The Bribery Act 2010, The English Are Coming

June 24, 2011 GS2LAW

There are very few moments in the law when you are truly flabbergasted, last week I was struck sideways by one of them when attending the conference on Expanding Worldwide Corruption Standards, which featured many of the leading lights who were familiar from my time litigating white-collar crime in the UK.

When drafters of UK legislation start speaking of ‘the need for a worldwide cohesive attack on corruption committed nearly exclusively by multinationals and their executives, the world better take heed. The US lawyers, used to dealing with the DOJ sat idly by and made trite comments on the brevity of the Bribery Act and how attractive it looks. Reading the materials provided, as somebody who spent a decade litigating crime at the highest levels in the UK, I was aghast at the lack of definition, winced at the broad scope of extraterritoriality, and paled at the impact that this piece of legislation could do in the wrong hands.

While I sat there, listening to magic circle lawyers, who might be very well informed on corporate procedures and internal investigations, their comments betrayed them as lawyers who they have never truly witnessed how loosely drafted legislation can take on a life of its own before the courts. For example, in the Bribery Act, certain terms were specifically designed to be interpreted as case law develops such as “financial or another advantage.”

What does this mean to the target of an investigation? A test prosecution will be a necessary step for the prosecuting authorities to learn how far they can go or stretch an interpretation. I could not understand why the room in New York was not more worried as the Act could have swingeing effects for any multinational that touches British shores, from hedge funds all the way across to the agriculturalist. Corporations and partnerships, and, more importantly, their directors and officers are exposed to criminal prosecution in the UK if any of part of their company or a subsidiary does partial business in the UK.

Once liability is established in the UK, the powers of disgorgement of the primary amount and any hypothesized direct or indirect benefits are much greater than in the US. Such penalties can sit side by side with unlimited fines and other remedies and UK judges do not shy away from making very large orders for confiscation.

There was only one person to talk to, Tim Kendal, a barrister in London, my pupil master, and, in my humble opinion, one of the best brains in the white-collar business. He confirmed that my fears were well held, that there is either a genuine lack of understanding or an ostrich mentality among the lawyers in the US. Further, Tim feels that the Act is the most disruptive piece of legislation requiring a complete overhaul of corporate governance from top to bottom.

The Act comes into force on the 1st July, with no period of grace. We have decided therefore that it is high time to write a series on the Bribery Act 2010, the Foreign Corrupt Practices Act, and worldwide anti-corruption measures. We have seen the ‘guidance’ being given by the US magic circle type of firms and it is simply inadequate as their pamphlets, as far as we can tell, have not been written by dually qualified lawyers with years of arguing these concepts in court. In the UK, if a corporation goes to a lawyer, the firm goes to a barrister for advice. Here you can have it direct from the horse’s mouth without the distortion of secondhand information. Stay tuned.