Wednesday, June 29, 2011
T-Minus 32 hours and Counting -- The UK Bribery Act Becomes Effective
The longest pre-game show in history is drawing to a close. The new world will shortly be upon us.
Will the UK Bribery Act be a game-changer or will it fizzle out like Y2K?
Everyone has their predictions; everyone has their focus and emphasis.
The critical issue in my view is prosecutorial discretion. Criminal laws can be interpreted, stretched and designed to fit to a variety of circumstances but the key determinant is how the prosecutor enforces the law and how the courts interpret the law. The courts rarely get in the way so long as the prosecutor acts reasonably.
Prosecutors and courts are not politically immune -- they read the same newspapers, the same headlines and can be politically sensitive. The Serious Fraud Office knows that a lot is on the line. Richard Alderman, if he stays, will act responsibly and prosecute those cases that he can easily justify. His easiest marks will be cases where the US and other jurisdictions have gathered significant information in an ongoing investigation or prosecution. Call it the piggyback strategy.
With time, I expect that the SFO will face some very important issues and try to resolve some questions concerning the UK Bribery Act.
Here are some of the key issues which need to be resolved/addressed:
1. The "adequate procedures" defense: How will the defense to a corporate charge for failing to prevent a foreign bribery offense actually operate? What kinds of evidence will companies be allowed to offer? Will acts of compliance, actual law-abiding conduct, be allowed or an overall presentation of the anti-corruption program and the compliance successes?
2. The commercial bribery offense: How much of a focus will the SFO place on commercial bribery prosecutions? Given the possible number of cases in this area, what criteria will the SFO apply to bringing such cases?
3. Extraterritorial Jurisdiction: How far will the SFO extend the law to capture foreign bribery conduct? The reach of the law is very broad, and even the Ministry of Justice Guidance did little to restrict the law's application. Without some significant UK impact, the SFO is likely to avoid enforcing the law to such tenuous circumstances.
4. Facilitation Payments: How far will the SFO go in enforcing the prohibition against facilitation payments, especially when the US and Canada have exceptions for such payments? The MOJ Guidance cut back on the prohibition but the SFO has preserved its ability to go after such situations when there is a direct harm caused to a UK business.