It is important to note that FSMA-authorised firms are under a separate, regulatory obligation to identify and assess bribery and corruption risks and put in place and maintain policies and processes to mitigate such risks. In practice, where these obligations are implemented effectively, banks are likely to have a higher degree of readiness in their response to the Bribery Act than other sectors.

The obligations of the FSA's rules and Principles in relation to the Bribery Act are not identical; banks will need to bear this in mind when reviewing the adequacy of their anti-bribery policies and procedures. The FSA has stated that the risk of bribery and corruption is relevant to two of its statutory objectives:

· the reduction of the extent to which it is possible for regulated firms to be used for a purpose connected with financial crime, which includes corruption

· market confidence - because bribery and corruption distort natural competition and could affect the UK's reputation, making it a less attractive place for firms to conduct business.

Banks need to be mindful that the FSA can take regulatory action against an entity - and/or relevant persons performing controlled functions - that fails to adequately address the risk of corruption or bribery (i. e. has inadequate systems and controls). The FSA's rules and Principles in SYSC 6.1.1R and PRIN 1, 2 and 3 apply to banks in relation to regulated activities carried on by a bank from an establishment in the UK. This includes corrupt transactions by anyone acting on the bank's behalf irrespective of where they are based. In relation to activities that might have a negative effect on confidence in the UK financial system, the fitness and propriety of the firm or its ability to meet financial resource requirements, SYSC 6.1.1 R and PRIN 1,2 and 3 apply in relation to activities wherever they are carried on. [15]

Unlike the Bribery Act, the FSA does not need to find evidence of corruption or bribery to take action. This is most clearly demonstrated by the July 2011 FSA regulatory action against a firm regarding breaches of Principle 3 of the FSA's Principles for Businesses and Rule SYSC 3.2.6R of the FSA's Senior Management Arrangements, Systems and Controls Handbook. In this particular case, the firm had put in place anti-bribery and corruption systems and controls but was considered by the FSA to have failed to implement them effectively. The final notice statement clearly states `the FSA did not seek to determine as part of its investigation whether any of this business was corrupt'.

Summary

The Bribery Act 2010 represents arguably the toughest legal regime against bribery anywhere in the world. Unlike the US Foreign Corrupt Practices Act of 1977 (as amended) the UK requirements cover both domestic and foreign bribery acts. There was good reason for bringing in the new Act: as the previous offences were fragmented and complex and the UK had been criticised by the Organisation for Economic Cooperation and Development for failing to meet international standards.

The Act adds an accompanying layer to the existing regulatory and ethical compliance considerations faced by banks operating in the UK. Existing considerations include FSA regulation, competition law, health and safety rules and corporate social responsibility.

The Act replaces previous offences with two general offences, covering active and passive bribery and a specific offence relating to the bribery of foreign public officials (all of which are applicable to individuals and UK-registered companies). It also introduces a specific corporate offence of failing to prevent bribery from occurring. The specific corporate offence is designed to make banks and other businesses responsible for bribery committed on their behalf. The liability relates to failure to prevent active bribery or bribery of a foreign official for or on behalf of a corporate body by, for example, its employees, agents or subsidiaries.

Companies can defend against the allegation that they failed to prevent bribery from happening by showing that `adequate procedures' were in place. The Act does not define `adequate procedures' but it does require the Secretary of State for Justice to publish `guidance about commercial organisations preventing bribery', which he duly did in March 2011. The Ministry of Justice (MoJ) guidance sets out six principles (the `Principles') and illustrates good practice examples rather than prescriptive standards.

Importantly, there is a clear message from the government that its guidance is not intended to provide a safe harbour. Whether adequate procedures are in place or not will ultimately be a matter for the courts to determine based on the facts of a given case.

2.5 The Bribery Act 2010 in practice

2.5.1 The City watchdog report

The City watchdog has warned that many banks are failing to provide proper controls to prevent bribery and corruption despite the high profile introduction of the Bribery Act last year. The Financial Services Authority said almost half of the 15 banks it visited for spot inspections failed to provide an "adequate anti-bribery and corruption risk assessment". It said it was considering referring some for further investigation and possible fines.

The FSA warned that senior managers' knowledge of corruption laws was so poor that it was "difficult for us to see how firms' senior management could provide effective oversight". Only two of the firms visited, it added, had carried out an anti-corruption audit. Tracey McDermott, the FSA's acting director of enforcement and financial crime said to the FSA, and the newly formed Financial Conduct Authority that will take on responsibility for financial wrongdoing from next year, will continue to monitor banks' progress closely and will consider issuing fines.

The warning comes hot on the heels of an Ј8.75m fine handed down to Coutts, the banker to the Queen owned by RBS, for breaches of money-laundering rules after three years of "serious" and "systemic" problems in handling the affairs of customers vulnerable to corruption because of their political links. The FSA's latest investigation examined the banks' rules and procedures to limit gifts and hospitality and check the background of future employees and remuneration structures. It found that investment banks generally limited hospitality to Ј400 for individuals and to Ј15,000 for corporate or sponsorship events. The report found that one banker had accepted corporate hospitality of "a three-day trip to the football World Cup in South Africa costing Ј10,000 for one employee and his wife".

