Bribery Act vs. FCPA: A Comparison

This assignment examines the key differences between the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act (FCPA). It explores the wider scope of the UK Act, encompassing both public and private sectors, while the FCPA focuses on bribing foreign officials. The analysis delves into specific provisions, defenses available, and potential implications for businesses operating internationally, particularly recommending the UK Bribery Act as a more comprehensive model for Libya.

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3&5
Introduction
According to Benjamin the global scale and nature of the oil and gas
industry along with complexity related to operations and contractual
connection with the venture partners, contractors and suppliers as well as
anti-corruption and anti-bribery law implementation need increased focus by
the management1. The risk of Bribery and corruption is rapidly becoming a
significant concern for the oil and gas sector. There is huge sum of capital
and profits involved in the sector which invites corruption. As stated by
Abdallah, Mirvat, and Houssam Salami the problem with corruption is most
significant in the developing countries because of their legal system and
weak regulatory authorities2.
The purpose of this chapter is to develop a proper framework for Libya
in relation to corruption in the oil and gas sector. The main primary source of
income in Libya is oil and gas industry. Corruption can pose a significant
hurdle in the development of the country as it restricts its independent
power of decision making and institutional foundations. Developed countries
like Australia and UK have a well-coordinated and tested corruption policy in
place to take care of corruption in the sector such as the Independent
1Sovacool, Benjamin K. "Countering a corrupt oil boom: energy justice, natural resource funds, and São Tomé e
Príncipe's Oil Revenue Management Law." Environmental Science & Policy 55 (2016): 196-207.
2Abdallah, Mirvat, and Houssam Salami. "Overview of the Oil and Gas exploration in Lebanon." Gas and Oil
Conference (MedGO), 2015 International Mediterranean. IEEE, 2015.

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Commission Against Corruption (New South Wales). However such policies
can be implemented in Libya or not is a great doubt. This is because the
legal system of the country is based in religious content and mainly on
Islamic Law. Therefore any change in the corruption policy of the country has
to be consistent to the Islamic provisions.
In addition the Libyan government is a single bureaucracy and
therefore it is a doubt that whether the policies which have been
implemented in Australia having a federal government could be successfully
implemented in Libya or not. The research aims to provide a corruption
management framework for the country.
The Libyan context
Libya (lɪbiə/ or /ˈlɪbjə/; Arabic: ليبيا) is a developing nation. It is situated on the
northern coast of Africa. The nation shares its borders with Tunisia and
Algeria in the West. In North, it is bordered by the Mediterranean Sea. In
East, its neighbors are Sudan and Egypt. Chad and Niger are present in the
South as illustrated in Figure (1). The capital city of the country is Tripoli
located in the east with the other large city Benghazi located in the west.
Libya is a small country by population with a large area of land. It is the
fourth largest country in land mass size in Africa and the seventeenth largest
in the world.3 Libya has a vast area of 1,759,540 square kilometre (around
3Central Intelligence Agency, The World Factbook<https://www.cia.gov/library/publications/the-world-factbook/
geos/ly.html>

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700,000 square miles). The coastline of the country stretches to 1900
kilometers4
Figure (1): Map of Republic of Libya
The authorities conducted first census in the country in 1954. At that time,
the total population of the country was only 1,080,000. 5 After this time, a
census was conducted after every 10 years. According to the last census,
which was conducted in 2009, it was discovered that the total population of
Libya was 6,411,776 persons.6 30 per cent of population in Libya is under the
age of 15 and most of population is concentrated along the Mediterranean
coastline.7
4Ibid
5Fathi Naser Bribesh, The quality of corporate annual reports : evidence from Libya (Doctoral Thesis, University of
Glamorgan, 2006)
6Central Intelligence Agency, above n XXX
7Ibid

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All Libyans are Muslims and follow the Maliki sect. Arabic is the official
language in Libya. Significant variations are present in the climate of Libya.
These are mainly affected by the Mediterranean Sea and desert. 8 The
country has mild Mediterranean climate along the coastline. On the other
hand, in the rest of the country the weather is arid desert weather. Libya
holds the 11th place among the oil producing countries of the world.9
The oil rich countries, many of them are termed as developing countries face
significant increase in revenue due to the rise in oil prices after the late
1970s and during early 1980s. It was again witnessed after 2000. But, there
are several are the countries that have shown least economic and social
indicators globally.10 The oil exporting countries could not achieve a high
economic growth rate in the long run, as compared to the non oil
producing/exporting economies.11121314 The income and the revenue of the
8Although the Amazigh language is spoken in some parts of the country.
9F. DiPiazza, Libya in Pictures (Twenty First Century Books, 2005) spell out first name
10Francisco Carneiro, 'Development challenges of resource-rich countries: the case of oil exporters' (Paper presented
at the Proceedings of the VI International Colloquium, 2007)
11Richard M Auty, Resource abundance and economic development (Oxford University Press, 2001), Masoud Nili
and Mahdi Rastad, 'Addressing the growth failure of the oil economies: The role of financial development' (2007)
46(5) The Quarterly Review of Economics and Finance 726, Jeffrey D Sachs and Andrew M Warner, 'The big push,
natural resource booms and growth' (1999) 59(1) Journal of Development Economics 43, Marc Badia-Miró, Vicente
Pinilla and Henry Willebald, Natural Resources and Economic Growth: Learning from History (Routledge, 2015)
12
13
14

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government witnessed higher volatility due to the turbulences taking place
in the oil.1516
The economy of Libya is not an exception from other resource rich countries.
Even if the nation produced significant amounts of crude oil since 1960’s, the
country had shown lower economic indicators in comparison with other
developing oil producing and non-oil-producing countries. Due to lack of
transparency in the country, inefficiency of government institutions,
corruption, and misusing the oil revenue, there has been under-performance
in case of development and Economic growth.17 Recently, it caused
significant economic and political turmoil in the country, resulting in eight-
month long civil war that ended up the dictatorship of Muammar Gaddafi
lasting 42 years in October 2011. Significant cost had to be paid for the war in
terms of loss of life, economic dysfunction and the infrastructure of the company. The oil
production was also reduced, which is the major source of revenue and export for the
nation. The production of oil reduced to 1.6 million barrels per day before the war to
nearly 50,000 barrels a day during the war. At the same time, most of the support
infrastructure of oil sector was also destroyed.18
There are many persons in Libya, who believe that oil wealth is not a blessing but a curse. One
explanation that can be given for the natural resource curse is that the wealth generated by natural
resources also causes a conflict with the usage of such resource. This in turn results in poor institutional
quality and less development. On the argument that has been given in this regard is that the huge
revenue generated by the natural resource sector also creates motivation for the interested groups like
local/foreign investors and government officials so that they may involve in rent seeking behavior. Such
behavior can be present in the form of corruption, veracity, or even civil conflict, as seen in case of
15Mr Steven Barnett and Mr Rolando Ossowski, Operational aspects of fiscal policy in oil-producing countries
(International Monetary Fund, 2002), Ricardo Hausmann and Roberto Rigobon, 'An alternative interpretation of
the'Resource Curse': theory and policy implications' (National Bureau of Economic Research, 2003)
16
17 Esposito, John L, Islam and politics (Syracuse University Press, 1998)
18Issa Ali and Charles Harvie, 'Oil and economic development: Libya in the post-Gaddafi era' (2013) 32 Economic
Modelling 273

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Nigeria.192021 Such behavior may also result in political crisis and economic
failure, including collapse of non-natural resource production, flight of
economic capital, higher rate of inflation, poor quality institutions, and
therefore lesser growth. A significant role is played by the institutions in
deciding the ability of the government to adopt and implement the policies
that mitigate the risks having adverse impact on economic growth.22The
countries that have well-established institutions are also in opposition to
implement better policies for responding to external shocks and therefore,
such countries are capable of maintaining their economic development. But
the lack of such institutions may cause poor policy choices, which in turn
deepens and extends the negative impact of external shock.
There is another possible explanation arising out of the literature. According to it the economic
factors caused by the boom in source (oil) sector and the volatility of its revenue are the main
reasons behind the natural resource curse. It has been suggested by this explanation that the
wealth generated by natural resources may cause lower growth in non-resource sector. It can be
briefly stated as the notion that arise in one tradable sector like oil contributes in the
contradiction of other non-boom tradable sectors like the manufacturing sector. This means that
the windfall revenue generated by oil sector results in a real exchange rate appreciation. This in
turn declines the competitiveness of non-resource tradable sector and in this way the growth of
non-resource tradable sector is undermined. 23
19Hausmann and Rigobon, above n xxx
20Dani Rodrik, In search of prosperity: Analytic narratives on economic growth (Princeton University Press, 2003)
refer to relevant page numbres
21Carlos A Leite and Jens Weidmann, 'Does mother nature corrupt? Natural resources, corruption, and economic
growth' (1999) (99/85) Natural Resources, Corruption, and Economic Growth (June 1999). IMF Working Paper
AVAILABLE AT CITE THE WEBSITE
22Rodrik, above n xxx
23Robert K Eastwood and Anthony J Venables, 'The macroeconomic implications of a resource discovery in an open
economy' (1982) 92(366) The economic journal 285

