Bribery and Corruption: FCPA and UK Bribery Act

The FCPA has two pillars that operate independently. This is important because the accounting provisions can be violated even when no corrupt payment was made, and because companies can face SEC enforcement for books-and-records violations without any DOJ criminal prosecution.

foreign official is interpreted broadly by US prosecutors to include employees of state-owned enterprises (SOEs), which is significant because in many markets, the company the salesperson is dealing with is government-owned. The Alcoa case (2014) involved payments to agents connected to Bahrain Aluminium, a government-owned company. The court and DOJ settlement accepted that an employee of a government-owned enterprise qualifies as a foreign official, even without a formal government title.

The Bribery Act 2010 came into force in July 2011 and immediately changed the compliance calculus for any company with a UK nexus, defined as being incorporated in the UK or carrying on business there, even partly. Its four offences cover far more territory than the FCPA.

• Section 1 (paying a bribe): offering, promising, or giving a financial or other advantage to another person, intending the advantage to induce or reward improper performance of a relevant function. Applies to public and private sector recipients.
• Section 2 (receiving a bribe): requesting, agreeing to receive, or accepting such an advantage, again in the public and private sphere.
• Section 6 (bribing a foreign public official): a standalone offence for which the improper performance element is not required; the intent to influence the official in the exercise of their functions is sufficient.
• Section 7 (failure to prevent bribery): the corporate offence. A commercial organisation is automatically guilty if an associated person, an employee, agent, subsidiary, or joint venture partner, bribes to obtain or retain business for it, unless the organisation proves it had adequate procedures to prevent bribery.

The Ministry of Justice published guidance on what constitutes adequate procedures built around six principles: proportionate procedures, top-level commitment, risk assessment, due diligence on third parties, communication and training, and monitoring and review. The guidance explicitly states that it is not a safe harbour checklist; adequacy is assessed on facts and circumstances. The first Bribery Act DPA in the UK was with Standard Bank in 2015, involving USD 6 million paid by a Tanzanian associate (Stanbic Bank Tanzania via a local partner) to induce Tanzanian officials to favour the bank's proposal for a USD 600 million government bond issue.

The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions was adopted in 1997 and entered into force in February 1999. It has 44 signatories, including all OECD members and several major emerging economies. Its core obligation is straightforward: signatories must criminalise the active bribery of foreign public officials in international business transactions. Before the Convention, many countries not only tolerated such payments but allowed them as tax deductions.

The Convention is monitored by the OECD Working Group on Bribery, which conducts phased peer reviews, currently in Phase 4. Working Group reports are public and include recommendations when enforcement is inadequate. The Working Group has repeatedly criticized Germany, France, and South Korea for periodic enforcement gaps despite having technically compliant legislation. The peer pressure from published criticism has driven several signatories to reform prosecution practices even without treaty-level enforcement mechanisms.

India's Prevention of Corruption Act 1988 (PCA) governs corruption by public servants in India. For the first thirty years of its existence, the Act focused on the demand side: public servants accepting bribes. A person paying a bribe was only an offender if they gave it voluntarily; paying under coercion was a complete defence, even when the victim called the police. The Prevention of Corruption (Amendment) Act 2018 changed this substantially.

• Bribe giver liability: the 2018 amendment created a specific offence for persons who give or offer bribes to a public servant. The defence of coercion is narrowed: a person must report the demand to law enforcement within seven days to claim they were extorted.
• Commercial organisation liability: a new provision makes commercial organisations liable when a person associated with them gives a bribe to obtain a business advantage, with a defence for organisations that had in place adequate procedures to prevent the bribe. The conceptual similarity to Section 7 of the UK Bribery Act is deliberate.
• Prior sanction for arrest: the amendment requires prior government approval before police can investigate a serving public servant, a provision aimed at preventing politically motivated prosecutions but criticized for impeding genuine investigations.

Enforcement of the PCA sits primarily with the Central Bureau of Investigation (CBI) for central government matters and with state anti-corruption bureaus for state-level matters. The Enforcement Directorate investigates the proceeds of PCA offences under the Prevention of Money Laundering Act, because corruption is a scheduled predicate offence under the PMLA.

Anti-corruption investigations rarely begin with direct evidence of a payment. They typically originate from anomalies in financial records, voluntary disclosures to regulators, or information from cooperating individuals.

• Third-party red flags: agents and consultants who are recommended by government officials, have no obvious qualifications, receive commissions significantly above market, operate through shell companies in secrecy jurisdictions, or cannot demonstrate actual services rendered.
• Books-and-records anomalies: expenses coded as entertainment, travel, or consulting that have no supporting documentation, are approved outside normal channels, or have a pattern coinciding with contract award or regulatory decision timelines.
• M&A due diligence: acquiring a foreign company and discovering pre-acquisition bribery is a common source of self-reported FCPA matters. The DOJ and SEC have issued guidance on successor liability and give credit for voluntary disclosure of predecessor conduct.
• Whistleblower reports: the SEC's whistleblower program, established by the Dodd-Frank Act, has paid more than USD 1.9 billion in awards to whistleblowers since 2012, many in FCPA cases. The program creates a direct channel for employees and third parties to report to regulators, bypassing internal compliance.