Companies need to get ready for the Bribery Act, which will create a number of imprisonable and finable offences. In order to protect both the company and its employees, companies should undertake changes to internal policies including introducing an ant
Companies need to get ready for the Bribery Act, which will create a number of imprisonable and finable offences. In order to protect both the company and its employees, companies should undertake changes to internal policies including introducing an anti-bribery compliance policy, together with systems and training to ensure that employees are able to distinguish bribes and make the correct decisions regarding them.
Currently the Bribery Bill has not completed its passage through Parliament, but unless there is an unexpected twist it appears to have the momentum to be passed before the election. Businesses can get on with implementing sensible measures to protect themselves from the new offences.
There are 3 personal offences and 1 corporate offence:
(1) bribing someone; (2) accepting bribes; (3) bribing public officials; and (4) a new corporate offence of failing to prevent bribery.
To concentrate companies' minds, the individual offences each can carry up to a 10 year prison sentence and fines and the corporate offences will attract a potentially unlimited fine.
Note that the Bribery Act will apply to bribery not only of public officials, but of individuals in other companies.
What is Bribery?
Bribery is not a new legal concept, however, prior to the Bribery Bill the principles were contained in a mix of historic laws and precedent. The Bribery Act will bring together these diverse offences in a more coherent fashion.
In general terms, bribery is the giving, offering and/or promising of an advantage with the intention of persuading the recipient to act improperly.
Bribes may be made directly or indirectly; having a third party bribe someone on your behalf is treated the same as if you had issued the bribe yourself. The recipient of a bribe does not necessarily have to be the same person who performs the function which the bribe has induced. Also, a bribe may not always be financial. All that matters is that the recipient received a benefit as an inducement to make a particular decision.
To commit an offence of bribery two things must be proved: (1) the accused has made an offer, promise or has given a financial advantage to a person; and (2) it was made with the intent of influencing their role (whether in respect of new work, retaining work or gaining another business advantage).
Does it only apply in the UK?
No. Whilst primarily directed at the United Kingdom, it is also intended to prevent bribery overseas by multi-nationals with a "close connection to the UK". This is a direct reaction to the public outcry over the Al Yamamah/Bae alleged bribery. A close connection is assumed if: (a) the person committing the offence has a UK passport; (b) the company (or part of it) is incorporated in any part of the UK or is a Scottish LLP; or (c) where a person is ordinarily resident in the UK.
The Bribery Act is not intended to restrict corporate hospitality as a legitimate activity. It does, however, leave ambiguous the line between acceptable corporate hospitality and corporate hospitality offered with the intent that the recipient acts improperly. Any criminal proceedings brought in respect of alleged inappropriate hospitality will be determined by a jury on the facts in each instance.
An interesting question is raised by corporate hospitality because, at its core, all corporate hospitality is initiated with a purpose in mind, in general to improve a business standing with the recipient of hospitality. Consequently, businesses must consider hospitality and the recipients of hospitality on a case by case basis. Very lavish hospitality may be acceptable where the target of the hospitality is an individual who is unlikely to respond to more ordinary hospitality or where it is offered with no intent to directly influence the individual.
Controversially the Bribery Act makes no allowance for facilitation payments. The OECD (Organisation for Economic Co-operation and Development) defines a facility payment as one paid to government employees to speed up an administrative process where the outcome is pre-determined. These so called ‘grease payments' are permitted by many countries and organisations, notably the US deem this as acceptable in the US Foreign Corrupt Practices Act. Whilst there is logic to permitting facilitation payments, it is also easy to see how the line may be blurred and it is for this reason that the British government is taking a restrictive approach.
This may make business more difficult for British companies overseas, especially as whilst the UK is taking the moral high ground on this issue, there is no international consensus upon this. It is unlikely that individual failures will be prosecuted, however the power remains in place and companies should adhere to the new UK rules.
Are there any defences?
There are no statutory defences to the individual offences, save for members of the national security services. Any accusation of bribery will be decided on its facts, the key factors likely to be whether an alleged bribe was made with a reasonable expectation of influencing a decision. There is, however, a statutory defence in respect of the corporate offence.
An organisation can defend a prosecution for failing to prevent bribery if it can show that it had adequate procedures in place designed to prevent employees or agents committing bribery, whether as a giver or a recipient. The nature of the procedures that would be deemed acceptable in a defence will vary from organisation to organisation. If a company works in a country where bribery is more common, a more robust procedure is expected than where a company works in markets that are historically not susceptible to bribery.
Practical Steps for Business
Companies should take some action to ensure that they are able to take advantage of the corporate defence in the event that bribery is ever alleged against them. Businesses are starting to look at relevant measures now, so that once the Bribery Act becomes law they are immediately able to demonstrate a track record of sensible procedures designed to prevent bribery offences. Companies may like to consider the following actions:
1. creation of a corporate anti-corruption and anti-bribery policy;
2. change your employee manuals, in particular considering whether digression from the anti-bribery principles should be a disciplinary offence;
3. a senior employee should be nominated as the responsible person who is responsible for overall compliance;
4. training for all staff about the changes, so that they understand what constitutes an infringement for the purposes of the Bribery Act;
5. ongoing advice to individuals within the business to enable them to distinguish between acceptable and unacceptable behaviour and to distinguish corporate hospitality from bribes. It is recommended that whenever there is a question over the status of any circumstance or corporate hospitality, this should be referred to the compliance officer to make a more considered decision;
6. introduce a system whereby at a regular interval each person in the organisation who deals with customers/suppliers signs a confirmation that they have neither given nor received any inducements;
7. include in contracts standard anti-bribery clauses, in effect driving compliance down your supply chain.
8. when procuring goods/services, introduce a checkpoint into the procurement process to ensure that potential suppliers are not undertaking inappropriate corporate hospitality, or offering more overt bribes. It is suggested that during the procurement process corporate hospitality is not accepted other than very generic offerings;
9. a whistleblowing procedure should be implemented to permit any member of staff with the suspicion of corrupt behaviour to report this in a confidential manner;
10. have a process to validate outgoing payment to individuals, or to organisations not part of your approved suppliers/customers; and
11. the organisation should maintain documentary evidence of compliance.
How Clarion can Help
Clarion can advise on all aspects of the implementation of a programme designed to achieve compliance with the Bribery Act. Whilst the advice will comprise of contributions from a number of different disciplines, clients will only need to deal with a single contact who will draw together the information behind the scenes. We are happy to come and talk to you about the Bribery Act in more detail and give you a clear understanding of the law that sits behind our recommendations.
If you suspect that your business or individuals within your business have committed what are potentially bribery-type offences, whether before or after the Bribery Bill is enacted, Clarion's highly regarded business crime & regulatory team can assist and will work with you to mitigate, to the extent possible, the consequence of the offence.
If you would like any further information, please contact:
Matthew Hattersley, Partner (Commercial)
0113 336 3351
Steve Milner, Partner (Business Crime & Regulatory)
0113 336 3337
This fact sheet is intended as guidance only and does not constitute legal advice in any individual case. Please do not take any step in reliance on its contents without taking specific advice from one of our lawyers.
Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.