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It also results in undermining the economic development in non-booming tradable sector by reallocation
of production factors towards natural resource sectors and the non-tradable sector.24252627
Political situation
Throughout the history and until its independence in 1951, Libya faced
continuous waves of innovation and colonization.282930When the country was
under the control of a Ottomon empire, the economy of media mainly relied
on subsistence primitive agriculture. Due to low and irregular rainfall and the
lack of financial resources, there were limited agricultural activities, confined
to subsistence crops and livestock production, which was also used by small
industries as raw material like food and clothes. There was no infrastructure
present in the country like roads, railroads or ports.
During the first two decades of occupation by Italy, Libyans arose in
significant resistance. There was a state of war in the country. However, the
economic condition of Libya improved as compared to the Ottoman period.
From 1932. There was significant investment made in industry and
agriculture by the Italians. However the living conditions in the country
remained over and basically the economy was run for the advantage of the
24Warner Max Corden, 'Booming sector and Dutch disease economics: survey and consolidation' (1984) 36(3)
oxford economic Papers 359
25W Max Corden and J Peter Neary, 'Booming sector and de-industrialisation in a small open economy' (1982)
92(368) The economic journal 825
26Robert K Eastwood and Anthony J Venables, 'The macroeconomic implications of a resource discovery in an open
economy' (1982) 92(366) The economic journal 285
27J Peter Neary and Sweder van Wijnbergen, 'Can an oil discovery lead to a recession? a comment on eastwood and
venables' (1984) 94(374) The economic journal 390
28John Wright, A history of Libya (Columbia University Press, 2012)
29Alison Pargeter, Libya: The rise and fall of Qaddafi (Yale University Press, 2012)
30Ali Abdullatif Ahmida, 'Libya, Social Origins of Dictatorship, and the Challenge for Democracy' (2012) 3(1) The
Journal of the Middle East and Africa 70

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Italians3132 It has been reported by the International Bank for Reconstruction
and Development (1960):
“... a heavy price have been paid by the Libyans for whatever was
achieved by the Italians. They were pushed out of their best farming
lands, large number of livestock of the Libyans also perished during the
war.... there. Traditional industries suffered heavy losses due to the
competition from products coming from Italy. Moreover, the Italians did
very little to prepare the Libyans for self-governance. (p. 27).
During the Second World War, the economy of Libya suffered heavily. Most
of the factories, farms and livestock suffered damage.33 However, after the
Great War, the military administration of Britain and France operated as the
caretakers of the country during the transitional period leading towards
independence of the nation. Libya achieved independence in 1951. Under
the administration of King Idris Al-Sansui, the country was named the United
Kingdom of Libya. But at this time, Libya was heavily dependent on foreign aid provided by the UN
agencies, and mainly coming from the USA and UK so that the country may face difficult economic
conditions. Therefore, strong economic and political ties were created with UK and the USA. Both of
these countries had their military bases in Libya for more than two decades, starting from 1953.3435
However the discovery of oil proved to be a turning point in the modern history of Libya in
1959. Due to the revenue generated by oil sales, Libya could overcome its deficit. It created a
surplus in the balance of trade, resulting in significant increase of GDP and per capita income in
the country. 36 Libya also became one of the major oil producing countries of the world as well
31Amal Obeidi, Political culture in Libya (Psychology Press, 2001)
32Ahmida, above n
33Obeidi, above n
34John Wright, Libya: a modern history (Taylor & Francis, 1981)
35Dirk Vandewalle, A history of modern Libya (Cambridge University Press, 2012)
36MB Mahmud and A Russell, 'An empirical investigation of the development of accounting education and practice
in Libya, and of strategies for enhancing accounting education and accounting practice in Libya' (2003) 5 Research
in Emerging Economies 197

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as a reasonably wealthy state, although it was still mainly dependent on the oil sector. 37
Although there was considerable improvement in economy and infrastructure by 1960s, many
Libyans were dissatisfied as a result of the domination of the wealth of the country by the ruling
elite and the Italian settlers and also due to the rejection of several pro-West policies of KIng
idris by many Libyans. 3839 As a result, this dissatisfaction increased with the rise of Arab
nationalism, especially among the younger Libyans, who were in favor of change, and what
inspired by the president of Egypt, Jamal Abdel Nasser (1953-1970), as well as the call for Arab
Nationalism, Pan Arabism, and for restoring the Islamic Arab identity on the basis of their
cultural foundation. 4041 Some officers created the Revolutionary Command Council (RCC) and
the governing body was headed by Gaddafi. The name of the country was also changed to
Libyan Arab Republic. 424344 In order to consolidate his power and also to increase his
popularity, Gaddafi announced his Plans to place Libya on the way to anti-imperialist, anti-
Communist and anti-corruption, along with ideological connections with Arab-Nationalism and
Islam. 45 Hence the regime of Gaddafi started to adopt and implement several reforms and
policies under the leadership of gaddafi. This had considerable impact on the political, economic
and social context in Libya for the next 42 years. The new regime made a call that all the
companies operating in the company should be controlled by Libyans, particularly the banks and
oil companies are affected. Moreover, the US and British military bases in the country were also
asked to leave immediately. 46 This happened in March and June 1970, respectively. The Arab
experts, mainly from Egypt replaced the American experts. Only the Arabic language was
allowed to be used on all features stationary and publications. It was also announced by Gaddafi,
that a "Cultural Revolution" had taken place in 1973, which proposed to encourage more
participation by the people in the political life.47 For this purpose, the People's Committees were
established to administer, regional and domestic administration. Later on, Gaddafi also
37Ibid
38Oxford Business Group, 'The Report, Libya, 2008' (Oxford Business Group, London
2008)
39Ahmida, above n
40Ibid
41Group, above n
42Ibid
43Ahmida, above n
44Pargeter, above n
45Ahmida, above n
46Ibid
47John L Esposito, Islam and politics (Syracuse University Press, 1998)

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announced in 1975, his political, economic and social views in the Green Book. This introduced,
the government of masses of the bases of direct democracy, and later it was developed to "the
People's Authority". The basis for this concept was "Shura", the Islamic jurisprudence.4849 This
was the Arabic term for 'consultation'. According to it, under Islam, all the decisions for Muslim
community need to be based on 'Shura' of Muslim society. Consequently, there was the
establishment of the General People's Congress (GPC) in 1977. This was the highest national
legislative body of the country replacing the RCC. At the same time, a new official name was
given to the country, the Socialist People's Libyan Arab Jamhuriya. All legislative as well as
executive powers of the country were delegated to GPC.505152 Later on, it was declared by GPC
that all the Libyans had the right to exercise their authority through the Basic People Congresses
(BPCs) and also through People's Committees (PCs). Both of them were created in all parts of
Libya. Male as well as female Libyans, who were about 18 years of age were required to take
part in direct consultation and consensus taking place in local BPCs. There were two bodies in
each BPC: one was a secretary at of conference and an administrative committee. There was also
a PC acting as the executive committee that had the authority to implement decisions and
recommendations made by the BPC. Furthermore, the BPSc were a part of GPC along with the
representatives of unions and professional associations. The people discussed and consulted the
annual agenda of local community and the general issues of the country in BPC. They also made
decisions and recommendations regarding these issues. Later on, they were passed up to GPC for
the purpose of considering at the time of the formulation of national policies. However the GPC
provided executive authority to the General Secretariat of the GPC and the General People's
Committees or the Ministries.
The members of the latter are the secretaries of ministries in Libya. They act as the government
of Libya. They also have the responsibility to implement national policies. When this system was
implemented during 1977 to 2011, Gaddafi himself held a senior position known as "the leader
of the revolution". In this way, he practically ruled the country through his revolutionary
instructions. Similarly, there were several barriers and difficult is present in the implementation
48Wright, above n xxx
49Ali A Zagoub, Corporate governance in Libyan commercial banks (University of Dundee, 2011)
50Yahia H Zoubir and Erzsébet N Rózsa, 'The end of the Libyan dictatorship: the uncertain transition' (2012) 33(7)
Third World Quarterly 1267
51Michael E Porter and Daniel Yergin, National economic strategy: an assessment of the competitiveness of the
Libyan Arab Jamahiriya (2006)
52Ahmida, above n xxx

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of this system. These included (i) the continuous restructuring of the legislative and executive
essentials of the system, which had an adverse impact on stability of public institutions, as well
as the effectiveness and efficiency of public policies in different areas; (ii) the decision-making
power became concentrated in the leadership of GPC and the secretaries of GPCs, which was
against the major purpose of introducing the system of decentralisation of decision-making; (iii)
Gaddafi regularly intervened in all the major decisions made by the GPC and GPCs due to which
the people lost trust in the effectiveness of the system because Gaddafi always had his say in
nearly all the significant decisions.
During the rule of Gaddafi, the relationship of Libya with the West remains unstable, especially
with the US and UK. For instance, there were several events taking place in late 1970s and 80s
between Libya and the US, which eventually resulted in the US imposing a ban in 1982 on all
exports to Libya except food and medicine and also on the import of oil from Libya in the US.
Additional economic sanctions were imposed by the US in 1986 against Libya. These included
the freezing of assets of Libya in the US, the imposition of a complete ban on direct import
export, travel related activities, including students and commercial contracts. The situation
worsened even further when an attack was carried out by the US on Tripoli and Benghazi in
April 1986. These attacks were carried out in retaliation of a bombing attack in a discotheque in
Berlin. Libya also had to face UN sanctions during the 1990s. It was accused that the
government of Libya had given orders for Lockerbie bombing of Pan Am flight no. 103.
Consequently, several sanctions were imposed by the United Nations against Libya in 1992 so
that the government of Libya can be forced to hand over to suspected Libyans to face trial in a
special court. As a result of the sanctions, the diplomatic representation of Libya was restricted
in other countries. Similarly, flights to and from Libya were also restricted, as were the supply of
arms and ammunition, sale of aircraft and their parts. Moreover, facing severe pressure from the
US, more sanctions were imposed against Libya by the UN. The sanctions included the freezing
of the assets owned or controlled by the government of Libya, as well as the funds and financial
resources abroad except the funds related with petroleum, oil equipment, a communication and
similarly the transfer of money or assets to Libya was also banned. The sanctions imposed by the
US and the United Nations had a significantly negative impact on Libya. The country had to face
several problems like the rising cost of raw materials, which resulted in an increase in the price

