March 31st 2011 Addendum: Please note that a date has now been set for the Bribery Act to come into force (July 2011) and government guidance is now available. Simply-docs will be publishing guidance during April 2011.
From April 2011 Britain will have the world’s most rigorous anti-bribery laws courtesy of the new Bribery Act 2010 which comes into force on 1st April.
This means that all business entities (including partnerships) either incorporated or trading (even partially) in the UK and persons associated with such businesses will be subject to more stringent anti-corruption laws. The term “associated person” is defined in Section 8 of the Act as person who performs services on behalf of a business (referred to as a “commercial organisation” in the Act) and may be an employee, agent or even a subsidiary of that business.
Businesses should be aware that under this legislation both individuals and commercial entities can be prosecuted for corruption, in some cases simultaneously, in regard to the same matter. In the past businesses could only be prosecuted if there was sufficient evidence, which was often difficult to gather. Section 7 of the Act now creates a new offence of failure to prevent the giving or receiving of a bribe. It is therefore imperative that all UK related businesses implement suitable measures to comply with this new anti-corruption legislation.
The act also outlaws any “facilitation payments” to foreign officials. A "facilitation payment" refers to the practice of paying a small sum of money to a public official (or other person) as a way of ensuring that they perform their duty, either more promptly or indeed at all. This is particularly relevant if you are dealing with US companies and the US law currently does not prohibit such payments. However, a US company operating (even partially) in the UK would fall under the provisions and jurisdiction of the Bribery Act.
The Serious Fraud Office (SFO) will execute and oversee enforcement of this law. The concept of self-reporting is no longer a requirement under the Bribery Act; however should the SFO discover that any bribery was not reported it is highly likely that the business in question will be found criminally liable. The SFO plans to rely primarily on whistleblowers and the integrity of businesses. Gifts and hospitality will now become a significant bribery risk and it is recommended that businesses carefully record business related gifts and/or hospitality, both given and received, and monitor the expenses of any “associated person”.
Under Section 9 of the Act, the Secretary of State is required to publish guidance notes for businesses on implementing measures preventing bribery. Having bona fide measures of this type in place constitutes a good defence to accusations of bribery. Currently the Ministry of Justice published only a draft version of such guidance for the purposes of consultation. This draft guidance covers six key principles and the final version should be available early this year and, it is to be hoped, prior to the Act coming into force in April.
The draft guidance notes can be accesses on the Ministry of Justice website; however we summarized the principles for you:
1) Risk Assessment: it is recommended that businesses assess the corruption risks taking into account aspects such as the country in which they propose to do business, the parties to, or the subject matter of, transactions and their business partners (particularly with regard to the location of those partners and the organisations they represent).
2) Top Level Commitment: a commercial organisation’s management needs to demonstrate and strive to foster anti-bribery attitudes; organisations should invest in communicating a statement of commitment to counter bribery.
3) Due Diligence: businesses should implement due diligence procedures to cover all parties involved in business relationships with particular regard to factors such as location, business partners’ associations and opportunities associated with transactions (e.g. pricing).
4) Clear, Practical and Accessible Policies and Procedure: businesses should implement clear and practical policy and procedure documentation with relevant support for that implementation such as organisational measures and the appointment of staff to specifically deal with matters pertaining to bribery.
5) Effective Implementation: measures to be taken by businesses in implementing an anti-bribery culture should include planning, delegation, training and clear statements of penalties for breaches.
6) Monitoring and Review: policies and procedures should be regularly subject to internal review and monitoring with additional emphasis on transparency and external verification.
The implication of these changes is that businesses may need to review some of their existing policies and plan to implement bribery prevention processes before April 2011. In light of these changes Simply-docs has updated the policy documents shown on the right.
A new Hospitality and Hospitality and Gifts Register Form, enabling you to monitor and record any gifts or hospitality which are received or given by your business is also available.
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