The UK Bribery Act 2010 (UKBA) took effect on 1 July 2011 replacing the UK’s existing network of bribery laws with a new single comprehensive Act.
The Act applies to:
– All United Kingdom companies, partnerships and individuals regardless of whether they are located in the UK or whether the activity in question was conducted in the UK
– Foreign companies and individuals doing business in the UK regardless of whether they have a physical or legal presence in the UK
The Act has been described as “the toughest anti-corruption legislation in the world”, raising the bar above the standard set by the United States Foreign Corrupt Practices Act. Due to the extra-territorial nature of the UKBA, all firms are being urged to review their bribery programmes for compliance with its requirements.
Beware of the new offences
The new Act establishes key offences of:
• Offering or paying a bribe
• Requesting or receiving a bribe
• Bribing a foreign public official
• A corporate offense of failing to prevent bribery being undertaken on its behalf
The Act also increases the maximum jail term for individuals for the first three offences from 7 to 10 years. Under the fourth offence, a company convicted of failing to prevent bribery is subject to unlimited fines.
The offences for individuals are a carry-over from the previous legislative regime. However the corporate offence is new. Under the Act, if an employee or third party service provider commits bribery with the intent to obtain or retain business or otherwise gain a business advantage for the organisation, the organisation itself may be subject to prosecution.
However, the Act does provide a defense if the company can prove that it has implemented “adequate procedures” to prevent bribery.
Take adequate procedures to prevent bribery
The UK Ministry of Justice (“MoJ”) has issued guidance to help firms clarify what “adequate procedures to prevent bribery” means in more practical terms.
According to the guidance, what counts as adequate should be risk based and depends on the bribery risks a firm faces and the nature, size and complexity of the business. The MOJ laid out the following six principles to help firms decide on what they need to do differently to meet the requirements of the UK Bribery Act:
• Proportionality: The action taken should be proportionate the risks a firm faces and the size of the business. So, you may want 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.
• 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 your staff (including middle management) and the key people who do business with you do not tolerate bribery.
• Risk assessment: Assess bribery risks you and your company faces such as the country you want to do business with, the sector, the value and duration of the project, the kind of business and the people you engage to do business.
• Due diligence: Knowing exactly who you are dealing with can help protect your organisation from taking on people who might be less trustworthy. You may want to do a few checks before engaging others to represent you in business dealings.
• Communication: Communicate anti-bribery policies and procedures to staff, intermediaries and representatives by making it clear that zero tolerance on bribery & corruption is the basis upon which your organisation does business.
• Monitoring & Review: The risk you face and the effectiveness of your procedures may change over time. You may want, therefore, to keep an eye of the anti-bribery steps you have taken so that they keep pace with any changes in the bribery risks you face.
In addition to ensuring they meet the minimum requirements above, firms are also recommended to:
• Review their current gifts and entertainment policies, especially to establish clear limits and expectations around hospitality
• Ensure that conflicts of Interest policies are up to date
• Ensure that policies on political contributions and social investment are robust and clear
As always, I welcome any questions and comments you may have about the development of an adequate anti-bribery regime within your organisation.