Posted: Wednesday, 22 June 2011 @ 13:45
The Bribery Act comes into force on 1 July 2011. In February and April I blogged on the implications, but I would just like to recap on the main points and highlight 2 Case Studies.
The Act creates 2 general offences, one of offering, promising, or giving a bribe, and the second of requesting, agreeing to or receiving a bribe. These are offences committed by individuals. There is also an offence of bribing a foreign official, and perhaps the most important offence as far as all organisations are concerned, an offence by a commercial organisation, which includes partnerships, of failing to prevent bribery.
Six general principles were outlined for commercial organisations to address.
1. A Risk Assessment: based on the country concerned, the transaction, and any partnerships involved.
2. Top Level Commitment: the organisation has to be lead from the top with a commitment to eradicate bribery and adopt the appropriate culture.
3. Due Diligence: a set of procedures to adopt for very transaction.
4. Clear, practical and accessible policies and procedures.
5. Effective implementation.
6. Monitoring and Review.
The Ministry of Justice has published a Guidance on the Act, and has also produced a very useful Quick Start Guide to the Act.
The Guidance goes into detail on the 6 principles and gives 11 Case Studies to show how they might come into play, and what actions should be considered to minimise the risk of bribery. Most involve trading with foreign organisations or foreign government bodies, but 2 case studies are more relevant to the majority of UK companies who do not have foreign trade.
Case Study 2
An installation company, operating in the UK domestic market, which uses independent consultants to facilitate business opportunities and prepare pre-qualification and tender documentation. The consultants operate on a fees plus expenses basis, yet because of the relationship and difficulties in monitoring and verifying expenses, the risk is assessed as medium to high.
The suggested actions for the company to consider are:
1. Have a written policy emphasising transparency and a zero tolerance to bribery
2. Communication of the policy to employees, consultants and external contacts for example local chambers of commerce. Also consider putting it on the external and internal websites
3. Due diligence procedures before engaging the consultants, for example making wide enquiries, taking references, obtaining financial statements
4. Contract terms to include zero tolerance to bribery, addressing bona fide hospitality, and the basis for fees and expenses
5. Periodic review and renewal of consultant contracts
6. Prepare key points guidance for sales staff and others involved in the bidding process
7. Have the bribery policy as a standing item on meeting agendas
8. Have a confidential whistle blowing procedure
Case Study 4
An engineering company which has an annual programme of hospitality events, involving sports, quality dining, and entertainment. Those attending meet their own travel expenses other than foreign public officials attending.
Suggested use of the 6 principles:
1. Undertake a Bribery Act risk assessment and record it
2. Have a bribery policy statement committing to transparency, reasonable and bona fide hospitality and promotional expenditure
3. Have an internal guidance for staff:
-emphasising transparency, conformity to laws and codes,
-hospitality to reflect a desire to cement good relations and show appreciation
-promotional expenditure to improve image as a commercial organisation
-guests not to be given impression they are under any obligation to confer any business advantage or that their independence will be affected
-clear criteria to decide appropriate levels of hospitality
-hospitality for any foreign officials to be cleared with the foreign public body
-appropriate levels of expenditure
-accounting documentation of all expenditure
4. Regular monitoring and review
5. Training and supervision of staff on bribery act policy and procedures
As I have stressed before, the majority of SMEs will have little to fear from the Bribery Act, and will have only a small amount of work involved in a risk assessment and company policy document. But all businesses should make themselves fully aware of the new law and take appropriate action now.
Nigel Musgrove
Business Solicitor
0845 003 5639
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