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Bribery Act promises harsh penalties
Written by Michael Veal
Arguably one of the most important pieces of legislation to be passed in recent years, the Bribery Act 2010 will soon come into force, with harsh penalties for those that don’t. Michael Veal explains how to prepare for it
Although the specific dates are still as yet undecided, the Bribery Act 2010 will soon be in force. The Act introduces controversial new corporate offences, which will add more weight to the increasing burden on prudent managers who are responsible for business planning. The Act has enormous importance from a practical, commercial point of view, in all sectors, whether public or private.
The Bribery Act 2010 comes in the wake of a string of cases successfully taken by the Serious Fraud Office against businesses operating in the construction sector. At least one of those included bribery of foreign officials, and resulted in penalties and other orders to be paid by the company concerned totalling over £6m.
The new legislation will make prosecution of similar offences much easier. What this means is simply that it will now be an offence to bribe another person, or receive a bribe, including the mere offer to give a bribe, or a request for one.
Essentially, these offences are committed where there is an activity that is in essentially in the public eye or connected with a business or employment; and there is an expectation that activity would be performed in good faith or impartially, or that the person performing it is in a position of trust (including foreign public officials); and some financial or other ‘incentive’ is on offer, given or accepted to ‘reward’ someone for the improper performance of the activity. A wide range of things, from corporate hospitality to gift may constitute a sufficient incentive.
Of most concern for business owners or managers is the new corporate offence. The commercial organisation itself commits the offence where a person associated with the organisation (eg. sales representatives) commits one of the offences outlined above.
A defence for the business would be to demonstrate that it had in place adequate procedures to prevent bribery but what that is, is unclear at the moment. The Secretary of State will publish guidance on this in due course, and so we do not expect that these parts of the Act will not come into force for some months yet.
Those convicted of offences potentially face severe fines plus between 12 months to 10 years imprisonment. In addition, the penalty for a corporate offence which fails to prevent bribery can be an unlimited fine.
Mitigating the risks
So what can be done to mitigate this risk? A good starting point would be to ensure the following:
-Identify areas of the business where bribery could be an issue, for example, in procurement or sales, where official permissions or consents are required. Look for warning signs. The risk is potentially higher where there is a foreign element, although a very recent police case in the Liverpool Crown Court highlights a potential problem with lavish corporate entertainment even in the domestic market.
-Consider corporate entertainment in particular, and consider some central monitoring of entertainment given and received. The distinction between what is acceptable and what is not is likely to remain blurred for some years to come, however it is unlikely that any hospitality, gifts, sponsorship or the like will be considered a bribe provided that it is proportionate to the relevant business function. To take an extreme example, paying for a potential client to attend a trade show so that you can promote your services to him might not be seen as a bribe, however paying for his round the world cruise probably would.
-Produce a written anti-bribery policy, remembering that it will be for the commercial organisation to prove that it had adequate procedures in place, not for the prosecution to prove that it did not. In particular, some sort of arms length payment approval process is likely to be a key element of the policy, and, depending upon the type and size of the organisation, a person may also be identified to consider corporate hospitality given and received.
-Give copies of the policy and training to relevant personnel about it, and make it a condition of the agreement associating those persons with the business that they adhere to it.
If business managers take these steps now, once the Secretary of State’s guidance is published, a minor review of the procedures may be all that is needed. Finally, it is worth mentioning that the commission of an offence under the Bribery Act 2010 is likely also to involve commission of other offences, for example money laundering offences under the Proceeds of Crime Act 2002.
Michael Veal is a partner within Lester Aldridge LLP’s regulatory team