Report on OECD Convention Signed by Australia, UK and USA

Australia, UK and USA have signed the OECD Convention. Australia has signed the
Convention on 7 June 1971; UK has signed the Convention on 2 May 1961 and USA has signed
the Convention on 12 April 1961 and USA is the first to sign the Convention. The OECD
Convention purports to prevent bribery activities and its adverse economical impact. The
Common objective with which the three nations have signed the Convention is to prevent corrupt
practices like bribery. All the signatories to the Convention have signed the OECD Convention
on Combating Bribery of Foreign Public Officials in International Business Transactions. This
chapter shall discuss about the different approaches of this three countries towards prevention of
corruption practices, which shall be explained individually.
The OECD has been a driving force for preventing corruption. Surveys showed that about
70-75% of bribery allegations involved companies from OECD members1. As indicated in
earlier chapters, corruption discourages and/or distorts domestic and international investment.
Investors avoid investing in countries that are known for high levels of corruption. Corruption
also fragments loyalties and shatters confidence in public institutions, thereby destabilizing
countries’ political and social systems. The then US President Bill Clinton summarized the case
against corruption when signing amendments to the Foreign Corrupt Practices Act in 1998. “We
have long believed bribery is inconsistent with democratic values, such as good governance and
the rule of law. It is also contrary to basic principles of fair competition and harmful to efforts to
promote economic development”2.
The enactment by the US of its Foreign Corrupt Practice Act 1977 put pressure on the
OECD, which in 1994 recommended that its members criminalise the offering of bribes to
foreign public officials related to business transactions. In 1996 the OECD adopted another
1 Barbara George, et al "The 1998 OECD Convention: An impetus for worldwide changes in attitudes
toward corruption in business transactions." (2000) 37(3) American Business Law Journal 485-525.
2 William J Clinton "Statement by the President." Office of the Press Secretary, The White House (2000).

resolution recommending members denounce laws allowing tax deduction for bribes. The OECD
members thought that the best way to combat the bribery of foreign officials was a binding
convention and after lengthy negotiations the convention was signed in February 1999.3
Distinguishing between private and public functions is in practice far from easy in that
the Article leaves much scope for circumvention. A public function has been defined simply as
any function which is carried on by a public official defined above. However it may happen that
the public official engages in conduct which is beyond the scope of their authority. The question
in this case would be whether such functions are considered as public functions or not. On the
other hand functions of private individual in connection with the public authorities also create
confusion and make it difficult to identify what kind of function is being carried out. Thus, it is
not often easy to differentiate between a Public and a private function.
The OECD Anti-bribery Convention:
The OECD Convention obligates all members to enact domestic laws making the bribery of
foreign public officials a criminal offence. Article 1 states:
[E]ach party shall take such measures as may be necessary to establish that it is a
criminal offence under its Law for any person intentionally to offer, promise or
give any undue pecuniary or other advantage, to a foreign public official, in order
that the official act or refrain from acting in relation to the performance of official
duties, in order to obtain or retain business or other improper advantage in the
conduct of international business. Likewise, complicity in any attempt or any
3 The OECD Convention for Combating Bribery of Foreign Public Officials in International Business Transactions
was signed on 17 December 1997 and came into force on 15 February 1999. PUT THE REFERENE TO THE
OECD WEBSITE NOT A SECONDARY SOURCE, EXAMINERS WOULD BE VERY UNHAPPY ABOUT
THE USE OF ASECONDARY SOURCE FOR THIS BASIC INFORMATION..

conspiracy to bribe a foreign public official in any form described in Article (1) is
also regarded as a Criminal offence4.
In the same vein, Article (2) binds member states to affix liability to legal persons for
bribing public officials abroad. Article (3) stresses that sanctions on violators will be “effective,
proportionate and dissuasive.” It provides that in jurisdictions where criminal liability does not
apply to legal persons, such persons would be subjected to sufficient civil penalties to ensure that
any proceeds of that are confiscated. Article (4) discusses jurisdictional issues:
[E]ach party shall take such measures as may be necessary to establish its
jurisdiction over the bribery of foreign public officials when the offence is
committed in whole or part in its territory and each party which has jurisdiction to
prosecute its nationals for offences committed abroad shall take such measures as
may be necessary to establish its jurisdiction to do so in respect of the bribery of a
foreign public official, according to the same principles5.
Article (5) states that the investigation and prosecution of those charged with bribing
foreign officials ‘ shall not be influenced by consideration of national effect upon the
relations with another state, or the identity of the natural or legal person involved.’
Article (8), on financial books, records and disclosure reports, prohibits, ‘...the
establishment of off-the-book accounts.’ The Convention stresses the necessity for
member states to co-operate in their fight against bribery of foreign public officials.
Mutual obligations for legal assistance and extradition are treated in Articles 9, 10 and
11. Article 12 mandates full co-operation by member states in implementing the
4 Spahn, Elizabeth. "Implementing global anti-bribery norms from the foreign corrupt practices act to the OECD
Anti-Bribery Convention to the UN Convention Against Corruption." (2013).
5 Paulus, Michal, and Eva Michalikova. OECD Anti-Bribery Policy and Structural Differences Inside the EU. No.
2016/23. Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, 2016.

