How does the Bribery Act 2010 affect golf clubs?4th January, 2012 by admin
1. The Bribery Act 2010 (‘the Act’) came into force on July 1, 2011. The changes it makes to the law regarding bribery and corrupt conduct are considerable.
The old common law offence of bribery, which was necessarily defined by reference to a series of decided cases, is abolished. In its place is substituted a variety of technical statutory provisions which seek to formally define bribery in all its forms.
2. Should golf clubs and their committees and staff be alarmed at the changes introduced by the Act? The short answer, in the view of your author, is no.
They should, however, be aware of the changes and their possible consequences for themselves and the club.
3. Bribery remains a criminal offence, and a serious one at that. The maximum sentence on conviction for an individual at a crown court is 10 years imprisonment and for a corporation an unlimited fine: Section 11.
4. The offence of ‘bribery’ is defined in Section 1 (‘Offences of bribing another person’) and Section 2 (‘Offences relating to being bribed’). Taking these in turn…
5. ‘Bribing another’: Section 1 describes two kinds of cases in which the offence of ‘bribing another’ is committed.
In the first kind of case, the person making the bribe ‘offers, promises or gives … an advantage to another’ (the advantage need not necessarily be financial) and he intends that advantage either (a) to induce ‘… a person’ (not necessarily the person to whom the bribe is actually offered) to ‘… improperly perform a relevant function or activity’, or (b) to reward ‘… a person’ (again not necessarily the person to whom the bribe is offered) for such ‘… improper performance’.
In the second kind of case, the person making the bribe acts in the same way as the first but with the knowledge or belief that the very acceptance of the advantage will amount to ‘… improper performance of a relevant function or activity’.
In both cases it is immaterial that the bribe is made through a third party.
We shall come to the definitions of ‘a relevant function or activity’ and ‘improper performance’ below.
6. ‘Being bribed’: Section 2 describes four kinds of cases.
In the first, the person receiving or soliciting the bribe ‘… requests, agrees to receive or accepts … an advantage’ (as with Section 1, the advantage need not necessarily be financial) ‘… intending that in consequence a relevant function or activity’ should be ‘… improperly performed’.
In the second case he ‘… requests, agrees to receive or accepts … an advantage’ and the very act of doing so amounts to an ‘… improper performance by him of a relevant function or activity’.
In the third case he ‘… requests, agrees to receive or accepts … an advantage’ (… not necessarily financial) as a reward for the ‘… improper performance’ by himself or another person ‘… of a relevant function or activity’.
In the fourth case ‘… in anticipation of or in consequence of’ his ‘… requesting or agreeing to receive or accepting … an advantage’ (… not necessarily a financial one), ‘… a relevant function is performed improperly’ by himself or by another ‘… at his request or with his assent or acquiescence’.
In none of these four cases does it matter whether the person receiving or soliciting the bribe does so personally or whether he does it through a third party, nor does it matter whether the ‘advantage’ is to come to him or to go to a third person.
In the second, third and fourth cases it does not matter whether the person receiving or soliciting the bribe knows or believes that ‘… performance of the function or activity’ is ‘improper’, and in the fourth case, if performance is by a third party, it does not matter whether the third party knows of the impropriety or not.
7. ‘Relevant function or activity’: The function or activity is a ‘relevant’ one if it satisfies at least one condition from each of two separate sets of conditions:
The first set of conditions requires that the function or activity falls within a defined range, as follows: (a) that it is a function of a public nature; or (b) that it is an activity connected with a business (… and this includes any trade or profession); or (c) that it is an activity performed in the course of a person’s employment; or (d) that it is an activity performed ‘… by or on behalf of a body of persons.. Condition (d) includes the activities of companies, partnerships, clubs and any other form of unincorporated association.
The second set of conditions requires that the person performing the function or activity (a) is expected to perform it in good faith; or (b) is expected to perform it impartially; or (c) is in a position of trust by virtue of performing it.
8. ‘Improper performance’: A function or activity is ‘performed improperly’ either if it is performed ‘… in breach of a relevant expectation’ or if a failure to perform it is itself ‘… a breach of a relevant expectation’.
So, what is ‘a relevant expectation’?
‘Relevant expectation’: If the activity is to be performed in good faith or impartially, then the ‘relevant expectation’ is in the former case ‘good faith’ and in the latter ‘impartiality’.
If the activity is to be performed in a position of trust, then ‘relevant expectation’ means ‘… any expectation of the manner of performance … that arises from that position of trust’.
9. Thus far the Act has concentrated on the actions of the ‘briber’ and the ‘recipient’. But, what of those who employ these people or are otherwise responsible for their activities, that is to say the golf club itself?
Section 7 is headed, somewhat ominously, ‘Failure of commercial organisations to prevent bribery’ and begins with the words:
‘… A relevant commercial organisation is guilty of an offence under this Section if a person associated with it bribes another person’ (… and here I paraphrase), to obtain or retain business, or to obtain or retain a commercial advantage.
