Laws Prohibiting Bribery: Global Standards And Compliance

Bribery is a criminal act that is prohibited by law in many countries. In the United States, for example, there are multiple federal statutes that prohibit bribery, with the most notable one being 18 U.S.C. § 201, which criminalizes the bribery of federal officials. This statute has two main subparts: Section 201(b) criminalizes the payment, offer, and receipt of bribes, while § 201(c) prohibits the payment, offer, and receipt of illegal gratuity. The Foreign Corrupt Practices Act (FCPA) is another important piece of legislation that prohibits bribery and applies to U.S. persons and companies, as well as foreign firms and individuals. It is important to note that anti-bribery laws are not limited to cash bribes and can include a broad range of activities such as gifts, travel, meals, entertainment, and charitable donations.

The Foreign Corrupt Practices Act (FCPA)

The FCPA defines a "foreign official" broadly, including agents and employees of a foreign government such as professors and employees of state universities, advisors to ministries, members of government committees, healthcare professionals at state-owned or controlled hospitals, employees of public international organizations, and members of royal families. The law also applies to the relatives and friends of foreign officials.

Under the FCPA, it is unlawful for a US person or company to offer, pay, or promise to pay money or anything of value to any foreign official for the purpose of obtaining or retaining business. This includes gifts, per diems, travel and meals, training or scholarships, employment, and charitable donations. The FCPA also prohibits authorising any money, offer, gift, or promise to give anything of value to any person, knowing that it will be offered to a foreign official.

The FCPA imposes significant sanctions for violations, including civil enforcement actions, disgorgement of ill-gotten gains, prejudgment interest, substantial civil penalties, and oversight by an independent consultant. Companies and individuals must also maintain accurate books and records and implement adequate internal accounting controls.

The FCPA is jointly enforced by the Securities and Exchange Commission (SEC) and the Department of Justice.

Domestic bribery (private to public)

In the United States, domestic bribery (private to public) is prohibited by multiple federal statutes, with the most important being 18 U.S.C. § 201. This statute has two main subparts: Section 201(b) criminalizes the payment, offering, and receipt of bribes, while § 201(c) prohibits the payment, offering, and receipt of illegal "gratuities". The penalties for violating § 201(b) are more severe than those for violating the anti-gratuities provision.

The definition of bribery under § 201(b) involves the giving and receiving of bribes. For the giver, § 201(b) requires the prosecution to prove that something of value was corruptly given, offered, or promised, directly or indirectly, to a public official. For the recipient, the prosecution must show that something of value was corruptly demanded, sought, received, accepted, or agreed to be received or accepted by a public official. The intent required for the giver is the intent "to influence any official act", while the intent required for the recipient is the intent to be "influenced in the performance of any official act".

On the other hand, § 201(c) deals with illegal "gratuities". For the giver, the prosecution must demonstrate that something of value was given, offered, or promised to a public official. For the recipient, it must be shown that something of value was demanded, sought, received, accepted, or agreed to be received or accepted by a public official. Under § 201(c), the unlawful gratuity must be "for or because of any official act performed or to be performed by such public official".

A key distinction between bribery and illegal gratuity is that bribery necessitates a specific intent "to influence" a particular official act or "being influenced" in an official act, whereas illegal gratuity only requires the unlawful gift to be given or received "for or because of" any official act. Bribery necessitates a specific quid pro quo or direct connection between the value given and a future official act, whereas illegal gratuity can be either forward- or backward-looking at a past or future official act.

It is important to note that the bribery and gratuity offences under § 201 do not require the unlawful gift to be actually paid. An offer by the giver or acceptance by the recipient is sufficient for criminal liability.

The term "public official" under § 201 is defined broadly to include Members of Congress, Delegates, Resident Commissioners, officers, employees, or persons acting on behalf of the United States or its agencies and branches, including the District of Columbia. The statute also covers "any person who has been nominated or appointed to be a public official".

Violations of § 201(b) (bribery) can result in up to 15 years' imprisonment, a fine of USD 250,000 (USD 500,000 for organisations), or up to three times the value of the bribe, whichever is greater, as well as disqualification from holding federal office. On the other hand, § 201(c) (illegal gratuity) violations carry a penalty of up to two years' imprisonment and a fine of USD 250,000 (USD 500,000 for organisations).

