The UK Ministry of Justice has now published its guidance on what companies will need to do to comply with the 2010 Bribery Act. It has also confirmed the companies will have three months in which to put in place appropriate procedures to deal with the risk of bribery; the Bribery Act will consequently come into force from 1st July 2011. The full guidance is available on the Ministry of Justice's website.
Purpose and Scope of the Act
The purpose of the Act is “…to provide a modern and comprehensive scheme of bribery offences to equip prosecutors and courts to deal effectively with bribery in the UK and abroad”.
- The Act contains two general offences covering the offering or giving of bribes (Section 1) and the requesting or accepting of bribes (Section 2).
- It additionally creates an offence relating to bribery of a foreign public official in order to obtain or retain business (Section 6).
- There is also a new type of corporate liability: failing to prevent bribery onbehalf of a commercial organisation (Section 7).
Depending on the type of offence, penalties can include up to ten years imprisonment and/or unlimited fines. However, the Act made it clear that companies would be able to claim a full defence if they could show that they had in place “adequate procedures” to prevent bribery.
The Act required the Secretary of State for Justice to publish guidance about what types of procedures companies could put in place to prevent bribing and this is the Guidance that has now been issued. The Guidance has adopted a common sense approach and the government appears to have taken on board the concerns raised during the consultation period which followed the Act being issued. This approach is likely to be welcomed by business. CBI Policy Director Katja Hall said: "We strongly support the principles behind the Bribery Act and welcome this much-improved final guidance”.
Key Points of the Guidance
When the Act was initially published in 2010, significant concern was expressed by UK businesses about the implication that large amounts of corporate hospitality would now be illegal. The MoJ Guidance makes it clear that hospitality is a legitimate business practice and that reasonable and proportionate corporate hospitality will not be prohibited. This means that entertainment of clients will not constitute a bribe provided it is for genuine business development purposes and falls within the norm for that industry;
The Guidance also confirms that facilitation payments are illegal, although it is the large and repeated payments, or payments that are part of a standard way of doing business, that are more likely to attract prosecution.
The Guidance makes it clear that what counts as ‘adequate’ if a company wishes to rely on the defence that it had ‘adequate procedures’ in place to prevent bribery, will depend on both the bribery risks that the company faces as well as the nature, size and complexity of its business. So an SME which faces minimal bribery risks may well require relatively low level procedures to mitigate those risks.
Six principles are set out to help companies decide what action, if any they may need to take:
- Proportionality – the action that a company needs to take and the procedures they must have in place should reflect the level of risk they face and to the size of their business
- Top Level Commitment – those senior personnel running a company should be responsible for ensuring that the company is not involved in bribery
- Risk Assessment – conducting research into where and with whom you are or will be doing business
- Due diligence – know exactly with whom you are or will be working
- Communication – ensure that both staff and contractors know about your bribery policies and procedures and are aware of their responsibilities
- Monitoring and review – ensure that your policies and procedures continue to be effective by monitoring them and amending them as necessary over time as the company evolves
Principle 6, 6.4 states that “Organisations might wish to consider seeking some form of external verification or assurance of the effectiveness of anti-bribery procedures. Some organisations may be able to apply for certified compliance with one of the independently-verified anti-bribery standards maintained by industrial sector associations or multilateral bodies”.
The Guidance document also contains a series of ‘case studies’ which are intended to illustrate how the application of these six principles might assist companies to decide what anti-bribery procedures and methods might be most suitable to individual needs.
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