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of goods produced in Libya. There were limitations on the import of goods and the supply of
certain goods stopped completely. The companies are facing problems in getting foreign
exchange that was required to import goods. Moreover, business visits to Libya were also
restrained. The market share of exports declined in Libya due to these sanctions. It was noted by
Porter and Yergin led infrastructure related with Information Communication Technology was
not as good, because the supplies related with technology and expertise will restricted by the
government during the imposition of these sanctions. Moreover, in 1990s, the companies from
Libya were also facing problems in importing several equipment, facilities or spare parts,
especially from the West that could have helped the development programs of Libya. However,
the sanctions imposed against Libya was suspended in 1999 after the country decided to hand
over two suspected citizens to Holland. So that they could be tried in a special court. In August
2003, the United Nations decided to officially lift the sanctions after the government of Libya
made a settlement with the families of the victims of Lockerbie incident. In 2004 the US
sanctions were also lifted after it was declared by the government of Libya that it was going to
abandon the Weapons of Mass Destruction Programmes. Consequently, Libya once again
reintegrated into the international community. However, the people of Libya rose in revolt
against the rule of Gaddafi on 17 February, 2011. As there was no organized political opposition,
the people of Libya protested and faced the security forces resulting in several deaths. There was
an armed conflict between the loyal forces of Gaddafi, and the opposition forces that were trying
to oust him. Later on, the leaders of civil society and the defectors of government set up the
National Transitional Council. This Council was formed to lead the rebellion and also to act as
the interface of different powers supporting the overthrow of the current regime. After these
events, resolution 1973 was adopted by the UN Security Council on 17th of March, 2007 which
allowed international intervention in Libya, under the leadership of NATO so that the attacks
against civilians can be stopped, civilians can be protected and no-fly zone can be enforced and
also an arms embargo along with a ban on flights and to freeze the assets of Gaddafi government.
In this way, the international community did not recognize the government of Gaddafi as the
legitimate representative of the people of Libya. Gradually, an Executive Committee was formed
by the NTC to act as interim governing body. Other countries, bilaterally recognized it as the
legitimate ruling authority of Libya. Gaddafi's rufile of Libya ended in October 2011 with his
death. The NTC became the only governing body in Libya. After nearly 5 decades, and for the

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first time in this time, the people of Libya voted to elect the members of General National
Congress in July 2012 as the constitutional assembly. It was delegated the power to draft a
constitution for Libya within 18 months. Afterwards, a transitional government was formed by
the GNC that had the responsibility to implement the national policies. The GNC also started the
process to redraft nearly all state legislation, and also the policy formulation and abolish those
that were inherited from Gaddafi's regime.
. Moreover, the implementation of this system faced many difficulties and
barriers including: (i) the continued restructuring of the system’s legislative
and executive institutions, which affected the stability of public institutions
and the efficiency and effectiveness of public polices in various areas and
sectors; (ii) the concentration of the power of decision making in the hands
of leadership of GPC and secretaries of GPCs which contradicted the main
aim of the system of decentralisation of decision making; (iii) the constant
intervention of Gaddafi in all major decisions of GPC and GPCs which reduced
the Libyan people’s trust of the effectiveness of this system as Gaddafi had
an upper hand in all the most important decisions.53545556
During Gaddafi’s rule Libya had an unstable relationship with the west
particularly the USA and UK. For example, many events during the late
1970s and 1980s between Libya and the US eventually led to the banning of
all exports except food and medicine to Libya in 1982 as well as the
importation of Libyan oil into the USA.57 In 1986, additional American
53Ibid
54Mogherbi Mohamed, 'Political, Legal and Institutional Requirements for the Privatisation ' in the Privatisation in
the Libyan Economy ( Economic Research Centre. (In Arabic), 2005)
55Porter and Yergin, above n
56Zoubir and Rózsa, above n
57Vandewalle, above n

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economic sanctions were imposed against Libya, including the freezing of
Libyan assets in USA, a total ban on direct import and export trade,
commercial contracts, and travel-related activities including students. This
escalated further when the US attacked Tripoli and Benghazi in April 1986, in
retaliation for a bombing in a Berlin discotheque.58 Moreover, Libya suffered
from UN sanctions in the 1990s. The Libyan government was accused of
ordering the Lockerbie bombing of Pan Am flight no.103 in 1988. As a result,
the UN imposed a number of sanctions on Libya in 1992 to force the Libyan
government to hand over the two suspected Libyans for trial in a special
court. These sanctions restricted Libya’s diplomatic representation in other
countries and banned flights from and to Libya, the sale of aircrafts and their
parts, supply of arms and related materials. In addition, in 1993 the UN, after
strong pressure from the USA, imposed additional sanctions including
freezing Libyan government owned or controlled assets and all funds and
financial resources abroad except funds related to petroleum, air
communications, and oil equipment and banned the transfer of money or
assets to Libya.5960 The American and UN sanctions had negative influences
on Libya. The country faced many difficulties such as an increase in the costs
of raw materials that led to a rise in prices of goods produced in Libya and
limitations on the importation of goods and some goods were stopped
completely as companies faced restrictions to get foreign exchange that
58Ibid
59Zoubir and Rózsa, above n
60Ahmida, above n

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they needed to import these goods.61 Additionally, business visits to Libya
were constrained and Libya’s market share of exports also declined as a
result of the sanctions. For example, Porter and Yergin noted that
Information Communication Technological infrastructure in Libya was poor as
the government was restricted on supplies of technology and expertise
during the period of sanctions.62 Also, during the 1990s Libyan companies
found it difficult to import many kinds of facilities, equipment or spare parts
particularly from western countries that could assist Libyan development
programmes.63 The international sanctions against Libya were suspended in
1999 following the handover of the two suspected Libyan citizens by Libyan
authorities to Holland to be tried in a special court. These sanctions were
officially lifted by the UN in August 2003, after the Libyan government
reached a settlement with the families of the Lockerbie victims. In 2004, the
American embargo lifted after the Libyan government declared it would
abandon its Weapons of Mass Destruction programmes. This resulted in
Libya being again reintegrated into the international community.646566On 17th
February 2011, Libyan people across the country rose against Gaddafi’s rule
of Libya. In the absence of an organised political opposition, Libyan people
protested andencountered the security forces leading to many
deaths.67Consequentially, an armed conflict started between forces loyal to
61Almehdi A Agnaia, 'Management training and development within its environment: the case of Libyan industrial
companies' (1997) 21(3) Journal of European Industrial Training 117
62Porter and Yergin (2006), above n
63Agnaia, above n
64Porter and Yergin, above n
65Zoubir and Rózsa, above n
66Ahmida, above n
67Zoubir and Rózsa, above n

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Gaddafi and opposition forces seeking to oust him. The National Transitional
Council was later set up by leaders of civil society and defectors from
Gaddafi government to lead the rebellion and be the interface with various
powers that supported the overthrow of Gaddafi.6869 Following these events,
the Security Council adopted resolution 1973 on 17th March 2011 which led to
international intervention, led by NATO, to end all attacks against civilians,
protection of civilians, a no-flyzone, and enforcement of the arms embargo, a
ban on flights and an asset freeze on Gaddafi regime. Therefore, the
international community refused to recognise the Gaddafi government as the
legitimate representative of the Libyan people and, gradually, the NTC
formed an Executive Committee as an interim governing body and it was
bilaterally recognised by other countries as the legitimate ruling authority in
Libya. In October 2011, Gaddafi’s rufile of Libya ended after his death, and
the NTC became the sole governing body of Libya. In July 2012 and for the
first time in five decades, the Libyan people voted for electing their members
of the General National Congress (GNC) as the constitutional assembly which
was delegated to draft a constitution for Libya within an 18 month
timeframe. After this, the GNC formed a transitional government to be
responsible for implementing national policies. The GNC is also in the
process of redrafting (in 2014) the majority of all state legislation, as well as
policy formation practices abolishing those inherited from Gaddafi’s time.
68Ibid
69Ahmida, above n

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The main motive or the objective of this research study is to focus upon the
widespread and firstly growing corruption in the economic as well as trading
purposes in mercantile aspects of the developing countries throughout the
world. Though, the research mainly focuses upon the corruption in petroleum
resource industry in Libyan context. The fiscal policy or the annual GDP
growth rate of Libya generally depends on the petroleum industry to a large
extend. But recent reports emphasis over the fact that, corruption in
industrial aspects provide detrimental impact on the economic background
of the nation.
According to the current reports, the oil reservoir or petroleum resources of
Libya are now holding the tenth position throughout the global business

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arena. The country produces 1.65 million barrels oil per day. Majority of the
crude oil is generally exported to the European market from the Islamic
countries and among that, almost 11% or around 403 million barrels oil is
exported by the Libya only.
After the civil war in 2011, the country has witnessed detrimental downfall in
political as well as economical perspective which in turns sheds light on the
“accountability vacuum” condition between the government and the
populace of Libya. This in turns provides detrimental impact on the
petroleum oil resources. On the other ward, it can be said that, in spite of
relatively higher level of the human development, a huge number of the
population in Libya do not get any kind of economic or social benefits from
the “oil-driven economy”. Financial estimation reveals that almost 30 to 40
percent of the total population lives below poverty level and above that,
more than 45 percent population does not get minimum essentials so that
they can lead a normal livelihood. Reports reveal that, before civil war, Libya,
one of the important members among the petroleum producing countries,
had generated more than 1 million crude oil per year, which decreased
drastically after civil war, 2011 and now the country produces 450,000 billion
crude oils. This can shed light upon the corruption, in petroleum oil resources
for prolonged period of time.

