The Inadequacy of Being "Adequate"

Questioning the Validity of the UK Bribery Act's

Adequate Procedures Defense

Corruption is arguably as old as politics itself. Ancient stories of corruption abound from China 1

to Greece and India2 to Rome and even further back then records have been kept. Yet, over the past

four decades significant strides have been made in the battle over corruption. Since the late 1970's

with the establishment of Transparency International and the U.S. government's passage of the

Foreign Corrupt Practices Act, the battle to fight corruption has taken on a new concerted

transnational effort. Where once corruption was seen as a local custom and a way of doing business, it

has now become an issue of international importance and is seen as a significant hindrance to

economic development. Governments the world over have taken on the project of stamping out

corruption and eliminating the vestiges of this ancient practice with one recent and highly significant

development in this area being the passage of the U.K. Bribery Act.

When it was passed in 2010, the UK Bribery Act was seen as the most robust action taken at the

national level against corruption since the passage of the US FCPA 1977. The act enshrined certain

positions espoused by both United Nations Convention Against Corruption (UNCAC) and the OECD

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions,

in that it extended traditional corruption laws to include international corruption, business-to-business

bribery and even eliminated the facilitation payments exception. Additionally, the act has praised for

its inclusion of provisions holding corporations strictly liable for bribes paid by agents acting on the

corporation's behalf. While all of these are clearly steps forward in the laudable fight against

corruption on both the domestic and international fronts, in their haste to expand the project certain

portions of the Bribery Act may have run afoul of basic principals of statutory construction and may

jeopardize the Bribery Act's effectiveness as an exercise of legislative power.

This essay will provide a discussion of certain provisions of the Bribery Act and specifically

analyze the "adequate procedures" defense and call into question the validity of this defense and ask

to what extent failure to provide for a specific standard of conduct or define with any clarity what

actions provide a defense against the imposition of liability on a corporation undermines not only the

defense itself but may also undermine the imposition of liability in the first instance. Analysis of the

Bribery Act will also address the issue of what standard (reasonableness, willful failure to reduce a

perceived risk, etc.) the defense aims to create and whether it is advisable or even permissible to allow

such a defense in the context of creating a strict liability offense. This essay will also review the use

of this standard as a means for prosecuting corporations for violations of other laws and whether

1 Xinhua News Agency November 20, 2006, Unearthed Relics Reveal Corruption 2800 Years Ago2 Jitendra Narayan, Corruption in Administration in Ancient India, Indian Journal of Political Science, Vol. 66, No. 3 (July-Sept., 2005), pp. 559-574

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importing those standards into the Bribery Act without proper delineation of the parameters of what

constitutes "adequacy" might undermine the project as a whole. Additional consideration will be

given to the attempts by private firms and organizations to help define what is considered "adequate"

and question whether an approach to statutory construction that envisions standard setting by private

organizations without enlisting their direct support is appropriate given foundational notions of

personal liberty and state regulation of individual behavior through criminal enactment. Finally,

suggestions as to how the project might achieve the ends of enlisting the support and leadership and

buy in from BoD's and senior management through imposition of obligations by other means, similar

to the internal controls approach adopted under financial disclosure regulatory approaches will be set

forward.

The Anti-Corruption Project, A Short History

In 1977, in the wake of the Nixon administration and the significant levels of government

corruption revealed during investigations of the Watergate affair, the U.S. Congress held numerous

hearings regarding both domestic and international corruption. What arose out of this intense work on

government reform was one of the first, if not the first, laws enacted with the intention of combatting

bribery and corruption on an international level, the Foreign Corrupt Practices Act. When passed, this

legislation was considered a watershed moment in that it established bribery of foreign public officials

as criminal behavior and provided U.S. government agencies, namely the Securities and Exchange

Commission and the Federal Trade Commission with the tools go-after corrupt individuals and

companies.

This act as originally passed was both breathtaking in its reach, yet narrow in its application. 3 For

the first time, it outlawed (i.e., criminalized) the outright bribery of foreign officials by companies and

their actors. It also enlisted the novel idea of taking a disclosure approach as to a broad category of

payments by both domestic and non-U.S. incorporated entities as long as they were listed on a U.S.

stock exchange and thereby subject to Securities and Exchange Commission ("SEC") regulation. The

FCPA also provided for the for an exceptionally broad jurisdiction by criminalizing the use of the

mails or any means or instrumentality of interstate commerce in furthering the corruption. The broad

reach of this legislation was not without its critics and decried by the U.S. business community as an

anti-competitive impediment to U.S. businesses abroad. Yet, the passage of this law set the stage and

served as a base for the development and expansion of an anti-corruption project that would have

international reach and eventually impact the lives of millions.

