Bribery Act & Business Dealings
After some considerable delay, the Bribery Act 2010 came into force on 1st July. The question for many businesses, particularly those dealing with other businesses or with government officials will be: what do I need to do?
Back in March, the government published comprehensive guidance on the Bribery Act and it has been expanded upon by a variety of sources and commentators ever since. Simply-Docs published its own version of this guidance which is available here.
The bottom line is that, in order to comply, you should use some common sense.
What can I do wrong?
There are three offences under the Bribery Act:
1) Offering or receiving a bribe;
2) Bribing a foreign public official; and
3) Failing to prevent a bribe being paid on an organisation’s behalf.
How can I avoid doing wrong?
First and foremost is context. If you have a small business that operates only within the UK, it is quite possible that the Bribery Act will have no impact upon you at all. As your business increases in size and deals with more third parties, such as contractors, agents and partners, the following principles should be kept in mind:
1) Proportionate Procedures;
2) Top Level Commitment;
3) Risk Assessment;
4) Due Diligence;
5) Communication (and training);
6) Monitoring and Review.
Businesses are required by the Act to implement proportionate procedures to guard against the risk of bribery. Central to this requirement is this word: proportionate. A sole trader selling plumbing supplies to consumers from their corner store will not be expected to implement the same procedures as a manufacturer of plumbing supplies selling their wares via agents across Europe and Asia.
Businesses are advised to look at the following when determining what to address with their anti-bribery and anti-corruption procedures:
1) The involvement of top-level management;
2) Risk assessment procedures;
3) Due diligence with respect to “associated persons” such as employees;
4) Gifts, hospitality, PR expenditure, charitable and political donations and facilitation payments;
5) Matters pertaining to recruitment, employment terms and conditions, employee procedures and rates of pay;
6) Appropriate controls for book-keeping, auditing and expenses;
7) The transparency of transactions;
8) Disclosure of information;
9) Decision making procedures including the delegation of authority, separation of functions and conflicts of interest;
10) The enforcement of anti-bribery measures;
11) Procedures on the reporting of bribery;
12) The way(s) in which the business intends to implement anti-bribery measures;
13) The communication of relevant policies to staff and training therein;
14) The way(s) in which procedures are to be monitored, reviewed and evaluated.
Top-level management within a business should demonstrate a commitment to preventing bribery within that business and by those associated with it. Management should be responsible for instilling an anti-bribery culture within a business and for communicating that commitment to other levels within the business.
How much work is required here depends upon the size of your business. Again, context and proportionality are particularly relevant. In any case, from a sole trader to a multinational giant, management should ensure that they are aware of the issues in this area which may be relevant to their business and (where appropriate) ensure that responsibility is placed upon suitable individuals.
For many businesses, a statement of commitment or a simple anti-bribery policy is a good place to start. The following key points should be considered:
1) A commitment to fair, honest and open business practices;
2) A zero-tolerance policy towards bribery;
3) Details of consequences at all levels of the business (including third parties such as agents);
4) The business benefits of preventing bribery (not least of which is avoiding the sanctions for falling foul of the Bribery Act!);
5) Procedures to be implemented within the business to prevent bribery;
6) Those persons within the business who will be responsible for the development and implementation of anti-bribery procedures; and
7) Prevention measures outside of the business with which the business may be (or become) involved such as industry association programmes.
Risk assessments are important tools in many areas of running a business; not least where bribery is concerned. By using a risk assessment, a business can easily determine the degree to which it may be exposed to internal and external risks.
Above all, consider context and proportionality. In addition to that, consider the following factors when assessing bribery risks:
1) Your business. What are the structures and procedures within your business and how, if at all, do those structures and procedures increase or reduce the risks of bribery taking place?
2) Your sector. Consider whether your sector is particularly affected by bribery or associated behaviour.
3) Transactions. Certain transactions may be more risky than others.
4) Your partners. Always remember that you are responsible for “associated persons” too. You may have business partners or agents that deal in other countries, interacting with officials.
5) Business Opportunities. You may be tempted to go the extra mile to secure that dream contract. Be careful though – especially when involving contractors and other intermediaries.
6) Country. Stereotypes aside, certain countries may be more risky to do business in than others when it comes to bribery. It may even be unofficial standard practice to bribe officials to get things done; take care and where appropriate deal with the appropriate authorities.
This heading essentially encompasses everything else in the guidance; particularly those points raised under the heading of risk assessment. With each new business relationship and each new transaction, care should be taken to ensure that risks are identified and eliminated (or at the very least reduced as much as possible). Each business relationship and indeed each transaction should be assessed on its own. Information should be sought to ensure that your business has a clear picture of the transaction to be undertaken and of any parties with whom it is to be undertaken.
If your businesses is more than just you, these matters should be communicated to other relevant people within your business. Depending upon the size of your business, a simple email to all staff may suffice. Alternatively, training may be required for different staff members and / or departments. Once again, context rules all. A sole trader working in a limited area will likely need to do nothing at all. A large supplier, on the other hand, may need to more carefully consider how to deal with its business partners, suppliers and clients.
As is the case under the heading of Top-Level Commitment, a simple policy statement is always a good place to start, ensuring awareness of the overall culture of a business and of the central issues relating to bribery which are relevant to that business, albeit in outline form.
Monitoring and Review
No business should implement polices once and leave them be for ever more. Periodic reviews of all business policies should be conducted from time to time as appropriate. For example – most policies are best reviewed annually as a matter of course and additionally in the event of any significant change in the business such as a change to its structure or business plan.
By following the guidance available both from Simply-Docs and from governmental sources such as the Ministry of Justice and Serious Fraud Office, and most importantly by adopting a common-sense approach, you can easily ensure that your business steers clear of risks associated with bribery. The law does not seek to make doing business unduly burdensome. Indeed, in Ken Clarke’s own words, “Combating the risks of bribery is largely about common sense, not burdensome procedures.”
The Bribery Act does not mean that businesses must put an end to hospitality for clients and partners, for example. It simply means that care and due diligence should be exercised when dealing with different clients, associates, partners, markets and officials. After all, the goal of the legislation is to stamp out corruption, not commerce.
New Policy Documents
To assist your business in ensuring compliance with the Bribery Act Simply-Docs has published two new policy documents, available to both Business-folder and Employment-folder subscribers.
The new Anti-Bribery Policy, designed to be used in conjunction with other key policies, addresses important bribery-related matters including gifts and hospitality, payments to officials, and political and charitable donations. An all-new Expenses Policy is also available, addressing all key areas relating to employee and business expenses with extra emphasis on the provision of hospitality and gifts to third parties. Both new documents are available via the links to the right.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.