In this blogpost,  Saumya Agarwal, Student, Amity Law School, Delhi, writes about bribery and related offences Act that are enacted in the USA and the UK and the differences in these acts, their applicability in various situations and on whom it is applicable.

Difference between corruption and bribery

There is some difference between corruption and bribery. Corruption is the abuse of the position of trust to gain an undue advantage and bribery is a single offence which contains the practice of offering something, usually money to gain an illicit advantage.

Anti-Corruption Law in the USA                                                 

The anti-corruption law in the US is Foreign Corrupt Practices Act (FCPA)  which was enacted in 1977 for the purpose of making it unlawful for a certain class of people and entities to make payments to foreign governmental officials to assist in obtaining or retaining business. It applies to any person who has a certain degree of connection to the United States and engages in foreign corrupt practices. The act also applies to any act by US businesses, foreign corporations trading in the US, American nationals, citizens and residents acting in furtherance of a foreign corrupt practice whether or not they are physically present in the US.

It is the most widely enforced law in the US. The Securities and Exchange Commission (SEC) and the Department of Justice are both responsible for enforcing the Act. The act was first to introduce corporate liability, responsibility for third parties and extraterritoriality for corruption offences means- all the persons and the companies who have committed the offences of corruption abroad. In the case of any violation of the act, there are consequences including high financial penalties of USD 250,000 per violation for an individual act and USD 2,000,000 per violation for the company. The people face prison time as well.

 The policy applies broadly to three categories of persons or entities: ‘issuers’, ‘domestic concerns’ and certain persons and entities under ‘territorial jurisdiction’. These provisions prohibit

(1) US persons and companies,

(2) companies organized under US laws,

(3) companies that have their principal place of business in the US,

(4) companies listed on stock exchanges in the US or

 (5) companies required to file periodic reports with the SEC (issuers) and

 (6) certain foreign persons and business acting while in the territory of the US (territorial jurisdiction) from making corrupt payments to foreign officials to obtain or retain business.

On the analysis of the law, the conclusion reached is positive. The MNCs have confirmed that briberies are not basic facts of the businesses in many countries, but that doesn’t mean that it doesn’t exist. The governments have taken important steps; much more is needed to be done because bribery continues to be a problem in many countries.

Many companies have adopted anti-bribery/anti-corruption (ABAC) solutions. As the business is increasing, the companies are focusing more on their core competencies. As a result, they are engaging in more third party contracts to provide critical business functions. The businesses do not have direct control over the third party and as such exposed to the regulatory and reputational risk of third-party FCPA violations. The companies that operate internationally engage more in third party contracts sometimes even with the parties in countries which are high on Corruption Perceptions Index; these companies have adopted the solutions to protect themselves from fines and reputational damages.

Anti-Bribery Law in the UK

The Bribery Act, 2010 is an Act enacted by the British Parliament to prevent bribery acts and all the criminal activities related to it in Britain. The act covers the crime of bribery, being bribery, the bribery of foreign public officials and the failure of a commercial organization to prevent bribery on its behalf.

The penalties for committing a crime under the Act are a maximum of 10 years’ imprisonment, along with an unlimited fine and the potential for the confiscation of property as well as the disqualification of directors. The directors and officers will be guilty of the offences if they are actively and passively involved.

It has a universal jurisdiction allowing anyone to be prosecuted-be it an individual or a company with the links to the UK, regardless of even the place where the crime occurred.To get caught, all that is required is that your company is carrying on the business or part of their business in the UK. The new law can catch any business that has a potential connection in the UK. However, the UK government has mooted that this condition will be applicable if there is a demonstrable business presence in the UK. It is advisable for the companies to take a close look at the legal and operational set up of their group operations to (or “intending to”) ensuring that risk is minimal if possible, as the meaning of carrying on business is likely to be interpreted broadly by the UK courts.

The companies will potentially be caught by the new law if they have branches, subsidiaries and the group relationships that go with them, sales representatives, agents, distributorships or even bank accounts and costumers in the UK.

Difference between FCPA and the UK Bribery Act

The Bribery Act has a broader applicability than FCPA. So the companies and the organizations that are operating on a global basis to be aware of the differences between the FCPA and the Bribery Act and to be prepared for the implications of the Bribery Act coming into force.

The main points of difference between the Bribery Act and the FPCA are:

• Both the acts make it an offence to bribe a foreign (public) official. Although under the Bribery Act, a ‘foreign public official’ is defined as more narrowly than the FCPA. But it includes (i) anyone who hold a foreign legislative or judicial position; (ii) individuals who exercise a public function for a foreign country, territory, public agency or public enterprise; or (iii) any official or agent of a public organization.

• The FCPA does not cover bribery on a private level, but such an act can be covered under other US legislations. The Bribery Act covers both the public and private acts.

• Under the FCPA both the criminal and the civil proceedings can be brought but under the Bribery Act only the criminal proceedings can only be brought which will be enforced by the Serious Fraud Office (SFO).

• The FCPA covers only the active bribery, e., Only the act of giving a bribe in contrast to that the Bribery Act covers both the active and passive acts of bribery ( the taking of a bribe).

• The Bribery Act creates a strict liability for the corporate offences subject only to establish that a company has ‘adequate procedures’ as opposed to vicarious liabilities. Under the FCPA, a company can be vicariously liable for the acts of its employees and agents which are subject to the US jurisdiction.

• Under the FCPA, it must be proved that the person offering the bribe did so with a ‘corrupt’ intent. The Bribery Act makes no requirement for a corrupt or improper intent about the bribery of a foreign official.

• The defence of promotional expenses can be demonstrated that have a reasonable and bona fide expenditure under the FCPA, but there is no defence concerning the promotional expenses under the Bribery Act about foreign public officials. However, the Ministry of Justice has provided some comfort on this aspect in its guidance.

• The penalties also differ under both the acts. Under the FCPA, an individual can be fined up to USD $250,000 per violation and may be given a five years imprisonment. A company under the FCPA is liable for a fine up to USD $2,000,000 per violation.Under the Bribery Act, an individual found to have committed an offence under the Bribery Act is liable to imprisonment of up to ten years and an unlimited fine. A company found guilty is subject to an unlimited fine.

After reading and analyzing these acts, there are certain changes that are a must in the Prevention of Corruption Act, 1988. The recommendations of the changes in the act will be taken care of in the next article.