribery Act 2010, with its broad jurisdictional reach and scrutiny of both public and private sector bribery, is a pivotal force in promoting fair business practices. Its comprehensive approach and the potentially significant penalties for non-compliance should prompt organisations to examine their internal controls and ensure robust anti-bribery measures are in place that align with both required legal standards and best practice. Once established, it is imperative that companies regularly reassess and update their anti-bribery frameworks to stay ahead of potential risks. In a time where corporate integrity is increasingly under the microscope, ensuring that businesses operate with transparency at the forefront of their operations is not only essential from a legal perspective but integral to sustaining public confidence and long term commercial success. 

Multinational organisations should also remain alive to the fact that the scope of corporate liability for bribery offences varies significantly between jurisdictions. As the plight of Rolls Royce PLC made clear, companies with global operations should be aware of the intricacies of anti-bribery regimes across jurisdictions and the global risk of prosecution. Guidance on Swiss corporate bribery offences can be found in our article here. 

Attention is also drawn to the new offence of failing to prevent fraud.  Our review of the guidance issued by the Home Office is linked here.

With offices in many of the world’s major financial centres including London, Geneva and Zurich as well as Paris, Dubai, Hong Kong and Singapore, we are ideally placed to work with you to prevent, resolve and assist with  bribery allegations as they arise, whatever the law, language, rules, industry sector, or subject matter of that dispute may be.

Whether you are an individual or a business, our strategically focused specialists will work alongside you through every aspect of any proceedings. Please contact Rhys Novak, Emilie Brammer or your usual Charles Russell Speechlys LLP contact if you would like to get in touch.