2
Rule of Law
As the corruption in Libya provide detrimental effect in both political as well
as the economical perspective, so proper rule and legislation can be best
possible way for the government to overcome this massacre. Proper and
strict legislation can provide effective framework to the administrative
process by which the unfavorable impact of corruption in society can be
minimized.
Libyan Commercial Law
Commercial law was introduced in Libya in 1953. It included the regulations related with
business activities, that were performed by a person, regardless of his or her legal status. It also
included the rules that were executed on traders (first article 1/P) (Libya State 1970), which
required that every trader should follow regular daily bookkeeping, inventing and budget at the
minimum level (Article 58) (Libya State 1970), and to maintain special files to record
correspondence and dialogues that are relevant for trade affairs (Article 59) (Libya State 1970).
The most formal objective conditions and measures that guaranteed the consistency of these
books are mentioned below.
Each page of the obligated books need to be numbered and stamped by the Court of first
instance's stamp. Apart from it, it is also obligated for the registrar to write attestation on the first
page of each book, which indicates the number of pages and also to confirm the official title
along with date and signature of this attestation. There should be no spaces, writings in the
margin or any erasure's writings between the lines in the books and files (Article 60) (Libya State
1970). Every trader is required by the law to retain these books and files for at least a period of
five years (Article 64) (Libya State 1970). 70 It also requires the board of directors to establish
the fiscal year-end balance sheet concerning joint stock companies, to calculate profit and loss
and to attach a report to the balance sheet, which shows the progress made by the company
(Article 272) (Libya State 1970). The contents of assets and deductions in the balance sheet
70Younis Hassan El-Sharif, 'The Influence of Legal Environment Upon Accounting in Libya' (1981) 8(2) Dirasat in
Economics and Business 36

2
needs to be fixed in the balance sheet with their overall value (Article 273) (Libya state 1970)
and should be confirmed by General Assembly (Article 516) (Libya State 1970). It is also
required that the board of directors should give a copy of the balance sheet and the calculation
related with profit and costs as an attachment to the report, the control committee's report and the
confirmation minute of the General Assembly to the trade registered due to begin a period of 30
days of confirmation (Article 583) (Libya state 1970).
The commercial law of Libya had creates several rules related with estimating the assets,
establishing legal reserve, increasing/decreasing the invested capital and sharing the profit. Some
of the important rules related with the valuation of assets can be described as follows:-
Fixed assets are valued on account of original cost;
Inventory needs to be valued at the "lower of cost or market";
Trademarks are not going to be valued higher than the cost of purchase price, and the value of
these assets need to be amortized in the financial year, according to their usual life;
Debts need to be valued at their estimated realized value;
Organization and development costs may be capitalized by obtaining consent from the board of
directors, in this case the capitalized values need to be amortized for a period not exceeding five
years; and
Goodwill, cannot be recorded unless it has been purchased, and once it has been recorded, it
should be amortized in the subsequent years by a suitable amount estimated by the directors and
the Court of auditors
(Articles: 574, 575 and 576) (Libya State 1970).
The legal reserve is established by deducting no less than five percent of the net annual profits
until the value of the reserve becomes twenty percent of the capital of the company, and
considered as a part of seized profits, that are classified as standing capital (Article 557). The
increase in the capital of the company is achieved by issuing new shares with the price more than
their nominal value. This can be achieved before finalizing the establishment of legal reserve all
by transferring the surplus reserve to the capital of the company by issuing free new shares or by
increasing the nominal value of floating shares (Articles: 578 and 590) (Libya State 1970). The
reserve capital can be decreased , if it is more than the needs of the enterprise or in case of losses

2
that increase one third of the capital, by exempting the participants to pay the remaining
installments ought to return the capital installment to the State that confirms with the current
legislation (Articles: 578 and 590) (Libya State 1970).
The need for appointing auditors has also been provided by the commercial law (Article 550)
(Libya State), so that the administration of the company can be monitored and the sound progress
of the activities of the company according to law can also be ensured. The duties of auditing
board are mentioned in article 5 for three of commercial law (Article 553) (Libya State 1970).
The law requires that a report should be submitted to the Gen. assembly regarding the outcomes
of the fiscally and activities which also reveals his views regarding the progress made by the
company apart from the authenticity and the confirmation of budget and accounts (Article 580)
(Libya State 1970). However,. It is not specified by the law, what should be included in this
report. Similarly, it does not deal with the formalities that should be a part of this report.
The Financial System Law
The main objective of the research is to focus upon the unfavorable impact
of the corruption in petroleum oil resources, it can be interpreted that, this
massacre not only impact upon the societal stability but it also create such a
consequence that provide negative effect on the financial framework of the
nation. This financial instability in society can minimize only by adopting
and/or by implementing proper and effective financial legislation in overall
administrative policy of the nation. As the structure of the economy of Libya
is “oil-driven”, so reformed financial act or regulative policies can be suitable
for minimizing the negative impact of corruption in petroleum oil resources.
The Act related with the rise of The Financial System Law (FL) (Libya State 1967) commenced
its operation in 1967. Article 1 of the FL provides that this law permits the Secretary of Treasury
to control the State Budget and also to make plans for future expenditure. For the purpose of

2
doing so, a Financial Controller for every organization and institution is selected by the Secretary
of Treasury. The controller plays the role of preparing a report of the policies implemented in
institutions and submits the report to the Secretary of Treasury. A copy is also given to the
related secretary, institution and organization. In this regard, it has been mentioned by Kilani that
this arrangement follows the principle that "the treasury should be where the money of the public
is". As a result, the Secretary of Treasury is related with all the publicly held organizations.
Usually, the administration processes of the budgets are similar. According to Article 6, there are
two parts of every budget: revenue and expenditure (Libya State 1967). There are three divisions
of expenditure: wages, general expenses and new projects. Moreover, according to Article 23 of
FSL (Libya State 1967), the Secretary of Treasury is required to prepare annual report. That is
going to be submitted to the Public Control Office, and which provides elaborate information
regarding the State's budget and expenses. The report also calls its improvement, debt or any
emergency account and also trust.
Income Tax Law
The income tax law has been enforced in Libya. Between 1933 and 1968, and it was based on the
Italian income tax law. But after the undertaking of some necessary amendments so that the law
become suitable for local circumstances, a new income tax law was introduced in Libya in 1968.
The Income Tax Law No. 64 (Libya State 1973) replaced the earlier law. This was used by
several companies for setting up external financial reports.71
A distinction is not made by the Libyan income tax law between the income tax generated from
ordinary activities and the text generated from unusual activities, whether the income is a
product of an activity sale or any of the material or nonmaterial assets of the activity (Article
65).72
Income Tax Law No. 64/1973 (Libya State 1973) was amended along with the Stamp Tax Law.
According to the principal popular Congress resolution which was convened between
26/12/2002 and 2/1/2003. The Income Tax Law No 11 took the place of Income Tax Law No 64.
71
72

2
The new legislation introduced several significant changes. For example, the new legislation
offered tax allowances, particularly for the persons with high incomes.73 It also deleted the
public tax category of income and in the same way, the new legislation raise the value of each
category and the progressive taxes on the activities (Libya State 2004a). This was done in order
to encourage the private sector so that it makes more profit and industry contributes in the
development plans of Libya.
Cultural and religious context
A significant role is played by the tribal loyalties in the social relations, politics and economics
of Libya. However, due to the different legacies of colonial era, independence and the
development of oil industry as well as the economic crisis faced during 1980s and 90s, played an
important role in altering the tribal and social structure. It is true that the traditional values
change significantly in view of the impact of economic changes. The social life in Libya
traditionally revolves around the family and tribal loyalty of an individual, which overrides the
other obligations of the community.74 The woman remain loyal to family, clan and tribe.
Sometimes the emphasis on sectarianism and regionalism operates the loyalty to profession and
even the law.75 In this regard, Libya is not significantly different from several other developing
nations that have many traditions and customs emphasizing the collective rights and obligations
of families and tribes. Collectively, the family and tribes institutionalize in the work-related
practices and social projects of the people. Therefore the culture of Libya is characterized by
prevailing attitude of favoritism. When it comes to the appointments for government jobs, which
are frequently made on account of personal friendship of family connections instead of merit.76
Libya is also one of the Arab countries which were a part of the cultural study conducted in 1997
by Hofstadter, along with Kuwait, Egypt, Lebanon, Saudi Arabia, Iraq and the United Arab
Emirates. There is there are certain common characteristics present in case of other countries,
73
74Ibid
75Almehdi A. Agnaia, 'Management training and development within its environment: the case of Libyan industrial
companies' (1997) 21(3) Journal of European Industrial Training 117
76Geert Hofstede, 'Cultures and organizations' (1997) Who published this, where is it available?

