Bribery and corruption - Guernsey18 Aug 2015
Historically, the law against bribery in Guernsey and Sark consisted of a common law offence which was rather uncertain in its ambit and seldom, if ever, tested in court. The position in Alderney was similar, albeit reinforced to some extent by a 1994 statute specifically aimed at prohibiting and punishing the bribery of public officials. In order to guarantee compliance throughout the Bailiwick with evolving international standards, and to enable the OECD Anti-Bribery Convention to be extended to the Islands, the Prevention of Corruption (Bailiwick of Guernsey) Law, 2003 was enacted.
The Prevention of Corruption Law restated and extended the law against corruption in all the Islands of the Bailiwick and implemented measures to combat bribery and corruption both domestically and internationally. Since 2011, the UK Bribery Act 2010 has also been shaping market practice and expectations because of its extra-territorial effect.
The Prevention of Corruption Law
Under the Prevention of Corruption Law, bribery is a serious criminal offence which is punishable with up to 7 years imprisonment and an unlimited fine. Under Bailiwick legislation, the offence of bribery is committed when a person, with corrupt intentions, attempts to influence an "agent" by offering an inducement on account of that agent doing any act or making any omission in relation to his office or position, or in relation to his principal's business or affairs generally. Similarly, the offence of requesting or receiving a bribe is committed when an "agent", acting corruptly, accepts or attempts to obtain an inducement in return for doing such an act or making such an omission.
The Law contains a long and non-exclusive list of persons who will be considered to be "agents" for these purposes. The list includes any person employed by or acting for another; any Bailiwick of Guernsey official; any foreign official and any company or other body corporate. However, there is no statutory definition of the necessary "corrupt" state of mind on behalf of the giver or receiver of the bribe. English case law may not be particularly helpful here, in view of the somewhat unsatisfactory state of the English authorities on the point, particularly in relation to whether or not an element of dishonesty is necessary. It is likely that, in a Guernsey trial, the Jurats would be directed to approach the meaning of "corrupt" on a case-by-case basis, as an ordinary English word which requires no further legal elaboration or analysis.
The statutory definition of acts of corruption is therefore different in the Bailiwick of Guernsey to the definitions adopted in certain other jurisdictions, notably the UK. This is largely a result of a decision to adopt one of a number of current international models for the analysis of corrupt transactions, is largely of academic significance only and is not likely to produce appreciable differences of approach in practice.
In line with international requirements, the Guernsey legislation creates specific offences in relation to corruption of foreign public officials.
The legislation is intended to have a degree of extra-territorial effect even beyond those specific offences, in that it does not matter for the purposes of a Guernsey prosecution whether the agent's functions or his principal's affairs or business have any connection with the Bailiwick. Anyone may be prosecuted in Guernsey if any part of a corrupt transaction takes place in the Bailiwick, notwithstanding that other acts constituting the offence may have been committed outside the Bailiwick. Similarly, in any case where the giver or receiver of a bribe is a Bailiwick person or body or a British national ordinarily resident in the Bailiwick, even if the corrupt transaction takes place entirely abroad, the Guernsey authorities may take action.
Furthermore, acts of bribery carried out abroad will constitute predicate offences for the purposes of the Bailiwick's anti-money laundering legislation. Any property obtained by virtue of the act of bribery (meaning not just the bribe itself, but also any advantage which was conferred as a result of the bribe) will fall to be treated as "proceeds of crime". It follows that businesses and individuals within the regulated sectors are obliged to have procedures in place for detecting potential proceeds of bribery as part of their general anti-money laundering obligations. Furthermore, if they become aware of matters which give rise to reasonable grounds for suspicion that someone connected to a transaction has been engaged in bribery anywhere in the world, they are required to report this suspicion to the proper authorities. Failure to do so without reasonable excuse is itself an offence, punishable with a term of imprisonment up to 5 years and an unlimited fine.
Impact of the Bribery Act 2010
The UK's Bribery Act 2010, which came into force on 1 July 2011, is also of direct relevance to many individuals and businesses in Guernsey, because of that statute's broad extra-territorial reach and the conceptually new corporate offence of failure to prevent bribery.
