The UK’s Bribery Act of 2010: The Obligations and Risks It Imposes on US Employers with Business in the UK

[Readers: The article below was prepared by my colleagues, Nick Burkill and Joanne McGilloway of Dorsey’s London office. Nick is the Co-Head of our London office Trial Group. He can be reached at: burkill.nicholas@dorsey.com, or by phone at,  +44(0)20.7588.0800. Additional information regarding Nick is available at: http://www.dorsey.com/burkill_nick/.  Joanne is an attorney and trainee solicitor in Dorsey’s London office.

If you have any questions about the information set forth below, please don’t hesitate to contact Nick directly.  We hope you find this information helpful.  Regards, Roy]

By: Nick Burkill and Joanne McGilloway

Introduction

The UK Bribery Act is expected to come into force shortly. The Act was implemented in response to pressure on the UK to reform its outdated anti-corruption legislation. The scope of the Act is broader than that of the Foreign Corrupt Practices Act (“FCPA”). Whereas the FCPA only applies if the recipient is a foreign official, the Bribery Act 2010 will cover all bribes, regardless of the recipient’s status. The new Act has extra-territorial effect and has implications for any corporation or group carrying on part of its business in the UK, regardless of where it is incorporated.

The Serious Fraud Office (“SFO”), the UK agency charged with investigating and prosecuting corruption, has backed up its threats of real action to enforce the Act with a series of prosecutions in 2010 under the existing legislation. Companies based in the US also should be aware that US regulatory agencies have been achieving results working alongside the UK authorities in order to bring criminal proceedings on both sides of the Atlantic, leading to the prosecution of companies and individual officers.

Bribery Offenses

The Act creates four new offenses. These are:

(1) Bribing, giving, promising or offering a bribe

(2) Being bribed, requesting, agreeing to receive or accepting a bribe

(3) Bribing a foreign public official

(4) Failing to prevent bribery where an associated person pays a bribe to obtain or retain a business advantage for a commercial organization.

Extra-Territorial Effect

The basic bribery offenses of bribing and receiving a bribe apply to acts or omissions that take place in the UK or outside it if one of the parties involved has a close connection with the UK (for example, if a party is a UK registered company or UK resident).

The Act also imposes strict liability on commercial organizations that fail to prevent payment of a bribe in connection with its business by those acting on their behalf (so called “associated persons”), where the bribery was intended to obtain or retain a business advantage for the company . “Associated person” includes people who perform services for, or on behalf of, the commercial organization regardless of their capacity. This covers employees, agents, subsidiaries and even joint venture partners.

The strict liability offense applies not only to bodies incorporated in the UK, but also covers foreign companies which conduct business there even if the offense occurs elsewhere. As a result, a US group with a UK subsidiary, could still incur UK liability for payments made by a sister company based in a third country to persons there. The offense applies to companies even if they only possess a minor presence in the UK. Furthermore, there is no requirement for the associated person to have any connection with the UK. Read more

Leadership Series, Article # 4

[Readers: Presented below is the fourth article in our Leadership series. This article was submitted by Christine Esckilsen. Ms. Esckilsen is a Managing Director in the General Counsel Department at Piper Jaffray’s Minneapolis headquarters. She manages all of the firm’s litigation. In addition, Ms. Esckilsen advises the firm on employment law issues and consults on matters including hiring, performance management, executive compensation, policies and procedures. Prior to joining Piper in 2002, Ms. Esckilsen was in private practice for seven years at Littler Mendelson in California where she was an employment and labor law litigator for national corporations.

Ms. Esckilsen has had the benefit of observing leadership skills as both in-house and outside counsel. Moreover, she herself is a leader within the Piper organization. As such, she brings a unique perspective to this important topic. I hope you find Christine’s article instructive and interesting. Regards, Roy]

Reflections on Leadership

By: Christine Esckilsen

Every company has its own culture. I work for an investment bank. Perhaps you are now thinking bailout money (we didn’t take any), proxy statements, red-eye flights, sharp elbows and Brooks Brothers ties. Fair associations all. Yet working here has taught me that effective leadership is best accomplished by being present, open, and connected, concepts addressed below. Why is this important? Because the key to effective leadership is developing engaged employees. We cannot truly engage others unless we are present, open, and connected with them.