2
there are also significant differences present in many respects. Hofstede77showed that, for
instance, the Saudis are more collectivist than some other Arabs such as the
Lebanese or Egyptians. Baydoun and Willett78 demonstrated that the value
the Lebanese place on power distance is probably much closer to the French
value. Power distance refers to the unequal distribution or the flow of power
from the hierarchical level to the subordinate level of the society through
which only higher income group can experience benefits from both
economical as well as societal perspective and the lower income groups do
not get anything for living a life. The recent reports reveal that, after civil
war in Libya in 2011, 30 to 40 percent of the total population lives under
below poverty level and almost 45 percent of the population are involved in
oil industry but unfortunately does not get any economic benefits from this
“oil-driven economy” of the country. Hofstede79and Baydoun and
Willett80compare culture value scores between Arab countries, and other
nations. Arab countries scored high levels of power distance with a score of
80 compared with low levels of power distance in Great Britain and the US,
35 and 40 respectively. Superiors and subordinates in large power distance
societies consider each other unequal. Hierarchical systems exist and
subordinates are expected to be told what, when and how to carry out their
tasks. Centralization is expected to characterize high power distance
societies. Arab countries scored 68 for uncertainty avoidance. This score is
relatively high compared to 35 and 46 in Great Britain and the US
respectively. Hofstede81 argued that strong uncertainty avoidance societies,
which include Arab countries, tend to be collectivists. Arab countries scored
38 on individualism which is considered low compared to Great Britain and
the US with a score of 89 and 91 respectively. This indicates that Arab
countries are more collectivist societies than many other countries. Islam
77Ibid
78Nabil Baydoun and Roger Willett, 'Cultural relevance of western accounting systems to developing countries'
(1995) 31(1) Abacus 67
79Geert Hofstede, above n
80Nabil Baydoun and Roger Willett, above n
81Geert Hofstede, above n

2
may be one of the reasons for the collectivist nature of these societies. In
this context, the Prophet Mohammed says that "believers [Muslims] in their
mutual love, sympathy and co-operation, are like the [interacting] parts of
the human body: when one part complains, the other parts call each other to
hasten to its rescue, each sharing its pain and sleeplessness".
The variety and the influence of cultural dimensions, economic, political and
historical variables on the reform of public sector have led to different
reforms in different countries. Chiefly, social aspects influence the public
administration through the domination of values, customs and traditions,
which may hinder progress and the success of the administration in
accomplishing its objectives. Among the social themes that noticeably
influence public reform in Libya is tribalism and consequent nepotism. In
accordance with custom and traditions, participation in the professions in the
public sector is influenced by nepotism, by the influence of relations and
close friends because of tribal affiliation and not through professional
performance. This situation has been firmly established with the emergence
of the idea of open-nomination for assuming public professions. This method
can exploit the sustainable societal framework and also can impact upon the
livelihoods of the large population throughout the Libya. This has inflicted
serious damage on the public interest. It is worth mentioning here in this
context, that tribalism is implanted even in the minds of the qualified and the
educated people not only in Libya but it is also implanted among the people
of the Islamic countries throughout the globe. . Rather than turning
themselves away from this tradition and practice they find themselves

2
willingly or unwillingly steered by the tribe. They yield to its instructions
regarding management and authority, because if they turn away from their
tribe, they will be deprived of assuming membership of the professions in
spite of their qualifications and performance. As a result, those administering
public authorities support their own interests and the interests of the party
over public and national interest. This is reflected in explicit egoism and
demoralization of employees in the developing country to the stage where
workers look at their profession as a mere source of subsistence,
endeavoring to hold on to it until completion of legal tenure and retirement
on a pension. During this period, employees strive to outdo one another and
colleagues evade the burdens of work and deny responsibility. In actual fact,
one’s profession is not looked on as a means of offering service to the
country and people or a place in which to show talent and capability to
increase the level of performance and production in the community.
Administrative aspects are also affected by the social aspect, which is based
on nepotism, courtesy and tribal affiliation. Appropriate rules to evaluate
performance and assess employees’ efficiency are absent. The current
system makes no comparison between the diligent and the lazy employee
and removes the creative spirit of active employees, who in the shadow of
these systems endure the mistreatment and hatred of their lazy colleagues
and bosses alike. If they earnestly get on with their work they are accused of
being covetous to take control of higher administrative professions and fulfil
their own personal interests. On the other hand, they may be questioned and

2
held liable for mistakes committed by lazy employees and find an
acceptance by those lazy and negligent employees in performing their
assigned duties at work. These negative impacts associated with being an
employee, are compounded by other negative impacts, where the citizen
who receives the service is answerable for it. It represents a reflection of
social concepts on the employees character in accepting the services, as the
employees come to the department totally convinced that he will not leave it
unless he accomplishes all matters he wishes to undertake on the
foundations of family relationship and friendship, whether that is in
accordance with the rules and regulations or not. The reality cannot accept
fallacy. Today we cannot refer to any administration unless we have a close
relative or a friend in it. This subject, social relationships, though
indisputable even in western societies, is the existence of human relations
within the administration. In western countries, if an employee can help
obtain a service quickly for one of
His or her friends, it is more difficult to offer this service or help obtain it
ahead of others, unless someone entrusted with a prominent post authorizes
him to acquire such a service. In the west, employees cannot break the law
or give priority as happens in similar situations in developing countries. This
is what prompted the necessity to ask how any employee can undertake any
work or business and accomplish it without external influence. The influence
of tribalism and nepotism is a matter which undoubtedly needs to be
rectified by raising the awareness level of every citizen and employee.

2
Educational institutions may contribute to this promotion of awareness by
educating their students and making them realize that the only criterion that
should regulate their relationship to others, is as a citizen of their country
and not membership of their tribe.
Apart from this, set up an ICAC or the independent commission against the
corruption committee can be considered as an important and effective anti-
corruption agenda in Libyan context, which is widely used in south Wales and
throughout the Australia. But, according to social religious perspective, but
the countries have some basic differences. Among those differences, the
religion or the religious believe can be accepted as one of the important or
major differences between Australia and Libya. Libya is an Islamic countries
and the Libyan regulation is based on Islamic approach which is also known
as Sharia Law. So, the anti-corruption agenda or reform act to control the
corruption in Libyan public sector must be consistent and relevant with the
Islamic approach.
Apart from the religion perspective, Libyan governmental framework is
unitary in nature and it is based on single central bureaucracy; whereas
Australia is a federal country and the social administration is generally based
on the three tire system: national, state and the local. Moreover the judiciary
system and the media in Libya is very weal compared to the Australia. Lack
of transparency, excessive involvement of the political authorities in legal
and judiciary system of the society of Libya can restrict the implementation

2
of reform or regulatory act, by which government can keep accountability
and control over the corruption.
Judicial Independence
According to Melton, James, and Tom Ginsburg the independence of the legal
framework of a country collectively, institutionally and individually is
necessary for ensuring impartiality in decision making82. The independence
of the judiciary have been ensured for centuries in various ways. These ways
include keeping the judges separate from the legislature and executive and
not involving them in political debates. The judges cannot be removed from
their position unless a resolution has been passed by the parliament. Entire
immunity is provided to the judges from the legal risk of being sued for
making an alleged wrong decision while they act as judges. For the purpose
of ensuring that the decision made by the judges is obeyed by the public it
has to be ensured that they indulge in impartial decision making. For the
purpose of making impartial decision the judiciary has to be kept
independent. In the same way for the purpose of making the judiciary
independent the judiciary has to be kept free from pressure, influence and
interference. However this is not the case in Libya. A dual judicial system had
been developed during the reign of the Ottoman Empire for the purpose of
distinguishing between secular and religious legal matters. However the
system was no longer necessary which the primacy of the Islamic law had
been accepted. There are significant challenges faced by the judiciary of
82Melton, James, and Tom Ginsburg. "Does de jure judicial independence really matter? A reevaluation of
explanations for judicial independence." Journal of Law and Courts 2.2 (2014): 187-217.

2
Libya which pose hurdles to the judges to provide strict enforcement of law
against corruptions. The 2011 uprising in Libya was fuelled by the desire of
the society to be based on the rule of law and the principles of justice. The
constitutional declaration of 2011 apparently assured the people of the
country that the rule of law would be established83. However significant
challenges are being faced by the Libyan judicial system. The main reasons
for this is the significant deterioration of security and political conditions
since 2014. Currently the judicial system barely functions and is subjected to
significant difficulties from increasing unclear legal and judicial framework
and armed actors. The present government crisis engendered the
uncertainty relating to the framework. The Australian anti-corruption polices
and been successfully implemented and currently used because the country
has an independent judiciary and a very competent and strong framework.
These laws cannot be implemented in Libya because of its weak judicial
system. Thus before thinking about any law to combat corruption in the oil
and gas industry the primary requirement is to ensure the independence of
the judiciary from political interference. Only when the diary would be able to
impose the law in a proper manner the problem of corruption in the sector
would be solved.
Independent media
Law provides a Universal human right to the citizen in form of freedom of
expression. This right is used by journalist in their day to day work as they
83Linzer, Drew A., and Jeffrey K. Staton. "A global measure of judicial independence, 1948–2012." Journal of Law
and Courts 3.2 (2015): 223-256.

