The Bribery Act 2010 AntiMoney Laundering and Financial

The Bribery Act 2010 Anti-Money Laundering and Financial Crime Conference 18 March 2011 - London Daren Allen & Aaron Stephens www. blplaw. com

What will we cover today? • Quick overview of the Bribery Act 2010 • Section 1 offence – bribing another person • Section 6 offence - bribery of a foreign public official • Section 7 offence – failure of a commercial organisation to prevent bribery by an "associated person" • Adequate Procedures / Ministry of Justice Guidance • Corporate Hospitality • Key Elements of Compliance • Questions and Discussion

The Bribery Act 2010 • Repeals current law: • Public Bodies Corrupt Practices Act 1889 • Prevention of Corruption Act 1906 • Prevention of Corruption Act 1916 • Sections 108 to 110 of the The Bribery Act SECTION 1 Bribing another person SECTION 2 Being bribed SECTION 6 Bribery of foreign public official Anti-terrorism, Crime and Security Act 2001 • Common law offence of bribery • Introduces 4 offences SECTION 7 Failure of commercial organisation to prevent bribery

Section 1: Bribing another person May be committed in two ways: • Offering, promising or giving • a financial or other advantage • to another person WITH INTENT TO: KNOWING OR BELIEVING THAT: (i) the acceptance of the advantage would itself constitute the improper performance of a relevant function or activity induce a person to perform improperly a relevant function or activity; or (ii) reward a person for the improper performance of such a function or activity

Section 1: Bribing another person (2) "perform improperly a relevant function or activity"

Section 1: Bribing another person (3) "relevant function or activity" • any function of a public nature • any activity connected with a business (including any trade or profession) • any activity performed in the course of a person's employment • any activity performed by or on behalf of a body of persons (whether corporate or unincorporate) provided that a person performing the function or activity: • (i) is expected to perform it in good faith; • (ii) is expected to perform it impartially; or • (iii) is in a position of trust by virtue of performing it. "perform improperly" = in breach of duty or trust

Section 6: Bribery of a foreign public official • Foreign Public Official (FPO) is an individual who: • holds a legislative, administrative or judicial position of any kind, whether appointed or elected, of a country outside the UK; • exercises a public function (i) for or on behalf of a country or territory outside the UK; or (ii) for any public agency or public enterprise of that country or territory; or • is an official or agent of a public international organisation (e. g. United Nations, World Bank, etc. )

Section 6: Bribery of a foreign public official (2) • Offering, promising or giving • a financial or other advantage • to a Foreign Public Official with the intent to: (i) influence the FPO in his capacity as a foreign public official; and (ii) obtain or retain business or an advantage in the conduct of business. Not bribery if the written law applicable to the FPO either permits or requires the FPO to be influenced by the advantage.

Section 7: Failure of Commercial Organisations to Prevent Bribery • If any person associated with a relevant commercial organisation is or would be guilty of the s. 1 offence (bribing another person) or the s. 6 offence (bribery of a foreign public official), then the commercial organisation is also guilty of an offence if the person acted with the intent to: • to obtain or retain business for the commercial organisation; or • to obtain or retain an advantage in the conduct of business for the commercial organisation.

Section 7: Failure of Commercial Organisations to Prevent Bribery (2) • The associated person may be the organisation's: • employee; • agent/consultant; • joint venture partner; or • subsidiary. • Must be performing services "for and on behalf of" the organisation. • Control is key. • Adequate procedures defence

Section 9: Adequate Procedures guidance Consultation period 14 September - 8 November 2010 6 Principles of Bribery prevention (1) Risk Assessment (4) Clear, Practical and Accessible Polices and Procedures (2) Top Level Commitment (5) Effective Implementation (3) Due Diligence (6) Monitoring and Review

Jurisdiction • The Act has a broad scope and extraterritorial reach (broader than the FCPA): • any individual ordinarily resident in the UK (whether or not a British national) can be prosecuted for bribery offences committed anywhere in the world; • any partnership or company (wherever incorporated) can be prosecuted if it does business in the UK (e. g. through a permanent establishment, subsidiary or branch operation), even if the offence was committed outside the UK.

Corporate Hospitality • Draft Mo. J guidance: "Reasonable and proportionate hospitality or promotional expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, is recognised as an established and important part of doing business". • Section 1, 2 or 7 offence committed only where an intention to influence improper behaviour. • Section 6: "Under section 6 there must be an intention for a financial or other advantage to influence the official in his or her official role and thereby secure business or a business advantage. ”

Corporate Hospitality (2) • What is reasonable is to be left to prosecutorial discretion. Prosecutors will decide: • what is legitimate and illegitimate corporate hospitality within the scope of the Act; • whethere is sufficient evidence for a reasonable prospect of a conviction; and • whether or not it would be in the public interest to prosecute.

The Bribery Act 2010 - summary • Individual and corporate liability for giving, or receiving, bribes. • Specific offence for bribing Foreign Public Officials. • Strict liability offence for commercial organisations who "fail to prevent" bribery by associated persons. • Extra-territorial. • Directors/Senior Officers can be found personally liable – "consent or connive". • Act will come into force in [? ] – 3 months after publication of Mo. J guidance.

Key Elements of Compliance • Identifying the company's exposure to corruption risks as well as its risk appetite. • Developing/supplementing policies and procedures. • Assessing third party relationships and specific risk areas, e. g. potential liability resulting from third parties paying 'bribes' on your behalf. • Calibrating due diligence according to risk. • Identifying and dealing with "red flags". • Training and awareness – instilling a real culture of anticorruption amongst staff and third party service providers. • Regular monitoring and review.

How is corruption discovered? • Whistleblowers. • Change of management. • Acquisitions or disposals (due diligence). • Audit. • Change of regime overseas. • As a result of overseas investigation. • As a result of another investigation e. g. money laundering. • Specific intelligence gathering. • International cooperation. • Self-reporting.

Questions? ANY QUESTIONS?

Daren Allen Tel: +44 (0)20 3400 4170 Email: Daren. Allen@blplaw. com Aaron Stephens Tel: +44 (0) 20 3400 4163 Email: Aaron. Stephens@blplaw. com

The Bribery Act 2010 Anti-Money Laundering and Financial Crime Conference 18 March 2011 - London Daren Allen & Aaron Stephens This document provides a general summary only and is not intended to be comprehensive. Specific legal advice should always be sought in relation to the particular facts of a given situation. www. blplaw. com