Convention: ‘[They] shall co-operate in carrying out a programme of systematic follow-
up to monitor and promote the full implementation of this Convention.’6
Limitations of the OECD Convention:
This Convention, despite its successes in reducing bribery by state members, has its
limitations as compared to the UK Bribery Act 2010. Article (1) defines the act of bribery as
‘.any person intentionally offer[ing] or give[ing] any undue pecuniary or other advantage to
foreign public official”. This ignores passive bribery. The Commentary on the Convention states
says that this Convention deals only with what is in the law of some countries referred to as ...
active corruption. There is a difference between the terms’ bribery and corruption’ where bribery
is a particular offence that is concerned with the practice of offering something, usually, money
and purporting to obtain any illegal advantage. On the other hand the term’ corruption’ refers to
abuse of a position of trust conducted for the purpose of gaining an undue advantage. Active
corruption involves promising to give a bribe, in contrast to ‘passive bribery’, the offence
committed by the official ‘who receives the bribe.’ The Article (1) definition of bribery is weak,
since it only deals with donors and ignores recipients (the bribed officials).7.
The further problem is that the Article (1) definition of a ‘foreign public official’ is too
narrow. It is limited to persons exercising functions for a foreign country, a public enterprise or
to officials or agents of public international organisations, ignoring politicians, political parties
and party members.8 Corruption and bribery are common among politicians, party officials and
6 Spahn, Elizabeth K. "Multijurisdictional Bribery Law Enforcement: The OECD Anti-Bribery Convention." Va. J.
Int'l L. 53 (2012): 1.
7 Tarullo, Daniel K. "The Limits of Institutional Design: Implementing the OECD Anti-Bribery
Convention." Va. J. Int'l L. 44 (2003): 665.
8 Pacini, Carl, Judyth A. Swingen, and Hudson Rogers. "The role of the OECD and EU Conventions in
combating bribery of foreign public officials." Journal of Business Ethics 37.4 (2002): 385-405.

political candidates. This limited definition of bribery also excludes bribes paid to officials of
state owned companies. A public official is any person holding a position of an official authority
which is conferred to they by the state. In other words the person holds an administrative,
judicial or legislative authority in any form whether elected or appointed.9.While Article (1), says
that ‘foreign public official’ includes ‘any person exercising a public function for foreign
country, for a public agency or public enterprise’, the Commentary Article (15) to the
Convention states that:
An official of a public enterprise shall be deemed to perform a public function
unless the enterprise operates on a normal economic basis in the relevant market10.
It also omits the bribery of foreign subsidiaries. Article (2) of the Convention mentions bribery
of subsidiaries but only indirectly, when it states:
[E]ach party shall take any measures necessary to establish that complicity in,
including incitement, aiding and abetting, or authorization of an act of bribery of a
foreign public official shall be a criminal offence.
Although this provision may be read as prohibiting parent companies in state members
from using foreign subsidiaries as conduits for bribes, it would be hard to implement, because
legally proving the acts of legally distinct subsidiaries are connected with parent companies
would be extremely difficult.11
It also ignores acts of bribery committed independently by subsidiary bodies and
disguised bribes, such as favouritism shown to relatives of foreign public officials, both of which
9 Harms, Brian C. "Holding Public Officials Accountable in the International Realm: A New Multi-Layered
Strategy to Combat Corruption." Cornell Int'l LJ33 (2000): 159.
10 Carr, Indira M., and Opi Outhwaite. "The OECD Anti-Bribery Convention Ten Years On." (2009).
11 D'Souza, Anna. "The OECD anti-bribery convention: changing the currents of trade." Journal of Development
Economics 97.1 (2012): 73-87.

facilitate circumvention. So also does the Convention’s interpretation of the phrase ‘other
improper advantage in the conduct of international business’ in Article (1). The Commentaries
on the Convention in trying to clarify the meaning of “important advantage” states in (8):
It is not an offence, however, if the advantage was permitted or required by the
written law or regulation of the foreign public official’s country, including case
law.
In most developing countries politicians and political parties and dominant senior public
officials can influence or amend existing laws or draft new ones to serve their interests.
Permitting all payments, whether justified or not, so long as they are allowed in a foreign
country, may facilitate bribery and so defeat the intent of the Convention. In countries whose
‘culture’ allows such payments, the permission is usually contained in unwritten traditions rather
than written laws. Corruption is a major obstacle for the proper development of Libya12.
Widespread corruption has infected almost all sectors of Libya and oil industry along with public
procurement are among the most hit sectors in the county by corruption. Favouritism and Bribery
are common practices in most sectors and mostly all business suffer unethical competition from
business owned by the states who also have domination in the local market. Under Gaddafi’s rule
the situation got worse in the period post revolution13. There is a defected institutional structure
to combat corruption in the county and violence along with political instability undermines the
rule of law14. The process for drafting a written constitution is still under progress of the Libyan
Constitution Drafting Assembly and because of the delay the legal framework is still extracted
12 Domoro, Omer M. Othman, and Syed Omar Syed Agil. "Factors Influencing Police Corruption in Libya-A
Preliminary Study." International Journal of Economic and Management Science 2.2 (2012): 25-35.
13 Domoro, Omer M. Othman, and Syed Omar Syed Agil. "The influence of organizational culture on police
corruption in Libya." Journal of Business and Management 2.5 (2012): 33-38.
14 Rose-Ackerman, Susan, and Bonnie J. Palifka. Corruption and government: Causes, consequences, and reform.
Cambridge university press, 2016.

