A New Compliance Challenge: Bribery Laws

Peggy Whitmore

R-Squared Services & Solutions, Inc.

Corruption and bribery are in the law enforcement spotlight – both here in the U.S. and internationally. Between increasing U.S. Foreign Corrupt Practices Act enforcement, enactment of the United Kingdom’s new Bribery Act, and the efforts of the Organisation for Economic Co-operation and Development (OECD) to combat corruption globally, companies with international business must be sensitive to the changing business environment and the attendant risks and opportunities. It is time for all global businesses to review their anti-bribery and anti-corruption compliance efforts. This is particularly true in the pharmaceutical, device, and life sciences industries, given the numerous points of contact with government officials at virtually every point in a product’s life cycle and given that so many countries deliver health care through government-owned or operated systems.

One thing is certain – if your employees at every level, including on the front lines, are trained to be sensitive to bribery risks and anti-bribery laws, your organization gains significant protection in both actual bribery prevention and the ability to show evidence of systems intended to ensure compliance.

With respect to the new UK law, here are some key points to consider:

Persons are liable for either paying or receiving bribes. This is broader than the FCPA, which does not cover actual or potential recipients of bribes.

Bribery offenses can result from payments to virtually any and all persons with whom a company conducts business. Unlike the FCPA, the UK Act is not limited to payments made to foreign government officials.

Facilitation payments are technically bribes under the UK Act. Unlike the FCPA, the UK Act does not explicitly exempt facilitation payments. While such payments might not be prosecuted, it’s likely to be an area of risk with exposure depending on all relevant facts and circumstances.

Corporate liability can attach for the action of any “associated person.” A company is guilty of a bribery offense if a person “associated” with that company bribes another person, intending to obtain or retain business or an advantage in the conduct of business for that company. The definition of “associated” is not clear at the present moment, but the Act’s language is broad: “performs services” as “determined by a reference to all relevant circumstances.”

Senior Officers are liable for bribes committed with consent or connivance. A senior officer of a company covered by the UK Act (see below), will be liable for any bribery offense committed if they fail to demonstrate appropriate action once they became aware of the violation.

Companies can be held strictly liable for a failure to prevent bribery. It is an affirmative defense if a company can show that “adequate procedures” were in place to prevent bribery.  UK Act guidance on “adequate procedures” is under development, but preliminary guidance provides six broad management principles to “help relevant commercial organizations decide what bribery prevention procedures they can put in place.” See:  http://www.justice.gov.uk/consultations/briberyactconsultation.htm.

An offense is committed under the UK Act if: (1) any action or omission that constitutes part of the bribery offense occurs in the UK; or (2) the person/ company is closely connected to the UK.

Penalties imposed by the UK Serious Fraud Office can include: Unlimited fines for corporations and up to 10 years imprisonment for individuals.

Since governments around the world, and organizations like OECD and Transparency International, are focusing additional resources and attention on bribery and corruption, it makes sense for international businesses to evaluate existing compliance programs, assess gaps or weaknesses in those programs, and provide appropriate blended training solutions to close those gaps.  Paying attention to developments in enforcement and anti-bribery laws, regulations, and guidance and keeping all members of your organization up-to-date is critical.

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