A COMPARISON OF THE U.K. BRIBERY ACT AND THE U.S. FOREIGN CORRUPT PRACTICES ACT.

* **
1. INTRODUCTION
Corruption has become one of the most prominent topics on the agenda of international policy debate.1 However it is surprising that until the 1997 OECD Anti-bribery Convention, the United States was the only nation in the world with an explicit extraterritorial anti-bribery law, containing both anti-bribery provisions and accounting control provisions.2 This is however no longer the case as 39 countries are signatories to the OECD convention,3 however the most widely recognised anti-bribery legislations is the United States of Americas (US) Foreign Corrupt Practices Act4(FCPA) and the United Kingdom (UK) Bribery Act 2010 (the Bribery Act). Due to the prominence of both legislations, companies are always advised to acquaint themselves with the provisions enshrined within them. That said, while the two legislations are focused on combating bribery and other forms of corrupt practices, they differ both in content and approach in meeting the goals of their creation. Below is an attempt to contrast both laws and thus an analysis of which of them is better at bribery prevention.

* Sulaiman BALOGUN LLM (International Commercial Law) Robert Gordon University, Aberdeen, Scotland.
1

Michael F. Zeldin and Carlo V. di Florio, Global Risk Management under International Laws To Curb Corrupt Business Practices, ACCA Docket 18, no. 1 (2000) 2 Nicholas Cropp The Bribery Act 2010: Part 4: a comparison with the Foreign Corrupt Practices Act: nuance v nous Crim. L.R. 2011, 2, 122-141 3 <http://www.oecd.org/document/21/0,3746,en_2649_34859_2017813_1_1_1_1,00.html> Accessed 1st April, 2012 4 The Foreign Corrupt Practices Act of 1977, 15 U.S.C. 78m, 78dd-1, 78f (1988) (Public Law 95-213, 91 Stat. 1494, as amended by the Omnibus Trade and Competitiveness Act of 1988, Public Law 100-418, sections 5001-5003 (H.R. 4848), and the International Anti-bribery and Fair Competition Act of 1998 (S. 2375).

SCOPE OF JURISDICTION
While the FCPA governs corporations and citizens of U.S origin, foreign corporations listed on any U.S. stock exchange, or required by the Exchange Act to file disclosures, including employees and other associates of these companies, and entities that commit the offence within the territorial jurisdiction of the U.S.5 The UK Bribery Act on its part exercises its jurisdiction over bribery offences committed by residents and citizens of the United Kingdom or entities carrying on business in the UK.6 Also under the jurisdiction of this act are bribery offences committed anywhere in the world by an entity closely connected to the UK.7 While their jurisdiction as stated above feels similar, the Bribery Acts provisions have a wider reach than that of the FCPA since the U.K. legislation applies to: (a) U.K. partnerships, limited partnerships and incorporated companies wherever they do business (irrespective of where the offense is committed); and (b) Commercial organizations that carry on business or part of a business in the U.K. wherever registered or incorporated. Also Non-U.K. companies may also be held liable under the Bribery Act if conduct in furtherance of the offense occurs in the U.K. Foreign companies doing business in the U.K., may be criminally liable if an agent, employee or subsidiary offered or accepted a bribe anywhere in
5 6 7

15 U.S.C. 78dd-1(a) and 15 U.S.C. 78dd-2(h)(1). Section 7 (5) UK Bribery Act 2010 Section 12 (4) UK Bribery Act 2010

the world, regardless of whether the misconduct involved the U.K. business or occurred in the U.K., and even if the company had only limited contacts with the U.K. In addition, the person who is associated with the entity and who committed the offense need not be closely connected to the U.K. to confer jurisdiction upon the U.K.s Serious Fraud Office (SFO) under the corporate offense.8

BRIBERY OF A FOREIGN OFFICIAL

Both legislations recognize the act of bribing Foreign Public Official (FPO), as being a crime. However, both of them give differing definitions of a FPO. The Bribery Act provides that a FPO is any person who: holds a legislative, administrative or judicial position of any kind whether appointed or elected, of a country outside the United Kingdom; and exercises a public function either on behalf of the country as a whole, or on behalf of an agency of that country; or Is an official or agent of a public international organisation with affiliations to countries governments of countries or other public international organisations.9 The FCPA on its own part defines a FPO as any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.10 It can be noted from the two provisions that the Bribery Act defines a FPO more narrowly, and specifically points at various portfolios, thus making it scope in terms of subject more defined.11 The FCPA and the Bribery Act
8

M DUNCAN et al A Comparison of the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act (Paul Hastings Client Alert 2010) 9 Section 6 UK Bribery Act 2010 10 15 U.S.C. 78dd-1(f) (2006) 11 <http://www.nortonrose.com/knowledge/publications/52195/differences-betweenthe-uk-bribery-act-and-the-us-foreign-corrupt-practices-act> Accessed 1st April, 2012

specifically targets bribery of FPOs. However, the Bribery Act goes a step further to include individuals, employees and managers of private organizations, and private citizens as well. CORRUPT INTENT Also worthy of note is the fact that under the FCPA it must be proved that bribes have to be made with the corrupt intent to obtain a favour, the U.K. Bribery Act contains no corrupt intent element in the offense of bribing a foreign official. The Bribery Act merely requires that the bribe be paid to obtain advantage in the conduct of business.12

PRIMARY FOCUS
The FCPA also focuses on bribery with foreign elements, while the Bribery Act focuses on both domestic and foreign bribery.

