By Glenn Collins
Studying this technical article and answering the related questions can count towards your verifiable CPD if you are following the unit route to CPD and the content is relevant to your learning and development needs. One hour of learning equates to one hour of CPD. We'd suggest that you use this as a guide when allocating yourself CPD units.
The Bribery Act 2010 consolidates and brings up to
date several existing laws, some of which date back to the 1880s. The act has
four broad categories of offence:
1 ‘offering, promising or giving an
advantage’ (section 1 of the act)
2 ‘requesting, agreeing to receive an
advantage or accepting an advantage’ (section 2)
3 bribery of a foreign public official
(section 6)
4 failure by a company to prevent a bribe
being paid on its behalf (section 7).
Failure to comply with the
act could result in an unlimited fine and up to 10 years’ imprisonment. Section
11 of the act sets out the following penalties.
1 An individual guilty of an offence under
section 1, 2 or 6 is liable:
a on summary conviction, to imprisonment
for a term not exceeding 12 months, or to a fine not exceeding the statutory
maximum, or to both
b on
conviction on indictment, to imprisonment for a term not exceeding 10 years, or
to a fine, or to both.
2 Any other person guilty of an offence
under section 1, 2 or 6
is liable:
a on
summary conviction, to a fine not exceeding the statutory maximum
b on
conviction on indictment, to a fine.
3 A person guilty of an offence under
section 7 is liable on conviction on indictment to a fine.
4 The reference in subsection (1)(a) to 12
months is to be read:
a in its application to England and Wales
in relation to an offence committed before the commencement of section 154(1)
of the Criminal Justice Act 2003
b in its
application to Northern Ireland, as a reference to six months.
Parts of the act were
originally due to come into force on 1 April this year. However,
there was a great deal of concern about the act, with business owners
unsure that the necessary procedures could be put in place in time.
There was also a lack of clarity, with some observers
concerned that normal business hospitality could be caught by the legislation.
The government
delayed the implementation by withdrawing, reconsidering and then reissuing
guidance for business. Section 9 of the act states: ‘The secretary of state must
publish guidance about procedures that relevant commercial organisations can
put in place to prevent persons associated with them from bribing as mentioned
in section 7(1).’
The delay came as a relief to many, as it has
allowed businesses more time to assess the measures already in place to prevent
bribery, and to establish what, if any, additional procedures will be necessary
in order to comply with the legislation.
The revised implementation date is now 1 July.
Businesses will therefore need to have undertaken risk assessments and should
have policies and plans in place for 1 July.
The new guidance about what commercial
organisations need to introduce to prevent bribery (section 9 of the Bribery
Act 2010) has been made available.
The new revised guidance issued on 30 March is
much improved and reflects normal business activity.
There are still a few concerns with the redrafted
guidance as it still isn’t sufficiently clear on the notion of corrupt intent
and areas like this might only become clear once case law is established.
However, the government has been clear that the guidance has been produced on
the assumption that bribery is rare.
It has also sought to address some of the problem
areas from the previous guidance. There is now a clear statement on
hospitality: that the ‘government does not intend for the act to prohibit
reasonable and proportionate hospitality and promotional or other similar
business expenditure intended for these purposes’. It goes on to state that for
hospitality to amount to a possible bribe under section 6 of the act
‘there must be an intention for financial or other advantage to influence the
official in his or her official role and thereby secure business or a business
advantage’.
The new guidance, case studies and quick-start
guidance make it clear that each business will need to assess its risks to
prevent bribery and should apply procedures that reflect these risks. This
proportionate approach to risk marks a useful change from the original
guidance.
It’s important for all businesses to consider the
procedures that they require to combat bribery as there is a full defence if a
business can demonstrate that it has adequate procedures in place to prevent
bribery.
The guidance follows the following six principles:
* Proportionality. The actions the business
undertakes should be proportionate to its risks and to its size. A larger
organisation might need to do more to prevent bribery than a small business.
Additionally, a business that trades overseas will need to assess whether
it is trading in an area where bribery is commonplace.
* Top-level commitment. The top-level management
of the business will be in the best position to show that the organisation is
committed to operating without bribery, and will need to foster a culture where
bribery is never acceptable. It should be made clear to all staff that the
organisation’s policy is never to tolerate bribery.
