Kicking-out kick-backs on the Bribery Act
By Deepak Arora, Associate in the Dispute Resolution department at Fox Williams LLP
The Bribery Act 2010, which comes into force on 1 July 2011, creates a new corporate offence which has the effect of rendering commercial organisations guilty under the Act if they fail to prevent bribery and do not have adequate procedures in place designed to prevent acts of bribery. Employers might be liable to unlimited fines (for the company), or ten years' imprisonment and/or an unlimited fine for individuals who commit an offence.
The only defence for employers is to prove that the organisation had “adequate procedures” in place designed to prevent bribery and corruption being committed by people associated with it.
The Ministry of Justice published principles and guidance on 30 March 2011 on the procedures which employers can put in place to prevent bribery by their employees, consultants and contractors. The three month period between the publication of the Adequate Procedures Guidance and the implementation of the Act is to give commercial organisations the opportunity to carry out risk assessments of their business and put into place adequate procedures.
The Ministry of Justice considers that adequate procedures should be informed by the following six principles:
• Proportionate Procedures — A commercial organisation’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation’s activities.
• Top-Level Commitment — The top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They should foster a culture within the organisation in which bribery is never acceptable.
• Risk Assessment — The commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment is periodic, informed and documented.
• Due Diligence — The commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation in order to mitigate identified bribery risks.
• Communication (Including Training) - The commercial organisation seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training, that is proportionate to the risks it faces.
• Monitoring And Review - The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.
The Adequate Procedures Guidance also contains eleven case studies for commercial organisations to understand how the six principles might be put into practice.
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.
Practical Tips For Employers
In light of the Adequate Procedures Guidance, top tips for employers to reduce the risk of prosecution if employees and contractors engage in bribery include:
• Put in place policies and procedures to counter bribery, and communicate these to staff and to others who perform services. This will enhance awareness and help to deter bribery by making clear the basis on which an organisation does business. Such policies must be monitored regularly;
• Ensure compulsory training of all staff on the employer’s anti-bribery procedures. If only a few employees operate in a high-risk area, ensure the training is targeted accordingly;
• Reporting lines of communication and whistle blowing procedures should be communicated to staff so that employees can report corruption safely and in confidence. Reporting structures should be ready and implemented prior to 1 July 2011;
• Consider introducing staff appraisals that take into account employee knowledge of anti-corruption policies, and introduce awards or incentives for exemplary behaviour and knowledge;
• Review employment contracts so that breach of the anti-bribery provisions is grounds for gross misconduct; and
• Update consultancy arrangements — employers have less control over how consultants operate so it is crucial that the consultant is aware of their obligations.
Please contact us if you would like to know more about the implications of the Bribery Act 2010 on your business or how Fox Williams LLP can help you with risk assessment.
Deepak Arora is an Associate in the Dispute Resolution department at Fox Williams LLP. Deepak can be contacted on 020 7614 2648 or firstname.lastname@example.org
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