For any UK business looking to do business internationally, it is important to understand what your obligations are to comply with the Bribery Act 2010. Failure to comply might mean you could be liable for prosecution if you are accused of engaging in corrupt practices.
The main obligations under the Act are that your business must understand and document the risks it faces and take appropriate steps to mitigate them. Your bribery prevention procedures should then be proportionate to those risks.
What might the consequences of non-compliance be?
• Commercial organisations: an unlimited fine (set at the court’s discretion).
• Individuals: up to 10 years’ imprisonment, an unlimited fine (set at the court’s discretion), or both.
• Public contractors: possibly being barred from tendering for public contracts.
Further consequences for your business might include:
• Severe reputational damage through negative press coverage
• Disruption of business.
• Being placed on blacklists and being unable to tender for certain types of project.
Further consequences for individuals might include:
• disciplinary actions
• termination of employment.
The four key offences
There are four key offences set out in the Act:
• Active bribery: offering, promising or giving a bribe.
• Passive bribery: requesting, agreeing to receive or accepting a bribe.
• Bribery of a foreign public official: to obtain or retain business or an advantage in the conduct of business.
• Failure of commercial organisations to prevent bribery: this can include an “associated person” acting for, or on behalf of, the organisation paying the bribe. An “associated person” might be an employee, a subsidiary entity or an agent
How your business can mitigate the risk
To help you understand the sort of anti-bribery procedures your business can put in place to prevent bribery, the Ministry of Justice has issued the “adequate procedures guidance” containing the six core principles. These principles are not prescriptive and there is no one-size-fits-all situation.
1. Proportionate procedures
“A commercial organisation’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation’s activities. They are also clear, practical, accessible, effectively implemented and enforced. “
This means that whilst you should establish procedures to mitigate bribery and corruption risks, and guide ethical conduct and decision-making, those procedures should take into account the particular circumstances of your business. This might include things like the size of your business, the markets you are exporting to and the scale of your exporting activities.
2. Top – level commitment
“The top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They foster a culture within the organisation in which bribery is never acceptable.”
It is important that you can show your top-level management is committed to anti-bribery compliance and that resources are in place to ensure the effectiveness of your anti-bribery programs and controls. Your business’ anti-bribery policy must be clearly communicated both internally to your staff and externally to customers, suppliers, partners and contractors.
3. Risk Assessment
“The commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment is periodic, informed and documented.”
Some of the more common areas of risk might be:
• higher risk locations – such as countries with a higher perceived or actual level of corruption
• higher risks in certain sectors
• higher risks for certain kinds of transaction – such as licenses, public procurement contracts and hospitality or entertainment
• higher risk from third party involvement – such as where you rely on third parties or intermediaries to deliver your product or service to market
Your risk assessment should examine a variety of such internal and external factors, and assess the areas of highest risk in terms of potential exposure to bribery.
4. Due Diligence
“Due diligence is firmly established as an element of corporate good governance and it is envisaged that due diligence related to bribery prevention will often form part of a wider due diligence framework. The purpose of this Principle is to encourage commercial organisations to put in place due diligence procedures that adequately inform the application of proportionate measures designed to prevent persons associated with them from bribing on their behalf.”
You should have procedures to prevent bribes being paid on your company’s behalf. This is because you could still be prosecuted under the Act even if bribes are paid indirectly via third parties, such as sales agents and distributors, local representatives and business partners. These procedures should be based on your risk assessment and the particular circumstances of your business.
5. Communication (including training)
“The commercial organisation seeks to ensure that bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training that is proportionate to the risks it faces.”
You should ensure that your business’ policies and procedures which support an anti-bribery culture are communicated clearly to everyone both internally and externally. You should ensure that everyone involved understands how bribery can arise, when they and the business may be at risk, and what your policies are for dealing with any issues.
6. Monitoring and review
“The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.”
You will need to show that you continue to evaluate the effectiveness of your anti-bribery procedures. This could include periodic reviews of your policies and procedures, monitoring of third party relationships and auditing of high risk financial transactions.
Whilst the Bribery Act can seem to impose an additional burden on your company, especially if you are a SME, remember that measures need to be proportionate to your business’ particular circumstances and to the markets you are trading with. Once you have a framework established it should be a fairly simple matter to adapt to any new market you enter.
The Guidance shows that the UK Government recognises the problems business face with regard to the demands for facilitation payments overseas. So, while it may not be possible to stamp them out immediately, your business will be expected to show a genuine commitment towards eradication of these payments. This will involve identifying where in the business facilitation payments are being demanded, acting to ensure the locals are aware that these payments are unacceptable, ensuring agents and employees are given guidance on how to deal with requests for such payments and, if appropriate, using diplomatic channels to try and change local practice.
The Guidance also confirms that prosecutors will consider very carefully what is in the public interest before deciding whether to prosecute. On that basis, prosecutors are expected to prosecute only significantly serious offences. Although one-off payments are unlikely to result in prosecution (especially if these are fully recorded in your company books), the Serious Fraud Office's concerns will be raised if these one-off payments become regular features of your business; if repeated, even payments of small amounts could indicate a course of conduct that may lead to prosecution.
If you need any further help, The Institute of Export & International Trade can assist your business to comply with the provisions of the Bribery Act with training, our helpline and one-to-one assistance with paperwork.