The Bribery Act received Royal Asset in April 2010 and is expected to come into force in April 2011. The Act completely overhauls current criminal laws dealing with bribery and corruption and introduces a tough new regime for organisations in the UK. However, according to research we conducted earlier this year, many businesses are in the dark over the new Act, with 60% of organisations unaware that failing to prevent bribery will be a criminal offence.
New bribery offences
The old law was outdated and made it very difficult to achieve successful prosecutions.
The new law creates the following criminal offences:
- Bribing another person.
- Being bribed.
- Bribing foreign public officials.
- Commercial organisations failing to prevent bribery by employees, agents or subsidiaries (the ‘corporate offence’).
These new offences, other than the corporate offence, impose the risk of imprisonment for senior management and employees who fall foul of the legislation and there are unlimited fines for any employer involved in bribery or corruption. Further, where an offence is proved to have been committed with the consent or connivance of a senior officer of the organisation, both that person and the organisation can be prosecuted. In certain circumstances, the Act applies even where the alleged offence happens outside the UK and it is relevant to both public and private sector employers. For the corporate offence, an organisation can face an unlimited fine and debarment from bidding for public contracts.
Importantly, the Act actively encourages employers to take steps to address the risks of bribery. In particular, it does this by providing a defence to the corporate offence where a commercial organisation can show that they have adequate procedures in place to prevent bribery and corruption. HR professionals are instrumental in ensuring that there are robust systems and procedures in place to minimise the risk of prosecution under the Act.
What do employers need to do?
Employers need to act now to embed a strong anti-corruption culture throughout their organisations by ensuring that policies and day-to-day practices are aligned with the requirements of the new legislation. This will include introducing or updating anti-bribery and whistleblowing policies, training new and existing staff, reviewing remuneration practices, closer scrutiny of purchasing decisions, clear rules on corporate entertainment, gifts and expenses as well as taking a hard line on those found to be 'greasing palms' to win business. In addition, senior management need to be made aware of their personal exposure under the Act.
As a minimum, all organisations need to review the adequacy of their existing systems, policies and training. For example, do staff know the dividing line between a gift to a customer and a bribe? A risk-based assessment of the organisation's exposure to corruption needs to be undertaken, with a thorough review of the internal controls surrounding procurement processes and any obviously high risk activity. Do not forget to extend this review to joint venture partners and other business partners.
Consideration for cross-border issues
HR professionals should also be prepared for competing interests within their organisations when it comes to dealing with allegations of bribery. How to balance the fairness of any employee investigation and, ultimately, dismissal process against the need for corporate compliance, early resolution and the control of publicity should be thought through in advance.
For multinational organisations, consideration needs to be given to cross-border issues, for example, the need for co-operation between teams operating across different legal systems and cultures.
Government guidance
It had previously been anticipated that implementation of the Act would occur in October 2010. Over the summer, the coalition government announced a delay to this schedule to allow for a consultation exercise to be launched in September in order to devise guidance for commercial organisations about the ‘adequate procedures’ which they must put in place to prevent bribery being carried out on their behalf.
The consultation closes on 8 November and it is anticipated that the finalised guidance will be published in January 2011, followed by a three-month familiarisation period leading up to the implementation of the Act. The Ministry of Justice (MoJ) has also announced that it will hold a series of events following the consultation to raise awareness of the Bribery Act and the changes it brings.
For now, the MoJ[1] has published draft guidance which is instructive and is a useful starting point. It proposes guidance formulated around six general principles. These are:
- Risk assessment – knowing the organisations’ bribery risks.
- Top level commitment – establishing a culture across the organisation in which bribery is unacceptable.
- Due diligence – knowing who the organisation is doing business with in order to feel confident that business relationships are transparent and ethical.
- Clear, practical and accessible policies and procedures.
- Effective implementation – going beyond ‘paper compliance’ to embedding anti-bribery in the organisation.
- Monitoring and review – instituting regular auditing and financial controls that are sensitive to bribery and are transparent.
It sets out also a number of examples which will help organisations identify risk areas and ask the right type of questions when applying the Act’s principles.
In deciding what bribery prevention measures best suit their particular circumstances, organisations will be assisted by this guidance. However, we would strongly recommend not waiting for the finalised guidance before taking action. The risk being that a three-month window is simply insufficient to address the risks posed by the Act upon implementation.
[1] Ministry of Justice Bribery Act draft guidance