FOOTBALL AND THE CRIMINAL LAW BRIBERY AND CORRUPTION-A NEW WORLD ORDER

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1 FOOTBALL AND THE CRIMINAL LAW BRIBERY AND CORRUPTION-A NEW WORLD ORDER Football and bribery Bribery and corruption has sadly been part of the game of football for over 100 years. Over the years there are literally dozens of such cases- players taking bribes for throwing matches, match officials agreeing to fix a result in return for a bribe, betting syndicates offering bribes to guarantee a result are the most common types of corrupt behavior. Those involved have included players, referees, linesmen, coaches, clubs and officials of national organizations. And it has happened the world over. In Italy, Portugal, Belgium, Germany, Brazil, Malaysia, South Africa and the UK-in England and Scotland. And of course most recently executive committee members of FIFA have been disciplined/supended/fined for seeking or accepting bribes [cash, offers to build facilities etc] for votes in respect of venues for the 2018/22 World Cups and other issues. FIFA has also launched investigations against individuals suspected of taking part in bribery in connection with FIFA elections. In these cases those involved have certainly been disciplined by the respective national authorities. In the English and Scottish cases those involved were prosecuted under the existing law and were sent to prison. Because before the Bribery Act 2010 there always was a law against bribery and from the beginning of the last century statutes against bribery and corruption-which were a bit complicated and directed at the corruption of public officials and people acting as agents. Making a corrupt payment so as to induce a public official to do something he should not do as part of his functions or an employee to act against his employer s interests was against the law. So a football supporter slipping a 50 note into the pocket of a club employee to get access to restricted area on a match day or a football agent paying a manager under the counter so that he buys or sells a player always was and will be illegal.

2 So what s new? Two brand new offences and a redefining of an existing offence. Old fashioned bribery has been redefined and involves someone offering or giving someone some financial or other advantage intending that person to act improperly in carrying out his/her functions whether as an employee, or if connected with a business or of a public nature. Equally someone in such a position commits an offence if he asks for or accepts such an advantage to behave improperly or where it is improper to ask of or accept such an advantage. Bribery world wide-the law updated and extended Until 2001 those doing business abroad could make any payments and provide such benefits for those with whom they were doing business without any risk of prosecution for corruption under the old law. It did not apply abroad. In 2001 the old law was then extended to acts of corruption committed abroad by UK nationals or a UK company. The new Act applies the new provisions to anything done abroad by a person with a close connection with the UK i.e. a British citizen, someone ordinarily resident here or British Overseas and other categories of British related citizens So bribery as commonly understood and as now defined is a crime wherever it is committed by such a person. The first brand new provision relates to Bribery of foreign public officials. It is an offence for someone to give or promise directly or indirectly a financial or other advantage to a public official so as to influence the official in the way he carries out his functions and in order to gain or retain business or an advantage in the business. A foreign public official [an FPO] is someone works for a foreign government as [say] a civil servant or for a public enterprise in that country or for a public international organization. Whether or not mere support staff are FPO@s is not entirely clear. However it is clear that the organization for whom the person works must be acting on behalf of the country in question. So an employee of a private company [owned by shareholders] is not a foreign public official. Nor would someone working for a foreign national football association be an FPO unless football was a nationalised sport in that country. Would someone working for Barcelona be an FPO? Possibly if the club is owned by/on behalf of the community! It has been said that this provision in practice deals with same behavior as the main parts of the Act. It seems it was brought into law as part of our international treaty obligations to try to stamp out this type of corruption. And this offence is only concerned with offers of improper payments. It will not be necessary to prove any improper conduct by the FPO or receipt of any payment.