from the constitutional declaration coming into force when Gaddafi was oust. The security
apparatus along with the Judiciary also proving to be ineffective which is making the proper
implementation of law very difficult15.
It lacks effective enforcement mechanisms. Determining which corporations do not
comply with its demands and deciding who is bribing whom, are left to the police forces of state
members. They may be lax in discharging this function, as each country’s police may look to its
own interests. The appropriate solution was to establish a central body entrusted with monitoring
all member countries’ compliance with the Convention.
For all its limitations, the OECD Convention is a step forward in combating bribery and
corruption.
The US Anti-Corruption Legislation has been referred to in order to discuss in details the
concerns related to bribery of foreign officials. The Foreign Corrupt Practices Act of 1977 is a
Federal legislation in the United States that mainly deals with accounting transparency
requirements stipulated under the Securities Exchange Act 1934 and issues relating to bribery of
foreign officials.
US Foreign Corrupt Practices Act 1977
The US legislation is contained in the Foreign Corrupt Practices Act 1977. An
important aspect of the legislation is its s extra-jurisdictional reach. Through the process of
Extra-jurisdictional reach a government may exercise authority over any territory which is not
under its jurisdiction however an understanding has to be present with the other government
having jurisdiction of such place in order to carry out this process. The legislation 1977 prohibits
15 Rose-Ackerman, Susan, and Bonnie J. Palifka. Corruption and government: Causes, consequences, and reform.
Cambridge university press, 2016.

U.S. firms and individuals from making payments as bribes to foreign officials for the purpose of
a business deal and in contrary to the duties of the foreign officials. The Foreign Corrupt
Practices Act states that it is unlawful to bribe any employee or officer of a foreign government
or department or any person who is works on behalf of government, agency, department or
instrumentality in an official capacity. A facilitating payment is a payment that is made to a
government official or public. Such payment acts as incentive for the officials to complete some
action or procedure expeditiously for the benefit of the person making such payment. The
process also refers to the legal provisions of a country going beyond its territories in connection
to authorising the court of the other country to impose their jurisdiction against persons before
them in relation to an act done outside the country.
The FCPA applies only to the bribery of non-US public officials (other US statutes
criminalise commercial bribery e.g. the Travel Act 1961) and significantly impacts upon US
business in relation to corruption and bribery offences. This is because companies which fall
under the control of the FCPA are increasingly becoming wary of buying businesses which do
not come under the provisions of the FCPA because of the fear that may be subjected to
liabilities that would lead to expenditure. In addition, businesses that do not come under the
provisions of FCPA show significant reluctance in getting associated with transactions which
may potentially bring them under the control of the FCPA. The consequences arising out of
FCPA are significantly visible in post transaction integration cost such as proper compliance of
the FCPA of a company which was not under the provisions of the act and transaction cost
denoting efforts of increased due diligence. The FCPA criminalises conduct by certain classes
of persons and entities making payments to foreign government officials with the ‘corrupt
intention’ of obtaining or retaining business. More specifically provided by the FCPA

The anti-bribery provisions of the FCPA prevents the intentional use of the mails or any
source of instrumentality of interstate commerce to be used dishonestly pertaining to any offer,
payment, that has been promised to be paid, or the authorization of the payment in monetary
form or anything valuable to any person. The use of such sources are prohibited, in particular,
with teh knowledge that all or a portion of such money or valuable thing offered, given or
promised, directly or indirectly, to a foreign official with a view to influence the foreign official
in his or her official capacity. The provision prohibits the use of portion of such money or
valuable thing for inducing the foreign official to do or omit to do any conduct that is
contravenes his/her lawful duty, or for securing any improper advantage to assist in obtaining or
retaining business for or with, or directing business to, any person.16
The FCPA applies to all US persons and certain foreign issuers of securities. According
to the preamble of OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions, bribing foreign public officials leads to serious political and
moral concerns and weakens good governance and economic development. It further results in
distortion of international competitive conditions. Amendments to the Act in 1998 ensured
conformity with the OECD Convention while simultaneously ensuring the anti-bribery
provisions also applied to foreign firms and persons acting directly or via agents to make corrupt
payments in the ‘territory’ of the US. The term ‘territory’ has been broadly interpreted by the
Department of Justice as their Criminal Resource Manual for prosecutors indicates that it applies
‘whenever a foreign company or national causes an act to be done within the territory of the
United States by any person acting as that company's or national's agent’.17
16 The Foreign Corrupt Practices Act 1977 (FCPA), 15 USC 78dd-1, et seq.
17 Deming, Stuart H. "The potent and broad-ranging implications of the accounting and record-keeping provisions of
the Foreign Corrupt Practices Act." J. Crim. L. & Criminology 96 (2005): 465.

