UK Bribery Act

Statute and Elements of Offences Under the UK Bribery Act

The UK Bribery Act (UKBA or the Act) includes four principal offences: (1) bribing another person; (2) being bribed; (3) bribing a foreign public official; and (4) failure to prevent bribery. The statute also places certain limitations on who may be charged and sets forth penalties for violations.

This chapter first explains the background of the UKBA, then takes the reader through the definitions necessary to understand the statute, and finally describes the elements of the offences under the Act in detail. As with the Foreign Corrupt Practices Act (FCPA), the UKBA is broadly worded, and there continues to be almost no case law interpreting its provisions. In contrast to the FCPA, there remains little enforcement practise or formal guidance to fill out the meaning of the statute. In many cases, there will be little, if any, concrete guidance about the likely application of the UKBA, and companies potentially subject to its jurisdiction must tread carefully to ensure compliance. This chapter also provides companies within UKBA jurisdiction with helpful background and context from which they can assess and better address compliance with the UKBA.

1. Background

The UKBA was passed on 8 April 2010. It came into force on 1 July 2011 and applies to conduct that occurred on or after that date. Over a decade on from the commencement date, there have been only a relatively small number of cases prosecuted under the UKBA, and most of those have not been contested. Guidance from the courts on the interpretation of the UKBA is therefore very scant.

The UKBA is essentially a codifying statute. Most of the offences “created” by the UKBA existed previously, but in disparate and archaic forms. The UKBA was intended to simplify the outdated language and arrange the offences into one statutory location.

However, the UKBA did create a new offence, the corporate offence of failing to prevent bribery (section 7). This offence is discussed in more detail below.

2. Definitions

The UKBA uses several specific terms, which it defines and of which it provides examples to assist the reader with understanding how the offences should be construed.

Function or activity to which the bribe relates (section 3)

The offences in the UKBA refer to “relevant functions or activities.” A function or activity is relevant for the purposes of the UKBA if the function or activity is one of the following:

• public nature;

• connected with a business;

• performed in the course of a person’s employment; or

• performed by or on behalf of a body of persons (whether corporate or unincorporated).

A person performing the function or activity must also be:

• performing the function or activity with the expectation that it is being performed in good faith;

• performing the function or activity with the expectation that it is being performed impartially; or

• in a position of trust by virtue of performing it.

A function or activity is a relevant function or activity even if it has no connection with the United Kingdom and is performed in a country or territory outside the United Kingdom.

Essentially, all functions or activities of a commercial or public nature are relevant for the purposes of the UKBA. The Act covers actions of public servants, employees, contractors, agents, and most other types of business or governmental relationships.

Improper performance to which bribe relates (section 4)

A relevant function or activity is performed improperly if it is performed in breach of a relevant expectation, such as the performance of the function in good faith or with impartiality. A relevant function is also to be treated as being performed improperly if there is a failure to perform the function or activity and that failure itself is a breach of a relevant expectation.

Expectation test (section 5)

Where the UKBA refers to “expectations,” the test for that expectation is what a reasonable person in the United Kingdom would expect in relation to the performance of the type of function or activity concerned.

Where the conduct concerned is to be performed outside of the United Kingdom and is not subject to the law of any part of the United Kingdom, any local custom or practice will be disregarded unless it is permitted or required by the written law applicable to the country or territory concerned. In this regard, written law means law contained in a written constitution, or provision made by or under legislation, which is applicable to the country or territory concerned. Written law may also mean any judicial decision, which is applicable as law and is evidenced in published written sources.

3. Offences under the UKBA

There are four main offences under the UKBA:

• bribing another person (section 1);

• being bribed (section 2);

• bribing a foreign public official (FPO) (section 6); and

• failing to prevent bribery (section 7).

Jurisdictional reach (section 12)

Any offence committed under sections 1, 2, or 6 that occur within the United Kingdom is subject to the jurisdiction of the UKBA, irrespective of the nationality of the individual committing the offence.

To the extent that acts potentially constituting offences under sections 1, 2, or 6 take place outside of the United Kingdom, the UKBA applies if and to the extent that the individual alleged to have undertaken those acts has a “close connection” with the United Kingdom. A close connection essentially encompasses British citizens or other individuals who have some type of British nationality, or who are ordinarily resident in the United Kingdom. In relation to corporate entities, this means bodies incorporated under the law of any part of the United Kingdom or Scottish partnerships.

Any organisation that is a “relevant commercial organisation” under the Act, i.e., it is either a British incorporated entity or an overseas incorporated entity that carries out a business or part of a business in the United Kingdom, is subject to section 7 of the UKBA regardless of the location of the alleged bribery. There is no definition of “carrying on a business,” but it is likely that having a branch or office in the United Kingdom or holding board or management meetings in the United Kingdom would bring an organisation within the ambit of section 7.

