The Bribery Act 2010: are you running a risk of breaking the law?
To see the difficulties that businesses can get into through bribery - or even allegations of bribery - look no further than the reputational damage suffered by international football association FIFA, aero-engine manufacturer Rolls-Royce and pharmaceutical giant GlaxoSmithKline in recent times. Not to mention, in Glaxo’s case, eye-watering fines.
Simply put, the world is getting tough on bribery, with country after country enacting legislation to make it a criminal offence. Here in the UK, for instance, the requisite piece of legislation is the Bribery Act 2010, which came into effect nearly four years ago.
To understand the scale of the shift in opinion that has taken place regarding bribery, it’s necessary to know only that the pieces of legislation that the Act replaces were actually brought into law in 1889, 1906, and 1916 respectively. In short, we’re talking about the first new anti-Bribery law in around a hundred years.
However, the Bribery Act does more than just bring the law up to date. The difference between today’s legislation and the century-old laws that it replaces is that the Bribery Act is far more wide-ranging in scope, making compliance much harder.
It’s also an Act with undoubted teeth. Because even if they didn’t know that bribes were being paid or accepted, directors can still be potentially liable. And senior company officers who knew—but turned a blind eye—are much, much more culpable.
What’s more, it’s important to note that the liability is personal, not corporate: in other words, the fines are paid by individual directors and company officers, and it is individual directors and company officers who must serve the jail time.
Nor are we talking about a slap on the wrist. Fines are potentially unlimited, and custodial sentences can be up to ten years.
Risks in the supply chain
What makes complying with the Bribery Act particularly challenging is that parts of the legislation have been framed with the intention of not just emulating America’s Foreign Corrupt Practices Act (FCPA), but going beyond it.
Specifically, the Act covers all private sector transactions, irrespective of whether a foreign official is involved or not.
Which means that the focus isn’t just on whether a company itself pays bribes or not. Corrupt practices carried out by its suppliers and agents also come under the Act—which means that any business with a UK trading presence is now open to a new offence of negligently failing to prevent corruption.
It is here, arguably, that the greatest vulnerability lies. In the real world, few businesses get the opportunity to bribe government officials in order to win multi-million pound contracts.
But many more import goods from contract manufacturers overseas where local officials might have been bribed to ignore health and safety requirements or child labour laws. Equally, bribes paid by overseas agents in order to make sales are also covered by the Act.
What’s more, there are those awkward ‘grey areas’ to consider—expensive seasonal gifts from suppliers at Christmas, for example, or overly-lavish corporate entertainment provided by trading partners or prospective suppliers.
Prevention is better than defence
So what should a business do? Our view is clear: the only defence is to have adequate processes in place.
These processes serve two purposes.
First, they serve to minimise the risk of corrupt practices taking place, through establishing policies which make it clear that the company does not sanction bribery.
Second, in the unfortunate situation that allegations of corrupt practice do have to be defended, then the company’s directors and officers can point to the processes that it has in place, and argue that reasonable steps to prevent bribery had been taken.
So what do those processes look like? Our advice is quite clear:
- Have a policy in place, covering the Bribery Act, and Bribery Act compliance
- Train employees in its requirements, and make sure that relevant third parties, too, know that they must also comply
- Be seen to be enforcing it—keep a record of training, be able to demonstrate any relevant actions taken, and have Bribery Act compliance as a recurring item at board meetings
- Appoint a senior-level compliance officer, with a clear board mandate
- Make sure that there are suitable policies in place for those ‘grey areas’—eg, seasonal gifts from suppliers, and corporate entertainment. Be very clear about what is allowed, and what isn’t.
We can help
That said, it’s one thing to say "have a policy in place", and quite another to be able to assess whether or not that policy is adequate.
And given what is at stake, company directors and senior officers can be forgiven for wanting to make sure that their Bribery Act provisions are watertight.
Here at The Legal Director, we specialise in providing clear-cut legal advice in business-friendly language. Providing it affordably, to suit a business’s own needs and workloads. And providing it in a range of offerings stretching from a fixed fee monthly retainer for telephone advice, to your own part-time legal director, working alongside your own board of directors.
To find out more, call James, Kirstie or Ed on 020 3755 5099 at any time.
Posted Thursday, June 11th, 2015 by Warren RylandTweet
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