The bribery of a foreign public official is a serious crime in anti-bribery and corruption legislation, stated in Section 6 of the UK Bribery Act 2010. A foreign public official works on behalf of a foreign government, and therefore has access to vital information. Consequently, if a foreign public official is bribed, there are severe repercussions in the form of imprisonment and unlimited fines. Therefore, to avoid the penalties stated in the UK Bribery Act 2010, compliance with this legislation is essential.

Who are foreign public officials?

Ultimately, a foreign public official is an individual who acts on behalf of a foreign government. The UK Bribery Act 2010 deals with the bribery of both government officials and commercial officials. The UK Bribery Act lowers the threshold needed to identify whether bribery has taken place with a foreign public official in comparison to commercial bribery, because bribery of a foreign public official is considered to be a serious crime and therefore there needs to be tighter restrictions.

There is a degree of confusion surrounding who constitutes a foreign public official and therefore the Serious Fraud Office (SFO) have published some guidelines to offer organisations a clear approach to their conduct with foreign public officials. The SFO former Fraud Chief Richard Alderman produced a statement on behalf of the SFO which stated that when dealing with the conduct of a foreign public official, the SFO “are not looking for improper inducement, but an attempt to influence.”

The Organisation for Economic Co-operation and Development (OECD) convention published a test which can be used by an organisation to clarify whether a foreign public official is legitimate or not. This OECD test works upon the basis of whether the foreign state is in a position to influence the foreign organisation which is in question. The purpose of this test is to establish whether the organisation is being influenced and ran by the State, which has serious implications regarding bribery and corruption.

How to prevent bribery of foreign public officials?

The UK Bribery Act states that adequate procedures should be implemented by organisations to demonstrate that they have attempted to prevent the bribery of a foreign public official. The stated adequate procedures are:

– Proportionate Procedures. The procedures which an organisation puts into place should reflect the scale of the risk which the organisation could face, therefore the procedures are proportionate to the risk.

– Top-level Commitment. This refers to individuals higher up within the organisation, as it is intended that they demonstrate their commitment to anti-bribery and corruption legislation.

– Risk Assessment. A risk assessment must be conducted by an organisation regularly to analyse and find out how potential risks to an organisation’s integrity could occur.

– Due Diligence. These procedures should be conducted in relation to the individuals who will be performing on behalf of the organisation.

– Communication. An organisation is expected to communicate the adequate procedures to all members of the organisation, as well as conducting training.

– Monitoring and Review. As time goes on the employees and personnel of an organisation will change, therefore updates and reviews of adequate procedures need to be conducted to ensure they are all in line with the organisation and potential risk.

It is advised that commercial organisations have a code of conduct which consist of the adequate procedures above. Therefore, if a bribery offence does take place within an organisation, then the adequate procedures will demonstrate that the organisation has attempted to prevent bribery appropriately.

What are the consequences of failing to prevent bribery of a foreign public official?

Due to Section 7 of the UK Bribery Act 2010 the “broad and innovatory offence” of the failure of commercial organisations to prevent bribery has been established. An organisation is now held responsible for any bribery offence or corruption which occurs within their organisation, if there has been no demonstration of adequate procedures implemented in attempt to prevent bribery from occurring. `

In July 2018 there was heightened controversy surrounding the Australian government and the bribery of foreign public officials by the Australian consulting firm Sinclair Knight Merz (SKM). SKM were found to be bribing foreign public officials in Vietnam, the Australian government became implicated in this bribery due to SKM being a significant contributor to the government’s foreign aid programme. SKM were found guilty of bribing Vietnamese public officials in order to secure work on aid projects from 2006-2011.

This is a demonstration of how bribery of foreign public officials can occur, and therefore the necessary measures taken to expose when this bribery has taken place and to prevent against it, is important.

Section 7 of the UK Bribery Act 2010 holds organisations accountable for bribery and corruption offences which occur within the organisation. Therefore, to avoid the penalties which could be imposed upon an organisation, adequate procedures and steps to identify if a bribery offence has occurred, must be conducted.

What steps can be taken to identify a bribery offence?

The UK Bribery Act 2010 states that a bribery offence can assume 4 forms:

1) Section 1 of the Bribery Act-The offence of offering a bribe

2) Section 2 of the Bribery Act- The offence of accepting a bribe

3) Section 6 of the Bribery Act- The offence of bribing a foreign public official

4) Section 7 of the Bribery Act- The offence of an organisation failing to prevent bribery by those who work on their behalf

Section 7 of the UK Bribery Act is perhaps the most contentious, as it establishes company liability for a bribery offence which has been conducted by an employee or associated person. Therefore, organisations are now required to identify when a bribery offence has been committed, to protect the organisation against potential fines.

