From the 1 July this year all companies will be liable to an unlimited fine where any members of staff or associated persons (that is, anyone who performs services for or on behalf of that company) engage in bribery (giving or receiving) in connection with their duties. The only available defence for such companies is that they had “”adequate procedures”” in place to prevent or detect such conduct.
The Ministry of Justice (‘MoJ’) has now published its long-awaited guidance for companies on the “”adequate procedures”” they must demonstrate if they are to avoid conviction. It was hoped that this guidance would clarify the vague and general principles laid down in earlier drafts. Sadly, this has not materialised and the major difficulty faced by businesses remains the lack of precision about what is considered “”reasonable and proportionate””.
Businesses will have much to do between now and the 1 July 2011.
The MoJ has laid down six key principles to help businesses decide what adequate procedures they ought to adopt. Predictably, these are highly conceptual and give little clear direction. They are:
- Proportionate procedures: ensuring appropriate systems and controls are in place to prevent and detect bribery;
- Top-level commitment: ensuring the anti-corruption message is delivered from senior directors or management;
- Risk assessments: appraising the risk areas faced by a company in connection with bribery, and documenting and routinely revisiting them;
- Due diligence: knowing who will be performing services for or on behalf of a company and ensuring those service providers are aware that they must not partake in bribery in connection with their duties;
- Communication/training: ensuring that policies and procedures are embedded and understood through effective internal and external communication; and
- Monitoring and review: making changes and improvements to anti-corruption measures as and when necessary.
Media scare-mongering about all corporate hospitality being outlawed has finally been laid to rest. Provided that such hospitality serves a legitimate business interest and is not disproportionate, it will be acceptable.
“”Bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organisation, better present products and services, or establish cordial relations, is recognised as an established and important part of doing business and it is not the intention of the Act to criminalise such behaviour.”” – MoJ.
Only where the gift or hospitality is extraordinary or lavish, or has the ability to influence or reward improper performance by the recipient, could the payment be regarded as a bribe. That said, there are exceptions: even a relatively small gift given at an inappropriate time, (for example, to a key decision maker in advance of a tender proposal), may be regarded as a bribe, for obvious reasons.
All companies now have three months to implement adequate procedures to prevent and detect bribery. In particular, those who operate in perceived “”higher risk”” areas should seek specialist advice from us to ensure appropriate measures are put in place. Those areas include:
- Involvement in public procurement;
- Making “”facilitation payments””, political or charitable donations;
- Hosting or attending lavish corporate hospitality events;
- Trading in foreign jurisdictions where bribery risks are known to be higher; and
- Engaging agents/introducers/fixers, etc, whether in this country or abroad.
Your preparation for the Act must include:
- Comprehensive risk assessments to identify where the main risk areas are;
- An immediate review of anti-corruption policies and procedures, including clear guidelines for all staff and associated persons;
- A review of all contractual documentation with associated persons; and
- The appointment of a compliance officer at board level.
Muckle LLP can assist with any or all of the above and can bring together expertise from across our Business Protection, Employment and Commercial Services teams to ensure the right measures are in place, depending on the specific needs of your business. We can do this all at a pre-arranged fixed price and to an agreed timescale.
For further information please contact Jonathan Dunkley, call 0191 211 7918 or alternatively email us at [email protected].