This interpretation enables the prosecution of foreign nationals who have never been to
the US, provided that they caused some act in furtherance of the offence to occur in the US, and
of foreign companies who are liable for acts carried out on their behalf – a form of strict liability.
Prosecutions are often brought in relation to the accounting provisions of the FCPA that require
companies with securities listed on any US stock exchange to (a) make and keep books, records
and account that accurately and fairly reflect the transactions of the corporation and (b) devise
and maintain a system of internal accounting controls.
There are instances, which is the evident of the fact that in US, very few disincentives is
provided to several bribe-givers in international transactions. The FCPA statute in the US
considers payment of bribes by the US firms to abroad as an offence which calls for a change.
The OECD Ministers have agreed to such change in the G7 Summit held in June which forms
the issue that is proposed in the OECD Convention. Such provisions enabled Siemens and
Innospec to be prosecuted in the US (see chapters 4.4 and 4.5). Another instance of activities
related to foreign corrupt practices that was carried out in the USA was the Wa-tergate Scandal.
It involved illegal political payment made by several US corporate leaders.
The US Act cannot be viewed in isolation from other legislative provisions whose purpose is to
deter corruption, particularly important is whiste blower legislation.
Whistle-blower legislation
In the US, whistle-blowers are provided both protection and incentives. The Securities and
Exchange Commission (SEC) is authorised to pay eligible individuals who provide information
are eligible by providing good quality information which constitutes an action over $ 1 million

under the FCPA18. The monetary benefits provided to such individuals range from 10-30% of the
total penalties imposed. In order to supervise the SEC’s Program related to Whistle-blowers the
office of Whistleblower has been initiated. The law prohibits any kind of retaliation with respect
to whistleblowers and fines have been imposed by the SEC on companies in relation to actions
such as removing the whistleblowers from their positions, giving the investigation
responsibilities to the whistleblowers of the action which has been reported by them, changing
the job function of the whistleblowers, taking away the supervisory responsibility of the
whistleblowers and marginalising whistleblowers.
There may be leniency, which may be created in relation to organizations having a self-
reporting policy of reporting and cooperating with the department as identified by the
Department of Justice and SEC. The decision related to disclosing voluntarily is fact dependent
and complex and has broad consequences, which have to be considered carefully. The policy of
the Department of Justice is the primary policy related to the federal prosecution of the business
organizations. A memorandum had been published by the DOJ which described the FCPA pilot
program to motivate voluntary decisions and self-reporting in April 2016. The report of
investigation contains the SEC’s policy with respect to section 21(a) of the Securities Exchange
Act 193419.
American Anti-Corruption Act 1977
18 Smarzynska, Beata K., and Shang-Jin Wei. Corruption and composition of foreign direct investment: Firm-level
evidence. Vol. 7969. Cambridge, MA: National bureau of economic research, 2000. NO. NO NO, YOU must go to
the original source NOT someone else saying what it is. WHAT IS THE ACT, WHAT IS THE SECTION, WHAT
DOES THE ACT SAY
19 Securities Exchange Act 1934 (US) WHAT SECTION

The American Anti-Corruption Act (AACA)20 covers three areas. including the prevention of
political bribery, overhauling lobbying, ending illegitimate money through the dramatic
enhancement of transparency and creating citizen funded elections to give every voter a voice.
The provisions of the FCPA apply to Domestic Concerns, Issuers, agents acting on behalf of
domestic concerns and anyone who breaches the provisions of the FCPA within the territories of
the US. ’'Issuers’ means, any business organization which has its shares listed on the US
exchange, companies having shares in “Over the counter market” and having the requirement of
filing reports with the SEC periodically. Out of jurisdiction issuers who have their American
Depository Receipts listed on US exchanges are also considered to be as issuers under the FCPA
subjected to a few exceptions.
The term of domestic concern is even broader and includes any US national, citizen or resident
along with any business organization which is established under US laws or having its primary
dealing place in the US. Entities and foreign nationals are covered by the term “person” who
breach the provisions of the FCPA.
You need a paragraph about why this is all important, how these statutory provisions interact to
combat bribery and corruption. Note also how corruption is tackled on a number of different
fronts not just simply criminal provisions. A sentence indicating that these types of provisions
could be considered by Libya in deciding what is the best approach to corruption and its
prevention
It might also be good to give some recent examples of its application in relation to foreign
nationals. If we remember correctly we have previously sent quite a few from newspaper
reports that you could include.
20 Steiner, George A., and John Steiner. Business, government and society. New York, 1994. Who is the publisher?

5.7.1 Active and passive bribery UK Bribery Act 2011
The UKBA contains four offences: the general offences of active and passive bribery, the bribery
of foreign officials, and the failure of commercial organisations to prevent bribery.
The two general offences are in many respects similar to previous laws such as the Prevention of
Corruption Act 1906, Public Bodies Corrupt Practices Act 1889 and the Prevention of
Corruption Act 1916. Section 1 outlines the offence of bribing another person:
(1) A person (“P”) is guilty of an offence if either of the following cases applies.
(2) Case 1 is where— (a) P offers, promises or gives a financial or other advantage to another
person, and (b) P intends the advantage— (i) to induce a person to perform improperly a relevant
function or activity, or (ii) to reward a person for the improper performance of such a function or
activity.
(3) Case 2 is where— (a) P offers, promises or gives a financial or other advantage to another
person, and (b) P knows or believes that the acceptance of the advantage would itself constitute
the improper performance of a relevant function or activity. (UK BA, 2010, Section 1) Section 2
covers offences related to being bribed: (1) A person (“R”) is guilty of an offence if any of the
following cases applies. (2) Case 3 is where R requests, agrees to receive or accepts a financial
or other advantage intending that, in consequence, a relevant function or activity should be
performed improperly (whether by R or another person). (3) Case 4 is where— (a) R requests,
agrees to receive or accepts a financial or other advantage, and (b) the request, agreement or
acceptance (5) Case 6 is where, in anticipation of or in consequence of R requesting, agreeing to
receive or accepting a financial or other advantage, a relevant function or activity is performed
improperly— (a) by R, or (b) by another person at R's request or with R's assent or acquiescence.

