Be ready for bribery law

STEPHEN DUFFETY, Baker Tilly’s East Anglia managing partner, warns that tougher laws on corruption could affect all businesses

ONE of the most far-reaching pieces of anti-corruption legislation is about to be introduced in the UK, affecting most, if not all, East Anglia businesses.

The Bribery Act will be legally enforceable from April 2011 and places the onus on organisations to ensure that their anti-corruption procedures are robust.

The Act includes a new offence of failure of commercial businesses to prevent bribery. This will be committed when a person associated with a relevant commercial undertaking (which includes employees, agents and external third parties) bribes another person and the business cannot show that it had adequate procedures in place to prevent bribes being paid.

The penalty under the Act for an individual is seven to 10 years in prison, and for a company the fine is unlimited.

The legislation includes a potential criminal defence for commercial organisations which do put adequate bribery prevention procedures in place. The draft guidance sets out some general principles:

n Commercial organisations should know and keep up to date with the bribery risks in their particular sector and market, including the countries in which they operate, the nature of their transactions and the due diligence of business partners.

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n Senior management must clearly and regularly communicate an effective anti-bribery message across the organisation.

nCommercial organisations should know who they do business with and be confident that their business partners’ anti-bribery provisions reflect their own.

n Policies and procedures should be applied to everyone employed by the organisation as well as its business partners. These should cover risks such as political and charitable contributions, gifts and hospitality, promotional expenses, how to respond to demands for facilitation payments and how to deal with an allegation of bribery that comes to light.

Commercial entities are expected to embed anti-bribery in their internal controls, recruitment and remuneration policies, operations, communications and training on practical business issues. Financial controls need to be developed or enhanced to reflect the requirement to flag and report conduct that may indicate bribery.

Certain types of corporate hospitality could fall within the definition of a “bribe” and care should be taken if corporate hospitality is offered to a customer when a new contract being awarded.

Many organisations trade internationally, either directly or indirectly, and must understand the implications of the Act on their business and put procedures in place to manage their risk. It is likely that larger corporate customers will require this before doing business.