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The Corporate Offence

 

An offence is committed by a commercial organisation when:

  • A person "associated" with the commercial organisation (i.e. performs services for it) bribes another person (within the meaning of sections 1 and 6);
  • The bribe is intended to obtain or retain business for the commercial organisation or retain an advantage in the conduct of the organisation's business.

Importantly, it is a defence for the commercial organisation to show that it had adequate procedures in place to prevent bribery being committed by those associated with it.

It has recently been announced that the SFO is considering extending this offence to include acts of financial crime by a person associated with a commercial organisation. As at February 2014, no draft provisions have been published. More information can be by found here.

The prosecution must prove that the bribe was paid with the intention to obtain or retain business for the organisation itself. The government made it clear during parliamentary debate that the definition was wide and could include liability for consortia, contractors, joint ventures partners and subsidiaries. Where parent and subsidiary are co-partners to a contract in respect of which a subsidiary commits a corrupt act, the test is likely to be met. Where the subsidiary is acting on its own account and the contract is ring fenced it less likely the parent will be caught by the Act. As currently drafted prosecutors may be able to argue that the parent company will receive a business advantage, where revenue generation in the subsidiary will be an advantage to the parent.
Whether a person is performing services for or on behalf of the commercial organisation relates to the actual activities being undertaken at the time rather than the person's general position within the organisation. A person may, for example, be the commercial organisation's employee, agent or subsidiary. All the relevant circumstances will be considered, but if the person was an employee, it will be presumed that they were performing services on behalf of the commercial organisation. The burden will be on the commercial organisation to show otherwise (s. 8).
The bribery in question relates only to the offering, promising or giving of a bribe; there is no offence of failure to prevent the taking of a bribe.
This is defined widely to include anyone who performs a service for the parent company. The associated person or organisation does not have to be in the UK or working for a UK entity. It may be an employee, consultant, agent or contractor based anywhere in the world acting on the UK entity’s behalf. The Act expressly provides that subsidiaries may be associated entities, but whether a subsidiary performs services on behalf of the parent company is to be determined by reference to “all relevant circumstances” and not merely the relationship between them. Until case precedent gives guidance arguably any holding in a UK subsidiary or even joint venture may suffice.

For a more detailed analysis of the question of whether a foreign parent company can be liable for the activities of a UK or foreign subsidiary click here.
The offence is committed by the organisation; its employees, directors or other executives are not separately liable under this head, although an organisation will only be liable if the individual from the commercial organisation who makes or offers the bribe would him/herself be guilty of an offence of bribing another person or a foreign official (whether or not they are prosecuted).
"Commercial Organisations" include UK partnerships, UK-incorporated companies and companies established elsewhere but which carry on a business or part of a business in the UK. Carrying on a business is not defined, but if an organisation has a branch office in the UK it may satisfy this requirement as the branch would be part of the same legal entity. Having a UK subsidiary that is a separate legal entity might not necessarily result in the parent being treated as carrying on business in the UK. Much would depend on whether the subsidiary’s activities form part of the parent’s business and the degree of control exerted by the parent. Until prosecutional and judicial guidance is forthcoming it is sensible to take a broad approach and ensure that all subsidiaries are Bribery Act compliant.

Corporate offence