New UK anti-bribery law could snare corrupt local businesses, private citizens

The United Kingdom (UK) has passed far-reaching anti-bribery legislation that could see Guyanese companies and individuals with business links there being prosecuted for corruption acts committed after July 1, 2011 in Guyana or any other place.

“Principally the new Act does two things: it extends the jurisdiction of the UK courts to deal with corruption by companies and individuals outside of the UK. It has what we call extra-territorial jurisdiction or what the Americans would call long-arm jurisdictions,” Queen’s Counsel Paul Garlick told Stabroek News on Wednesday.

Paul Garlick

Garlick is in Guyana, as part of a multination tour, holding conferences on the laws relating to anti-corruption and strategies for businesses in the region to avoid liability under the UK Bribery Act 2010.

He spoke to the Stabroek News at an interview held at the British High Commission, where he explained the genesis of the law, its various provisions, and how businesses could safeguard themselves from prosecution by adhering to guiding principles.

“The UK Bribery Act is the latest Act enacted by the UK to bring it in line with its international obligations against corruption,” he said.

Further, he explained that the law has created a number of new criminal offences, since the old law dealing with bribery and corruption was antiquated. He said that while the old laws focused on bribery of public officials, the new Act extends the reach beyond public officials, such as bribery between commercial organizations.

“The new 2010 Act, which came into force on July 1, 2011, creates a number of important offences. So there is the offence of bribing another person and that is under Section 1 of the 2010 Act. This is the offence of actively bribing somebody, where one person offers a bribe to another. The second offence is being bribed, so it is an offence for someone to receive a bribe or to solicit a bribe,” he said.

“The third major offence that we have created is bribery of a foreign public official, a stand-alone, discrete offence. We probably did not need to have a separate offence of bribery of a foreign public official but because of our international obligations, we had decided that we would spell it out in a separate offence to mark its gravity,” he added.

Garlick also pointed out that the law creates a new offence—failure by a commercial organization to prevent bribery by persons associated with that organization. “The person who is prosecuted is the commercial organisation. That could be a company or it could be a partnership, any commercial organization involved in trade,” he noted. He said that this provision could also include NGOs, if the act was carried out as part of its fundraising. “That could be construed as a commercial venture by a commercial organization and they could come within the ambit of the Act,” he said.

‘Beyond borders’

“Normally the criminal laws of a country do not extend beyond its geographical jurisdictions. Normally we would not be concerned with what a Guyanese company does or does not do. We would leave that to Guyanese law and that’s because we respect obviously the Guyanese authority to enact the laws to deal with its own companies. But because bribery has a worldwide effect and its consequences extend beyond the borders of Guyana and can have consequences which are worldwide and which can have an impact on the UK, the UK has enacted a law which brings within its jurisdiction certain conduct which could be carried out by a Guyanese company, even though the Guyanese company is carrying out that conduct outside of the UK,” Garlick noted.

“What the UK Parliament has done is decided that in certain circumstances we would assume jurisdiction but there has to be a basis for assuming jurisdiction,” he said. “What Parliament decided to do is to make the key to jurisdiction the fact that the Guyanese company may be performing part of its business in the UK,” he said. “Guyanese companies could be liable under Section 7 [of the Act] and could be tried in English courts…if and only if they are carrying out part of their business in the UK,” said Garlick.

He emphasized that it is not the intention of the British authorities to penalize Guyanese companies. “…That’s not what the Act is intended to do. It is not intended to prosecute Guyanese companies for acts which may not take place in the UK.

Its intention is to prevent a culture where companies can use agents abroad and allow them to commit acts of bribery, which can have a detrimental effect on our economy,” he explained.

The fines for the offences, Garlick added, will be very large but some consideration is usually given to a company’s ability to pay that fine.

He said too that it is unlikely that dollar for dollar, a fine on a Guyanese company could be equated with what an English company might be asked to pay.

‘Corruption hurts’

Garlick said that contrary to what some may believe, corruption is not a victimless crime. “Corruption hurts everybody in society and it actually hurts the poor disproportionately than it hurts the rich. It causes the diversion of funds which were intended for the development and improvement of society. It undermines a government’s ability to provide basic services to its citizens,” he argued.

“From the citizen’s point of view, it feeds inequality because of injustice. They see the big fat cats getting bigger and they see nothing being done for them,” he said.

He also said that from an external point of view it discourages foreign investment and aid. “Because if you are a foreign investor and you are contemplating investing abroad, you may be [much] dissuaded of doing so if you hear about corruption and bribery in the nation state in which you were hoping to invest,” he said.

He said that corruption does three things: it hurts the citizenship, undermines the government and dissuades foreign investment and aid. “When you combine those things it becomes apparent that corruption is not a victimless crime,” he said. “People do suffer,” he added.

Garlick illustrated his point about corruption by saying that it is like an additional tax.

He said that the OECD reports that corruption equates to six percent of the world’s GDP. “Now, if you translate six percent of the whole world’s GDP into money that is a very substantial sum.

And that sum is money that is being diverted from the system and being diverted into people’s pockets illegitimately,” he said.

He said this means that someone else has to make up for this money that has been improperly siphoned off. “Where does it come from? It can only come from one source: taxation,” he said.

“In some jurisdictions the amount of money that has to be put in to replace the money siphoned off by bribery and has to be put in by tax amounts to an increase of 20 percent in taxation,” he said.

He noted that the legislation in the UK had its genesis in its obligation to international law and instruments by the European Union, the United Nations and the OECD to enact laws to prevent bribery and corruption.

He said that the United Nations adopted the Convention against Corruption in October 2003 by the General Assembly and it came into force in December 2005. “At the moment, there are 152 member States which are signatories to the Convention.

We ratified the UN Convention in February 2006 and we then had to enact legislation to bring us into compliance with that and we have been doing that ever since, in various aspects,” said Garlick.

He advised that businesses and organisations could take on board seven practical suggestions for anti-bribery compliance.

These are: educating their board and senior managers; conducting anti-bribery risk assessments; creating plans to close identified gaps; reviewing related corporate policies; conducting third party due-diligence; improving programme awareness; and seeking outside assistance, if necessary.