Following on the relative success of the U.S. enforcement of the FCPA in high profile cases and

with a push from some in the international community, the OECD took up the issue of combating

3 M. Koehler, Symposium: The FCPA at Thirty-Five and its Impact on Global Business: The Story of the Foreign Corrupt Practices Act, 73 Ohio St. L.J. 929, 931.

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international corruption in the 1990's. After significant lobbying by high profile members of the, then,

newly established international anti-corruption NGO, Transparency International, the OECD in 1994

formally added anti-corruption to its agenda and called for the criminalization of bribery in the

international context.4 The project eventually resulted in the adoption of the Convention on

Combating Bribery of Foreign Public Officials in International Business Transactions in 1997. This

convention was the first international treaty to focus on the "supply side" by calling on states to

criminalize the bribing of a foreign official.5 In addition, this treaty provided that where companies

(i.e., legal persons) are not covered under their domestic anti-bribery regimes, states parties to the

treaty must "ensure that [companies be] subject to effective, proportionate and dissuasive non-

criminal sanctions, including monetary sanctions."6 Finally, the treaty required participating states to

institute asset recovery mechanisms and also submit to an implementation review program. This

treaty was eventually signed and ratified by forty countries all of which have also concluded

implementing legislation, with Columbia being the latest to do so in 2012.7

While the treaty was a significant step in the advancement of the anti-corruption project

especially in the European context, certain aspects of bribery were not addressed by the convention.

The convention did not cover facilitation payments, which are payments to progress government

actions that the government must already take often referred to as "grease payments". It also did not

address corporate-to-corporate (i.e., private corruption). Finally, while the treaty did call on states to

utilize sanctions against companies that bribe, these sanctions were only civil and non-criminal. Yet,

despite these limitations the treaty for the first time created an much needed international framework

for nations to cooperate across boarders in fighting transnational bribery.

In response to ratification of the OECD Convention and in recognition of its obligations

thereunder, the U.S. updated its domestic anti-bribery legislation, the FCPA, in 1998 with the passage

of the International Anti-Bribery and Fair Competition Act of 19988 thereby expanding the already

broad reach of the FCPA. These revisions included expanding prohibited conduct to include merely

"influencing"9 a foreign official or the "securing of any improper advantage"10. The updated

legislation also expanded the scope of covered persons to include officials of international

organizations, such as United Nations officials, members of the International Olympic Committee and

other organizations of international stature.11 New provisions also solidified the extraterritorial

application of U.S. anti-bribery legislation by providing for "alternative jurisdiction" over actions

4 At http://www.transparency.org/whoweare/history5 At http://www.oecd.org/corruption/oecdantibriberyconvention.htm; See also, OECD Convention, Art. 1 cl. 1.6 Ibid. , Art. 3, cl. 2.7 At http://www.oecd.org/daf/anti-bribery/antibriberyconventionratification.pdf 8 Pub. L. No. 105-366, 112 Stat 3302 (codified as amended at 15 U.S.C. § 78) (1998).9 Ibid. at § 2(a)(1), amending, The Securities Exchange Act of 1934, § 30A(a) (codified as amended at 15 U.S.C. 78dd-1(a)) (1998).10 Ibid. 11 Ibid. at § 2(b), amending, The Securities Exchange Act of 1934, § 30A(f)(1) (codified as amended at 15 U.S.C. 78dd-1(f)(1)) (1998).

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taken outside the U.S. by any entity incorporated in the U.S. or any entity having shares registered

with the SEC. This includes any actions taken by a U.S. person serving as an officer, director,

employee, agent or even shareholder any such company.12 The toughness of this legislation made the

U.S. the standard bearer in the fight against public corruption.

