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IM On The Money - Issue Three

The Bribery Act - Update

The Bribery Act is almost upon us, so this may be the time to look at a few of the issues it gives rise to.

It is important to be aware of the fact that companies and partnerships can commit Bribery Act offences as well as individuals. It is equally important to appreciate that if a company does commit an offence then any senior official who consents to or connives in the offence can be punished personally. A senior official is widely defined as a director, manager, secretary or similar officer. The use of the word “manager” would seem to suggest that personal liability could quite easily lie outside the boardroom.

In March this year the Government published a document intended to be guidance on the subject of the procedures which businesses need to put in place to prevent a person connected to the business bribing on its behalf. It is, as is now well known, an offence for a business to fail to prevent a person connected to it bribing for business advantage on its behalf, and it is a defence to any such allegation to have in place adequate procedures designed to prevent such conduct.

A note of caution is that the document produced in March goes some distance beyond what the Act requires, which is to “publish guidance about procedures that can be put in place”. What the document does is to go further than that and offer commentaries and interpretation of the Act in relation to offences other than the corporate offence of failing to prevent bribery. These commentaries have no statutory basis whatsoever and it would be less than sensible for any business to rely on them as guidance as to their business conduct generally.

One of the most talked about, and least understood, aspects of the Bribery Act is business entertaining. Proper business entertaining has as its aim the creation or maintenance of relationships, or introductions to products or services. There is nothing inherently wrong in that. The purpose of the Bribery Act is to eradicate and punish corrupt behaviour. Those are two separate concepts. The way in which they became bridged is when the entertainment offered is too extravagant or frequent to meet the true purpose of business entertainment and it becomes, instead, a vehicle for creating obligations which can only be repaid by improper conduct. It is important to have procedures in place to record all business entertaining. Who, what, when, where, and more important than cost even, why. It is also vital to have permissions and sign offs recorded. It is the transparency which such records create will act as an effective shield against any allegation, particularly false ones, that influence has been bought. In a nutshell the key issues for business entertaining in order not to fall foul of the new regime are reasonableness, proportionality to the true purpose of business entertainment and transparency through the keeping of good records.

Kevin Robinson, Partner, Irwin Mitchell, London 

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