(UK BA, 2010, Section 2)itself constitutes the improper performance by R of a relevant function
or activity. (4) Case 5 is where R requests, agrees to receive or accepts a financial or other
advantage as a reward for the improper performance (whether by R or another person) of a
relevant function or activity.
These offences cover active and passive bribery and in doing so introduce the key
concepts of ‘relevant function or activity’ and ‘improper performance’. The former includes any
function of a public nature and any activity connected with a business, performed in the course
of a person’s employment or performed by or on behalf of a body of persons (whether corporate
or unincorporate). The person performing the function or activity must be expected to perform it
in good faith or impartially or is in a position of trust by virtue of performing it. The latter will be
determined by whether the function or activity is performed in breach of a relevant expectation
and there is a failure to perform the function or activity, which is itself a breach of a relevant
expectation. The function or activity is relevant even if it has no connection with the UK and is
performed in a country or territory outside the UK.
The US deploys a tougher regime than UK in screening potential extremists who attempts
to enter into US. At US Borders, fingerprints were detected of every person at arrival to ensure
no one enters with false IDs. In UK, illegal immigrants have been found trying to enter without
fingerprint checks. Further, the US deploys stringent intelligence network to prevent the
extremists from entering into the country such as CIA and national Security Agency. On the
other hand, UKBA usually applies a less stringent approach in contrast to the ‘vigorous, pro-
active approach’ including extensive intelligence to track the potential terrorist threats. The US
Customs and Border Protection Agency (CBP) has 60,000 employees as compared to UK
Border Force that has 7600 staffs, which is one eighth the size if US Counterpart. Libya should

adopt the Border security approach followed by the US to prohibit entry of potential extremists
into the country for the security and safety of the country and its citizens.
5.7.2 Bribing a foreign public official
Section 6 is of most significance for this research. It outlines the offence or bribery of foreign
public officials. (1) A person (“P”) who bribes a foreign public official (“F”) is guilty of an
offence if P's intention is to influence F in F's capacity as a foreign public official. (2) P must
also intend to obtain or retain— (a) business, or (b) an advantage in the conduct of business. (3)
P bribes F if, and only if— (a) directly or through a third party, P offers, promises or gives any
financial or other advantage— (i) to F, or (ii) to another person at F's request or with F's assent or
acquiescence, and (b) F is neither permitted nor required by the written law applicable to F to be
influenced in F's capacity as a foreign public official by the offer, promise or gift. (UK BA,
2010, Section 6).
This offence incorporates the OECD requirement for the supply side of bribery in relation to
foreign public officials as well as the active and passive bribery requirements of domestic and
foreign bribery in the UN and CoE Criminal Law Conventions. The UKBA retains a similar
definition of a ‘foreign public official’ to that of the above Conventions and again includes that
bribery only occurs where the applicable national law of the foreign public official neither
permits nor requires the official to be influenced. Conceptually, there is an explicit focus placed
on the intention of the bribe, which must also aim to obtain or retain a business or business
advantage, which ties into the focus on international business transactions and the location of
corporate bribery within transnational markets. In some respects, this ‘business’ aspect creates a
narrower test than the general offences, but conversely, the broader focus on the ‘intention to
influence’ rather than induce ‘improper performance’ as in the general offences, creates a wider

test. That said, under the UKBA, it is only illegal to bribe a foreign official if it is in connection
to business transactions, although it may be a rarity that a bribe would be given in other
circumstances in this context. Hypothetically, a corporation may bribe a foreign official to
encourage changes in policy to reflect the UK’s general interests, for example, with no specific
business advantage linked to the bribe.
5.7.3 The corporate offence Section 7 has provided the most concern within the private sector.
This section creates a new offence of failure of commercial organisations to prevent bribery: (1)
A relevant commercial organisation (“C”) is guilty of an offence under this section if a person
(“A”) associated with C bribes another person intending— (a) to obtain or retain business for C,
or (b) to obtain or retain an advantage in the conduct of business for C. (2) But it is a defence for
C to prove that C had in place adequate procedures designed to prevent persons associated with
C from undertaking such conduct21.
In the UK, criminal sanctions, as one mechanism for enforcement, may have limited impact on
controlling corporate bribery because of the ease at which senior managers can subcontract
offending behaviour and distance themselves from prosecution. However, the s. 7 offence is
intended to reverse current corporate liability laws by introducing the possibility of ‘strict
liability’ for corporations failing to prevent bribery; the company may be found criminally liable
even if no one within the company was aware of the bribery. The section means that directors
and managers have to that no corruptive practices take place within their organization. This
would enhance and encourage the process of whistleblowing in the organizations as the actions
of one would be deemed to affect the liability of others.
21 Bribery Act 2010 s.7