2
exercise their right towards notifying the public. One of the fundamental
pillars of a democratic society is a free press. The role of media is to seek out
and circulate information ideas news opinion and comments and make those
who are in authority accountable. Media act as a platform for making
multiplicity of voices heard to those were in authority. It acts as a public
watch dog at the regional local and national level doing the job of a Guardian
and activist as well as an entertainer and educator. According to Leslie the
better the media of a country the less population the country has to live
with84. Research which have been conducted in relation to political corruption
recommends that the basic contributor with respect to good governance is a
Press structure which is free and independent and is able to invigorate lively
as well as respectful political disclosure along with making the people
participate in elections. The more the freedom provided to the press the less
is the corruption in a country. Another research has shown that where there
is high percentage of newspaper consumption the corruption in such country
is low85. Just like the judiciary the independence of media also have to go
through significant challenges in Libya.
After the end of the Gaddafi period there was an assumption that the rule of
law would be established and media would be able to play an enhanced role
in the society. Public in Libya started to take increased interest in
newspapers as well as digital media. However there is significant doubt over
84Leslie, Michael. Media and democracy in Africa. Routledge, 2017.
85Camaj, Lindita. "The media’s role in fighting corruption: Media effects on governmental accountability." The
International Journal of Press/Politics 18.1 (2013): 21-42.

2
how independent and free the media is in Libya as it has to operate under
tremendous pressure. There is no second thought about the fact that media
has great power. It has powers so great which can easily influence the entire
nation for and against the government. However for the exercise of such
power the media has to be made free from interference by political parties.
On the other hand, if media is owned by the members of the political party,
and this is the case in Libya now, they then it cannot be regarded as free no
matter how much freedom the government apparently provides to media. A
strong and independent media structure can easily tackle and significantly
reduced the evil of corruption from society. If there is a fear of media among
those who indulge in illegal activities they would think twice before doing
any act as they would be having the fear of getting exposed to public. In oil
and gas industry where the corruption is high and in a country like Libya
where the main source of income comes from this industry, media has a very
significant role to play. Even after the end of the Gaddafi government there
has not been much changes in relation to the Framework in which media
personals operate. Through the process of periodic exposure the media can
help to create public opinion against corruption. It also helps in sustaining
newly created momentum against malpractices. It provides the public a
platform through which they can share the grievances with the other and can
highlight the issue. Several countries have various measures in relation to
the freedom of press such as Sting operations, holding public debates,
introduction of Right to Information, investigative journalism and opinion

2
polls. However such Liberty is a very restricted to the media personals in
Libya. These features restrict the media in Libya to fight corruption
effectively. In order to ensure that corruption is eradicated from the Oil and
Gas sector in the country, the first and foremost requirement is
establishment of a free and strong media structure which can report any
corruption and make those who are responsible accountable to the public.
Another factor which causes significant shortcomings to the independence of
media in Libya is the corruption in media itself86. As the Oil and Gas sector
involve huge amount of capital those who are involved in malpractices bring
along with them media persons by offering them gifts and drives so that
there is legal activities can be hidden. These practices have to be eradicated
from the media industry in Libya so that an appropriate and just media
Framework is formed. Thus the media in Libya has to be made independent
along with the judiciary if the government is interested if fighting corruption.
This can be done by enhancing transparency in media industry and public
funding so that the sector does not depend upon government sources.
Conclusion
Therefore from the above discussion it can be concluded that policies in
relation to managing oil and gas industry corruption in Libya require
significant changes. These changes cannot be directly copied from other
86Hardy, Jonathan. Critical political economy of the media: An introduction. Routledge, 2014.

2
jurisdictions such as New South Wales or United Kingdom. This is because
the legal as well as constitutional framework of such jurisdiction is totally
different from that of Libya. The primary source of income for Libya comes
from the oil and gas industry. The country holds the eleventh position in the
Global Business Arena in relation to Oil and Petroleum Reserves. The best
possible way to address the issue of corruption in Libya is through the
implementation of the rule of law.As the corruption in Libya provide
detrimental effect in both political as well as the economical perspective, so
proper rule and legislation can be best possible way for the government to
overcome this massacre. Proper and strict legislation can provide effective
framework to the administrative process by which the unfavorable impact of
corruption in society can be minimized. Legal modifications are required in
areas such as Commercial Law, the Financial System Law and Taxation Law.
These areas of law are directly related to matters concerning money and
thus they can help to tackle the problem. Strengthening taxation law would
ensure that the individuals have to provide strict accounting compliance
which would help identify any black money involved. There are various
examples of anti-corruption policies which have been used by other
jurisdictions. On the other hand the judicial system of Libya is still not strong
and free from government interference. These laws cannot be implemented
in Libya because of its weak judicial system. Thus before thinking about any
law to combat corruption in the oil and gas industry the primary requirement
is to ensure the independence of the judiciary from political interference.

2
Only when the diary would be able to impose the law in a proper manner, the
problem of corruption in the sector would be solved. In addition to the
judiciary, the media also as discussed above has a significant role to play in
relation to corruption in the oil and gas sector. Independent and free media
can be used as a primary tool to tackle the problem of solution. However,
even though increased and enhanced rights have been provided to the
media during the post Gaddafi period, such rights are not enough to tackle
the increasing problem of corruption. Therefore the independence of media
also needs to be established if the government intends to fight corruption in
the oil and gas industry.

2

2
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 economic 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 these three countries towards prevention
of corruption practices, which shall be explained individually.
The OECD can be described as the driving force behind the campaign to prevent corruption. It
has been revealed by several surveys that in case of nearly 70 to 75% of bribery allegations, the
companies involved had from OECD member countries.87 As discussed in earlier chapters of the
present study, corruption discourages and also distorts domestic as well as international
investment. The investors avoid to make investment in a country where there is a high level of
corruption. Similarly, it also fragments loyalty. The confidence in public institutions is also
shattered due to corruption, which in turn destabilizes the political and social systems of the
nation. Speaking against corruption, the then president of the US, Bill Clinton, while signing the
amendments to Foreign Corruption Practices Act, 1998 stated that, "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".88
With the enforcement of Foreign Corrupt Practices Act, 1977, pressure was put on OECD and as
a result, a recommendation was made by it that offering bribes to foreign public officials in
context of business transaction should be made a criminal offense.. Another resolution was
adopted by OECD in 1996, according to which it was recommended that the member countries
should denounce the legislations which allow tax deduction for bribes. It was believed by the
87 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.
88 William J Clinton "Statement by the President." Office of the Press Secretary, The White House (2000).

2
OECD members that the best way to deal with the menace of bribery to foreign officials was to
have a binding convention and after prolonged negotiations, such convention was signed by the
member countries in February 1999. 89
Distinction between public and private functions is not very easy in practice, 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:
It is required by the OECD convention that all the member nations issued in a domestic
legislation, which make offering bribe foreign public officials or criminal offense. It has been
mentioned in Article 1:
Each party shall take measures necessary to establish that it is a criminal offense under its Laws
for any person to intentionally offer, promise or give any undue pecuniary advantage to foreign
public officer, for the purpose that the official acts regarding the performance of official duties,
to obtain or retain business or other improper advantage by conducting international business.
Similarly, complicity in any attempt or write the foreign public officials in any form described in
Article 1 will also be considered as a criminal offense.
Similarly, Article 2 of the convention requires that the member states should affix liability to
legal persons regarding the offer of bribe me to public officials abroad. Under Article 3 stress has
been laid that sanctions on violators need to be "effective, dissuasive and proportionate". It is
further provided that in case of jurisdictions where criminal liability is not applicable to legal
89The 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..

2
persons, the persons may be subjected to sufficient civil penalties in order to make sure that any
proceeds are confiscated. Jurisdiction matters are discussed in article for which provides:
"Each party shall take such measures as may be necessary to establish its jurisdiction over the
bribery of foreign public officials and offenses committed in whole or part in its territory and
each party which has jurisdiction to prosecute its nationals for offenses committed abroad shall
take such measures as may be necessary to establish its jurisdiction to do so. Regarding the
bribery of a foreign public official, according
to the same principles".90
It has been mentioned in Article 5 that the investigation and prosecution of the persons charged
with offering bribe to foreign officials should not be impacted by consideration of national effect
on the relations with other state or by the identity of natural or legal person involved in it.91
Article 8 of the convention is related with financial books, records and disclosure reports. It
prohibits "the establishment of off-the-book accounts. The convention has also laid stress on the
need for the member states to cooperate with each other in their fight against bribery. Mutual
obligations related with exhibition and legal assistance are mentioned in Articles 9, 10 and 11.
Under Article 12, it is required that the member states should fully cooperate with each other in
implementing the Convention. Hence, "[They] shall cooperate in getting out a program of
systematic follow-up to monitor and promote the full implementation of this Convention".92
Limitations of the OECD Convention:
Although the convention achieved some success in reducing bribery by the member states, it has
its own limitations, particularly when it is compared to the UK Bribery Act, 2010. The act of
90Spahn, 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).
91Spahn, Elizabeth K. "Multijurisdictional Bribery Law Enforcement: The OECD Anti-Bribery Convention." Va. J.
Int'l L. 53 (2012): 1.
92Paulus, 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.

