Bribery Act 2010
The Bribery Act 2010 was given Royal Assent in April 2010 and came into force on 1st July 2011.
The Act contains two general offences:
1. Active bribery - offering, promising or giving a bribe.
2. Passive bribery – requesting, agreeing to receive or accepting a bribe.
Under the Act there are four broad areas of offences:
1. Bribing a person – section 1
Under section 1 it is an offence to directly or indirectly offer, promise or give a financial advantage to another:
Where the intention is to induce another person to perform a relevant function or activity improperly or reward such action, or where the acceptance of the bribe itself constitutes improper performance of a relevant function or activity.
2. Accepting a bribe – section 2
Under section 2 it is an offence to where a recipient or potential recipient of a bribe requests, agrees to receive or accepts a financial or other advantage with the intention that a relevant function will be performed improperly by them. Or that by agreeing to the above a relevant function is itself performed improperly. Or improper performance is rewarded. Or is improperly performed in anticipation of a bribe. It is irrelevant if the improper performance is carried out by the actual recipient of the bribe or another person.
3. Bribing a foreign public official – section 6
Under section 6 it is an offence to offer, promise or give a financial or other advantage to a foreign public official. With the intention of influencing the official in the performance of their official duties. The person offering the bribe must also have the intention to obtain or retain business or obtain an advantage.
4. Failure to prevent bribery – section 7
Under section 7 a commercial organisation will be liable under the Act if a person associated with it bribes another party and with the intention of obtaining or retaining business or gaining an advantage.
An organisation will be liable under the Act if a senior person, (for example a managing director, ceo, finance director, member of the board or other senior managerial role) within the organisation commits an offence under the Act. As the person is in a senior position the organisation is held liable for their actions.
Other employees and agents
An organisation can also be liable if an employee or agent acting for the organisation pays a bribe specifically in order to obtain or retain business or gain a business advantage for the organisation.
Under section 12 of the Act courts will have jurisdiction over offences under sections 1,2 or 6 of the Act committed in the UK. However, they will also have jurisdiction over offences committed outside the UK, where the person committing the offence has a close connection to the UK, such as being a British national or being ordinarily resident in the UK.
However, under section 7 breaches the requirement of a close connection with the UK does not apply, nor does not matter whether the breaches occur in the UK or elsewhere.
However, no one can be prosecuted in England & Wales without the prior approval of either the Director of Public Prosecutions (DPP) or the Director of the Serious Fraud Office. Either of these officials has to be satisfied that a conviction is more likely to succeed, than fail. Also that it would be in the public interest to bring a prosecution. (For “public interest” you may want to substitute “political interest”. As this will inevitably allow for some lobbying in the background by any company at risk of prosecution.)
Prison & Fines
An individual found guilty of an offence under section 1, 2 or 6 is liable to imprisonment for a maximum of 10 years or to an unlimited fine, or both.
A company is liable to an unlimited fine.
A person guilty of an offence under Section 7 is liable to an unlimited fine.
Also both a company and its managing director, senior officer or ceo could be subject to criminal penalties.
Defence - adequate procedures
Organisations will have a defence to the specific offence of failing to prevent bribery if they can show they have “adequate procedures” in place to prevent bribery.
What is deemed “adequate” does depend upon the nature of the risk of bribery for the organisation. This in turns depends upon the size, nature and complexity of the organisation. For example a weapons manufacturer that bids for large foreign defence contracts is going to need much more in the way of anti-bribery procedures than a small engineering company that supplies widgets.
To decide the level of risk the guidance outlines 6 principles:
The action taken to combat bribery should be in proportion to the risks faced by the business, see above.
2. Top Level Commitment
The most senior management of any business should let all employees and agents know that bribery should not occur, and the senior management should be involved in steps to minimise the risk. Basically, it has to be communicated from the very top down to all levels of staff and agents. The aim of this is to change cultures in organisations where bribery has been a risk or has occurred before.
3. Risk Assessment
This is a case of weighing up the actual risks of the organisation and it’s employees being involved in bribery. Again it goes back to what the product and/or service markets the organisation operates in, and the geographical markets. Certain foreign markets will carry increased risks over the domestic market, others will carry less. For example, operating in Russia will carry much greater risks than say the US, simply because the different business cultures.
4. Due Diligence
This is checking who you are doing business with or who is doing business on your behalf as an agent or is working for you as an employee. In overseas markets it is always a good commercial idea to employ or engage people who have experience in that market. However, the risk here is employing someone already imbued with a culture prone to bribery and corruption. Somewhere where bribery can be required for getting something as simple as a telephone line for an office, all the way up to obtaining mining or drilling rights.
It is important to communicate the policy and culture to all staff and agents. This may mean some practical training.
6. Monitoring & Review
You will need to reassess the measures you take to counter bribery where the product or service changes or where a business opens in a new geographical market. The new geographical market is an obvious case. However, home or established markets can carry increased risks due to special factors, such as particularly large and lucrative contracts or events. For example, a catering company operating in the South-East of England whose market is large scale corporate hospitality would have to be alert to the increased risks of bribery when bidding for say a contract tied to the 2012 Olympics.
This scenario is very real – in the lead up to bidding for construction contracts for the Olympic infrastructure the UK government made it very clear that bribery and price-fixing was a major issue and that extensive measures were being taken to combat it. So, established markets can change due to a special event. They can also change because of an economic downturn or increased competition. Suddenly a “whatever it takes” mentality can take hold in order to beat competitors. Businesses need to be aware of these increased risks.
Also, from a purely competitive view, if a rival is found to breach this law it could put them out of tendering for large contracts for a considerable period of time. Put in this context it is commercially important to make sure that your own business is operating within the law.
Written policies & procedures
The Act is practical in the sense that the greater the risk the more comprehensive your training and procedures should be. However, if the risk is low oral warnings to staff can be enough.
It is important to note that the Bribery Act does not require any external verification or validation of procedures. It is up to the organisation concerned to ensure that the procedures they have in place are sufficient to the risks.
Who to check?
Businesses should carry out due diligence of new employees or agents operating in new markets, particularly if the employees or agents are already established in the market.
However, businesses do not necessarily need to check those organisations that supply them, those further down the chain of supply. Unless the market operated in suffers from endemic corruption. This is where a company needs to be aware that it’s own employees may come under pressure to pay bribes, simply to operate in certain markets. Pressure to pay bribes for trivial matters will certainly mean much greater pressure to pay significantly larger bribes to secure contracts within a territory, or to be even allowed to bid for those contracts.
The Act makes it clear that corporate hospitality, entertainment and promotion is excluded from the provisions. The Bribery Act also still allows for corporate gifts. So tickets to Ascot and the Open at Royal St George’s are still on.
Given the amount spent on corporate hospitality and the number of people employed within the hotel and leisure industry this was always going to be allowed under the Act.
The only proviso is that the hospitality offered has to be proportionate. This would mean that taking the chief executive of a company you are doing business with in a foreign market to a karaoke bar would be ok, having Beyoncé sing for him while he is there would not be.
GlaxoSmithKline former chief in China accused of bribing hospital officials - BBC News
GSK admits China executives broke bribery laws, share price falls - BBC News
City of London Police and British Standards Institute offer anti-bribery courses to businesses - BBC News