Bribery is the offering or giving of any benefits such as cash or gifts to any public servant or office holder or to a director or employee of a private business in order to induce that person to give inappropriate help in breach of their duty to the organisation which has employed or appointed them. This duty extends to acts of bribery which occur overseas under the Anti Terrorism Crime and Security Act 2001. In addition the Serious Fraud Office has powers to compel companies to handover documents.
It is essential that organizations have in place adequate procedures designed to prevent those associated with it from undertaking bribery. Our team are able to assist in taking the appropriate steps necessary to formulate an anti corruption code of conduct which should apply to an entire workforce. We have recently advised a number of firms including overseas businesses.
Guidance and compliance with the Bribery ActThe Bribery Act came into force on 1 July 2012. The Act creates new offences of offering or receiving a bribe and bribery of foreign public officials (section 6), as well as failure to prevent a bribe being paid on an organisation's behalf (section 7), for which guidance has been published.
Like much flawed UK legislation, it is likely to trap many unwary and innocent individuals, Directors and Officers, but not the real corrupt politicians and government officials it was intended for.
The Ministry of Justice has published guidance to commercial organisations on the "adequate procedures" they must implement to ensure they have a defence to the offence of 'failing to prevent bribery' under The Bribery Act 2010 ("the Act"). Your company should bear this in mind and seek guidance from Edward Hayes specialist compliance lawyers to protect your Directors and Officers.
The key points in the guidance include:
- That concerns about facilitation or bribes (bungs, sweeteners etc) payments, which remain unlawful, are dealt by the joint guidance of the Director of Public Prosecutions and the Serious Fraud Office. The main issue is that large or repeated payments of this type are likely to result in prosecution, whereas a single small payment is a factor tending against prosecution;
- The Act only applies in the UK!
- Only a commercial organisation, either incorporated or formed or that which carries on business in the UK, can commit an offence under section 7 of the Act. Foreign commercial organisations which do not have a demonstrable business presence in the UK will not be caught by the Act. For example, a company which is simply listed in the UK will not necessarily be considered to have a UK presence. However the guidance is clear that a common sense approach will apply with the final arbiter being the Courts; and
- Likewise, having a UK subsidiary will not in itself mean that a parent company will be deemed to be carrying on a business in the UK (and therefore section 7 of the Act will not apply), since a subsidiary may act independently from its parent or other group companies.
There is encouragement for organisations to self-report instances of bribery, co-operate with investigations and make full disclosure following requests by authorities. Before taking such steps you should always seek advice as the whistle blowing incentives promised by Regulators, such as the FSA, are often veiled with caveats and can be disastrous. These are factors which will be considered when an authority is considering the appropriateness of commencing criminal proceedings.
Further to the above, the guidance includes general principles for commercial organisations to adopt. The principles are intended to be flexible in order to allow each commercial organisation to tailor its policies and procedures so that they are proportionate to the nature, scale and complexity of its activities. As a result, the detail of how organisations will address these principles will vary, but it is stressed that the outcome should always be effective anti-bribery systems and controls.
Genuine and well intentioned corporate hospitality and promotional expenditure will not fall foul of the Act. The six general principles are:
- Proportionate Procedures - a commercial organisation should demonstrate suitable prevention policies, creating an anti-bribery culture. These policies will be based upon an assessment of the nature and extent of the risks relating to bribery to which the organisation is exposed. This includes jurisdictional, transactional and relationship issues and training, skills or policies and pay structures.
- Top Level Commitment – senior level management of an commercial organisation should be committed to preventing bribery. This will include the establishment of a culture in which bribery is never acceptable and is clearly communicated to all levels of management, the workforce and any relevant associated entities or persons. This commitment may be made public and may be communicated to subsidiaries, agents and business partners. Top level commitment may also be assisted by appointing a senior manager to oversee anti-corruption compliance and instructing an external Compliance team
- Risk Assessment – all main organisations will be familiar with the buzz word - the organisation's policies and procedures to prevent bribery being committed on its behalf should be clear, practical, accessible and enforceable. Those policies and procedures will take account of the roles of the whole work force from the owners or board of directors to all employees and all people and entities over which the commercial organisation has control. As well as a general anti-bribery commitment, this may include guidance on political and charitable contributions, gifts, appropriate levels and manner of hospitality and promotional expenses, advice on law and regulations, guidance on extortion situations, whistle-blowing procedures, information on sector-specific anti-corruption programmes and procedures to deal with the investigation of and action in relation to corruption incidents. A formal code of conduct may be appropriate and may form part of employment contracts and supply / purchase agreements. Edward Hayes compliance lawyers speak plain English so we can advise you on what you ACTUALLY need to do. Compliance could also include establishing financial and audit controls and disciplinary procedures and considering performance appraisals and selection criteria. Mechanisms may address red flag or vulnerable areas such as procurement, international agents and offices and supply chain management.
- Due Diligence – the organisation will adopt due diligence policies and procedures which cover all parties to a business relationship, including the organisation's supply chain, agents and intermediaries, all forms of joint venture and similar relationships and all markets in which the commercial organisation does business. This may include a review of the risks of bribery in relation to particular jurisdictions (together with information about appropriate preventative actions and the local laws (section 6(3)(b) and customs), the risks relating to specific business opportunities and due diligence on business partners and third party agents. The concept of business partners is potentially very broad in scope and may include "intermediaries, consortium or joint venture partners, contractors or suppliers".
- Communication and training - the organisation will deliver its policies and procedures. This process ensures that the development of policies and procedures reflects the practical business issues that an organisation's management and workforce face when seeking to conduct business without bribery. Policies should be implemented through the allocation of roles and responsibility. Internal communication and training is of importance. This principle also covers external communication of policies and procedures, and "larger organisations may also wish to consider offering or even requiring the participation of business partners in anti-bribery training courses". We can quickly and easily deliver the necessary training in a positive manner .
- Monitoring and Review - the organisation will institute monitoring and review mechanisms to ensure compliance with relevant policies and procedures as well as identifying any issues as they arise. The organisation reacts to changes in circumstances and implements improvements where appropriate. This may encompass financial and auditing controls, financial monitoring, bribery reporting and incident management procedures. Large organisations may wish to consider periodic reporting of such monitoring to an appropriate audit committee, who may in turn wish to independently assess the adequacy of the firm's policies and disclose their findings in an Annual Report. Transparency is of importance and organisations may wish to monitor the implementation of their policies in overseas offices.
To discuss your individual requirements contact our team.