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The impact the UKBA has had on transatlantic law enforcement and business

  • United Kingdom
  • Fraud and financial crime
  • Litigation and dispute management

22-06-2021

1 July 2021 will mark ten years since the enactment of the UK Bribery Act 2010 (the “UKBA”).  Prior to the enactment of the UKBA, the UK’s ability to fight bribery was hindered by outdated anti-bribery laws and there was a need for reform. However, the introduction of the UKBA was a major turning point as it became, jointly with the US’s Foreign Corrupt Practices Act (“FCPA”), the toughest bribery law globally. The UKBA has since been branded “an exemplary piece of legislation” by the House of Lords Select Committee in 2019. Our briefing on this report can be found here for information.

In this article we look at what impact the introduction of the UKBA has had on transatlantic law enforcement and business.

The UKBA basics

The UKBA made it an offence to give bribes, receive bribes, bribe a foreign public official, and also introduced the new corporate offence of failing to prevent bribery. It has wide territorial reach and can be enforced against the following “persons”, despite where they are in the world at the time in which an offence was committed: companies incorporated in the UK (including UK partnerships), citizens of the UK or British Overseas territories; and to individuals (including foreign nationals) resident in the UK. It even goes as far as applying to foreign corporate bodies with a business or part of a business in the UK, and to any national or entity carrying out bribery in the UK. Senior officers of a corporate body are also held accountable under the UKBA in certain circumstances. 

The FCPA basics

The FCPA was introduced in 1977 and as a result US law enforcement of the FCPA is more mature than in the UK. Whilst it is argued that the UKBA is more far-reaching in its extra-territorial scope, the FCPA also does not shy away from this. In addition to applying to US nationals and entities, the FCPA applies to foreign nationals and entities acting in the US, as well as to entities with a US contact that is used for corrupt purposes.  Further, there is potential for a foreign entity or national to be held liable for “aiding and abetting” an FCPA violation or for “conspiring” with others to violate the same, even if the foreign entity or national did not take any act in furtherance of the corrupt payment whilst in the territory of the US.  In addition, the FCPA applies to issuers of securities registered in the US, as well as other issuers that are required to report to the Securities and Exchange Commission (the “SEC”).  Both the US Department of Justice (the “DOJ”) and the SEC have the authority to bring FCPA enforcement actions.  

Key differences between the UKBA and FCPA

1.    Focus only on the bribe payer in the FCPA

A key difference is that the FCPA makes it an offence to make corrupt payments to foreign officials but only focuses the offence on the person making the bribe as opposed to the person receiving it, whereas the UKBA on the other hand, focuses on both the bribe payer and the recipient.

However, there has been a push in the US to pass legislation to address soliciting or receiving bribes in the Countering Russian and Other Overseas Kleptocracy (CROOK) Act, but which has not yet been voted on by the US Congress. For enforcement actions in which the total criminal penalties exceed $50,000,000, the CROOK Act would require an additional prevention payment of $5,000,000 to be deposited into a newly-created Anti-Corruption Fund, which would be used to assist anti-corruption initiatives overseas.

In recent years, there has also been a notable increase in the DOJ’s use of anti-money laundering statutes to prosecute those who receive bribes.

2.    Focus on Foreign Public Officials in the FCPA

The FCPA does not prohibit private, business-to-business bribery or bribery of domestic public officials unlike the UKBA which prohibits both public and private sector bribery. However, both bribery of US domestic public officials and private bribery are covered by other US state and federal anti-corruption legislation.

3.    Focus on the bribe payer’s intention in the FCPA

Knowledge is an important and complex factor in FCPA enforcement actions.  Intent is required in certain circumstances depending on which provision (i.e. the anti-bribery or accounting provision) is being enforced and whether the liability is civil or criminal. The UKBA, however, does not focus on this to such a great extent and only the general offences of giving and receiving bribes require intention whereas the corporate offence does not.

