Bribery Act 2010: Now in Force! What does it mean for your business?

21/07/11

With effect from 1 July 2011 new offences have been introduced by the Bribery Act 2010 and there are severe penalties for individuals and businesses found guilty of committing them.

The following briefing note provides some practical steps for your business to take now that the Bribery Act 2010 has come into force.

What is bribery?

Transparency International (a non-governmental anti-corruption organisation) defines bribery as "the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal or a breach of trust."

Why has the Bribery Act 2010 been introduced?

The Bribery Act 2010 was introduced to strengthen the existing bribery and corruption laws in the UK.

The Organisation of Economic Co-operation and Development (OECD) has repeatedly criticized the UK system for being weak and ineffective compared with the more robust regimes in other countries, such as the US Foreign and Corrupt Practices Act.

What are the new offences?

Bribing another person (the 'Active Offence')

• A person will be guilty of this offence if they offer, promise or give a financial advantage or other advantage, to another person:
  • to bring about improper performance of a relevant function or an activity; or
  • to reward a person for the improper performance of a relevant function or an activity.
• The types of function or activity that can be improperly performed include:
  • all functions of a public nature;
  • all activities connected with a business; and
  • any activity performed in the course of a person's employment.
• The function can be caught by the Act even if it has no connection with the UK or is performed outside the UK.
  It may not matter whether the person offered the bribe is the same person that actually performs or performed the function or activity concerned.
• The advantage can be offered, promised or given by the person themselves or by a third party

Being bribed (the 'Passive Offence')

• The recipient or potential recipient of the bribe will be guilty of this offence if they request, agree to receive, or accept a financial or other advantage to perform a relevant function or activity improperly.
• It does not matter whether it is the recipient, or someone else through whom the recipient acts, who requests, agrees to receive or accepts the advantage. In addition, the advantage can be for the benefit of the recipient or another person.

Bribing a foreign public official

• A person will be guilty of this offence if they intend to influence an official in their capacity as a foreign public official. The offence does not cover accepting bribes, only offering, promising or giving bribes.

Failing to prevent bribery (the 'Corporate Offence')

• A commercial organisation will be guilty of this offence if a person associated with it bribes another person, with the intention of obtaining or retaining business or a business advantage for the commercial organisation. The offence can be committed in the UK or overseas.
• A business will be able to avoid conviction if it can demonstrate that it had 'adequate procedures' in place designed to prevent bribery.

What are the penalties for committing an offence?

• The offences of bribing another person, being bribed and bribing a foreign public official are punishable on indictment either by an unlimited fine, imprisonment of up to ten years or both. Both a company and its directors could be subject to criminal penalties.
• The new corporate offence of failure to prevent bribery is punishable on indictment by an unlimited fine.
• Businesses convicted of corruption could find themselves debarred from tendering for public sector contracts.
• Your business may also be damaged by adverse publicity if it is prosecuted for an offence.

Practical steps to take towards 'adequate procedures' under the Bribery Act 2010

Small and medium-sized enterprises will inevitably have fewer resources to counter bribery than larger companies. However, you can take some straight-forward measures to mitigate the risks which may be posed by someone in your business contravening the Bribery Act 2010.

Director-level and senior management support

Make sure all senior managers and directors understand they could be personally liable for offences committed by the business. It is important that senior management lead the anti-bribery culture of your business, especially to take advantage of the 'adequate procedures' defence.

Risk assessment

• Make sure you understand the risks your business may be exposed to. For example, certain industry sectors (such as construction, energy, oil and gas, defence, mining and financial services) and some countries present a greater risk than others, as there may be an actual or perceived local culture of bribery.
• Think about the types of transaction your business engages in; with whom the transactions are undertaken and how you execute the transaction. High-risk transactions include:
  • procurement and supply chain management;
  • involvement with regulatory relationships (for example, licences or permits); and
  • charitable and political contributions.
• Review how your business entertains its current and potential customers, especially those from government and charitable agencies. Routine or inexpensive corporate hospitality is unlikely to be a problem, but you should put clear guidelines in place.
• f your business operates in foreign jurisdictions, always check local laws and regulation.

Anti-corruption code of conduct

Create and implement a code of conduct setting out clear, practical and accessible policies and procedures.

Dealing with third parties

Your business will be liable if a person associated with it commits an offence on your behalf. You should review all your relationships with any partners, suppliers and customers. For example, if an agent or distributor uses a bribe to win a contract for your business, you could be liable.

Policies and procedures

Review and update any existing policies and procedures your business has related to bribery and corruption. If you do not have any policies or procedures in place, prepare them now as a matter of urgency.

Effective implementation and monitoring

• Introduce a compulsory training programme for your Board and then all staff. If only a few of your employees operate in a high-risk area, make sure the training is targeted at them, and keep records of training and follow up training.
• Ensure anti-corruption policies and procedures are continually monitored for compliance and effectiveness, both internally and externally.

More information

If you have any questions about the content of this checklist, please contact Paddy Gregan, Head of Business Services on 01235 836605 or email him on paddy.gregan@bsdr.com and Stephen Conlan, Head of Employment on 01235 836609 or email him on stephen.conlan@bsdr.com.