The U.K. Bribery Act: endless jurisdictional liability on corporate violators.

• Author: Lordi, Jessica A.

From ancient times, governments have prohibited bribery because of its negative implications in society and business transactions. The U.S. Foreign Corrupt Practices Act, the work of the Organization for Economic Cooperation and Development, and the United Nations Convention against Corruption have inspired the United Kingdom to revise its Bribery Act, expanding its extraterritorial provision to reach corporations with loose ties to the United Kingdom. However, the U.K. Bribery Act takes the extraterritorial arm of most bribery statutes and extends it to a harmful extreme; it may employ universal jurisdiction, an extraterritorial reach saved for the world's most egregious crimes. Even if Britain never uses the broad provision as the basis of universal jurisdiction, the Act creates a host of complex international issues including prosecuting attenuated cases. The U.K. should amend the Act to narrow its scope to match the extraterritorial reach that the Foreign Corrupt Practices Act and international conventions utilize and allow. The international community should work to prohibit bribery, but encourage each nation to do so on its own terms within its own cultural norms and appropriate boundaries.

1. INTRODUCTION II. BRIBERY'S COMPLICATED IMPACT AND THE ACTS AND CONVENTIONS THAT INFLUENCE THE EXTRATERRITORIAL PROVISION OF THE U.K. BRIBERY ACT A. The Bribery Problem B. Bribery Laws that Influenced the U.K.'s Bribery Act 1. U.S. Foreign Corrupt Practices Act 2. Organization for Economic Cooperation and Development Concerning the Bribery of Foreign Public Officials 3. U.N. Convention Against Corruption III. U.K. BRIBERY ACT'S EXTRATERRITORIAL REACH COMPONENT POSES POTENTIAL PROBLEMS A. An Overview of the Act B. Types of Extraterritoriality that the U.K. Bribery Act Could Utilize and the Resultant Problems and Complications 1. Types of extraterritoriality that the U.K. Bribery Act could employ 2. If the U.K.'s broad jurisdictional element uses universal jurisdiction, then it is inappropriate and not in line with universal jurisdiction's historical uses 3. The Act creates a possibility for prosecutors to misuse the power the Act gives them C. The World is Not a Global Village that is Conducive to Far-Reaching Extraterritorial Laws on Bribery D. The Act May Have Serious Implications on U.K. Business E. The Act Potentially Discredits International Law IV. PROPOSED SOLUTIONS TO THE PROBLEMS THAT THE ACT POSES V. CONCLUSION I. INTRODUCTION

   Imagine an American company that produces large-scale electric generators and conducts business internationally. This company has done business periodically in the United Kingdom (U.K.) and plans future transactions with British clients. In a completely separate transaction absent any British affiliates and connection, this American company sells a generator to a German company. During the transaction, an agent of the American company bribes an agent of the German company without fraud and independent investigation. The Serious Fraud Office ("SFO") in the U.K. files suit against the American company for a bribery violation under the U.K. Bribery Act 2010. Under the Bribery Act, Britain has the expansive and unprecedented power to prosecute the American company for its violations in Germany and impose liability with serious sanctions, including prison terms of up to ten years and limitless fines. (1) The American company does not anticipate a U.K. prosecution, so the company does not prepare for liability anywhere except for in Germany. This hypothetical illustrates the potentially expansive reach of Britain's revised Bribery Act.

   The U.K. Bribery Act 2010 ("Bribery Act" or "the Act") criminalizes three primary offenses: (1) paying and receiving bribes; (2) bribing foreign public officials; and (3) failing to prevent bribery. (2) The Act not only allows for the U.K. to prosecute a violation under the Act if the perpetrator is a British resident or if a corporation is incorporated in the U.K., it also allows for prosecution of any company that "carries on a business or part of a business in the U.K. irrespective of the place of incorporation or formation." (3) Because of its extraterritorial reach, (4) the law regarding this last type of violator is particularly problematic.