Following closely on the heals of the OECD convention and the widespread adoption of enacting

legislation by several of the states parties thereto, the United Nations took up the cause of anti-

corruption and after almost two years of intensive negotiations the General Assembly adopted

UNCAC in October of 2003.13 This Convention was the first globally binding convention to address

bribery and to require that states pass legislation to criminalize international bribery. The major

provisions included in UNCAC designed to address bribery included provisions requiring states to not

only address bribery post-act, as a criminal offense but also to take affirmative steps to prevent

bribery by establishing anti-corruption commissions and requiring public disclosure of government

official assets and the like.14 UNCAC also obligated states to adopt or in some cases consider adopting

legislation that criminalizes not only bribery, but other forms of corruption and related activities

which hide corruption such as money laundering.15 To further support the prosecution of such acts

UNCAC provides that member states also cooperate and provide for specific forms of "mutual legal

assistance" and the sharing of information and cooperation in enforcement activities across boarders. 16

Finally, and maybe most importantly, the member states agreed to provide for asset recovery

mechanisms, whereby assets can be seized and recovered by states whose national wealth has been

plundered.17 The breadth and depth of the convention is sweeping in its obligations and the degree to

which the member states have agreed to cooperate in what has now become a global fight against

corruption.

While slow on the uptake, the U.K. in response to several high profile corruption scandals,

including the BAE case and others finally met its obligations under both UNCAC and the OECD

Convention when it enacted the UK Bribery Act 2010 (the Bribery Act). Several provisions of the

Bribery Act broaden the anti-corruption project even further than before by expanding upon both the

OECD Convention and UNCAC. First, the act addresses both the supply-side and the demand-side of

bribery.18 The Bribery Act addresses both public and private corruption, including business-to-

business corruption.19 The Bribery Act also goes beyond the FCPA and other anti-bribery laws in that

it, for the first time, eliminates the long standing exception for facilitation payments. The Bribery Act

12 Ibid. at § 2(c)(1), amending, The Securities Exchange Act of 1934, § 30A (codified as amended at 15 U.S.C. 78dd-1) (1998).13 See at https://www.unodc.org/unodc/en/treaties/CAC/ (accessed 7 April 2014).14 Ibid. 15 See at https://www.unodc.org/unodc/en/treaties/CAC/convention-highlights.html#Criminalization (accessed 7 April 2014). 16 See at https://www.unodc.org/unodc/en/treaties/CAC/ (accessed 7 April 2014).17 Ibid.18 Bribery Act 2010 (UK) s 1 & 2.19 Bribery Act 2010 (UK) s 6.2.

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is ground breaking in that it also establishes a specific criminal offence for a company's failure to

prevent bribery with an affirmative defense for those companies that have adequate procedures in

place designed to prevent bribery. It is to this specific portion of the Bribery Act that this essay now

turns.

The UK Bribery Act and The Search for a Standard

When arguing over how best to structure a provision in the law that would finally begin to hold

companies, and arguably more important, senior management and board members accountable for the

bribery their employees and agents engage in on the company's behalf, lawmakers considered several

options.20 These options ranged from the general corporate liability standard under UK law, the

Identification Doctrine, with its almost impenetrable corporate shield to tort-like considerations of

negligence and gross-negligence finally settling on application of a strict-liability standard. The

implications for each of these standards on normalization of behavior throughout the organization and

oversight through effective corporate governance deserves discussion here as well as the complicated

relationship between these standards and the proposed defense of "adequate procedures".

Identification Doctrine

Under UK law it is a common feature of corporate liability that a corporation can only be held

liable for the acts of employees if the actions can be linked to a senior officer that represents the

"controlling mind" of the organization. This standard severally limits the ability to hold a

company responsible for the actions of lower level employees. The argument underlying this

principal appears at first blush a common sense argument consistent with the basic

jurisprudential proposition, that one should only be held liable for one's own actions under the

law and not for the actions of other. The argument is often so convincing that it is raised

automatically by companies in the USFCPA context and in corporate cases more broadly.

One need not look to far into almost any case of employee malfeasance, to hear the

bewildering cries of senior management and directors claiming "we can't be held responsible for

the acts of a rogue employee". While this claim often rings true to the ears of the general public

those very same individuals have a sense that something just doesn't sit right with making such a

claim. They would be good to follow those instincts.