If an employee or associated person has committed a bribery offence, then the organisation initially needs to decide how that individual is related to the company. Section 8 of the UK Bribery Act defines an “associated person” as an individual which performs services on behalf of an organisation. Therefore, third parties and agents, such as consultants, sub-contractors and advisers, are included in the scope of associated persons. An organisation which is in contact with these associated persons is subsequently liable for any corrupt offences which a third-party member might conduct. Consequently, an organisation should carefully choose which third parties they are going to employ.

The Red Flags which can help you to identify corrupt behaviour:

1) Evidence of an employee/ associated person purchasing unusual items on behalf of the company. This sort of behaviour could suggest that an employee and a client of the company are engaging in an usual relationship, especially if there is a large quantity of an item ordered which is unnecessary for the company.

2) The acceptance of poor quality items, which the organisation would not tolerate. If an employee is still allowing the purchasing of such items, it might suggest that a corrupt deal has been arranged between the employee and the supplier.

3) Invoices can expose strange behaviour, therefore an organisation should monitor invoices to check if there is a pattern of unusual invoices. Unusual invoices will be un-flagged and unprofessional, which would suggest they are being used for illegitimate means.

4) If an employee appears to be pushing for a particular transaction or seems unusually invested in a particular business deal, then it suggests that they have a conflict of interest.

5) Expenses can be monitored to expose corrupt activity. If an employee has offered unusual and incomplete travel forms and expenses, then it could be discovered that the individual is using the money from these expenses for improper means.

6) Associated persons pose a high risk to organisations, therefore associated persons and third parties must be analysed for signs of corruption or unusual conduct.

What happens if your organisation doesn’t identify that a bribery offence has been committed?

If an organisation cannot demonstrate that adequate procedures were in place, then they will be subject to an unlimited fine. Furthermore, the organisation might have to consider that the proceeds of its criminal conduct can be confiscated under the UK Proceeds of Crime Act 2002. If the bribery offence which has occurred is severe, then an organisation could also be subject to automatic debarment under the EU Public Procurement Regulation 2004/18/EC.

In July 2018 a US and UK bribery and corruption investigation of Glencore, the Anglo-Swiss multinational commodity trading and mining company, took place. UK authorities began to investigate the corrupt activity of Glencore, with specific investigation into Glencore’s conduct with Israeli billionaire Dan Gertler and the leader of the Democratic Republic of Congo. The Serious Fraud Office (SFO) have lobbied to conduct a full investigation into Glencore’s dealings in the Democratic Republic of Congo. Glencore is based in Switzerland, yet the organisation’s shares are traded in London, therefore the SFO have the right to conduct an investigation. Peter Jones, Senior Researcher/Campaigner for Global Witness, regards the SFO’s involvement in the Glencore investigation as a positive push forward to keep UK-listed corporations responsible for their business overseas. The concerted efforts by UK and US authorities demonstrates the commitment to preventing corruption and bribery in the business sector.

If an organisation can identify a bribery offence before it is too late, then it will be beneficial in the long term. Therefore, knowledge of how to conduct the necessary investigations to uncover corruption in an organisation is vital.

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Bribery and corruption has been increasing across the business sector since the beginning of the twenty-first century. Consequently, the Organisation for Economic Co-operation and Development (OECD), the UK Ministry of Justice, the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act 2010 have instigated a commitment to putting an end to bribery and corruption. Therefore, there is now more guidance than ever to help individuals and businesses to avoid bribery and corruption.
How can implementing adequate procedures allow an organisation to avoid bribery and corruption?
The UK Bribery Act 2010 introduces “adequate procedures” in Section 9, these procedures aim to defend organisations against corruption and to offer guidance on how to avoid bribery and corruption.
The Ministry of Justice has published guidance to demonstrate that the implementation of adequate procedures can help an organisation to avoid bribery and corruption in the workplace. Therefore, if an organisation successfully implements adequate procedures into their organisation, then they should be able to avoid bribery and corruption.
Adequate Procedures:
1) Proportionate Procedures. An organisation should implement procedures which are proportionate to the types of risks which could affect the organisation. Thus, factors such as the size of the company and the industry in which the company rests, will affect the type of corruption risk. Consequently, procedures need to take this in to consideration.
2) Top-Level Commitment. The employees and associated persons within an organisation will only commit to anti-bribery and corruption policies seriously, if the board of directors commit to the policies as well. Therefore, there needs to be a demonstration from individuals at the top of an organisation to prove that bribery and corruption is not tolerated within their organisation.
3) Risk Assessment. An organisation needs to conduct a risk assessment across the organisation to identify where corruption may take place and why. As a result, an organisation will be able to identify the external and internal risks which they need to tackle.
4) Due Diligence. It is recommended that an organisation conducts a proportionate and risk-based approach to due diligence, and as a result this will allow the organisation to understand explicitly the individuals which they are dealing with. The Bribery Act states that organisations will be held liable for corruption conducted by associated persons, therefore the organisation needs to be aware of every single person they are conducting business with.
5) Communication. An organisation needs to ensure that all employees and associated persons understand and are aware of the anti-bribery and corruption policies in their organisation. This can be achieved through circulating the policies around the organisation through documentation, and also through offering training to the employees, to allow them to understand the policies.
6) Monitoring and Review. An organisation and its personnel are constantly changing, and therefore the types of risks which could affect the organisation will also be constantly changing. Thus, an organisation needs to review their anti-bribery and corruption policies to ensure that they are still effective.

