Gordons construction health & safety update - The Bribery Act 2010 - what you need to know!

The Bribery Act 2010 has gained royal assent creating new statutory offences of bribing and being bribed.  Although the Act won’t be in force until at least October 2010, companies are advised to act to put appropriate policies in place now to avoid facing prosecution by the Serious Fraud Office once the Act does become law.

Under the Act, a company is guilty of bribery where an “advantage” is offered or accepted in connection with the “improper” performance of the recipient’s functions.  The Act defines “improper performance” as conduct falling short of a reasonable person’s expectation of good faith, impartiality or trust.

The Corporate Offence 

The Act introduces a new strict liability offence for companies and partnerships that fail to prevent bribery by associated persons undertaking activities on their behalf. “Associated persons” may include employees, agents or subsidiaries. An organisation can be held to account for the acts of an associated person engaged in bribery even if the organisation did not condone or even know about it.  There is no need for negligence on the part of any one individual to be proven, and the organisation will be guilty of the offence where a person associated with the organisation bribes another person intending to obtain or retain business or a business advantage for the organisation.

Any entity incorporated or formed in or under the laws of the United Kingdom can be prosecuted in relation to the corporate offence wherever they carry on business, as can any other body corporate or partnership which carries on business in the United Kingdom.  Further there is no need for the associated person in question to have a close connection to the UK - the defendant organisation’s connection will be sufficient.  The Act expressly states that in relation to activities which are not subject to UK laws, local practice and custom must not be taken into account unless such practice or custom is permitted or required by local written law. 

The offence is subject to an “adequate procedures” defence, which effectively reverses the burden of proof (albeit a civil burden) for an organisation to show that it had adequate procedures in place to prevent bribery, in order to escape liability under the provision. 

Adequate Procedures

It will be a defence to a charge of failure to prevent bribery to show that the organisation had adequate procedures in place designed to prevent people acting on behalf of the company from committing bribery offences. No specific guidance on what would be “adequate” for the purposes of the defence has yet been given but the Government has stated that guidance will be published on the Act as a whole before it comes into force. However, the Government does not intend to prescribe the anti-bribery measures to be taken and that there will be no monitoring of compliance. Instead it will be for the courts to take into account the size and needs of the particular business being prosecuted. 

However, the Serious Fraud Office (“SFO”), one of the bodies authorised under the Act to bring prosecutions has already indicated the types of policies that it will be looking for when considering whether businesses’ procedures were adequate. These include: a clear statement of anti-corruption culture supported at the highest levels of management; a code of ethics; accountability; processes for auditing the programme; adequate training; a system of reporting; investigation and disciplinary processes; and various behavioural policies, including ones for gifts and hospitality, facilitation payments, outside advisers and political contributions. In the absence of any official guidance from the Government therefore, the recommendation must be for businesses to comply with the SFO guidelines as far as possible. 

It is also worth noting that the adequate procedure defence does not apply to a senior officer of the company. Any director who commits any act of bribery will have committed a criminal offence in his own regard and on behalf of the company.

Penalties

A company found guilty of an act of bribery will be subject to an extremely heavy fine as well as the commensurate bad publicity that a prosecution would cause. No guidance has yet been provided on how fines would be assessed.

Any person who commits an act of bribery faces up to 10 years' in jail. A director might also be subject to striking off in accordance with the provisions of the Company Directors Disqualification Act 1986. 

Organisations are advised not to wait until the Act comes into force but to act quickly to review their current procedures and ensure that appropriate policies are put in place and understood by any person who may undertake business on its behalf, taking advice where necessary. A failure to do so could result in a high price being paid by the organisation and its directors once the Act becomes law.

If you wish to talk to somone about the issues raised in this article please contact Katherine Southby.

Published: 17th June 2010

Katherine Southby

Back to top