What impact will the Bribery Act 2010 have on employers?

16 April 2010

The Bribery Act (“Act”) modernises the law on bribery, increases the penalty for such crimes and creates new offences of bribery of foreign public officials and failure by commercial organisations to prevent bribes being paid on their behalf. Employers who fail to tackle bribery amongst their workforce may face large fines or imprisonment, under the Act. This Insight examines important parts of the Act and suggests that employers implement anti-bribery policies and procedure in order to comply with this new legislation.

What offences relevant to employers are created under the Act?
The Act creates a number of offences covering the requesting, offering, promising, giving or acceptance of a bribe. The failure of a company (or partnership) to prevent bribery by an employee or a person who provides services to the business has also become an offence. It is a defence for the company to show that there were adequate procedures in place designed to prevent its employees or agents committing bribery.

The intention behind the Act is not to prosecute well run companies for every infraction of the new legislation. The Government state it is wrong to make such companies liable to a fine if a rogue element within its ranks bribes on behalf of the organisation when those who manage it can show they have put in place procedures designed to prevent bribery on its behalf.

What is the “adequate procedures” defence?
The Government is to provide further guidance on this defence because the Act does not contain a definition of what “adequate procedures” constitute. While the guidance is awaited, the Government has indicated that it expects companies to take a proportionate approach to implementing such procedures that will take into account the risks that their businesses are likely to encounter.

A starting point for firms will be to review their existing procedures and policies. A small company that is unlikely to encounter bribery problems should consider creating an anti-bribery policy that it ensures its staff will follow. In contrast, a large company that deals with exports to countries where bribery is prevalent should introduce a more rigorous policy. This would be likely to include a series of checks and audit trails that would reduce the risk of bribery offences occurring. This could include staff training in anti-bribery procedures as well as corruption awareness seminars. Companies that do not have a “whistle-blowing” policy should introduce one in order to enable staff to report acts of bribery.

What are the potential penalties for failing to comply with the Act?
Companies or partnerships can face unlimited fines while individuals convicted of offences can face prison sentences of up to 10 years. If a bribery offence of a staff member is proved to have been committed with the consent or connivance of a director, manager, company secretary or other similar person, the senior officer or person (as well as the company or partnership) is guilty of the offence and liable to be proceeded against and punished accordingly. The Government has promised further guidance on how the penalties will be assessed, in due course.

Comment
Bribery and corruption is becoming an increasingly common occurrence in international as well as domestic business. We suggest that employers seek legal advice on the plans they introduce in order to comply with the Act.