Chapter Four

Bribery and Corruption

1. Are bribery and corruption the same things?

Ans: ‘Black’s Law Dictionary’ defines bribery as: ‘the corrupt payment, receipt, or
solicitation of private favour for official action’.

Bribery is thus a specific offence which concerns the practice of ‘offering something
or acceptance of some sort, usually money, to gain any advantage illegitimate or
otherwise’.

Corruption can be regarded to be any abuse of a position of trust in order to gain an

undue advantage and includes any illegitimate use of office and includes a range of
different types of criminal behaviour.

Corruption, in short, is most defined as ‘the misuse or the abuse of public office for
private gain’ (World Bank, 1997, United Nations Development Programme (UNDP),
1999). Corruption is, therefore, a much broader criminal behaviour and not always
related specifically to bribery, but bribery can be regarded as a subset of the overall
crime of corruption.

Although bribery and corruption are often considered in relation to country risk
and specific customer groups, it needs to be considered that they also occur in
conjunction with wider themes such as ESG. Carbon offsetting, for example, may be
achieved by setting up a carbon credit farm in a country where corruption and
bribery is rife.

2. Does the UK Bribery Act 2010 cover the overseas associates of a parent UK-based
company?

Ans: The Bribery Act 2010 has global reach both for UK companies operating
abroad and for overseas companies with a presence in the UK. In the case of
companies registered in the UK, a company can commit an offence under Section 7
of the Act ‘failure of commercial organisation to prevent bribery’ if an employee,
subsidiary, agent or service provider (associated persons) bribes another person
anywhere in the world to obtain or retain business or a business advantage. The UK
 Bribery Act, because of its extra-territorial reach, has a significant impact on many
foreign companies.

A foreign subsidiary of a UK company can cause the parent company to become

liable under Section 7 of the Act when the subsidiary commits an act of bribery in
the context of performing services for the UK parent. If the foreign subsidiary is
acting entirely on its own account, it will not cause the UK parent to be liable for
failure to prevent bribery under Section 7 as it is not then performing services for
the UK parent. However, the UK parent company may still be liable for the actions of
its subsidiary in other ways such as false accounting offences or under the Proceeds
of Crime Act (POCA) 2002.

3. Are only acts of giving and taking a bribe offence under the Bribery Act?

Ans: The Bribery Act establishes four key criminal offences.

The first two offences relate to offering and receiving a bribe. The third, a new
offence introduced by the Act relates to the bribing of a foreign Bribery and
Corruption 4 79 public official.
All the three offences can be committed by an individual or a corporate body. The
fourth is also a new offence and relates to the failure of commercial organisations to
prevent bribery.

1. Bribing another person (Bribery Act, Section 1) – it is an offence to offer, promise

or give a financial or some other advantage to induce another person where the
briber intends the advantage to bring about an improper performance by another
person of a relevant function or activity, or to reward improper performance of
such a function or, the briber knows or believes that the acceptance of the
advantage offered, promised or given in itself constitutes the improper
performance of a relevant function or activity. The advantage can be offered,
promised or given by the briber directly or through someone else, eg, if a bribe is
paid by a third party (such as a partner organisation) for their benefit, in this case,
they can be found guilty of offence.

2. Being bribed (Bribery Act, Section 2) – it is an offence to request, agree to receive

or accept a financial or other advantage with the intention that, therefore, a
relevant function or activity should be performed improperly. It does not matter if
the bribe is received directly or through someone else. It is immaterial whether the
recipient or the person acting as a conduit to receive the bribe, knows or believes
the performance of the function or activity is improper.
 3. Bribing a foreign public official (Bribery Act, Section 6) – it is an offence if a
person offers, promises or gives any advantage to a foreign public official with the
requisite intention to influence the foreign public official in the official capacity and
to obtain or retain business or an advantage in the conduct of business. However,
unlike the general bribery offences in Sections 1 and 2, there is no requirement to
show that there has been improper performance. The offence of bribing a foreign
public official only covers the offering, promising and giving of bribes and not the
acceptance of them.