‘With the new Bribery Bill you can start off like the Americans do which is proving that
a bribe was paid by someone associated with the company – the association thing is quite
wide – in connection with the business, obtaining/retaining that sort of thing or gaining
an advantage in the course of conducting that business. The only thing then is that you
test the ultimate controlling company’s regime designed to stop that sort of thing going
on – adequate procedures. So it’s not a controlling mind, it’s the opposite way round.
Rather than actually having the board expressly authorise the bribery, what you have got
is the board not having a good enough regime to stop it and it has got to permeate the
whole of the fabric of a group’s business.
The section 7 offence allows companies to be criminally prosecuted for the actions of its
‘associated persons’ (for a more detailed discussion of corporate criminal liability see chapter
6.4). Section 8 defines ‘associated person’ as a person who performs services for or on behalf of
the company. Accordingly, this person may be the company’s employee, agent or subsidiary. A
recent PricewaterhouseCoopers event highlighted this third party integrity risk to companies22. It
was stated that the average FTSE89 100 company has over 50,000 external entities that it
regularly interacts with and for large MNCs this can be over 100,000. Section 7 includes a
defence for companies which is available if they are able to prove that ‘adequate procedures’
(see 5.7.7 UKBA Guidance below) were in place to prevent ‘associated persons’ committing
bribery. This places the emphasis on corporations to ensure anti-corruption procedures and
compliance regimes are robust enough to prevent employees, agents, third parties or
intermediaries acting for the company from committing bribery. The implications of this are a
shift away from limited approaches of criminal prosecution towards the promotion of non-
22 Managing Third Party Risk: Only As Strong As Your Weakest Link (2017) PwC
<http://www.pwc.co.uk/services/forensic-services/insights/managing-third-party-risk.html>.

enforcement mechanisms and variations thereof (e.g. enforced self-regulation and self-
regulation).23
5.7.4 Facilitation payments
The topic of facilitation payments has created much concern amongst businesses, where it has
been argued that such payments are common and even suggested their criminalisation places UK
business ‘on an uneven playing field’. Facilitation payments are otherwise known as ‘small
bribes paid to facilitate routine Government action’. In some countries, these form of payments
are considered as normal payments. In simply words, facilitation payments are used to convince
the government officials for making them do a task that they are statutorily obligated to perform.
Although it is often argued that these form of payments are essential for their operations in some
regions, however, the difference between a bribe and a facilitation payment is often unclear. For
example, these could include lorry drivers required to make small payments to pass through
borders, or payments given to officials to speed up the process of obtaining a trading licence or
passport. Such payments could trigger the section 6 offence of bribery of foreign public officials.
Where there is intention to induce improper conduct and where the acceptance of such
payments is improper, the section 1 offence of active bribery could be triggered and therefore
also the section 7 corporate offence. Facilitation payments were unlawful under previous law and
unlike the US FCPA, the UKBA does not provide any exemption for such payments.24 This
position ties in with the 2009 Recommendation of the OECD which acknowledges the corrosive
effect of small facilitation payments, particularly on the sustainable economic development and
23 Nicholas Lord, Regulating Transnational Corporate Bribery In The UK And Germany (Cardiff University School
of Social Sciences, 2011) <https://orca.cf.ac.uk/26844/1/Nicholas%20Lord_PhD%20Thesis_May%202012%20-
%20NEW.pdf>.
24 Jordan, Jon. "The OECD's call for an end to corrosive facilitation payments and the international focus on the
facilitation payments exception under the foreign corrupt practices act." (2010) 13 U. Pa. J. Bus. L. 881.

the rule of law, and requests Member countries to encourage companies to prohibit or discourage
their use. The US legislation, however, predated the OECD Convention, whereas the UK’s
position was clearly influenced by the international pressure from the OECD, although
facilitation payments were illegal under previous UK law25.
The likelihood of being prosecuted for facilitation payments is low, although corporations cannot
rely on this. That said, the Government recognises the problems of international commerce in
certain sectors in some parts of the world and that the eradication of facilitation payments is a
long-term objective requiring economic and social progress and sustained commitment to the
rule of law where such payments are a problem. This requires collaboration between
international bodies, governments, the anti-bribery lobby, business representative bodies and
sectoral organisations. Thus, as Richard Alderman, Director of the Serious Fraud Office (SFO)
and member of the OECD advisory group on Bribery, recently stated:
…the prospects of the SFO prosecuting shall we say a $50 one off facilitation payment
picked up by a corporate and remedied by them is remote in the extreme. That remains
my view. This view though does not mean that it is open to companies to allow small
facilitation payments of up to a certain amount each year. This becomes a course of
conduct which is likely to lead to consideration by the SFO of a prosecution.26.
Such figures are not a particularly useful measure against which corporations can monitor their
facilitation payments given differences in exchange rates, different cultural requirements or the
extortion element of much facilitation payments. The common law offence of ‘duress’ is very
25 Palmer, Axel. A critique of the counter economic crime regime in the United Kingdom, with reference to the
United States of America and Australia. Diss. University of the West of England, 2014. IT WOULD BE MUCH
BETTER TO REFER TO THE UK LAW rather than someone’s unpublished dissertation.
26 Lord, Nicholas. Regulating corporate bribery in international business: Anti-corruption in the UK and Germany.
Ashgate Publishing, Ltd., 2014.