The Bribery Act was designed to replace the fragmented and complex patchwork of UK offences, some of which were contained in the Prevention of Corruption Acts 1889 to 1916 and some of which existed separately at common law. The Act has created two general offences relating to active and passive bribery (i.e. bribing another person and being bribed). As is the case with the Guernsey legislation, there is a discrete offence of bribing a foreign public official. The UK offences apply to legal persons as well as individuals and are punishable by imprisonment of up to 10 years and/or a fine.
A particular innovation of the Bribery Act was the creation of a new corporate offence of failure to prevent bribery. This offence is committed where a commercial organisation is found to have failed to prevent a bribe being paid on its behalf by a person "associated with" the commercial organisation, with the intention of obtaining or retaining business, or an advantage in the conduct of business, for that commercial organisation. Such "associated" persons include anyone who performs services for the commercial organisation and could therefore comprise its employees, agents, joint venture partners, subsidiaries or even independent contractors and suppliers. The offence is one of strict liability, is punishable by an unlimited fine, and has extra-territorial effect such that many businesses within the Bailiwick are well advised to take it into account when reviewing and monitoring their own internal and external policies and procedures.
Territorial scope of the Bribery Act
Anyone may be prosecuted in the UK for a bribery offence if any act or omission which forms part of the offence takes place in that jurisdiction.
In addition, the UK courts have jurisdiction to try such offences committed outside the UK where the person committing them has a "close connection" with the UK, by virtue of being a British national or a person ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership.
In relation to the corporate offence of failure to prevent bribery, provided the commercial organisation is incorporated or formed in the UK, or carries on a business or part of a business in the UK (wherever in the world it may be incorporated or formed) then the UK courts will have jurisdiction. The requirement of a close connection does not apply, and the commercial organisation can be liable for bribery on the part of a person who is neither a British national or UK resident, nor a body incorporated or formed in the UK. It does not matter whether the acts or omissions which form part of the offence of failure to prevent bribery took place in the UK or elsewhere.
It is, however, a defence to a charge of failing to prevent bribery for a commercial organisation to prove that it had in place "adequate procedures" designed to prevent persons associated with it from undertaking such conduct. The Bribery Act requires the Secretary of State to publish guidance about such procedures. The current guidance was published on 30 March 2011, in readiness for the Act's entry into force in July of that year.
Adequate procedures for preventing bribery – the six guiding principles
The March 2011 guidance is designed to be of general application and is formulated around six general principles, which provide a working framework for the creation of adequate (but not overly burdensome) policies and procedures.
- Proportionate procedures: A commercial organisation's procedures to prevent bribery by persons associated with it should be proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation's activities. They should also be clear, practical, accessible, effectively implemented and enforced.
- Top-level commitment: The top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) should be committed to preventing bribery by persons associated with it. They should foster a culture within the organisation in which bribery is never acceptable.
- Risk assessment: The commercial organisation should assess the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment should be periodic, informed and documented.
- Due diligence: The commercial organisation should apply due diligence procedures, taking a proportionate and risk-based approach, in respect of persons who perform or will perform services for or on behalf of the organisation, in order to mitigate identified bribery risks.
- Communication: The commercial organisation should seek to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training.
- Monitoring and review: The commercial organisation should monitor and review procedures designed to prevent bribery by persons associated with it and should make improvements as and where necessary.
Ultimately, what counts as "adequate" will depend on the bribery risks faced by the commercial organisation and the nature, size and complexity of the business.
Combating the risks of bribery
Despite the fact that the Prevention of Corruption Law has been in place in the Bailiwick of Guernsey for some time, the implementation of the UK's Bribery Act has received great publicity and may well herald the arrival of greater scrutiny on issues of bribery and corruption. Many individuals in Guernsey will be subject to both the Bailiwick and UK statutes by virtue of their nationality, as will many commercial organisations in the Bailiwick which carry on part of their business in the UK.
While the Bailiwick's Prevention of Corruption Law contains no specific offence of failure to prevent bribery, and therefore no defence of "adequate procedures", establishing effective anti-bribery and corruption policies and procedures in line with the UK guidance will reinforce general anti-money laundering compliance procedures, help to detect and prevent unscrupulous acts, reduce the risk of reputational damage and assist in defending any regulatory or criminal investigation or prosecution. In terms of winning business, there is also a growing trend for companies operating globally to seek to ensure that such standards are adhered to by all those with whom they establish relationships.
Bedell Cristin offers clients a "healthcheck" of their anti-bribery and corruption procedures to ensure that they are fit for purpose.