Exclusivism, inclusivism and pluralism in the UK Bribery Act 2010

Author:Joseph Lee
Position:College of Social Sciences and International Studies, University of Exeter, Exeter, UK

Purpose – The purpose of this paper is to identify mechanisms by which an international obligation to prevent or punish corporate bribery can be enforced by a national law through trade relations. Design/methodology/approach – The UK Bribery Act 2010 is an example of national law which enforces OECD anti-bribery norms, with a view to effecting an institutional change in the law and... (see full summary)

1 Introduction

In an effort to strengthen global anti-corruption governance and to remedy deficiencies in the anti-bribery regime ( Edmonds and Gay, 2010 ; OECD, 2008 ), the UK passed the Bribery Act (the Act) in 2010 ( Sullivan, 2011 ; Gentle, 2011 ; Monteith, 2011 ; Cropp, 2011 ). The Act – replacing common law and other statutory offences of bribery1 – carries a moral mandate, required as well as inspired by a number of international anti-corruption conventions and foreign laws, most notably the OECD convention against Bribery of Foreign Public Officials in International Business Transactions (the “OECD convention”)2 and the US Foreign Corrupt Practices Act 1977(the “FCPA”)3. The aim of the Act from the perspective of corporate governance is to clamp down on corrupt trade practices perpetrated by commercial entities, particularly multinational companies (MNCs), in the course of international trade. The Act can also have the effect of bringing about institutional changes in countries where the MNCs operate. The jurisdiction of the Act over home and foreign companies beyond the UK borders illustrates an essential requirement to spread the norms of the OECD convention to the fight against corruption in trade at a global level and thereby bring about institutional changes. The Act also demonstrates the role of the nation state as regulator ( Wagner, 2011 )4 in the increasingly MNC-dominated global economy ( Lindahl, 2010 ). The interplay between the Act and other legal and moral systems – that is the operations of the Act, as governance through criminal law with the aim and effect of holding MNCs to account for bribery5 can be divided into three legal concepts:

  • legal exclusivism whereby the law pronounces the moral truth and disregards other moralities;
  • legal inclusivism whereby the law recognises other “laws” as valid, in that it pronounces and upholds the moral truth; and
  • legal pluralism whereby the law is forced, as an inevitable consequence rather than an intended effect, to recognise other moralities.
  • Although the article is based on an expectation of how the Act will be enforced, the three concepts represent the expected modes of governance of the enforcement of the Act in the context of international trade.

    2 Methodology

    I will first discuss how the UK uses criminal law and regulation in its corporate governance and how the Act fits into antecedent governance. This will be followed by a discussion on how the Act reaches out beyond the UK borders. Then I will present the three legal concepts which characterise the interplay between the enforcement of the Act and the law and morality of foreign countries. Finally, the discussion will be put in the context of trade relations between the UK and Taiwan as a case study to illustrate how the three legal concepts can affect the enforcement of an international norm and influence national laws. These concepts provide a framework through which problems can be better mitigated and the enforcement system can be improved to increase its efficacy.

    The three concepts interact dynamically and have implications in upholding the moral truth of anti-bribery laws. Arguments based on the dichotomy of law and morality ( Betham, 1996 ), clarify what the Act is intended to achieve, as well as how and to what extent the Act can achieve its intended objectives ( Evans, 2004 ; James and Lodge, 2003 ; Radaelli, 2000 )6. The reason for this is that the intention of the Act is not simply to impose legal norms on a foreign country's legal system but also to effect a transfer of a policy of anti-corporate bribery to the socio-political environment of the foreign state. The composite of these effects is to bring about institutional change.

