The Government has announced that the Bribery Act will come into effect on 1st July. It places a new burden on employers to ensure that their employees or representatives are not engaging in corruption.

Most business people tend to think of this being something which only affects large companies trying to win business abroad and has nothing to do with their small or medium sized business. The focus is undoubtedly on such companies doing business abroad but any employer could be liable if it does not have "adequate procedures" in place to deal with the issue, and will have a responsibility for the corrupt acts of not just its employees but agents, subsidiaries or joint venture partners.

The Act reforms the existing bribery laws and provides for a consolidated scheme of criminal offences. It covers bribery both in the UK and abroad, and in both the private and public sectors The Act creates four offences:

• Offering, promising or giving a bribe to another person;
• Being bribed (requesting, agreeing to receive or accepting a bribe):
• Bribery of a Foreign Public Official;
• Corporate criminal offence of failing to prevent bribery.

The most significant is the new ‘Corporate Offence’. On a strict liability basis, an organisation will be liable and subject to an unlimited fine if they have negligently failed to prevent bribery or a corrupt act, unless they can prove that they have genuinely taken sufficient measures to prevent it.

The media have suggested that some corporate hospitality could fall within the definition of bribery. Strictly speaking it could, but this is not the intention of the Act. Wholly excessive hospitality however, which is not ‘reasonable and proportionate’, could get you into trouble - offering that Purchasing Manager a luxury cruise to the West Indies might attract attention, but a few tickets to Wembley or Wimbledon probably won't. The Ministry of Justice's position on corporate hospitality as explained in the revised guidance is that 'Bona fide hospitality and promotional, or other business 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 and it is not the intention of the Act to criminalise such behaviour'.

The steps to be taken to prevent bribery will vary from organisation to organisation. Relevant factors will include the organisation's particular business circumstances and culture, size, business sector, nature of business and locations of operation. The finalised guidance emphasises a proportionate approach, bearing in mind the size of the organisation, the complexity of its operations and the extent of its bribery related risk.

Guidance has only recently been published, so to give businesses a few months to digest it, implementation of the Act was pushed back from April. The full guidance that is claimed to be 'practical and comprehensive for business' can be found at:

http://www.justice.gov.uk/guidance/docs/bribery-act-2010-guidance.pdf

The guidance sets out six guiding principles, each followed by commentary and examples.

• Proportionate procedures
• Top-level commitment
• Risk assessment
• Due diligence
• Communication (including training)
• Monitoring and review

Although the principles are intended to be of general application, the guidance stresses that it is not advocating a one-size-fits-all approach. Instead, employers are encouraged to put in place procedures that are proportionate to the risk of bribery faced by their particular organisation.

So what should you do to safeguard your business?

An employer that can show it has adequate procedures and policies designed to prevent acts of bribery in place, should not face any claims.

Organisations should assess potential risks associated with their current business practices and, where appropriate, implement or update their anti-corruption procedures.

Employers should also consider: - whether their employees require training; if their employment documentation should include express obligations relating to corruption; or whether disciplinary procedures should be updated to include corrupt acts as examples of misconduct.

It is a defence for a business to prove that it had in place procedures designed to prevent bribery, but these should be comprehensive and should be enforced. A theoretical, paperwork exercise will not do.

Key Questions

• How relevant is this legislation to your organisation? Business risk analysis.
• If so, is there a clear, publicised anti-bribery policy that is overseen by a designated person at board level?
• Are there clear policies on corporate gifts and hospitality and are integrity and compliance built into all business processes?
• Is there regular anti-bribery training for relevant employees e.g. in sales and/or purchasing, highlighting the risks associated with specific roles?
• Are anti-bribery clauses written into all business/commercial contracts?
• Is there a whistleblower facility to provide clear channels for staff to raise concerns in a safe and confidential manner?
• Have you reviewed your financial and other controls e.g. personal business expenses, to minimise the scope for corrupt acts to be committed?


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