The UK Bribery Act: A Guide For Companies
The Bribery Act came into force in 2011 and there is a lot of confusion regarding what it covers and the way in which it will require a change in the way businesses operate. This page aims to provide a handy guide to the new law and includes an FAQ section to help businesses ensure they comply with the Act.
If you have any further questions about the Bribery Act or need any further advice regarding its implications for your business, please do not hesitate to get in touch to speak to a member of our team. Simply call us on 0345 872 6666 or complete our online enquiry form and we will give you a callback.
Find out more about how JMW can help if you have been accused of bribery and corruption here.
The Bribery Act: A Summary
Bribery is generally defined as giving someone a financial or another advantage to encourage that person to perform their functions or activities improperly or to reward that person for having already done so. This could cover seeking to influence a decision-maker by giving some kind of extra benefit to that decision-maker rather than by what can legitimately be offered as part of a tender process.
The Bribery Act 2010, which commenced on 1 July 2011, replaces the offences at common law and under the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916 (known collectively as the Prevention of Corruption Acts 1889 to 1916). These are replaced with a new consolidated scheme of bribery offences. The key provisions of the Act are:
- Two general offences covering the offering, promising or giving of an advantage, and the requesting, agreeing to receive or accepting of an advantage
- A discrete offence of bribery of a foreign public official to obtain or retain business or an advantage in the conduct of business
- A new offence of failure by a commercial organisation to prevent a bribe from being paid for or on its behalf. It will be a defence if the organisation has 'adequate procedures' in place to prevent bribery
- A maximum penalty of ten years’ imprisonment for all the offences, except the offence relating to commercial organisations, which will carry an unlimited fine
- Extra-territorial jurisdiction to prosecute bribery committed abroad by persons ordinarily resident in the UK, as well as UK nationals and UK corporate bodies
- A defence for conduct that would constitute a bribery offence where the conduct was necessary for the proper exercise of any function of the intelligence services or the armed forces engaged in active service
The Act is not concerned with white-collar crime, such as fraud, theft, books and record offences, Companies Act offences, money laundering offences or competition law.
How The Bribery Act May Affect Your Business
- There is a full defence for this offence if you can show you had adequate procedures in place to prevent bribery
- You do not need to put bribery prevention procedures in place if there is no risk of bribery on your behalf
- Hospitality is not prohibited by the Act
- Facilitation payments are bribes under the Act, just as they are under the old law
When Could My Organisation Be Liable Under The Bribery Act?
Your organisation may be liable for failing to prevent a person from bribing on your behalf, but only if that person performs services for you in business. It is very unlikely that you will be liable for the actions of someone who simply supplies goods to you.
Your organisation could be liable if a senior person in the organisation (for example, a managing director) commits a bribery offence. Their activities would be attributed to the organisation.
Your organisation could also be liable where someone who performs services for it - like an employee or agent - pays a bribe specifically to get business, keep business or gain a business advantage.
No one can be prosecuted in England and Wales unless one of the two most senior prosecutors (the Director of Public Prosecutions or the Director of the Serious Fraud Office) is personally satisfied that a conviction is more likely than not, and that prosecution is in the public interest.
How Do I Assess The Risk Of Bribery?
Many organisations will face little or no risk of bribery, especially if their business is undertaken primarily in the UK. If you operate overseas, the risks may be higher.
Factors such as the particular country you want to do business in, the sector in which you are dealing, the value and duration of your project, and the people you engage to do your business will all be relevant.
There are simple practical steps you can take to assess and mitigate risks. These are mostly obvious and are similar to (or even the same as) those you probably take anyway. For example, you might use simple internet searches to find out about the levels of corruption or bribery in the particular country you propose to do business in. You could consult UK diplomatic posts or UK Trade and Investment for advice, or consult business representative bodies in the relevant country for up-to-date local knowledge.
Do I need complex procedures in place even if there is no risk of bribery?
If there is very little risk of bribery being committed on behalf of your organisation, you may not feel the need for any procedures to prevent bribery. If, having assessed the position, there is a risk of bribery then, if you want to rely on the defence, the procedures you adopt should be proportionate to that risk.
There is no need for extensive written documentation or policies. You may already have proportionate procedures through existing controls over company expenditure, accounting and commercial or agent contracts, for example.
In larger organisations it will be important to ensure that management in charge of the day-to-day business is fully aware and committed to the objective of preventing bribery. In micro-businesses, simple reminders to key staff about the organisation's anti-bribery policies may be enough.
In addition, although parties to a contract are of course free to agree whatever terms are appropriate, the Act does not require you to comply with the anti-bribery procedures of your business partners in order to be able to rely on the defence.
Transparency International has produced a guidebook advising on adequate procedures to ensure compliance you can download it here.
Can I provide hospitality, promotional or other business expenditure under the Bribery Act?
