Aston Law

Fraud, Bribery and

Corruption 2019/20
Week 3 – lecture 1 – bribery – the Bribery Act
2010 and the failure to prevent offence

9 October 2019
Robert Goddard South Wing 709
r.j.goddard@aston.ac.uk Office hours: see WASS
 In today’s session

•Further reflections on the nature of corruption and

bribery.

•An introduction to the international framework, the UK’s

anti-corruption plan and the UK Bribery Act 2010.

•Research from different academic disciplines –

examples to help illustrate the insights provided and to
prompt possible ideas for the main assessment. Not
exhaustive – we will return to much more later in the
module.

2
News

•Boris Johnson
•The GLA Code and the 7
Principles of Public Life:
• Selflessness
• Integrity
• Objectivity
• Accountability
Lord Nolan (1928-2007)
• Openness First chairman of the
• Honesty Committee on Standards in
Public Life
• Leadership [pictured in 1994]
3
News

4
Fraud Act 2006: fraud by false representation

5
 7 Oct
News

https://www.ft.com/content/d59ce1f6-e6b5-11e9-9743-db5a370481bc
6
Fraudster of the week: Frank William Abagnale Jr.
“What I did was almost 50
years ago and it's about
4,000 times easier today to
con people than when I did
it … Fifty years ago,
information was hard to
come by”

In the old days, a conman

would be good looking,
suave, well dressed, well
spoken and presented
(1948-) themselves real well. Those
days are gone because it's
not necessary”.
From an interview:
http://www.wired.co.uk/article/frank-abagnal
e
7
But what is corruption?
“In its traditional “Dishonest or fraudulent
sense, corruption conduct by those in power,
refers to moral typically involving bribery”
impurity … But the [
concept of https://en.oxforddictionaries.com/d
efinition/corruption
corruption has ]
changed over the
centuries and “…making or becoming
varies somewhat morally corrupt; the fact or
across cultures”. condition of being corrupt;
moral deterioration or decay;
(L. Holmes, depravity”
Corruption, Oxford,
2015). [http://www.oed.com/view/Entry/42
045?redirectedFrom=corruption#ei
d
8
]
Insights from economics

Have any economists made

arguments justifying corruption?

See further (if a little dated): A. Ades and R. Di Tella, “The new
economics of corruption” (1997) Political Studies 496 and available here:
http://www.people.hbs.edu/rditella/papers/pscorrsurvey.pdf
9

What is wrong with bribery?
“It is, in principle, possible for some bribes to be
beneficial, on balance, if they overcome unfair,
inhumane, or inefficient practices … bribery might
permit someone to escape an oppressive regime,
or it might allocate import quotas to the most
efficient firms. However, bribery is always a
second best outcome. If bribery overcomes
inefficient rules, the best policy is either to repeal
the rule or to legalize payments to the state.
Official tolerance of bribery leaves in place the
transaction costs of corruption, favors those who
disrespect the law, encourages officials to create
even more red tape and delay to increase
incentives for payoffs, and undermines state
legitimacy”.
From: S. Rose-Ackerman, “The Law and Economics of Bribery and
Extortion”, John M. Olin Center for Studies in Law, Economics, and
Public Policy Research Paper Number 408. Available to download
free at SSRN (id=1646975).
10
Corruption: bribery – insights from
the literature - language
“Overall, we observe two different approaches to bribing
public servants. While transferring a ‘‘gift” is preferred
because it appears less offensive and demanding, a bribe is
chosen precisely for the opposite reason: it is more
demanding. A bribe makes it clearer that reciprocity is
expected, including the threat to retaliate in case of
opportunistic behavior. Participants were willing to live up to
this threat and devote resources to retaliation after naming
their payment a bribe. This suggests that the wording of a
bribe is intended to help enforce a corrupt agreement.
This disproves the notion that corrupt actors strictly
prefer to camouflage a bribe as a gift.” [emphasis added]

Johann Graf Lambsdorff and Björn Frank, “Bribing versus gift-giving – an

experiment”, (2010) 31(3) Journal of Economic Psychology 347-357.
11
Insights from the literature: differences
across countries
• UK, Italy, Germany and France.

