Catching up with corporate bribery

Research from the Law School means that the onus is now on commercial organisations to show that they have adequate anti-bribery procedures in place.

Corporate corruption is never far from the headlines, with the recent scandals at FIFA and Brazil’s Petrobras among the highest-profile examples. The Organisation for Economic Co-operation and Development (OECD)'s 2014 Report on the bribery of foreign public officials, showed such corruption to be a global phenomenon.

“With almost one in two concluded foreign bribery cases involving officials from countries with high to very-high HDI (human development index) rankings, it is clear that this is a crime that takes place in countries at all levels of development,” concluded the OECD in a study based on data from more than 400 cases.

As a global hub for business and finance, the UK ought to be central to anti-corruption efforts. And thanks to research at the University of Bristol Law School led by Professor Celia Wells, the 2010 Bribery Act has established the legal framework needed to make that possible.

Detailed critique

Wells, head of the Law School from 2010 until 2014, is a leading figure in the study of corporate criminal liability. And it was her detailed critique of the draft Bribery Bill that led directly to a change in language that puts the onus firmly on corporate entities to demonstrate effective anti-corruption practices.

“The University of Bristol research means that the onus is now on commercial organisations to show that they have adequate anti-bribery procedures in place.,” explains Wells. “That was stricter than had been proposed, or previous laws.”

Giving expert evidence on the draft legislation to Parliament’s joint scrutiny committee, Wells argued that the wording of the draft Bribery Bill was not only unnecessarily restrictive and complex, but did not even comply with the OECD’s anti-bribery convention.

The subsequent change introduced the relatively simple clause that a commercial organisation was guilty of an offence if a person associated with it bribed another person with the intention of obtaining business. Crucially, a prosecution’s requirement to prove negligence was removed.

Corporate liability

Transparency International, with whom Wells has worked closely, now advises companies that UK law goes beyond the requirements of even the US Foreign and Corrupt Practices Act of 1977, long regarded as a benchmark for corporate liability in anti-corruption cases.

“The Bribery Act…presents heightened liability risks for companies, directors and individuals,” says the organization. “To avoid corporate liability for bribery, companies must make sure that they have strong, up-to-date and effective anti-bribery policies and systems.”

Not surprisingly, there was considerable resistance to that change. One key question was whether removing the requirement for a prosecution to prove negligence would be unfair to business. Wells’ response was that since the business concerned would provide the money for the bribe, sign the contracts, and realise any associated profit, it was self-evidently equipped to supervise and monitor the acts of its employees and agents – and the Parliamentary scrutiny committee agreed.

Committee member Lord Goodhart said: “I found Professor Wells’ suggestion on how to deal with corporate offences very persuasive, namely that there should be vicarious liability with the company being liable for any bribery committed by anybody acting on their behalf, with a due diligence defence.”

Expert witness Monty Raphael QC added: “Were it not for [Wells’] re-working of Clause 7 of the Bribery Bill 2010, it would not have received the Parliamentary support it did. This section is destined to become the ‘offence of choice’ for prosecutions in the areas of corporate bribery.”

OECD says collective action is needed

Since then Wells has been working with the OECD to further develop its anti-corruption initiatives, and as a trustee of the activist organisation Corruption Watch is advising on how this might be extended to cover more corporate crime, including the financial sector.

As the OECD’s secretary general Angel Gurría wrote, collective action is needed to defeat corruption. Thanks in part to Bristol’s researchers, law enforcement agencies and courts are now better equipped than ever to prevent, detect and punish crimes that, in Gurría’s words, erode the integrity of institutions, the strength of economies, and the trust of citizens.

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