No individual banks were named in the report. The introduction of the Bribery Act last year was the most significant overhaul of the UK's bribery laws for 100 years, placing legal responsibility on firms for ensuring that anti-corruption measures are enforced. [20]

2.5.2 Sweett Group Case

Construction and professional services company Sweett Group plc was sentenced Friday in London and ordered to pay Ј2.25 million ($3.15 million) for bribing an official in the United Arab Emirates. The company pleaded guilty in December 2015 to a charge of failing to prevent an act of bribery intended to secure and retain a contract with Al Ain Ahlia Insurance Company (AAAI), contrary to Section 7 (1) (b) of the Bribery Act 2010. The offenses occurred between December 2012 and December 2015. SFO director David Green said Friday: "This conviction and punishment, the SFO's first under section 7 of the Bribery Act, sends a strong message that UK companies must take full responsibility for the actions of their employees and in their commercial activities act in accordance with the law. ” The SFO announced in July 2014 that it had opened an investigation. The investigation found that a Sweett Group subsidiary, Cyril Sweett International Limited, made corrupt payments to Khaled Al Badie. He was then the vice chairman of AAAI and chaired AAAI's real estate and investment committee. The payments were intended to secure a contract with AAAI for the building of the Rotana Hotel in Abu Dhabi, the SFO said. Abu Dhabi owns part of AAAI. The court Friday fined London-based Sweett Group Ј1.4 million ($2 million), and assessed about Ј851,000 ($1.2 million) in confiscation. The court also award the SFO costs of about Ј95,000 ($136,000). The SFO said its "investigation into individuals continues." [20]

2.5.3 The case of Standard Bank in Tanzania

A former unit of South Africa's Standard Bank based in London has agreed to pay $32.6m (Ј21.7m) in fines and repayments of bribes and profits following an alleged bribery scandal in Tanzania. The high court in London heard how the bank's division had agreed to the payments in exchange for the Serious Fraud Office (SFO) offering it the UK's first deferred prosecution agreement if conditions are met. Deferred prosecution agreements (DPAs) were introduced in February last year and allow prosecutors to suspend a prosecution for an agreed period of time and then withdraw it. In exchange, companies must pay a fine, repay related profits and assist in the prosecution of any individuals.

The former Standard Bank unit is charged with failing to prevent bribery under the Bribery Act 2010 but, under the DPA, prosecution has been halted and will be dropped after three years if conditions are met. The settlement in London relates to the banking division's work in 2012-13 on a $600m private placement of sovereign debt to finance electricity, water and other infrastructure work in Tanzania, part of the government's five-year development plan. The original fee on the capital-raising proposed by the then London office of Standard Bank, and a local sister office in Tanzania, was 1.4%, but plans for the transaction stalled. Later, the fee was raised to 2.4%, and the former Standard Bank units agreed to pay 1% to a local company in Tanzania, Enterprise Growth Market Advisors Ltd.

As a result of the new fee arrangements, $6m was paid to a new bank account in the name of EGMA in March 2013. Within 10 days, the account had been almost entirely emptied after four cash withdrawals of between $1.17m and $1.45m. The proceeds have not been traced. As well as the settlement reached in London on Monday, the scandal is subject to an investigation in Tanzania and is also being examined by the US Securities and Exchange Commission. Standard Bank will pay financial orders of $25.2m and will be required to pay the Tanzanian government a further $7m in compensation. [20]

2.5.4 Compass group subsidiary case

An international subsidiary of Compass Group, the British catering giant that supplies more than 1,500 UK primary schools and 30 NHS Trusts, paid bribes to government officials in Kazakhstan, documents seen by the Guardian reveal. Theunit's agents made "facilitation payments” to customs officers in the former Soviet republic for an unspecified period up to 2011, internal Compass papers show, with the transactions originating in the same international division that was separately accused of bribing a UN official to win contracts. The company paid Ј40m to settle civil litigation in the UN case in 2006, without admitting legal liability.

One Compass document, however, which was co-authored in September 2013 by the group's human resources director, Jane Kingston, and its general counsel, Mark White, admits: "As part of the Group's implementation of adequate procedures to prevent bribery and corruption in the business and in order to create a defence under the 2010, a Group-wide roll-out of the Code of Business Conduct had begun in February 2011 and before the 2010 Act came into force.

"As part of the roll-out, the Group became aware of small facilitation payments being made through the freight forwarders in Kazakhstan in order to release goods from customs and immediately required the practice to stop. The position was closely followed up in order to ensure that the practice had indeed stopped. ”

The Serious Fraud Office (SFO) defines a facilitation payment as "a type of bribe and should be seen as such. A common example is where a government official is given money or goods to perform [or speed up the performance of] an existing duty. Facilitation payments were illegal before the Bribery Act came into force and they are illegal under the Bribery Act, regardless of their size or frequency”. Lawyers said that facilitation payments, sometimes referred to as "speed" or "grease” payments, were previously outlawed under the Public Bodies Corrupt Practices Act 1889, as well as via the common law offence of bribery.

The company said it was "committed to setting the highest standards for responsible business practice, which is underpinned by a global framework of policies and measures and is supported by comprehensive communications and training”. [20]

Summary

The Bribery Act 2010 proved to be really efficient in preventing and fighting corruption all over the world. Dozens of multinational companies notorious for the terrific fines and penalties are a good evidence of it.

Conclusion