• Females were significantly more opposed to bribery than

were the males.

• For all four countries, the oldest group was most opposed
to bribery and the youngest group was least opposed.

• Those who categorized themselves as religious were

most opposed to bribery, whereas those who were not
religious were least opposed. Atheists fell in the middle.

Hernandez, Teresa and McGee, Robert W., Ethical Attitudes Toward Taking
a Bribe: A Study of Four European Countries (January 10, 2013).
Available at SSRN: https://ssrn.com/abstract=2199245
12
Behavioural ethics and bribery
• In this context, behavioural ethics explores how
decision makers understand the context of a situation
in which bribery may occur and how they view
themselves within that context.
• Bounded ethicality:
“the tendency of people to engage in behavior that is
inconsistent with their own ethical values. That is, bounded
ethicality refers to situations in which people make decision
errors that not only harm others, but are inconsistent with their
own consciously espoused beliefs and preferences–decisions
they would condemn upon further reflection or greater
awareness”
(From: Gino, Francesca and Moore, Don A. and Bazerman, Max H., See No Evil: When
We Overlook Other People's Unethical Behavior (January 2, 2008). Harvard Business
School NOM Working Paper No. 08-045. Available at SSRN: https://
ssrn.com/abstract=1079969).
13
International
frameworks for
preventing
corruption and
bribery

14
 “ The Convention introduces a
comprehensive set of standards,
measures and rules that all
countries can apply in order to
strengthen their legal and
regulatory regimes to fight
corruption. It calls for preventive
measures and the
criminalization of the most
prevalent forms of corruption in
both public and private sectors.
And it makes a major
breakthrough by requiring
Member States to return assets
obtained through corruption to
the country from which they
were stolen”.
https://www.unodc.org/documen
ts/treaties/UNCAC/Publications/
Convention/08-50026_E.pdf
15
16
Article 1

Statement of purpose

The purposes of this Convention are:

(a)To promote and strengthen measures to

prevent and combat corruption more
efficiently and effectively;
(b)To promote, facilitate and support
international cooperation and technical
assistance in the prevention of and fight
against corruption, including in asset
recovery;
(c)To promote integrity, accountability and
proper management of public affairs and
public property.
17
Article 15: Bribery of national public officials

Each State Party shall adopt such legislative and

other measures as may be necessary to establish
as criminal offences, when committed intentionally:

(a)The promise, offering or giving, to a public

official, directly or indirectly, of an undue advantage,
for the official himself or herself or another person
or entity, in order that the official act or refrain from
acting in the exercise of his or her official duties;

(a)The solicitation or acceptance by a public official,

directly or indirectly, of an undue advantage, for the
official himself or herself or another person or entity,
in order that the official act or refrain from acting in
the exercise of his or her official duties.

18
Article 16

Bribery of foreign public officials and officials of

public international organizations

1. Each State Party shall adopt such legislative and

other measures as may be necessary to establish
as a criminal offence, when committed intentionally,
the promise, offering or giving to a foreign public
official or an official of a public international
organization, directly or indirectly, of an undue
advantage, for the official himself or herself or
another person or entity, in order that the official act
or refrain from acting in the exercise of his or her
official duties, in order to obtain or retain business
or other undue advantage in relation to the conduct
of international business.

19
Article 16

Bribery of foreign public officials and officials of

public international organizations

2. Each State Party shall consider adopting such

legislative and other measures as may be
necessary to establish as a criminal offence, when
committed intentionally, the solicitation or
acceptance by a foreign public official or an official
of a public international organization, directly or
indirectly, of an undue advantage, for the official
himself or herself or another person or entity, in
order that the official act or refrain from acting in the
exercise of his or her official duties.

