22 Mar 2017
Viv Jones & Neill Blundell of international law firm Eversheds Sutherland profile Kenya’s new Bribery Act.
Many compliance professionals have traditionally used the Foreign Corrupt Practices Act 1977 (USA) and the Bribery Act 2010 (UK) as their lodestar for designing anti-bribery systems and responses. If something was good enough to comply with US or UK law, they thought, it would probably be fine everywhere else. Kenya’s new Bribery Act, which pairs onerous obligations with severe penalties, may mark the start of a new era in which developing countries pass and enforce anti-bribery laws that are far more stringent than those in “traditional” compliance jurisdictions.
Public concern about bribery is on the rise in Kenya. In April 2016, a residential building in Nairobi collapsed, killing a number of occupants. Immediately, ordinary Kenyans and politicians alike blamed corrupt local government officials for allowing the unsafe building to continue to be occupied. With a general election scheduled for August 2017, the President and government are keen to send a message about bribery.
The Bribery Act 2016, which came into effect in January 2017, certainly sends that message. It follows the approach of the United Kingdom’s Bribery Act 2010 in abolishing distinctions between bribery in the state and private sector (B2B bribery), clarifies the core of the bribery offence (“improper performance” of a duty), and provides a clear basis for holding corporations responsible for the corrupt conduct of their employees and “associated persons”. Offenders face severe penalties: 10 years’ imprisonment and a KSH 5 million fine for individuals, or an uncapped fine for corporations. Whistleblowers are protected. Further, it requires the government to publish guidelines on how the private sector can comply with the new law. To that extent, the Bribery Act 2016 brings Kenya in line with international expectations for anti-bribery laws.
However, the Bribery Act 2016 contains further obligations which mean that Kenya now has one of the toughest anti-bribery regimes in the world. In particular:
- persons in “a position of authority” in a private or public sector entity now have a legal duty to inform the Ethics and Anti-Corruption Commission (EACC) of any instances of bribery about which they have knowledge. Failure to do so is a criminal offence punishable by ten years’ imprisonment and a KSH 5 million fine. It is unclear how this is intended to affect issues around legal professional privilege and self-incrimination. There is no prescribed form for reports and it is unclear how detailed a report to the EACC must be in order for a person to discharge that duty. As drafted, there is no requirement for the instance of bribery that is reportable to be relevant to the reporting person’s position of authority. There is no provision in the Act for leniency for self-reporting persons.
- like in the UK, corporations may be convicted for the corrupt conduct of their “associated persons” e.g. employees, officers, agents and joint venture partners. Unlike in the UK, there is no statutory defence to such a prosecution e.g. by way of having “adequate procedures” in place to prevent that bribery.
- regardless of the above, there is a free-standing obligation on public and private bodies to “have in place procedures appropriate to its size and the scale and to the nature of its operation, for the prevention of bribery and corruption”. If the company fails to put in place such appropriate procedures, directors and senior offices (a term which may include managers) may be prosecuted if that failure took place with their “consent or connivance”.
Unfortunately, from a technical perspective, the drafting of the Act is problematic in several areas. This creates some uncertainty regarding how it will be enforced.
Corporations doing business in Kenya and the compliance or legal professionals that advise them must respond quickly to the Bribery Act 2016 in four principal ways. First, corporations must ensure that any existing antibribery compliance systems (particularly those oriented at compliance with US or UK legislation) actually reflect the duties contained within the Kenyan law. Second, corporations must ensure they have an extremely agile system in place to receive employees’ concerns and whistleblowing calls, get legal advice, conduct preliminary review of issues, and decide whether to self-report – all within 24 hours. This is an extremely demanding turnaround time. Third, workers need to be trained on their new obligations. Finally, senior management must set a strong “tone from the top” on antibribery to workers and also to business partners who can create criminal liability for the company: joint venture partners, agents and consultants.
How corporations should do this in practice is a matter they will have to determine for themselves. The government’s guidance is unlikely to be a blueprint for compliance – rather it will probably identify key themes and values – and in any case it is unclear when that guidance will be published. Consequently, Kenyan businesses should draw from international best practice in anti-bribery in their respective industry, and jurisprudence from other jurisdictions that have implemented similar laws in the past. (Even if that jurisprudence isn’t binding on Kenyan courts, it should at least be informative).
By enacting the Bribery Act 2016, the Kenyan government has sent a strong message that it does not intend to tolerate bribery. The important question now is whether those fine intentions will translate into reality. It is unclear whether the EACC has been adequately resourced to respond to the increase in its workload that the Bribery Act must surely bring; Chief Justice David Maraga is concerned that some litigation has been pending in Kenyan courts for over a decade and estimates ten percent of judges are corrupt; and prosecutions of bribery matters (particularly those with political dimensions) are difficult and time-consuming processes.
More generally, the duties imposed on international companies by the Bribery Act 2016 will not be the last addition to the anti-bribery pantheon. Parliaments and prosecutors in developing countries have observed the US Department of Justice and the UK Serious Fraud Office extract millions of dollars from giant corporations. In most cases, there has been no attempt to return any of that money to the developing countries in which the misconduct originated. Little surprise, then, that Brazil, Russia, and now Kenya have upgraded their laws to increase domestic enforcement: they will surely not be the last.
The full text of the Kenyan Bribery Act 2016 is available to read here.
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