If you have clicked on this article, chances are you know of the Bribery Act, which came into force in July 2011. The act received a tremendous amount of publicity, and still does to this day, thanks to its introduction of four new offences, which put bribery and corruption back on the forefront of compliance for businesses all around the world. These four offences are:
- Bribing another person.
- Being bribed.
- Bribing a foreign public official.
- A corporate offence of failing to prevent bribery.
Offence number 4 is without a doubt what motivated companies’ compliance efforts the most and rightly so. It required businesses to review, or in some cases write, policies and procedures to protect themselves against the risk of falling under these wide reaching offences.
Far reaching scope
Indeed, the Bribery Act 2010 applies to UK companies and their activities anywhere in the world, as well as foreign companies with activities in the UK.
It is important to note that in relation to the corporate offence of failing to prevent bribery, requirement of a close connection with the UK does not apply. Accordingly, a company may be liable for a bribery offence committed outside of the UK, by a person who is neither a UK national nor resident in the UK, regardless of whether the company incorporated in the UK. Provided the organisation carries on a business or part of a business in the UK (wherever in the world the company may in fact be incorporated or formed) then UK courts will have jurisdiction under the Bribery Act. The scope of the Act is therefore far reaching.
Most commercial organisations should have by now put in place anti-corruption policies. However, that is not enough according to the Bribery Act 2010.
Commercial organisations need to assess whether they have adequate procedures in place to ensure that they are not involved in bribery or corruption and do not incur liability under section 7 of the Act. A failure to implement adequate procedures may result in criminal and civil liability and penalties for both organisations and individuals.
What is an adequate procedure?
An adequate procedure is one that allows an organisation to identify and monitor corruption, respond appropriately if corruption is uncovered and assess its procedures and practices on an ongoing basis by disciplining staff, reviewing procedures and avoiding or mitigating criminal liability.
The UK government published guidance that sets out six principles designed to act as guide posts for organisations. These principles are:
- Proportionate procedures
Procedures must be proportionate to the bribery risks the organisation faces and to the nature, scale and complexity of the company’s activities.
- Top level commitment
The board of directors (or its owners for smaller organisations) should establish a culture in which bribery and corruption are no tolerated.
- Risk assessment
Organisations must regularly assess and understand the risks of corruption that they face, consider the suitability and effectiveness of anti-bribery measures and determine the resources necessary to (further) implement them. The organisation should consult its staff, employee representatives and external stakeholders on the risks faced by the organisation and the appropriate method to reduce those risks.
- Due diligence
Carrying out risk-based due diligence on an organisation’s business partners is an essential aspect of managing the risks of bribery. Such background checks should help identify bribery risks and enable the organisation to take preventative measures.
Policies and procedures must be embedded and understood throughout the organisation through internal and external communication. This includes training for staff as you would expect but also statements by its leadership in relation to the organisation’s approach to bribery both to its staff and its external partners.
- Monitoring and review
Effective incident management reporting, financial and auditing controls are necessary to monitor anti-corruption policies.
These six points are useful but they do not reflect the difficulties and practicalities involved in ensuring effective implementation of anti-corruption policies such as:
- Due diligence exercises on existing or prospective business partners;
- treatment of gifts, hospitality and promotional expenditure, charitable and political donations and demands for facilitation payments;
- transparency of transactions and disclosure of information with existing and prospective business partners;
- financial and commercial controls, such as: delegation of authority, approval of expenditures and commercial contracts, separation of functions, avoidance of conflicts of interests; and
- reporting processes and the protection of whistle-blowers.
The material contained in this guide is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.
© Miller Rosenfalck LLP, January 2020