What's Next for Corporate Attribution and Bribery in the UK
In the UK, the Economic Crime and Corporate Transparency Act 2023 (the Act) has expanded the general longstanding rule that the conduct of "directing minds and wills" could create criminal liability for a corporate. It now includes liability based on the actions of senior managers. Senior management is undefined by the Act, but it is designed to encompass a wider group of people within an organisation than was captured under the common law. The expectation is that prosecutors will make use of the statutory mechanism to hold more organisations to account in a wider variety of circumstances than before, including for substantive bribery offences.
The UK Bribery Act 2010 (the UKBA) criminalises organisations if they have failed to prevent bribery by an associated person that is intended to benefit that organisation. This is a strict liability offence for corporates and there have been a number of actions and deferred prosecutions concluded in relation to it. UKBA can also be used to criminalise organisations for substantive bribery offences providing that the mental state of a natural person committing these offences can be attributed to the company.
It has historically been more difficult for prosecutors to attribute substantive active or passive bribery by an individual to a corporate, in part due to challenges with identifying a directing mind and will. A very few deferred indictments have contained charges of conspiracy to corrupt (under the pre-UKBA law) or active bribery contrary to s.1 UKBA. No company has ever been convicted of (or had an indictment deferred containing) a passive bribery offence under s.2 UKBA. The Act makes it easier to prosecute organisations for substantive bribery offences – both active and passive bribery (and as opposed to failure to prevent bribery) – because of the expanded group of individuals whose actions and mindsets can be attributed to the business.
There is, in theory, a tension whereby a relevant organisation could have adequate anti-bribery and corruption procedures that form a proper defence to a failure to prevent bribery offence, but could nevertheless face an action for a substantive bribery offence carried out by people within its business. How a senior manager will be defined is yet to be tested by the courts, but we may well see prosecutors using the expansion of the law to prosecute corporates in cases where they might otherwise have encountered difficulties showing the lack of procedures necessary to succeed on the strict liability offence.
Partner, Addleshaw Goddard LLP