4.    Facilitation payments exceptions in the FCPA

The UKBA does not contain an exemption for making or receiving facilitation payments and the facilitation payments are classed as bribes under the UKBA.  However, facilitation payments are not prohibited under the FCPA and are classed as an “exception”.

5.    Penalties

The penalties for non-compliance with the UKBA emphasised the UK’s commitment to fighting bribery. There is a maximum penalty of ten years’ imprisonment, an unlimited fine, or both for individuals found guilty of committing any of the offences under the UKBA and companies could also be subject to unlimited fines. 

The FCPA’s penalties are not capped and will be issued depending on the type and number of violations.

Under the FCPA, individual offenders face imprisonment of up to five years and fines of up to $250,000 per violation. Companies, on the other hand, can face fines of up to $2 million per violation. The penalties are stricter for accounting violations with companies facing fines as high as $25 million per violation. 

Impact of the UKBA in the US

Whilst the introduction of the UKBA did not cause any amendments to the FCPA, the DOJ in 2020 published an amended version of the 2012 Resource Guide to the FCPA, which further addressed the use of anti-bribery compliance programmes.

The importance of anti-bribery compliance programmes in the UK has significantly increased as a result of the statutory defence contained within the UKBA to the offence of failure to prevent bribery, where a company can demonstrate that it had ‘adequate procedures’ (an anti-bribery compliance programme) in place at the relevant time.  Although it is not a formal defence under the FCPA, the effectiveness of a corporation’s compliance programs is often an important consideration during settlement negotiations.

Transatlantic law enforcement trends

Both the US and UK authorities have over the past decade demonstrated continuous increased commitment to investigate and prosecute violations of anti-bribery laws. In the US, the DOJ and the SEC have been imposing higher penalties each year and setting new records for settlements, such as the $1 billion fee that Ericsson agreed to pay to both the SEC and the DOJ in June 2019 following a US enforcement action for alleged FCPA violations.

Since the introduction of the UKBA, the UK’s Serious Fraud Office (“SFO”) has concluded seven enforcement actions against companies under the UKBA which have resulted in financial penalties totaling over £1.5 billion in financial penalties. Two of the largest of these enforcement cases were conducted jointly with the US authorities.

Until the introduction of the UKBA in the UK, criminal proceedings against companies were rare, except for in regard to environmental, and health and safety offences, unlike in the US. Almost three years after the introduction of the UKBA corporate offence of failure to prevent bribery, the UK government introduced the US concept of ‘Deferred Prosecution Agreements’ (“DPAs”). A DPA is an agreement reached between a prosecutor and company under criminal investigation in which the company agrees to comply with a number of terms, such as paying a financial penalty, paying compensation and co-operating with future prosecutions of individuals, and in return the prosecutor agrees to suspend the prosecution for a defined period, usually three years. In the UK, the DPA must be approved by a Judge.

DPAs were introduced in the UK as a way of avoiding lengthy and costly trials and allowing a wrong-doing company to make full reparation whilst avoiding a criminal conviction. Since DPAs were introduced in early 2014, the SFO have settled nine DPAs, six of which were for offences under the UKBA.

In the US, prosecutors can also use Non-Prosecution Agreements (“NPAs”), but NPAs are unlikely to ever be introduced in the UK since the House of Lords determined in 2019 that they would not add value to the UK’s criminal justice system.

The impact on transatlantic business

With the possibility of unlimited fines and the extra-territorial reach of the legislation in both the UK and US, non-compliance with anti-bribery regulations has become an increasingly serious issue for companies.

Companies falling within the wide jurisdictional reach of the FCPA and UKBA should implement compliance programmes that take into account the Six Principles and hallmarks of effective anti-bribery compliance programmes as set out in the guidance published by the UK’s Ministry of Justice and the DOJ respectively.

If you would like to know more about effective anti-bribery and corruption compliance programmes designed to address the UKBA and FCPA, the specialists in our Global Corporate Crime & Investigations team would be happy to help you.

Our Global anti-bribery and corruption guide also provides a snapshot of the key elements of the anti-bribery legislation in various countries across the globe.