ATTEMPTED BRIBERY
While the FCPA focuses on bribery itself, the Bribery Act makes an offence of attempting to bribe.13

ACTIVE AND PASSIVE BRIBERY

The FCPA only covers the offence of giving bribes,14 who receive bribes from American companies cannot be prosecuted however the Bribery Act covers both giving and receiving of bribes.15

STRICT LIABILITY CORPORATE OFFENCE

The Bribery Act creates a strict liability offence of failure of a company to prevent bribery by a person associated with the organization where the bribe is in furtherance of the companys business.16 The only available defence is that the company had a comprehensive compliance program

12

United States v. Joshua C. Cantor, 4 FCPA Rep. 699.821601, 699.821609 699.821610 (S.D.N.Y. 2001),
13 14

United States v. Blondek, 741 F. Supp. 116, 119-20 (N.D. Tex. 1990) as cited in Marika Maris & Erika Singer, Foreign Corrupt Practices Act, 43 AM. CRIM. L. REV. 575 at 584 15 Section 1 and Section 2 UK Bribery Act 2010 16 Section 7 UK Bribery Act 2010.

which it fully applied, enforced and trained its entire staff on.17 The FCPA however has no such strict liability provision.18 Although, it should be noted that strict liability is imposed under its accounting provisions for failure of a company to implement adequate internal control procedures.19

FACILITATION PAYMENTS
This are payments to low level employees who have no real decision making powers to award business to a company. These payments are to speed up the processing of licenses, permits, and other documents needed for the pursuance of business. The FCPA creates an exemption for facilitation payments whereas the Bribery Act makes no such exception as it holds the view that obtaining these business documents faster than a competitor due to facilitation payments gives an unfair competitive advantage over competitors.20

ENFORCEMENT
Under the Bribery Act, only criminal proceedings may be brought against suspected offenders however asides criminal prosecution a corresponding civil suit may be filed under the FCPA.

PENALTIES
Under the Bribery Act individuals found guilty faces up to a ten year prison sentence and an unlimited fine while companies found guilty under the act face an unlimited fine. The FCPA on its own part is less punitive as it provides for a maximum sentence of five years and a $250,000 for individual offenders, while companies get fines of up to $2 million.

17

M DUNCAN et al A Comparison of the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act (Paul Hastings Client Alert 2010) 18 <http://www.nortonrose.com/knowledge/publications/52195/differences-betweenthe-uk-bribery-act-and-the-us-foreign-corrupt-practices-act> Accessed on 1st April, 2012 19 <Vista Law http://www.transparency-usa.org/documents/FCPAvsBriberyAct.pdf> Accessed 1st April, 2012 20 M DUNCAN et al A Comparison of the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act (Paul Hastings Client Alert 2010)

CONCLUSION
The Bribery Act attempts to go beyond the limits of any anti-bribery legislation currently in force especially in relation to the bribery of foreign officials. It places an onus on companies to know whether they are acting lawfully. In respect of the severity of the punishments available to the UK the Bribery Act again surpasses the US Foreign Corrupt Practices Act (FCPA) in its ability to tackle bribery and corruption around the world. 21 The FCPA on its part allows for exceptions to its restrictions, for example its allowance for facilitation payments, which many businesses agree is part and parcel of doing business in many countries. No such exceptions exist at all in the Bribery Act as currently drafted, thus potentially leading to the risk of prosecutions of minor incidences of bribery which the Act was not exactly designed to prohibit.22 Thus from the above it is quite clear that both laws have their strong points, but if the truth is to be told, the FCPA after over 30 years is old and clunky. The Bribery Act though extremely tough and at times seemingly idealistic in its provisions still provides a better chance at clamping down on corruption, it goes way beyond the limits of previous laws and even takes up jurisdiction on forms of corruption which the FCPA is silent on. Thus it is the view in this paper that the Bribery Act is the better of the two great pieces of legislation.

