Bribery has been a criminal offence for many years but, until very recently, has not been policed very carefully. However, the new Bribery Act 2010 is due to come into force in April 2011 and is doing so with a significant fanfare. High on the international corruption list, the UK has been heavily criticised for failing to tackle bribery and corruption and this Act is being seen as the “big stick” to beat British businesses into shape. Many people will dismiss the Act as being irrelevant to their business but the way that the Act is drafted could make that a very dangerous stance for any business to take.
The US has corruption laws which are fiercely enforced and have been a major concern for US businesses for years. The total fines there amounted to around $1.45bn in the first quarter of 2010 (compared with $155million for the whole of 2007). The new Bribery Act, in some ways goes even further than the US law; striking fear into the hearts of those British business that are familiar with the US law.
The Act creates four criminal offences: paying bribes, receiving bribes, bribing foreign public officials and negligent failure to prevent bribery. Although the first three are, some might say, fairly obviously criminal and what is new about that, it is the fourth that is of greatest concern to partnerships and companies. It requires that a person who is associated with the partnership/company to bribe another person intending that business will be obtained and/or retained. This can be as simple as an employee (or even third party or agent) providing excessive corporate hospitality for an existing, or prospective, client. What makes it all even more difficult for the business is that it is not necessary for senior management even to be aware of, or complicit in, the bribery for the business to be guilty of a criminal offence. It is for the business to show that it took sufficient steps to have prevented it. This requires adequate systems and controls to be in place and for them to be audited – lip service will not be enough – and what will be “adequate” is not yet clear.
The Government has committed to issuing guidance on what will amount to adequate procedures but it is likely that this will be very general and difficult to apply to the individual needs of a particular business. It is also difficult to see how, if the prosecution can show that a bribe was paid in the relevant circumstances, the company’s preventative measures were good enough to prevent bribes being paid because they must have, of necessity, failed. The consequences of committing any of the offences under the Act is 10 years imprisonment for individuals and an unlimited fine for businesses. But, there are more wide-reaching effects of a conviction too: disqualification from tendering for Government contracts, reputational damage and disgorgement of money gained as a result of the offence (this is the value of the work gained rather than the bribe paid).
Rigorous, and audited, training of employees and compliance programmes will be required to avoid what is likely to be a very risky area for many partnerships and companies for the years to come
Yorkshire & North East: Paul Haycock
London & South England: Sarah Wallace