As was pointed out by the Director of Public Prosecutions to the Joint Committee the

Identification Doctrine would prove almost impossible to overcome as a standard for prosecution

given that it is rare to find a direct order to bribe being given by a board member to someone

under his charge. Additionally, the OECD Working Group had criticized this standard as not

20 Joint Comm. on the Draft Bribery Bill, Draft Bribery Bill: First Report of Session 2008-09, 2008-9, H.L. 430-I (UK) [hereinafter Draft Bribery Bill, vol. I DRAFT BRIBERY BILL, vol. I], available at http://www.publications.parliament.uk/pa/jt200809/jtselect/jtbribe/115/115i.pdf.

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being dissuasive enough presumably on the grounds that senior management need only claim

ignorance of the whole affair to avoid liability, thus providing an incentive to bury one's head,

instead of taking efforts to prevent bribery. An outcome that runs contrary to imposing corporate

liability in the first instance.

Negligence v. Gross Negligence

The original provisions regarding corporate liability included a negligence standard whereby

organizations would be held liable for negligent failures to prevent bribery. 21 This stood in

contrast to the above mentioned "identification doctrine" and appear to expand the scope of the

offence to include any company where anyone in the organization had been negligent in

preventing bribery. It was asserted that negligence was too high a bar to overcome in proving that

a company should be liable, given the difficulties in proof and or determining which standard

should apply against which to measure the negligence. Thus, negligence was seen as being to

easy an out for corporations and this was viewed to be problematic in "that bribes are most often

paid in order to benefit a commercial organization".22

As an alternative negligence, a gross-negligence standard was proposed. Given that this

provision created a new criminal offence, so commentators noted that the means rea should be

more akin to a criminal offence and as such, a higher level of negligence should be required.

Again, this was viewed with skepticism as it was seen to undermine the intention of the

corporate liability provisions. Most commentators agreed that the provisions were meant to be

prophylactic and encourage or incentivize companies to be proactive in the implementation of

procedures which would prevent bribery in the first instance. It was argued that if corporate

boards and senior management believed that the level of guilt had to rise to a gross-negligence

level, they would for the most part believe themselves insulated from being liable under the

offence and would have little or no incentive to put any procedures in place.23

Wells's Strict Liability

The third alternative standard and that set out by Professor Wells, was application of strict

liability for companies whose agents bribe someone.24 This standard appeared to embody the

spirit of corporate liability in such cases best but was a concern for those speaking on behalf of

corporate interests.25 The concern being that holding the company strictly liable for the actions of

any agent or employee who brides in all cases, places too much responsibility on directors and

senior management to basically police the acts of all employees or, more troublingly, that of 21 Ibid. at 31, para 72.22 Ibid., quoting the Response of the Serious Frauds Office to the Law Commission Consultation paper no 185, Reforming Bribery.23 Ibid. at para 87.24 Ibid. at para 78.25 Ibid. at para 83.

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every agent that act on behalf of the company, including those agents over whom the company

has little or no control such as independent agents. The Joint Committee report points out that the

law has in several jurisdictions adopted the basic proposition that a company is strictly liable for

the acts of employees.26 This standard is akin to Respondeat Superior or a form of agent/principal

liability. While respondeat superior is not a common feature of U.K jurisprudence, by adopting a

strict liability standard whereby corporations are liable for any and all bribes paid by an

employee or other type of agent, this in a sense gets respondeat superior in through the backdoor

and achieves the desired result that companies not be able to claim ignorance as a defense. That

being said, without providing any defense at all in this context, corporations would potentially be

incentivized to not address the anti-corruption issue in the first instance because it would not

matter what level of attention they paid to the issue or what procedures they put into place to

prevent bribery, they would be liable regardless. This appeared to work against the intention of

the provision in the first instance, that being that companies should be incentivized to design

procedures to prevent bribery. Thus, the introduction of a defense was viewed necessary to make

the strict liability an effective standard to hold corporations against. This gave rise to the

adoption of the "adequate procedures" defense.

