Bribery Act Guidelines published
The Ministry of Justice has now published the long awaited guidelines to the Bribery Act and as a consequence the Act will become “live” on 1st July 2011. You can find the details at www.justice.gov.uk/guidelines/bribery.htm The guidance says that a proportionate and commonsense approach should be taken and there is a certain amount of backtracking on the extra-territorial effects. For example the text of the act says that all companies that carries out part of their business in UK are covered by the act but the guidance says having a London listing alone will not lead to liability and that even where there is a UK subsidiary it will be a matter of fact as to whether that subsidiary is sufficiently a part of the parent to bring the act into play. This is really too woolly to be helpful and opens the door to less than transparent decisions on whether to prosecute. The guidance on facilitation payments which it is acknowledged are a fact of life in some countries is more helpful and businesses should consider this carefully and draw up appropriate guidance for their staff and agents in those countries where this is likely to be a problem. It is especially important to not that this remains very different from the US regime and it is absolutely not a carte blanche to make this type of payment. The UK governement is keen that businesses play their part in standing up to bribery based activities by cutting off the pool of potential payers and by using approaches to British firms as a way of highlighting the problem to the local authorities and putting pressure on them to reform. The most important step that companies must take is to introduce procedures to educate staff and agents against giving or accepting bribes. If anything does go wrong and a complaint is made that a business has been paying bribes a strong defence can be made if appropriate procedures have been put in place. Six principles are given as to what will generally be involved to ensure the procedures are appropriate although compliance with these is not a guarantee that you will be safe while a plan that does not follow the six principles may be quite acceptable so it will depend on the circumstances and management will have to take a view. In general however the six principles are a good starting point. They are as follows:
- There must be top level committment. Generally this will mean that top managment should be actively involved in disseminating the company’s policy on the matter and should be available to provide advice and support to those on the ground. They must set the tone that establishes the importance to the company of compliance and the consequences for any individual who flouts the rules. The policy must be seen to be consistant and fairly handled for example it will not be helpful to have speeches on not offering bribes if bonuses are set up in such a way as to encourage excessive risk taking.
- There must be a risk assessment. The business should thoroughly audit its activities and identify where there is a risk of bribes being offered or accepted.
- The procedures should be proportionate. Having identified the potential risks the main efforts to manage them should be addressed to the areas of highest risk and should be appropriate to the nature of the company. At the very least a code of practice covering the main risk areas for that business, clearly communicated to all staff and partners will be required.
- Due diligence. As businesses are responsible for those that act for their benefit great care needs to be taken in selecting staff and business partners and their past business practices should be scrutinised.
- Training. Training in the implications of the act for that specific business and tailored for different staff groups should be implemented. As well as telling people what to look out for it should also offer guidance in how to handle difficult situations and who to contact within the company for help.
- Monitoring. All procedures and training introduced in relation to the act requires to be regulary reviewed for effectiveness and where appropriate refreshed and improved. If a company does find an inadvertant breach it should consider whether to report itself to the authorities. Staff should be encouraged to bring forward problems to management and not to feel that they need to cover them up for fear of reprisals. Care should be taken to review the situation before entering any new markets.
Another area that has caused great concern is the issue of corporate hospitality and whether for example a lavish day out at a sporting fixture might fall within the definition of a bribe. The guidelines offer some help on this and the government has made clear that it is not intended to be a blanket ban but that it should be proportionate. Additionally it must be remembered that a bribe is intended to induce improper behaviour so the likely outcome of the hospitality needs also to be considered. Clearly the timing of the event and the nature of the guest list will be as significant as the choice of event. Particular care must be taken in relation to foreign government officials where a stricter set of rules apply.
Clearly the Bribery Act is a significant and complex development for UK corporate governance and must be implemented by each business in accordance with its specific needs ahead of the July deadline. If you would like help with understanding what it means for you or if you would like help in developing procedures for your business please contact me at firstname.lastname@example.org