Active Vs Passive Bribery

Posted by

Kina Bhattacharjee

on 19 Jul 2021

Active Vs Passive Bribery

In many countries, bribery legislation focuses on active forms of bribery. However, often the consequences for acts of passive bribery may be just as severe.

For context, it helps to understand the act of bribery and the roles of those engaged in this unlawful practice.  Our partners at Transparency International have a great definition:

"The offering, promising, giving, accepting, or soliciting of an advantage as an inducement for an action which is illegal, unethical or a breach of trust. Inducements can take the form of money, gifts, loans, fees, rewards or other advantages (e.g., taxes, services, donations, favours etc.)."

Transparency International

Bribery occurs when someone in an appointed position, at any level in the hierarchy of an organisation voluntarily breaches trust in exchange for a benefit to themselves.

This benefit does not necessarily have to be monetary or financial, as it can also come in the form of (usually expensive) gifts or discounts, hospitality and expenses, or personal favours in exchange for business-related favours.

How is bribery defined in UK legislation?

When an act of bribery takes place, two or more parties are involved:

  • One or more parties who offer a bribe (generally active bribery)
  • One or more parties who receive a bribe (generally passive bribery)

The UK Bribery Act (2010) defines bribery as an offence where financial or other benefits are offered, promised or given to another person to induce that a person "to perform improperly a relevant function or activity or to reward a person for the improper performance of such a function or activity."

According to this legislation, the bribery offence occurs when a person "knows or believes that the acceptance of the advantage would itself constitute the improper performance of a relevant function or activity."

In other words, the law is broken when the parties involved know that they are about to perform, or are performing, an act of bribery or when third parties are leveraged to carry the act of bribery out.

Outside of the UK, legislation often focuses primarily on active bribery offences. For example, in the United States, the Foreign Corrupt Practices Act (FCPA) prohibits its citizens and entities from bribing foreign government officials for the purposes of fulfilling business interests.

Anti-bribery Good Practice Guide

What is active bribery?

The UK Bribery Act defines the offence of offering, promising, or paying a bribe as an active form of bribery.

Even if a person is compelled to commit an act of bribery under some duress, they are still likely to be seen as performing an act of active bribery, according to the Bribery Act.

Examples of active bribery include:

  • Paying public officials inducements to secure a contract, be awarded a license or circumvent safety or planning controls.
  • Making small undocumented payments to customs officials to expedite the passage of goods through a port.
  • Providing medical practitioners with excessive travel expenses to influence them to prescribe a particular brand of pharmaceutical products.

Recent active bribery cases

1. Braskem - bribery to secure building permissions

The former chief executive officer of Braskem SA, Brazil’s largest petrochemicals company, owned up to his role in a sweeping bribery plot also involving Braskem’s parent company, Odebrecht SA.

Jose Carlos Grubisich pleaded guilty to two counts of conspiracy to violate US anti-bribery laws, acknowledging that he approved a $4.3 million payoff to an official of Petroleo Brasileiro for rights to build and operate a plant.

2. Ericsson - bribing government officials

The DoJ said that Ericsson conspired with third parties to violate the FCPA from at least 2000 to 2016 by taking part in a scheme to hand out bribes and to falsify books and records, in addition to failing to implement adequate internal accounting controls.

Telecommunications gear firm Ericsson agreed with Nokia to pay a damages claim of €80m (£69m). The settlement followed investigations carried out by the US Department of Justice (DoJ) into corruption, including the bribing of government officials. It settled with the DoJ back in 2019 and was required to pay over $1bn (£709m) in penalties.

 

Anti-Bribery E-learning Module

What is passive bribery?

The offence of soliciting, agreeing to receive or accepting a bribe is deemed a passive form of bribery.

Intriguingly, if a person has made their intentions of receiving a bribe very clear, their actions could still be regarded as passive bribery.

Examples of passive bribery include:

  • An employee working in a bank, accepting a bribe to share customer data.
  • A security guard bribed to allow access into a building for the purposes of theft.
  • A procurement professional accepting a bribe to award a contract to a vendor.

Recent passive bribery cases

1. IKEA executives - corrupt payments from a supplier

The UK Serious Fraud Office sentenced Adam Hauxwell-Smith to three years in prison. The two former IKEA executives, John Brown and Paul Hoult, received two year and 13-month sentences, respectively, after admitting to taking bribes.

Ikea would not take more than 40% of a supplier's turnover to stop suppliers from becoming over-reliant on their business.

Almost all of the turnover from the companies set up by Hauxwell-Smith was with IKEA. Two influential IKEA executives received over £1.3 million in corrupt payments to keep this quiet and ensure that supplies and invoices were approved.

2. FIFA officials - payments to award contracts

According to a DoJ investigation, officials working at FIFA received bribes worth millions of dollars from representatives of Russia and Qatar to secure World Cup hosting rights.

The DoJ issued a criminal indictment on three senior FIFA officials for receiving bribes for voting in favour of the Gulf state hosting the tournament.

Yet, the tournament in Russia went ahead in 2018, as will the one in Qatar. However, the DoJ found insufficient evidence of wrongdoing to warrant the Gulf state from being stripped of its host status.

Gifts & Hospitality Checklist

Want to learn more about Bribery & Corruption?

Our Bribery Hub has everything you need to ensure you follow the six principles detailed in the UK Government's Bribery Act Guidance.

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