Of particular significance to commercial organisations conducting business in or from the UK will be the creation under the Act of a new strict criminal liability offence for failure to prevent bribery by a person associated with the organisation. The only defence will be for the organisation to prove that it had in place “adequate procedures” to prevent such payments occurring. This creates an enormous incentive for organisations to develop and implement corporate compliance programs directed at detecting and preventing corrupt payments. Importantly, it should not be assumed that procedures compliant with the US Foreign Corrupt Practices Act (“FCPA”) will be adequate for the purposes of the Act. Organisations subject to the Act should review their policies and procedures and take this opportunity to protect themselves from liability.
For private fund advisers/managers, the issue of bribery may arise in connection with (i) soliciting investment into the fund and (ii) investments made by the adviser/manager in the course of managing the fund’s assets.
The Act, which will come into force in April 2011 (and not in October 2010 as had previously been expected), will bring the UK into full compliance with the Organisation for Economic Development Anti-Bribery Convention.  The Act will modernise and replace the UK’s existing bribery laws  and sets out four principal offences (and several sub-offences) relating to the payment, request for, or receipt of a “financial or other advantage”  —referred to in this memorandum as a bribe. Further details of these offences are set out in the following paragraphs.
1. Bribing Another Person
Under the Act, a person is guilty of an offence where they offer, promise or give a bribe to another person:
2. Being Bribed
It is also an offence for an individual to request, agree to receive or accept a bribe from another party:
3. Bribery of Foreign Public Officials
It is an offence to bribe a foreign public official (“FPO”)  if the briber’s intention is (i) to influence an FPO in his professional capacity, and (ii) to obtain or retain business or an advantage in the conduct of business.
The offer, promise or giving of any bribe to an FPO or another person at an FPO’s request or with an FPO’s assent or acquiescence will also constitute bribery provided that the FPO is neither permitted nor required by written law applicable to the FPO to be influenced in the FPO’s capacity as a foreign public official by the offer, promise or gift.
4. Failure of Commercial Organisations to Prevent Bribery
This offence can only be committed by a commercial organisation—which will be guilty ofan offence if a person associated with it  bribes another person intending to obtain or retain business or an advantage in the conduct of business for the commercial organisation.
“Commercial organisations” for the purposes of this offence include bodies corporate and partnerships formed in the UK and those formed outside the UK which conduct their business (or any part of it) in the UK. Firms will be guilty of an offence wherever in the world the actions or omissions which form part of the offence take place. 
The offence bears strict liability and does not require any fault or negligence to be proved on the part of the commercial organisation. However, the commercial organisation will not be guilty of the offence if it can prove (on a balance of probabilities)  that it had in place adequate procedures designed to prevent persons associated with the commercial organisation from engaging in bribery.
Adequate Procedures Defence
The Act does not provide a definition of “adequate procedures”, although the UK Ministry of Justice has confirmed that a consultation exercise on procedures that commercial organisations can put in place to prevent bribery by persons associated with them (the “Guidance”) will be launched in September 2010. The Guidance will be published early in 2011 so as to allow businesses time to familiarise themselves and make necessary changes before the Act comes into force.
The member of the UK’s previous Labour government who sponsored the Bribery Bill, stated that firms will be expected to develop procedures appropriate to their own circumstances and business sectors taking into account, for example, their size and the particular risks to which they might be exposed. He also stated that the following publications could and should be drawn upon for the Guidance:
Given that there will only be a few months between the Guidance being published in early 2011 and the Act coming into force, it would be prudent for businesses to begin a review of their anti-bribery systems and procedures now, with particular attention being given to the sources of anti-corruption guidance referred to above. We will provide updates once the consultation and the final Guidance are published.
Recent FSA Thematic Review
The FSA has recently conducted a thematic review on how FSA regulated insurance brokers have addressed the risks of becoming involved in corrupt practices, such as bribery, particularly where third parties are used to win business. Its findings have been published in a report  (the “Report”), in which the FSA stated that it considers that at present there are serious weaknesses in some firms’ systems and controls, which means that there is a significant risk of illicit payments or inducements being made to, or on behalf of, third parties to win business.
The FSA identified a number of serious concerns, particularly around due diligence of third party relationships. Although the Report focuses on insurance brokers, the FSA noted that many of the issues covered are relevant to firms in other sectors, all of whom should take note. The tables at the back of the Report set out examples of good and bad practice in connection with anti-bribery policies and procedures and the recommended action that should be followed when dealing with third parties. Many of these examples may be included within the Guidance, when it is published early in 2011.
Interaction with the US Foreign Corrupt Practices Act of 1977 (“FCPA”) 
For those used to complying with the FCPA, it is significant that the Act is wider in scope than the FCPA in a number of respects including:
Consequences of Conviction
An individual who is found guilty of any of the offences of bribing another person, being bribed or bribing an FPO will be liable to imprisonment for a maximum of ten years and/or an unlimited fine. 
