In 2011 the government released its guidance on the Bribery Act 2010 (“the Act”). Here we review what every charity and not-for-profit organisation needs to know.
Implementation and guidance
The original draft guidelines were published in September 2010. These were heavily criticised as it was not clear how the Act would be implemented and what impact this would have on UK commercial organisations, and organisations which carry on business in the UK. The Act came into force on 1 July 2011.
The new guidance, published on 30 March 2011, follows much the same outline as the draft guidelines, however there is much more detail on the key provisions.
There is information on the new offence of failing to prevent bribery created by Section 7 of the Act, and guidance is given regarding when an organisation will be a ‘relevant commercial organisation’. This will include charitable companies which, although they may have charitable aims, also carry out some commercial activities. Unincorporated charities and charitable trusts cannot be liable under this section of the Act as a ‘relevant commercial organisation’ is defined as either an incorporated body or a partnership.
Guidance is also given on who will be classed as an ‘Associated Person’ for the purposes of the new Section 7 offence.
One of the main criticisms of the draft guidance was that it seemed to many commentators that corporate hospitality and facilitation payments would be considered ‘bribery’ under the Act.
It was acknowledged by all parties that the existing anti-corruption laws were wholly inadequate and needed replacing but there is still concern that the new legislation has not been subjected to sufficient scrutiny and that adopting an anti-bribery policy for many companies will turn into a bureaucratic nightmare.
The guidance published on 30 March 2011 has attempted to address these issues, along with the Joint Prosecution Guidance published by the SFO and the Director of Public Prosecutions. The overriding message appears to be that common sense will prevail. The main points are:-
- Bona fide hospitality and promotion is recognised as an established and important part of doing business and it is not the intention of the Act to criminalise such behaviour;
- As long as the expenditure serves a legitimate business interest and is not disproportionate, it will not fall foul of the Act. Only where a gift or expenditure is lavish or extraordinary in the circumstances will investigations be made.
- Facilitation payments (typically small payments which seek to secure the provision of a service to which the payee is rightfully entitled in any event) are prohibited under the Act, however the problems that commercial organisations face in some parts of the world are recognised. Provided that any payments are small or self reported in the interests of preventing corruption, it is unlikely that the SFO will feel it is in the public interest to prosecute.
The six principles established in the draft guidance have been preserved, however some have been renamed. The six principles are designed to inform the procedures that organisations should now be putting in place to prevent bribery and corruption.
Organisations are encouraged to implement proportionate measures to combat bribery and show that they are committed to fostering an anti-corruption culture.
The guidance now also contains a number of case studies to illustrate how the six principles can be applied. These are a useful tool in demonstrating how the government envisages the Act will be applied and what organisations can to do protect themselves.
The Act came into force on 1st July 2011 and by then commercial organisations must have put in place suitable anti-bribery procedures in order to have a defence against the new offence of failing to prevent bribery.
You will need to ensure that you have put in place suitable anti-bribery procedures in order to protect your organisation and the officers of your organisation against the new offence of failing to prevent bribery.
As a minimum we would recommend:
The adoption of an 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. 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 should be considered. 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.
Charities may operate in areas that are more at risk of bribery occurring. This is particularly likely to be true in some overseas areas, where bribery and facilitation payments may arise. Concern had been expressed that trustees and managers in the UK could be guilty of an offence if bribes were paid by staff working overseas. While the Act does make the charity responsible for bribes paid by their staff, the guidance does state that where payments are made because of duress it is unlikely that the charity will face prosecution. However, this is only likely to apply in extreme circumstances (such as where there is a risk of loss of life, limb or liberty).
The guidance should help to reassure charities although there is still some uncertainty on to the extent to which charities activities are covered which should be clarified further.