In announcing the publication of guidelines last week on how the Bribery Act 2010 should be managed, the Justice Secretary Kenneth Clarke described bribery as a crime that "we know when we see".
The guidelines demonstrate the Government has listened to concerns that honest companies may get caught out unwittingly. However, it still fails to take account of the cultural differences particularly in relation to companies that trade overseas. What may be perceived as a bribe in the UK may simply be seen by others as an accepted way of doing business.
The much awaited guidelines at last bring greater clarity to the interpretation of the Act, especially in the area of corporate hospitality. It is now clear that genuine hospitality or similar business expenditure shall continue to be a bona fide part of business development as a reflection of good relations.
Where it may not be deemed reasonable and appropriate, for example, would be if a local authority client dealing with a waste recycling contract were treated to a trip to the Rugby World Cup in Australia. The Act deals only with bribery and has four specific offences of paying and receiving bribes, bribing a foreign official and failing to prevent bribery.
Companies convicted of an offence face unlimited fines with up to ten years imprisonment for individuals. ‘Failing to prevent bribery’ is the element causing most consternation to the business community particularly in respect of an ‘associated person’. That is, someone not directly involved with a business such as when a person is working in a joint venture or subsidiary. In these instances it will be imperative for businesses to show that they have ‘adequate procedures’ in place to prevent bribery.
The best defence will involve appropriate training of employees and effective audit trails which will ensure that in the event of an allegation being made a business can demonstrate that they have taken all reasonable steps to prevent and detect acts of bribery.
What counts as ‘adequate’ will depend on the bribery risk that a business faces. To assist in making that assessment, the Ministry of Justice has issued six guiding principles to help businesses decide what, if anything they need to do. These range from thinking about a bribery risk that they might face to raising awareness by communicating policies and procedures to staff and to others who will perform services on their behalf.
Principles to defence:
- Proportionality
- Top level commitment
- Risk assessment
- Due diligence
- Communication
- Monitoring and review
The principles behind the Act are commendable, but questions remain as to how the legislation can be enforced. There are currently only nine or ten prosecutions for bribery in the UK each year and only time will tell of its effectiveness in terms of tackling corruption and supporting business growth.
The Bribery Act 2010 will be implemented on July 1.
Tim Ellsmore is managing director of 3ami Limited. The 3ami Monitoring and Audit System (MAS) is an effective tool for preventing and identifying cases of corruption, systems abuse and leakage.
Relevant Links:
- Bribery Act Guidance (PDF/External Site)
- Bribery Act Quick Start Guide (PDF/External Site)