Proposed EU Anti-Corruption Directive – how does it compare to the US and UK gold standard?

The European Commission has published a proposed Directive which, building on measures already in place, would require member states to incorporate uniform anti-bribery measures into their laws. Whilst most EU member states have improved their anti-bribery regimes in recent years, there remains a lack of coherence (including in respect of definitions of bribery and corruption), and the proposed Directive aims to address these issues.

Amongst other measures, the proposed Directive addresses three key issues that have been part of the UK’s Bribery Act 2010 for 12 years by requiring members of the European Union to ensure that their laws do the following:

• Tackle bribery in both the public sector and the private sector;
• Hold corporate bodies to account for bribery offences committed for their benefit; and
• Give member states jurisdiction over bribery offences that cross their borders.

In this alert we focus on how these three proposed measures compare with existing United Kingdom and United States laws.

Public and private sector bribery:

Articles 7 and 8 of the proposed Directive deal with bribery in the public and private sectors, respectively. Each requires it to be an offence to give or offer, or to request or receive, an advantage in connection with another person’s duty. The offence is committed if the advantage is given directly or through someone else. It is also committed if the advantage is given to someone other than the person whose duty is to be affected.

The offence of private sector bribery applies to “economic, financial, business or commercial activities” and refers to the advantage as “undue”.

The absence of the word “undue” in the public sector offence suggests that there is a lower test for public sector bribery. It is not necessary to show that the advantage in question was intended to produce a particular outcome. It is enough that the person for whom the advantage is given is a public official.

The UK Bribery Act also applies to both the public and private sectors. It too deals with the conferring or seeking of an advantage in relation to a person’s duty. It is an offence to do so with a view to the “improper performance” of a “relevant function or activity”. These terms, which are defined in the Bribery Act, are the focus of the offence and apply to both the public and private sectors. The Bribery Act also makes it an offence to bribe a foreign public official. It is not an element of this offence that the bribe must be intended to bring about the improper performance of the public official’s duties, simply that it is intended to influence the official acting in that capacity.

The lower test applied in relation to public officials in the proposed Directive, as with foreign public officials in the UK context, suggests that facilitation payments would be caught by the Directive.

In contrast to the proposed Directive and to the UK Bribery Act, the anti-bribery provisions of the U.S. Foreign Corrupt Practices Act (“FCPA”) apply only to bribery of foreign (non-U.S.) officials, not to the bribery of private parties, which is often prohibited by state law.  Moreover, the FCPA covers only the “supply side” of bribery – the offer, promise or payment of the bribe, not the request or receipt of the bribe.

Corporate liability:

Article 16 of the proposed Directive requires corporate bodies to be held liable for offences committed for their benefit by persons having “a leading position” within the corporate body. Such a position encompasses a power to represent the corporate body, to take decisions on its behalf and to exercise control within it. It is not clear what level of control a person would need to exercise within the corporate body in order for the person to be deemed to hold a “leading positon” within in it, and this ambiguity may lead to differences between the implementation of the corporate liability principle between member states.

The UK Bribery Act goes further than the requirements of the Directive. In the UK, a corporate body automatically commits a criminal offence if it fails to prevent an “associated person” from committing a bribery offence. Under the Bribery Act, an “associated person” includes a person who performs services, in any capacity, for the corporate body. The definition not only covers persons having a leading position but any employee and third party performing services for or on the company’s behalf (e.g. an agent or consultant).  The only answer to a charge of this offence is to show that the body had in place adequate procedures to prevent the bribery.

Under the FCPA, corporations (and other “legal persons”) can be held liable for violations of the bribery provisions of the Act based on conduct of employees acting within the scope of their authority and at least in part to benefit the corporate entity.  Corporations can similarly be held liable for the corrupt acts of third parties directing at obtaining, retaining, or directing business (or other improper advantage) for the corporation or another party where the corporation knows or is wilfully blind to the third party’s corrupt conduct.

Jurisdiction:

In article 20, the proposed Directive requires EU members to assert jurisdiction over offences that are committed:

• In whole or in part in their territories;
• By a member’s national, or by someone ordinarily resident in the member’s territory; or
• For the benefit of a corporate body established in the territory of the member.

The UK Bribery Act goes further than the proposed Directive in this regard too. A company incorporated outside of the UK, but doing business in the UK, would commit an offence under the Bribery Act if its associated person bribed another for its benefit. This is so even if that bribery took place in another country.

Broadly speaking, FCPA anti-bribery jurisdiction rests on concepts of nationality and territorial jurisdiction. For U.S. natural and legal persons, the FCPA’s anti-bribery provisions apply to their conduct world-wide. For non-U.S. corporations whose shares are traded publicly on U.S. exchanges, the anti-bribery provisions apply only if the corrupt conduct has a sufficient nexus to the U.S. through use of the means and instrumentalities of interstate commerce. For all other non-U.S. persons, the FCPA anti-bribery provisions apply to conduct in furtherance of corrupt payment that occurs within the territory of the U.S.

Timescales:

It is not clear whether the proposed Directive will be adopted or, if so, when this will be. It still has to be considered in both the European Parliament and Council.

Should it be adopted, member states will have 18 months from this date to transpose its requirements into their laws.

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