The Bribery Act 2010

28/06/2010

By Henar Dyson, Senior Associate in Corporate and Commercial. Featured in New Business magazine.

Bribery is seen as a threat to economic progress and development around the world. Instead of businesses competing on a level playing field, they might be competing, unfairly, against the biggest backhander. Until now, the United Kingdom authorities have been much less aggressive in dealing with bribery than other national authorities, most notably in the United States. The Bribery Act 2010 is an attempt to reverse this approach and ensure that bribery is tackled more effectively. The Act is expected to come into force in October 2010.

The Act includes four offences:

1) Bribing another person - giving financial or other advantage with the intention of inducing another person to perform a relevant function or activity improperly or rewarding that person for doing so. The "relevant function or activity" includes anything connected with a business, whether involving private or public commercial organisation.

2) Accepting a bribe

3) Bribing a foreign public official

4) Failing to prevent bribery - this is the most controversial offence as it makes a commercial organisation liable for bribery carried out by a person associated with it, whether or not it was aware of the bribe. A commercial organisation will include any business, including partnerships and companies. Associated persons will include employees, agents and third parties involved with the business. There is a defence if the organisation can show that it had adequate procedures in place to prevent bribes being paid.

The devil is usually in the detail, but the Act is actually fairly short. Government guidance is due and will need to be reviewed carefully to assess the government's interpretation of the new law. It is fair to say now that the definitions in the Act are widely drafted and some commentators have suggested that some normal business activity might inadvertently be caught by the new rules.

Jurisdiction

The new offences will have extra-territorial application. This means that, as long as the person or commercial organisation is British, the Act will apply, wherever the bribery actually takes place and whether or not it is connected with the United Kingdom. The Act will also apply to commercial organisations from outside the United Kingdom which have a business presence in the United Kingdom.

Penalties

It goes without saying that the strongest deterrent would be the loss of business coming from adverse publicity. In addition, the Act includes criminal penalties. The maximum jail term will be raised from 7 years to 10 years and fines for commercial organisations convicted of failing to prevent bribery will be unlimited. It is also worth noting that bribery involving a public body could result in a permanent bar to tendering for public sector contracts, which will be extremely relevant to businesses that rely on public contracts.

Conclusion

Bribery offences have only been applied where very senior management was involved in the bribe. Although the Act does not amount to a radical overhaul, it would be naïve of businesses to ignore this opportunity to ensure that they have anti-bribery policies in place. We suggest that these are the basic and sensible steps for all businesses to take.

• ensure that high level management understands the implications of the new Act and is encouraged to foster a culture that will not accept bribery

• write a bribery policy and build in anti-bribery provisions into your employee handbook and employment contracts

• carry out a risk assessment of the business. Consider the possible risks based on the type of work that you do and the countries in which you operate

• ensure that your policy extends to third parties that you deal with - know your customers, agents and distributors and carry out due diligence on third parties at the beginning of the relationship

• consider setting up a committee responsible for compliance with the new Act and vet supplier chains and third parties

• provide training to your staff in relation to the Act and its implications for them

• review your policies relating to political or charitable donations, gifts, and entertaining

• guidance on the Act is due from the Government. It should be reviewed and changes made to your policy, if necessary.