Shoosmiths LLP
  April 12, 2010 - England

Businesses urged to prepare as Bribery Bill becomes law
  by Andrew Pickin

The Bribery Bill has finally become law, introducing a completely new regime with which British businesses will need to comply.


The old law has been widely criticised, with the Organisation for Economic Co-operation and Development stating recently that it was ‘characterised by complexity and uncertainty’.


Reform was seen by most commentators as necessary and long overdue.


There have, however, been tensions in the progress of law reform between those who argue that our rules failed to crack down on wrong-doers – particularly where bribery takes place overseas – and others who feel that new rules could hamper the competitiveness of British firms seeking new business in global markets.


The new Act and the new sanctions regime

The new Act will introduce four new offences:


·         the first basic offence – it will be a criminal offence to offer, promise or give a bribe

·         the second basic offence – it will be a criminal offence to request, agree to receive or accept a bribe

·         the Act introduces an entirely separate offence of bribery of foreign public officials

·         the Corporate Offence – the Act introduces an entirely new offence of failure by relevant commercial organisations to prevent bribery by persons working on behalf of the organisation


The Corporate Offence is scheduled to come into force in October 2010, but it is not yet known when the others will take effect, though this is expected to be in the very near future.


A maximum of 10 years’ imprisonment is allowed for all offences while corporate failure could involve an unlimited fine.


In addition, and significantly, directors, managers and company secretaries can also be at risk of prosecution personally if an offence is committed by a company of which they are officers if the offence is committed with their consent or connivance.


Having said that, it is clear that the primary focus of the Serious Fraud Office (SFO) – one of the bodies responsible for initiating prosecutions under the new Act – wants to focus on ‘real offenders’, rather than those who are trying to do the right thing.


The SFO General Counsel has said that one ounce of prevention is worth a pound of cure when it comes to prevention of corporate corruption.


The Corporate Offence

The so-called Corporate Offence is of particular interest. 


It is committed where a person associated with a commercial organisation bribes another person with the intention of obtaining or retaining business, or an advantage in the conduct of business for the organisation.


Liability for breach is strict, and it is not a defence that the corporation has not been negligent.


It should also be noted that the definition of a person who is associated with a commercial organisation includes ‘a person who performs services for or on behalf of the organisation in whatever capacity’. This is potentially a very wide category indeed, which could certainly include, for example, a ‘fixer’ or introducer in an overseas market.


The defence

There is an important statutory defence available to companies faced with a risk of prosecution.  Accordingly, it is a defence for an organisation to prove that it had in place adequate procedures designed to prevent persons associated with the organisation from undertaking such conduct. 


Adequate procedures: What are they?

Companies will want to know what procedures they need to put in place to ensure they can use the statutory defence.


Guidance will be published by the Secretary of State prior to October 2010. In reality, however, we already have a good idea of the areas companies will need to consider. 


Guidance and protocols from respected bodies, including for example the GC 100 Group, make clear that companies should focus on at least the following areas:

·         a clear statement acknowledging top level responsibility for the company’s anti-corruption programme

·         risk assessment provisions

·         clear policies and procedures

·         appropriate implementation arrangements

·         provisions dealing with due diligence and relationships with business partners

·         monitoring and review of actions/conduct


What should you do?

We believe that to prepare for the new Act, businesses will need to take the following steps:


·         understand the new law

·         assess risk in your business – there is no ‘one size fits all’ approach

·         consider what policies you already have in place to ensure that employees, business partners and others understand your refusal to tolerate corrupt practices

·         consider what you are doing to make clear to your workforce what is acceptable and what is not

·         establish clear governance structures to ensure that responsibility is recognised at the highest level

·         critically evaluate what you need to do to build on existing good practices to ensure compliance with the new rules


We can assist you in the work you may need to do to prepare for these changes.


Face up to new responsibilities

Brook Horowitz, head of anti-corruption programmes for the International Business Leaders Forum, wrote in the FT this week: “Companies all over the world are facing increased pressure to take measures to eliminate the risk of corruption from their business practices.


“That pressure is intensified by the fact that the very countries presenting the greatest corruption risks also represent primary growth markets. How to maximise growth and minimise risks in these markets presents one of the biggest management challenges facing business today.”


We believe companies that face up to their new responsibilities and prepare to meet them will be able to go forward with the confidence that they have nothing to fear from these welcome reforms.