In January 2016 the first UK company to be prosecuted for corruption was sentenced to a fine of just over £1.3m, had over £800k confiscated and was ordered to pay £25k in prosecution costs; with two directors being convicted and sentenced (in 2015):

  • Christopher Smith received an 18-monthimprisonment sentence (suspended for two years) for two counts of corruptly agreeing to make payments, contrary to section 1(1) of the Prevention of Corruption Act 1906 and ordered to carry out 250 hours of unpaid work. Further, he received a three-month curfew.
  • Nicholas Smith, the company’s sales and marketing director, received a three-year imprisonment sentencefor three counts of corruptly agreeing to make payments.

Further, both men received six-year bans on acting as company directors.

In his sentencing, the Judge stated, “Corruption of foreign officials is damaging to the country in which the corruption occurs is damaging to the reputation of UK business and, of course, in the market in which a business operates. It is anti-competitive.”

The conviction follows an SFO investigation into corrupt payments made to the company in return for the award of contracts.
The company was convicted under the old legislation as the offences pre-dated the Bribery Act 2010 (2010 Act).

OUR BRIEF

To outline the offences introduced by the 2010 Act and the penalties for committing them. To highlight the practical steps a business can take to avoid breaching the legislation.

What is bribery?

Anti-corruption organisation Transparency International defines bribery as “the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal or a breach of trust.”

Who can receive a bribe?

It is a common misconception that the 2010 Act only outlaws the bribery of public officials. In fact, the 2010 Act is much wider, and applies to all entities that carry on business or parts of it business in the UK.

The reasons for introducing the 2010 Act

To strengthen the existing bribery and corruption laws in the UK.

The Organisation of Economic Co-operation and Development (OECD) had repeatedly criticised the UK system for being weak and ineffective compared with the more robust regimes in other countries, such as the US Foreign and Corrupt Practices Act.

The offences under the 2010 Act

Bribing another person

A person is guilty of this offence if they offer, promise or give a financial advantage or other advantage, to another person.In other words:

  • to bring about improper performance of a relevant function or activity; or
  • to reward a person for the improper performance of a relevant function or activity.

The types of function or activity that can be improperly performed include:

  • all functions of a public nature;
  • all activities connected with a business;
  • any activity performed in the course of a person’s employment; and
  • any activity performed by or on behalf of a body of persons.

The person performing such function or activity must be in a position of trust, and the expectation is that they carry out that function or activity impartiallyand in good faith.

It may not matter whether the person who offered the bribe is the same person that actually performs, or performed, the function or activity concerned.

The advantage can be offered, promised or given by the person themselves or by a third party.

Being bribed

The recipient or potential recipient of a bribe is guilty of this offence if they request, agree to receive or accept a financial or other advantage to perform a relevant function or activity improperly.

It does not matter whether it is the recipient or someone else through whom the recipient, who requests, agrees to receive or accepts the advantage. In addition, the advantage can be for the benefit of the recipient or another person.

Bribing a foreign public official

A person is guilty of this offence if they intend to influence an official in their capacity as a foreign public official.

The offence does not cover accepting bribes, only offering, promising or giving bribes.

Making the offer, promise or gift directly to the official, or via a third party, does not in fact matter.

Failing to prevent bribery

A commercial organisation is guilty of this offence if a person associated with it bribes another person, with the intention of obtaining or retaining business, or a business advantage, for the commercial organisation. The offence can be committed in the UK or overseas.

A business can avoid conviction if it can demonstrate that it had adequate procedures in place designed to prevent bribery.

What are the penalties for committing an offence?

The offences of bribing another person, receiving bribes and bribing a foreign public official are punishable on indictment either by an unlimited fine, imprisonment of up to ten years or both.

Note: Both a company and its directors could be subject to criminal penalties.

The offence of failure to prevent bribery is punishable on indictment by an unlimited fine.

Businesses convicted of corruption could find themselves permanently debarred from tendering for public sector contracts.

Receiving adverse publicity, if prosecuted for an offence, could damage your business’ reputation.

Practical steps to help avoid liability under the 2010 Act

Top level commitment

All senior managers and directors must understand they could be personally liable under the 2010 Act for offences committed by the business.

It is important that senior management lead the anti-bribery culture of a business, especially if the business wants to take advantage of the “adequate procedures” defence to the offence of failing to prevent bribery.

Risk assessment

Which potential risks could affect your business. For example, certain industry sectors (such as construction, energy, oil and gas, defence and aerospace, mining and financial services) and countries are associated with a greater risk of bribery. Think about:

  • what transactions you engage in;
  • who you transact with; and
  • how you conduct those transactions.

High-risk transactions include:

  • procurement and supply chain management;
  • involvement with regulatory relationships (e.g. licences or permits); and
  • charitable and political contributions.

Review how the business entertains potential customers, especially those from government agencies, state-owned enterprises or charitable organisations.

Routine or inexpensive corporate hospitality is unlikely to be a problem, but put clear guidelines in place.
If the business operates in foreign jurisdictions, always check local laws.

