Out-Law / Your Daily Need-To-Know

Bribery Act: implications for universities

Out-Law Guide | 05 Nov 2010 | 9:41 am | 3 min. read

This guide is based on UK law. It was written in November 2010.

The UK's anti-bribery legislation will be overhauled in April 2011 when the Bribery Act 2010 comes into force. The Act introduces strict liability for organisations whose agents or associates engage in bribery, unless the organisation has adequate procedures in place to prevent it.

Organisations, including universities, should have full and effective anti-bribery measures in place before April to mitigate their risk.

The Act

The Bribery Act 2010 creates four key offences:

  • Active bribery (the offence of offering to bribe another)
  • Passive bribery (the offence of accepting or requesting a bribe)
  • Bribery of a foreign public official
  • Failing to prevent bribery (the offence by a commercial organisation of failure to prevent bribery by any person associated with it)

The maximum sentence is 10 years for individuals who commit such offences. Organisations are liable for an unlimited fine. It is expected that fines are likely to be defined with reference to an organisation's annual turnover, a method used when punishing anti-competitive conduct by organisations.

Failing to prevent bribery

There is nothing groundbreaking about the first three offences, all of which apply to individuals as opposed to commercial organisations. What is new is the strict liability offence of failing to prevent bribery.
The broad definition of 'association' means an organisation will be liable for the actions of any person carrying out services for or on behalf of the organisation, in whatever capacity. It could catch any contractors, agents or subsidiary companies.

The Act has extra-territorial reach, so the bribery does not need to take place on UK soil.  Further, if the organisational failures are with the consent or connivance of any senior officers of that organisation, they too could be liable for an offence under the Act.

The only defence a commercial organisation will have if charged with bribery is the defence of 'Adequate Procedures'. In summary, this means that an organisation can escape or mitigate liability if it can show that it had sufficient safeguards in place throughout the organisation designed to prevent persons associated with it from undertaking acts of bribery. 

It is this element of the legislation that has had the greatest impact. Commercial organisations now have to consider and implement policies and training on bribery and corruption as well as review their approach to hospitality, gifts and charitable donations, all of which have potential for interpretation as bribes under the new legislation.

Application to universities

Although the Act is focused on 'commercial organisations,' it could apply to universities, notwithstanding their position as charitable institutions. Firstly, individuals within universities could be involved in an activity which could constitute an offence under the new Act, for example in connection with the misappropriation of grants or data manipulation in funded research. Secondly, as more universities conduct international and private sector ventures, paid-for commercial research and other commercial activities to make up public funding shortfalls, there is scope for corrupt practices to become more widespread among persons 'associated' with them. These activities also increase the scope for prosecutors to treat universities as 'commercial organisations'. Consequently, a university could be charged with failing to prevent bribery. 

How universities should prepare for the Bribery Act

Richard Alderman of the Serious Fraud Office warned that a 'strong anti-corruption culture' is pivotal and universities will need to ensure that they have robust systems and procedures in order to defend any prosecution under the Act.

Universities should appoint a compliance officer who can report on and assist in the implementation of preventative measures.

Obvious areas of attention include:

  • hospitality such as entertainment and gifts, which could be construed as bribery if they are not transparent, auditable and proportionate;
  • donations of any kind will need to be scrutinised;
  • due diligence should be carried out in relation to collaborative activities and contracts in countries which are perceived as having a high level of corruption, as well as collaborative activities with sectors which are considered high-risk, such as construction and pharmaceuticals;
  • consideration should be given to any corporate entities through which universities undertake business activities; and
  • reviews should be carried out of any domestic or international collaborative activities with third parties such as international partnerships, joint ventures, student exchange programmes and work placement schemes.

As long as there is an awareness of the risks, and implementation of adequate measures to guard against them, then any institution will substantially mitigate the risk of being held criminally liable for the actions of individuals. The key is to assess the risks and act accordingly.

Contact

Chris Breen

Based in: London

Email: [email protected]

Telephone: +44 (0) 20 7490 6310