BBA issues Bribery Act 2010 guidance

Wednesday 1st February 2012

The British Bankers’ Association has now published guidance on compliance with the Bribery Act 2010 (“the Act”) – click here for details.

The guidance, published following consultation with the Serious Fraud Office (“SFO”), Crown Prosecution Service (“CPS”), Financial Services Authority (“FSA”); and the Ministry of Justice (“MOJ”), is intended to assist the banking sector regarding steps to be taken to avoid corporate criminal liability.

For those familiar with the far reaching and all encompassing legislation, the guidance contains few surprises but it does include some helpful comments on the aspect of the Act that has undoubtedly given rise to the most column inches of commentary in the last 2 years or so – corporate hospitality. The guidance also considers the different, and comparative, obligations under the US Foreign Corrupt Practices Act 1977 (“the FCPA”), of particular interest, noting the criminalisation of the receipt of a bribe under the Act as compared with the FCPA which does do so; and the application of the Act to both private and public officials worldwide, contrasted with the FCPA which is limited to the bribery of public officials and only outside the US.

In theory at least, the FSMA regulated-sector should have been better prepared than most for the introduction of the Act given the obligations to monitor and have in place systems and procedures to prevent bribery and corruption. Even before the Act came into force, the FSA has had, and has taken, the opportunity to make full use of its powers under the Financial Services and Markets Act 2000 (“FSMA”), the associated Regulations and the Proceeds of Crime Act 2002 to hold businesses to account for behaviour involving bribery.

In July 2011, the FSA fined Willis Limited £6.895 million under FSMA and the associated Regulations which included a 30% discount for Willis’s co-operation in, and early settlement of, the FSA’s enforcement action. Had it not done so, the fine would have been £9.86 million.

The FSA found that the firm had failed to have in place adequate systems and procedures to prevent payments amounting to £27 million to sales representatives overseas; undertook inadequate due diligence on its sales representatives overseas: did not provide adequate training to its staff on anti-bribery measures; and did not review relationships sufficiently regularly to ensure that problems did not arise.

Whilst it is clear that obligations under the Act and FSMA are not identical, the Act undoubtedly adds to the available regulatory weaponry when dealing with FSMA regulated entities for bribery.

The Square Mile has, historically, been a hotbed of corporate entertainment – champagne fuelled trips to Wimbledon and Ascot in some cases the norm. There can be no doubt that this was tempered in the wake of the financial crisis but the looming shadow of the Bribery Act still struck fear into many brokers and FSA approved persons. Whilst the BBA guidance does give some comfort that those days are not necessarily at an end entirely, any individual and business will need to ensure that it has in place very effective anti-bribery procedures with Hospitality Registers that are properly monitored. If lavish entertainment is to be given out, there must be rigorous scrutiny of its appropriateness if any business does not want to find itself on the wrong side of the law, facing huge fines, confiscation and potentially imprisonment for those involved.

The last few years have been tough for the banking sector and no business will want to be the first to be caught up in a scandal surrounding disproportionate hospitality – public sympathy will be non-existent and if the recent trends in sentencing for “white collar criminals” are anything to go by, the courts are likely to be as unsympathetic.

The Gordons regulatory team is on hand 24 hours a day to offer assistance and advice in connection with any regulatory matter. Protecting the legal position of senior manager, directors and the company from the outset is essential to the successful management of a regulatory investigation and compliance is key.