No bribes please, we’re British

It was heralded as the new law that would put Britain at the forefront of the fight against corporate corruption. “Bribery blights lives,” Kenneth Clarke, then Justice Secretary, said shortly before the new Bribery Act came into force on July 1, 2011. “At stake is the principle of free and fair competition, which stands diminished by each bribe offered or accepted.”

Nonetheless, more than three years on, not a single company has been prosecuted under the new law. Despite this, David Green, the director of the Serious Fraud Office (SFO), has disclosed that his agency is investigating a number of alleged bribery offences which, if they come to fruition, will be prosecuted under the new law. “Watch this space,” he said. “We have cases under development.”

Companies found guilty of a Bribery Act offence can be hit with staggering fines and might be blocked from tendering for public contracts. The loss of revenue and damage to a company’s reputation could also help to put it out of business.

UK Bribery statistics

Two elements of the new law are particularly important for companies. The act creates the corporate offence of bribing a foreign public official in order to obtain or retain business. It also creates an offence of failing to prevent bribery. These offences cover any company that is deemed to be doing business in the UK.


One of the most significant elements of the offence of failing to prevent bribery is that the company does not need to know that a bribe has been paid by one of its employees or agents. The company can fall foul of the legislation simply by failing to have “adequate controls” in place to prevent bribery. As a result, companies have been forced to put in place controls to prevent bribery by any individual that represents them, including “fixers” and other third-party agents, wherever they are in the world.

Satindar Dogra, a partner at law firm Linklaters, says companies have had to be particularly cautious when they use the services of third-party agents in emerging markets and other high-risk jurisdictions.

“Companies seek to manage their risks by ensuring that appropriate vetting and due diligence has been carried out on such agents; that agents receive anti-bribery training or have their own developed code of conduct; and that there are appropriate anti-bribery warranties and termination rights in the contractual documents,” he says. “Where due diligence raises red flags, a satisfactory explanation of the red flags is required, failing which a company would be ill-advised to proceed with the agent in question.”

What makes “adequate” anti-bribery controls is a moot point, says lawyer Dan Hyde, a partner at HowardKennedyFsi. Adequacy is highly subjective and is not defined in the Bribery Act, although the government has published guidance on the matter.

Some jurisdictions and sectors may be viewed as posing too great a risk

“Adequate procedures would certainly involve having a bespoke anti-bribery policy that was effectively disseminated and actively implemented,” Mr Hyde says. Staff must be readily primed to notify management when red flags arise, he advises.

Mr Hyde recommends that companies need to examine their relationships with third-party agents overseas “to ensure, as far as possible, they are choosing the right third-party representative and that the risk is not too great”. This due diligence would include assessing the level of corruption in a country, in the agent and in the home government. There should also be “myriad” checks on the reputation and reliability of the agent, and the transaction they are being asked to complete. “Some jurisdictions and sectors may be viewed as posing too great a risk,” he says.


Problems with third-party agents abroad can be amplified if a company does business in the United States and is therefore subject to the punitive provisions of the Foreign Corrupt Practices Act (FCPA). According to Mondaq, the online information service, FCPA investigations and prosecutions resolved last year involved alleged corrupt conduct on every continent except Australia and Antarctica. A large number of the actions involved the oil and gas industries, but enforcement actions also targeted the financial services, technology and medical sectors.

GlaxoSmithKline, the British pharmaceutical company, is currently under investigation by both the SFO and the US Department of Justice over allegations of bribery in China. Last year Chinese police accused GSK of channelling as much as ¥3 billion (£280 million) in bribes to encourage doctors to use its products. Similar allegations later surfaced regarding GSK’s sales practices in Poland, Iraq, Lebanon and Jordan. The SFO opened a criminal inquiry into GSK’s sales practices in May this year after the US Justice Department launched its own probe.

GSK says it is “committed to operating its business to the highest ethical standards” and will continue to co-operate fully with the SFO while the agency carries out its investigation. GSK says it has overhauled its operations in China and has unveiled a global policy to stop paying doctors in the manner alleged.

However, if the SFO’s investigation into GSK was to lead to a prosecution, the drugmaker could be the first company to be prosecuted under the Bribery Act.