The Vague-ries of the "Adequate Procedures" Defense

When designing the corporate liability provisions of the Bribery Act, careful consideration was

given to whether a defense should be provided for corporations, which could be subject to criminal

liability under the Bribery Act, again, be it negligence or strict liability as discuss previously. The

proposed defense of having "adequate procedures designed to prevent [bribery]" was viewed as

providing corporations with an incentive to develop and implement anti-corruption procedures. The

defense reads in full as follows:

But it is a defence for [a commercial organization] to prove that [the commercial

organization] had in place adequate procedures designed to prevent persons associated

with [the commercial organization] from undertaking such conduct.27

As some pointed out during the legislative process, as worded, the defense provides no guidance

as to what procedures would prove to be sufficient. The wording on its face does not provide anything

more then a general assertion and lacks the specificity normally required of criminal statutes. Indeed,

the Joint Committee noted that there was "near-unanimous agreement in evidence that the meaning of

'adequate procedures' . . . [would] require amplification through guidance."28 Cast in its final form, the

defense appears to create more confusion than it does incentive and the vagueness of the language

26 Ibid. at para 79.27 Bribery Act 2010 (UK) c. 23, s 7(2).28 Draft Bribery Bill, vol. I , supra note 20, at para. 91 (U.K.).

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could serve to be its demise. Thus, in order to divine the meaning and parameters of the defense, this

essay will undertake a formal interpretive analysis of the statute.

The Appropriate Interpretation of "Appropriate Procedures"

In undertaking the exercise of statutory interpretation, certain rules of construction inform

the formal analysis for determining the meaning of a statutory provision. These include such

principles as 1) the utilization of the legal meaning of the words of a statute, 2) common usage

meaning of terms used in a statute in the absence of any legal meaning, and 3) that meaning of

the statute as worded, which comports with the intention of the drafters of the legislation. Each of

these tools will be utilized in turn to explored the possible meanings of the phrase "adequate

procedures" and why the commonly agreed upon interpretation that "its up to judges to decide",

while arguably appropriate under one method of interpretation, may not be the correct answer,

and why the correct interpretive answer may prove quite unsatisfactory to those who support the

use of the Bribery Act as a means of pushing forward the anti-corruption project.

Legal interpretation

One of the basic approaches to interpreting a statute involves utilizing the legal interpretation

of words used in the statute. This involves deriving the meanings of words having legal

significance as provided for in the statute itself (i.e., as defined within the statute) or from other

sources where such words are given a legal meaning. For example, the use of the word person

can have several different legal meanings such as referring to either individuals or juridical

persons and as such, legislation will often provide a specific definition of the "person" means for

the purposes of the statute. In the case of the Bribery Act the term "adequate procedures" is only

mentioned in the wording that sets out the defense itself. No where else in the Bribery Act is the

word "adequate" mentioned and the word "procedures" is only mentioned in one other place

within the Bribery Act and that is under Section 9, which provides that:

The Secretary of State must publish guidance about procedures that relevant

commercial organisations can put in place to prevent persons associated with them

from bribing as mentioned in section 7(1)29

Thus, while it appears that certain procedures may gain some meaning from subsequent

guidance, there is no indication that such procedures as may be set out in such guidance would

prove "adequate" as is required by the language of the statute in order for a corporation to avail

itself of the defense. While this may seem a splitting of hairs, the statute is imposing strict

liability upon a corporation for failing to prevent any agent from paying a bribe, thus if a

meaningful defense is to be provided the meaning of the words of the defense need to be 29 Bribery Act 2010, c. 23, § 9 (U.K.).

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adequately defined and understood by the corporation's actors or agents. At his point there is

nothing in the statute that provides a legal definition of the term "adequate". Thus for any

guidance issued by the Secretary of State or other authority to provide sufficient clarity, this

guidance would have to specifically present in sufficient detail the actions that would be

considered "adequate" under the law and identifies them as being such, or provides a specific

legal definition of the word "adequate" as applied in to the Bribery Act. A mere issuance of

guiding principles discussing what procedures a company could adopt would simply not provide

a legal definition of the term "adequate".

Common usage interpretations

In the absence of a legal definition being provided for a term of use in a statute, a second

method for determining the meaning of a particular statutory provision is to refer to the

commonly understood meaning of the particular term in question. An example of this type of

interpretation would be the use of the term "year". While one could argue that the term year

could potentially have several definitions, (e.g., calendar year, lunar year, light year, etc.) it

would be commonly understood to mean one Gregorian year consisting of 365 days, where the

word to be used in a statute passed by a legislature in the U.K., the U.S. or a number of other

"western" jurisdictions and thus an additional legal definition would not be needed to understand

the meaning of the term. Additionally, where there may be multiple common usages of a

particular term, it is common to make reference to a dictionary for an indication of the common

meanings given to a term.

