The Bribery Act – What you need to know, Andrew Ryan – Head of Dispute Resolution

Three months and counting….

With the Government now confirming that the Bribery Act 2010 will come into force on the 1st July 2011, and issuing Guidance Notes, together with a quick start guide (click here). It’s now time for businesses to consider what actions they need to take in order to comply.

For small and medium sized businesses with little or no bribery risk, the Ministry of Justice is emphasising that minimal procedures will be required.  However reassuring this is, the law itself does not include any exclusion for smaller organisations, so it is essential that you have appropriate procedures in place.

In preparing for the Act, Section 7 will be of the most important considerations.  This makes any organisation liable if someone associated with it, including an employee or agent, is themselves involved in bribery.  It will be the directors of the business who may face a fine or even a prison term. The only defence is if it can be illustrated that relevant procedures are in place to prevent bribery.

Obviously, for some companies the risk will be small, but for others – depending on the markets and the countries in which they operate – the risk will be far greater. But no matter what the level of risk, we recommend that you put in place relevant procedures to ensure you would have a defence, if such a situation arose.

The Guidance sets out six principles for bribery prevention.  These are:

1.            Proportionate procedures – the policies and procedures you need to have in place should be proportionate to the risks you face and to the size of your business.

2.            Top level commitment – Those at the top of an organization are in the best position to ensure their organization conducts business without bribery.

3.            Risk Assessment – Think about the bribery risks you might face.

4.            Due Diligence – Knowing exactly who you are dealing with can help to protect your organization from taking on people who might be less than trustworthy.

5.            Communication – 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 you organization does 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.

Some steps you may wish to consider to mitigate any risk include:

  • Introduce an anti-bribery policy and circulate it to all employees and relevant parties.
  • Include anti-bribery in your induction and training procedures
  • Revisit or introduce policies, procedures and records regarding hospitality and gifts.  The revised guidance attempts to emphasise the distinction between legitimate hospitality and bribery, but it may be difficult to identify in reality.
  • Include bribery as an offence that could constitute gross misconduct.
  • If your organisation subcontracts work, ensure bribery is included as a standard contractual commitment.
  • Introduce procedures to review and evaluate the success of your anti-bribery procedures.

Our View… In theory, the Act should provide better clarity for companies as the previous rules were often confusing and disjointed. However, as with any new legislation only time will tell. The real challenge for directors and owners is to be aware of what their obligations actually are as the penalties will be severe.  For further information please contact a member of our dispute resolution team

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