Domestic bribery (private to private)

The Travel Act is a federal statute that prohibits travel or use of the mails in interstate or foreign commerce with the intent to distribute the proceeds of any unlawful activity or to promote, manage, establish or carry on any unlawful activity, including violations of the FCPA or state bribery laws. As of 2016, commercial bribery is prohibited in some form in a majority of US states, and its definition in respective state statutes varies.

The federal mail and wire fraud statutes prohibit the use of mail and interstate wire communications to execute a "scheme or artifice to defraud" or deprive another of money or property, including the intangible right of "honest services." In Skilling v. United States, the US Supreme Court held that the honest-services theory of fraud includes bribes and kickbacks paid to employees of private firms, but not more generalized efforts to defraud a company's shareholders. Thus, the use of mail and wire communication in connection with commercial bribery can subject respective persons to prosecution for mail and wire fraud.

In addition, under the FCPA's accounting provisions, the SEC may pursue claims against publicly-traded companies for commercial bribery in the domestic context. The FCPA's accounting provisions, which require publicly traded companies to keep accurate books and records and maintain adequate internal controls, also apply to domestic transactions. For both wilful and non-wilful violations of the accounting provisions, the SEC can pursue both individuals and issuers of registered securities or issuers that are required to file annual or other periodic reports with the SEC. These issuers include any entity whose securities trade on a US exchange.

The consequences of commercial bribery conduct vary depending on the prosecuting entity and the statute under which the bribe is punished. The SEC can only assess civil monetary fines, and any criminal charges, which can lead to both fines and imprisonment, must be brought by the DOJ.

Corruption of foreign public officials

The Corruption of Foreign Public Officials Act (CFPOA) was passed by the Canadian Parliament in 1998 to implement the country's obligations under the OECD Convention on Combating Bribery in International Business Transactions into Canadian law. The OECD Convention, which Canada signed in 1997, aims to stop the flow of bribes and remove bribery as a non-tariff barrier to trade, creating a level playing field in international business.

The CFPOA was amended in 2013 to increase the maximum penalty for convicted individuals, create a new books and records offence, and expand jurisdiction based on nationality. The amendment also stated that the exception for facilitation payments would be eliminated at a later date. This came into force on October 31, 2017, and such payments are now included under the foreign bribery offences listed in the CFPOA.

In the United States, the Foreign Corrupt Practices Act (FCPA) of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq., was enacted to make it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. The anti-bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to a foreign official to influence the official, induce the official to do or omit to do an act in violation of their lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business.

The FCPA defines "foreign official" broadly, including agents and employees of a foreign government, such as professors and employees of state universities, advisors to ministries, members of government committees, healthcare professionals at state-owned or controlled hospitals, employees of public international organizations, and members of a royal family. The official need not be high-ranking, and the designation also applies to the relatives and friends of the official.

Violations of the FCPA contain three elements:

• A payment or something of value is offered, promised, or given;
• To a foreign official, political party, party official, or candidate;
• For a corrupt purpose.

"Something of value" extends beyond cash and gifts and can include per diems, travel and meals, gifts, training or scholarships, employment, and charitable donations. A violation of the FCPA is considered to have occurred even if the effort does not succeed.

Facilitation payments

In broad terms, a facilitation payment is made to incentivise an official to work to the advantage of the payer or as a reward for having already done so. Both the offering and accepting of such a payment are offences.

The United Nations Convention against Corruption (UNCAC) prohibits facilitation payments. However, the legal status of these payments varies by country. For example, in the US, they are legal as they are considered to expedite an official process without changing the outcome. In contrast, in the UK, facilitation payments made abroad are considered bribes and are prohibited.

Under the Bribery Act 2010, which applies across the whole of the UK, facilitation payments are a form of bribery and are penalised as such. Businesses must also be aware of facilitation payments and other bribery offences. If an employee or associate is not prevented from committing bribery in the business's name, then the business may be held liable for failing to prevent bribery.

To avoid a charge, a business must be able to prove that it has taken reasonable precautions and put procedures in place to avoid the bribe from occurring. If found guilty of making facilitation payments under the Bribery Act 2010, individuals could face steep penalties, including up to twelve months in prison, an unlimited fine, or both for a summary conviction. For an indictment conviction, individuals could face up to ten years in prison, an unlimited fine, or both.

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