3 So what effects do those provisions have on the world of football? It is a statement of the obvious that football at the top club level is now highly internationalised whether in terms of player transfers, club ownership and broadcasting rights. Pre-season tours abroad are a regular feature in club calendars. Clubs are therefore increasingly dealing with foreign clubs, individuals and other bodies. So if an English club is buying a player from Malaysia or Brazil there will be an agent or more than one -acting for the buying club or the selling club and/or the player. There is management of the selling club, the chief executive, the president or the head coach. What are the likely financial arrangements? The financial transactions will include the transfer fee, the wages, any signing on fee and the agents fees. Who should get what? The transfer fee should go to the selling club, any signing on fee to the player and the agents fees to the agents. If the English club was involved in arrangement whereby any money went to the club officials or via an agent to the player then that would likely to be a bribe and an offence. The club officials would be acting improperly in relation to the business of the club and/or their employment and the agent would be acting improperly in transmitting a payment to the player as a hidden signing on fee [if that was what was going on] And the fact that any illicit payments were arranged and made abroad to foreign nationals makes no difference if any individual in the UK was involved-he/she is guilty of bribery. Negotiations may well be complicated and through a number of different parties but even of the club was acting through a third party it will be guilty-provided of course it knows what is going on. Other transactions. In addition there may be emigration/immigration and visa/work permit issues to sort out in the country in question. These processes can be notoriously slow and it might be tempting to speed things up. In general any payment to an official in a foreign government department [an FPO] to do just that- unless an authorized fast track process -may land the club in trouble. In these cases anyone in the UK involved will be guilty of bribery and/or of bribery of an FPO. A note of caution. It is frequently said in the debate about the new law that it takes no account of local practices and customs. Indeed it is often said that business is in some parts of the world is difficult or impossible without payments, sweeteners or at least lavish entertainment. The new law expressly disallows any reliance on any such local customs. It does however recognize that if payments are permitted by local written law

4 Club ownership and the investment in English clubs by foreign owners/investors This topic raises a multitude of issues around the fit and proper person tests, the rules about financial management and reporting and the new UEFA Financial Fair Play Regulations. However, so far as the new bribery law is concerned, in any negotiations with overseas backers or buyers and their intermediaries and it will be vital to ensure there are no improper payments by or to any of those involved whether in business or exercising a public function. Sovereign wealth funds are an interesting example of bodies which might be governmental or in which those managing them might be exercising a public function and thus FPO s. So again negotiations with such bodies would have to be conducted with the new law in mind. What is a financial or other advantage? This expression plainly includes cash payments or gifts of monetary value. It also will include soft loans, free medical or other expenses, rent-free property etc. Entertainment and other forms of social activity which is excessive or disproportionate having regard to the transaction involved. Also any offer of commercially sensitive information or cartels. It might also catch investments in other projects which are made to induce the other party to act improperly or if a FPO to influence the way he carries out his duty. Failure of commercial organizations to prevent bribery. This provision is perhaps the most important to English football clubs in a global market. Clubs like other commercial organizations may be unwittingly involved in bribery without any suspicion still less knowledge that anyone who has anything to do with the club or its business was involved in that type of activity. The club may be wholly innocent. But if someone associated with the club does commit bribery then unless there are adequate procedures in place [an ABC policy] the club/company is liable to an unlimited fine. Who does this apply to? Who is an associated person? What are adequate procedures? It applies to UK companies or partnerships and such organizations as carry on business here. Business has an everyday meaning and would certainly include the running of a football club. So it will apply to all domestic football clubs as they are invariably limited companies registered here or if not they carry on business here. It would apply to agents if operating as a company or partnership. Interestingly and perhaps importantly in that connection this part of the Act does not apply to individuals. Questions do potentially arise if an international company is involved in bribery and its only connection with the UK is a subsidiary here and whether liability attaches to that UK company. This situation could arise in the case of foreign based companies or groups who now own some

