Wednesday, March 2, 2011

The Shrinking U.K. Bribery Act

Recent developments reported by the U.K. Telegraph suggest that when Bribery Act guidance is finalized and released, the Bribery Act will look very much like the FCPA. In fact, because of the Bribery Act's adequate procedures defense and other hinted at limitations, the Bribery Act may turn out to be more lenient than the FCPA.

The Telegraph reported (here) that eventual guidance to be released by the U.K. government "will make allowances for the use of so-called 'facilitating payments'" and that the guidance "will clarify how the law will view corporate hospitality and will give companies some protection against illegal acts committed by joint venture partners."

According to the Telegraph, "the new guidance will acknowledge [facilitating payments] payments are a global problem that cannot be eradicated overnight." According to the Telegraph, the eventual guidance "will say that while facilitating payments remain illegal, payments not considered 'serious' may not attract prosecution."

This eventual guidance seems to be similar to the conclusion Congress arrived at in 1977 when enacting the FCPA. For instance, House Report No. 95-640 (September 28, 1977) states as follows:

“The language of the bill is deliberately cast in terms which differentiate between [corrupt payments] and facilitating payments, sometimes called ‘grease payments.’ […] For example, a gratuity paid to a customs official to speed the processing of a customs document would not be reached by this bill. Nor would it reach payments made to secure permits, licenses, or the expeditious performance of similar duties of an essentially ministerial or clerical nature which must of necessity be performed in any event. While payments made to assure or to speed the proper performance of a foreign official’s duties may be reprehensible in the United States, the committee recognizes that they are not necessarily so viewed elsewhere in the world and that it is not feasible for the United States to attempt unilaterally to eradicate all such payments. As a result, the committee has not attempted to reach such payments.”

Even though the Bribery Act will still apparently prohibit facilitating payments - in contrast to the FCPA's express facilitating payment exception - numerous prior posts (see here, here and here for example as well as all the CustomsGate enforcement actions) raise the issue of whether the enforcement agencies recognize such an exception and whether the FCPA's facilitating payment exception has any real meaning.

The expected U.K. guidance on corporate hospitality would seem to be akin to the FCPA's current affirmative defense for "reasonable and bona fide expenditures, such as travel and lodging expenses, incurred by or on behalf of a foreign official" " directly related to (A) the promotion, demonstration, or explanation of products or services; or (B) the execution or performance of a contract with a foreign government or agency theorof."

Without the benefit of an actual analysis of the expected guidance on joint ventures, it is a bit difficult to draw conclusions from the Telegraph article. But if, as reported, the eventual guidance "will give companies some protection against illegal acts committed by joint venture partners" this protection will make the Bribery Act even more lenient than the FCPA (or at least FCPA enforcement theories).

Several FCPA enforcement actions in recent years, including some of the most high profile (see e.g., Bonny Island, Nigeria enforcement actions), have been based on conduct of joint venture partners.

Of note, the reported U.K. guidance regarding joint ventures would seem to conflict with the justification underlining the recent SFO charges against MK Kellog Ltd. under the Proceeds of Crime Act. (See here).

The oft-cited statement that the Bribery Act is the "FCPA on steroids" was curious to begin with; the statement now appears to be completely off-base given expected guidance on the Bribery Act.


  1. I enjoyed your article and I agree that initial assessments of the Bribery Act seem to have oversized its teeth in comparison to the FCPA. However, what about the Bribery Act's wide application including private sector bribes? It seems some commentators have seen this as a substantial increase in potential liability when compared to the FCPA. Any thoughts?

  2. Kevin, thanks for your comment. You are absolutely correct that the Bribery Act is a more comprehensive statute than the FCPA. That is widely known, accepted and acknowledged. The comparisions that are being made and most discussed though are between the Bribery Act's "FCPA"-like provisions and the FCPA itself and that has been my focus including in the above post.