A Simple Guide to the Bribery Act

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A guide to The Bribery Act 2010

A SIMPLE GUIDE TO THE BRIBERY ACT This guide outlines the main components of the Act and explains the offences in the legislation. It also summarises business’ responsibilities and how they can ensure that their own procedures comply with the demands of the law.

1. THE BRIBERY ACT 2010 The UK Bribery Act was passed by Parliament in April 2010, and following a review by the Justice Secretary, it is scheduled to be fully implemented from 1 July 2011. Businesses will need to have undertaken risk assessments and should have policies and plans in place for 1 July.

The purpose of the Act is to reform the criminal law of bribery to provide for a new consolidated scheme of bribery offences to cover bribery both in the United Kingdom and abroad.

The Act covers all businesses, professions and trades in the UK, and extends to cover corruption in public bodies. There are also extra territorial provisions which mean that the Act applies to the conduct of UK companies and partnerships overseas, and to overseas companies and partnerships which conduct business in the UK.

2. THE OFFENCES

a. Bribing another person An offence which can be committed in two ways, where a person commits the offence of bribing another person if they offer, promise or give a (financial or other) advantage to another person: - where the person intends the advantage to induce a person to perform improperly a relevant function or activity or to reward such conduct - where the person knows that the acceptance of such advantage would itself constitute improper performance.

b. Being bribed - for example where a person represents / agrees to receive / accepts a financial or other advantage, intending that a relevant function / activity be performed improperly.

1 c. Bribing of foreign officials A person bribes directly if they intend to influence an official and to obtain / retain a business advantage, and the person offers, promises or gives any financial advantage to the official or another person at the official’s request.

A person bribes indirectly if another person is asked to influence an official, and with a view to obtaining / retaining a business advantage.

d. Failure to prevent bribery This new offence relates to the failure of a commercial organisation to prevent bribery – firms can be held responsible for the conduct of their employees and agents unless they can demonstrate that they have established anti-corruption procedures.

e. Liabilities and Penalties The penalties apply to UK companies, partnerships and individuals. Non UK citizens and residents can also be prosecuted if they undertake business in the UK.

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 these penalties.

3. WHERE TO START? In March 2011 the Ministry of Justice issued Guidance notes about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing (section 9 of the Bribery Act 2010).

The guidance stresses that combating the risks of bribery is largely about common sense, not burdensome procedures. The core principle it sets out is “proportionality.”

The guidance is embedded in six principles:

(i) 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.

(ii) 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.

(iii) 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.

(iv) Due diligence The commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation, in order to mitigate identified bribery risks.

(v) Communication (including training) The commercial organisation seeks to ensure that its 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.

2 (vi) Monitoring and review The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.

These principles are interrelated and require interpretation to achieve a consistent and practical set of policies and procedures.

The guidance argues that the Act is directly beneficial for business, because it creates clarity and a level playing field, helping to align trading nations around decent standards. It also establishes a statutory defence: organisations which have adequate procedures in place to prevent bribery are in a stronger position if isolated incidents have occurred in spite of their efforts.

4. POLICIES AND PROCEDURES Guidance recommends undertaking a risk assessment and to create, or adopt existing procedures to eliminate or reduce to acceptable levels, the risks identified.

All businesses 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 type of statement, a zero tolerance to bribery and a commitment to carry out business fairly, openly and honestly would be issued by the board.

It is also recommended that businesses adopt: - a company code of conduct - employee and management training - procedures designed to reduce or eliminate the risk of corruption - appropriate internal and external controls.

Businesses should consider appointing a Compliance Officer at a senior level within the organisation to undertake a full risk assessment, to review current policies, to implement the required procedures, to supervise training and to implement the controls

5. IMPORTANCE OF TRAINING A defence against the wide-ranging powers of the act, which comes into force on 1 July, is to prove that a company has “adequate procedures” to combat bribery. All relevant staff should therefore be trained – - Directors, Partners, Senior Managers - Employees closely involved in purchases or sales - All employees responsible for customer relations - Accounts employees and managers - Employees responsible or appointing agents.

For more information visit www.accaglobal.com/advisory or www.briberyactukcompliance.co.uk/

ACCA LEGAL NOTICE

This guide is an example only. It may not address all of the issues for each specific client. You should undertake additional research into any client matters not dealt with in the examples and amend your advice accordingly.

While every care has been taken in the preparation of this Guide, neither the writer nor ACCA accept any responsibility for any loss occasioned by reliance on the guide.

3 This is a basic guide prepared by the Technical Advisory Service and the Bribery Act Training and Compliance Centre www.briberyactukcompliance.co.uk/ for ACCA members and employers. It is an introduction only and should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.