It has been ten years since the Serious Fraud Office (SFO) launched the UK Bribery Act 2010. By analysing its successes and its failures over the last decade, we can prepare for its legal evolution and predict trends in anti-bribery and corruption. How have British companies and foreign companies that operate within the UK responded to the law? Have companies stepped up their anti-corruption policies and reporting? What responses have we seen both from the corporations under this jurisdiction and from the governing agencies responsible for enforcing it? This article will answer these questions and more by analysing the national and international response to the UK Bribery Act.
What is the UK Bribery Act 2010?
The UK Bribery Act 2010 is an act of Parliament to criminalise bribing foreign officials and business representatives. It covers four offences, including the bribing of another person, the acceptance of a bribe, the bribing of a foreign public official and failure of commercial organisations to prevent bribery. Let’s take a look at what the UK Bribery Act was designed to do, why it was instituted, who it applied to, and the overall effects of the law.
Why was the UK Bribery Act introduced?
By introducing the Bribery Act, the UK took the first step toward aligning its anti-corruption laws with international standards in 1998 by advising the Organisation for Economic Co-operation and Development’s (OECD) efforts in deterring “hardcore cartels.” This act was still far behind, and the introduction of the UK Bribery Act 2010 would align the UK with other top countries and regions in anti-corruption regulations.
What did the UK Bribery Act look to resolve?
This UK Anti-Bribery Policy created a simplification of corporate criminal liability and officially criminalised corrupt offences:
- active and passive bribery, i.e. both bribing and being bribed
- not just bribery of public officials, but also bribery entirely in the private sphere
- failure to prevent bribery from taking place
One of the most significant differences between this law and others like it in the past is the distinction between reactive and proactive anti-corruption measures. Under this guidance, criminalising bribery itself was no longer enough to comply — businesses operating in the UK were now required to have “adequate procedures” in place to prevent bribery from happening, even if the bribery is unconnected with the UK. These procedures include having an anti-bribery policy in place, ensuring all employees understand the applications of the policy and being proactive in eliminating opportunities for corrupt behaviour.
Who does the UK Bribery Act affect?
The Bribery Act applies to both UK companies and foreign companies with operations in the UK, even if offences take place in a third country and are unrelated to UK operations. This greatly expands the list of companies who need to remain in compliance with the UK Bribery Act, as it includes those well outside the UK who still conduct operations there.
Due to the scope and reach of the UK Bribery Act, many companies and governing bodies feel that the law is the toughest of its kind. Until 2010, the only other major legislation around bribery and anti-corruption was the OECD Convention, which primarily focused on criminalising the act of UK companies bribing foreign entities. The UK Bribery Act of 2010, however, largely extended the scope of companies that need to comply, including any organisation that operates within the UK, as well as the preventative measures that corporations must have in place in order to meet compliance standards.
Enforcement of the Act
While the compliance regulations are rigorous, many also feel that the lack of actual prosecutions that have been initiated and completed since the institution of the Bribery Act has resulted in minimal efforts to meet its standards. As of 2020, only five convictions and five deferred production agreements (DPAs) had been instituted as a result of UK anti-bribery and corruption enforcement.
According to an OECD study, over 80% of respondent companies expressed that protecting their reputation and avoiding prosecution were either “significant” or “very significant” factors in implementing an anti-bribery approach. However, a 2012 study identified that 29% of respondent organisations were prepared to violate the Act to gain new business, and 20% believed they could do so “without getting caught.” Several years on, companies in this camp are supported by a lack of public faith in government enforcement of the Act, with 27% believing that the government will not pursue cases for fear of it impacting UK growth. If prosecutions and convictions continue to remain low, organisations may not be motivated to maintain such high compliance standards and could align themselves with those companies that have been more sceptical about enforcement.
Protect your organisation with anti-corruption risk assessment
While it’s clear that the UK Bribery Act 2010 has begun to shift corporate responsibility in the right direction in regards to anti-corruption, it’s also clear that companies and the governance around corruption risk still have a lot of work to do.
With ever-changing regulations regarding anti-corruption and bribery, it can be challenging for organisations to stay on top of compliance and utilise the best technology and solutions. The experts at ethiXbase offer the leading anti-bribery and corruption risk assessment solution, which includes:
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Understanding the right corruption risk assessment needs for your company is essential to anti-corruption initiatives and maintaining compliance. To learn more about the solutions available from ethiXbase, get in touch with an expert at ethiXbase today.