4. Failure of a relevant commercial organisation to prevent bribery (Bribery Act,

Section 7) – it is a strict liability offence, which in practical terms means that, if a
commercial organisation fails to prevent someone associated with it from bribing
another person with the intention to obtain or retain business or an advantage in
the conduct of business for the organisation, it will be guilty of an offence under
the Act. The commercial organisation’s only defence to this offence will be if it can
prove that, despite a particular case of bribery, it nevertheless had adequate
procedures in place designed to prevent persons ‘associated’ with it from
undertaking such conduct.

4. What is meant by ‘facilitation payments?

Ans: In the UK, there have been successful prosecutions under the Bribery Act,
which have either involved the offering of or the acceptance of a bribe. The cases
have made it apparent that prosecutors will not be deterred from prosecuting
small value bribes as the sums involved in some cases ranged from £300 to £5,000.
80

Those found guilty under the Bribery Act face fines and imprisonment:

• For summary offences – the maximum fine is £5,000 and a maximum term of
imprisonment of 12 months.

• For conviction on indictment – an imprisonment of up to ten years and/or an

unlimited fine.
5. Is an organisation liable for acts of associated persons?
 Ans: A person associated with a commercial organisation is defined under Section
8 of the Act as someone who ‘performs services’ for or on behalf of the
organisation. This person can be an individual or an incorporated or unincorporated
body. Section 8 of the Act provides that the capacity in which a person performs
services for or on behalf of the organisation does not matter, so employees (who are
presumed to be performing services for their employer), agents and subsidiaries can
all possibly be included.

The concept of a person who performs services for or on behalf of the organisation
gives Section 7 of the Bribery Act a broad scope. This concept covers the entire
range of persons connected to the organisation who might be capable of
committing bribery for or on behalf of the organisation. It may also include joint
venture partners, associated business and other connected individuals.

6. What is meant by adequate procedures?

Ans: In a legal context, strict liability refers to the liability that does not depend on
actual negligence or intent to harm, but that is based on the breach of an absolute
duty. It is an absolute duty of the directors and managers of any commercial
organisation that undertakes a business or part of its business in the UK to be
aware of Section 7 of the Bribery Act 2010 offence of failing to prevent bribery. It is
a strict liability offence, which in practical terms means that if an associate,
whether an employee or a third-party service provider, has paid a bribe to obtain
or retain a business or business advantage, the organisation concerned will be
guilty of an offence.

the organisation must be able to show that, despite the particular act of bribery
having taken place, it nevertheless had put in place adequate procedures designed
to prevent and deter bribery from taking place.

7. What are the six principles of bribery prevention?

Ans: The six principles are:

 1. Proportionate procedures – actions taken within the firm should be
proportionate to the risks faced and the size of the firm.

2. Top-level commitment – those at the top are responsible for establishing a

culture across the organisation in which bribery is unacceptable.

3. Risk assessment – knowing and keeping up to date with the bribery risks in the
firm and market.

4. Due diligence – knowing who you are doing business with or who provides
services to the firm; knowing why, when and to whom the firm is releasing funds
and seeking reciprocal anti-bribery agreements.

5. Communication (including training) – ensuring staff and those who provide

services to the firm are aware of policies and procedures and what to look out for.

6. Monitoring and review – risks and effectiveness of procedures may change over
time, so a firm needs to review their policies and procedures.

8. Name four differences between the Bribery Act and the Foreign Corrupt Practices
Act (FCPA).

Ans: the main differences between the Bribery Act and the FCPA are as follows:

• 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 include:
• anyone who holds a foreign legislative or judicial position
• individuals who exercise a public function for a foreign country, territory,
public
agency or public enterprise, or
• any official or agent of a public organisation.

• 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 UK’s Bribery Act prohibits both active and passive bribery, ie, giving
and 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 does not require the intent to be ‘corrupt’ or ‘improper’ in
relation to the bribery of a FPO, 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 UK’s MoJ has, however, issued guidance in this
context that confirms that prosecutors will exercise discretion in determining whether to
prosecute in such a situation.

• Promotional expenses – the FCPA provides 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 MoJ has provided some comfort on this aspect in its guidance.

• 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 million per violation. For offences committed
under the Bribery Act, there is a maximum penalty of ten years imprisonment for all the
offences, except the offence relating to commercial organisations who can be subject to an
unlimited fine.

