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Clifford Chance

Clifford Chance

Regulatory Investigations and Financial Crime Insights

The UK Bribery Act is the gold standard, but more guidance is needed

The House of Lords Bribery Act 2010 Committee has concluded that the legislation is 'exemplary' in its post-legislative scrutiny report on the Bribery Act 2010, but has identified areas where more guidance is needed.

On 14 March 2019, the House of Lords Bribery Act 2010 Committee published its report on the Bribery Act 2010. While the Act has been in place for almost eight years, it was the product of decades of dissatisfaction with the existing law on bribery, and so many were keen to hear from the Committee on how it has been working.

At the time the Committee was established in May 2018 there had been commentary about the burden of the Act being too onerous for SMEs, leading to concerns that the legislation may be watered down as a result. However, there is no indication of this in the report, with the Committee concluding that the Act is working well and serves as a 'gold standard' in anti-bribery and corruption legislation for other countries to aspire to. Indeed the 'failure to prevent' offence for entities in s.7 of the Act has been replicated in the Criminal Finances Act 2017 in relation to tax evasion – and while the acts refer to 'adequate procedures' and procedures that are 'reasonable in all the circumstances' respectively, the Committee's view is (in the words of Lord Saville), "that is a distinction without a difference".

The Committee, chaired by Lord Saville, heard from 52 witnesses and received over 60 written submissions to reach this conclusion, as well as looking at Deferred Prosecution Agreements (DPAs) which, while not limited to bribery cases, have in three of the four DPAs to date dealt with crimes under the Bribery Act.

DPAs – not 'an easy way out', but no substitution for individual prosecution

In respect of DPAs, which allow cases to be settled without the companies involved being convicted of offences, the Committee concluded that they are not 'an easy way out', despite concerns to the contrary. Further, it found that the discounts on the financial penalties that may be available are appropriate to encourage self-reporting, while at the same time providing effective deterrence. It also emphasised, in respect of individuals involved in corrupt behaviour, that a DPA is not, and cannot be, a substitute for prosecution of individuals.

More Bribery Act awareness, guidance and training needed

While the Committee were largely favourable about the structure of the Act, its offences and its interaction with DPAs, it was acknowledged that guidance is required for SMEs to increase awareness on how best to operate in a way that is compliant with the Act. We would argue that this guidance needs to go beyond this to assist even larger businesses where doubt in application of the Act remains.

At the same time as increasing awareness from those at risk under the Bribery Act, the Committee pointed to the need to support this by also raising awareness of key public stakeholders. A lack of awareness (as well as training) was cited as a possible contributing factor to the small number of bribery prosecutions under the Act, and the need for police forces to upskill on anti-bribery was highlighted. There was also a call for the Government to ensure that there are properly trained and instructed officials to support UK companies with potential exposure through export activity.

There was also recognition that the Ministry of Justice should assist with the enduring grey area of corporate hospitality by providing examples to help with the assessment of legitimacy, Lord Saville having gone as far in recent commentary as to say that it "is still not clear where businesses should draw the line between genuine hospitality which simply oils the wheels of commerce, and excessive generosity which is in effect a bribe".

Need for greater agency and authority cooperation and progress

The Committee highlighted the need to remedy the lack of cooperation identified as between the CPS, SFO, Police, NCA, HMRC and others. It also considered that a priority for the CPS and SFO is to speed up bribery prosecutions, perhaps as a result of evidence about the length of time that major SFO investigations can take, and the effect on individuals of having a prosecution hanging over them during this time.

The full report ('The Bribery Act 2010: post-legislative scrutiny') can be found here.

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