4. Elements of Offences

For ease of reading, we use the language of the UKBA when discussing bribers (P) and recipients or intended recipients of bribes (R). In relation to the section 7 offence of failing to prevent bribery, which is a corporate offence, we again use the language of the UKBA when discussing the corporate entity (C) and its associated persons (A).

Bribing another person (section 1)

The UKBA provides that bribing another person is an offence. As discussed above, this offence applies to commercial bribery as well as to bribery of government officials. The UKBA details two cases of bribery, which it criminalises:

• Case One is where P offers, promises, or gives a financial or other advantage to another person and P intends the advantage either to (1) induce a person to perform improperly a relevant function or activity or (2) to reward a person for the improper performance of such a function or activity.

• Case Two is where P offers, promises, or gives a financial or other advantage to another person, and P knows or believes that the acceptance of the advantage would itself constitute the improper performance of a relevant function or activity.

In relation to Case One, it is irrelevant whether the person to whom the advantage is offered, promised, or given is the same person as the person who is to perform, or has performed, the function or activity concerned.

In both cases, it does not matter whether the advantage is offered, promised, or given by P directly or through a third party.

The offence is deliberately widely drawn and covers both the actual payment of bribes, as well as offers (genuine or otherwise) of payment of bribes. In addition, it covers payment or offers both before and after the corrupt action is contemplated.

The corrupt action does not need to actually occur, nor does the recipient or intended recipient of the bribe have to accept the bribe and/or intend to take the corrupt action that P desires.

This offence can be committed by a commercial organisation as well as by individuals. The general English criminal law of identification would apply in this instance. To establish a commercial organisation’s guilt, the prosecution would have to show that the offence had been committed by an individual who can be identified as the directing mind and will of the organisation, and that in committing the offence, he or she had been acting on behalf of the organisation. Recent case law has affirmed that the English courts will strictly interpret the question of which individuals can be identified as the directing mind and will of an organisation. This onerous requirement is the primary reason for the comparatively low rate of corporate prosecutions in the United Kingdom.

Being bribed (section 2)

The UKBA provides four ways in which a person or commercial organisation can be guilty of an offence of being bribed:

• Case One is where R requests, agrees to receive, or accepts a financial or other advantage intending that, as a consequence, a relevant function or activity should be performed improperly (whether by R or by another person);

• Case Two is where R requests, agrees to receive, or accepts a financial or other advantage and the request, agreement, or acceptance itself constitutes the improper performance by R of a relevant function or activity;

• Case Three is where R requests, agrees to receive, or accepts a financial or other advantage as a reward for the improper performance (whether by R or another person) of a relevant function or activity; and

• Case Four is where, in anticipation of or in consequence of R requesting, agreeing to receive, or accepting a financial or other advantage, a relevant function or activity is performed improperly by R or by another person at R’s request or with R’s assent or acquiescence.

As with the section 1 offence, the section 2 offence is intended to be very wide. The four cases detailed are intended to cover all conceivable permutations of requesting or accepting bribes.

In all cases, it is irrelevant whether R requests, agrees to receive, or accept (or is to request, agree to receive, or accept) the advantage directly or through a third party nor whether the advantage is (or is to be) for the benefit of R or another person.

In Cases Two to Four, it is irrelevant whether R knows or believes that the performance of the function or activity is improper.

In Case Four, where a person other than R is performing the function or activity, it is irrelevant whether that person knows or believes that the performance of the function or activity is improper.

Bribery of FPOs (section 6)

Under the UKBA, a person who bribes an FPO is guilty of an offence if it is P’s intention to influence the FPO in his or her capacity as a foreign public official. P must also intend to obtain or retain business, or an advantage in the conduct of business.

P bribes the FPO if and only if:

A. directly or through a third party, P offers, promises, or gives any financial or other advantage;

(i.) to the FPO; or

(ii.) to another person at the FPO’s request or with the FPO’s assent or acquiescence; and

B. the FPO is neither permitted nor required by the written law applicable to the FPO to be influenced in his or her capacity as a foreign public official by the offer, promise, or gift.

References in the UKBA to “influencing the FPO in his or her capacity as a foreign public official” mean influencing the FPO in the performance of his or her functions as such an official, which includes:

• any failure to exercise those functions; and

• any use of the FPO’s position as such an official even if not within the FPO’s authority.

Who is an FPO?

