Bribery Act 2010 – Honesty is the best policy

On 1st July 2011, the Bribery Act (2010) came into force across the UK, making it a criminal offence for an individual or organisation to offer or receive a bribe. The offence carries a maximum prison sentence of 10 years.

A 2011 Fraud Survey poll by Ernst & Young found one employee in seven working at large UK companies said they would be prepared to offer bribes to win business, and one in six said they’d offer personal gifts to win a deal. Only a quarter of respondents said they were aware of an anti-bribery policy at their organisation.

The details of the Bribery Act

A bribe is described as a “financial or other advantage that is offered or requested with the intention of inducing or rewarding the improper performance of such a relevant function or activity, or with the knowledge or belief that the acceptance of such an advantage would constitute the improper performance of such a function or activity”.

A relevant function or activity is:

• Any function of a public nature
• Any activity connected with a business
• Any activity performed in the course of a person’s employment or
• Any activity performed by or on behalf of a body of persons

Where the person performing it is expected to perform it in good faith, impartially, or is in a position of trust by virtue of performing it.

The Bribery act creates four new offences:

• To offer, promise or give a bribe
• To request, agree to receive, or accept a bribe
• Bribery of a foreign public official (even if they demand the bribe) with the intention of obtaining or retaining business or an advantage in the conduct of business
• Failing to prevent bribery

There are also ‘confiscation’ proceedings allowed as part of the act, which means an individual/organisation can have the proceeds stemming from the criminal bribe forfeited.

What should Employers do?

The last offence (‘Failing to prevent bribery’) is a Corporate offence which in detail is ‘failure by a commercial organisation to prevent bribery that is intended to obtain or retain business, or an advantage in the conduct of business, for the organisation’. This is a crucial area for organisations as they’ll need to show they had ‘adequate procedures’ in place designed to prevent bribery by (or of) persons associated with the organisation, to have a defence against this corporate offence.

So, if a bribe occurs, the company will be expected to show it had adequate ‘bribery prevention measures’ in place. If it fails to do so, the company and its senior executives may be liable. The Act aims to punish those who make a bribe and those who turn a blind eye.

The government advise that for Employers proportionality is key – all businesses must consider the possibility of bribery, but where the business is small and bribery unlikely, they will have a lot less to do.

The larger the company, and especially if the company operates in countries where bribery is more commonplace, the greater the need to assess the risk of bribery within the company and with those associated with it.

The Act covers people other than employees who are associated with the company and for whose actions the company can be held liable (for example, recruitment firms, commercial agents, joint venture partners, consultants, sub-contractors and freelancers).

Bribery, under the act, doesn’t have to take place in the UK (and non-UK companies are also subject to the law if they operate in the UK, regardless of where the alleged bribery took place).

The government, although not defining what these ‘adequate procedures’ are, have published guidance outlining the steps a company must take in order to demonstrate that the briber acted contrary to the company’s expectations.

There are six principles a Company needs to consider:

• Proportionality – their procedures are in proportion to the bribery risk the organisation faces
• Top-level commitment from the organisation to a zero-tolerance on bribery – and communication of this to staff, customers, suppliers etc. plus appointing a senior executive of the firm to have responsibility for bribery prevention
• Regular risk-assessment of the nature and extent of exposure to potential external and internal bribery risks
• Due diligence – a thorough examination of third parties acting on the organisations behalf and their trading partners
• Communication of these measures – including training so that bribery prevention policies and procedures are understood throughout the organisation, and the likelihood that all types of employment contracts will need amending to refer to bribery in the context of gross misconduct/termination
• Monitoring and reviewing all of the above principles regularly.

To minimise the risk of falling foul of the Act, Companies should have:

• Whistle-blowing procedures (setting out how staff raise concerns about bribery and request advice and support)
• Prevention policies to cover financial and commercial controls (invoices, remuneration)
• Prevention policies to cover rules on gifts, hospitality (a reasonable amount of corporate hospitality is still permitted), promotional spend/sponsorship (including charitable donations)
• Procedures on recruitment (including work experience) and discipline/grievance that include anti-bribery measures
• Details of how anti-bribery measures will be enforced.