Time to review bribery risks

KATE DODSWORTH, a solicitor at Ashton Graham, explains the new corporate criminal offence of failing to prevent bribery

THE Bribery Act 2010 comes into force in April 2011 and will replace current anti-bribery legislation, which is often criticised as out of date and difficult to enforce.

The Act creates four new criminal offences. The first two are straightforward and relate to giving and receiving bribes while the third offence relates specifically to bribery of foreign public officials. The maximum penalty for individuals committing these offences will be 10 years in prison.

Perhaps more importantly, the fourth offence is the failure of commercial organisations to prevent bribery. A relevant commercial organisation (such as a limited company or a partnership) will commit a criminal offence if a person associated with that organisation receives a bribe or bribes, or attempts to bribe, another person. The penalty will be an unlimited fine.

The scope of the Act is far-reaching. The new corporate offence can be committed by an organisation with any type of presence in the UK. It also extends to bribes given or received outside the UK. For example, if a US company with a UK subsidiary takes part in bribery in Africa, it may be prosecuted under the Act, even though the offence had nothing to do with its UK subsidiary.

The definition of a “person associated” with the organisation is also wide. The Act covers employees, sub-contractors, agents and intermediaries and even third party business partners in a joint venture.

The only defence is for the commercial organisation to show it had “adequate procedures” in place to prevent bribery. Although the Government will provide guidance, ultimately it will be for each organisation to prove the adequacy of its own procedures. The Ministry of Justice has launched a period of consultation on this guidance, which closes on November 8, 2010. Final guidance will be published in early 2011.

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It is imperative, therefore, that businesses have anti-bribery procedures in place and also that all members of staff are fully trained and aware of the risks that bribery presents. The draft guidance makes it clear that the defence will only be made out if steps are taken to ensure that procedures are implemented and understood, not just left to sit on a shelf and collect dust.

In addition to creating or updating a specific anti-bribery policy, you should look closely at your corporate hospitality policy. Whilst tickets to sporting events or regular business lunches may be above suspicion, paying for a target client’s five star holiday is more likely to be seen as a bribe!

You should also review your public interest disclosure or “whistleblowing” policy to ensure that adequate protection is given to individuals who report suspicions of bribery. There is, therefore, much to be done at April 2011 looms.

This article is for general information purposes only and does not constitute legal or other professional advice. You should not act or rely upon this information.