By Donna Goldsworthy and Gavin Foggo of Fox Williams LLP
The Bribery Act 2010 is one of the most significant pieces of legislation to affect all businesses for a decade and reforms the law on bribery and corruption in the UK. The Act was passed in April 2010 and is due to come into force on 1 July 2011.
The Act introduces a new corporate offence which imposes criminal liability on any business should it fail to prevent bribes being paid on its behalf. It criminalises the activity of both giving and receiving a bribe, as well as bribing a foreign public official. The offence is widely drawn and catches a bribe paid by another person who performs services on behalf of a UK business, whether the wrongdoing was committed in a foreign jurisdiction or in the UK.
The ‘adequate procedures’ defence
The only defence to a criminal offence under the Act is for a UK corporate to show that it has in place “adequate procedures”, systems and controls to prevent bribery and corruption. Who is ultimately responsible for this? Senior management. The sanctions in place? Ten years imprisonment and/or an unlimited fine for individuals, and unlimited fines for a corporate.
The six guiding principles
The Ministry of Justice has now published the final form of guidance governing the procedures which businesses can implement to help prevent bribery by persons associated with them.
The guidance is formulated around six key principles which are designed to “guide” and help businesses understand the breadth and nature of procedures they might put in place to prevent bribery. The guidance is not intended to be prescriptive - what may be deemed as “adequate” for one business may not be “adequate” for another. Each company will need to tailor its policies and procedures so that they are proportionate to the nature, scale and complexity of its activities, taking into account its size, industry sector and market focus. This seems to be a sensible approach given that small and medium sized domestic businesses will generally face different challenges to large, multi-national corporations.
The six key principles set out in the guidance are:
Any action a business takes should be proportionate to its size and the risks faced.
There must be a clear commitment in the management structure of the organisation to counter bribery.
Businesses must undertake regular and comprehensive assessments of the internal and external risks they face, the nature and frequency of which can vary.
Knowing exactly the parties a business deals with can help to protect an organisation from taking on people who might be less than trustworthy. As such, businesses are required to implement suitable due diligence methods and appropriate preventative measures.
Businesses must make clear the basis on which business is done, and communicate all practical policies to staff.
Monitoring and review
Anti-bribery policies must be viewed as dynamic and not static, to allow for the evolution of risks presently faced by a business. Businesses must institute mechanisms for the continual review of policies and procedures at regular intervals.
To establish successfully an “adequate procedures” defence, a business must demonstrate it has taken account of the six principles in developing, implementing, monitoring and reviewing its anti-bribery policies and procedures. These principles are intended to guide a company through the implementation process, as well as the decision process over whether those policies and procedures are likely to be deemed as adequate or not.