The two main significant pieces of legislation governing international anti-corruption enforcement are the US Foreign Corrupt Practices Act ("FCPA") and the UK Bribery Act 2010 ("BA 2010"). The FCPA was enacted in 1977 to prevent corrupt practices, create equal opportunity for honest businesses to succeed and to maintain public confidence in the integrity of the marketplace of the United States1. The BA 2010 received Royal Assent on 8 April 2010 and entered into force on 1 July 2011 in the UK, decades later than the FCPA2.
This Newsletter article mainly touches upon the types of offences, territorial applications, and penalties under the BA 2010 and the FCPA.
General Overview of Provisions and Offences
The BA 2010
The BA 2010 has major implications for any of the businesses (or trades) that are incorporated in the UK, based on four major offences, including:
* Bribing another person;
* Soliciting or accepting a bribe;
* Bribing a foreign public official; and
* Failing to prevent bribery (for a business).
The FCPA has two broad categories of provisions:
* Anti-bribery provisions: These provisions prevent US persons, companies, company officers, directors, employees and agents, and others acting within the US, from corruptly paying, offering, or promising anything of value to a foreign official in order to obtain or retain business.
* Accounting provisions: These provisions ensure the transparency of accounts in all companies that file a report with the Securities and Exchange Commission ("SEC") in the US. In order to maintain transparency of accounts, companies are required to:
- Make and keep books and records that accurately and fairly reflect the transactions of the corporation; and
- Devise and maintain an adequate system of internal accounting controls.
Jurisdiction Territorial Application
The BA 2010
The BA 2010 applies to bribery committed by a business, or on its behalf, anywhere in the world3.
The offences of bribing another person, soliciting or accepting a bribe, or bribing a foreign public official, are committed if any act or omission forming part of an offence;
* Takes place in the UK, or
* Does not take place in the UK, but
- The act or omission would be an offence if it took place in the UK, and
- The person concerned has a close connection with the UK, i.e. it is a British citizen; ordinarily resident in the UK; a body incorporated in the UK; or a Scottish partnership.
Consequently, the BA 2010 has extraterritorial effect. It applies to foreign businesses having a trading presence in the UK, along with UK businesses that trade abroad4.
The FCPA can apply to prohibited conduct anywhere around the world, and extends to publicly traded companies and their officers, directors, employees, stockholders, and agents. Agents can include third party agents, consultants, distributors, joint-venture partners, and others5.
It is indispensable to note that the anti-bribery provisions of the FCPA also apply to foreign firms and persons who take (themselves or through agents) any action in furtherance of such a corrupt payment while in the US.
The BA 2010
The Serious Fraud Office is the lead prosecuting agency under the BA 2010. The following penalties apply for any breach of the BA 2010:
* Individuals may be subject to unlimited fines, and/or up to ten years' imprisonment;
* Companies may be subject to unlimited fines, and may be excluded from public procurement exercises in the UK; and,
* Directors may also be disqualified from acting as a director for between two and 15 years6.
The SEC and the Department of Justice are jointly responsible for enforcing the FCPA. The sanctions for FCPA violations can be significant, since the SEC may bring civil enforcement actions against issuers and their officers, directors, employees, stockholders, and agents for violations of the anti-bribery or accounting provisions of the FCPA. Companies and individuals that have committed violations of the FCPA may have to return these ill-gotten gains, plus pay prejudgment interest and substantial civil penalties. Companies may also be subject to oversight by an independent consultant7.
While the UK anti-bribery regime is one of the strictest in the world, and is far broader in scope than the US regime of anti-corruption enforcement, both the BA 2010 and the FCPA have extraterritorial application as regards international anti-corruption enforcement especially in terms of the operational zone of the companies in question. Therefore, non-US and non-UK companies should also be cognizant of these regulations with respect to their international commercial transactions. Both the FCPA and the BA 2010, also in relation those third parties acting on behalf of the companies, their employees, board members or shareholders.
1 Lexis PSL, Corporate Crime, Bribery, corruption, sanctions and export controls; Bribery, The Foreign Corrupt Practices Act-background, https://www.lexisnexis.com/uk/lexispsl/corporatecrime/document/391423/5M8R-9JC1-F188-325G-00000-00/The-Foreign-Corrupt-Practices-Act%E2%80%94background.
2 Lissack & Horlick on Bribery > Chapter 12 The international perspective: lessons from US authorities' enforcement of the Foreign Corrupt Practices Act > B History and summary of the FCPA.
3Lexis PSL Corporate Crime Bribery, corruption, sanctions and export controls; Bribery > The Bribery Act 2010
4 Lexis PSL, Commercial, Bribery and corruption regulation; Bribery and corruption regulation, The US Foreign Corrupt Practices Act and the UK Bribery Act 2010 compared
5 US Securities and Exchange Commission, Foreign Corrupt Practices Act,
6Lexis PSL, Corporate Crime, Bribery, corruption, sanctions and export controls; Bribery, Best practices in FCPA investigations - checklist
7US Securities and Exchange Commission, Foreign Corrupt Practices Act,