What is bribery and corruption?
Bribery and corruption have a range of definitions in law, but the fundamental principles apply universally. Bribery is the offer, promise, giving, demanding or acceptance of an advantage as an inducement for an action which is illegal, unethical or a breach of trust. Bribes can take on many different shapes and forms, but typically they involve corrupt intent and usually both parties will benefit.
Acts of bribery or corruption are designed to influence the individual in the performance of their duty and incline them to act dishonestly. The person being bribed is generally someone who will be able to obtain, retain or direct business.
Corruption is the misuse of public office or power for private gain; or misuse of private power in relation to business outside the realm of government. For the purposes of this Policy, whether the payee or recipient of the act of bribery or corruption works in the public or private sector is irrelevant.
The Corruption Law addresses the main offences around bribery and corruption in Jersey. The Corruption Law does not use the term “bribery” and instead uses the undefined term “advantage” (which can include financial benefit or any other inducement, such as gifts, release from liability, the granting of a contract etc). Offences must be committed “corruptly”, which is also undefined in the Corruption Law. The legislation is deliberately broad and non- prescriptive to allow actions to be taken against corruption in its broadest sense.
The Corruption Law contains three main offences in relation to corruption concerning public bodies and public officials and corrupt transactions with agents. The offences cover both “active” corruption (criminalising the person corruptly giving or offering an advantage) and “passive” corruption (criminalising the person receiving or agreeing to accept an advantage), whether the giving or receiving or the advantage is direct or indirect. The offences apply to legal persons, and so apply to companies as well as individuals. Broadly, the main offences are as follows:
1. Foreign public officials: It is an offence to give, promise or offer (or to receive, solicit or agree to receive) any advantages as an inducement for somebody working in or for a public body (whether domestic or foreign) to do something or refrain from doing something.
“Public body” is broadly defined and includes:
Regulators (which would include the Jersey Financial Services Commission).
Governments (in Jersey or their equivalents in countries and territories abroad).
Any company in which the States of Jersey is the principal shareholder.
The person giving the bribe does not have to be the party that benefits from a certain act or omission and the party receiving it may not be the one who is directly working for the public body.
Further, corrupt behaviour by public officials (whether in or outside of Jersey) as a form of abuse of public office is likewise an offence.
2. Domestic Public Officials: this offence catches what might colloquially be called abuse of public office. “Public official” is broadly defined, including officers or employees of a “public body” – so the offence is relevant to companies which are principally state owned (whether by the States of Jersey or their equivalent outside Jersey).
3. Private Commercial Bribery: Additionally, the Corruption Law addresses “corrupt transactions with agents”. Private or public sector agents must not accept, obtain or offer any advantage that serves as an inducement for an act, omission or display of favour relating to the affairs of their principal.
The extraterritorial scope of the Corruption Law and the Bribery Act (see below) will often apply to Jersey or British legal entities (including Scottish Limited Partnerships), Jersey citizens and UK citizens operating in Jersey or in other jurisdictions.
The penalties for each offence are severe, being up to 10 years imprisonment and a fine. Corruption offences committed by a body corporate can also cover the individuals involved, such as directors, secretaries, partners (in a partnership), managers or anyone acting in similar capacity. The liability and potential penalties for the individuals are the same as for the offending entity.
Parties who suffered losses as the result of corruption can apply to the civil courts to recover damages and compensation.
There are no statutory defences provided in the Corruption Law.
Unlike the Bribery Act (see below), the Corruption Law does not contain a defence of “adequate procedures”, which means a Jersey entity cannot defend itself by referring to its anti-bribery and corruption procedures (which are designed to detect and prevent acts of corruption and bribery). However, as a matter of good practice and to address the concerns posed by the Bribery Act, Jersey entities would be well advised to have anti-bribery and corruption procedures in place, making it less likely that they will fall foul of the Corruption Law in Jersey.
Territorial scope of the Corruption Law
Anyone may be prosecuted in Jersey if any of the acts which constitute the offence were committed in Jersey, notwithstanding that other acts constituting the offence were committed outside Jersey. As noted above, the public bodies or public officials involved may be located elsewhere in the world, and in the case of corrupt transactions with agents, it is immaterial if the principal’s affairs or business, or the agent’s functions, have no connection with Jersey and are conducted, or carried out, outside Jersey.
In addition, UK nationals resident in Jersey, Jersey companies or Jersey limited liability partnerships can be prosecuted in Jersey for acts carried on wholly outside Jersey, where such acts (if carried out in Jersey) would be an offence under the Corruption Law.
The Bribery Act creates two general offences of bribing another person (the offering, promising or giving of an advantage) and being bribed (the requesting, agreeing to receive or accepting of an advantage). The offences apply to legal persons, and so can apply to companies as well as individuals. These offences are all punishable by imprisonment of up to 10 years imprisonment and/or a fine.
The Bribery Act also imposes a positive obligation on organisations to take steps to prevent bribery. It creates a corporate offence of failing to prevent bribery. That offence applies to any relevant commercial organisation which fails to prevent associated persons from committing bribery. An associated person is someone who performs services for that organisation whether as employee, agent or subsidiary – a wide definition indeed. This is a strict liability offence, punishable by an unlimited fine.
It is a defence for an organisation to prove that it had in place “adequate procedures” designed to prevent persons associated with it from undertaking such conduct – even if in the particular case in question those procedures failed to do so. What is deemed to be “adequate” in the circumstances, however, will clearly be subjective and fact specific.
As mentioned above, Jersey has no equivalent of the UK offence of failing to prevent bribery. However, under Jersey Law where an offence is committed by a body corporate with the consent, connivance or neglect of any director or officer, those individuals are also guilty of an offence. Similarly, under Jersey law generally, where an offence is committed by an individual it may be possible to attribute liability to an associated company.
Territorial scope of the Bribery Act
The Bribery Act has extra territorial effect. Bribery offences which are committed outside the UK may be prosecuted in the UK if the person offering or accepting the bribe has a “close connection” to the United Kingdom. A close connection includes being a British citizen, British Overseas Territories Citizen or a British National which means many individuals resident in Jersey are subject to the Bribery Act as well as the equivalent Laws in Jersey.
The Bribery Act does not, by its terms, extend to organisations in the Channel Islands. However, they are capable of being caught by it. Provided the organisation is incorporated or formed in the UK, or carries on a business or part of a business in the UK (even if incorporated overseas) then the UK courts will have jurisdiction. The requirement of a close connection does not apply, and the phrase “part of a business” is not defined by the Bribery Act. Guidance has been issued, however, to note that organisations that do not have a “demonstrable business presence” in the UK will not be caught.
Combating the risks of bribery
Establishing and implementing effective anti-bribery and corruption policies and procedures in line with the UK Guidance will help to detect and prevent unscrupulous acts, reduce the risk of reputational damage and assist in defending any prosecution. Procedures should be put in place that are proportionate to the bribery risks faced by an organisation and to the nature, scale and complexity of the company’s activity. Such policies and procedures should also be monitored and reviewed, in order to ensure they continue to align with the company’s activity and risk profile. Training for employees should also be scheduled on a regular basis, to ensure policies, procedures and standards are imbedded at all levels.
Should you require further detail or wish to discuss any of the above, please do not hesitate to get in touch with your usual Appleby contact.