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bribery has been defined by Article 1 as "any person intentionally offer[ing] or give[ing] any
undue pecuniary or the advantage to foreign public official". However, in this definition, passive
bribery has been ignored. According to the commentary on Convention states, the convention
only deals with what has been mentioned in the law of certain countries as ..... active corruption.
A difference exists between the terms of bribery and corruption. Bribery is a particular offense
that is related with the practice of offering something, generally money and in return to obtain
any illegal advantage. The term correction is related with the abuse of position of trust,
conducted for gaining an undue advantage. In case of active corruption, promise to give bride is
made as compared to passive bribery, where the offense is said to be committed by the official
who had received the bribe. The definition of bribery, mentioned in Article 1 has been described
as the because it only deals with the donors and recipients (bribed officials) have been ignored. 93
Another problem present in this regard is that the definition of "foreign public official"
mentioned in article 1 is too narrow. It is confined to the persons who are exercising functions
from a foreign country, a public enterprise or the officials or the agents of public international
organizations. Therefore, politicians, political parties and the members of such parties are
ignored by this definition. It is common to find corruption and bribery among politicians,
officials of ruling parties and the political candidates. The limited definition of bribery also
excludes the brides that are paid to the officials of state-owned companies. A public official can
be described as a person who holds the position of official authority that has been conferred to
such person by the state. Therefore, the person holding an administrative, legislative or judicial
authority in any form, whether elected or appointed. It has been mentioned in Article 1 that the
foreign public official includes the person "exercising a public function for foreign country, for
public agency or public enterprise", it has been mentioned in Commentary Article 15 to the
convention that:
"an official of public enterprise shall be deemed to perform a public function unless the
enterprise operates on a normal economic bases in the relevant market." 94
93Tarullo, Daniel K. "The Limits of Institutional Design: Implementing the OECD Anti-Bribery
Convention." Va. J. Int'l L. 44 (2003): 665.
94Pacini, 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.

2
The bribery cases involving foreign subsidiaries have also been omitted. Bribery by subsidiaries
has been mentioned in Article 2 of the Convention, but only indirectly. It is mentioned that:
"[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 officials
shall be a criminal offense."
Even if this provision can be considered as prohibiting the parent companies in member states
from using foreign subsidiaries as a conduit for bribes, it will be difficult to implement due to the
fact that legally proving the acts of legally distinct subsidiaries are related with the parent
company is very difficult.
The definition also ignores the bribery acts that are committed independently by subsidiary
companies and disguised bribes like favoritism shown to the relatives of foreign public officials
even if circumvention is facilitated in both the cases. Same is the case with the interpretation of
the phrase "other improper advantage in the conduct of international business" by the Convention
mentioned in Article 1. The commentaries on the Convention have made an effort to clarify the
meaning of "important advantage"and stated:
"It is not an offense, however, if the advantage was permitted or required by
the written law or regulation of the foreign public officials country, including case law".95
In case of most of the developing nations, the political parties and politicians as well as the
dominant senior public officials are in a position to influence or amend the present laws or draft
new legislation to serve their interests.96 Permitting all payments, whether they're justified or not,
if they are allowed in a foreign country, may facilitate brides and in this we defeat the intention
of the Convention. In countries where such payments are allowed by their 'culture', the
permission is generally contained in unwritten traditions instead of the written laws.97
95Harms, Brian C. "Holding Public Officials Accountable in the International Realm: A New Multi-Layered
Strategy to Combat Corruption." Cornell Int'l LJ33 (2000): 159.
96D'Souza, Anna. "The OECD anti-bribery convention: changing the currents of trade." Journal of Development
Economics 97.1 (2012): 73-87.
97Carr, Indira M., and OpiOuthwaite. "The OECD Anti-Bribery Convention Ten Years On." (2009).

2
Corruption is a major obstacle for the proper development of Libya98. 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 revolution99. There is a defected institutional structure
to combat corruption in the county and violence along with political instability undermines the
rule of law100. 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
from the constitutional declaration coming into force when Gaddafi was ousted. The security
apparatus along with the Judiciary also proving to be ineffective which is making the proper
implementation of law very difficult101.
There is a lack of effective mechanisms. Deciding which corporations have failed to comply with
its demands and deciding who is bribing whom, have to be decided by the police force of the
member state. However, they can be lax in performing their duty, because the police may have
their own interests in such cases. The appropriate solution is the establishment of a central body
that had the responsibility to monitor compliance by all the member countries with the
Convention.
For all its limitations, the OECD Convention is a step forward in combating bribery and
corruption.
98Domoro, 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.
99Domoro, 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.
100Rose-Ackerman, Susan, and Bonnie J. Palifka. Corruption and government: Causes, consequences, and reform.
Cambridge university press, 2016.
101Rose-Ackerman, Susan, and Bonnie J. Palifka. Corruption and government: Causes, consequences, and reform.
Cambridge university press, 2016.

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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
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.

2
The FCPA is applicable only in case of bribery of non-US public officials (another US
statutes, commercial bribery has been criminalized, like the Travel Act, 1961), and considerably
effects the US business in terms of corruption and bribery offenses.
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. Under the FCPA,
conduct by some classes of persons and entities making payments to foreign government
officials, has been criminalized if there is "corrupt intention" to obtain or retain business.
The anti-bribery provisions present in FCPA do not allow the intentional use of mails or any
source of instrumentality of interstate commerce for using dishonestly, pertaining to an offer or
payment that has been promised to be paid or the authorization of payment in monetary form or
anything else of value to a person. Such sources are prohibited to be used, particularly with the
knowledge that all are part of the money or valuables being offered, given or promised to be
given, to a foreign official, directly or indirectly, for the purpose of influencing the official in his
official capacity. Therefore, this provision does not allow the use of any part of such money or
valuable thing to induce the foreign official to do or not to do any act that contravenes his or her
lawful duty or to secure an improper advantage for assisting in obtaining a retaining business, or
directing business to any person.102
The FCPA is applicable to all US citizens and certain foreign issuers of securities. The preamble
of OECD Convention on Combating Bribery of Foreign Public Officials in International
102The Foreign Corrupt Practices Act 1977 (FCPA), 15 USC 78dd-1, et seq.

2
Business Transactions, offering bribr to foreign public officials results in serious political and
concerns. It also weakens the economic development and good governance. Moreover, it also
causes distortion of international competitive conditions. Amendments were made in 1998 to the
Act in order to make sure that the OECD Convention confirms the date and at the same time to
ensure the anti-bribery provisions also apply to foreign firms as well as the persons who are
acting directly or through their agents to make corrupt payments within the territory of the
United States. A broad interpretation has been given to the term territory by the Department of
Justice. Their Criminal Resource Manual for prosecutors provides that it is applicable "whenever
any foreign company or national has caused an act within the territory of US by any person who
is acting as the agent of such company or national”.103
This interpretation allows the prosecution of foreign nationals who have not even visited the US,
provided that they caused a certain act, while furthering the offense to take place in the US and
of the foreign companies, who are liable for the acts that have been carried on on behalf of such
company, or in other words, a form of strict liability. Often, prosecution is initiated regarding the
accounting provisions of the FCPA. According to which the companies with securities listed on
US stock exchange, (a) should make and keep books, records and accounts that fairly and
accurately reveal the transactions of the Corporation and (b) device 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
103Deming, 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.

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related to foreign corrupt practices that was carried out in the USA was the Watergate 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 whistle-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 FCPA104. 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 Whistle-blower has been initiated. The law prohibits any kind of retaliation with
respect to whistle-blowers and fines have been imposed by the SEC on companies in relation to
actions such as removing the whistle-blowers from their positions, giving the investigation
responsibilities to the whistle-blowers of the action which has been reported by them, changing
the job function of the whistle-blowers, taking away the supervisory responsibility of the whistle-
blowers and marginalising whistle-blowers.
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, whichhave to be considered carefully. The policy of
the Department of Justice is the primary policy related to the federal prosecution of the business
104Smarzynska, 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

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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 1934105.
American Anti-Corruption Act 1977
The American Anti-Corruption Act (AACA)106 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.
105Securities Exchange Act 1934 (US) WHAT SECTION
106Steiner, George A., and John Steiner. Business, government and society. New York, 1994. Who is the publisher?