The term "adequate" is one such term. Common meanings of the term adequate can range in

meaning and, as such, reference to dictionary usages should prove helpful in determining which

meaning should attach in this case. The Oxford English Dictionary defines the term "adequate"

as: "satisfactory or acceptable in quality or quantity".30 The Merriam-Webster Dictionary defines

the term as: "1)  sufficient for a specific requirement; also :  barely sufficient or satisfactory 2)

lawfully and reasonably sufficient".31 Black's Law Dictionary provides the following definition:

"sufficient; proportionate; equally efficient".32 Thus when common usage is considered, a range

of meanings can be given to the phrase "adequate procedures" in the context of the defense as

stated, namely, "adequate procedures designed to prevent persons . . . from undertaking

[bribery]."

Based on the above definitions, one meaning of the phrase "adequate procedures" could be

that the defense requires that the corporation, "has . . . sufficient procedures designed to prevent

bribery" or stated another way "has . . . procedures sufficiently designed to prevent bribery" but

30 http://www.oxforddictionaries.com/definition/english/adequate?q=adequate31 http://www.merriam-webster.com/dictionary/adequate32 http://thelawdictionary.org/adequate/

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this definition would prove problematic and unworkable within the context of the statute. The

statute imposes a strict liability offense on a corporation for "failure to prevent bribery" with a

defense. If the defense requires that the procedures are sufficiently designed to prevent bribery,

then the fact that bribery took place would in an of itself prove they were not sufficient, and as

such, the defense would have no meaning as a defense. It would mean that a company would

always be liable whenever an agent commits bribery regardless of the level of preventative

measures put in place. While this would ensure that the provision is actually a strict liability

provision, as was anticipated by the drafters in the first instance, it would yield the language of

the defense superfluous and meaningless. This is problematic in the statutory interpretation

context because where the words or a statute are open to multiple interpretations, one leaving the

provision meaningless in context and the other giving effective meaning to the words, then the

meaning which results in an effective meaning should prevail, as it is not appropriate to assume

that legislators would insert meaningless provisions into a statute, especially a criminal statute.

Thus, if another meaning for the phrase can be found that breaths meaning into the defense that

meaning would prevail over the one discussed here.

Accordingly, as second meaning of the phase based on the common usages set out above

could be that the corporation needs only have "barely sufficient procedures designed to prevent

bribery". This would seem to provide companies with an argument that in the absence of specific

procedures set out in the Bribery Act or any guidance, the company need only adopt minimal

procedures aimed at preventing bribery. From a corporate planning or governance perspective,

companies would prefer this approach as they would be able to spend minimal amounts of

corporate funds, even potentially nothing, on implementing only the most minimal of procedures

and still be able to claim that they qualify for the defense. This interpretation would not likely sit

well with the drafters of the statute as it would appear to undermine the strict liability nature of

the provision, but they would be hard pressed to point to any definition of "adequate" within the

Bribery Act or elsewhere to bolster their claim that any particular procedures are required or that

any particular set of procedures is not "adequate". Additionally, the burden of proving adequacy

should fall on the defendant but again, how is one to prove something is adequate when there is

no definition of what constitutes adequacy. Equally problematic, is the prosecution's burden of

proving that the defendant has not proved certain procedures were not adequate, as there is no

standard against which to measure adequacy. In such cases, it appears that the judge would be the

one to decide whether the proffered procedures were adequate, but this would also prove

problematic as again, the judge would have no objective standard against which to measure

adequacy. Any determination the judge made would be open to attack on appeal as arbitrary and

subjective, and in the context of criminal liability no less. This is most likely the position that

corporations will take and could substantially undermine the use of the Bribery Act to promote

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companies to undertake their own development of robust anti-corruption regimes in anticipation

of a remotely needed defense in case someone related to their organization happens to fall under

the other substantive provisions of the Bribery Act.

A third interpretation, and one that appears to have been adopted by the U.K. government, is

that this provision requires that the company implement "risk-based systemic procedures

designed to prevent bribery".33 This interpretation would seem to require that a corporation

implement a "reasonably" designed anti-corruption program that mitigates the risk of bribery but

not one that necessarily prevents bribery. There are a few problems with this interpretation. First,

how is one to determine what is reasonable. Second, providing a reasonability based defense to a

strict liability statute seems inconsistent with strict liability as a standard. Third, no where in the

Bribery Act is the word risk mentioned, even once. Fourth, this interpretation appears to add an

affirmative duty on corporation's to prepare a defense before ever being accused of the particular

offence in question, an affirmative duty that is not provided for within the Bribery Act itself.

