New bribery laws, which could put workers behind bars and hit companies with unlimited fines, received Royal Assent on 8 April 2010, clearly marking the start of a tough new era for organisations and corporations across Britain.   These new laws will bring significant responsibility to company directors.   Companies could face prosecution for failing to prevent bribery in their organisation under the new regime.

If bribes are paid by or on behalf of an organisation, the company will have to demonstrate that it has ‘adequate procedures’ in place to prevent corrupt business practices or face the penalties.

It is highly likely the Ministry of Justice will issue Guidance on these procedures in June or July but will not be prescriptive. The guidance is likely to cover anti-bribery policies, training of staff, corporate entertainment and gifts, and better due diligence on agents and business partners.

The Bribery Bill has been pushed through Parliament to clear this business before the election and, from previous experience, the Act is likely to come into force on 1 October 2010.   This means that businesses now have a very short window of opportunity to review systems and procedures in their organisations that will avoid them falling foul of the new law.

The Bribery Act introduces:

• a general offence of offering or receiving bribes,
• a specific offence of bribing a foreign public official, and
• a corporate offence of failing to prevent bribery.

According to recent research by Eversheds, which canvassed the views of almost 700 executives, 60% of businesses are unaware of the corporate offence of failing to prevent bribery and one in four board directors don’t know that they could face prosecution.

Neill Blundell, Head of the Fraud Group at Eversheds, commented:

“The Bribery Act is now a reality and businesses need to be aware of the penalties they could face if they don’t comply.   The UK has previously been criticised for its approach in dealing with major bribery cases, so this is a significant step change that will go far beyond the scope of the US Foreign Corrupt Practices Act. This truly is a wake-up call for corporate Britain.”

Eversheds’ Corruption Clampdown report reveals a lack of knowledge and understanding about the new laws, even at the top of UK businesses. The report found that one in five (20%) organisations don’t have robust systems to prevent bribery from taking place and there is also confusion about what constitutes bribery.

While three quarters (73%) of those surveyed understand more explicit forms of bribery – giving or receiving an illicit payment – there was a lack of awareness of the more discreet forms that will be covered by the Act, such as offering a commercial advantage or offering and receiving lavish gifts.

CDM2007.orgcomments:

The Bribery Act does seem to raise as many questions as it does answers.   If an organisation has not yet decided what is needed to be done to ensure it or its staff are adequately protected, it is recommended to seek robust advice on the nature and extent of the risks as they apply to the business and the first stage ought to include a gap analysis.    A proper understanding of what the new law says (including whether it really is new) is the fundamental starting point.

The construction industry is renowned to having standard practices with long established suppliers, policies on the acceptance of hospitality to relationships with agents et al… all of this could be under scrutiny under the new laws.

There are, of course, available and understandable defences to the Act, many of which focus on ensuring that a culture of anti corruption can be demonstrated to exist through the organisation.   All of this would mean that robust proof of support from board level, effective training, robust due diligence and rigorous supply chain management will all go some way to ensuring compliance.

The size, resources and circumstances of each organisation will be considered in assessing the adequacy of procedures in any investigation. The important element will be the implementation of procedures.

A well-trained competent staff structure is a good starting point … an organisation that has the 'world class' culture to be competent and exemplar and has the resolve to rise above the general level will win its business on merit and will not have to worry about 'buying' its trade ... 

Ed.