New Irish anti-corruption laws: issues for businesses

The Criminal Justice (Corruption Offences) Act 2018 (2018 Act) was signed into law by the Irish president, Michael D Higgins, on 5 June 2018. It has not yet been announced when the legislation will come into effect, but it is anticipated to be soon.

Once in force, the 2018 Act will have significant implications for both Irish businesses and UK and other non-Irish businesses operating in Ireland. It introduces a number of new offences, as well as expands the scope of Irish anti-corruption laws beyond bribery of public officials to businesses operating across all sectors. It also introduces severe new penalties.

What offences are created by the 2018 Act?

The 2018 Act criminalises both 'active' and 'passive' corruption, broadly corresponding to the offering and accepting of a bribe. It also criminalises active and passive 'trading in influence', which is to do with promising an undue advantage to someone who claims to be able to exert improper influence over the decisions of a public official.

These offences apply regardless of whether the alleged ability to exert improper influence existed, or whether the supposed influence led to the intended result.

The Act also creates a number of new offences targeted at Irish public officials. It will criminalise any act of an Irish public official carried out in the course of their official position with the intent of corruptly obtaining an advantage for a third party, regardless of whether or not a third party was involved. It will also criminalise the use of confidential information obtained by a public official through their office for a corrupt purpose.

Can a company be guilty of an offence under the 2018 Act?

A company will be guilty of an offence under the 2018 Act if the offence is committed by an officer, employee, agent or subsidiary of the company, and the offence was committed with the intention of obtaining or retaining business or any business advantage for the company.

The individual who committed the offence will also be personally criminally liable under the Act, and officers of the company may also be personally criminally liable. The majority of offences under the 2018 Act carry a maximum penalty of ten years in prison and an unlimited fine.

This means that the same wrongful act may be prosecuted on three different fronts: the individual who undertook the wrongful act; the officer of the company who consented to the act or who was wilfully negligent; and the company itself.

Does a company have a defence?

A company will have a defence against corruption proceedings brought against it if it is able to prove that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence. This defence is similar to the 'adequate procedures' defence available to UK companies under the 2010 Bribery Act (UK Act).

There is no Irish-specific guidance yet available on when the defence will apply. However, Irish businesses may refer to guidance provided by the UK Ministry of Justice as a helpful starting point for developing policies and procedures which will support the defence if it is ever needed. The UK guidance sets out six principles around which anti-corruption policies can be based:

• procedures should be proportionate to the risks a company faces, as well as the nature, scale and complexity of the company. They should also be clear, practice, accessible and effective, both in implementation and enforcement;
• there should be top-level commitment within company management to preventing bribery to persons associated with the company, fostering a culture that bribery is never acceptable;
• a company should perform periodic risk assessment and document the nature and extent of its exposure to possible external and internal bribery risks by persons associated with it;
• due diligence procedures to mitigate potential bribery should be applied in respect of those who perform services for or on behalf of a company, taking a proportionate and risk-based approach;
• bribery prevention policies should embedded and understood throughout an organisation via internal and external communication and internal training;
• there should be a system of monitoring and review and, where necessary, improving anti-bribery procedures by persons associated with the policy.

How else does the 2018 Act reflect the UK position?

There are many similarities between the 2018 Act and the UK Act. Both contain offences of active and passive bribery and bribery of foreign officials, and both contain similar penalties and defences. However, there are two significant points of difference to be aware of:

• the UK Act has a more pervasive territorial scope, as it does not contain the same requirement that the offence must also be an offence in the country in which it took place as the 2018 Act. This makes the UK Act stricter than the 2018 Act on citizens or companies operating in parts of the world where anti-corruption law is weaker than in the UK or Ireland;
• the 2018 Act contains several specific offences and penalties focused on public officials which do not appear in the UK Act, reflecting the recommendations of the Mahon tribunal into corrupt payments to politicians.

The defence available to companies under the 2018 Act and the UK Act is also worded slightly differently, as set out above. From a practical perspective, however, if a UK company has robust anti-bribery procedures in place which are sufficient so as to allow it to rely on the UK 'adequate procedures' defence, it is likely that it will also be able to rely on the 'all reasonable steps/due diligence' defence under the 2018 Act if it implements the same procedures in its Irish business.

How might the 2018 Act impact UK businesses and other businesses operating outside Ireland?

The 2018 Act purports to have extra-territorial effect on both companies and individuals if three conditions are met:

• the corrupt act which takes place outside of Ireland is an offence in Ireland;
• the corrupt act is also an offence under the law of the country where the corrupt act takes place; and either
• the person who carried out the act is an Irish official or citizen, or they had their principal residence in Ireland for the period of 12 months immediately preceding the corrupt act; or
• the company in question is a company formed under Irish company law or is any other body corporate established under the laws of Ireland.

Of course, companies and individuals will also be subject to the anti-corruption legislation of the countries in which they are operating. For example, if an Irish company operating in the UK carries out a corrupt act which is an offence under the UK Act as well as under the 2018 Act, then it could be prosecuted under both pieces of legislation for the same corrupt act.

Dermot McGirr is a white collar crime expert at Pinsent Masons, the law firm behind Out-Law.com. A version of this article first appeared on LexisPSL.