Bermuda: First Investigations Under New Anti-Bribery Legislation

Bermuda’s Bribery Act 2016 came into effect in September 2017 to meet the threat that bribery poses to the proper functioning of the island’s economy and the operation of the rule of law. The legislation is too new for cases to have yet concluded, but law enforcement has recently revealed that approximately 40 investigations are underway.

As stated in the guidance published by the Government of Bermuda in June 2017, the objective of the act is to create robust offences in relation to both the offering and the receiving ends of bribery. The act outlines the circumstances in which such offences may arise in both the public and private sectors. It applies to the “improper performance” of an activity that amounts to a breach of an expectation that a person will act in good faith, impartially or in accordance with a position of trust.

The act affects employers because it establishes, inter alia, corporate liability for failing to prevent the payment of a bribe on behalf of a commercial organization. This means that to avoid liability, employers would need to be vigilant in the management of their business and adopt suitable policies and procedures aiming to prevent any persons or entities associated with them from bribing. Employers may want to establish procedures that are proportionate to the bribery risks they are facing. They may also want to consider policies on business expenditures relating to the provision of hospitality, gift-giving, or other courtesies or promotional activities. Such expenditure is not criminalized if it is relatively modest, in good faith, and commensurate with the norms of the particular industry. Conducting due diligence, training staff, and monitoring their practices and the effectiveness of their policies are measures that can serve as a good defense in the event that an employee commits a bribery offence.

The legislation is still too young to have created any legal precedent, but the Bermuda Police Service has announced that over 40 criminal investigations involving acts of corruption by individuals and businesses are underway—at a time when plans are afoot to introduce legal gambling to the island.

Bermuda looks to the United Kingdom for guidance and takes careful note of cases such as the one involving Jardine Lloyd Thompson Specialty Limited, which was penalized £2.684m (reduced by 30 percent because the company settled at an early stage of the investigation) for failing to carry out its own anti-bribery checks and controls before beginning new working relationships with overseas third parties to guard against the risk of corruption.

According to Bermuda’s Chief Inspector Nicholas Pedro, “Traditionally in Bermuda, corruption or bribery was limited only to public officials,” so the new law will be “extremely impactful on a wide cross-section of the community.” Failure to prevent bribery is also now a crime. Pedro explained: “This basically creates a requirement to make sure that everybody is trained and aware about the legislation.”

In dealing with these cases, he states that priority will be given to offences that “present a jurisdictional risk to Bermuda.” As stated in the Ministerial Guidance, it is hoped that the act, by strengthening Bermuda’s regulatory environment to combat bribery, “will help to enhance Bermuda’s international reputation for the highest ethical standards.” At a time when the European Union is considering placing Bermuda on a “blacklist” of non-cooperative jurisdictions in relation to financial transparency, Bermuda needs this more than ever.

Written by Juliana M. Snelling and Olga Rankin of Canterbury Law Limited and Roger James of Ogletree Deakins

© 2019 Canterbury Law Limited and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.