There has been an avalanche of commentary on the UK Bribery Act in recent months. And for good reason. It is truly ground-breaking legislation in terms of its scope and the absence of any maximum penalty.  

Also, its extraterritorial character means that Australian companies and their legal advisers can't afford to ignore it. However, it's worth noting that Australia has its own legislation dealing with bribery of foreign officials and any analysis of the UK Bribery Act is best considered with this fact in mind.

As a bit of background, in 1999 the Howard Government enacted legislation specifically outlawing bribery of foreign officials. The offence is contained in Section 70 of the Criminal Code Act 1995 (Cth). Under Section 70 an individual or corporation (Person A) is guilty of an offence if all of the following elements are present: Person A gives or offers a benefit to Person B or causes a benefit to be given or offered to Person B; the benefit is not legitimately due to Person B; Person A intends to influence a foreign public official (who may be Person B or someone else - for example Person B's colleague or relative) in the exercise of their official duty; for the purpose of obtaining or retaining business or obtaining or retaining a business advantage not legitimately due. A benefit is any advantage and is not limited to money or property.

It's no defence under the Australian law (nor is it an offence under the US Foreign Corrupt Practices Act or the new UK Bribery Act) to argue that you did not realise your conduct constituted bribery or that your conduct was unlawful.  Furthermore, local or industry customs, the value of the benefit and any official tolerance are to be disregarded when assessing whether a benefit was legitimately due.

The Australian law provides only two defences. First, the benefit was expressly permitted or required by the domestic laws that govern the foreign public official. And second, that the benefit was a "facilitation payment".

The first of these is straightforward enough and it will be a very rare case indeed when this defence can be relied upon.

But the facilitation payment defence is more problematic. It's been a great source of legal uncertainty for Australian businesses interacting with foreign officials.

A facilitation payment is a payment to a foreign public official, the value of which is of a minor nature, for the sole or dominant purpose of expediting or securing the performance of routine government or administrative actions of a minor nature.  However, the payment must not concern a decision or encourage a decision to be made about whether to award new business or contracts or the continuation of existing business or contracts.  

Also, in order to satisfy the defence, a corporation or individual who makes a facilitation payment must prepare a contemporaneous certified record of the payment including particulars such as the amount, the date the payment was made, the recipient and the reason for the payment.

A similar defence is available under the FCPA. But it's submitted that with the UK Bribery Act, which comes into force on 1 July 2011, Australian companies would be wise to completely disregard the existence of the facilitation payment defence - even as a defence of the last resort - and expressly forbid employees, subsidiaries and agents from offering facilitation payments.  

Such is the extra-territorial reach of the Bribery Act that a company with a jurisdictional link to the UK can be prosecuted for the actions of a non-British person outside the UK.  This means that an Australian company carrying on business in the UK can be prosecuted for acts done by its employees, subsidiaries and agents in Australia or any other country.

The Bribery Act expressly outlaws facilitation payments and, if prosecuted, it will be no defence to protest you were complying with Australian law.

The Act also introduces a corporate offence of failing to prevent bribery.  This means that companies will be liable if anyone acting under its authority - including agents, subsidiaries and even join venture partners - is found to be involved in corrupt practices and they do not have in place adequate procedures to counter corrupt practices such as foreign bribery.  A failure to expressly outlaw facilitation payments 'in house' is inconsistent with having adequate procedures in place.

Even if a company is beyond the reach of the Bribery Act, compliance with the official Guidance to the Bribery Act prepared by the UK Ministry of Justice [http://www.justice.gov.uk/guidance/making-and-reviewing-the-law/bribery.htm] is excellent risk management and will greatly reduce the possibility of a prosecution under any anti-bribery law. The provision of facilitation payments for even trivial matters is inconsistent with this approach.

If prosecuted under the Bribery Act or Section 70, there is an excellent chance it will attract media coverage, with massive reputational damage the inevitable consequence - even if the prosecution fails.