Bribery and corruption – brief guide through certain foreign Anti-bribery and Anti-corruption regulation and their comparison to the Czech regulation
It is not unusual to encounter a reference to anti-bribery or anti-corruption laws in international trade, particularly as a contract clause, where the parties undertake to comply or declare their compliance with such legislation. We would like to present you a brief summary of the most common sources of anti-bribery law, the British 2010 Bribery Act, the US FCPA and the OECD Anti-Bribery Convention. We have also included a brief comparison with Czech law at the end of the article.
United States Foreign Corrupt Practices Act (FCPA)
The purpose of this act is to prohibit U.S. citizens, entities and foreign corporations trading securities in the U.S. from bribing foreign government officials. The same rules apply to foreigners if they are in the U.S. territory at the time of the corrupt conduct.
FCPA considers as bribes not only direct payments, but also indirect payments made to any other recipient in furtherance of influencing or transferring a part of the payment to a foreign official. To be held liable, the person offering a bribe indirectly must have knowledge (including conscious disregard and wilful blindness) of the prohibited use of their money. Due to the possibility of indirect bribing (even for example through business partners), companies conduct internal audits, background checks of their suppliers, due diligence, or they often include anti-bribery provisions in their internal policies.
Shockingly, it is perfectly legal under the FCPA to provide grease payments to foreign officials. Such payments do not affect the decision of the foreign official and therefore are not considered a bribe. This leaves a significant grey zone for speculations whether a certain payment should be considered a bribe or not.
Donald Trump has repeatedly stated that he sees it as unfair for American businesses to not be able to bribe foreign officials in order to help international trade and he has tried to abolish this act.
UK Bribery Act 2010
This criminal law act replaces the existing common law rules and is considered „the toughest anti-corruption legislation in the world“. Up to 10 years of imprisonment or even an unlimited fine can be imposed as a punishment in accordance with this act. The full text can be found here.
Some of the criminal offenses under this act are similar to the ones known to Czech law – acceptance of a bribe and bribery. However, the group of officials that can participate in corruption is wider. It covers any function of a public nature; any activity connected with a business, trade or profession; any activity performed in the course of a person’s employment; or any activity performed by or on behalf of a body of persons whether corporate or unincorporated.
The standard in deciding what would be considered a breach of duty of the official is what a reasonable person in the UK might expect of a person in such position. Local practices or customs should be disregarded when deciding this, unless they form part of the “written law” of the respective jurisdiction.
Direct as well as indirect bribing of foreign officials is prohibited, but the term “international officials” includes not only officials of a foreign country, but also of an international governmental organisation. In such cases, only the person offering the bribe would be prosecuted, not the foreign official.
The most discussed part of the Act is its article 7, which creates a new offence of failure of commercial organisations to prevent bribery. A commercial organisation can be guilty of the offence if the bribery is carried out by an employee, an agent, a subsidiary, or another third-party, whom can also be separately prosecuted. Article 7 applies to all organisations which have business in the UK; therefore, it is possible that a German business with retail outlets in the UK which pays a bribe in Spain can be subject to this Act.
The offence under article 7 is one of strict liability, with no need to prove any kind of influence of the bribe on a certain decision. The commercial organisation has a defence if it can show that, at the time of the bribery, it had adequate procedures designed to prevent persons associated with the organisation from undertaking such conduct in place. The burden of proof in this situation is on the organisation.
Adequate anti-bribery procedures are described in a guide published by the Ministry of Justice of the UK, which can be found here.
The only exception from the Bribery Act are military and intelligence service operations.
OECD Anti-Bribery Convention
This international convention was concluded as a result of the efforts of the OECD Working Group on bribery in international business transactions. It has been ratified by all 37 member states of the OECD (including the Czech Republic) as well as by Argentina, Brazil, Bulgaria, Costa Rica, Peru, Russia and South Africa.
The signatory countries have undertaken to put in place legislation that criminalises bribing a foreign public official by both natural and legal persons. The Convention also includes provisions on extradition, but does not apply to the act of accepting a bribe. The OECD has no authority to implement or enforce the Convention, but it monitors situation in the participating countries via its Working group on bribery.
In 2009, the signatory countries adopted a series of recommendations to update to the Convention, another update is expected to come into force this year.
The Convention and other relevant documents can be found here.
Comparison with Czech law
In the Czech Republic, this issue is governed by the Criminal code. Its scope is defined both by the territorial principle (the whole territory of the Czech Republic) and the personal principle (citizens of the Czech Republic can be prosecuted for criminal offences committed abroad). If a bribe is offered by a Czech citizen to a foreign person abroad, it is considered a criminal offence punishable under Czech law. The same applies when a foreign citizen pays a bribe in the Czech Republic.
The conduct prohibited by both the FCPA and the Bribery Act is practically identical to the conduct described by two offences under the Criminal code – bribery (Section 332) and indirect bribery (Section 333). Both the person offering and accepting a bribe can be prosecuted according to these provisions. The criminal code defines “a bribe” as any unjust advantage, financial or other. The offence of bribery can be conducted not only against an official, but also in connection with own or other person’s business.
According to the Act on Criminal Liability of Legal Entities, both aforementioned crimes can be committed by a legal entity, if the conditions of its criminal liability are fulfilled. Similarly to the British Act, the legal entity has a defence if it can show that all reasonable efforts have been made to prevent the crime (Section 8 par. 5). The burden of proof is on the prosecuting authority, in compliance with the principles of the Czech criminal proceedings.
- Date: 22. 07. 2020