Last Updated December 14, 2018

Law and Practice

Authors



Brown Rudnick LLP (London) has offices in the United States and Europe, and represents clients from around the world in high-stakes investigations, litigation, international arbitration and complex business transactions. The firm has a leading white-collar crime practice with clients including public and private corporations, multinational businesses and start-up enterprises. Founded more than 70 years ago, Brown Rudnick has approximately 250 lawyers and regularly serves clients around the world.

The Bribery Act has extensive extraterritorial jurisdiction. An offence can be committed in certain circumstances even where the alleged offending occurs wholly outside the UK.

In relation to Sections 1, 2 and 6, each offence is committed where any act or omission constituting part of the offence occurs in the UK (see Section 12). If the person committing the act or omission has a “close connection” with the UK, it is irrelevant that his or her conduct occurred entirely outside the UK. Under Section 12(4), a close connection with the UK includes where the person is a British national, British citizen, ordinarily resident in the UK, or a body incorporated under UK law.

The corporate offence (Section 7) of failure to prevent bribery in the course of business applies to any “relevant commercial organisation.” An RCO, which is a body corporate or partnership (wherever incorporated) that carries on any part of its business in the UK, could be prosecuted for failure to prevent bribery even where the bribery takes place wholly outside the UK and the benefit or advantage to the company is intended to accrue outside the UK.

The Bribery Act does not define what constitutes “part of a business;” however, the MOJ Guidance provides some assistance in this regard, noting (at paragraph 36) that organisations without a “demonstrable business presence” in the UK are not caught. The MOJ Guidance notes, for example, that being listed on the LSE would not in and of itself mean a company was carrying on a business or part of a business in the UK for the purposes of Section 7. The MOJ Guidance further states (at paragraph 36) that “having a UK subsidiary will not, in itself, mean that a parent company is carrying on a business in the UK, since a subsidiary may act independently of its parent or other group companies.” Where there is a dispute as to whether a business presence in the UK satisfies the test, the final arbiter will be the courts; it should be noted that the SFO may not take a conservative approach to this issue if it is otherwise confident about the strength of its evidence in any particular case.

The following are examples of recent cases.

  • Sweett Group plc, the first corporate convicted under Section 7, pleaded guilty in December 2015 to the offence of failing to prevent an act of bribery by its subsidiary company, Cyril Sweett International, based in the United Arab Emirates. The subsidiary had made corrupt payments to two senior directors at Al Ain Ahlia Insurance Company to secure a contract with that company for construction of the Rotana Hotel in Abu Dhabi.
  • Standard Bank plc entered a DPA in respect of a suspended charge under Section 7 in relation to its Tanzanian sister company, Stanbic, regarding a bribe paid to a local partner in Tanzania. Standard Bank subsequently entered a DPA with the SFO in November 2015. Although Standard Bank had no interest in, oversight or control over Stanbic, the latter was an associated person because it was performing services on Standard Bank’s behalf and for its benefit; both companies stood to benefit from the transaction in relation to which the bribe was paid.
  • Rolls-Royce plc and Rolls-Royce Energy Systems, Inc entered a DPA in respect of a suspended charge of failure to prevent bribery under Section 7 (amongst other charges) in relation to bribes paid by intermediaries and Rolls-Royce employees in Indonesia, Nigeria, China and Malaysia.

As will be apparent, each of those cases centred upon conduct overseas, often through an overseas office or subsidiary of the UK company.

Individuals and corporates can commit the offences of active bribery, passive bribery and bribery of a foreign public official under Sections 1, 2 and 6. Because these offences require mens rea, the liability of a corporate for the offences must be established through the ‘identification principle’, which establishes that only the acts and state of mind of those who represent the “directing mind and will of the corporation” can be imputed to the corporation itself (Lennard v Asiatic Petroleum [1915] AC 705). The case of Tesco Supermarkets Ltd v Nattrass [1972] AC 153 defined the directing mind and will of a company as extending to the "board of directors, the managing director and perhaps other superior officers of the company who carry out functions of management and speak and act as the company." Under the Bribery Act, where the directing mind and will of the company has the necessary criminal intent, the corporate will be directly liable for the offences under Sections 1, 2 and 6.

Where an offence under Section 1, 2 or 6 of the Bribery Act is committed by a body corporate and it can be proved that the offence was committed with the consent or connivance of a senior officer or a person purporting to act in that capacity, the senior officer or person is also guilty of the offence as an individual under Section 14 of the Bribery Act. However, where the offending was outside the UK, they will only be liable if they have a “close connection” to the UK under Section 12.

By contrast, only a relevant commercial organisation can be liable for the offence of failure to prevent bribery by an associated person under Section 7. The RCO will incur liability for an offence or offences by the associated person unless it can prove it had adequate procedures in place to prevent bribery, even where it was not aware of the offence.

The situation is more complex where a company has been subject to a merger or an acquisition. There is no specific doctrine of 'successor liability' in England and Wales. Consequently, prosecutors and the courts would have to ensure that any successor company shared the relevant mens rea of the purchased or acquired company. In cases where a successor company became suspicious of money laundering or other suspicious activity, they would have to consider whether to make a suspicious activity report as outlined above.

Individuals and companies can be held liable for the same offence or same underlying misconduct. By way of example, Rolls-Royce entered a DPA in respect of failure to prevent bribery offences and the SFO is now considering which individual employees of Rolls-Royce to charge in respect of the underlying bribery offences. Likewise, in XYZ, the company entered a DPA in respect of failure to prevent bribery and individuals are currently being prosecuted for the underlying misconduct. A company and an individual could both be prosecuted for the same offences under Section 1, 2 or 6, provided the necessary mens rea was present.

Brown Rudnick LLP

8 Clifford Street
London
W1S 2LQ
United Kingdom

+44 207 851 6000

+44 207 851 6100

www.brownrudnick.com
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Authors



Brown Rudnick LLP (London) has offices in the United States and Europe, and represents clients from around the world in high-stakes investigations, litigation, international arbitration and complex business transactions. The firm has a leading white-collar crime practice with clients including public and private corporations, multinational businesses and start-up enterprises. Founded more than 70 years ago, Brown Rudnick has approximately 250 lawyers and regularly serves clients around the world.

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