10. A ‘relevant commercial organisation’ is defined as:
(i) a body incorporated within the United Kingdom, or
(ii) a partnership (… whether a limited partnership or otherwise) formed under the law of the United Kingdom,
and in both cases, which is carrying on business in the United Kingdom.
A person is ‘… associated with’ a ‘relevant commercial organisation’ if he performs a service for it or on its behalf. Whether that person performs the service as an employee or agent or in some other capacity is immaterial.
11. It follows from the above that whereas Section 7(1) will not apply to a members’ club, which as a matter of law is an ‘unincorporated association’, it will apply to a club which was formed as a company or which has turned itself into a company, and is thus a ‘relevant commercial organisation’.
The consequences of Section 7(1) for a club which operates as a company are both obvious and potentially alarming.
12. Thankfully Section 7(2) provides a welcome, albeit, onerous, escape route:
‘It is a defence for the relevant commercial organisation to prove that it had in place adequate procedures designed to prevent persons associated with it from undertaking such conduct’.
By way of summary, to comply with Section 7(2), the organisation’s anti-bribery procedures must be proportionate to the risk of bribery taking place (… the greater the risk of bribery the greater the degree of commitment to an anti-bribery strategy that is required); there must be commitment to an anti-bribery strategy from top-level management; there must be a risk assessment; there must have been due diligence in regard to the manner in which the club does its business and who it employs to do it; staff must be told all about the anti-bribery strategy; the strategy must be monitored and reviewed in practice.
13. Finally a word of caution to members’ clubs. Whilst Section 7 does not apply to you, the usual common law complicity rules about being an accessory to the commission of a crime, do.
If an unincorporated members’ club acts as an accessory to the commission of an offence under the Act, the club will be guilty of an offence.
Consequences of the Act in practice:
14. What of corporate hospitality? Ken Clarke has been quoted as saying:
“Cases will be brought where they are in the public interest, which will require the personal agreement of the Director of Public Prosecutions or the Director of the Serious Fraud Office. I do not expect a large number of prosecutions and certainly not for trivial cases … The guidance makes clear that no one is going to try to stop businesses getting to know their clients by taking them to events like Wimbledon, Twickenham or the Grand Prix. Reasonable hospitality to meet, network and improve relationships with customers is a normal part of business.”
So the corporate golf day is safe, although your author (out of an abundance of caution) would counsel in favour of ensuring that the club is not laid open to allegations of complicity in corrupt activity if the level of hospitality being shown by the host of the day is so great as to be beyond all reason.
Offering a disproportionately valuable prize as a ‘freebie’ to a small number of selected client guests in circumstances where it is almost certain to be won probably crosses the dividing line between what is lawful and what is not.
15. What of club administration in the context of Section 7? Section 7 is aimed at companies and partnerships whose employees or agents might offer bribes for the purpose of securing or retaining business for their employer.
I hesitate to provide an example (not least because it might be thought that I was giving offence by doing so) but if a club were in danger of losing a lucrative tournament and a member of staff were to offer an inducement to the tournament organiser for the purpose of retaining the business, there is no doubt that the club would be held criminally liable if it were unable to avail itself of the ‘adequate procedures’ defence in Section 7(2).
The committee and secretary of an incorporated club should look at the Ministry’s quick-start guide and the rather lengthier formal guidance which accompanies it, act upon it, and if in doubt seek formal legal advice.
And a reminder to those clubs which are not incorporated: Whilst you are not caught by Section 7, the complicity rules still apply. Whilst not compelled to comply with the quick start guide and the Minister’s formal guidance, these contain valuable advice and are well worth a look if you wish to follow best management practice.
16. There remains the prospect of the club becoming embroiled in a Section 1 / Section 2 scenario.
Every club needs to make purchases both for the maintenance of the course and for the clubhouse. Over-eager suppliers might seek the club’s custom by way of improper inducements. How should the club approach the matter as far as its staff is concerned?
The essentials of good governance have not changed. The Act sets out, albeit in rather intricate form, what is forbidden. The essentials of ‘corrupt practice’ are the same as they always were, although now they are rather more tightly defined.
It is good practice for any club or association to ensure that its staff are aware of the existence of the law against corrupt practices and what are the likely consequences of breaking it. Naturally these are sensitive matters, both in terms of the club’s relationships with its staff and in the context of the club’s relationship with its suppliers, lest either feel that by seeking to educate and inform, the club is casting aspersions. Each club must make its own choices about how to approach the matter.
17. A well run club has nothing to fear from the Act, although as I said at the outset the club and its staff should be aware of it and the consequences that will follow for those who break it.
18. Finally, two health warnings:
(a) This article is not intended to comprise legal advice. It is intended as an informal summary of the Act and its consequences, and I cannot be held responsible should any of my readers act upon it without taking formal advice. If a club or committee or secretary find themselves in difficulty, or simply wish to take advice on how they should plan for the purposes of complying with the Act, they must take formal advice tailored to their specific requirements and circumstances.
(b) I have described the Act as it applies to England and Wales. The Act makes special provision for its application in Scotland. The basic rules are the same but some of the technicalities differ.
Christopher Aylwin is a barrister at 3 Paper Buildings, Temple, London