BUSINESSES are concerned that they will have little time to meet the demands of the Bribery Act when its offences come into force next year. If they wait for the government’s guidance on “adequate procedures” to be published, it may be too late to make the required adjustments.
When the Bribery Act offences come into force in April 2011, a corporate entity will be automatically criminally liable if anyone performing services for it anywhere in the world bribes to win or keep business for it. Employees, subsidiaries and even foreign agents can make a UK company liable to unlimited fines, even if management knew nothing about it. UK companies will be expected to make sure they know what is being done on their behalf and to police it.
The only defence is having adequate procedures designed to prevent bribery, and the government’s guidance is supposed to help business understand what this requires. The Ministry of Justice (MoJ) has just completed its consultation on the guidance, and while the final version will be published in the new year, the draft makes interesting reading. Only when the first cases are prosecuted through the courts will matters become clear, but there are already some obvious steps that businesses should be taking.
The MoJ’s draft guidance is “not prescriptive and is not a one-size-fits-all document” – in other words, the guidance won’t tell you the answer. Instead, it sets out Six Principles for Bribery Prevention that businesses can consider applying.
First, it demands a “top level commitment” to eradicating bribery: if management don’t really believe in it, it’s not going to happen. Second, there must be risk-assessment of the business, knowing and keeping up to date with bribery risks you face in your sector and market. Third, due diligence should be carried out on agents, business partners and even staff to ensure they have the expertise required with no conflicting interests and are paid no more than is fair.
Fourth, businesses must set out clear, practical and accessible policies and procedures so that everyone acting on its behalf knows what is acceptable and how to deal with any issues. Fifth, there should be effective implementation of the policies and procedures: “this is about going beyond ‘paper compliance’ to embedding anti-bribery in your organisation’s internal controls, recruitment and remuneration policies, operations, communications and training on practical business issues,” says the document. Finally, there must be monitoring and review to help ensure the procedures are working. Importantly, none of the principles are obligatory, but persuading a court that your procedures are “adequate” may be difficult if you chose not to apply all of them.
The MoJ also published “illustrative scenarios” covering key areas of concern, including intermediaries, joint ventures and hospitality. Unfortunately, they offer few answers and raise new questions: how much less is expected of small and medium sized companies? The scenarios suggest the bar is still very high. We will have to see what the courts make of these scenarios, which are not part of the guidance.
In the meantime, businesses should review industry guidance and assume the MoJ guidance will not change. The FSA’s recent report on corruption in commercial insurance broking is also recommended reading whatever your business. It offers the best insight we have of how the authorities may assess “adequate procedures”. Developing anti-bribery procedures is not simple and takes time if you really want procedures that are “adequate”: you can’t buy an off-the-shelf product. Those that haven’t already got their procedures in place should start working on them now.
Omar Qureshi is a partner at CMS Cameron McKenna