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
Other Articles In This Category
- Did you negotiate your last loan agreement - or just sign on the dotted line?
For businesses wanting to grow or invest, external finance can be an attractive option: access to the funds that they need, without equity dilution or... read more
2nd of November 2017 by Warren Ryland
- Protecting the value of your newly-acquired businesses can be a challenge
Buying a business is exhilarating. Hard work, to be sure - but undeniably exciting, and with a rich sense of the opportunities that lie ahead. So perhaps... read more
2nd of October 2017 by Warren Ryland
- GDPR. The clock is ticking: a tough new take on data protection is fast approaching
With effect from 25 May 2018—in other words, less than a year away—your business is exposed to a new regulatory regime backed by hefty fines. And by... read more
6th of September 2017 by Warren Ryland
- Persons of Significant Control: important changes to reporting requirements
It’s barely a year since the introduction of the PSC regime - and already, the compliance requirement has been tightened. And at a time when many businesses... read more
23rd of June 2017 by Warren Ryland
- Avoiding conflict when forming a business: probing questions for potential partners
Every year, several hundred thousand new businesses are created. In 2015, according to the Office for National Statistics, the total was 383,000—the highest... read more
28th of April 2017 by Warren Ryland
- Is your business at risk from the Uber decision? Why your self-employed contractors could really be employees
Fuelled by companies such as ride-hailing business Uber and personal courier firm Deliveroo, the so-called ‘gig economy’ is on the rise. So much so,... read more
12th of January 2017 by Warren Ryland
- The Legal Director - Commended for Innovation in the FT Innovative European Lawyers awards
Law firm The Legal Director (TLD) has been commended in the FT Innovative European Lawyers awards, which were announced at the beginning of this month. TLD ranked... read more
28th of October 2016 by Warren Ryland
- Debt versus Equity - Financing for SMEs
The need for additional finance is often the price of success for small to medium-sized enterprises (SMEs) that are looking to grow. The question that faces the... read more
14th of October 2016 by Warren Ryland
- The deceptive complexity of the Modern Slavery Act
At the end of July, Prime Minister Theresa May launched a cabinet-level government taskforce to eradicate modern slavery in the UK. It was, she said, “one of... read more
31st of August 2016 by Warren Ryland
- How our clients will benefit from the Bar Council's escrow account
Outside the narrow realms of consumer technology, there’s often an inevitable trade-off between cost and quality. In other words, you can have something at... read more
7th of July 2016 by Warren Ryland
- As the net starts to close, the Bribery Act prosecutions begin
As we have written before, the Bribery Act 2010 is a law with undoubted teeth. Fines are potentially unlimited, and custodial sentences can be up to ten... read more
1st of May 2016 by Warren Ryland
- New rules on shareholder identification are now in force
New rules on shareholder identification are now in force - and yet many businesses aren’t aware of them. Does your business have corporate or nominee... read more
12th of April 2016 by Warren Ryland
- First SRA-regulated law firm signs up to Bar Council's escrow account
PRESS RELEASE: The Legal Director has become the first law firm regulated by the Solicitors Regulation Authority (SRA) to sign up to the Bar Council’s... read more
31st of March 2016 by Warren Ryland
- Trade marks: the 3 biggest mistakes to avoid
Wander around a supermarket, or browse the advertisements in newspapers and magazines, and you’ll see trade marks everywhere. And it’s likely, too, that... read more
29th of February 2016 by Warren Ryland
- Avoiding flexible working's hidden pitfalls
You don’t have to look too far to see that traditional modes of employment are increasingly giving way to more flexible working arrangements. Returnee... read more
9th of November 2015 by Warren Ryland
- Are you paying your workers the right amount of holiday pay?
A recent ruling by an Employment Appeal Tribunal is set to cause many businesses a headache. Quite an expensive headache, at that. Simply put, it means that... read more
15th of July 2015 by Warren Ryland
- It's official: "Lawyers are not cost-effective"
Imagine, for a moment, that when faced with a serious illness, significant numbers of people took no action. And of those who did take action, around... read more
20th of January 2015 by Warren Ryland
- Could a Shareholder Agreement save your business?
Here at The Legal Director, we’ve recently come across a business where the two co-founders have fallen out -- one is now leaving, in order to set up on his... read more
1st of December 2014 by Warren Ryland
- The high-fee culture that's hobbling British business
Another week, and yet another critical item in the press on the cost of obtaining corporate legal advice. And to be sure, it’s certainly a fairly open goal at... read more
11th of November 2014 by Warren Ryland
- Is crowdfunding the answer to your business's financing challenge?
As the credit crunch and ensuing recession of 2008 began to bite, lending to businesses dried up. To their shock, even long-established, profitable businesses... read more
2nd of September 2014 by Warren Ryland
- Complying with the Data Protection Act: 3 business bear-traps awaiting the unwary
Visit the website of the Information Commissioner’s Office, and there’s an interesting section entitled ‘Enforcement’. In it, the... read more
1st of September 2014 by Warren Ryland
- What might a Legal Audit reveal about your business?
When we start working with a business we assess their existing legal arrangements to determine how these can be improved and aligned with commercial objectives. We... read more
9th of July 2014 by Warren Ryland