20
Article 12

Private sector

Each State Party shall take measures, in

accordance with the fundamental principles of its
domestic law, to prevent corruption involving the
private sector, enhance accounting and auditing
standards in the private sector and, where
appropriate, provide effective, proportionate and
dissuasive civil, administrative or criminal penalties
for failure to comply with such measures

21
 http://www.oecd.org/daf/anti-bribery/ConvCombatBribery_ENG.pdf

22
23
 You can find reports for other
countries here:
http://www.oecd.org/daf/anti-bribe
ry/countryreportsontheimplement
ationoftheoecdanti-briberyconven
tion.htm

Phase 4
follow-up
2017 report

http://www.oe
http://www.oecd.org/ cd.org/corrupt
corruption/anti-briber ion/United-Ki
y/UK-Phase-4-Repo ngdom-phase
rt-ENG.pdf -4-follow-up-r
eport-ENG.pd
f

2019
24
Dec 2014

25
Gifts and bribery
“One of the trickiest issues
in determining whether or
not a given act constitutes
corruption is how to
distinguish a gift from a
bribe. In many Asian
cultures, not only is a gift
not seen as a bribe, but it
can be insulting to decline
it, or to treat it as
essentially a bribe”
(L. Holmes, Corruption,
Oxford: OUP, 2015).
“The origins of Chinese
gift-giving are found in
ancient practices that
propound a rule of virtue
… A bribe is distinguished
from a gift of virtue,
because a bribe requires
an immediate return. Put
another way, a gift
develops a relationship,
and a bribe achieves
immediate gain, e.g.,
permit approval for a
business.”
M. Szto, “Chinese Gift-Giving, Anti-
Corruption Law, and the Rule of Law
and Virtue” (2016) 39 Fordham
International Law Journal 591 -
https://ssrn.com/abstract=2769392
26
A gift or a bribe?
Holmes (2015) provides the
following six variables to help us
distinguish between a bribe and a
gift: To what extent
do we see (1) to
1.The intention of the donor. (5) reflected in
2.The expectation of the recipient. the UK Bribery
3.The timing of the giving. Act 2010?
4.The value of the gift.
5.The perceived social See later.
acceptability of the transaction.
6. The legal perspective.

27
UK legislation
The Act contains a consolidated
scheme of bribery offences to
cover bribery in the UK and
abroad, including offering and
receiving.

The Act also creates a discrete

offence of bribery of a foreign
public official and a new offence
where a commercial organisation
fails to prevent bribery.

See: https://www.legislation.gov.uk/ukpga/2010/23/contents and

https://www.legislation.gov.uk/ukpga/2010/23/notes/contents
28
 Aim of the Act: replace old and fragmented laws and
introduce a new corporate offence.

1997: UK signs
1998: Law Commission the OECD
report: Legislating the Convention.
Criminal Code: Corruption.
1999: OECD
Background

Working Group
2008: Law Commission
expresses
report: Reforming Bribery.
concerns with
‘gaps’ in the UK
2009: Draft Bribery Bill
legal
published in March; Bill
framework.
introduced in Parliament in
November.

2010: Bill receives Royal 2017/9: OECD

Assent in April. Phase 4 report
and follow-up. 29
30
 (1) A person (“P”) is guilty of an offence if either of the following
cases applies.
(2) Case 1 is where —
(a) P offers, promises or gives a financial or other
advantage to another person, and
(b) P intends the advantage—
Section 1 (i) to induce a person to perform improperly a
Offences of
bribing another relevant function or activity, or
person (ii) to reward a person for the improper performance
of such a function or activity.
(3) Case 2 is where —
(a) P offers, promises or gives a financial or other advantage to
another person, and
(b) P knows or believes that the acceptance of the advantage would
itself constitute the improper performance of a relevant function or
activity.

(4) In case 1 it does not matter whether the person to whom the advantage is
offered, promised or given is the same person as the person who is to perform,
or has performed, the function or activity concerned.
(5) In cases 1 and 2 it does not matter whether the advantage is offered,
promised or given by P directly or through a third party.
31
 (1) A person (“R”) is guilty of an offence if any of the following cases
applies.

(2) Case 3 is where R requests, agrees to receive or accepts a

financial or other advantage intending that, in consequence, a
relevant function or activity should be performed improperly
Section 2 (whether by R or another person).
Offences relating
to being bribed (3) Case 4 is where—
(a) R requests, agrees to receive or accepts a financial or other
advantage, and
(b) the request, agreement or acceptance itself constitutes the
improper performance by R of a relevant function or activity.