To accomplish this, we need to draw on our mind, physical body and emotions. As Americans, we prize and stress the intellect. So, the true work comes in understanding and managing the physical body and the emotions. Once we accomplish this, we can mobilize our teams and feel good doing it! For the skeptics, I submit to you that if this model of successful leadership can work at an investment bank, it can work anywhere. Read more

Lawyer Whistleblower Ethics – A Difficult Duty

[Readers: Yesterday, I posted an article on the recent Kidwell v. Sybaritic, Inc. decision from the Minnesota Supreme Court. As I referenced in the final practical pointer in the analysis, the decision does implicate a number of interesting ethical issues. My colleague, Bill Wernz, who was the former Executive Director of the Office of Lawyers' Professional Responsibility, has just written an article for Minnesota Lawyer (July 12, 2010, Vol. 14, No. 28) that focuses on just these ethical issues. With approval from Minnesota Lawyer, Bill's article is reprinted below. If you have any questions regarding Bill's analysis, don't hesitate to contact him at wernz.william@dorsey.com or at 612.340.5679. Regards, Roy]

Read more

Leadership Series, Article # 3

[Readers: A significant part of my legal practice relates to the movement of employees from one company to another and the litigation that often ensues as a result of these transitions. When the departing employee holds a significant leadership position, additional issues are implicated. What effect will the executive’s departure have upon key customer relationships? If the executive joins a competitor, will that jump start the competition? What impact will the executive’s departure have on the remaining employees and their attitudes about the company he or she left?

In the years I have practiced, I periodically have met executives who are inspirational leaders. When these individuals leave their companies, either to join a competitor or to start a new company, the ramifications of their departures are heightened. Almost immediately, they are deluged with inquiries from their former colleagues, exploring whether there might be additional opportunities at the executive’s new employer.

Steve Champeau, the author of the third article in my leadership series, is one of these inspirational leaders. The CEO of Trans-Alarm, Inc. (http://www.transalarm.com/index.cfm) for the last several years, Steve previously had extensive experience in critical leadership roles at other national and international companies. Steve’s insights into leadership, set forth in his article below, illustrate why he inspires those around him. I hope that you enjoy Steve’s observations. Regards, Roy]

Leadership Reflections

By: Steve Champeau

Change is good…You go first.

After 22 years of growing a very small business into a medium size business and having it acquired by a big business which I then led as well, I eventually decided to move on to join a small company again. Creating the 100-day plan for my new venture was exciting, but nothing could prepare me for the reality of what I was actually going to face. The people, culture, systems, customers, products, scale and cash flow were all quite different from what I left. Not bad, just different. Thankfully, the leadership requirements of the job were identical. Best-selling author Mac Anderson wrote the book titled, Change Is Good…You Go First, and I reflected long and hard about the change management process before I decided to leave.

I’m glad I made the change, and here is what I learned in the process: Read more

Leadership Series, Article # 2, Another Lesson from Kids

Earlier this month, I started a series of articles on the subject of leadership.  The first article, written by Brian McDermott, was entitled, “Everything You Wanted to Know about Leadership . . . and Should Have Asked Your Kids.”  (That article is still available on the Blog and can be found by using the “View By Topic” bar to the upper left and clicking on “Leadership,” or simply by scrolling down this Blog page to Brian’s May 5 article.)  As Brian’s article suggests, you can find examples of leadership in many different contexts . . . if you simply pay attention.

I’ve spent a considerable portion of my non-work time coaching youth sports.  Like Brian, I try to keep my eyes open to examples of leadership from those around me, young and old. Let me offer an illustration.

I have coached a lot of boys traveling baseball teams.  These teams typically start when kids are 9 years old and continue until they are 15, when their high school sports careers begin.  Practices almost always begin with stretching exercises, followed by a 3-5 minute jog around the baseball fields.  On a team of 12 boys, the players are in different shape and of varying athletic ability, strength and stamina.  Consequently, when they run, the kids often spread out, in bell curve fashion.  The two or three fastest, strongest kids take the lead, about six kids are in the middle group, and two or three kids lag behind.  As the run progresses, the last few kids get farther and farther behind the leaders. Read more