Fifth, the interpretation is inconsistent with the requirement under statutory interpretation

principles that where a statute is subject to multiple interpretations, the interpretation that

benefits the defendant in a criminal proceeding should control over one that inners to the benefit

of the government.

While this interpretation may be preferred by the government, private and quasi-private

bodies and supporters of the anti-corruption project in the larger sense, this interpretation cannot

hold when considered closely. Unfortunately, in spite of the commendable and even laudable

efforts of non-corporate actors that stand behind the project and their well motivated desire to

incentivize corporations to act to address the problem, an interpretation of the defense which

contorts the language and imposes affirmative duties on a corporation that are simply not

included in the language of the statute cannot stand under proper statutory interpretation

principles. Unfortunately, the language of the statute as written must be interpreted to require a

company to only do as little as needed to demonstrate that it did something to prevent bribery and

as such the defense provide a company with a fairly easy standard to obtain. Yet, there is still a

larger problem lurking within the wording of the defense. As has been mentioned in passing

above, the wording is insufficient on it's face to be considered viable as a defense in that the

wording is vague and vagueness in the context of a criminal statute can render an entire provision

void. The issue of the provision being "void for vagueness" and the implications arising

therefrom may prove more difficult to the provision's effectiveness the difficulties in interpreting

language the is there. It is to this significant issue that this essay will not turn.

33 See generally, Ministry of Justice, The Bribery Act 2010 - Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing (section 9 of the Bribery Act 2010) (UK).

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Void for Vagueness

Over the centuries, it has been a fundamental principal of statutory and criminal code

construction that the law should be set out with sufficient specificity for an individual to be able

to understand what the law requires and how to conduct ones affairs and behaviors so as to

comply with what the law requires. Bacon summed it up with his maxim, "It is a miserable

slavery where the law is vague or uncertain".34 As did Bentham in his criticisms of Blackstone

for his vagueness of what the law is.35While there have been instances in the past of laws drafted

in a broad and imprecise manner, these laws have been viewed with suspicion and either ignored

or in some instances been subjected to review by courts and held to not be valid. Lord Francis

This principal is so fundamental that it has been held a right afforded individuals under the U.S.

Constitution as part of its procedural due process provisions.36

While this is fine in progressing the development of a comprehensive system of anti-

corruption writ large, it raises issues as a statutorily based motivator in that the language of the

statute, again, does not provide sufficient guidance as to what conduct suffices. Strategic

privatization37 of regulatory processes cannot be mandated through vague criminal statutes left

open to anyone's interpretation. This dangerously undermines long held foundational principals

of statutory construction, namely that legislation should be of such a nature as to inform the

citizenry of what specific actions will or will not constitute a violation of the law so that

individuals are able to conduct themselves in a manner which is consistent with the law. Over the

years, the idea that a statute must specifically spell out the exact actions has been relaxed but

only to the extent that a statute delegates the detailing to another agency or authority of the

government, not to the extent that vague principals of general approach can be a substitute for

specific actus reus requirements.

Represents a problematic reversal of recent developments in the regulatory space to adopt soft

law mechanisms for coercing certain behavioral outcomes. While it is one thing to use soft law

forms of nudging in addition to or in place of the traditional command and control mechanisms

of legislation, it is entirely another to ignore the safeguards against abuse of state power

enshrined in criminal law by allowing statutes to be written in a manner that includes only soft

law guidance principles. By this I mean that opening up the statutory process and morphing it

into a principles based statutory process leaves individuals vulnerable to abuse of state power in

that the principles based approaches are by definition open ended and not detailed enough to

make a determination as to when ones behavior comports with the law or not. For example, it is

34 Res est misera ubi jus est vagum et incertum. Also, Ubi jus incertum, ibi jus nullum. Where the law is uncertain, there is no law and Incerta pro nullis habentur. Uncertain things are regarded as nothing.35 Bentham, A Fragment on Government or A Comment on the Commentaries, London 1923 at 198.36 City of Chicago v. Morales, 527 U.S. 41 (1999).37 K. Hall, Comments: Strategic Privatization of transnational anti-corruption regulation.

