In the 9 years since the Bribery Act 2010 (the Act) came into force there has been a notable lack of case law. At the time the Act was made law this was the strictest anti-bribery legislation in the world and it is therefore interesting that so few prosecutions or deferred prosecution agreements have resulted from it. Key concepts such as the defence of adequate procedures are still ill-defined, leaving compliance programmes with a distinct lack of certainty. On 14th March 2019 the House of Lords published their post-legislative review of the Act. The report makes for welcome reading highlighting several key areas of concern. For the full report, see here.
The House of Lords post-legislative scrutiny report
The Lords recognised that there have been very few cases under the Act since it became law and only three Deferred Prosecution Agreements (DPAs). The report discussed a number of reasons for the lack of prosecutions, but three main issues emerged. Firstly, unlike other crimes, there is a lack of understanding amongst the general public on how to report bribery. The Lords noted the fact that the Home Office is correcting this problem by creating a central place for the general public to make reports and it is hoped this will lead to an increase in enforcement. Secondly, police forces outside London are often less well trained on the Act, the Lords’ review also made recommendations for correcting this. Finally, it was noted that the nature of bribery investigations means they are very lengthy. The report highlighted concerns from several parties, such as Baker Mackenzie, showing that investigations can take between 4 and 6 years to conclude. This is a significant period of time for an organisation to wait for a notice of prosecution. The review noted that the Serious Fraud Office has recently started using AI technology to speed up the sifting of documents which is a major reason why investigations are so lengthy. A single bribery investigation can involve up to 100 million documents which would take a considerable amount of time to review by hand. However, the Lords has recommended that the Director of the Serious Fraud Office and the Director of Public Prosecutions both devise plans to speed up investigations and better communicate with the subjects of investigation.
The Lords praised the Act generally but criticised the implementation, particularly in relation to small and medium sized enterprises (SMEs). They recommended that greater guidance is given to all organisations on the difference between business hospitality and bribery since in the absence of that detail business compliance regimes are often too strict. The Lords acknowledge that a lack of case law means it is harder to give that guidance but have called on the Ministry of Justice to provide more examples of what acceptable corporate hospitality looks like. The report also suggested providing extra support for SMEs in the form of properly trained and instructed officials who understand local customs and issues. This is extremely welcome news for all businesses.
The section 7 offence of “failing to prevent bribery” received particular scrutiny in the report, with special focus being directed to the defence of “adequate procedures”. This offence means that if you discover an employee has bribed a customer then unless you can prove that you took “adequate procedures” to prevent that bribery then the company will be guilty of an offence. The risk is increased when this is applied to subcontractors who a company will have even less control over. But what constitutes “adequate procedures” has never been clearly defined either in the Act or in subsequent guidance. The lack of clarity on this defence is a key problem in the Act, particularly for SMEs who don’t have access to the same resources as larger corporates. The Lords said that greater guidance needed to be given on the meaning of ‘adequate procedures’ but that specifically it “should not mean anything more stringent than ‘reasonable in all the circumstances’”. The Lords has recommended that additional guidance and case studies on adequate procedures are produced for SMEs. A move towards codifying the Lords statement on the meaning of “adequate procedures” would immediately give a great deal more comfort to risk and compliance officers across the country.
The Lords rejected suggestions to legalise facilitation payments, concluding this would be a regressive step. They also declined to recommend the idea of vicarious liability offence considering it was beyond their remit.
Lastly it was noted that the Scottish regime and England and Wales regimes diverge on the issues of Deferred Prosecution Agreements with Scotland instead using a system of Civil Settlements. The Lords recommended that Scotland adopt the DPA regime in order to conform the two schemes across the UK making it simpler for businesses operating in Scotland, England and Wales.
Proving an ‘intention’ to commit bribery
One thing the report did not cover was the difficulty under the Act for proving an ‘intention’ to commit bribery. Whilst this may or may not have affected the rates of prosecution, in-house teams should continue to examine how they might handle the problem of proving intention in the context of anti-bribery policies and internal investigations to ensure that they are not failing to prove they took “adequate procedures” to prevent bribery. You may instead consider that intention is not a part of your internal employment processes but adopt a strict liability approach. By setting out standards of behaviour which can be proved objectively e.g. staff members may not accept gifts or hospitality over £X without approval from a supervisor, you are able to enforce behaviours regardless of whether there was an intention to be influenced by the gift or not.
Many of the recommendations are practical steps that will greatly benefit businesses and provide a necessary level of clarity about the current regime.