October 2011

Q: I run a medium sized marketing company. One of the companies with which we regularly do business has inserted some new clauses in its commercial terms referring to the Bribery Act 2010. What is this and do we need to take any action?

A: The Bribery Act 2010 came into force on 1 July 2011 following international pressure on the UK Government to combat corruption.  The Act is a complete overhaul of corruption and anti-bribery laws in the UK and introduces far reaching legislative changes.

The Act introduces four new offences:

• Bribing another person;
• Being bribed;
• Bribing a foreign public official;
• Failure to prevent bribery – applies to organisations and employers will be able to defend themselves if they can show that they had “adequate procedures” in place to prevent bribery by or of people associated with their organisation.

Bribery can include gifts, corporate hospitality, client entertainment and can also include sponsorship and publicity of third parties.

In terms of penalties, unlimited fines can be imposed on organisations where a conviction is secured, and the corporate offence of failing to prevent bribery is likely to be the most significant element of the Act. Individuals who commit an offence under the Act can be imprisoned for up to ten years and/or can receive an unlimited fine.

Failing to Prevent Bribery

The new offence of failing to prevent bribery has caused organisations significant concern as it is broadly defined.  An organisation is deemed to have committed the offence of failing to prevent bribery if a person associated with it bribes another person for the organisation's benefit.  It appears that associated persons include agents, employees, subsidiaries, intermediaries, joint venture partners, distributors and any other service providers. It will be interpreted widely and the only defence is that the organisation had adequate procedures in place to prevent the bribery from occurring.

Adequate Procedures

The Act fails to define what “adequate procedures” would be but guidance suggests it may include measures such as risk assessments, adequate organisational procedures, top level commitment to anti-bribery measures, due diligence in relation to those with whom organisations do business and ensuring that staff are aware of the organisation's policies on bribery and corruption.

Practically speaking this involves ensuring that senior management are aware of the Act and you should consider circulating a board resolution confirming the company's commitment to the ethos of the Act. Consider incorporating an Anti-Bribery & Corruption policy into your Staff Handbook and reviewing other policies to ensure compliance. As your business associate has done, consider amending your terms of business to ensure compliance with the Act. It is recommended that you seek legal advice in relation to your policies and procedures and other documentation. 

If you require any advice on this topic, please contact Yasmin Awan at Clarkson Wright & Jakes on 01689 887805 or email yasmin.awan@cwj.co.uk