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one thing to post a speed limit and inform individuals that if they exceed the limit they are

strictly liable to a fine and yet, through enforcement allow that limit to serve not as an automatic

trigger but more as a suggested example of the appropriate speed. It is quite another to simply

post a sign that says "No Speeding" and then ticket individuals going at various speeds. It is easy

to see how this might produce problematic results and claims of arbitrariness. The same could be

said for a rule that says, "Do something about bribery or else". Do what? Well, it's not for us to

tell you. You figure it out. How the drafters could have thought this would incentivize senior

management to spend what in some cases could be millions of dollars on a compliance program,

without any assurance that what they are doing will be of any benefit, seems either naive or

intentionally structured to be ineffective. As we must assume that legislators would not

intentionally structure a provision of the statute to be intentionally ineffective, then the only

conclusion is that they must have honestly believed that this would motivate directors and senior

management to act, despite the uncertainty around the effectiveness of their actions.

It is simply not enough to say, well, you can try your best but you won't know until a judge

tells you whether you've done it adequately or not. Nothing will motivate a company more to do

as little as possible to comply with a law than being told that no one knows what you should do

and in what measure and anyway no matter what you do you won't know until a judge tells you if

you've done enough or not. To the corporate mind this translates to, "well if I don't know what to

do now and how much to spend doing it and it may not matter if I do anything because I may be

held liable anyway (i.e., the costs could be significant and the benefits uncertain and remote),

then maybe its better to save on the expenditures and wait until the risk crystalizes". This is the

mindset of businessmen the world over. In the context of uncertainty, err on the side of

conservatism, which means don’t spend money if you can't be sure of a benefit and if you don't

know how much is enough then don't do anything. The incentive created by drafting the defense

in this manner has just the opposite incentive of that intended by at least some of the drafters.

Conclusion - The Way Forward

So where do we go from here? As the defense appears inadequately definite to provide sufficient

guidance to anyone subject to a strict liability offense under the main provision, we are left with a

strict liability standard for corporations whose employees bribe. I would argue that this is not

necessarily the wrong place to be. In the battle against corruption, holding companies liable for the

actions of all employees and agents would mean that management would be incentivized to do what

management is hired to do, and that is manage the organization. It is a very western sort of

management concept to say, "Well it's not my fault. I didn't know." in response to an accusation that

someone under your charge has done something wrong. Claiming ignorance in this context

demonstrates a negligent failure to preforms ones duties at best or willful dereliction of duty at worst.

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Neither of which should be acceptable where boards and the management they hire are charged with

duties to act on behalf of absentee corporate owners (i.e., shareholders). Strict liability is the standard

that best supports and motivates in this context.

Yet, as regards the defense of "adequate procedures" it is purely inadequate in this context. While

it is admirable that legislators have made an attempt to promote the involvement of corporate actors,

third party service providers and international organizations in exploring how best to develop anti-

corruption systems based on procedures designed to prevent corruption, the method for doing so is a

questionable one. The better alternative appears to be the internal controls requirements for financial

reporting under the U.S. FCPA/SEC model and which has been adopted by the U.K. through recent

actions against insurance companies by the U.K. Financial Conduct Authority.38 These systems have

been set up in such a manner as to require that companies have robust internal controls over corporate

actions and disclosure based on a history of financial reporting and to have robust corporate

governance procedures. This system has developed over time into a robust system of know-how and

standards such that corporate actors have little trouble understanding or knowing what constitutes an

appropriate level of oversight or behavior. This systems-based approach works and should be

permitted to work. The failure here is in trying to import a systems approach to preventing-corruption

through the substantive legislation itself as a defense to imputed strict liability.39 The better approach

would be to either mandate the requirement directly within the statutory scheme as is done with

internal controls for financial reporting and risk management (i.e., companies are required to

implement a system of anti-corruption. This system must be reviewed and audited by an outside

auditor.) or to add anti-corruption to the already existing system of internal controls reviews that exist.

Either method would prove more useful and "adequate" in motivating the development of anti-

corruption procedures than a mere general, uncertain and confusingly worded defense against a strict-

liability offense.

38 See http://www.fcpaprofessor.com/the-u-k-financial-conduct-authority-and-its-focus-on-adequate-procedures-to-prevent-bribery for a general discussion of both the Willis Limited and Aon cases. 39 Hall, above n. 37 at 65-68.

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