KEY DIFFERENCES BETWEEN THE BRIBERY ACT AND THE FCPA
Foreign Corrupt Practices Act (FCPA) and the U.K Bribery Act enforcement actions have increased the pressure on companies to be more proactive to deter fraud and misconduct
The UK Bribery Act (the Bribery Act) was passed on 8 April 2010 and comes into force on 1 July 2011. Until recently, international anti-corruption enforcement has been largely dominated by the US Foreign Corrupt Practices Act 1977 (the FCPA). The Bribery Act has been cause of some considerable controversy, in particular , given the implication which breadth of some of its provisions may have for British companies operating abroad.
The Bribery Act, however, represents part of a broader international trend and has an even wider application than the FCPA. While organisations may consider that their anti-corruption procedures are sufficiently robust for the purposes of the FCPA, this may not be the case where the Bribery Act is concerned. It is therefore important for organisations operating on a global basis to be aware of the differences between the FCPA and the Bribery Act and to be prepared for the implications of the Bribery Act coming into force.
The main differences between the Bribery Act and the FCPA
Bribery of foreign (public) officials
Both the Bribery Act and the FCPA make it an offence to bribe foreign (public) officials. Under the Bribery Act a “foreign public official” is defined more narrowly than under the FCPA but still includes (i) anyone who holds a foreign legislative or judicial position; (ii) individuals who exercise a public function for a foreign country, territory, public agency or public enterprise; or (iii) any official or agent of a public organisation.
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Private-to-private bribery
The FCPA does not cover bribery on a private level, unlike the Bribery Act, although such conduct can be caught under other US legislation.
Active and passive bribery
The FCPA only covers active bribery, that is to say the giving of a bribe. In contrast, the Bribery Act prohibits both active and passive bribery i.e. the taking of a bribe.
Failure to prevent bribery
The Bribery Act creates a strict liability corporate offence for failure to prevent bribery (as opposed to vicarious liability) subject to being able to establish that a company has “adequate procedures”. Under the FCPA, however, a company subject to US jurisdiction can be held vicariously liable for acts of its employees and agents. The UK offence extends to acts of “associated persons” which means anyone who performs services for or on behalf of the commercial organisation.
Intent
Under the FCPA it must be proved that the person offering the bribe did so with a “corrupt” intent. The Bribery Act makes no requirement for a “corrupt” or “improper” intent in relation to the bribery of a foreign public official, although the requirement remains for the general bribery offence.
Facilitation payments
The FCPA creates an exemption for facilitation payments whereas the Bribery Act makes no such exception. The Ministry of Justice guidance, however, confirms that prosecutors will exercise discretion in determining whether to prosecute. In addition, informal guidance received from the SFO indicates that where it is considering action, it will be guided by the following six principles:
ØWhether the company has a clear and issued policy.
ØWhether the company has written guidance available to employees as to the procedures they must follow where a facilitation payment is requested or expected.
ØWhether such procedures are really being followed (monitoring).
ØEvidence that gifts are being recorded at the company.
ØProper action, collective or otherwise, to inform the appropriate authorities in countries when a breach of the policy occurs.
ØThecompany is taking what practical steps it can to curtail such payments.
Promotional expenses
The FCPA provides for a “defence” to promotional expenses in so far as it can be demonstrated that they were a reasonable and bona fide expenditure. There is no such defence concerning promotional expenses under the Bribery Act, in relation to foreign public officials, although the Ministry of Justice has provided some comfort on this aspect in its guidance.
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Penalties
An individual found to have committed an offence under the Bribery Act is liable to imprisonment of up to ten years and/or to an unlimited fine. A company found guilty is subject to an unlimited fine.
For offences committed under the FCPA an individual can be fined up to US$250,000 per violation and may also be given up to five years imprisonment. A company guilty under the FCPA is liable for a fine of up to US$2,000,000 per violation.
Key considerations for FCPA compliant organisations
- Business-to-business or commercial bribery must be taken as seriously as bribery of public officials.
- Companies should review gift, hospitality and promotional expense guidelines.
- Companies should reconsider policies that allow facilitation payments and develop strategies to reduce such payments.
- Companies should formalize or revise risk assessment processes.
- Companies should expand the scope of their anti-corruption programmes to include all “associated persons” and review third party due diligence, contractual protection and monitoring.
- Companies should ensure they have adequate procedures in place; they are a complete defence for companies under the Bribery Act and represent significant protection and/or “sentence mitigation” elsewhere.
The Bribery Act has a significantly wider scope than the FCPA and so FCPA-compliance programs are unlikely to be sufficient to ensure compliance with the Bribery Act. While the FCPA applies only to the bribery of foreign public officials, the Bribery Act covers bribery in both the public and private sectors. In addition, the Bribery Act, unlike the FCPA, does not have exclusion for facilitation payments and so such payments will constitute bribery offences if they fulfill the other criteria. The Bribery Act also creates a new strict liability offence of failure by a commercial organisation to prevent bribery. As the only defence available to such an offence is that adequate procedures to prevent bribery were in place, commercial organisations will need to ensure that their anti-bribery policies are adequate in light of the extensive scope of the Bribery Act.
