The Bribery Act: A Summary

What your business needs to know

From 1 July 2011, the Bribery Act 2010 now means that businesses need to ensure that they have adequate procedures in place to prevent acts of bribery and protect themselves in a legal dispute.

All organisations should review their existing policies and take action if required because failure to do so could result in a substantial fine or even imprisonment!

The Bribery Act

The Bribery Act 2010 replaces the existing anti-corruption statute and common law. It covers bribery which takes place in the UK and overseas, by employees and third parties employed by the organisation.

The Act outlines four offences of bribery and introduces a new corporate offence of bribery. It also makes it easier to prosecute offenders.

In summary, it provides:

• a general offence of active bribery, which prohibits giving someone a financial or other advantage to induce them to perform their duty improperly

• a general offence of passive bribery, which prohibits requesting, receiving or accepting a bribe

• an offence of bribing a foreign public official in order to win business, keep business or gain a business advantage for the organisation

• an offence relating to failure by a business to prevent a person associated with it from committing the above offences on its behalf in order to win business, keep business or gain a business advantage for the organisation

According to the Act, a person is guilty of bribery ‘if he offers or gives a financial or other incentive to someone with the intention of getting that person or a third party to perform a function or activity improperly or as a reward for an improper act’. He or she is also guilty if they know or believe that the offer or payment itself constitutes an improper performance of a relevant function or activity.

The penalties

Those found guilty of an offence face significant penalties. Now, the maximum penalty for bribery rises from seven to ten years imprisonment and/ or an unlimited fine. Disqualification from acting as a director for a substantial period of time may also arise in some cases.

Corporate hospitality

One of the areas of concern highlighted by businesses relates to the provision and receipt of corporate hospitality, promotional and other such business expenditure. Under the strict rules of the Act, it would appear that these activities may constitute bribery offences.

But, it is not the intention of the Act to criminalise bona fide, proportionate and reasonable hospitality and promotional. For example, it will still be acceptable to take a client for a meal at a nearby restaurant, but lavish gifts may be considered an offence under the new Act.

Facilitation payments

This is the practice of paying a small sum of money to a public official (or other person) for performing routine functions which they were obligated to perform in any case. Despite many objections, these payments are classified as bribes under the Act and are therefore illegal.

Defending your business

Adequate procedures and proportionate risk

An organisation will have a full defence against the corporate offence if it can show that it had ‘adequate procedures’ in place to prevent an act of bribery. The Act does not define the meaning of ‘adequate procedures’ and it is therefore open to interpretation.

The guidance requires procedures to be proportionate to the organisation’s bribery risks.

What counts as ‘adequate’ will therefore depend on the bribery risks faced by a business and its nature, size and complexity. The risk is likely to be increased if you operate overseas. For instance, a large organisation employing 500 people with a number of overseas outlets will need to make more provisions than a self-employed plumber.

The Act is not there to impose the ‘full force’ of criminal law upon well run businesses for an isolated incident of bribery and a small or medium-sized business which faces minimal bribery risks will require relatively minimal procedures to mitigate those risks.

So…What do you need to do?

Here are six guiding principles to help you prevent bribery from being committed on your behalf:

• Take proportionate procedures

• Have top-level commitment to ensuring the company is unified in preventing bribery

• Do occasional risk assessments

• Apply due diligence procedures

• Allow good communication and training

• Finally- monitor and review.

If you would like any help regarding the new Bribery Act then please contact me:

Harri Lloyd Davies

01792 410104

harri.lloyd.davies@bevanbuckland.co.uk

 

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