2. INTRODUCTION
Corruption has become one of the most prominent topics on the agenda of international policy debate.23 However it is surprising that until the 1997 OECD Anti-bribery Convention, the United States was the only nation in the world with an explicit extraterritorial anti-bribery law,
21

Robert Mitchell. The UK Bribery Act & the US FCPA: a comparative analysis E.C.L. & P. 2010, 12(11), 6-7. 22 Nicholas Cropp The Bribery Act 2010: Part 4: a comparison with the Foreign Corrupt Practices Act: nuance v nous Crim. L.R. 2011, 2, 122-141 23 Michael F. Zeldin and Carlo V. di Florio, Global Risk Management under International Laws To Curb Corrupt Business Practices, ACCA Docket 18, no. 1 (2000)

containing provisions.24

both

anti-bribery

provisions

and

accounting

control

This is however no longer the case as 39 countries are signatories to the OECD convention,25 however the most widely recognised anti-bribery legislations is the United States of Americas (US) Foreign Corrupt Practices Act26(FCPA) and the United Kingdom (UK) Bribery Act 2010 (the Bribery Act). Due to the prominence of both legislations, companies are always advised to acquaint themselves with the provisions enshrined within them. That said, while the two legislations are focused on combating bribery and other forms of corrupt practices, they differ both in content and approach in meeting the goals of their creation. Below is an attempt to contrast both laws and thus an analysis of which of them is better at bribery prevention.

SCOPE OF JURISDICTION
While the FCPA governs corporations and citizens of U.S origin, foreign corporations listed on any U.S. stock exchange, or required by the Exchange Act to file disclosures, including employees and other associates

24

Nicholas Cropp The Bribery Act 2010: Part 4: a comparison with the Foreign Corrupt Practices Act: nuance v nous Crim. L.R. 2011, 2, 122-141 25 <http://www.oecd.org/document/21/0,3746,en_2649_34859_2017813_1_1_1_1,00.html> Accessed 1st April, 2012 26 The Foreign Corrupt Practices Act of 1977, 15 U.S.C. 78m, 78dd-1, 78f (1988) (Public Law 95-213, 91 Stat. 1494, as amended by the Omnibus Trade and Competitiveness Act of 1988, Public Law 100-418, sections 5001-5003 (H.R. 4848), and the International Anti-bribery and Fair Competition Act of 1998 (S. 2375).

of these companies, and entities that commit the offence within the territorial jurisdiction of the U.S.27 The UK Bribery Act on its part exercises its jurisdiction over bribery offences committed by residents and citizens of the United Kingdom or entities carrying on business in the UK.28 Also under the jurisdiction of this act are bribery offences committed anywhere in the world by an entity closely connected to the UK.29 While their jurisdiction as stated above feels similar, the Bribery Acts provisions have a wider reach than that of the FCPA since the U.K. legislation applies to: (a) U.K. partnerships, limited partnerships and incorporated companies wherever they do business (irrespective of where the offense is committed); and (b) Commercial organizations that carry on business or part of a business in the U.K. wherever registered or incorporated. Also Non-U.K. companies may also be held liable under the Bribery Act if conduct in furtherance of the offense occurs in the U.K. Foreign companies doing business in the U.K., may be criminally liable if an agent, employee or subsidiary offered or accepted a bribe anywhere in the world, regardless of whether the misconduct involved the U.K. business or occurred in the U.K., and even if the company had only limited contacts with the U.K. In addition, the person who is associated with the entity and who committed the offense need not be closely connected to the U.K. to confer jurisdiction upon the U.K.s Serious Fraud Office (SFO) under the corporate offense.30

27 28

15 U.S.C. 78dd-1(a) and 15 U.S.C. 78dd-2(h)(1). Section 7 (5) UK Bribery Act 2010 29 Section 12 (4) UK Bribery Act 2010 30 M DUNCAN et al A Comparison of the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act (Paul Hastings Client Alert 2010)

BRIBERY OF A FOREIGN OFFICIAL

Both legislations recognize the act of bribing Foreign Public Official (FPO), as being a crime. However, both of them give differing definitions of a FPO. The Bribery Act provides that a FPO is any person who: holds a legislative, administrative or judicial position of any kind whether appointed or elected, of a country outside the United Kingdom; and exercises a public function either on behalf of the country as a whole, or on behalf of an agency of that country; or Is an official or agent of a public international organisation with affiliations to countries governments of countries or other public international organisations.31 The FCPA on its own part defines a FPO as any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.32 It can be noted from the two provisions that the Bribery Act defines a FPO more narrowly, and specifically points at various portfolios, thus making it scope in terms of subject more defined.33 The FCPA and the Bribery Act specifically targets bribery of FPOs. However, the Bribery Act goes a step further to include individuals, employees and managers of private organizations, and private citizens as well. CORRUPT INTENT Also worthy of note is the fact that under the FCPA it must be proved that bribes have to be made with the corrupt intent to obtain a favour, the U.K. Bribery Act contains no corrupt intent element in the offense of

31 32

Section 6 UK Bribery Act 2010 15 U.S.C. 78dd-1(f) (2006) 33 <http://www.nortonrose.com/knowledge/publications/52195/differences-betweenthe-uk-bribery-act-and-the-us-foreign-corrupt-practices-act> Accessed 1st April, 2012

bribing a foreign official. The Bribery Act merely requires that the bribe be paid to obtain advantage in the conduct of business.34

PRIMARY FOCUS
The FCPA also focuses on bribery with foreign elements, while the Bribery Act focuses on both domestic and foreign bribery.