(4) Case 5 is where R requests, agrees to receive or accepts a financial or other

advantage as a reward for the improper performance (whether by R or another
person) of a relevant function or activity.

(5) Case 6 is where, in anticipation of or in consequence of R requesting,

agreeing to receive or accepting a financial or other advantage, a relevant
function or activity is performed improperly—
(a) by R, or
(b) by another person at R's request or with R's assent or acquiescence.
32
 …continued:

(6) In cases 3 to 6 it does not matter—

(a) whether R requests, agrees to receive or

accepts (or is to request, agree to receive or accept)
Section 2 the advantage directly or through a third party,
Offences relating (b) whether the advantage is (or is to be) for the
to being bribed benefit of R or another person.

(7) In cases 4 to 6 it does not matter whether R knows or

believes that the performance of the function or activity
is improper.

(8) In case 6, where a person other than R is performing

the function or activity, it also does not matter whether
that person knows or believes that the performance of
the function or activity is improper.

33
 (1) For the purposes of this Act a function or activity is a
relevant function or activity if—
(a) it falls within subsection (2), and
(b) meets one or more of conditions A to C.

(2) The following functions and activities fall within this

subsection—
Section 3 (a) any function of a public nature,
Function or
(b) any activity connected with a business,
activity to which
bribe relates (c) any activity performed in the course of a person's
employment,
(d) any activity performed by or on behalf of a body of persons
(whether corporate or unincorporate).

(3) Condition A is that a person performing the function or activity is expected to

perform it in good faith.
(4) Condition B is that a person performing the function or activity is expected to
perform it impartially.
(5) Condition C is that a person performing the function or activity is in a position
of trust by virtue of performing it.
(6) A function or activity is a relevant function or activity even if it—
(a) has no connection with the United Kingdom, and
(b) is performed in a country or territory outside the United Kingdom.
(7) In this section “business” includes trade or profession.
34
 (1) For the purposes of this Act a relevant function or activity
—

(a) is performed improperly if it is performed in breach of a

relevant expectation, and
(b) is to be treated as being performed improperly if there is a
failure to perform the function or activity and that failure is itself
Section 4 a breach of a relevant expectation.
Improper
performance to
which bribe relates
(2) In subsection (1) “relevant expectation”—
(a) in relation to a function or activity which meets condition A
or B, means the expectation mentioned in the condition
concerned, and
(b) in relation to a function or activity which meets condition C,
means any expectation as to the manner in which, or the
reasons for which, the function or activity will be performed
that arises from the position of trust mentioned in that
condition.

(3) Anything that a person does (or omits to do) arising from
or in connection with that person's past performance of a
relevant function or activity is to be treated for the
purposes of this Act as being done (or omitted) by that
person in the performance of that function or activity.
35
 (1) For the purposes of sections 3 and 4, the test of what
is expected is a test of what a reasonable person in the
United Kingdom would expect in relation to the
performance of the type of function or activity concerned.

(2) In deciding what such a person would expect in

Section 5 relation to the performance of a function or activity where
Expectation the performance is not subject to the law of any part of
test the United Kingdom, any local custom or practice is to be
disregarded unless it is permitted or required by the
written law applicable to the country or territory
concerned.

(3) In subsection (2) “written law” means law contained in

—
(a) any written constitution, or provision made by or
under legislation, applicable to the country or territory
concerned, or
(b) any judicial decision which is so applicable and is
evidenced in published written sources.

36
 (1) A person (“P”) who bribes a foreign public official (“F”) is
guilty of an offence if P's intention is to influence F in F's
capacity as a foreign public official.