An FPO is an individual who:

A. holds a legislative, administrative, or judicial position of any kind, whether appointed or elected, of a country or territory outside of the United Kingdom (or any sub-division of such a country or a territory);

B. exercises a public function;

(i.) for or on behalf of a country or territory outside of the United Kingdom;

(ii.) for any public agency or public enterprise of that country or territory; or

C. is an official or agent of a public international organisation.

What is a public international organisation?

A public international organisation is an organisation whose members are any of the following:

(i.) countries or territories;

(ii.) governments of countries or territories;

(iii.) other public international organisations; or

(iv.) a mixture of any of the above.

What written law is applicable?

The written law applicable to the FPO is:

A. where the performance of the functions of the FPO which P intends to influence would be subject to the law of any part of the United Kingdom, the law of that part of the United Kingdom;

B. where paragraph (A) does not apply and the FPO is an official or agent of a public international organisation, the applicable written rules of that organisation; or

C. where paragraphs (A) and (B) do not apply, the law of the country or territory in relation to which the FPO is a foreign public official so far as that law is contained in;

(i.) any written constitution, or provision made by or under legislation, applicable to the country or territory concerned; or

(ii.) any judicial decision which is so applicable and is evidenced in published written sources.

The definition of bribery of an FPO provided by the UKBA is not entirely straightforward. However, as with the other offences under the UKBA, the intention is to create a wide offence that covers what would ordinarily be thought of as bribery of an FPO to induce or reward corrupt behaviour.

This offence can be committed by a commercial organisation as well as by individuals.

Failure of commercial organisations to prevent bribery (section 7)

The only section of the Act that was truly a new addition to the law of the United Kingdom is the so-called “section 7” offence, which expands the law of corporate criminal responsibility in this sphere.

The offence is drafted as follows:

A “relevant commercial organisation” (C) is guilty of an offence under this section if a person (A) associated with C bribes another person intending:

A. to obtain or retain business for C; or

B. to obtain or retain advantage in the conduct of business for C.

Who is an “associated person”?

The UKBA (in section 8) defines an associated person (A) as someone who performs services for or on behalf of C.

The capacity in which A performed services for or on behalf of C is irrelevant, as is the legal nature of the relationship. The UKBA provides three examples of an associated person: an employee, an agent, or a subsidiary. The UKBA expressly states that the question of whether or not A is a “person who performs services for or on behalf of C” is to be determined by reference to all the relevant circumstances, not merely by reference to the nature of the legal relationship between A and C. 

However, if A is an employee of C, it will be presumed that A is a person performing services for or on behalf of C, unless it can be shown to the contrary.

It is necessary for the prosecution to demonstrate that:

• A is or would be guilty under section 1 (bribing another person) or section 6 (bribery of an FPO), whether or not A has been prosecuted for such an offence; or

• A would be guilty of such an offence if the Act were applicable to him or her.

What is a “relevant commercial organisation”?

The Act defines a “relevant commercial organisation” to which section 7 applies as:

• a body which is incorporated under the law of any part of the United Kingdom and which carries on a business (whether within the United Kingdom or elsewhere);

• any other body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the United Kingdom;

• a partnership which is formed under the law of any part of the United Kingdom and which carries on a business (whether within the United Kingdom or elsewhere); or

• any other partnership (wherever formed) which carries on a business, or part of a business, in any part of the United Kingdom.

Penalties (section 11)

An individual who is found guilty of an offence under section 1 (bribing another person), section 2 (being bribed), or section 6 (bribing an FPO) is liable to a maximum term of imprisonment of 10 years, an unlimited fine, or both.

A commercial organisation guilty of an offence under sections 1, 2, or 6 is liable to an unlimited fine. Similarly, any commercial organisation guilty of a section 7 offence is liable to an unlimited fine.

Although the maximum fine that can be imposed is unlimited, to date, the fines imposed under the UKBA have typically been much smaller than fines handed out by the US authorities in FCPA matters, except for a small number of larger settlements entered into by multinational companies.

In practice, levels of fines in the UK are determined by reference to the Sentencing Guidelines (Guidelines) that govern punishment of corporate crime. The Sentencing Council for England and Wales publishes these Guidelines for the sentencing of offenders convicted of committing offences of fraud, bribery, and money laundering. The Guidelines identify several factors that must be considered by judges when arriving at an appropriate level of fine. These include (but are not limited to):

• the level of culpability;

• the amount of harm done;

• previous convictions;

• level of cooperation with the authorities;

• attempts to conceal the wrongdoing; and

• whether there has been a change in management and/or the compliance program since the offending was uncovered.