   Such broad reaching language raises the question--is this extraterritorial provision even legal under international law? If the U.K. uses the provision as a means to prosecute bribery anywhere in the world against companies with any level of connection to the U.K., the law could reach beyond permissible extraterritorial jurisdiction and effectively establish universal jurisdiction for bribery offenses. (5)

   How British prosecutors will utilize the Act's broad provision is difficult to predict. While the Act's Guidance helps predict the U.K.'s approach to interpreting the law, the Guidance is a compilation of non-binding promises and suggestions to the SFO and its enforcement agents. (6) These statements and the Act's proposed interpretation do not legally change the broad language that potentially grants prosecutors great, unbounded discretion to prosecute. Enforcing the Act within its extraterritorial reach could have serious implications on international business transactions and operations. Therefore, the U.K. should not prosecute these violations to the full extent of the current statutory language.

   This Note explores the Act's jurisdictional component and its problematic extraterritorial reach, and proposes an amendment to remove that reach in conformance with international law. Part II discusses bribery's impact on international business and analyzes the Act in relation to domestic and international standards. Part III analyzes the potential problems with the Act's extraterritorial reach component. Part IV proposes potential solutions to the problems that the Act poses including: (1) prosecutors could refrain from exercising broadly reaching powers under the Act; (2) Britain could repeal the Act; or (3) Britain could amend the Act by eliminating the extraterritorial reach component. Part IV illustrates that the most likely and practical option is to revise the extraterritorial reach component, limiting the broad jurisdiction that it currently allows.

   II.BRIBERY'S COMPLICATED IMPACT AND THE ACTS AND CONVENTIONS THAT INFLUENCE THE EXTRATERRITORIAL PROVISION OF THE U.K. BRIBERY ACT

   1. The Bribery Problem

      Nations have different definitions of bribery and have different levels of acceptable practices. However, from ancient times, governments have prohibited bribery, in varying degrees, because of bribery's implications in society and business transactions. (7) Every major religion and school of ethics, including Buddhism, Christianity, Confucianism, Hinduism, Islam, Judaism, Sikhism, and Taoism expressly admonishes bribery. (8) Bribery is socially unacceptable and is illegal at some level in every nation. (9)

      Bribery results in economic, systemic, and social damage. (10) Bribery causes economies to function inefficiently; (11) instead of depending on price and quality, corrupt transactions hinge on which buyer is able to pay the largest bribe. (12) Bribery thus expels competitors, develops monopolies, and discourages foreign business. (13) Further, bribery impedes productivity, and its future and long-term damages far outweigh any immediate benefits. (14)

      There is evidence that bribery is causing a decrease in investments. (15) Studies have shown a correlation between perceived levels of bribery and investment. (16) Moreover, a survey of one-hundred-and-fifty prominent individuals from sixty-three developing nations showed that half thought that corruption had increased in their nations over the past ten years. (17) There is an inverse relationship between corruption and gross domestic product. (18) As corruption in a country decreases, it increases the country's investment to gross domestic product ratio four percent and raises its gross domestic product almost half a percent. (19) Bribery decreases growth in gross domestic product. (20) Low gross domestic product growth rates negatively influence health, mortality rates, environmental quality, and directly correspond to degeneration in living conditions. (21) For instance, Nigeria once had a dynamic middle class. (22) This middle class "watched its wealth disappear, its neighborhoods turn into slums, and its children grow up in hardship" because of economic corruption in the country. (23) In Kenya, individuals who gained title of land through bribes violently forced the poor from their lands. (24) The Zairian people suffered as their nation sank into a "Zaire-shaped hole" in the center of Africa. (25) Their country had been sold, bought, and stolen. (26)

      Bribery is a systemic problem around the globe. (27) Research by the World Bank shows that cryptic regulatory systems coupled with weak enforcement institutions allow a domestic environment in which individuals are more likely to offer and accept bribes. (28) Additionally, industrialized nations substantially add to the bribery problem. (29) Foreign businesses from industrialized nations that do business abroad, particularly in developing countries, generally contribute to corruption by making the assumption that bribes are general business practice--"an attitude which often turns out to be a self-fulfilling prophecy." (30)

      As the world becomes more integrated, it transforms into a "global village." (31) In 1967, Marshall McLuhan invented this phrase, and many use it to describe globalization in international business, economics, politics, and society. (32) As the world shrinks, there is more awareness that conduct in one region may have ripple effects over the entire world. (33) The global village conception encourages nations to increase their efforts to standardize transnational order with a sole set of united laws and regulations. (34) However, the cultural diversity with respect to bribery...