New Bribery Act Coming Into Force
About Jennifer Haworth
Jennifer Haworth is a senior associate in the firm’s Litigation & Dispute Resolution team. Jennifer has a wide practice in all aspects of civil and commercial litigation both in Bermuda’s courts as well as in mediation and arbitration.
Jennifer Haworth’s full profile on mjm.bm.
In December 2016, the legislature in Bermuda passed the Bribery Act 2016 (the “Act”) which will come into force on 1 September 2017. The Act is based on the UK Bribery Act 2010.
Currently, there are several separate laws dealing with bribery and corruption offences in Bermuda, such as the Criminal Code 1907 (Section 111 Official Corruption and Section 112 Extortion By Public Officers), the Parliament Act 1957 and the Parliamentary Election Act 1978. But as of Friday, there will be one comprehensive statute which sets out what constitutes bribery in Bermuda.
The Act covers both public and private bribery and there are no territorial limits that apply. This means that the bribery offences apply to acts committed within Bermuda and outside Bermuda by persons with a “close connection” to Bermuda. There is no requirement indicating that the bribe has to be made with corrupt intent, but there must be an inducement to perform a relevant function improperly.
There are several offences contained in the Act, such as: active bribery, passive bribery, bribery of Foreign Public Officials, failure of commercial organisations to prevent bribery, failure to report bribery and interfering with duty to report bribery.
The failure of commercial organisations to prevent bribery represents the introduction of a new offence and is one of particular importance. The offence is read widely to apply to any organisation which can be considered to be ‘doing business’ and it is essentially a strict liability offence with only one possible defence – that the organisation had ‘adequate procedures’ in place to seek to prevent bribery. If a “bribe” has occurred, then the commercial organisation is guilty unless the commercial organisation can prove on the balance of probabilities it has adequate procedures in place designed to prevent persons associated with the entity from undertaking such activities. Importantly, “adequate procedures” is not defined in the Act.
Importantly, it is sufficient if a bribery crime is alleged to have occurred; there does not have to be a conviction in order for the organisation to be faced with the charge of failure to prevent. Also, for this offence, there is no requirement for the bribery or any of the individuals involved to have any connection with Bermuda which is important with group structures and those organisations which do business in other jurisdictions.
The offence covers acts by an organisation’s employees or representatives, anyone who performs services on behalf of the organisation. A holding company may be liable for the acts of its subsidiary. There must be intent on the part of the subsidiary that the holding company or another subsidiary will benefit. No intent or recklessness or knowledge is required on the part of the commercial organisation. This simplifies the enforcement of the Act because there is no need to attribute a “criminal mind” to the organisation in order to make it liable.
The new Act imposes heavy penalties: on summary conviction, a fine not exceeding $500,000.00 and on indictment an unlimited fine. In addition, a prison term may be imposed of 10 years on summary conviction or 15 years on indictment.
In June 2017, the Ministry of Legal Affairs release Guidance Notes designed to assist organisations with ensuring they have adequate procedures in place. The Guidance Notes set out six principles which every organisation should follow and which they should embody in their procedures. However, each organisation must tailor its policies and procedures to suit its purpose. The Guidance Notes indicate that there is no ‘one size fits all’ approach to this.
It will be critical for organisations to ensure that existing policies and procedures are reviewed or that new policies are created as needed to ensure compliance with the Act. Those policies will need to be reviewed regularly to ensure that they keep pace with events or changes as they occur. Communication of those policies both internally and externally will be of great importance. The Guidance Notes also stress the importance of regular training not only for staff but also for those at the management and board levels to ensure knowledge of areas of risk and compliance with the Act.
MJM provides bribery related training to clients and members of their staff. We also advise organisations in relation to ‘adequate procedures’.