What is a foreign public official?
Article Type: Editorial From: Journal of Money Laundering Control, Volume 14, Issue 2
The Bribery Act 2010 will come into force on 15 April of this year, after businesses have been given time to draw up appropriate procedures (generally including formal codes of conduct), on which they could rely under section 7(2)of the Act in the event of a possible prosecution for the new offence of failure by a commercial organisation to prevent bribery. While that offence has been one of the most highly publicised elements of the new Act, another has been the formal incorporation into an anti-corruption statute, in section 6, of the offence of bribery of a foreign public official (currently found in section 108 of the Anti-Terrorism, Crime and Security Act 2001).
At first glance, it would seem clear what bribery of a foreign public official is. The definition of bribery, in section 1 of the 2010 Act, is straightforward: offering, promising or giving an advantage, financial or otherwise, to a person where that advantage is intended to induce them to performing their duties in an improper manner (or reward them for doing so). Section 6 of the Act then extends the provisions to foreign public officials,defined as persons holding a legislative, administrative or judicial position in a foreign jurisdiction or who exercise a public function on behalf of that jurisdiction or on behalf of any of its public institutions or enterprises. Officers or agents of public international organizations are also covered. In other words, it would appear that foreign public officials means foreign politicians, government officials, judges and civil servants.
So far, so clear. Or is it? “Public institution or enterprise”needs to be examined carefully: it will cover a wider range of institutions than may at first appear. Certainly, large public entities such as SNCF (French Railways) or the State Grid Corporation of China will be covered. So, however,will any enterprise, of whatever size, that is owned by a national or local government.
An important and topical example is sovereign wealth funds. The US Securities and Exchange Commission was reported in January of this year to be investigating suspected bribery of such funds by several banks and other financial institutions. Although, at the time of writing, few details have as yet been published, the reports should place international business on notice. While sovereign wealth funds are explicitly government owned and administered, the operations of many of them are highly global. The China Investment Company, for instance, has, since its creation in 2007, held investments in institutions in a wide range of sectors, from global financial institutions to Canadian energy companies. Similarly, the Abu Dhabi Investment Authority (ADIA) states on its web site:
ADIA, as a matter of practice, does not invest in the UAE. Nor does it typically invest in the Gulf region except in instances where such investments constitute part of an index.
In other words, its investment portfolio is definitively global rather than regional. But although sovereign wealth funds differ substantially from “typical”government operations, such as administering the country (or territory) or, in certain jurisdictions, operating certain key sectors, they are as much public enterprises as the more “traditional” entities are.
They are not, however, unique in this respect. A number of jurisdictions have many corporations which, although they are clearly commercial in nature, are owned and run by the government. Nor should it be thought that this only applies to the transition economies of, for example, East and Central Asia. It is equally true of the Gulf states, a region of commercial centres of increasing international importance. In Dubai, for example, the ruler and his family own not only the utilities and the “national” airline, Emirates, but also the “construction” group Nakheel. As well as being involved in construction itself, this group owns considerable real estate, the Jumeirah hotel group, which itself comprises the majority of the luxury hotels in Dubai(and also, incidentally, owns hotels in London, New York and the Maldives) and a number of financial institutions. All of these entities will therefore constitute “public enterprises”. Anyone who exercises at least a significant function in relation to any one of them will, in turn, be a “foreign public official”. It is not just the Ruler himself who will be covered (as he would in any case due to his holding of both a legislative and administrative position), but also the various managers lower down the structure. The same may be said of Abu Dhabi, Qatar and large parts of the Saudi economy.
The message is clear: in complying with section 6 of the 2010 Act, it is not enough simply to focus on “the usual suspects”. As businesses draw up their procedures, manuals and codes of conduct, they would therefore be well advised to plan accordingly.
Richard Alexander