likely to be available as there are circumstances in which individuals have no choice but to make
payments in order to protect against loss of life, limb or liberty. Thus, small one-off facilitation
payments are unlikely to be prosecuted by the UK authorities. This is due to the limited
resources of Serious Organized Crime Agency (SOCA), the SFO???? to fully enforce the law
and due to a high level of discretion as a willingness to increase the reporting of criminal activity
is likely to result in no prosecution or investigation. However, since the UKBA came into force,
individuals and corporations are required to inform SOCA or its planned successor body, the
National Crime Agency (NCA), of any facilitation payments made. This obligation to self-report
is also in line with the OECD’s 2009 Recommendation that companies ‘must in all cases be
accurately accounted for in such companies’ books and financial records’ (OECD, 2009:
recommendation VI, ii 96 ). The real risk for business individuals making small facilitation
payments (as well as the directors of companies who may become liable for aiding and abetting
the payments) arises when the acquisition, use or possession of the criminal property (e.g.
financial profit from such a payment) is not disclosed to the authorities. It is then that such
individuals will be committing money laundering offences under the Proceeds of Crime Act
2002 (POCA). Failure to report places the individual that makes the facilitation payment at risk
of criminal prosecution for the offence of money laundering, with potential for 14 years
imprisonment and an unlimited fine.
5.7.5 Corporate hospitality
A further area of concern is that of corporate hospitality and the potential for such hospitality,
promotional or other business expenditure to amount to bribery under the UKBA , although
some media articles on the matter have been inaccurate and sensationalist27. The UKBA
27 Nicholas Lord, Regulating Transnational Corporate Bribery In The UK And Germany (Cardiff University School
of Social Sciences, 2011) <https://orca.cf.ac.uk/26844/1/Nicholas%20Lord_PhD%20Thesis_May%202012%20-

Guidance 100 , however, has made clear that such expenditure to improve a commercial
organisation’s image, or establish cordial relations, is accepted as an established and important
part of doing business and such behaviour is not intended to be criminalised under the UKBA
providing it is reasonable and proportionate. For example, covering reasonable travel and
accommodation expenses to allow foreign officials to visit a workplace, or hospitality involving
fine dining and tickets to a football match at the given location would not raise the necessary
inferences. That said, it is recognised that such behaviour can be a bribes under section 6. To
amount to a bribe, it would be necessary to prove an intention for a bribe to influence an official
in their official role and thereby secure business, or a business advantage. It will be a question
for prosecutors and, later, jurors whether, on the totality of the evidence in such cases (e.g. type
and level of advantage offered, manner and form in which the advantage is provided, and level of
influence official has on awarding contracts), the unavoidable inference is that the expenditure
was intended to influence the official to grant business or a business advantage in return.
Extra-territorial jurisdiction
Section 12 of the Act gives the UK courts jurisdiction over sections 1, 2 or 6 offences committed
in the UK but also over offences committed outside the UK where the person has a close
connection to the UK.28 This includes British nationals, individuals ordinarily resident in the UK,
bodies incorporated in the UK or Scottish partnerships. This close connection requirement does
not apply to section 7 (the corporate offence). Under section 7, if an organisation is incorporated
or formed in the UK, or the organisation carries on a business or part of a business in the UK,
irrespective of where it is incorporated or formed, the UK courts will have jurisdiction. So how
does this compare with how US deals with the issue? Is there a prefereable approach?
%20NEW.pdf>.
28 Bribery Act 2010 (2017) Legislation.gov.uk <http://www.legislation.gov.uk/ukpga/2010/23/section/12>.

The UKBA Government Guidance
The UKBA, in particular section 7, was subject to much lobbying from national and
international businesses before and, especially, after its passage.29. The issues of ‘adequate
procedures’ and what constitutes ‘carrying on business’ in the UK were a particular focus. The
Government, under section 9 of the Act, was required to publish guidance on its provisions. This
Guidance was published on 30 March 2011, three months before the Act came into force 1 July
2011. The Guidance addressed these issues but received a mixed response (as perhaps may be
expected). For example, TI branded the guidance ‘deplorable’ and argued it would weaken the
Act - Chandrashekhar Krishnan, Executive Director of TI UK explained:
‘The Bribery Act, as passed by the last Parliament, is one of the best anti-bribery laws in
the world. But the Guidance will achieve exactly the opposite of what is claimed for it.
Parts of it read more like a guide on how to evade the Act, than how to develop company
procedures that will uphold it.’30
Conversely, many private sector organisations have made reference to the ‘common sense’
approach of the Guidance. The role of lobbying from business groups may have played a
significant role in this, as the perspective of one leading private sector organisation indicates:
‘…the final version *as compared to an earlier consultation draft+ is in our view a
significant improvement and we are pleased to note that many of the concerns we raised
in our response to the consultation draft have to a lesser or greater extent been addressed’
(Personal Email Correspondence, 2011)
29 Nicholas Lord Regulating corporate bribery in international business: Anti-corruption in the UK and Germany.
Ashgate Publishing, Ltd., 2014.
30 Bribery Act 2010 Guidance - GOV.UK (2017) Gov.uk <https://www.gov.uk/government/publications/bribery-act-
2010-guidance>.

