On July 1, 2021, it will be ten years since the anti-corruption law entered into force. The law is widely regarded as a pioneering piece of legislation. In addition to raising the level of anti-corruption legislation globally, the law has profoundly influenced organizations’ attitudes towards compliance. We explore its successes, shortcomings and legacy through a series of articles. This second article in the series examines whether, a decade later, the law has still not achieved some of its goals: to effectively deter companies from allowing corruption under their watch, prosecute those who do and hold them to account. to guilty people. . We focus on how the law has been enforced in the UK, particularly in relation to Corruption Deferred Prosecution Agreements (“DPAs”) and the impact of the law on individuals and small businesses. and medium-sized enterprises (“SMEs”).
Prosecutions under the Act
When the law was introduced, the UK government said the new legislation would ensure the UK is “at the forefront of the fight against corruption”.1 Ten years later, the law is still widely seen on paper as having at least achieved that goal, with many commentators praising the law as the strictest anti-corruption legislation in the world. However, this has not yet resulted in prosecution under the Act.
As the House of Lords ad hoc committee on the 2010 Corruption Act noted in its 2019 post-legislative review report, the number of prosecutions has been “low”.2 Most of the cases brought in the early years of the law concerned only minor offenses involving bribes under £ 10,000, which could have been prosecuted under the precursor legislation, rather than criminal offenses. allegations of large-scale corporate corruption that the law was intended to address. The SFO – the lead agency responsible for investigating complex corruption cases and enforcing the law in cases of corruption abroad – reported in March 2020 that it had brought five cases to court since introduction of the law.3
Factors behind the low prosecution rate
Nonetheless, as the House of Lords report also noted, corruption has historically been prosecuted at a relatively low rate due to the inherent complexity and resource-intensive nature of investigations. The introduction of the Law does not change this reality.
When viewed in conjunction with the United States Foreign Corrupt Practices Act 1977 (the “FCPA“), the implementation of the law has been relatively swift; enforcement actions under the FCPA have been largely dormant for decades after its entry into force, while prosecutions under the corruption – although few in number – began fairly quickly. It is still too early to judge the Act solely on the basis of the number of prosecutions brought under its provisions to date, but as the Act enters its second decade , the prosecution rate will be a closely observed indicator of its effectiveness.
ODA – effective enforcement or evasion of guilt?
Three years after the law was introduced, the Crime and Courts Act 2013 introduced DPAs to the UK, providing prosecutors with a new method of enforcement in the context of fraud, corruption and d other economic crimes. The DPAs appear to have quickly become the SFO’s enforcement tool of choice when prosecuting allegations of bribery and corruption against legal persons.
To date, six of the nine DPAs concluded by the SFO relate to corruption offenses, including in all cases offenses under the law. In particular, these six corruption-related DPAs involved the legal person accepting at least one charge under the flagship offense of “failure to prevent” under section 7 of the Act. However, it should be noted that UK prosecutors are not the only ones who tend to resolve corruption cases through voluntary agreements with offending parties.4
On the one hand, the SFO’s use of DPAs to enforce the Law against Corporations has ensured the effective punishment of wrongdoing by these entities without incurring the significant costs and risks associated with pursuing a case. On the other hand, the number of DPAs in relation to the number of criminal proceedings has raised concerns that the former have become a substitute for the latter.
Critics of the DPA regime argue that it is a “soft option” for those who engage in serious corrupt practices who “at a fair price can escape punishment by granting impunity to those who engage in serious corruption. who flagrantly break the law “,5 and that the increasing prevalence of ODA may diminish the long-term deterrent effect of the law.
At the same time, prosecutors have also struggled to secure convictions against those involved in the DPAs. Currently, there is no recourse for individuals to correct the factual basis of a DPA to reflect their acquittal.
The insensitivity of the CCA regime to the interests of individuals is underlined by the unavailability of PADs to individuals. In the United States, where DPAs were originally designed, the agreements were first introduced for individuals and only recently became a tool for criminal law enforcement against legal persons. The lack of any generalized legislative appetite in the UK to extend DPAs to individuals raises the prospect of new cases of people suffering procedural injustice from the corporate DPA.
