Criminal Law Review Article Corruption and fraud: bribery and abuse of position In drafting new laws everyone - not just enforcers - seeks some clarity of definition. ‘Fraud’ and ‘corruption’ have this in common: it is an impossible task. Legislators round the world have struggled to come up with satisfactory definitions; we in the UK are no different. Indeed, the history of judicial attempts to bring clarity to fraud and corruption makes for a less than illuminating read. In fact neither can be satisfactorily defined, which is why the Law Commission's ‘Advisory Group on the Corruption Act became one on the Bribery Act (BA). Both fraud and corruption are fluid, liquid, chameleon-like creatures capable of disappearing like water through one's fingers. The best approach is not to try to define them at all, but to treat them like a virus or complex disease which shows itself through its most common symptoms: abuse of position and false representation for fraud, and bribery for corruption. The close links between bribery and abuse of position under the Fraud Act have largely been missed. In fact the Fraud Act has been heavily influential in drafting the general bribery offences. In the summer of 2007, as a member of the Law Commission's Advisory Panel, I pointed out the merits of the Fraud Act's s.4 abuse of position offence as a potential model to follow in terms of an expectation that someone else will abuse a position. The trick then became one of sufficiently delineating and differentiating the particular anticipated abuse of position, which became an expectation of a breach of trust, impartiality or good faith by someone else under the general bribery offences. But there is still close interplay between the Fraud and Bribery Acts: a briber, by seeking a breach of trust, impartiality or good faith by someone else, may also be abusing his or her own position. The same may be true of those who accept the bribe. ‘There is however a crucial difference between the two Acts: although the BA has a far greater jurisdictional reach, it is more likely that a Board member will abuse his or her position or make false representations (thus triggering direct corporate criminal liability for fraud) than being directly involved in bribery. officials (FPO) There have been misunderstandings about the nature of the wrongdoing under the s6 offence. The wrongdoing here lies in intending to influence a foreign public official through or by what is given or offered or promised. (The link is implied in s.6 (3)). It is not an offence (or potential offence), as many have suggested, to provide a FPO with a meal (or other benefit) unless the provider intends through the provision of the meal (or other benefit) to influence the FPO in his or her official capacity. Thus, if what is provided is reasonable, proportionate and done in good faith, it is difficult to see how the offence can be triggered. Bribing foreign pub!Some have suggested putting monetary limits on hospitality and expenses. I would prefer to see suggested acceptable standards of provision (rather than valués) along the lines of ‘we will provide a hotel or restaurant to a 3 or 4 star standard’. The same is true of travelling and related expenses, Values or monetary limits will vary around the world, whereas agreed standards of provision should remain universal. Paying a fee to a FPO is a more difficult area. Ideally, wherever possible, this should be avoided. However, there are instances where the FPO is required for his or her genuine independent expertise, especially where he or she is wearing ‘two hats’. The involvement of many foreign doctors and consultants in phased drug testing is one such area, Provided any payments are open and transparent for both parties, and that the FPO consultant is not going to be involved in any decision-making relating to contracts involving the company who has paid him, it would be difficult to make an offence. ity The sea change for enforcers came with the extension of corporate and partnership criminal liability in s.7. I was fortunate enough to have persuaded Professor Horder to create such a precedent when the Law Commission was initially reluctant to do so. There were (and still are) pressing reasons why it was necessary. Most serious bribery is committed in a business environment - to benefit or for the benefit of business. It seemed illogical, therefore, not to make business liable to some degree for such bribes. If this had not been done, the Act would have been toothless, and some of the root problems caused by bribery not addressed. Business criminal lial There has been much talk of ‘vicarious ‘or ‘strict’ liability. Such terms are not helpful when the offence is one of failing to prevent bribery and there is a defence. Also a Board's failure to prevent is not the same as direct culpability for the bribe. (Note the difference with the Foreign and Corrupt Practices Act) It is a big stick, but with it comes an enormous carrot of a defence of having ‘adequate procedures’ designed to prevent bribery. (Unlike the FCPA) It may seem an odd thing for a prosecutor to say, but the defence is actually the most important aspect of the whole Act because it gives business the incentive to do something about preventing bribery. ‘The Ministry of Justice's (MoJ’s) guidance on how to prevent bribery is essential. Iwas fortunate enough to be on the working group. It was vital to narrow down any guidance to commonly accepted principles applicable everywhere. To that extent the guidance is admirable, as well as being very practical. I would stress risk assessment and risk mitigation, which should be dynamic and ongoing, and will differ as businesses enter new contracts, deal with new people, and deal with new countries. The business ‘tone from the top’ is also crucial. Some businesses have asked how far are they expected to have to go, particularly with their partners or supply chains. A great deal depends upon the nature of the business and the degree of control involved .Where there is little control, would have thought that business would be expected to try and manage the situation, tosatisfy themselves that the procedures of any partner (or proposed partner) are indeed adequate, and where they are not adequate to persuade them of the need (and help them) to be so. Ultimately, they make have to be prepared walk away. What would this for UK business? The answer to that must lie in whether I want to invest in a sustainable business, or one that is not. Carrying on a business and ‘services’ There has been some criticism about the overall breadth of the Act. I might add that there were very similar criticisms about the Fraud Act, Ethical businesses ask what the SFO is doing to support them by putting out of business unethical rivals that gain competitive advantage from their unethical behaviour. In particular, the Bribery Act will give jurisdiction in respect of the activities abroad of foreign entities that carry on a business here. It is an important extension to our jurisdiction (and was not originally in the Law Commission's Bill but came about after a meeting with the Mo]'s Bill manager, Rod Macaulay.) ‘The phrase ‘carrying on a business in the UK’ was necessary to create a fairer environment for UK businesses. Indeed, it was vital also to capture foreign companies doing business in the UK, so that UK business would not. be disadvantaged by comparison. It will always be a matter of fact and degree. The question business should always ask is "Do I have a presence in the UK, and if so why"? S.7 was not intended to make the main company liable for failing to prevent bribery by a subsidiary, unless the subsidiary itself (under operating head liability) is directly bribing, In the normal course a bribe by an individual performing services for a subsidiary would not therefore render the main or holding company (as well as the subsidiary) liable for failing to prevent the bribe, However, if it appears that the individual is in fact performing services for both A and B, then both A and B may be liable for preventing C’s bribe. Again that will be a matter of fact and degree and assessing all the circumstances. Corporate directing minds Corporates continue to be directly liable for bribery under the ‘directing mind’ principle, As mentioned above, if the Board of a subsidiary performing a service for a holding company bribes, the holding company may be liable for failing to prevent the subsidiary from bribing, One important point has been missed: many think that ‘consent and connive’ under 5.12 is something new. In fact it merely replicates the consent and connivance clauses of both the Theft and Fraud Acts, To my knowledge there has been little use of these sections by prosecutors and accordingly they remain underused. (There is, of course, a strong overlap between ‘connive’ and encourage or assist). To trigger consent or connivance offence, the guilt of the directing mind of the corporation must first be proved, In other words, a Board member or senior manager must be involved in fraud or bribery which renders both the individual and the corporate or partnership liable. That being established, if other Board