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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.
5.7.1 Active and passive bribery UK Bribery Act 2011
There are four offenses mentioned in the UK Bribery Act: the general offenses of active and
passive bribery, offering bribe to foreign officials, failure of commercial organization to prevent
bribery.
The two general offenses are in some aspects similar to the previous laws like the Prevention of
Corruption Act, 1906, Public Bodies Corrupt Practices Act, 1889 and Prevention of Corruption
Act, 1916. The offense of bribing another person has been mentioned in section 1.
(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

2
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.
Both active and passive bribery are covered by these offenses and while doing so, the key
concepts of "relevant function or activity" and "improper performance" have also been
introduced. The former covers the functions of a public nature, and any activity related with the
business, that is performed in course of the employment of a person not performed by your own
behalf of the body of persons (corporate or incorporated). It is expected that the person
performing the function of activity should perform it in good faith and impartially or they should
be in a position of trust while performing it. The latter will be decided by seeing if the function
or activity has been performed in breach of a relevant expectation and if there was any failure to
perform the function of activity, that in itself amounts to a breach of relevant expectation. The
function or activity can be described as relevant even if it is not related with the UK and it has
been 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 intothe 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-

2
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 can be described as the more important provision for the present research. This section
outlines the offense of bribery of a 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).
The OECD requirement has been incorporated in this offense according to which the supply-side
of bribery regarding the foreign public officials and also the active and passive bribery
requirements of domestic and foreign bribery in the United Nations and CoE criminal law
conventions. The UK Bribery Act also has a similar definition of "foreign public official" as that
of the above named conventions, and it also mentions that bribery only takes place when the
applicable national law of the foreign public official does not allow order requires the official to
be influenced. Conceptually, and explicit focus has been placed on the intention of bribe, that
should try to obtain or retain business or business advantage, that is kept in focus on international
business transactions and also the location of corporate library within the transnational markets.
This business aspect results in a narrower test, as compared to the general offenses, but at the
same time, the wider focus on the "intention to influence" instead of inducing "improper
performance" as in case of general offenses, results in a wider test. After saying this, according
to the UK BA it has been described as illegal to offer. Bribe to a foreign official, if the bride is

2
given in connection with business transactions even if it may be a rare case that a bride may be
given in any other circumstances in this regard. Hypothetically, bribe, may be given by a
corporation to a foreign official for encouraging transformation in policy to reflect the general
interests of the UK, for instance, which has no particular business advantage associated with the
bribe.
5.7.3 According to the corporate offense mentioned in the section 7, is the cause of most for the
private sector. A new offense of failure on the part of commercial organizations to prevent
bribery has been created by this section. (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 forC to prove that C had in place adequate
procedures designed to prevent persons associated with C from undertaking such conduct.107
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 intention behind
the offense under section 7 is to reverse current corporate liability legislation by introducing the
chances of "strict liability" for the companies that have failed to prevent bribery; the corporation
may be found criminally liable even if no person within the company knew regarding 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.
‘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
107Bribery Act 2010 s.7

2
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 around.
Rather than 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). Associated person has been defined by section 8 as a person who is going to perform
services for or on behalf of the corporation. As a result, such person can be an employee, agent
or a subsidiary of the company. A recent PricewaterhouseCoopers event highlighted this third-
party integrity risk to companies108. 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. Hence, emphasis is placed on the corporations to make
sure that they have robust anti-corruption procedures and compliance regime so that their
employees, agents, intermediaries or third parties acting on behalf of the company are prevented
from committing bribery. The implications of this requirement is a need for shifting away from
the limited approaches of criminal prosecution and in favor of promoting non-enforcement
mechanisms and their variations (for instance, enforced self-regulation as well as self-
regulation).109
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
108Managing 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>.
109 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>.

2
business ‘on an uneven playing field’. Facilitation payments are otherwise known as ‘small
bribes paid to facilitate routine Government action’. In some countries, these forms 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 forms of payments are essential for their operations in
some regions, However the distinction between facilitation payment and a bribe is not clear in
many cases. For example, these could include lorry drivers required to make small payments to
pass through borders, or payments given to officials to accelerate the process of obtaining trading
license or passport.. This type of payments may result in the offense of bribery of foreign public
officials mentioned in section 6.
Where the intention is of inducing improper conduct and when the acceptance of payment can be
described as improper, the offense of active bribery mentioned in Section 1 may be committed
and as a result, also the corporate offense mentioned in section 7. Facilitation payments were
also declared unlawful under the previous legislation, and as against the US at FCPA, the UK
BA does not contain any exemption regarding such payments. 110 The position is related with the
recommendations made by OECD in 2009 when it was acknowledged that small facilitation
payments also had corrosive effect, especially on sustainable economic development of the
nation and 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 law111.
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 certain parts of the globe and the abolishing of facilitation payment is the long-
term objective which needs social and economic progress and sustained commitment towards the
rule of law where such payments are a problem. This needs partnership between various
international bodies, anti-bribery lobby, different governments, as does representative bodies and
110Jordan, 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.
111Palmer, 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.

2
sectoral organizations. 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.112.
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 offense of duress mentioned under the
common law may also be available as circumstances are present under which the individual does
not have any other choice but to make payment for the purpose of protecting themselves from
loss of life, limb or liberty. Therefore, it is not likely that the UK authorities are going to
prosecute small, one of facilitation payments. 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. Then, it can be said that such persons are committing
the offenses related with money laundering under the proceeds of crime act,2002 (POCA).
Failure to report places the individual that makes the facilitation payment at risk of criminal
112Lord, Nicholas. Regulating corporate bribery in international business: Anti-corruption in the UK and Germany.
Ashgate Publishing, Ltd., 2014.

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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 sensationalist113. According to the UK BA
Guidance 100 it has been clearly stated that expenditure for improving the image of commercial
organization or to establish cordial relations can be accepted as an established and significant
part of business and it is not the intention of UK BA to criminalize such behavior provided. It
can be described as proportionate and a reasonable. For instance, reasonable travel and
accommodation expenses, which allow the foreign officials to visit 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 bribe 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 therefore to 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
(For example, the type and level of advantage that was offered, manner and form of providing
the advantage and the level of influence that such officer had on awarding contracts), the
necessary inference will be that the intention behind making the expenditure was to influence the
official so that a business or business advantage may be granted in return.
113 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>.

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Extra-territorial jurisdiction
According to section 12 of the Act, jurisdiction has been granted to the courts regarding sections
1, 2 or 6 offenses that took place in the UK, and also regarding the offenses that took place
outside the UK when the person has a close connection with the UK. Therefore British nationals,
persons who ordinarily reside in the UK, the entities incorporated in the UK or Scottish
partnerships are included. However, the requirement of close connection is not applicable in case
of section 7, the corporate offense. According to this section, if the organization was formed or
incorporated in the UK or if the organization carries on business are part of its business in the
UK, regardless of the place of its formation, not in corporation, the courts in UK will have
jurisdiction. Therefore the question arises how it can be compared with the US deals regarding
the issue? If a preferable approach is present?
The UKBA Government Guidance
Section 7 of the UK BA faced much lobbying by national as well as international business before
and even after its passage. The issues related with 'adequate procedures' and what amounts to
'carrying on business' in the UK were the main focus. 114 Under section 9, the government was
under an obligation to publish guidance regarding its provisions. The guidance was published by
the government on 30 March 2011. Three months before the enactment of the Act on 1 July
2011. The guidance discussed these issues, but got a mixed response (as was probably expected).
For instance, the guidance was held to be 'deplorable' by TI. It was argued that it would weaken
the Act. According to the executive director of TI UK, Chandrashekhar Krishnan
‘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
114Nicholas Lord Regulating corporate bribery in international business: Anti-corruption in the UK and Germany.
Ashgate Publishing, Ltd., 2014.

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read more like a guide on how to evade the Act, than how to develop company procedures that
will uphold it.’115
On the other hand, there were several organizations from the private sector that refer to the
"common sense" approach adopted by the guidelines. A significant role may be played by the
lobbying on part of business groups, as is indicated by the perspective of a major organization
from private sector:
‘…the final version *as compared to an earlier consultation is 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)
The Guidance deals with the issue of 'adequate procedures' that resulted in several questions after
the passing of the UK Bribery Act. There are 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) that have
been mentioned along with the community and examples from case study. It is clearly stated in
the Guidance that these are not perspective on one-size-fits-all approach. It is also acknowledged
that small and medium enterprises are also likely to need different procedures as compared to the
MNCs. These principles encourage a contextual and risk-based approach to deal with bribery
risks and it was recognized by the Guidance that there are no policies on procedures that can deal
with and prevent all the cases of bribery.
Concern has also been expressed regarding the so-called "carve outs" of the Guidance. It has
been mentioned by the Guidance regarding the "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 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
115Bribery Act 2010 Guidance - GOV.UK (2017) Gov.uk <https://www.gov.uk/government/publications/bribery-act-
2010-guidance>.

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commercial organisation” for the purposes of section 7. Likewise, having a UK
subsidiary will not 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).
Two issues are raised by this statement: first of all the overseas companies may not fall within
the purview of the Act; and secondly the patent companies that have UK subsidiaries may not
satisfy the test of "carrying on business" in the UK. However, there can be a difference in the
interpretation of this statement. For instance, a group of investors, based in the UK, along with
International Corporate Governance Network had expressed concern regarding the fact that the
Guidance provides exemption to some overseas issuers in London Stock market from the ambit
of UK Bribery Act. It was termed as the "mooted carve out" and was going to be based on the
companies that did not have any other business presence in the UK except raising capital. This
possible interpretation was challenged by them that it does not amount to carrying out business
in the UK. It was argued by them that such carve out may have adverse impact on the integrity of
London financial market, resulting in a disadvantage for the UK companies. Similarly, it was
mentioned by Chandrashekhar Krishnan of TI that "the foreign companies may be listed on
London Stock exchange, pay bright and maybe able to get away with it" which will result in a
disadvantage for all the honest companies and at the same time. It will go back on the stated
purpose of the Government to create a level playing field for all through the extraterritorial reach
of the Act (Krishnan, 2011: TI website104). . On this account, it is possible that a parent
company having a subsidiary in the UK can be prosecuted for bribery by one of its other
subsidiaries in the third country. For Alderman, such a situation allows the ethical companies of
UK not to be disadvantaged by the foreign companies that are using different standards and also
use 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 2010has a wider scope as compared to the FCPA in three respects. Firstly, the

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Bribery Act seizes persons who offers bribe to any person whereas the U.S. FCPAis 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 because such payment is 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.