Under the Guidelines, a fine can be adjusted upward to ensure that it removes all gain obtained by the offending; punishes the corporate entity; and ensures the appropriate level of deterrence. The Guidelines are clear that there should be a “real economic impact” to emphasize to management and shareholders the need to operate within the law. Indeed, if deemed the most appropriate outcome, the fine can be so large as to put the company out of business, as recognized in the DPA entered into by Sarclad Ltd., in which the Serious Fraud Office (SFO) cited the company’s cooperation as a key factor in its decision not to press the court for such a fine.

In addition, the general law on confiscation of the proceeds of crime, as set out in the Proceeds of Crime Act 2002, will also apply, as will the law on compensation of victims, as set out in section 130 of the Powers of Criminal Courts (Sentencing) Act 2000.

Liability of senior officers (section 14)

As set out above, the general English law of corporate identification will apply to determine whether corporate entities committed the offences under sections 1, 2, or 6. In addition, where the prosecution can prove a criminal offence on the part of the company, and a senior officer of the company (who must have a “close connection” to the United Kingdom) has consented or connived in the commission of the offence, that senior officer, as well as the company, is guilty of the offence and liable to be proceeded against and punished accordingly. This is the case even if the senior officer did not him or herself pay or receive a bribe.

Affirmative Defences

Aside from the defence under section 7, there are very few affirmative defences under the UKBA. Those that do exist (section 13) relate to the proper exercise of any function of a member of the intelligence services or the armed forces when engaged in active service. With the exception of section 7, these defences do not apply to commercial organisations.

Section 7 contains an affirmative defence against a charge of failure to prevent bribery under which a relevant commercial organisation can show that it has adequate procedures in place designed to prevent persons associated with it from committing bribery offences.

The Ministry of Justice has, as required by section 9 of the UKBA, published guidance for commercial organisations as to the procedures that ought to be put in place to prevent persons associated with the commercial organisations from committing bribery. In 2018, Skansen Interiors Ltd. (Skansen), a small interior design company operating within the United Kingdom, was prosecuted for failure to prevent bribery under section 7 of the UKBA and became the first company to assert the adequate procedures defence. However, Skansen was ultimately found guilty, as it had only limited policies and procedures in place, and they were geared towards company values rather than specific policies for anti-bribery and corruption compliance; furthermore, none mentioned the UKBA. As this was a jury trial, there was no judgment or judicial comment. Consequently, the case did not provide much by way of additional guidance on the meaning of “adequate procedures” under section 7. However, Camilla de Silva, then-joint head of Bribery and Corruption at the SFO, subsequently stated that although “[t]he starting point is about having bespoke compliance procedures in place…it is more about the substance of the procedures and about them actually working in the first place.” In theory, if a commercial organisation complies with the guidance and has specific and effective anti-bribery and anti-corruption procedures, it ought to have a defence to any allegation of a section 7 offence.

Resolution of UKBA Investigations

There are a number of ways in which criminal investigations, including those relating to allegations of infringements of the UKBA, can be resolved.

5. Charge

A criminal charge begins the legal process. The Code for Crown Prosecutors provides a two-stage test for whether an accused should be charged with a criminal offence. First, a prosecutor must be satisfied that there is sufficient evidence against the accused for there to be a realistic prospect of conviction. Second, the prosecutor must also be satisfied that the prosecution is in the public interest. There are a number of factors that are listed in the code to determine the public interest.

Once charged, the accused must decide whether to plead guilty or not.

6. Guilty Plea

If a defendant pleads guilty at the earliest available opportunity, he or she will, according to the Sentencing Guidelines, receive a reduction in any sentence of one third. A sliding scale is then applied to the reduction given, reducing to a one tenth discount if the defendant pleads guilty at the door of the court or after the trial has begun.

7. Not Guilty Plea

If a defendant pleads not guilty, a full criminal trial will ensue. The offences under sections 1, 2, and 6 of the UKBA can be tried in either the Magistrates’ Court or the Crown Court, depending on the severity of the offence. The Crown Court has greater sentencing powers than the Magistrates’ Court, but it is possible to be convicted by magistrates and referred to the Crown Court for sentencing, if the magistrates consider that their powers are insufficient. A section 7 offence can only be tried in the Crown Court.

8. Deferred Prosecution Agreement (DPA)

DPAs were introduced in February 2014 through Schedule 17 of the Crime and Courts Act 2013. They are intended to allow a corporate offender to make reparations for criminal conduct, without a criminal conviction (and its attendant consequences) being imposed. DPAs are concluded subject to the approval of a judge, who must be satisfied that the DPA is in the interests of justice and its terms are fair, reasonable, and proportionate.

