Posted: Monday, 7 February 2011 @ 14:59
The Bribery Act 2010 became a statute last April. It had cross party support, and was intended to fulfil our treaty obligations. It was due to come into force this April, but is now being delayed.
So what is all the fuss about? And why should SMEs be concerned with it?
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.
A company officer or senior manager could also be convicted for consenting to or conniving with another person in the commission of a bribery offence.
For individuals the maximum sentence is 10 years imprisonment, for commercial organisations they face an unlimited fine.
The Act also makes possible the prosecution in the UK of acts of bribery committed abroad by persons ordinarily resident in the UK, as well as British nationals and UK based companies.
So what is a bribe? Apart from the clear cut back-hander to win a contract, the so-called “bung”, it could also stretch to excessive gifts and entertainment designed to influence key players in the contract awarding process. In other words the bribe is intended to persuade or reward the other person in what would be an improper performance of their role.
In September 2010 the government issued a consultation paper including a draft Guidance for commercial organisations on prevention procedures. The new government had already set out its stall to address the tendency of UK law to “gold plate” treaty obligations, to the disadvantage of UK business, and the publication of the draft Guidance highlighted this problem. Many have criticised the possible anti-competitive effect on UK business, and the CBI have called the Act itself “not fit for purpose”.
So the outcome has been a spot of navel gazing by the government. The publication of the Guidance has been delayed, and with it the in-force date of the Act. In any event there will be a minimum 3 month period from the publication of the Guidance and the Act coming into force, so we are already looking some way beyond April.
So why should SMEs care? And what should they be doing now? Firstly, it is unlikely that the Act itself will be abandoned. We have our treaty obligations to meet. But the Guidance itself may receive a major overhaul from the published draft. But that draft does point the way forward and identify the sort of procedures which all organisations will have to put in place to prevent bribery.
Six general principles were outlined for commercial organisations to address, said to reflect UK and international practice.
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.
Of course, the burden will fall most heavily on large multi-national companies with complex and high value contracts involving many countries and agencies. At the other end of the scale will be small companies operating exclusively within the UK with small value contracts. But nevertheless, even small commercial organisations will need a written Risk Assessment and written policies and procedures in force to protect themselves in the event of bribery or acceptance of bribes by their employees or agents.
SMEs should now be carrying out their risk assessments and setting up their procedures so they are ready when the Act finally comes into force.
Blog by Nigel Musgrove
Nigel has been providing dispute resolution advice as a solicitor for over 35 years. As well as advising SMEs and business owners on disputes he also offers a specialist licensing law service. View profile
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation
to discuss your particular circumstances.