Acting on Bribery is now a must for all businesses14.09.2011
The Government’s new Bribery Act came into force on 1 July. It has generated much discussion and many myths have arisen around it, the most preposterous being that corporate entertaining will be disallowed.
The Act replaces old legislation, creating offences of offering or receiving bribes, bribery of foreign officials and a corporate offence of failing to prevent a bribe being paid on an organisation’s behalf. Penalties for convicted individuals and organisations range from fines to terms of imprisonment.
Fortunately corporate entertaining, and many businesses, will be largely unaffected by the legislation.
The threshold required before the Serious Fraud Office will prosecute is likely to be high. Taking clients to sporting fixtures or cultural events is unlikely to be an offence, however timing should be considered. For example, lavish hospitality to an organisation prior to a tendering process might well be frowned on.
Payments or hospitality to foreign public officials (FPO) is more problematic. A good test is to ask if the hospitality is reasonable and proportionate to the norms for that particular industry. Paying for legitimate expenses incurred by the FPO when promoting products or services to them, for example, would be allowed.
The Government recognises that in certain parts of the world and industry sectors facilitation payments – ‘unofficial payments made to public officials in order to secure or expedite the performance of a routine or necessary action’ – are prevalent.
Prosecution is more likely if facilitation payments include large or repeated payments, and payments that are planned for and are accepted as a standard way of conducting business. Small, isolated payments to do something routine are unlikely to lead to prosecution.
Organisations therefore need a clear policy setting out procedures an individual must follow if facilitation payments are requested and can then demonstrate that they have been followed.
So what should businesses do?
The Government has published guidance to explain how businesses will be affected and what they should do to comply with the new legislation. It stresses that having “adequate procedures” in place is a defence to the corporate offence of failing to prevent bribery.
Bribery prevention procedures should be proportionate to risk, and will vary depending upon the size of the organisation and sector of industry in which they operate.
Small or medium sized businesses will require relatively minimal procedures to mitigate bribery risks. The starting point is to carry out a risk assessment and put in place appropriate procedures and practices within the organisation.