BRIBERY ACT 2010 - Is your organisation ready?

BRIBERY ACT 2010 - Is your organisation ready?

The new Bribery Act legislation came into force on 1 July 2011 and it aims to tackle corruption by bringing the UK into line with international law. It applies to individuals and to businesses (whether UK or foreign) which are based in the UK, where a bribe relating to it has taken place anywhere in the world.

What is a bribe?
A bribe is an inducement or a reward to someone to perform their activities improperly, in order to gain or to retain business or a business advantage.

The offences:
It is an offence for a person to offer a bribe and for a person to accept a bribe. It does not matter whether a person accepts the bribe directly or through a third party; whether the bribe is for the benefi t of them or another person; or whether they know the performance of the activity is improper.

Activity to which a bribe relates:
It is any function of a public nature; any activity connected with a business and any activity performed in the course of a person’s employment. This applies even if it is performed outside the UK. The activity is performed improperly if it is in breach of a relevant expectation.

Expectation test:
What is expected is a test of what reasonable person would expect in relation to the performance of the activity concerned.

Failure of commercial organisations
to prevent bribery:

A commercial organisation is guilty of an offence if a person associated with the organisation offers bribes in order to obtain a 6 business advantage.

But it is a defence for the organisation if it can show that it had put into place adequate procedures designed to prevent persons associated with the organisation from undertaking such conduct. Meaning of associated person: A person is associated with an organisation if they perform services for or on behalf of that organisation. The capacity in which they perform services for or on behalf of the organisation does not matter. Therefore the person may be an employee, agent or a subsidiary.

Penalties:
An individual guilty of an offence is liable on conviction to imprisonment of up to 10 years, or to an unlimited fi ne, or to both. A business guilty of an offence is liable to an unlimited fine. Offences by a business: If the offence has been committed with the consent of a senior officer of an organisation, the senior officer is guilty of the offence and is liable to be punished accordingly. Excessive hospitality?

How is corporate hospitality or entertaining affected by the Act?

This was of significant concern to businesses and it caused a delay in the introduction of the Act until there was clarity. It has been determined that a business is still able to provide hospitality, entertaining or gifts, but it should be proportionate, for example, it is acceptable to provide tickets to Wimbledon, it is however not acceptable to pay for flights to the UK and the cost of hotels to enable someone to attend Wimbledon. Likewise lavish gifts will fall foul of the Act.

What businesses should do to comply with the law:
Within the Bribery Act a new law has been introduced of failing to prevent bribery. This is very significant to businesses as they might commit a corporate offence if they do not take adequate measures to prevent bribery taking place. Therefore a business may offer a defence if it can show that it has put into place suitable controls and procedures which are designed to prevent bribery arising.

In order to place reliance on this defence, a business should take the following action:-

1. Consider the risk of bribery taking place by assessing and being aware of its business markets and relationships, to ensure that they are open and transparent and to act where risk is detected.

2. Exercise care when it has dealings abroad or is involved with government contracts.

3. Senior management should be aware of the Act and its implications.

4. A business should develop a culture and ethics code where bribery is unacceptable.

5. Draw up an anti-bribery policy and ensure the information is communicated to existing and new employees, possibly via a training program.

6. Set out in contracts of employment or employee handbooks that a breach of the Act is a serious misconduct and set out the penalty an employee may face, e.g. instant dismissal.

7. Carry out adequate investigations into prospective suppliers & customers.

8. Set out in the standard terms and conditions the anti-bribery policy so that customers are made aware of the commercial expectations that the business has in its dealing with them.

9. Ensure that adequate whistle blowing procedures are in place if someone suspects a colleague has been involved in bribery.

10. Employees should be made aware of what is an acceptable level of giving or receiving gifts and hospitality.

11. If there is an internal control function, then it should periodically check that the procedures and controls are adequate and are being

By having these controls and procedures in place, a business will substantially reduce the risk of bribery arising. Though of course, such procedures cannot guarantee the elimination of bribery, it will however provide a business with the critical defence that it has done all it can to prevent it, should it turn out that an employee has been involved in bribery.

by Engin Zekia




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