The Guidance addresses the concept of ‘adequate procedures’ which raised a series of questions
following the passing of the UKBA. Six guiding principles (proportionate procedures; top-level
commitment; risk assessment; due diligence; communication (including training); and,
monitoring and review – these principles are discussed in more detail in chapter 6.5.3) are set out
along with commentary and case study examples. The Guidance makes clear that these are not
prescriptive or a one-size-fits-all approach, acknowledging that small and medium enterprises
(SMEs) will likely require different procedures to MNCs. The principles promote a risk-based
and contextual approach to managing bribery risks, with the Guidance recognising that no
policies or procedures are capable of detecting and preventing all bribery.
Concern has been raised over so-called ‘carve-outs’ of the Guidance. The Guidance states the
following in relation to ‘carrying on business’ in the UK:
The government would not expect, for example, the mere fact that a company's securities
have been admitted to the UK Listing Authority's Official List and therefore admitted to
trading on the London Stock Exchange, in itself, to qualify that company as carrying on a
business or part of a business in the UK and therefore falling within the definition of a
“relevant commercial organisation” for the purposes of section 7. Likewise, having a UK
subsidiary will not, in itself, mean that a parent company is carrying on a business in the
UK, since a subsidiary may act independently of its parent or other group companies.
(Paragraph 36, Ministry of Justice Guidance).
This statement raises two issues: first, overseas companies may be exempt from the Act; and,
second, parent companies with UK subsidiaries may not satisfy the test of ‘carrying on business’
in the UK. Interpretations of this statement can, however, vary. For example, a UK based
investors group in conjunction with the International Corporate Governance Network expressed

their concern that the Guidance exempts certain overseas issuers in the London market from the
purview of the UKBA. This ‘mooted carve out’, as it was termed, would be based on these
companies having no other business presence in the UK apart from raising capital. They
challenged the possible interpretation that this does not amount to carrying out business in the
UK and argued that such a ‘carveout’ could adversely impact upon the integrity of the London
financial market, disadvantaging UK companies. Chandrashekhar Krishnan of TI went even
further, claiming that ‘foreign companies could be listed on the London Stock Exchange, pay
bribes and get away with it’ which will disadvantage all honest companies and go back on the
Government’s stated aim of creating a level playing field through the Act’s extra-territorial reach
(Krishnan, 2011: TI website104). Conversely, it has been argued that the inclusion of such
overseas companies within the jurisdictional reach of the Act would negatively affect London as
a capital raising market, as in the case of Kazakh companies that may be diverted away from the
London Stock Exchange105.s. On this basis, it is possible for a parent company with a UK
subsidiary to be prosecuted for bribery by one of its other subsidiaries in a third country. For
Alderman, this enables ethical UK companies not to be disadvantaged by foreign corporations
using different standards and using bribery to undermine UK businesses.
Conclusion
From the above discussion, it can be inferred that there are certain essential differences
between the UK Bribery Act 2010 and the U.S. Foreign Corrupt Practices Act (FCPA). The
UK Bribery Act 2010 has a wider scope as compared to the FCPA in three respects. Firstly, the
Bribery Act seizes persons who offers bribe to any person whereas the U.S. FCPA is applicable
to the corruption of foreign officials. The ‘expectation test’ stipulated under section 5(1) of the
Bribery Act while determining whether a person has bribed another person. Secondly, the

Bribery Act includes a stand-alone offence of bribing a foreign public official, which does not
require a corrupted intention to be established against the briber unlike the FCPA bribery
offense. Thirdly, under the Bribery Act, it is an offense to request, receive, and accept or agree to
a bribe. The FCPA is applicable to persons offering or giving a bribe and not to persons who
accepts such bribe.
Further, the other essential difference between the two statutes lies in the fact under the
FCPA any bribery offense may be defended on the ground that such payment are reasonable and
are bonafide business expenses. Under the Bribery Act, there are no such defences applicable
under Bribery Act; hence, organisations must ensure that business costs paid to the third parties
are reasonable expenses. Individuals who are convicted of any criminal offence committed under
the Bribery Act shall be sentenced imprisonment for a period of 10 years whereas individuals
committing offenses under the FCPA shall be sentenced 5 years imprisonment for every offence.
Therefore, it is convenient and better for Libya to adopt the UK based approaches
embedded in the Bribery Act as this legislation encompasses public/private and all other
commercial activities unlike the FCPA Act that is restricted to the bribing of foreign officials.
The Bribery Act is applicable to both public and private sectors unlike the FCPA are applicable
to bribery of foreign public officials. Further, the Bribery Act does not exclude facilitation
payments unlike the FCPA.

http://www.acc.com/legalresources/quickcounsel/UKBAFCPA.cfm?makepdf=1
AND ALSO https://www.bba.org.uk/wp-content/uploads/2014/05/ABC_guidelines_designed-
final.pdf which has a specific section on the US v UK approaches.
Do a literature review using Google Scholar and SSRN for critical commentary on the US and
UK acts. What material can be found in the Rose Akerman book which I have yet to read? The
chapter at this stage does not have any critical reflection on the legislation or materials.