Anti-bribery policies are the way forward

The Bribery Act 2010 ("the Act") is due to come into force on 1 July 2011.

The Act will replace, update and extend the existing law against corruption which dates back to 1889. The Act extends the crime of bribery to cover all private sector transactions (previously bribery offences were confined to transactions involving public officials and agents). Its scope is extensive. The offences established by the Act are very broadly defined and it has significant extra-territorial reach.  

Under the Act there will be four criminal offences:

  1. A general offence covering offering, promising or giving a financial or other advantage to another person with a view to influencing that person's behaviour to improperly perform a relevant function or activity;
  2. A general offence covering requesting, agreeing to receive or accepting a financial or other advantage to perform a relevant function or activity improperly;
  3. Bribery of Foreign Public Officials to obtain or retain business; and
  4. A new offence for commercial organisations where they fail to prevent bribery by those acting on their behalf.  

In relation to the new offence of failing to prevent bribery by persons acting on behalf of an organisation, there is no requirement for intent on the part of an organisation. A commercial organisation commits an offence if a person associated with it bribes another person for that organisation's benefit.

A person is "associated" with a commercial organisation if it performs services for or on behalf of the organisation, regardless of the capacity in which they do so. This will be construed broadly and could cover agents, employees, subsidiaries, intermediaries, joint venture partners and suppliers.

The organisation has a defence if it can prove it had "adequate procedures" in place to prevent bribery. Therefore, it is advisable for businesses to implement and enforce an anti-bribery policy.

The Act recognises that no commercial organisation is capable of preventing bribery at all times. If an organisation is considered to have contravened the Act, co-operation with the Serious Fraud Office (SFO) will be taken into account when taking the decision to issue criminal proceedings.

The Ministry of Justice has identified six principles which should be the starting point for adequate bribery prevention for all commercial organisations. The guidance strongly advises a risk based approach to adopting satisfactory procedures based on the size, nature and complexity of the business.

Penalties

Individuals found guilty of an offence under the Act could face a prison sentence of up to 10 years, an unlimited fine or both.

Senior officers of an organisation could be liable for a prison sentence if bribery was perpetrated with their consent or connivance and could be disqualified from acting as a director for up to 15 years.

Organisations could receive unlimited fines. No guidance has yet been given, but fines for companies are likely to be substantial. In addition, any contract formed as a result of bribery is likely to be void on public policy grounds.

Commenting on the Bribery Act, Laura Christie, a specialist employment lawyer said; "The penalties for falling foul of this legislation are massive. No business or employer can afford not to put in place an anti-bribery policy. Putting in place an anti-bribery policy is a simple solution to a potentially massive problem. Define your policy and the rules within which your staff, suppliers and other connected parties can work within and communicate it. We are speaking to a number of employers and HR professionals about this very problem and helping them to take steps to make sure that they do not fall foul of this new legislation."