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The Bribery Act 2011: Are you ready?- 30/03/2011
The Government has today announced that the Bribery Act will come into force on 1st July 2011. Responding to the understandable concerns of business over the potentially very broad scope of the new law, it has also published its much anticipated Guidance. The main Guidance produced should help commercial organisations adopt procedures (appropriate to their size and business environment) to prevent persons associated with them (eg. their agents at home or abroad) committing acts of bribery and thereby reduce their exposure to prosecution under the Act. There is also a useful Quick Start Guide, aimed specifically at SMEs.
Ken Clarke, the Justice Secretary, noted that he recognises the new offences of:
- offering or receiving a bribe;
- bribery of foreign officials; and
- failure to prevent a bribe being paid (on which see below the "adequate procedures" defence),
are "quite tough rules". The main thrust of the Guidance, however, offers reassurance to businesses that "combating bribery is about common sense, not bureaucracy".
The key points to note are as follows:
Corporate Hospitality
The guidance makes clear that reasonable hospitality to meet, network and get to know your clients will not fall foul of the new legislation. As such, there's no need to cancel those seats at the Grand Prix, Wimbledon or the Olympics after all.
Adequate Procedures Defence
In relation to the offence of "failure to prevent a bribe being paid", the procedures that need to be put in place in order to rely on the "adequate procedures" statutory defence need only be proportionate to the size and nature of your business.
Whereas major multi-nationals must exercise greater due diligence and have more detailed compliance procedures in place, verbal communication may suffice for a small company. If there is very little risk of bribery being encountered by members of your company or on its behalf, no specific bribery prevention policies will be required.
Associated Person
A company will only be held criminally liable for the acts of an "associated person" where that person actually represents or performs services for it and the bribery committed is intended to benefit that company. It is very unlikely therefore that a company will be liable for the actions of someone who simply provides services to it.
Facilitation Payments
Facilitation payments, which are payments made to induce officials to perform routine functions that they are obliged to perform in any event, remain illegal under the Act.
Role of the Courts
In relation to the scope of application of the Act's provisions and, importantly, whether or not an organisation is "carrying on a business" in the UK, the courts will consider a range of factors. Mr Clarke states, for example, that mere listing on the London Stock Exchange or simply having a UK incorporated subsidiary will not necessarily engage the Act.
Prosecution
Cases may be brought only when either the Director of Public Prosecutions or the Director of the Serious Fraud Office is satisfied both that:
i. a conviction is more likely than not; and
ii. prosecution is in the public interest.
Businesses may be relieved to learn that Mr Clarke does not anticipate a large number of prosecutions, and certainly not for trivial cases.
The Manches team is on hand to steer you towards minimising risk and maximising profitability. A more detailed ebulletin will follow in due course. If you would like to attend Manches' forthcoming Bribery Act seminar, covering the updated position, please email your contact details to Kate Chapman.