ATTEMPTED BRIBERY
While the FCPA focuses on bribery itself, the Bribery Act makes an offence of attempting to bribe.35

ACTIVE AND PASSIVE BRIBERY

The FCPA only covers the offence of giving bribes,36 who receive bribes from American companies cannot be prosecuted however the Bribery Act covers both giving and receiving of bribes.37

STRICT LIABILITY CORPORATE OFFENCE

The Bribery Act creates a strict liability offence of failure of a company to prevent bribery by a person associated with the organization where the bribe is in furtherance of the companys business.38 The only available defence is that the company had a comprehensive compliance program which it fully applied, enforced and trained its entire staff on.39 The FCPA however has no such strict liability provision.40 Although, it should be

34

United States v. Joshua C. Cantor, 4 FCPA Rep. 699.821601, 699.821609 699.821610 (S.D.N.Y. 2001),
35 36

United States v. Blondek, 741 F. Supp. 116, 119-20 (N.D. Tex. 1990) as cited in Marika Maris & Erika Singer, Foreign Corrupt Practices Act, 43 AM. CRIM. L. REV. 575 at 584 37 Section 1 and Section 2 UK Bribery Act 2010 38 Section 7 UK Bribery Act 2010. 39 M DUNCAN et al A Comparison of the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act (Paul Hastings Client Alert 2010) 40 <http://www.nortonrose.com/knowledge/publications/52195/differences-betweenthe-uk-bribery-act-and-the-us-foreign-corrupt-practices-act> Accessed on 1st April, 2012

noted that strict liability is imposed under its accounting provisions for failure of a company to implement adequate internal control procedures.41

FACILITATION PAYMENTS
This are payments to low level employees who have no real decision making powers to award business to a company. These payments are to speed up the processing of licenses, permits, and other documents needed for the pursuance of business. The FCPA creates an exemption for facilitation payments whereas the Bribery Act makes no such exception as it holds the view that obtaining these business documents faster than a competitor due to facilitation payments gives an unfair competitive advantage over competitors.42

ENFORCEMENT
Under the Bribery Act, only criminal proceedings may be brought against suspected offenders however asides criminal prosecution a corresponding civil suit may be filed under the FCPA.

PENALTIES
Under the Bribery Act individuals found guilty faces up to a ten year prison sentence and an unlimited fine while companies found guilty under the act face an unlimited fine. The FCPA on its own part is less punitive as it provides for a maximum sentence of five years and a $250,000 for individual offenders, while companies get fines of up to $2 million.

CONCLUSION
The Bribery Act attempts to go beyond the limits of any anti-bribery legislation currently in force especially in relation to the bribery of foreign officials. It places an onus on companies to know whether they are acting lawfully. In respect of the severity of the punishments available to the UK
41

<Vista Law http://www.transparency-usa.org/documents/FCPAvsBriberyAct.pdf> Accessed 1st April, 2012 42 M DUNCAN et al A Comparison of the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act (Paul Hastings Client Alert 2010)

the Bribery Act again surpasses the US Foreign Corrupt Practices Act (FCPA) in its ability to tackle bribery and corruption around the world. 43 The FCPA on its part allows for exceptions to its restrictions, for example its allowance for facilitation payments, which many businesses agree is part and parcel of doing business in many countries. No such exceptions exist at all in the Bribery Act as currently drafted, thus potentially leading to the risk of prosecutions of minor incidences of bribery which the Act was not exactly designed to prohibit.44 Thus from the above it is quite clear that both laws have their strong points, but if the truth is to be told, the FCPA after over 30 years is old and clunky. The Bribery Act though extremely tough and at times seemingly idealistic in its provisions still provides a better chance at clamping down on corruption, it goes way beyond the limits of previous laws and even takes up jurisdiction on forms of corruption which the FCPA is silent on. Thus it is the view in this paper that the Bribery Act is the better of the two great pieces of legislation.

43

Robert Mitchell. The UK Bribery Act & the US FCPA: a comparative analysis E.C.L. & P. 2010, 12(11), 6-7. 44 Nicholas Cropp The Bribery Act 2010: Part 4: a comparison with the Foreign Corrupt Practices Act: nuance v nous Crim. L.R. 2011, 2, 122-141