Bribery is a subject which has barely been out of the headlines in the last twelve months, covering the full spectrum from Cricket and Football to arms sales, sanctions busting and ‘phone hacking’, yet it was a humble magistrates court clerk who had the dubious distinction of being the first person to be prosecuted under Bribery Act 2010.
In a paper delivered at The University of the West of England, Axel Palmer considered the issue of the bribe itself.
In the last year, the coalition government has published guidance on the implementation of Bribery Act 2010. The Bribery Act was intended to remedy the deficiencies in previous legislation and bring the United Kingdom (UK) into step with other nations, thus complying with its international obligations to United Nations the Organisation for Economic Co-operation and Development. It also looked across the Atlantic to the United States which had the Foreign Corrupt Practices Act (FCPA) since 1977. That the UK was late on the scene was demonstrated by bribery of foreign public officials only becoming a crime in 2001. The legacy provided to the incoming coalition government was a new offence applicable to a ‘commercial organisation’ of ‘failure of commercial organisations to prevent bribery’.
This offence makes commercial organisations responsible for bribery by persons associated with it. However, the Act also provides a defence if the organisation has ‘adequate procedures’. The difficulty faced, particularly by commercial organisations, is to define what exactly is a bribe? And the relevance is that the UK Bribery Act goes further than the FCPA by not allowing ‘facilitation’ payments. Thus, the UK approach has created a new ‘gold standard’ for anti bribery laws.
So, just what is a bribe? Variously described as ‘grease payments, bungs, backhanders, facilitation payments or tips’, these are payments which are intentionally designed to achieve ‘improper performance’ of a function or activity. Here it is important to note that what are prosaically described as facilitation payments (bribing a foreign public official to do his job faster etc), with the justification of merely ‘doing in Rome what the Romans do’, is a practice outlawed in UK but permitted in US.
The Law Commission observed that ‘most people have an intuitive sense of what “bribery” is. However, it has proved hard to define in law.’ The Oxford English Dictionary (OED) definitions of: ‘to grease the wheels’; ‘to make things run smoothly’; ‘to ply with money’; ‘to grease a person’s hand or palm’; ‘a tip or bribe made surreptitiously’; ‘a secret payment’; or, in the case of a tip, ‘a small present of money given to an inferior, especially to a servant or employee of another for a service rendered or expected’. OED is succinct in defining a bribe as: ‘to take dishonestly, to purloin, to steal, rob, to obtain by abuse of trust, or by extortion.’ Thus, for the avoidance of doubt, Russell on Crime defines bribery as: ‘the receiving or offering of any undue reward by or to any person … in order to influence his behaviour in office, and incline him to act contrary to the know rules of honesty and integrity.’
It would, of course, be helpful to understand what is meant by ‘reward’. The Bribery Act’s predecessor legislation had several stabs at a definition (‘any gift, loan, fee, reward or advantage’; ‘any gift or consideration’; ‘any money gift or other consideration’) but the Bribery Act offence relates to ‘a financial or other advantage’, where the “advantage” is ‘left to be determined as a matter of common sense’.
Commercial organisations, in particular, might well understand what is meant by bribery and corruption on a grand scale, involving ‘high level’ corporate organisations or governments and the cases of Mabey and Johnson, Innospec, BAE Systems are prominent examples. On a domestic level, headlines such as ‘network rail chief and wife in suicide pact after being caught taking luxury bribes from corrupt company executives’ (cash, Porsche car, five star holidays), and cases such as Excel (being over-paid for contracts in return for cash and gift payments), are straightforward and the bribery issues readily appreciated. The Magistrates Clerk, Munir Patel, took £500 to avoid putting details of a traffic summons on a court database. He admitted one offence but the prosecution believe he earned at least £20,000 by helping 53 other offenders.
What is more problematic, though, is the ‘grey area’ which might be considered on a par with ‘a little white lie’. There is no grey area in the UK, so it is unlawful for those covered by the Bribery Act, including overseas with a connection to the UK, to make payments to ‘secure or expedite the performance of a routine or necessary action to which the payer has a legal or other entitlement.’ This means not paying for visas, permits, licenses or, say, loading or unloading perishable goods from the docks or provision of a telephone or electricity service. In this regard, making it plain in advance to a restaurant waiter that special attention would be rewarded (by a tip) is a bribe. In reality, there is no distinction between a bribe and a facilitation payment: if a payment is made willingly, it is a bribe; if a payment is made unwillingly, it is extortion.
That then leaves the vexed question of corporate hospitality. This aspect excited much comment and the Ministry of Justice have been keen to clarify that ‘Bona fide hospitality and promotional or other business expenditure which seeks to improve the image of a commercial organisation, better to present product and services, or establish cordial relations will not be unlawful.’ Or, in other words, ‘no one is going to try to stop businesses taking clients to Wimbledon or the Grand Prix’. That type of entertainment may be at the low end of the risk spectrum if entertaining a UK client but flying a business contact around the world to such an event would invite scrutiny. At the low risk end would be restaurant meals, domestic travel and entertainment such as company golf days where the provider of the hospitality is always present: at the other end, is lavish entertainment or expenditure with no obvious business rationale.
The final area is giving and receiving of gifts. The Serious Fraud Office (which has prime responsibility for enforcing the Bribery Act), makes it plain that these are not unlawful: ‘there are countries in which the giving and receiving of gifts is part of the accepted culture. Giving a gift to somebody in these circumstances is a mark of respect for them.’ Furthermore, on a recent visit to China, the SFO Director said ‘I myself bring gifts when I come to China. I give these to my hosts at meetings because of the respect that is due to them and because it is important that the Serious Fraud Office is seen to show that respect.’ Just how the SFO marked their respect is not disclosed, thus, not setting a yardstick or guideline.
Grease, bungs, backhanders and facilitation payments are bribes but hospitality and gifts need not be if provided in the context of relationship building and symbols of respect.
This paper was submitted by Axel Palmer to a conference organised by the Commercial Law Unit at UWE in February 2012. For more information contact Axel.Palmer@uwe.ac.uk