Q When does the Bribery Act come into force?
A The Act was delayed and will now come into force on 1 July 2011.
Q Who does the Act apply to?
A The Act applies to all uk-based businesses and organisations no matter what their size in terms of numbers of offices or employees, as well as to individuals.
Q What does the Act cover?
A The Act covers bribery only. Other forms of white collar crime such as fraud, book and record offences are not covered by the Act.
Q So what is bribery?
A As a legal concept, under the new Bribery Act, bribery is a “financial or other advantage” offered, promised or given to induce a person to perform a relevant function improperly or to reward them for doing so. In practical terms, this is a broad-ranging definition which would cover gifts, hospitality, entertainment, political or charitable donations and giving publicity or sponsorship.
Q Is timing important?
A No. The bribe can still fall under the Act even if the financial or other advantage is given after the event.
Q Presumably the bribe has to be given and received rather than just promised to trigger the Act?
A This is not the case. Liability is triggered under the Act when the bribe is offered, promised or agreed to. Whether or not it then materialises is irrelevant; no advantage actually has to be obtained in order for such an action to fall foul of the Act.
Q What are the main offences under the Act?
A There are four main offences:
- Bribing another;
- Being bribed;
- Bribing a foreign public official; and
- Failure of a commercial organisation to prevent bribery by an “associated person” for its benefit.
In terms of the last offence, “associated person” is widely defined and includes employees, agents and subsidiaries. Employees are presumed to be “associate persons” of their employer and consultants, agency workers and volunteers will also be “associated persons”. Consequently, employers will be liable for a wide range of people, some of whom they will have little control over.
Q What are the penalties?
A The penalties are severe. Individuals who commit or are involved with the commission of the offence can be imprisoned for up to ten years and employers can be liable to unlimited fines and be prevented from tendering for future public contracts.
Q Is there any defence for employers faced with a claim under the Act?
A Employers will have a defence to a claim against them, if they can show that they have put “adequate procedures” in place to prevent bribery.
Q Is there any practical guidance to help employers as to what might constitute “adequate procedures” to prevent bribery?
A There is no definition of what “adequate procedures” are. However, as a result of guidance published by the Ministry of Justice on 30 March 2011, six principles have been established which intend to assist commercial organisations in preventing bribery and which employers therefore need to take note of:
- Proportionate procedures – employers need to be sure that they have clear, easy to read policies which are available to all who work or ‘perform services’ for them, who will fall within the definition of “associated person”. Employers should consider how the use of their other internal procedures may be used to reduce the risk of bribery.
- Top level commitment – top level management must be openly committed to preventing bribery. Employers should look to establish a culture of zero-tolerance to bribery and this policy must be clearly communicated to all workers and business partners.
- Risk assessments – employers need to be aware of, and kept up to date, with the bribery risks of their sector and, if relevant, the countries with which they do business. The regular comprehensive assessment of both internal and external risks is necessary.
- Due diligence – employers need to take steps to ensure that they know who they are doing business with in order to better understand the risks that might face them. This would include suppliers, agents and intermediaries and joint venture partners. Employers are advised to take steps to ensure that these parties have similar anti-bribery policies in place so as to reduce the risk of their own liability.
- Communication – paper compliance is not enough, employers need to ensure that employees are properly trained and vetted to avoid bribery liability. Training should include how to report suspicious activity and employees must be made aware of subsequent internal penalties for breaching such policies.
- Monitor and review – commercial organisations need to decide who is responsible for implementing and monitoring of the anti-bribery policies and procedures. Employers should consider a regular review of these procedures. Such procedures would be reinforced by effective financial and auditing controls that pick up potential and actual irregularities.
Employers should also be aware of the Bribery Act in relation to the following employment-related events:
- Bonus and Commission
- Contractual Requirements
- Disciplinary Procedures
- Discrimination
- Expenses
- Gifts and Hospitality
- Investigating allegations
- Recruitment
- Whistleblowing
For a free initial consultation please call 01202 499255 and Paul or Kate will be happy to discuss any questions you may have.