he government has issued guidance in relation to the Bribery Act 2010 which will come into force on 1 July 2011. The legislation introduces a new offence of failure by a commercial organisation to prevent a bribe being paid (section 7 offence). Businesses ought to consider action in relation to this offence over the next three months.

Points to note in relation to the section 7 offence are:

• The section 7 offence is committed if a person associated with a commercial organisation bribes another person with the intention of obtaining or retaining business for the organisation.
• The term “associated person” is cast very widely and businesses will need to ensure that various people (inside and outside the organisation) are aware of and committed to the business’s anti-bribery policies and procedures. This includes both individuals and other businesses, and may include contractors and subsidiaries.
• A bribe includes both a financial payment and any “other advantage”.
• Whilst the guidance states that it is not intended for bona fide hospitality or promotional expenditure to be criminalised, it points out that corporate hospitality is sometimes used as a bribe and therefore is still within the remit of the legislation.
• “Facilitation payments” that are common in some countries are not allowed and it may prove difficult for businesses to continue to trade in certain countries as the Act is extra-territorial.
• The Act carries heavy penalties including fines and up to ten years imprisonment.
• There is one defence only to the section 7 offence: the business must prove that it had adequate procedures in place to prevent associated persons from undertaking bribery-related conduct.
• “Adequate procedures” are not defined in the Act. The government guidance suggests what may be required but has no prescriptive advice for businesses.

What Steps Should Businesses Take?

• Given the level of uncertainty and the potential severity of offences, businesses should take the legislation seriously and put procedures in place before 1 July 2011.
• Doing nothing or adopting a bare minimum approach is not recommended.
• Until a standard of best practice emerges, businesses will need to be both vigilant and perhaps over-cautious.
• Businesses should acquaint themselves with the Act itself and the associated guidance, and should look at the six principles and various case studies at the back of the guidance and apply these to their own particular situation.
• Businesses should put in place procedures that accord with the six guiding principles:

1. Implement policies and procedures that are proportionate to the risks;
2. ensure top-level management commitment to anti-bribery measures;
3. adopt a risk-based approach and look at the bribery risks associated with the business;
4. conduct due diligence, particularly where there is an increased risk of bribery, such as when conducting business in foreign markets;
5. communicate policies and conduct training on anti-bribery procedures, and this will need to extend beyond internal staff to all associated persons who perform services on behalf of the business; and
6. ensure ongoing monitoring and review of anti-bribery policies and procedures.

Unfortunately, it is not possible to say at this stage what will be sufficient to meet the “adequate procedures” requirement. However, businesses are advised to work towards complying with the spirit of the law and the guidance, and continue to monitor developments both before and after 1 July 2011. This should ensure that they are able to remain compliant.

If you would like advice on your obligations under the Bribery Act 2010 or to discuss other corporate and commercial legal matters, please contact Nicky Androsov.