The Definition of Bribery - Active vs Passive

Posted by

Emmeline de Chazal

on 05 Apr 2024

For most countries, bribery legislation focuses on active forms of bribery. However, unbeknownst to many, the consequences of passive bribery may be just as severe.

Active vs Passive Bribery

To help you understand the act of bribery and corruption and the roles of those engaged in these unlawful practices, our partners at Transparency International define it as:

"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.)."

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 come in the form of gifts or discounts, hospitality and expenses, or personal favours in exchange for business-related favours.

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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 person to perform a relevant function or activity improperly 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 parties involved break the law when they 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 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 to fulfil business interests.

What is active bribery?

The UK Bribery Act defines the offence of offering, promising, or paying a bribe as an active form of bribery. According to the Bribery Act, a person is guilty of bribery even if they are compelled under some duress.

Examples of active bribery include:

  • Paying public officials inducements to secure a contract, be awarded a licence 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.

Active bribery cases

1. Glencore - bribes foreign officials to avoid audits and win business

Glencore was ordered to pay $700m after the firm pleaded guilty to its decade-long scheme of bribing foreign officials across several countries. This sentence consists of a $428.5 million fine and $272 million in forfeiture, in line with a plea deal reached by Glencore and federal prosecutors.

2. 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 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.

3. Glencore - bribes in exchange for preferential access to oil

Glencore Energy (UK) Ltd pleaded guilty to several counts of bribery to access oil and illegal gains. The Serious Fraud Office (SFO) found that the company had paid over £22.2m in bribes through its employees and agents to get preferential access to oil and preferred delivery dates. Glencore was ordered to pay $1bn to settle the bribery allegations.

4. Ericsson - bribing government officials

The Department of Justice (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 DoJ into corruption, including the bribing of government officials. It settled with the DoJ in 2019 and was required to pay over $1bn (£709m) in penalties.

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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 purpose of theft.
  • A procurement professional accepting a bribe to award a contract to a vendor.

Passive bribery cases

1. Former Bank of China boss - accepting bribes and illegally granting loans

Liu Liange, the former head of one of China's largest commercial banks, was arrested on charges of accepting bribes and illegally granting loans. This was part of a two-year anti-corruption campaign in the country's financial sector.

China's Central Commission for Discipline Inspection (CCDI), responsible for investigating corruption within the Communist Party, confirmed the arrest, which was initiated in March. President Xi Jinping prioritised combating corruption in his leadership, resulting in investigations and arrests of numerous bankers and financiers since late 2021 when authorities began targeting the financial sector.

2. 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.

Gifts & Hospitality Checklist

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