Bribery and corruption - risks for your business and directors

Bribery and corruption are serious criminal offences in England that undermine fair competition and erode public trust. The Bribery Act 2010 is the key legislation, outlining various offences and potential consequences for individuals and organisations.

With over 20 specialist criminal lawyers including experts such as George Kampanela, renowned and experienced in corporate criminal offences, we can help your directors ensure that you mitigate the very real risks of bribery and corruption and, if offences may have been committed we are experienced in representing clients in criminal defence.

Legal definition of bribery

The Act defines bribery as offering, promising, giving, or asking for an advantage (financial or otherwise) to influence someone improperly in performing a relevant function or activity. This can occur in domestic or foreign settings.

Here's a breakdown of key offences:

• Bribing Another Person: Offering or giving an advantage to influence their actions in any capacity, be it private or public.

• Accepting a Bribe: Agreeing to receive an advantage in exchange for improper performance of a function.

• Bribery of Foreign Public Officials: Offering or giving an advantage to a foreign public official to obtain a business advantage in violation of their local laws.

Potential criminal law penalties for bribery and corruption

The consequences of bribery and corruption offences can be severe:

• Individuals: Maximum 10 years imprisonment and/or an unlimited fine.

• Organisations: Unlimited fines, debarment from public contracts, and reputational damage.

Director Liability for Bribery and Corruption in England

Directors hold a position of significant trust within a company. However, this power comes with a heavy responsibility – personal liability for their actions, including those pertaining to bribery and corruption. English law holds directors accountable under both civil and criminal frameworks, making the consequences for wrongdoing potentially severe.

Civil Liability:

• Breach of Duty - directors owe a duty to act in the best interests of the company. Engaging in bribery or corruption can be seen as a breach of this duty, potentially leading to lawsuits from the company itself or its shareholders.

• Negligence - if a director fails to take reasonable steps to prevent bribery or corruption within the company due to a lack of oversight, they could be held personally liable for any resulting losses.

Criminal Liability:

• Consent, Connivance, and Neglect - the "controlling mind" principle applies. If a director knowingly consents to or actively encourages bribery, or turns a blind eye to corrupt practices due to neglect, they can face criminal prosecution alongside the company.

• Failure to Prevent Bribery - the Bribery Act 2010 specifically holds companies liable for bribery committed by associated persons (including employees and subsidiaries) "under their procedures." This "failure to prevent" offence can extend to directors if they haven't implemented adequate anti-bribery and corruption policies or failed to monitor their effectiveness.

Examples of Director Liability:

• In a real-world scenario, if a director authorizes a bribe to secure a lucrative contract, they could be personally liable for the bribe amount and any resulting losses to the company. They might also face criminal prosecution.

• If a director fails to implement a whistleblowing hotline or ignores red flags raised by employees regarding potential bribery, they could be held liable for negligence in the event of a subsequent bribery scandal.

Defending a Prosecution

If facing a bribery or corruption charge, several defences can be explored by your legal team:

• Lack of Intent: Demonstrating the absence of any intention to influence someone improperly.

• Reasonable Belief: Showing a genuine belief that the advantage offered or received wasn't a bribe.

• Facilitation Payments: Providing proof that the payment was a minor facilitation payment to expedite routine procedures (rare defence with strict criteria).

What your business and you as director need to do

Directors must take proactive and ongoing steps to minimise the risk of corporate and/or personal liability.

Implementing robust anti-bribery and corruption policies within your organisations is a  crucial first step. These policies should include:

• Clear Definitions – make very clear what constitutes a bribe and acceptable business practices.

• Train Employees - educate staff on bribery risks and red flags.

• Whistleblower Procedures - establish clear channels for reporting suspected wrongdoing.

Policies alone are not enough. Organisations and directors must be proactive and that means keeping anti-bribery and corruption under regular review and taking very firm and swift action if any breach is suspected or found. Other important ongoing actions include :-

• Regular Training - educate employees at all levels on bribery and corruption risks.

• Conduct Due Diligence - properly vet third-party partners and business associates to minimize the risk of association with corrupt practices.

• Seek Legal Advice -  lawyers like our lawyers can help directors understand their duties and implement effective compliance measures.

What about corruption but where there is no bribe?

While a bribe is a common element of corruption, it's not the only factor under English law.  You can still be liable if someone acting on your behalf does and you didn't have proper safeguards to stop it.

There are other ways corruption can occur besides bribery, but they're not explicitly defined in a single law. These might involve :-

• Misuse of power - an official using their position for personal gain, not necessarily financial.

• Fraud - deceiving someone for an advantage.

• Abuse of trust - a person in a position of trust acting dishonestly.