UK Passes New Bribery Laws

April 12, 2010 International Tax CooperationTaxation in UK

House of Lords ChamberThe UK House of Commons and House of Lords have passed an extensive new set of laws reforming an outdated set of legislations concerning bribery, its definitions and prescribed legal punishments.

On March 9th the long-awaited Bribery Act was passed, and has been hailed as the most significant reform to corporate criminal law seen in the UK this century. The new act replaces the UK’s previous anti-corruption and bribery laws, which are commonly considered to be too fragmented and antiquated to be applicable in the modern business environment.

The Bribery Act recognizes and categorizes bribery between active offenses, passive offenses, bribery of Foreign Public Officials (FPO), and corporate offenses. Active offenses are defined as offering or promising reward to another individual, in return of them improperly performing relevant function or activity. Conversely, passive offense involves the receiving or accepting of an offer made within an active offense. A separate form of bribery is committed when an active offense extended towards an FPO in an attempt to influence their official functions as an FPO, both within the UK and internationally. Finally, a corporate offense is defined as the failure of a business entity to prevent bribery, whereby the entity has not adequately installed measures to mitigate the occurrence of bribery committed by employees. Corporate offense charges can be laid against an organization regardless of whether they are aware or condoned the instance of bribery, whether it is active, passive, or FPO bribery.

While the new Bribery Act has undergone all necessary steps of legal ratification it will only be come into force across several stages over the period between June 2010 and October 2010. Upon the completion of the last implementation stage, the legal punishment for active or passive offenses, and bribing an FPO, extends to a maximum ten years imprisonment, an uncapped fine, or both. In the instance of a corporate offense, punishment will be a monetary fine, with no preset maximum limit.

Extolling the virtues of the legal overhaul, Claire Ward, Justice Minister in the House of Commons, said: “The Bill will be good for business; often commercial organizations bear the burden of the added costs of doing business in countries where bribery is prevalent. The Bill will also be good for developing countries by helping to ensure that aid and trade benefits those whom it is intended to benefit, and not corrupt officials.”

Photo by UK Parliament