Article by Scott Simmons, Associate, and Tito Garro, Barrister

 On 30th March 2012, the Organisation for Economic Co-operation & Development (‘OECD’) released its report
evaluating the UK Bribery Act 2010 (‘the Act’) and its enforcement of the Convention on Combating Bribery of
Foreign Public Officials in International Business Transactions (‘the Convention’). The report, running to 79
pages, took an in-depth look at how the UK had implemented the Act and gave a very positive view on what
had been achieved so far, but cautiously reminded the UK that there was still plenty of work to be done.

 The working group praised the UK for the significant increase in foreign bribery enforcement since its earlier
reports of 2005 and 2008. The UK was commended for publishing its Guidance to Commercial Organisations
(‘The Guidance’) which preceded the Act coming into force and for the heightened awareness of foreign
bribery-related issues in the UK. The working group also welcomed the UK’s approach of requiring companies
to compensate the country of a bribed official.

However, the report highlighted a number of pertinent issues which require consideration. For example, it
was concerned that, to settle foreign bribery cases, the Serious Fraud Office (‘SFO’) is increasingly relying on
civil recovery orders which require less judicial oversight and are less transparent than criminal plea
agreements, with some cases having confidentiality agreements in place that prevent the disclosure of key
information after cases are settled. As less information is made public, there cannot be a proper assessment
of whether the sanctions imposed are effective, proportionate and dissuasive. The report suggests that this
misses an opportunity for the UK to provide guidance and raise public awareness on foreign bribery-related
issues. Many commentators believe that this very point is the reason many companies have yet to implement
policies and procedures: a lack of public awareness of the sanctions has meant that businesses have failed to
appreciate just how serious the consequences of breaching the Act can be, with many risking the future of
their businesses.

 The report noted shortcomings with the Act, particularly in respect of what it referred to as the ‘identification
theory’, that being the ability to identify officers that have the ‘directing mind’ to commit an offence. The Act
states that senior officers can be guilty of an offence if an act of bribery takes place with their consent or
connivance. However, many corporations have complex structures in place, meaning that if an act was carried
out with the consent of, for example, a regional manager or relatively senior manager, they would not be
liable under the Act, thus lessening the effect of the offence. Nonetheless, it noted that as the section 7
offence of failure to prevent bribery becomes used by the SFO, concerns over the identification theory may
recede.

Most noticeably, the report dealt with the need for the UK to introduce Deferred Prosecution Agreements
(‘DPAs’). DPAs are commonly used in the US to encourage self-reporting without it necessarily leading to
prosecution. Under the terms of a DPA in the US the company may have to pay substantial amounts to those
affected by its actions and account for its profits, it may have to agree to working with a corporate monitor
and to account to the Department of Justice for its future actions. In return the US prosecution is deferred
and, so long as it keeps to the agreement, the prosecution will eventually be dismissed. In the UK, because no
such agreements exist, if the crime is serious enough, even a self-report could lead to prosecution as the
courts have the ultimate say in these cases, thus inhibiting many companies from seeing the benefits of selfreporting.

The report also looked at the Act in light of Article 5 of the Convention, which states that ‘investigation and
prosecution of the bribery of a foreign public official shall… not be influenced by considerations of national
economic interest, the potential effect upon relations with another State or the identity of the natural or legal
person involved.’ Earlier reports had noted that Article 5 did not have binding force in the UK and this
continues to be the case. The Code for Crown Prosecutors states that one public interest factor that tends
against prosecution is where ‘a prosecution may require details to be made public that could harm…
international relations’ and that this could be read as being inconsistent with Article 5.

Interestingly, the report looked at Crown Dependencies (‘CDs’) and Overseas Territories (‘OTs’). The report
makes the point of referring to some of these CDs and OTs as ‘offshore financial centres, which can be used to
facilitate foreign bribery’. It noted that it had been recommending that the UK extend the Convention to its
CDs and OTs since 1999, but the UK had left it for the CDs and OTs to decide to which treaties they become a
party.

The report further noted that the Convention had been extended to all three CDs – Isle of Man (2001),
Guernsey (2009) and Jersey (2009) – but only one OT: Cayman Islands (2010). ‘The other OTs have made little
progress, if any’. According to the report, Gibraltar had submitted a draft foreign bribery Bill to the UK for
review in 2005, but it was not until 2011 that it passed the Crimes Act, (the bribery provisions of which are
almost word-for-word the same as the Bribery Act), but this has yet to come into force.

The report recommended that the UK adopt a roadmap setting out specific goals, concrete steps and
deadlines for implementing the Convention in the OTs before the UK considers legislating on their behalf. It
also noted that the UK had not extended the jurisdiction of the Act to legal persons incorporated in the CDs
and OTs unless those companies carried out business or part of their business in the UK, despite the fact that it
had made clear in court briefs that ‘corporations incorporated under the laws of any of its Overseas Territories
are subjects of the United Kingdom’. The UK told the working group that it had not extended the jurisdiction
to legal persons because the regulation of commerce and business organisations had devolved to the CDs and
OTs. The report recommended that the UK extend the jurisdiction to companies incorporated in the CDs and
OTs as soon as possible.

What is equally interesting is what the report says about the bribery laws adopted in the Crown Dependencies.
All three have offences that cover foreign bribery, but only the Isle of Man has an offence that applies
specifically to foreign bribery. Jersey and Guernsey have offences that are based on the ‘problematic’ agentprincipal
concept similar to the pre-Bribery Act legislation in the UK, which itself was deemed insufficient by
earlier reports. Furthermore, none of the CDs and OTs has legislation criminalising a company’s failure to
prevent bribery. Therefore, when the Gibraltar Crimes Act comes into force, its bribery provisions will be the
most OECD-compliant of all the Crown Dependencies and Overseas Territories, enhancing its reputation as an
established international finance centre in the European Union.

According to information supplied by the SFO to the working group, it had 11 active bribery/corruption cases

and a further 18 cases under consideration as of 31st  January 2012. Only time will tell what impact those cases
will have in the UK and overseas, but in the meantime, the UK and Gibraltar still have plenty of work to do.

 Contact

Scott Simmons – Associate                                                                                        Tito Garro – Barrister                       

scott.simmons@hassans.gi                                                                                      tito.garro@hassans.gi

The information contained in this article is intended for guidance only and is not intended to provide specific legal advice
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