9. What is embezzlement?
 Ans: Embezzlement is the misappropriation of property or funds which are legally
entrusted to someone in their formal position as an agent or guardian. It is usually
a premeditated crime performed methodically, with the embezzler taking
precautions to conceal their activities of the criminal conversion of the property of
another person as the embezzlement occurs without the knowledge or the consent
of the affected person.

It is not always a form of theft or an act of stealing but is more generically an act of
deceitfully extracting assets by one or more persons that have been entrusted with
such assets. The person(s) entrusted with these assets may, or may not have, an
ownership stake in them.

It is a breach of trust and a type of financial fraud, eg, a lawyer might embezzle funds
from the trust accounts of their clients, a financial adviser might embezzle the funds
of investors, or somebody might embezzle funds from a bank account jointly held
with their spouse. In some cases, embezzlement can be conducted and concealed
through creative bookkeeping practices.

10. What is abuse of office by public office holders?

Ans: Abuse of office, in the form of ‘malfeasance in office’ or ‘official misconduct’,

is the commission of an unlawful act, carried out in an official capacity, which affects
the performance of official duties. Abuse of office can also mean a person using the
power they have for their own personal gain. It is often grounds for a ‘for cause’
removal of an elected official by statute or recall election.

Public office is abused for private gain when an official accepts, solicits, or extorts a
bribe. It is also abused when private agents actively offer bribes to circumvent public
policies and processes for competitive advantage and profit. Even if no bribery
occurs, public office can also be abused for personal benefit through patronage and
nepotism, the theft of state assets, or the diversion of state revenues.
The World Bank has settled for a more straightforward definition: ‘the abuse of
public office for private gain’.
11. Is illicit enrichment a criminal act?

Ans: UNCAC defines ‘illicit enrichment’ as the ‘significant increase in the assets of
a public official that he cannot reasonably explain in relation to his lawful income’.
 Article 20 of the Convention criminalises the conduct. Illicit enrichment is also
criminalised and prescribed as an offence under other national and international
instruments, such as the Inter-American Convention against Corruption (IACAC)
and the African Union Convention on Preventing and Combating Corruption under
comparable definitions.

12. What are the four aspects of the United Nations Convention Against Corruption
(UNCAC)?

Ans:
• Prevention – measures directed at both the public and private sectors. These
include model preventive policies, such as the establishment of anti-corruption
bodies and enhanced transparency in the financing of election campaigns and
political parties.

• Criminalisation – introduction of criminal offences to cover a wide range of acts of

corruption, such as bribery and the embezzlement of public funds, but also trading in
influence and the concealment and laundering of the proceeds of corruption. Other
offences likened to corruption, including money laundering and obstructing justice,
are also dealt with.

• International cooperation – cooperation between countries regarding prevention,

investigation and prosecution. Specific mutual legal assistance, including collection of
evidence and extradition.

• Asset recovery – a major part of the Convention, including requirements to return

assets from public sector embezzlement to the state requesting them. This is
particularly important for developing countries which lose huge amounts of badly
needed resources to corruption.

13. Have only European countries adopted the Organisation for Economic Co-operation
and Development (OECD) Anti-Bribery Convention?
 Ans: The OECD anti-bribery convention establishes binding standards to criminalise
the bribing of foreign public officials in international business transactions and
provides for a host of related measures that make this effective. It is the first and only
international anti-corruption instrument focused on the supply side of the bribery
transaction.

The OECD member countries including the UK and seven non-member countries –
Argentina, Brazil, Bulgaria, Colombia, Latvia, Russia, and South Africa – have
adopted this convention.

14. What is the role of the United Nations Development Programme (UNDP) in
combating corruption?

Ans: The UNDP is an organisation that tries to help developing countries in the
eradication of poverty and the reduction of inequalities through development of
policies, skills, institutional capabilities and in achieving resilience by way of
sustainable development outcomes.

‘Help countries achieve the simultaneous eradication of poverty and significant

reduction of inequalities and exclusion’.

The UNDP also provides advisory services to programming countries, engages in

advocacy and raising of global awareness on anti-corruption, and tries to build
synergies through synchronising global and regional activities.

Though it has a limited role, it tries to contribute to the global fight against
corruption by supporting UNCAC’s implementation and review, mainstreaming anti-
corruption in its ongoing work programmes to achieve the millennium development
goals (MDGs) while creating greater general awareness.