The Bribery Act 2010: What Your Business Needs to Know

The Act

Spring/summer 2011 is expected to see the implementation of the Bribery Act 2010 (the “Act”). The Act (which has been delayed by the coalition government) will introduce a new criminal offence for commercial organisations (companies or partnerships) who “fail to prevent” bribery occurring for their benefit. The failure to prevent bribery extends to individuals (including not only employees but agents and external third parties) acting on behalf of a commercial organisation.

Under the Act it is also an offence to:-

• Give, offer or receive bribes; and

• Bribe a foreign public official.

Bribery

• An offer or receipt of any gift, loan, fee, reward or any other advantage to or from any person as an inducement which is improper or illegal or which results in improper advantage.
• Relates to actions of a UK commercial organisation regardless of where the offence takes place.
• Also relates to actions of a non-UK commercial organisation that has a business presence in the UK (again regardless of where the offence takes place).

Penalties

• An as yet unlimited fine for a commercial organisation “failing to prevent” bribery.

• Up to ten years imprisonment for a senior officer of a body corporate where a bribery offence is proved to have been committed with his or her consent or connivance.

Other consequences

• A commercial organisation convicted of bribery may be barred from tendering for public contracts.

Defences?

• No defence is provided to a “direct” offer or receipt of a bribe. Commercial organisations should expressly prohibit this through their anti-bribery and corruption policy.
• In respect of a “failure to prevent” bribery a business may have a defence if it can show that it has adopted measures which seek to identify and mitigate bribery risk.
• The existing guidance indicates that “real” measures must be taken and adopted. Anti-bribery policies and procedures should be “embedded” and taken seriously throughout your organisation.

Identifying bribery risk

Certain sectors and business relationships are thought to present a heightened risk, in particular:-

• Trade with jurisdictions and sectors with a reputation for bribery and corruption;
• Public Officials - you should be vigilant as to payments made to speed up bureaucratic processes;
• Third Party Relationships - in view of the new “failure to prevent” offence it is important that you maintain close oversight of third party relationships and financial arrangements. Does the third party have a reputation for bribery and corruption that you are aware of?
• Joint Ventures - you should be vigilant in respect of business partners and their financial arrangements and general business reputation.

• Abnormal cash payments;
• Payments made through a third party or intermediary;
• Illogical or detrimental contractual or tendering decisions;
• Unexplained preference for parties in a bidding process;
• Pressure for payments to be made ahead of schedule;
• Abnormally high commissions for the particular market, location or business activity;
• Undue or lavish hospitality;
• Agreeing contracts which are not wholly favourable.

Mitigating bribery risk

• The steps taken can be proportionate to the type and size of the business and the considered risk of bribery exposure. More stringent measures, policies and procedures will be required in respect of large international businesses, business operating in sectors where bribery is considered to be prevalent and businesses operating in, or with other entities from, jurisdictions where bribery is considered to be prevalent.

As a minimum we would recommend:

• The adoption of a revised anti-bribery policy at board level, backed by a widely disseminated statement to staff and contractors outlining the board’s endorsement of anti-bribery measures.
• The anti-bribery policy should contain, among other items:-
  • A prohibition on all offers or receipt of bribes by staff and/or contractors;
  • A prohibition on all “grease” or facilitation payments made to public or private officials (typically small payments which seek to secure the provision of a service to which the payee is rightfully entitled in any event). These are expressly prohibited by the new Act;
  • A prohibition on the giving or receipt of all hospitality which aims to secure improper economic or commercial advantage;
  • A requirement that all hospitality given or received (which is not expressly prohibited) is entered within a centrally held hospitality register;
  • A requirement that staff and contractors should report all actual or suspected bribery by the organisation and/or its contractors to the Bribery Compliance Officer as appropriate;
  • A statement that any breach of the terms of the policy and its provisions as updated from time to time will constitute a disciplinary offence by the employee concerned.
• Depending on the size of your organisation, the appointment of a nominated Bribery Compliance Officer(s) to implement and revise anti-bribery and corruption policy. The Bribery Compliance Officer(s) should be responsible for:-
  • Conducting periodic risk assessments as to the organisations exposure as to bribery and corruption risk;
  • Providing training for staff on anti-bribery procedures and measures;
  • Maintaining accurate records of all disclosures made to him/her in respect of identified bribery and corruption risk;
  • Reviewing the entries on the hospitality and facilitation payment register;
  • Considering the efficacy of appropriate disclosure to regulatory authorities;
  • Incorporating the anti-bribery measures as effective internal controls within the organisation;
  • Conducting heightened due diligence in respect of bribery risk, where a report is made to him/her or where risk assessments indicate that there is a heightened bribery risk;
  • Updating the policy and procedures as further documentation and guidance becomes available.

How can we help?

We can work with your organisation to develop and implement revised anti-bribery and corruption policies which are appropriate to the bribery and corruption risk of your business. For more information or advice please contact Mark Lewis on 01926 880700.