Bribery Act 2010 – An Update
The implementation of the Bribery Act 2010, due to come into force in April, will now be delayed. The Ministry of Justice states that the Business Guidance has not been completed and that businesses will need at least three months after publication of the Business Guidance to make the necessary changes.
Nevertheless, it is probable that the Government will implement the Act and the required steps are clear, but will be subject to finetuning following publication of the Business Guidance.
Organisations, and businesses in particular, need to understand the implications. For example, imagine the following scenarios:
- As in previous years you invite one of your major customers (who happens to be about to start a new tender process) to join you for a convivial, but pricey, day out at Henley.
- In a troubled country in Africa, a junior employee of one of your subsidiaries makes a small “facilitation payment” to smooth the issue of a Government licence.
Would either of these scenarios present a problem for you under the provisions of the Bribery Act 2010? The answer is that they could, particularly if you do not have the antibribery systems required by the new Act.
As well as containing the general offences of offering, promising or giving a bribe and of requesting, agreeing to receive or accepting a bribe, the Act creates:
- the new distinct offence of bribing a foreign public official; and
- a new strict liability offence for organisations where they fail to prevent bribery by those acting on their behalf.
The Act has a wide reach: the offences are very broadly defined and the Act has significant territorial reach outside the UK. For example, the English courts will have jurisdiction in relation to bribes given or offered to, or received by, anyone anywhere in the world if the offence is committed by a British citizen (and various other kinds of British national), a UK company or an individual ordinarily resident in the UK.
The jurisdiction is even wider for the “Failure to Prevent” offence: a foreign company whose only connection with the UK is that it owns a shop in London can be prosecuted in the UK for bribery if it fails to have procedures in place that would prevent corrupt practices by its agent in South Africa; the conduct itself does not need to be connected in any way with the UK.
Moreover, to convict for the “Failure to Prevent” offence, there will be no need to prove negligence, or the involvement and guilt of the “directing mind and will” of the organisation. Consequently, there are likely to be more corporate prosecutions (and convictions). An organisation will only have a defence if it can show it had “adequate procedures” in place to prevent bribery.
“Senior Officers” (i.e. not merely directors) can also be convicted of an offence where they are found to have given their consent to, or connived in, the giving or receiving of any bribe.
It is also worth noting that the offences in the Act carry a maximum of 10 years imprisonment and/or an unlimited fine for an individual or an unlimited fine for a company.
To prepare for the implementation of the Act, organisations should do the following:
- Conduct a comprehensive organisation-wide risk assessment.
- Carry out an immediate review of anti-corruption policies and procedures, especially considering corporate hospitality, donations and facilitation payments. If there are no policies and procedures, create them!
- Conduct due diligence on all “associated persons”, especially third parties in at risk jurisdictions or sectors. The term “associated person” includes people who perform services for, or on behalf of, the organisation regardless of their capacity, so it may apply to employees, agents, subsidiaries or joint venture partners located anywhere in the world.
- Appoint a Compliance Officer at Board level, or a “reporting director” to report to the Board or CEO.
- Adopt a robust anti-corruption stance at the highest level, including making an internal statement of the organisation’s zero tolerance of corruption.
- Provide a budget to implement policy (for example, training and monitoring of staff in key risk areas), and establish disciplinary mechanisms.
Ministry of Justice Business Guidance:
The Ministry of Justice has been undertaking a consultation process and, as mentioned above, the Business Guidance is awaited which should cover, for example, what entertainment expenditure will be unobjectionable. In its consultation document “Consultation on guidance about commercial organisations preventing bribery (section 9 of the Bribery Act 2010)” from September 2010 the Ministry of Justice said:
“Hospitality and promotional expenditure can be employed improperly and illegally as a bribe. For example, recent UK convictions for corruption of foreign public officials have documented how contrived ‘professional education’ schemes can use promotional expenditure as a cover for bribery. But reasonable and proportionate hospitality or promotional expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, is recognised as an established and important part of doing business.
The question as to whether a particular item of expenditure constitutes a bribe will depend on all the surrounding circumstances. But it is unlikely, for example, that a routine and incidental business courtesy where the advantage involved is of small value, or where hospitality is standard, will have any impact on decision making in the context of a business opportunity of high value…
Generally, the higher the expenditure and the more lavish the hospitality or expenditure provided to a public official, the greater the inference that it is intended to influence the official to grant business or a business advantage in return. But reasonable and proportionate hospitality in itself is unlikely to trigger the section 1 offence [RLB: the general offence of bribing another person]. It is, however, for individual businesses, or business representative bodies to fulfil any expectations as regards the establishment and dissemination of any appropriate standards for hospitality and promotional expenditure.”
Particularly after the delay in implementation, it will be interesting to see whether the Business Guidance will provide more practical guidance on this aspect which has prompted so much speculation and concern. Up to now, the emphasis on “prosecutorial discretion” elsewhere in the Ministry of Justice’s consultation document has not given much cause for hope.
For further information contact:
Stephen Blair: firstname.lastname@example.org tel: + 44 (0)207 227 7254
Philip Maddock: email@example.com tel: + 44 (0)207 227 7381
Peter Coats: firstname.lastname@example.org tel: + 44 (0)207 227 7441
This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.