* Risk assessment. The business should assess the
nature and extent of its external and internal risks. It might be necessary to
carry out some research into the markets the business will be operating in,
particularly if it is a new business arrangement. Equally, it may need to
research the people or organisations it will deal with.
* Due diligence. The business must know who it is
conducting business with and assess the bribery risk. Taking on people who may
not be trustworthy can hopefully be avoided, or the risk reduced, by carrying
out some checks and asking some questions.
* Communication. The business should communicate
its policies and procedures, and train its staff. It may be worth considering
whether any additional training for staff will be necessary, or whether a
general raising of awareness will suffice. Policies and procedures should also be
communicated to other third parties that may carry out work for the
organisation.
* Monitoring and review. Establish procedures
that ensure regular reviews are undertaken to assess business risks to prevent
bribery. Risks may change over time, especially if new geographical markets are
introduced, so it is important to review the processes regularly to ensure that
they remain relevant and effective.
Where to start?
The new guidance is clear that the actions a business takes should be proportionate to the risks it
faces and its size. In the quick-start guide one of the key points states:
‘There is a full defence if you can show you had adequate procedures in place
to prevent bribery. But you do not need to put bribery prevention procedures in
place if there is no risk of bribery on your behalf.’ In the introduction to
the very useful case studies that can be found in appendix A of the guidance,
it’s made clear that the guidance is concerned with significant risks. It
states: ‘All but one of these case studies focus on bribery risks associated
with foreign markets. This is because bribery risks associated with foreign
markets are generally higher than those associated with domestic markets.’ The
case studies reiterate this point and set out simple to understand bullet
points that businesses could use to help them produce procedures that reflect
their risk and size.
At the same
time, a business should comply with one of the easiest requirements. This is to
make a clear statement that the business culture is one where bribery is never
acceptable. This statement should also spell out the consequences of any breach
– for example, that it will be treated as gross misconduct. This type of
statement would be issued by the board, which would also confirm that it is responsible
for the business’s anti-corruption policies, procedures and statements,
including all education requirements and whistleblowing procedures.
Larger business may already have a number of
relevant documented policies and procedures in place. They should ensure that
these policies and procedures are recorded and linked to the principles set out
in the guidance.
For example, to
conform to the principles of risk assessment and due diligence, a business will
need to ensure that the risk of bribery has been assessed. General risk
procedures should already be in place, but these procedures should be reviewed
to ensure that they incorporate the risk of bribery and corruption into
existing risk assessments of country, sector and market risks, assessment of third-party,
transaction and work risks, and the overall risks faced by the business.
The business should also ensure it has enhanced
supplier, customer and intermediary risk assessment policies and, if required,
that due diligence procedures are in place. These procedures and controls are
likely to bring together financial and commercial controls, anti-corruption
policies including updated terms and conditions, supply chain procedures and employment and agency procedures.
To comply with the principle of communication, the
organisation’s anti-bribery and corruption code, gift and hospitality policy,
and political and charitable support policy should all be communicated to
staff. There should also be a statement and rolling assessment plan to
highlight where education, awareness and training should be undertaken.
The communication of policies should come with a
clear statement that if any breach occurs or is suspected it should be
reported; the business should also ensure it has adequate whistleblowing policies.
It is clear from the guidance that business partners should also be kept up to
date with the business’s policies.
The principle of monitoring and review may be
incorporated into internal audit reviews. It is expected that testing,
detection and investigation procedures will be undertaken, and that following
any review or investigation the policies and procedures will be assessed and,
if required, improved. However, it should also be clear that all parts of the
business should comment on the policies and procedures, that these are under
continual review and are updated as required. It is important that this work is
retained.
Finally, hospitality and promotional expenditure,
one of the points of concern in the original guidance, will still be a
difficult area for business and will be part of the risk assessment work. But
as stated earlier in this article, the ‘government does not intend for the act
to prohibit reasonable and proportionate hospitality and promotional or other
similar business expenditure intended for these purposes’.
For hospitality to amount to a possible bribe,
‘there must be an intention for financial or other advantage to influence the
official in his or her official role and thereby secure business or a business
advantage’. The simple message is that proportionate, bona fide hospitality or
promotional activity can continue.
Glenn Collins is head of technical advisory, ACCA UK,
and Lisa Gilmour is technical adviser, ACCA UK
