The UK Bribery Act An overview

1. The UK Bribery ActAn overview Sammy Fang, DLA Piper Beijing Presentation to CBI China 19 April 2011, Beijing

2. Outline 1. The UK Bribery Act 2. Q&A

3. Bribery Act - general comments "UK Bribery Act when it comes into effect will be the strictest anti-bribery regime in the world" Red Flag Group • Bribery Act 2010 will come into force on 1 July 2011 • Guidance on "adequate procedures" issued on 30 March 2011 by the Ministry of Justice (MOJ) • Serious Fraud Office and Director of Public Prosecutions issued Joint Prosecution Guidance (30 March 2011)

4. Bribery Act - a summary of key points Covers bribery both in UK and overseas • 2 general offences: • offering, promising or giving an advantage • requesting, agreeing to receive, or accepting an advantage • Discrete offence of bribery of a foreign public official • Corporate offence of failing to prevent bribery • Individuals: up to 10 years' imprisonment and/or unlimited fine • Corporates: unlimited fine • Confiscation • Procurement

5. Jurisdiction? Bribery Act has a broad scope and extraterritorial reach (broader than the FCPA) and applies to: • any individual ordinarily resident in the UK (whether or not a British national) in respect of acts of bribery committed anywhere in the worldTHE BRIBERY DOES NOT HAVE TO TAKE PLACE IN THE UK • any company incorporated in the UK or any company or partnership carrying on business in the UK (e.g. through a permanent establishment, subsidiary or other operation) even if the offence was committed outside the UKBRIBES DO NOT HAVE TO BE PAID BY A UK COMPANY

6. How could this affect Chinese companies? • If a Chinese company was listed on the UK Stock Exchange it is likely to be regarded as carrying on business in the UK • If a Chinese company's UK subsidiary pays a bribe to win a contract in Kazakhstan for its own benefit or for the benefit of another company within that group, this will make the subsidiary and the parent company potentially liable under the new law

7. New main offence of paying a bribe • offence is committed by a person or corporate by offering, promising or giving a financial or other advantage to another, intending to induce or reward "improper performance of a relevant function or activity" or • offence is committed where a person or corporate offers, promises or gives a financial or other advantage knowing or believing that its acceptance would in itself be "improper performance of a relevant function or activity"

8. New main office of receiving a bribe • this offence is committed if a person or a corporate requests, agrees to receive or accepts a financial or other advantage, intending that a relevant function or activity should be performed improperly • the offence is committed if it would be improper performance even to request, agree to or accept an advantage • It does not matter if the advantage is received directly or indirectly, and the advantage can be for the benefit of the person requesting the bribe or another

9. Practical examples of offences of paying or offering a bribe • Paying a bribe • Peter sends £10,000 to Paul who works at Xco to give to Alan who Paul works with to persuade Alan to send to Peter confidential information about a product of Xco that Peter wants to benefit his own business • Offering to pay a bribe • Peter (UK citizen) offers to pay to Steven, a public servant at the Ministry of Transportation (in UK or overseas), £1,000 as a reward if he processes Peter’s application for a licence especially quickly (even if the £1000 is ultimately not paid and the licence is not issued)

10. Practical examples of offences of paying or offering a bribe • Receiving a bribe • Peter receives £10,000 from Paul for awarding a contract to Paul's company for a piece of work even though Paul's company has less experience and has submitted the highest bid for the project • Soliciting a bribe • Alan, a public servant at the Ministry of Agriculture, asks for £1,000 for himself in exchange for the speedy processing of a routine application.

11. New separate offence of bribing a foreign public official • The offence is committed where someone:- • Offers, promises or gives a financial or other advantage to a foreign public official • With the intention to influence foreign public official • With the intention to obtain/retain business or an advantage • An offence will be committed even where the bribe is paid by a third party (e.g. an agent in that foreign country) • There is a defence to this offence if local written law exists which permits or requires the payment to be made - custom is not enough

12. New corporate offence of failing to prevent bribery • This offence is committed where there is a failure of a "relevant commercial organisation" to prevent bribery • This is a strict liability offence - all the prosecutor has to do is prove that the bribe came from the company in question • The offence can be committed indirectly - if an "associated person" (agent, subsidiary, employee) paid the bribe • Only available defence is to show "adequate procedures" had been put in place to prevent bribes being paid • MOJ Guidance: bribery risks balanced against nature,size and complexity of your business; six principles as a guide

13. New offence committed by a company's senior officers • a senior officer, or anyone purporting to be a senior officer may be guilty of an offence of paying or receiving a bribe or bribing a foreign public official even if they took no part in the payment if:- • if he or she consented to or connived in (turned a blind eye) the commission of the offence; and • he or she has a "close connection" with the UK (e.g. a British citizen or ordinarily resident in the UK)

14. Corporate Hospitality or Promotional Expenditure • all gifts and client entertainment fall within the ambit of the UK Bribery Act • hospitality will only amount to bribery in a commercial transaction if it can be proved that it was offered to influence the recipient to act improperly • prosecutor does not have to prove the intention to influence an improper act for hospitality / gifts given to a public official • consider expenditure that is reasonable, proportionate and made in good faith, that is an established and important part of doing business • standard is that of a reasonable UK person • gifts and hospitality are immune from prosecution under the Act if permitted by written local law - custom is not enough

15. Comparison with the US Foreign Corrupt Practices Act ("FCPA") • FCPA seen for many years as the gold standard for bribery prosecutions, but FCPA focused compliance programmes will no longer be enough • UK Bribery Act is wider and more onerous because:- • it outlaws all facilitation payments - these are legal under FCPA • it applies to all acts of bribery, between commercial organisations and involving bribes to public officials • it creates unique, strict liability offence for corporates • it puts no limits on fines which can be fixed against companies • it has wider extra-territorial reach • it brings automatic and indefinite debarment from public sector contracts

18. Contacts Sammy Fang, Legal Director, DLA Piper, Beijing Tel: +86 10 6561 1788 (Ext. 823) Fax:  +86 10 6561 5158 Mobile:  +86 139 1038 3275 Email: sammy.fang@dlapiper.com