    The issue of morality is fundamental to the Act, which enacts its moral norms in the form of criminal law, company law and public policy regulation. From a criminal law perspective, the Act recognises the classical theory in criminology of punishing a culpable wrong, as well as the utilitarian regulatory tool of the use of strict liability to achieve the public good. From a company law perspective, the Act denies the protection of legal personality for groups of companies. It holds the parent company responsible for bribery carried out by a subsidiary and in effect lifts the veil of incorporation based on moral grounds ( Lee, 2011 )7. Finally, the way in which a government's management decisions are guided by policy (moral, ethical and power) rather than positivist law will dictate aspects of international relations, particularly when foreign judicial cooperation and mutual legal assistance are sought in order to obtain evidence for prosecution. Because success in obtaining judicial cooperation will depend on the law and morality of the country whose cooperation is sought8, the way in which the UK authorities deal with the law and morality of other countries, and how they manage international relations politically or economically, is relevant to understanding the Act's operations9.

    I will use Taiwan as the counterpart to UK law enforcement as a case study to show what the Act can achieve, as well as how and to what extent it can achieve its objectives through trade relations. Taiwan has been chosen because it has bilateral and multilateral trade relations (WTO) with the UK, and corruption remains, from the UK's perspective, an investment issue of concern10. Taiwan recognises bribery as a major economic stumbling block for attracting foreign direct investments (“FDI”) and as a political problem for developing a viable democracy ( Ministry of Justice, 2011 )11. Taiwan follows the Germanic civil law system, so its legal infrastructure is therefore comparable to that of the UK. It also has a modern criminal justice system, under which an independent prosecuting authority is guided by the Prosecutor General, as well as an independent judicial branch separated from the executive branch of the state. In addition, Taiwan has its own moral system under which strong personal relations form the basis of trust and confidence in trade. Despite its comparability, however, Taiwan's anti-bribery law regime and its moral system differ in some significant ways from those of the UK. I will give a more detailed account of the theoretical and practical reasons why Taiwan has been chosen in Section 7. It is in this context that the article analyses how the enforcement of the Act can bring institutional changes in Taiwan through trade relations.

    3 The UK's corporate governance through criminal law

    First, I will discuss the UK's corporate governance approach to the regulation of corporate crime, of which bribery offences form part ( Finkelstein, 1995 ; Osborne and Gaebler, 1992 ; Moran, 2003 ). The importance of this discussion is to show that the Act is not a stand-alone piece of legislation which can be destabilised by lack of legitimacy and enforcement will at home. This discussion will provide the rationale for the use of criminal law in corporate governance. The fact that the Act fits into the general corporate governance system strengthens its legitimacy and potential effectiveness. Although the OECD has raised certain concerns about the implementation of the convention by the UK ( OECD, 2012 ), this does not mean that the UK will not enforce the Act or will only sluggishly enforce the Act and thus defeat the basis of the discussion in this paper.

    In the UK, criminal liability has been used to regulate corporate activities12 by virtue of cost internalisation ( Gneezy and Rustichini, 2000 ), moral signalling or social opprobrium ( Lee, 2011 ). Not all crimes are honesty-related, thus giving rise to immediate moral culpability. Honesty-related corporate crimes (such as fraud, bribery, corporate looting, insider dealing, market abuse, running a cartel, falsifying accounts and reports and money laundering) are said to be motivated by the opportunity of large gains, which are influenced by the culture of competition and caused by a lack of normative values or constraints ( Coleman, 1987 ). Crimes that fall within the scope of non-honesty-related corporate wrongdoing, and are thus governed by utilitarian regulatory policy to achieve the public good13, include corporate manslaughter14, financial assistance15 and failure to comply with regulatory requirements imposed by law and public authorities16, to name but a few. Using criminal law to punish corporate wrongs on moral grounds ( Simester and Smith, 1996 ), or to regulate corporate behaviour based on public policy justified by the high propensity and magnitude of harm to the public good ( Hasnas, 2009 ; Rawls, 1997 ), is not foreign to the UK governance culture. Criminal liability imposed for a failure to comply with laws serves the purpose of signalling newly emerged moral obligations, which act as the basis of the public good the laws intend to achieve17. Subsequent punishment also raises the level of deterrence to ensure compliance by others ( Becker, 1968 ).

    4 Anti-corporate bribery offences under the Act

    What are the...

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