An organisation guilty of the corporate offence of the failure of a commercial organisation to prevent bribery will be liable to an unlimited fine. However, there are other implications of being found guilty of a bribery offence:
Fund managers located in the UK or doing business in the UK should ensure that their policies, procedures, systems and controls are sufficient to minimise or reduce risk of bribery—whether in the UK or elsewhere. Any third party agents whose services are used to solicit investment into the fund or acquire assets etc for a fund  should also be required to be subject to the same or equivalent policies, procedures, systems and controls to avoid the payment of bribes. In addition, the fund vehicle itself may be subject to the Act. A UK-based manager providing a fund with management services from within the UK will be a person ‘associated with’ the fund for the purposes of the Act. Where the manager has discretionary investment management authority for the fund the manager will be conducting the fund’s business in the UK.
The implications for a fund manager found guilty under the Act are, as set out above, extremely serious. The entity itself could have its authorisation removed by the FSA and the individuals could be imprisoned and/or debarred from working in the UK financial services industry; both the entity and the individuals could also be faced with an unlimited fine.
The implications for a fund and its investors are principally financial, since an unlimited fine could materially diminish the value of a fund if the UK courts were to impose a fine on the fund as well as prosecuting the relevant fund manager. In order to avail themselves of the “adequate procedures” defence (to the offence of failing to prevent bribery), directors of funds should ensure that any UK manager that manages the fund’s assets has implemented anti-bribery policies and procedures in compliance with the Guidelines.
The Guidance will be published in early 2011 and the Act comes into force in April 2011. Organisations located in, or doing business in, the UK should review their anti-bribery systems and procedures. The task of identifying risks, drafting new policies, training staff and getting the agreement of relevant stakeholders is likely to be time-consuming. In particular, it should not be assumed that procedures already in place that are compliant with the US FCPA will be adequate to avoid committing an offence under the Act.
While the Ministry of Justice’s forthcoming guidance on ”adequate procedures” is likely to be similar to guidance provided by the US authorities, it should be noted that the existing FCPA compliance programs may not necessarily be deemed to be “adequate procedures” for the purpose of the Act. Organisations with FCPA-based compliance programs would be advised to re-examine them in light of the Act.
2. The UK’s bribery laws date from 1889, 1906 and 1916—all of which will be repealed on the coming into force of the Act
3. The term is not defined in the Act and so in accordance with UK legal convention its meaning should be interpreted as its natural meaning. Accordingly, and with an abundance of caution, it should be construed broadly until such time as the UK courts have adjudged it to have a more restricted meaning.
4. Having a “close connection with the UK” under the terms of the Act means being a British citizen, anindividual ordinarily resident in the UK or a body incorporated in the UK It does not include branches of overseas firms, registered foreign entities or EU firms that conduct business in the UK under EU single market “passport rights”.
5. FPOs include officials or agents of a public international organisation, as well individuals holding a legislative, administrative or judicial position of a foreign country or who exercise a public function for a foreign country.
6. A “person associated with a commercial organisation” is any person who performs services for or on behalf of the commercial organisation, including employees, contractors, agents and subsidiaries. An employee will be presumed to be a person who performs services for the commercial organisation unless the contrary is shown.
7. Although the extraterritorial effect of the Act is judicially untested, it would appear that this offence would apply, for example, to an act of bribery committed by someone working in the US for a US firm with a UK office—even if the bribery is conducted in another country.
8. The burden of proof is the UK’s civil burden—ie, a lesser test than would have to be satisfied in cases requiring satisfaction of the criminal burden of proof (“beyond reasonable doubt”).
16. See, eg, Betty Santangelo, Gary Stein and Margaret Jacobs, “The Foreign Corrupt Practices Act: Recent Cases and Enforcement Trends”, J. Investment Compliance, Dec. 20, 2007, available at http://www.srz.com/Santangelo_Stein_Jacobs_Journal_of_Investment_Compliance_FCPA/.
18. Page 15 of http://www.official-documents.gov.uk/document/cm77/7748/7748.pdf.
19. No guidance has yet been given to UK courts as to what the level of fines should be for breaches of the Act.
20. FSA approved persons controlled functions include among others directors, partners, compliance officers, money laundering reporting officers, traders, asset managers and advisers.
21. A test that assesses an individual’s: (i) honesty, integrity and reputation; (ii) competence and capability and (iii) financial soundness.
22. Which will be particularly pertinent for funds investing in infrastructure projects or for private equity-style funds.
23. http://www.ussc.gov/2007guid/8b2_1.html (Chapter 8, “Effective Compliance and Ethics Program” of the 2007 Federal Sentencing Guidelines); and http://www.ussc.gov/NOTICE.HTM (proposed amendments to the US sentencing guidelines, which will become effective on 1 November 2010 absent any Congressional action).