(2) P must also intend to obtain or retain—

Section 6 (a) business, or

Bribery of foreign (b) an advantage in the conduct of business.
public officials

(3) P bribes F if, and only if—

(a) directly or through a third party, P offers, promises or gives any financial or other
advantage—
(i) to F, or
(ii) to another person at F's request or with F's assent or acquiescence,
and
(b) F is neither permitted nor required by the written law applicable to F to be influenced
in F's capacity as a foreign public official by the offer, promise or gift.
(4) References in this section to influencing F in F's capacity as a foreign public
official mean influencing F in the performance of F's functions as such an official,
which includes—
(a) any omission to exercise those functions, and
(b) any use of F's position as such an official, even if not within F's authority.
37
 …continued:
(5) “Foreign public official” means an individual who—

(a) holds a legislative, administrative or judicial position of any

kind, whether appointed or elected, of a country or territory
outside the United Kingdom (or any subdivision of such a
Section 6 country or territory),
Bribery of foreign (b) exercises a public function—
public officials (i)for or on behalf of a country or territory outside the
United Kingdom (or any subdivision of such a country or
territory), or
(ii)for any public agency or public enterprise of that
country or territory (or subdivision), or
(c) is an official or agent of a public international organisation.

(6) “Public international organisation” means an organisation whose members

are any of the following—

(a) countries or territories,

(b) governments of countries or territories,
(c) other public international organisations,
(d) a mixture of any of the above.

38
 …continued:
(7) For the purposes of subsection (3)(b), the written
law applicable to F is—
(a) where the performance of the functions of F which P
intends to influence would be subject to the law of any part of
Section 6 the United Kingdom, the law of that part of the United
Bribery of foreign Kingdom,
public officials (b) where paragraph (a) does not apply and F is an official or
agent of a public international organisation, the applicable
written rules of that organisation,
(c) where paragraphs (a) and (b) do not apply, the law of the
country or territory in relation to which F is a foreign public
official so far as that law is contained in—

(i) any written constitution, or provision made by or

under legislation, applicable to the country or territory
concerned, or
(ii) any judicial decision which is so applicable and is
evidenced in published written sources.

(8) For the purposes of this section, a trade or

profession is a business.
39
 19 February 2016 – SFO press release
https://www.sfo.gov.uk/2016/02/19/sweett-group-
plc-sentenced-and-ordered-to-pay-2-3-million-after-
bribery-act-conviction/

Construction and professional services company Sweett Group PLC

was today sentenced and ordered to pay £2.25 million as a result of a
conviction arising from a Serious Fraud Office investigation into its
activities in the United Arab Emirates.

The company pleaded guilty in December 2015 to a charge of failing

to prevent an act of bribery intended to secure and retain a contract
with Al Ain Ahlia Insurance Company (AAAI), contrary to Section 7(1)
(b) of the Bribery Act 2010. The relevant conduct occurred between 1
December 2012 and 1 December 2015.

40
 (1) A relevant commercial organisation (“C”) is guilty of
an offence under this section if a person (“A”)
associated with C bribes another person intending—
(a) to obtain or retain business for C, or
(b) to obtain or retain an advantage in the conduct of
business for C.
Section 7
Failure of a
commercial (2) But it is a defence for C to prove that C had in place
organisation to adequate procedures designed to prevent persons
prevent bribery
associated with C from undertaking such conduct.

(3) For the purposes of this section, A bribes another person if, and only
if, A—

(a) is, or would be, guilty of an offence under section 1 or 6 (whether or not
A has been prosecuted for such an offence), or
(b) would be guilty of such an offence if section 12(2)(c) and (4) were
omitted.

(4) See section 8 for the meaning of a person associated with C and see
section 9 for a duty on the Secretary of State to publish guidance.
41
 …continued:
(5) In this section—
“partnership” means—
(a) a partnership within the Partnership Act 1890, or
(b) a limited partnership registered under the Limited
Section 7 Partnerships Act 1907,
Failure of a
commercial or a firm or entity of a similar character formed under the
organisation to law of a country or territory outside the United Kingdom,
prevent bribery

“relevant commercial organisation” means—

(a) a body which is incorporated under the law of any part of the United
Kingdom and which carries on a business (whether there or elsewhere),
(b) any other body corporate (wherever incorporated) which carries on a
business, or part of a business, in any part of the United Kingdom,
(c) a partnership which is formed under the law of any part of the United
Kingdom and which carries on a business (whether there or elsewhere), or
(d) any other partnership (wherever formed) which carries on a business, or
part of a business, in any part of the United Kingdom,

and, for the purposes of this section, a trade or profession is a 42

 (1)For the purposes of section 7, a person (“A”) is
associated with C if (disregarding any bribe under
consideration) A is a person who performs services for
or on behalf of C.