5 of our clubs. Supposing some other part of the company or group was involved in bribery. Would the domestic club be guilty if it did not have adequate procedures? The answer is probably not but the law is not clear. The government s statements in parliament seemed to say something rather different from the Act itself! To render an organization such as a club potentially guilty the associated person must have committed bribery. Who is an associated person? A person performing services for or on behalf of the commercial organization and intending to obtain or retain some advantage for it. Such a person may not be an employee or a company representative but someone acting for the club, perhaps on a one off basis. So although the language is informal it means in practice someone acting as an agent as we would all understand. So if that person commits bribery and all the other conditions are satisfied what is the protection? The answer is adequate procedures. What are they? The Act does not tell us but says the government will publish guidance which it has done. Adequate has its ordinary meaning. Not perfect but sufficient or satisfactory. Provided the procedures are adequate then even if someone in the company deliberately or carelessly failed to observe them would not necessarily mean the company would not have a defence. What about government guidance? The Ministry of Justice have published an outline ABC [anti bribery and corruption] policy. It covers a wide range of topics which ought to be included in a company s own policy. There are however 6 principles which underpin the guidance. They are; Proportionality i.e. procedures sufficient to meet the risks involved Commitment from the top level Risk assessment. What are the risks? Due diligence as to people and transactions Communication/training in the organisation Monitoring and review of the ABC policy

6 The topics in such a policy must include; Penalties A code of ethics A statement of policy prohibiting bribery Guidance as to avoiding conflicts of interest and situations which might give rise to suspicion of bribery. Guidance as to corporate gifts and hospitality-the subject of further government guidance-bona fide and reasonable expenditure not caught by the new law Reporting procedures of any incidents Policy about employment of intermediaries Risk assessments as to transactions and geographical areas. Policy for HR department-employment contracts Staff training What happens to someone convicted of bribery or bribery of an FPO? Maximum 10 years imprisonment and/or an unlimited fine if tried at the Crown Court. 12 months and/or fine in the magistrates court. Company directors can of course be disqualified from acting as a company director if convicted of bribery. A commercial organization which has no defence of adequate procedures can be fined an unlimited amount. The amount will depend on all the circumstances including the period and the amounts of the bribery and to a substantial extent on the profits earned as a result of the bribery. So facilitating travel and training arrangements may be towards the lower end of the scale. However in cases of large scale financial transactions producing substantial profits, the likely level of penalty will be a good deal higher.

7 What are the risks and who will be prosecuted? In the context of football clubs touring overseas, where the risks of bribery will be at a fairly low level-travel arrangements, flights, customs clearance, transport etc. So the clubs should have an adequate ABC policy to meet those risks. However in cases of player transfers to/from abroad or acquisition of interests in English clubs involving large sums and the acquisition of valuable assets by foreign entities the risks may be much greater and a more comprehensive and sophisticated policy will be necessary to prevent a club from criminal conviction and penalty. When assessing risk it is also important to take account of the foreign country with which the club is dealing. More care is needed with some than others! There is a code for prosecutors both generally and in relation to the Bribery Act as to when it is appropriate to prosecute. Sufficiency of evidence and the public interest are crucial. All the facts of the case such as the amounts and frequency of payments, whether planned, any risk of repetition and any corruption of the person bribed will be taken into account. Minor offences involving little loss or harm, or arising out of mistakes or misunderstandings or where there can be an out of court settlement will be unlikely to be prosecuted. If individuals cooperate, e g self-report, then that can result in immunity or a reduction in sentence. Alternatively the SFO can arrive at a settlement with a company whereby it recovers an agreed amount by way of civil recovery and it will do so if a criminal prosecution is regarded as too heavy handed or the outcome is uncertain. So what is the advice can be given to those involved in running football clubs in an increasingly international market? Be aware of the new law Take care there is a proper ABC policy and procedures to ensure the organization you work for does not become involved in risky situations. Check out very carefully who works for you overseas and who they get to work for them Make sure your club staff know your ABC policy and give them guidance as to do s and don t when abroad. Where there a large financial transactions make sure you do your due diligence on the parties you are dealing with. Make sure corporate entertaining is reasonable and proportionate to business being undertaken and appropriate to the circumstances.

8 A final thought-the new Act is not the end of commercial life as we know it-as you might have thought from the reported remarks of the Duke of York about its effects who has been reported as suggesting the SFO were idiotic to investigate the al Yamama deal and that journalists who poke their noses in make it harder for British businessmen abroad-just be take care and be sensible. 26 th March 2012 ANDREW TROLLOPE QC