While the problems surrounding DPAs should not be blamed on the law itself, if the law is to meet its stated goals in the next decade, prosecutors will need to tackle both the companies and the offending individuals.
Lack of case law means lack of guidance
One of the consequences of the trend so far to resolve allegations of corporate bribery through ODA is the delay effect on building up a body of case law.
In particular, what constitutes “adequate” for the purposes of the “adequate procedures” defense against the violation of Article 7 has received little judicial attention, as the DPAs have diverted the most important cases from it. Article 7 of the courts. This makes it difficult for business organizations to assess whether their anti-corruption programs will qualify them for a defense in the event of a lawsuit.
This is not the only element of the statute that remains unclear; the jurisdictional application of the infringement of Article 7, which applies to a business which “carries on a business or part of a business” in the UK, has so far escaped substantive clarification . The recent DPA concluded by Airbus SE, domiciled in the Netherlands, may give an indication of the approach. The court approving the DPA admitted that the jurisdictional test was met on the grounds that part of Airbus’ business was carried on in the UK through two of its subsidiaries. This despite the fact that the operational headquarters of Airbus was in France and that the conduct to which it admitted took place outside the United Kingdom. However, the fact that Airbus did not challenge jurisdiction means that the law on this point remains fundamentally untested.
The fate of SMEs
The position of SMEs on the Act continues to attract attention because of concerns that small businesses will be harder hit by the legislation. The House of Lords report suggested that, in the case of the Section 7 violation, SMEs might not have sufficient defense knowledge of “adequate procedures” and less resources to design and implement. implement sufficiently robust compliance controls.
A high bar with insufficient guidance
As it stands, the bar defendants must cross to establish that they have “adequate procedures” are as high for SMEs as it is for large multinational corporations. The law does not provide for simplified procedures for SMEs that would provide a more proportionate approach to the availability of financial and other resources for these SMEs. Official guidelines do not help here, offering a unique approach that does not take into account the special characteristics of small businesses. The House of Lords report found the guidance to be “less effective” in providing SMEs with the information they need to design formal anti-corruption policies.
Engaging in a DPA: the prerogative of large companies?
In addition to this perceived injustice, concerns have also been raised about the eligibility of SMEs for ODA. One of the attractions of DPAs is that they allow prosecutors to punish corporate wrongdoing without the collateral consequences of a conviction that risk bankrupting the business or causing further harm to investors, employees. or at the market.
This rationale for pursuing a DPA rather than criminal prosecution is less relevant when it comes to enforcement action against SMEs whose size and scale mean that the conviction is unlikely to result in harm. systemic. With few prosecutions initiated to date by the SFO, it is difficult to test this thesis, but it should be noted that of the nine DPAs concluded by the agency to date, only one concerned an SME.
The challenges ahead
Even on its tenth anniversary, the Act is still in its infancy. The real test for the law and those charged with enforcing it is likely to come in the next decade, as the law’s track record ceases to apply, ongoing corruption investigations come to a head and the economic shock induced. by the COVID-19 pandemic creates an environment ripe for corruption.
The OECD Bribery Task Force recently warned that the crisis is increasing the possibility of foreign bribery, particularly in the healthcare sector, given the significant pressures on corporate operations and the intense demand for foreign bribery products. health and pharmaceuticals.6 As we recently Noted, the shift to new work practices (i.e. working from home and the increased digitization of work) creates new risks for businesses that can undermine their compliance programs, including those established to prevent Corruption.
To meet the challenges of the next decade, the effectiveness of the Act will largely depend on how it is applied.
The above article is the second in a three-part series celebrating the tenth anniversary of the implementation of the UK Bribery Act.
1 UK Department of Justice, Press Release, ‘UK crackdown on corruption with new corruption law‘,
2 House of Lords Special Committee on the Corruption Act, ‘The Bribery Act 2010: post-legislative review‘
3 FSO response to FOI 2020-040 – Bribery Act 2010
4 See more details: OECD, “Solving Foreign Bribery Cases with Non-Judicial Resolutions”, 2019
5 Transparency International UK, ‘Lack of individual prosecution in Rolls Royce corruption case – justice not served‘
6 OECD Working Group on Corruption, ‘The global response to the coronavirus pandemic must not be compromised by corruption‘, April 22, 2020