The Bribery Act 2013

The UK anti-bribery regime is now codified under a single piece of legislation and any organisation with any activity in the UK (whether incorporated here or not) needs to be mindful of the manner in which it conducts its business, even if the activity itself is outside the UK

The Offences and Penalties under the Bribery Act

The Bribery Act 2010 came into effect on 1 July 2011 creating four offences:

• the offering, promising or giving of a bribe;

• the requesting, agreeing to receive or accepting of a bribe;

• bribing a foreign official;

• failure by a commercial organisation to prevent a bribe being paid or received on its behalf.

Businesses and individuals need to ensure that they take adequate steps to ensure that they and their staff are aware of the provisions and comply with them in order to avoid the criminal penalties that apply.

The Act covers bribery in the UK and abroad by all businesses in both the public and private sectors. The maximum penalty jail term for an individual increases from seven to ten years.

A commercial organisation could face an unlimited fine and company directors will face lengthy disqualification periods.

When deciding whether a bribe has been paid, the courts will use the test of the opinion of a reasonable person in the UK, so beware of simply following local custom when making payments abroad.

Your business can also be guilty of an offence if one of its employees, agents or another person associated with your business pays or receives a bribe on your behalf, so you need to make sure the culture of your business adopts an affirmatively Anti-Bribery stance and staff are under no illusions as to what is acceptable.

Scope

UK Companies operating overseas

UK companies can be liable under the Act of the actions of an employee, subsidiary, agent or service provider if they engage in bribery activity.

If a foreign subsidiary of a UK organisation enagages in bribery activity while performaing services for the UK parent, the UK parent organisation can similary be liable. If the foreign subsidiary were acting entirely on its own behalf, there may be grounds for arguing that the UK parent does not have the liabilty for the bribery activity itself, but the parents could still be liable for offences in relation to a counting or the proceeds of crime.

Foreign companies operating in the UK

If a company is not registered in the UK, but carries on a part of a business in the UK, the Bribery Act applies. Unfortunately these terms are not yet defined, so foreign companies need to take particular care, since the offence and any perceived benefit could occur entirely outside the UK. In either case, the only defence would be the Adequate Procedures discussed below.

How you can protect yourself from a breach of the Bribery Act Adequate Procedures Defence

Businesses will be somewhat relieved that the guidance to the legislation has adoptted a practical approach insofar as anti-bribery procedures a business puts in place should be proportionate to the bribery risks that business faces. The guidance states that corporate hospitality of a reasonable and proporationate nature is not prohibited, for example taking a client to a football match or to Wimbledon will not fall within the defenition of a bribe if it is for genuine business development purposes and such entertainment is normal for the industry in which the business operates. The guidance recognises that reasonable and proportionate hospitality which promotes business is both an established principle and acceptable. If it is not lavish and is normal for your industry, it should not amount to an offence and detailed examples are provided in guidance.

Adequate Procedures Defence

Specifcally in relation to the new offense of the failure of a commercial organisation to prevent bribery, the Act provides a defence where “adequate procedures” have been adopted by the commercial organisation designed to prevent those “associated” with it from undertaking such conduct.

While “adequate procedures” are not defined, the guidance sets out six general principles, which should be followed across all industries, adopting a risk-based approach.

The Principles state that businesses should:

1. Adopt proportionate procedures
2. Make top level commitment
3. Conduct a bribery risk assessment
4. Perform due diligence on all their commercial relationships
5. Commit to clear communication and training
6. Undertake ongoing monitoring and review

By following the principles, a business can demonstrate its commitment to combating corrupt practices and go a long way to mitigating its liability for the actions of employees in contravention of the policy.

Foreign and Corrupt Practises Act

Many companies will be aware of and comply with the US Foreign and Corrupt Practices Act, and be tempted to rely on the same procedures to claim the Adequate Procedures Defence. However the Bribery Act and Foreign and Corrupt Act differ significantly. Therefore organisations should take advice on the way in which the Bribery Act will apply to their particular business.

Conclusion

Businesses, irrespective of where they are based need to be careful to ensure their procedures are compliant, even if they conduct only a small part of their business in the UK. The penalties are potentially very harsh, but compliance need not be a significant burden to the well-organised business. In addition to the regulatory requirement, many large international businesses now insist that their suppliers are compliant with the UK Bribery Act and so compliance can also form part of the qualification process to service lucrative clients. Whether the impetus is commercial or regulatory, carrot or stick, all businesses will benefit from engaging in the process sooner rather than later.