Implementing and communicating an anti-corruption code of conduct

Implement a code of conduct setting out clear, practical and accessible policies and procedures that apply to the entire business. Make sure you communicate the code effectively to all parts of the organisation.

Carry out background checks when dealing with third parties

A business will be liable if a person associated with it commits an offence on its behalf. Businesses should therefore review all of their relationships with any partners, suppliers and customers. For example, if an agent or distributor uses a bribe to win a contract for a business, that business could be liable.

Ensure you carry out background checks on any agents or distributors before you engage them.

Policies and procedures

Review any existing policies and procedures and update them if necessary. If the business does not have any policies or procedures in place, consider preparing them as a matter of urgency.

Effective implementation and monitoring

Consider introducing a compulsory training programme for all staff. If only a few employees operate in a high-risk area, consider targeting training at those employees.

Ensure you continually monitor anti-corruption policies and procedures are for compliance and effectiveness, both internally and externally.

Prevention is far better than cure

This is particularly so with the 2010 Act. Introducing and implementing effective policies, procedures and training is the best way to avoid problems in this area, and the best defence if the SFO come knocking at the door.

If you would like further advice or assistance on any of the matters raised in this note, please feel free to contact us.

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What clients say...

I have worked directly with Mo on multiple cases, so I have seen his legal analysis and skills first-hand. I highly recommend him.

Bryan Pieper Lawyer: 12 June 2015

Mo is a remarkable guy — Engaging, personable, and intelligent, with life experience that makes him a great choice to represent both international clients and American clients with international business or legal matters.

Bryan Pieper: Lawyer : 12 June 2015

He is an expert on immigration law including L1 intra company transfer visas

Sebastián Baglietto: Grupo Peñaflor: 15 October 2015

Mohammad is a great deadline oriented, ambitious and eager Lawyer who can be trusted.

Sebastián Baglietto: Grupo Peñaflor: 15 October 2015

I’ve had the privilege of working with Mohammad A. Syed since January 2015 and in that time I have known Mo to be a well-grounded and down to earth.

Sebastián Baglietto: Grupo Peñaflor: 15 October 2015

Mohammad is very professional and has successfully assisted us. I would highly recommend hiring his legal services to anyone seeking to develop business within the US market and for top quality immigration representation.

Victoria Mingo: Regional Export Manager USA, Bodegas Trapiche: 17 November 2015

I had the pleasure of benefiting from Mohammad’s legal services. He was assigned to set up our company in the US and advise us in all legal matters and secured an L1 intracompany visa for us.

Victoria Mingo: Regional Export Manager USA, Bodegas Trapiche: 17 November 2015

I highly recommend Mohammad Ali Syed for immigration law, especially for EB1 permanent residence applications. Science Program Lead at U.S. Anti-Doping Agency.

Shikha Tandon: Olympian: 8 December 2015

Throughout the EB1 process, Mo Syed and his team were easy to work with and were always just a phone call away!

Shikha Tandon: Olympian: 8 December 2015

The EB1 category has very stringent standards and it was imperative to provide as much evidence as possible under the different criteria. Mohammad Ali Syed helped me understand the different criteria so that I could provide relevant documents as supporting evidence.

Shikha Tandon: Olympian: 8 December 2015

Mohammad Ali Syed assisted me in successfully obtaining my Green Card through the EB1 category (for aliens of extraordinary ability). My accomplishments include swimming for India at the Olympics and working for the U.S. Anti-Doping Agency.

Shikha Tandon: Olympian: 8 December 2015

He is an expert in litigation, dispute resolution and international business. I’d recommend him in a flash.

Shakir Husain: Partner, IVM Capital: 9 December 2015

Mo has a robust extended network which he has leveraged for us when needed and we’re very grateful for the advice and work he’s done for us.

Shakir Husain: Partner, IVM Capital: 9 December 2015

Mo has been an excellent legal sounding board and has helped through a diverse set of problems that we've experienced as a business.

Shakir Husain: Partner, IVM Capital: 9 December 2015

He is an expert in immigration and nationality law. I would recommend him without hesitation.

Rahila Passi: PTA President, Sandpiper Elementary: 9 December 2015

Mohammad Ali Syed is a results oriented lawyer who had the knowledge of the system to follow the proper procedures and the connections to keep pushing my case through…

Rahila Passi: PTA President, Sandpiper Elementary: 9 December 2015

“Large and well-reputed practice”

Chambers: Asia Pacific 2015

“RIAA’s banking and finance department is noted for its ‘vast experience’ and ‘strong track record’”

Tier 1: IFLR1000 2015

“Our relationship with the firm started 20 years ago and we have never looked back.”

Chambers: Asia Pacific 2015

“They really take the time to listen to the case.”

Chambers: Asia Pacific 2015

“I only use RIAA and no other firm in Pakistan – I have the utmost regard for them.”

Chambers: Asia Pacific 2015

’Strong’ litigation department”.

The Legal 500 : Asia Pacific 2015

’Renowned’ corporate practice”

Tier 1: IFLR1000 2015

RIAA is ‘strong on telecoms-related work’, and has acted on for a number of high-profile clients in this sector.

