Chapter 4 - Bribery & corruption
Acquiescence
Occurs when a person knowingly stands by without raising any objection to the infringement - If a senior officer did not give obvious consent or connive (secretly allow) directly in bribery or corruption, an offence could still be committed by the passive acquiescence of the director or responsible senior manager
Bribery
Offering something or acceptance of some sort, usually money, to gain an advantage illegitimate or otherwise
FCA's principles for business (1,2,& 3 are relevant t0 bribery & corruption)
Principle 1 - obliges firms to conduct their business with integrity Principle 2 - A firm must conduct its business with due skill, care and diligence Principle 3 - A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems
Strict libability
Refers to the liability that does not depend on actual negligence or intent to harm, but that is based on the breach of an absolute duty
Adequate procedures
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
Abuse of office (malfeasance in office//official misconduct)
The abuse of public office for private gain
Passive concealment
The act of maintaining silence when one has a duty to speak
Fraudulent concealment
The affirmative suppression or hiding, with the intention to deceive or defraud of a material fact or circumstance that he is legally or morally bound to reveal
Embezzlement
The misappropriation of property or funds which are legally entrusted to someone in their formal position as an agent/guardian - usually a premeditated crime, with the embezzler taking precautions to conceal their activities of the criminal conversion of the property of another person as the embezzlement occurs without the knowledge/consent of the affected person
Corruption
The misuse or the abuse of public office for private gain
Passive bribery
The offence committed by the official who recieves the bribe (demand side)
Active bribery
The offence committed by the person who promises or gives the bribe (supply side)
Illicit enrichment
The significant increase in the assets of a public official that he cannot reasonably explain in relation to his lawful income - It is criminalised under UNAC (United Nations Convention Against Corruption) and other (inter)national bodies
United Nations Global Compact (UNGC)
- A UN initiative to encourage businesses worldwide to adopt sustainable & socially responsible policies & report in their implementation - UNGC's ten principles are based upon human rights, labour, environment & anti-corruption - UNGC is a forum for discussion & a network for communication between governments, companies & labour organisations
Foreign public officials (FPOs)
- A person who acts in an official capacity for a foreign government, outside the UK
United Nations Development Programme (UNDP)
- An organisation that tries to help developing countries in the eradication of poverty & the reduction of inequalities through development of policies, skills, institutional capabilities & achieving resilience through sustainable development outcomes UNDP work on anti-corruption cuts in 3 ways: 1. Sustainable development 2. Democratic governance 3. Resilience building
International Anti-Corruption Conference (IACC)
- Brings together civil society, political heads & the private sector to tackle the challenges posed by corruption - Takes place every 2 years in a different geographical region of the world - its overseen by the IACC council and organised by Transparency International (IT)
Associated persons
- Defined under section 8 of the Act as someone who "performs services" for or on behalf of the organisation - Can be an individual or an incorporated or unincorporated body
Good practice for firms
- Firm is committed to carrying out business fairly, honestly & openly - Senior management lead by example in complying with the firm's anti-corruption policies & procedures - Responsibility for anti-bribery & corruption systems and controls is clearly documented and apportioned to a single senior manager or committee
Maximum penalties under the bribery act
- For summary offences - max fine is 5000 & max term of imprisonment is 12 months - For conviction of indictment - an imprisonment of up to 10 years &/or unlimited fine - Convicted individual/organisation may be subject to a confiscation order under the POCA - A company director who is convicted may be disqualified under the Company Directors Disqualification Act (CDDA) - A company is subject to an unlimited fine
Extra-territorial reach of the Bribery Act 2010
- Has extra-territorial reach both for UK companies operating abroad & overseas companies with a presence in the UK - A foreign subsidiary of a UK company can cause the parent company to become liable under Section 7 of the act - "failure of commercial organisation to prevent bribery"
Global witness
- Is an NGO that carries out research & investigations into the causes and effects of the exploitation of natural resources by public and private entities worldwide, specifically in cases where exploitation is used to fund conflict, human rights abuses and corruption - They demand total transparency in the resources sector, sustainable and equitable resource management & want to stop the international financial system from propping up resource-related corruption