The DPA Code of Practice (the Code) sets out when and how prosecutors will use DPAs. The SFO has so far concluded 12 such agreements – Rolls-Royce; Standard Bank; Sarclad Ltd.; Guralp Systems Ltd.; Airline Services Ltd.; Airbus SE.; Amec Foster Wheeler Energy Ltd.; and two further DPAs with companies that have not yet been publicly named (corruption matters); Tesco Stores Ltd. (an accounting matter); G4S Care and Justice Services (UK) Ltd., and Serco Geografix Ltd. (matters involving both fraud and false accounting) – and the jurisprudence is still developing. The Crown Prosecution Service (CPS) is yet to enter a DPA in respect to a corruption-related offence.

It is a discretionary matter as to whether a corporate offender will be invited to negotiate a DPA with the prosecutor – and it is for the prosecutor, not the company, to seek to initiate those discussions. However, the Code and the SFO’s Operational Handbook provide some guidance on what factors the prosecutor will consider when deciding whether to initiate DPA discussions.

Generally, to be eligible for a DPA, the corporate offender will need to have self-reported the alleged criminal conduct and will need to cooperate fully with the investigation. It has been suggested that it is for these reasons that Petrofac Ltd., the oil and gas services company, was prosecuted for failing to prevent bribery in 2021 rather than being considered for a DPA. Petrofac did not self-report its conduct and was reportedly viewed by the SFO as uncooperative at the start of its investigation. However, as Petrofac pleaded guilty, there is limited information in the public domain about the extent to which this is indeed the case.

The Operational Handbook includes Corporate Co-Operation Guidance, which provides indicators of good practice to assist SFO staff in assessing the cooperation of a corporate entity. The Code also provides some guidance on cooperation. Further, a DPA will be more likely if a company has no previous convictions, has already implemented a full compliance program, or if the criminal conduct occurred long in the past and/or was the result of rogue activities by employees. 

In October 2020, the SFO published further guidance on its general approach to DPAs from the Operational Handbook. The detailed guidance does not mark any significant change to the SFO’s existing approach, but provides welcome detail about:

• the SFO’s approach to negotiating a DPA;

• how the statement of facts and agreement that underpin any DPA should be approached;

• how the standard terms will usually be imposed;

• how the financial penalty will be calculated; and

• the SFO’s disclosure obligations when entering into a DPA.

Notwithstanding the transparency afforded by the Code and the Operational Handbook, it could be suggested that the United Kingdom’s overall approach to DPAs has been inconsistent. It is noteworthy, for example, that the 2017 Rolls-Royce DPA did not stem from a self-disclosure of misconduct. However, officials stated that the company’s extraordinary cooperation with the government’s investigation played a part in the nature of the resolution.

Similarly, a key component of the 2019 Serco Geografix Ltd. (SGL) DPA was the undertakings provided by Serco Group PLC, the parent company, which “mirror the requirements imposed on SGL by the DPA.” In approving the DPA, the court noted that without the undertakings, it was unlikely that the goals of the DPA would have been achieved, because SGL itself was a dormant company. In comparison, however, a potential DPA between Skansen Interiors Limited (Skansen) and the CPS was rejected in 2018. This was despite Skansen self-reporting the conduct. The DPA was ostensibly refused on the basis that Skansen was a dormant company and so lacked the means to pay any penalty imposed. The former CEO of Skansen’s parent company, however, stated that the parent company had been willing to “pick up any conditions of a DPA” on Skansen’s behalf. It is unclear why there should have been such a discrepancy between the SFO’s treatment of SGL and the CPS’ treatment of Skansen.

9. Civil Recovery

Prosecuting authorities have the power under the Proceeds of Crime Act 2002 to decline to bring criminal charges and instead bring an action in the civil courts to recover the proceeds of alleged criminal activity. Previous directors of the SFO made use of these powers on occasion, most notably in 2012 against the parent company of Mabey & Johnson Ltd.

The SFO’s current public position is that it will continue to make use of civil recovery orders as an alternative to criminal charges under the right circumstances. Although the SFO has mainly focused on bringing criminal charges, in November 2020, the SFO entered into an agreement with Julio Faerman (implicated in Brazil’s Operation Car Wash) to recover nearly £1.2 million following an investigation into his UK assets.

The SFO also has the power, under the Criminal Finances Act 2017, to ask a court for the imposition of an account freezing order (AFO). If granted by a court, AFOs freeze money held in a bank account. If a court is satisfied that the funds in such an account represent the proceeds of crime, or are intended for use in a crime, then these funds can ultimately be forfeited. A freedom of information request revealed that as of 1 February 2020 the SFO had only obtained seven AFOs, in one instance seizing approximately £1,500,000. It remains to be seen if the SFO will utilize this power more widely in the future.