(2)The capacity in which A performs services for or on

Section 8
Meaning of behalf of C does not matter.
associated
person
(3)Accordingly A may (for example) be C's employee,
agent or subsidiary.

(4)Whether or not A is a person who performs services

for or on behalf of C is to be determined by reference
to all the relevant circumstances and not merely by
reference to the nature of the relationship between A
and C.

(5)But if A is an employee of C, it is to be presumed

unless the contrary is shown that A is a person who
performs services for or on behalf of C.
43
 (1)The Secretary of State must publish guidance about
procedures that relevant commercial organisations can
put in place to prevent persons associated with them
from bribing as mentioned in section 7(1).

(2)The Secretary of State may, from time to time,

Section 9 publish revisions to guidance under this section or
Guidance about
commercial
revised guidance.
organisations
preventing (3)The Secretary of State must consult the Scottish
bribery
Ministers and the Department of Justice in Northern
Ireland before publishing anything under this section.

(4)Publication under this section is to be in such

manner as the Secretary of State considers
appropriate.

(5)Expressions used in this section have the same

meaning as in section 7.

44
The failure of commercial organisations to prevent bribery:
guidance – https://www.gov.uk/government/publications/bribery-act-2010-guidance

Section 9
Guidance about
commercial
organisations
preventing
bribery

45
https://www.gov.uk/government/uploads/system/upload

The Government’s position:

s/attachment_data/file/181762/bribery-act-2010-

The procedures put in place by

commercial organisations wishing
to prevent bribery being
committed on their behalf should
be informed by six principles.

These principles are intended to

be flexible, and focused on
outcomes. They are not
prescriptive.
guidance.pdf

Bribery prevention procedures

should be proportionate to risk.

46
 The six principles:

1.Proportionate procedures.
2.Top-level commitment.
3.Risk assessment.
4.Due diligence.
5.Communication (including
training).
6.Monitoring and review.

https://www.gov.uk/government/uploads/system/uploads/attachm
ent_data/file/181762/bribery-act-2010-guidance.pdf

47
https://www.parliament.uk/business/committees/committees-a-z/lords-select/bribery-act-
2010/publications/

The Committee published its report in March 2019 and concluded:

“the Act is an excellent piece of legislation which creates offences which

are clear and all-embracing”

“The Ministry of Justice Guidance is less successful in providing small and

medium enterprises with the information and advice they need to enable
them to decide on a formal anti-bribery policy”.

48
https://www.parliament.uk/business/committees/committees-a-z/lords-select/bribery-act-
2010/publications/

The Committee published its report in March 2019 and concluded:

“Smaller bribery cases, mainly domestic, are dealt with by the Crown
Prosecution Service (CPS), while more complex cases, often with
international implications, are the responsibility of the Serious Fraud Office
(SFO). Police forces, the National Crime Agency, HMRC and other bodies
are involved, as are agencies in Scotland. There has been criticism of lack
of co-operation; this must be remedied. There has also been criticism of
the slow pace of investigations, and the failure to update businesses and
individuals on the progress of cases; improvements on these fronts should
be made a priority by the SFO and the CPS”.

49
https://www.parliament.uk/business/committees/committees-a-z/lords-select/bribery-act-
2010/publications/

The Committee published its report in March 2019 and concluded:

“We were also asked to look at deferred prosecution agreements because,

although not derived from the Bribery Act, they have had a major influence on some
of the largest recent cases of corporate corruption, allowing them to be settled
without the companies involved being convicted of the offences. When, five years
ago, the new regime began, there was some anxiety that it might be, or at least be
seen to be, an easy way out, especially for large companies. We have looked at
this carefully, and are satisfied that this is not the case. We believe that the
discounts being applied to financial penalties are appropriate to encourage
companies to self-report but not so large as to deprive the penalty of its
effectiveness. We are also clear that a deferred prosecution agreement with a
company is not, and cannot be, a substitute for the prosecution of any individuals
involved in corrupt conduct”.
50
Thank you for listening

Any
questions?

On Friday we start
looking at money
laundering
51