Yes. The government does not intend that genuine hospitality or similar business expenditure that is reasonable and proportionate be caught by the Act, so you can continue to provide bona fide hospitality, promotional or other business expenditure.
In any case where it was thought the hospitality was really a cover for bribing someone, the authorities would look at such things as the level of hospitality offered, the way in which it was provided and the level of influence the person receiving it had on the business decision in question. But, as a general proposition, hospitality or promotional expenditure that is proportionate and reasonable given the sort of business you do is very unlikely to engage the Act.
You can therefore continue to provide tickets to sporting events, take clients to dinner, offer gifts to clients as a reflection of your good relations, or pay for reasonable travel expenses in order to demonstrate your goods or services to clients if that is reasonable and proportionate for your business.
Do I need to do due diligence on all my suppliers in relation to the Bribery Act?
You only have to think about doing due diligence on persons who will actually perform services for you, or on your behalf. Someone who simply supplies goods to you is unlikely to do that. It is very unlikely, therefore, that you will need to consider doing due diligence on persons further down a supply chain.
Where you decide to undertake due diligence, how much you need to do will depend on your risk assessment. If you assess the risk as low then all you may need to do is make sure you feel satisfied that people performing services for you (for example, an agent) are genuine and someone you can trust to do your business without bribing. You could do this by making enquiries with business contacts, local chambers of commerce or business associations or via the internet, for example.
Where you think the risks are higher, then you may need to do more. You might ask your agent for a CV, financial statements or accounts, and other references. You might then follow those up to ensure they are genuine. The aim is to feel satisfied that the person that is to represent your organisation can be trusted not to use bribery on your behalf, but this does not necessarily require sophisticated and costly techniques. Personal contact, allowing you to assess the person for yourself, can be very helpful.
What do I need to do to rely on the defence?
You will not commit the offence of failing to prevent bribery if you can show that your organisation had 'adequate procedures' in place to prevent bribery. What counts as adequate will depend on the bribery risks you face and the nature, size and complexity of your business. So, a small or medium-sized business that faces minimal bribery risks will require relatively minimal procedures to mitigate those risks. The following six principles will help you decide what, if anything, you need to do differently:
The action you take should be proportionate to the risks you face and to the size of your business. So, you might need to do more to prevent bribery if your organisation is large, or if you are operating in an overseas market where bribery is known to be commonplace, compared to what you might do if your organisation is small, or is operating in markets where bribery is not prevalent.
2. Top Level Commitment:
Those at the top of an organisation are in the best position to ensure their organisation conducts business without bribery. If you are running a business, you will want to show that you have been active in making sure that your staff (including any middle management) and the key people who do business with you and for you understand that you do not tolerate bribery. You may also want to get personally involved in taking the necessary proportionate action to address any bribery risks.
3. Risk Assessment:
Think about the bribery risks you might face. For example, you might want to do some research into the markets you operate in and the people you deal with, especially if you are entering into new business arrangements and new markets overseas.
4. Due Diligence:
Knowing exactly who you are dealing with can help to protect your organisation from taking on people who might be less than trustworthy. You may therefore want to ask a few questions and do a few checks before engaging others to represent you in business dealings.
Communicating your policies and procedures to staff and to others who will perform services for you enhances awareness and helps to deter bribery by making clear the basis on which your organisation does business. You may, therefore, want to think about whether additional training or awareness-raising would be appropriate or proportionate to the size and type of your business.
6. Monitoring and Review:
The risks you face and the effectiveness of your procedures may change over time. You may want, therefore, to keep an eye on the anti-bribery steps you have taken so that they keep pace with any changes in the bribery risks you face when, for example, you enter new markets.
Do I need to employ consultants or lawyers to provide advice on the risks I face, the procedures I adopt, or the level of due diligence I should undertake in relation to the Bribery Act?
There is no duty to engage lawyers or consultants regarding this in - especially where you consider the risks to be low or non-existent.
The Act does not require external verification of any bribery prevention measures you have put in place, but engaging experts to advise on your particular business is something you should consider, particularly where a lot of your business is conducted abroad or through agents.
Useful Resources and Links
- How effective is anti-bribery training?
Here is a link to the statement by Richard Alderman, former Director of the Serious Fraud Office, in 2012. The statement concerns the effectiveness of anti-bribery training and encourages companies to engage with non-government organisations and the Serious Fraud Office, especially if they fear employees are becoming engaged in bribery
- Bribery Act 2010 and Explanatory Notes
- Guidance under section 9 about commercial organisations preventing bribery
- Bribery Act 2010: Joint Prosecution Guidance of the Director of the Serious Fraud Office and the Director of Public Prosecutions
- Role of the Crown Office and Procurator Fiscal Service
- How the prosecution system works
Talk to Us
For more information about the Bribery Act and what it covers, or if you would like to speak to the experienced team at JMW for advice about the possible implications for you and your business, get in touch today. Call us on 0345 872 6666 or complete our online enquiry form to request a callback.