What further steps can be taken to avoid bribery and corruption?
Avoiding bribery is the essential task of an individual and an organisation, if they want to avoid the penalties of the UK Bribery Act 2010. Therefore, an organisation needs to implement a robust anti-bribery and corruption policy in the workplace, and subsequently, there needs to be a commitment to this policy from all employees and associated persons.
Asian Development Bank (ADB) have demonstrated a commitment to anti-bribery and corruption within the business sector, which has allowed them to effectively avoid bribery at any cost. Initially, in ADB’s commitment to avoiding bribery, they published their corruption policies around the organisation. In effect, this is a demonstration of ADB complying to the adequate procedure “communication,” as the policy is being well communicated to employees. ADB even worked with the OECD to create the “Anti-Corruption Initiative for Asia and the Pacific.”
Following the implementation of adequate procedures, ADB has demonstrated a commitment to investigating all of its employees and associated persons, including third-parties and agents, to remove any form of corruption from the organisation’s contacts. In 2012 ADB recorded that they had removed 42 companies and 38 individuals from their organisation, by 2014 this had decreased to removing 31 companies and 30 individuals. This demonstrates ADB’s commitment to the adequate procedure “monitoring and review,” as they have re-investigated all associated persons to decide whether their conduct is in line with the organisation or not.
Clare Wee, leader of ADB’s anti-corruption and integrity office, has highlighted ADB’s commitment to noticing the red flags when they arise, allowing ADB to crackdown on any corrupt activity which has taken place.
Avoiding bribery and corruption is essential, therefore organisations and individuals should utilise the guidelines and advice that has been created to ensure that they are not liable for any offences.

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Politically Exposed Persons (PEP’s) can be identified as individuals who are currently, or have previously been, in a position which holds a public function and involves vast responsibility due to their access to state information. Consequently, PEP’s are ideal targets for bribery and corruption, because they have vital information and funds to offer. Consequently, if an organisation is going to communicate and conduct business with a PEP, then they need to do so fairly and lawfully, through complying with the UK Bribery Act.

How can PEP’s be a risk to organisational integrity?

PEP’s can pose a risk to organisations through bribery, corruption and money laundering. Therefore, restrictions need to be placed upon PEPs in order to monitor their behaviour in an organisation. The Dow Jones Watchlist created a list of roles which can be expected to involve risk, and this list included:

– Heads of state/national/regional government.

– Senior members of the armed forces.

– Political pressure group officials.

– Senior members of the police services.

PEP’s are very controversial; therefore, they are subject to tighter controls and regulations within organisations. The Sommet Evian Summit in 2003, which was conducted by G8 Member Nations, including the UK and the US, voted in favour of the Organisation for Economic Co-operation and Development’s (OECD) decision to place controls over the due diligence of PEP’s. These tighter controls were established to monitor the financial processing conducted by PEP’s, which in the past has been corrupt.

The controversial nature of PEP’s was heightened following the 2016 incident involving finance minister Pravin Gordhan and the Gupta family, who were involved with Oakbay Investments. The Gupta family claimed to be victims of a political campaign, which involved Gordhan being forced by the Guptas to intervene in the closure of Gupta owned business bank accounts. This enforces the importance of due diligence to protect the integrity of an organisation from the involvement of PEP’s.

To prevent PEP’s posing a risk to your organisation and reputation, investigation of PEP’s and implementation of anti-bribery and corruption policies need to be in place. Rudi Kruger, manager at Risk Solutions at LexisNexis South Africa, stated that PEP’s are risky individuals to employ due to them posing a risk of “money laundering, bribery and corruption due to their position and influence.” The Money Laundering Regulations 2007 implemented the requirement of enhanced due diligence to deal with PEP’s, notably outside of the UK, to ensure they are monitored correctly.

Another recent bribery scandal in March 2018 involved two former Greek Prime Ministers and an EU Commissioner, who were apparently bribed by Novartis, a Swiss medical giant, from 2006-2015. Novartis were investigated for bribing officials regarding drug prices and sales to hospitals, these bribes eventually totalled up to over €10 million.

If an organisation wants to achieve fair and lawful business relations with PEP’s, then organisations need to ensure they remain compliant with the UK Bribery Act, Money Laundering Regulations 2007 and the OECD regulations.