News 01st Jul 2021

Bribery Act 2010: Ten years on

Duncan Hames

Director of Policy

As Director of Policy, Duncan takes a strategic lead on UK focused work, building on TI-UK’s efforts to end the UK’s status as a “safe haven” for corrupt money, address corruption in the political sphere, as well as navigate new areas of work. He joins TI-UK after working on information security with Templar Executives, following 5 years as a Member of Parliament. He also serves on the board of the South London and Maudsley NHS Foundation Trust, where he chairs their audit committee

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A decade ago today, new legislation that aimed to put the UK at the forefront of the battle against bribery came into force. The Bribery Act 2010 represented a much-needed modernisation of Britain’s anti-bribery law, which had previously relied on a handful of Victorian-era statutes that were inconsistent and completely unsuited for the 21st century.

Transparency International UK campaigned tirelessly for 12 years to get this vital legislation across the line. When it came into force on July 1, 2011, the Act propelled the UK from its unenviable position lagging far behind most other Western democracies to a world leader.

Ten years on, the Bribery Act is still considered the international gold standard of anti-bribery legislation, alongside the US Foreign Corrupt Practices Act, and now France’s Sapin II. Allowing for vast extra-territorial reach, it allows investigators to prosecute corporate bribery anywhere in the world, so long as the company has operations in the UK.

The act targets those individuals who have been engaged in bribery but in addition, the ground-breaking ‘failure to prevent’ offence also allows law enforcement to hold corporations to account, even in cases where senior executives have been able to distance themselves from the wrongdoing or maintain a position of wilful ignorance. This failure to prevent offence was highlighted as ‘particularly effective’ by peers in their post-legislative review. After years of campaigning, we are pleased a similar offence is being considered as part of a review into Britain’s outdated criminal corporate liability laws which would make it easier to prosecute companies for turning a blind eye to money laundering and other economic crimes.  

Investigations by the UK’s Serious Fraud Office (SFO), the agency tasked with pursuing complex cases using the Bribery Act, have resulted in huge settlements by major multinationals. In 2017, engineering giant Rolls Royce was forced to pay £671million after admitting to sanctioning bribery to secure deals in six countries, including Indonesia, Russia and China. Last year, Airbus agreed to a £3billion settlement – the largest ever paid by a company – after a four-year corruption probe. Of this total, £840million was paid to the UK for breaches of the Bribery Act.

But despite these headline-grabbing fines, enforcement of the Bribery Act had been slow to emerge. The volume of prosecution is low, with the SFO bringing just a handful of cases to court over the past decade. This has seen the UK come within a whisker of losing its place amongst the top ‘active enforcers’ of foreign bribery.

The SFO has also chosen to combine most of its successful Bribery Act investigations with Deferred Prosecution Agreements (DPA), a type of corporate plea deal where a company reports itself to the authorities, admits culpability, pays a fine, and agrees to clean up its act. In exchange, the SFO agrees not to pursue the case, providing the company abides by the terms of the agreement. DPAs provide a convenient solution for the SFO, especially in these cases which are notoriously complex to prosecute, because they allow investigators to secure an admission of guilt and a hefty settlement without the risk – and cost - of a trial. Meanwhile, the company avoids the reputational damage of a corporate conviction as well as the impact this would have on their eligibility for lucrative government contracts in most parts of the world.

There is nothing about these arrangements that prevent criminal charges against the individuals involved in the bribery, but they don’t tend to follow.

This is important because bribery isn’t something done by faceless corporations – it’s something done by people. There’s the person who solicits the bribe, someone who arranges for the payment to be made, and someone who ultimately pays it. There are others who cover up the paper trail, senior leaders in a company who may have created a culture where bribery is acceptable, and auditors who fail to spot this criminal activity. Some of these people are more accountable than others, but currently none are facing justice in the UK.

There are several reasons for this. Bribery investigations are expensive, but the SFO doesn’t see any of the penalties it levies, which all go straight to the Exchequer. Despite a recent increase in its budget, the SFO receives just a fraction of what its US counterpart receives. Additional budget to bankroll major cases – dubbed ‘blockbuster’ funding - needs to be approved by the Attorney General’s office, risking investigations being blocked for both political reasons and over cost concerns. Underfunding of the court system by successive governments means there is a lack of dedicated crown courts to try serious economic crime cases.  This can all contribute to substantial delays resulting in individuals who may be considered too elderly or unwell to stand trial if a case eventually goes to court.

The Rolls Royce DPA is a case in point. Despite lawyers for the company and SFO agreeing a detailed statement outlining the extent of the wrongdoing, and clearly knowing the identities of individuals involved, investigators ultimately abandoned their efforts to charge any of them.

Critics complain this creates a situation where big companies can effectively buy their way out of trouble.  Large penalties are a quick and effective way to sanction companies, but they should be but one of a number of consequences for egregious corruption cases. Individual prosecutions are vital to ensure that justice is both done and seen to be done. Failing to hold to account those responsible will damage public confidence and risks setting a precedent where corporates can pay to make the problem go away.

At just 10 years old, the Bribery Act is still young legislation. But with the pandemic exacerbating corruption in some areas and opening whole new avenues for bribery in others, its enforcement will become increasingly important over the next decade. If Britain is to remain a world leader in the fight against foreign bribery, the SFO needs the resources and legal powers to independently pursue even the most contentious of cases.