Legal 500: 2015

RIAA’s ‘experienced’ tax department is praised as ‘top notch’. It is advising several multinational corporate clients on tax structuring to minimise fiscal exposure in Pakistan. Ahsan Rizvi leads on tax mandates.

Legal 500: 2015

RIAA has provided environmental advice on a number of domestic projects.

Legal 500: 2015

RIAA’s ‘strong’ litigation department advised Clariant Chemical and Clariant International on a High Court dispute, and is also acting for K-Electric on a constitutional matter.

Legal 500: 2015

RIAA’s ‘exceptionally good’ practice is ‘always available’ and ‘has excellent knowledge of the energy sector’.

Legal 500: 2015

Highlights for RIAA’s ‘renowned’ corporate practice included advising Unisys International on the sale of its majority shareholding in Unisys Pakistan to International Brands Limited.

Legal 500: 2015

"We have a very positive relationship with them. They are proactive, down-to-earth, thorough and extremely knowledgeable when finding solutions."

Chambers: Asia Pacific 2015

"I have the utmost regard for the firm; they are first class."

Chambers: Asia Pacific 2015

"They have vast experience of the power sector, and always provide alternative solutions to problems - they really take ownership of the projects they are working on."

Chambers: Asia Pacific 2015

What the team is known for: Active on a wide range of conventional and renewable projects, including notable activity on the conversion of power plants to coal.

Chambers: Asia Pacific 2015

What the team is known for: Offers high levels of expertise in the power sector, advising the sponsors on development, financing and regulatory issues.

Chambers: Asia Pacific 2015

Ahsan Zahir Rizvi keeps things on an even keel and so people trust him, even those on the other side."

Chambers: Asia Pacific 2015

Sources highlight Ahsan Zahir Rizvi’s strong negotiation capabilities, with one noting: "He can see the other side's perspective, that is his greatest strength.

Chambers: Asia Pacific 2015

Ahsan Zahir Rizvi is held in high regard for his depth of expertise in the power sector.

Chambers: Asia Pacific 2015

Ahsan Zahir Rizvi is also praised for "his precision in giving advice. He is very to the point."

Chambers: Asia Pacific 2015

Senior partner Ahsan Zahir Rizvi is one of Pakistan's most highly reputed transactional lawyers: "He is one of the most individually outstanding people, both from a commercial point of view and a legal point of view."

Chambers: Asia Pacific 2015

"RIAA has a very strong reputation for handling commercial and corporate matters."

Chambers: Asia Pacific 2015

"They have been absolutely outstanding. I don't think there is a team more dedicated."

Chambers: Asia Pacific 2015

Excellent bench of practitioners with a full-service corporate offering. Often mandated on big-ticket M&A deals, particularly for corporations in the energy and power sectors.

Chambers: Asia Pacific 2015

RBG provides notable expertise across the full spectrum of contentious and non-contentious banking matters, and counts numerous financial institutions among its clients. On the borrower side, the team has experience representing companies in the power, energy and transport sectors.

Legal 500: 2016

The firm has an active transactional practice and is instructed by clients across the energy, telecoms, financial services and construction sectors. Complementary expertise in tax, employment and competition benefits a practice covering mergers, acquisitions, takeovers, joint ventures and privatisations.

Legal 500: 2016

RIAA Barker Gillette’s disputes department handles cases spanning constitutional, employment, trade mark, energy and family law.

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RIAA Barker Gillette maintains an active energy practice, where it advises clients on compliance and liability under environmental law, and assists with licensing and regulatory approvals.

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RIAA Barker Gillette receives instructions from insurance company clients in relation to both contentious and non-contentious matters. Past work includes handling corporate transactions and international arbitrations.

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RIAA Barker Gillette advises on corporate and commercial agreements relating to power, water and construction projects, and is becoming increasingly involved in matters concerning wind and other renewables.

Legal 500: 2016

RIAA Barker Gillette’s longstanding experience in the construction sector, with past work including the construction and development of hospitals and various power and infrastructure projects. Acquisitions, sales, transfers and property leasing are other mainstays, as is project finance…

Legal 500: 2016

In the media space, the team has experience in licensing, and advises radio, television and print clients on operational matters.

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Telecoms is an area of strength at RIAA Barker Gillette, with the team providing expertise in corporate, commercial and regulatory matters.

Legal 500: 2016

RIAA Barker Gillette advises multinational corporate clients on tax structuring and restructuring. It is also active in tax litigation and appeals before the High Court.

Legal 500: 2016

RIAA Barker Gillette…"It is a powerhouse."

Chambers Guide: Asia-Pacific 2016

Renowned for his expertise in the power sector, peers highlight Ahsan Zahir Rizvi as "one of the most experienced projects lawyers in Pakistan."

Chambers: Global Guide 2016

Ahsan Zahir Rizvi continues to be revered by market commentators, who single him out for his "sharp legal mind."

Chambers: Global Guide 2016

Ahsan Zahir Rizvi is singled out by clients for the depth of his transactional experience and for "bringing a colour and vibrancy to the table."

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Sources describe Ahsan Zahir Rizvi as "an exceptional practitioner" and "a backbone of the firm."

Chambers: Global Guide 2016

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