Transparency international (TI)
- It's a NGO that monitors and publicises corporate & political corruption in international development - Also publishes the annual global Corruption Barometer, the Corruption Perceptions Index & a comparative listing on corruption worldwide
Group of States against Corruption (GRECO)
- It's the council of Europe's anti-corruption monitoring body established in 1999 - Fights corruption through a process of mutual evaluation & peer review - Monitoring process comprises an evaluation procedure based on info gathered via questionnaires and on-site visits - Also, a compliance follow-up procedure to assess the measures subsequently taken to implement the recommendations from GRECO's evaluations - GRECO works in cycles, called evaluation round, with each round covering a specific theme
Quantitative indicators of corruption
- Measuring corruption is not straight-forward, so the framework of preventing corruption (anti-corruption) is usually measured instead It's typically measured along 4 categories from 'soft' to 'hard': 1. Perception - data collected via opinion polls/surveys, usually opinions from ordinary citizens, business owners... 2. Experience - specific experiences inc frequency & amount of bribes 3. External assessments - ratings, rankings, and scores from large-scale surveys, data & third-party reports 4. Administration - 'hard measures' e.g. government laws, activities & performance data produced by governments
Difference between UK Bribery Act 2010 & the FCPA 1977
- The Bribery act reflects a broader international trend & has wider application that the FCPA - The FCPA does not cover bribery on a private level, unlike the Bribery act - The FCPA only covers active bribery, whereas Bribery act covers both active & passive (i.e. giving & taking of a bribe) - The Bribery Act has a wider scope of failure to prevent bribery, which is extended to associated persons // but FCPA a company can be held vicariously liable (imposes strict liability on employers for the wrongdoings of their employees) - Under FCPA, it must be proved that the person offering the bribe did so with 'corrupt' intent, unlike under Bribery Act which does not require intent to be 'corrupt' - FCPA makes an exemption for facilitation payments, unlike Bribery Act - the FCPA provides a defence to promotional expenses as long as it was a bona fide expenditure, but bribery act makes no exception for this - Penalties are different
Organisation for Economic Co-operaton and Development (OECD)
- The OECD anti-bribery convention aims to reduce corruption in developing countries by encouraging sanctions against bribery in international business transactions carried out by companies based in the convention member countries - It's the first and only anti-corruption instrument focused on the supply side of the bribery transaction
Facilitation payments (grease payments)
- The practice of paying a small sum of money to a public official as a way of ensuring that they perform their duty more promptly - The Bribery Act does not make an exemption for this
United Nations Convention Against Corruption (UNCAC)
- Was the first internationally agreed instrument to combat corruption Aspects covered by the convention include: - Prevention - Criminalisation - International cooperation - Asset recovery - major part of convention, inc requirements to return assets from public sector embezzlement to the state requesting them
Offences on UK Bribery Act 2010
1. Bribing another person (section 1) 2. Bring bribed (section 2) 3. Bribing a foreign public official (section 6) 4. Failure of a relevant commercial organisation to prevent bribery (section 7) - only defence from the firm is if they didn't have adequate procedures in place to prevent persons associated
6 principles for bribery prevention
1. Proportionate procedures 2. Top level commitment 3. Risk assessment 4. Due diligence 5. Communication (inc. training) 6. Monitoring & review
The Foreign Corrupt Practices Act (FCPA) 1977
A US federal law know for its 2 main provisions: 1. Accounting transparency requirements under the Securities Exchange Act 2. The bribery of foreign official - The act was passed to make it unlawful for certain classes of persons & entities to make payments to foreign government officials in order to assist in either obtaining or retaining business
Failure to implement adequate procedures
A commercial organisation commits the offence of failing to prevent bribery if a person associated with it bribers another person (anywhere in the world), UNLESS the organisation can prove it had adequate procedures to prevent bribery in place
Trading in influence
A situation where a person misuses their influence over the decision-making process for a third-party in return for their loyalty, money or any other material/immaterial undue advantage
Active concealment
Concealment by words or action of something that a person has a duty to reveal
