New Bribery Laws

January 4th, 2012

New legislation came into force last year to overhaul and modernise bribery laws dating back to 1889. Businesses are advised to review their position and take necessary action now to avoid prosecution…

Effective from 1 July 2011, the Bribery Act aims to combat bribery in the UK and internationally. It creates the following four offences and is wider ranging than previous, covering both the public and private sectors:

• Active bribery: promising or giving financial or other advantage.

• Passive bribery: agreeing to receive or accepting financial or other advantage.

• Bribery of foreign public officials.

• The failure of commercial organisations to prevent bribery by an associated person (corporate offence).

The Act applies to all UK citizens, residents and companies established under UK law, but it also has extraterritorial reach. An individual or company can be prosecuted for the above offences if they are committed abroad and where the individual or company has a “close connection” to the UK. Furthermore, non-UK companies can be held liable for failure to prevent bribery if they do business in the UK.

Understandably, the new legislation has raised a number of questions and concerns amongst businesses and we have highlighted some of the key areas below:

Associated Persons
Companies can be held liable for bribery committed by their employees or other associated persons, including agents, contractors and sub-contractors, even if they had no knowledge of it. This is only in cases where the individual actually represents the organisation and any bribery they commit is intended to benefit it.

Corporate Hospitality
This area is of particular concern for businesses, in terms of what is and what isn’t deemed acceptable. The Government has provided examples as to what constitutes “reasonable and proportionate” corporate hospitality and it is not expected that normal hospitality, sporting events, lunches and dining out will fall foul of the law. These are recognised as an established and important part of doing business and according to the Government, the intention of the Act is not to criminalise such behaviour.

Facilitation Payments
This is where an official is paid to perform a function he or she should normally carry out and although the Government has relaxed its stance on this, it does remain illegal. Allowances will be made and payments not considered “serious” may not attract prosecution.

Joint Venture Partners
It is thought this will particularly affect UK companies entering into partnerships abroad with local companies. Businesses will have some protection against illegal acts committed by joint venture partners and can avoid prosecution if they can prove they have not benefitted from a bribe paid by another member of their joint venture. Prosecutors will also be required to prove that the corrupt party was performing a service for a particular member.

Adequate Procedures
In order to avoid being prosecuted, companies must ensure they have “adequate procedures” in place, designed to prevent associated persons from carrying out corrupt activities. Guidance published by the Government states that such procedures need only be proportionate to the size of the business, allowing companies to act appropriately according to their own circumstances. In a small business for example, verbal communication may suffice.

With regards to the Bribery Act, the Government has assured businesses its intention is to make life harder for the minority of organisations responsible for corruption, rather than placing unnecessary burden on law abiding businesses.

All businesses are advised to take action as soon as possible and guidance on “adequate procedures”, including case studies, can be found the Ministry of Justice’s website: www.justice.gov.uk


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